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House of Lords

Monday, 23 January 2012.

2.30 pm

Prayers-read by the Lord Bishop of Manchester.

Armed Forces: Afghanistan


2.35 pm

Asked By Lord Lee of Trafford

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever): My Lords, I am sure that the whole House will wish to join me in offering sincere condolences to the families and friends of Private Matthew Thornton, 4th Battalion The Yorkshire Regiment; Lance Corporal Peter Eustace, 2nd Battalion The Rifles; Lance Corporal Richard Scanlon, 1st The Queen's Dragoon Guards; Private Thomas Lake, 1st Battalion The Princess of Wales's Royal Regiment; Rifleman Sheldon Steel, 5th Battalion The Rifles; Sapper Elijah Bond, 35 Engineer Regiment Royal Engineers; Captain Tom Jennings, Royal Marines; Squadron Leader Anthony Downing, Royal Air Force; Private John King, 1st Battalion The Yorkshire Regiment; and Rifleman Sachin Limbu, 1st Battalion The Royal Gurkha Rifles, who were all killed on operations in Afghanistan recently. My thoughts are also with the wounded, and I pay tribute to the courage and fortitude with which they face their rehabilitation.

UK force levels in Afghanistan will reduce from 9,500 to 9,000 by the end of 2012. By the end of 2014, British troops will no longer be in a combat role and will not be in Afghanistan in the numbers that they now are. Some UK troops will remain after 2014, including in training roles at the UK-led Afghan national army officer academy. The UK and the international community are committed to Afghanistan in the long-term.

Lord Lee of Trafford: First of all, I join these Benches in the earlier tribute. It is clear that we have in Afghanistan at present a very substantial amount of equipment. Clearly, some will be left for the Afghan forces, and some will no doubt be retained for our onward training role. However, bringing out the majority will be a major, complex task. Could my noble friend tell the House which routes are planned to be used in this pull-out? What is the speed of the pull-out likely to be? Are we going to hire extra heavy airlift? Finally, is he satisfied that the Ministry of Defence will have the systems and software in place to record all that equipment being brought out?

Lord Astor of Hever: My Lords, planning is still at an early stage, and the exact speed of recovery has not yet been set. It is too early to say what equipment we plan to retain, or its value, and what we will gift to the

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Afghans. We currently use a combination of surface and air routes to support operations in Afghanistan; work is ongoing to increase these to ensure that our drawdown is conducted in good order, and all equipment is consignment-tracked using an asset tracking system.

Lord Rosser: My Lords, on this side we also wish to express our sincere condolences to the families and friends of the 10 brave members of our Armed Forces who in the service of our country have been killed on operations in Afghanistan recently. British military personnel will continue to be in Afghanistan in a non-combat role after the withdrawal of our combat forces in less than three years' time. Who will be responsible for their security, particularly in the light of the recent killing of four French soldiers and wounding of 15 others by an Afghan force soldier, when this was by no means the first such incident of this type? What test will the Government apply to determine whether or not the Afghan national security forces are able to provide the necessary level of security for our non-combat personnel in Afghanistan after 2014?

Lord Astor of Hever: My Lords, UK and international forces are helping to build the strength and capability of the ANSF to allow them to lead security across Afghanistan by the end of 2014. They have responded professionally and effectively to several high-profile attacks and are ready and willing to take on increasing levels of responsibility. After 2014, UK troops will continue to support the ANSF by providing training at the new Afghan national army officer academy, and we will work with other NATO nations to ensure that the necessary force protection measures are in place.

Lord Rotherwick: My Lords, what is the situation regarding the Danish armour that is supporting our troops in Afghanistan at present?

Lord Astor of Hever: My Lords, that is a very important question. The deployment of Danish tanks has proved essential to our activities in Helmand, and the commander of Task Force Helmand cannot sing their praises enough. We and our allies in Regional Command Southwest welcome the Danish decision to retain this tank capability in Helmand until 2014.

Lord Stirrup: My Lords, successful disengagement of NATO and partner nations in combat roles depends upon the existence of a political and security situation that can be managed by the Afghan Government. With that in mind, can the Minister say whether the United Kingdom is being consulted on the talks that are taking place between the United States and the Taliban, and if these talks are aimed at an outcome that can be managed by the Afghan Government or are a cover for a precipitate drawdown of US forces before 2014?

Lord Astor of Hever: My Lords, we are clear that military means alone will not bring about a more secure country. We have always supported an Afghan-led political process to help bring peace and stability to Afghanistan, and we continue to encourage all parties to take forward reconciliation. We will continue to engage with our US colleagues on these important matters.

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Lord Sewel: My Lords, given the fragility of state institutions in Afghanistan, does the Minister accept that a likely outcome following the withdrawal of combat troops will be the fragmentation of the state of Afghanistan, with the greatest losers being women?

Lord Astor of Hever: My Lords, I think that that is a very gloomy statement, and I do not share the noble Lord's views on this.

Lord Dannatt: My Lords, would the Minister like to comment a little further on some of the equipment issues arising from our withdrawal from Afghanistan, in particular noting that many of the vehicles we use to provide protected mobility have been bought under the urgent operational requirement scheme specifically for Afghanistan? Would he comment about future protected mobility for the infantry in particular, given that the FRES utility programme has slipped from 2012 to about 2022?

Lord Astor of Hever: My Lords, there never was an intention to deploy FRES to Afghanistan. The Government have deployed a range of protected mobility vehicles, including the Mastiff, which is highly valued by our troops. The new Foxhound lightweight protected vehicle is being delivered for training purposes now so that those deploying shortly will be able to use it on operations in Afghanistan from the spring.

Lord Lawson of Blaby: My Lords, the noble and gallant Lord, Lord Stirrup, asked a rather important question. Would my noble friend the Minister care to give a slightly fuller answer than he has given so far?

Lord Astor of Hever: My Lords, I am sorry that my noble friend thinks that it was not a very full answer. I did say that we are in full discussions with our American allies, and I do not think that I can add anything to that.

Lord West of Spithead: My Lords, will we be asked to provide any aviation support post 2014?

Lord Astor of Hever: My Lords, I know that the Afghans have helicopters which have been very effective. They were deployed in direct support of troops recently in a very effective way.

Aviation: Passenger Duty


2.45 pm

Asked By Baroness Benjamin

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, the new rates of air passenger duty, or APD, which take effect from 1 April 2012, were confirmed in the Autumn Statement following a freeze in APD rates in 2011-12. Over the two-year period 2011-12 to 2012-13 APD rates, including those for flights to the Caribbean, will rise in line with the

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retail prices index. This increase, which does no more than keep pace with inflation, is necessary if the Government are to meet their overall fiscal projections.

Baroness Benjamin: I thank my noble friend the Minister for that Answer, but he is aware that air passenger duty is less if you fly to Hawaii than to Barbados, even though that is nearly double the distance. However, the Caribbean is the most tourism-dependent region in the world and the distortions created by APD rates are damaging to Caribbean countries-loyal friends and supporters of Britain. Would the Government consider amending the rates of APD to the Caribbean islands if they nominated Bermuda, an associate member of CARICOM, as their capital, bringing their banding into line with the US, their major tourism competitor? If not, what plans do the Government have to provide economic support to the Caribbean now that its livelihood is threatened?

Lord Sassoon: My Lords, in the current economic climate, air passenger duty is clearly a burden on all businesses whether in the Caribbean, the UK, or wherever else they are based. That is why we had a one-year freeze, although it is right that aviation should make a fair contribution. However a banding structure works, it is bound to have anomalies. It is the case, as many noble Lords will know, that because the banding works in essence on where the capital city is, the anomalies are indeed there, as my noble friend says, but whenever there are bandings there will be anomalies. We listened to the case that was made very well by the Caribbean authorities, including the tourist organisation, during our full consultation last year. We have no plans to make any further changes, other than those set out in the response to the consultation, but I hear very clearly what my noble friend says about how challenging the situation remains.

Baroness Scotland of Asthal: My Lords, do the Government accept that the Caribbean now has a number of very fragile economies and that these duties will have a disproportionate, deleterious effect on their well-being, and therefore will in many ways affect the United Kingdom too, which benefits greatly from many of those who hail from that region?

Lord Sassoon:My Lords, although I do not underestimate for one moment the effect on the Caribbean, there will be very many businesses located there, here and in other places for which air passenger duty is a burden. The present system of four bands was introduced by the previous Government. We had a one-year freeze in order to recognise the difficult situation in which people were placed by this and we looked at it. However, the fact is that the APD raised approximately £2.5 billion in 2011-12 and is an important revenue-raising duty.

Lord Campbell of Alloway: My Lords-

Baroness Gardner of Parkes: My Lords, what would be the effect of the suggestion that was made about Bermuda? Would it be possible for the Caribbean countries to reclassify themselves with Bermuda? What would that involve and would it make quite a difference to them, as has been claimed with regard to the United States?

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Lord Sassoon: That is a hypothetical question because there is no live question about there being a way to reclassify the Caribbean somehow from band C to band B. To illustrate the broader point, however, many of the respondents to the consultation suggested that we should move back from four bands to two, but that would have resulted in all those in short-haul bands A and B paying more, so it would have increased the air passenger duty for 91 per cent of all passengers paying it. There is no easy way of moving places from one band to another.

Lord Davies of Coity: My Lords, the Minister has referred to a number of anomalies. Does he accept that the anomalies display unfairness, and what are the Government going to do about them?

Lord Sassoon: As I have explained, the previous Government moved from a two-band system to a four-band one, which raised in the order of £300 million when they came into office and, by the time they left office, was raising in the order of £1 billion. These things are not easy. Where there are real difficulties, however, the Government recognise them. For example, special arrangements have been put in place for long-haul flights out of Northern Ireland to recognise its very special circumstances-its land border with a country that has no APD-and to preserve its flights to the United States. We have said that we will also look at the possible devolution of APD to Wales and Scotland.

Baroness Berridge: My Lords, one of the ways in which the system deals with anomalies is to divide large countries such as the Russian Federation into two APD bands. Why has it not been possible to have such a solution for the United States and Canada, which remain in one band and which creates the injustice that my noble friend Lady Benjamin referred to?

Lord Sassoon: My Lords, after reviewing this question at considerable length, a decision was taken to leave well alone on all this. As I have tried to explain, as soon as one moves one thing, that opens up the question of all sorts of other adjustments to maintain the revenue.

Transport Infrastructure: North-east England


2.52 pm

Asked By Lord Walton of Detchant

Earl Attlee: My Lords, the Government announced a range of transport proposals in the Chancellor's autumn Statement on 29 November 2011 for accelerated delivery in this spending review period. Those proposals

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were selected because they can be accelerated to start construction and make significant progress in the next three years, therefore making the earliest possible contribution to stimulating economic growth.

Lord Walton of Detchant: My Lords, I thank the Minister for that reply. Is he aware that almost 20 years ago, in response to questions from myself and the late Lord Jenkins of Hillhead, the then Conservative Minister in this House-the noble Earl, Lord Caithness-made a commitment on behalf of the Government that the whole of the A1 between Newcastle and Edinburgh would ultimately be dual? Is the noble Earl, Lord Attlee, aware that two schemes were in an advanced state of preparation in Northumberland to begin in 2009 but, when the previous Government downgraded that road to one of regional importance, they were postponed? Now that the coalition has upgraded the road to national importance, is it not time that these delayed schemes should be embarked upon and expedited?

Earl Attlee: My Lords, the noble Lord is correct in his description of the history of this project. The interim Regional Transport Board for the North East recommended to the Government in 2006 that proposals for the A1 Adderstone to Belford and Al Morpeth to Felton schemes were not funding priorities for the period up to 2016. The department therefore did not have a scheme to consider for the autumn Statement. However, it is good news that the Government have decided that that section of road is of national importance.

Lord Cormack: My Lords, as we rightly attach so much importance to the United Kingdom and its preservation, is there not an unanswerable case for making the high road to Scotland, and indeed the high road to England, a fully dual-carriageway road of national importance?

Earl Attlee: My Lords, I thought that someone would ask me a devolution question. There are very good road connections from the highly developed conurbation on Tyneside-Newcastle upon Tyne and Gateshead-but that is via the M6 corridor up through Carlisle. The journey time by car is shorter via Carlisle than it is via Berwick-upon-Tweed.

Baroness Maddock: My Lords, given that Northumberland is a more dangerous place to drive in than London according to figures released by the BBC on 19 January-32 deaths per 10 million hours of driving, compared with 23 in London-will the Government prioritise the value of road safety in transport appraisal calculations? Also, given that single-carriageway A roads like the A1 in Northumberland have the most serious accidents, does that not strengthen the case for dualling particularly dangerous parts of the A1 such as the Mousen bends, especially as that scheme is ready to go?

Earl Attlee: My Lords, first of all, the schemes on the A1 north of Morpeth are not ready to go, because they have been abandoned since 2006. However, my noble friend is absolutely right when she describes the dangers of a single carriageway, and I asked my officials precisely those questions. Interestingly, though, the

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accident rate for this section of the A1 was 154 per billion vehicle miles. This compares with 306 accidents per billion vehicle miles on all rural A-class roads within England. The rate for the A1, therefore, is approximately half that for rural A-class roads nationally.

Lord Davies of Oldham: My Lords, the Minister will appreciate that very significant improvements were effected to the A1 south of Newcastle with the removal of some dangerous right-hand turns and roundabouts and effective control of traffic. All these improvements, however, are a considerable way south of Northumbria and Newcastle. Is there not a case for appreciating that the A1 now does need attention to the points further north, and that in fact he should look at that scheme further?

Earl Attlee: My Lords, I re-emphasise that there is not a scheme at present that we can look at. The previous Administration also found, when they carefully analysed the situation, that there was not a business case for spending £10 per man, woman and child to dual all the way from Morpeth to Berwick-upon-Tweed.

Lord Geddes: My Lords, in relation to the Minister's reply to my noble friend Lord Cormack, could I ask the Minister when he last tried to drive from Newcastle to Carlisle and thence to Scotland? I think he will find that it took a very long time indeed.

Earl Attlee: My Lords, I did the best research I possibly could on behalf of your Lordships, but I confess that I did not actually drive the route. I did look on the map and I used the excellent AA Route Planner to see what the difference in time for the two would be, whether I went on the M6 or on the single-carriageway A1.

Lord Brooke of Sutton Mandeville: My Lords, given that we have run out of questions before time, may I congratulate my noble friend on the comprehensiveness of his replies?

Earl Attlee: When my noble friend got to his feet, I thought, "Oh no, he is going to ask me one of those tricky questions to which I will have to agree to write". On this occasion I shall just thank the noble Lord for his question.

National Planning Policy Framework


2.59 pm

Asked By Baroness Bakewell

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): The Government recognise the valuable role cultural institutions, such as theatres, museums and libraries, play in people's everyday lives. As part of the simplification of planning policies under the national planning policy framework, it was

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decided to include cultural development under the general heading of leisure and community facilities, rather than setting out a long list of specific categories. Our policies are intended to support local authorities that want to include cultural institutions as an integral part of the vision for their areas.

Baroness Bakewell: I thank the Minister for the Answer but she will know that there has been concern for some time that cultural interests are not specifically mentioned in the national planning policy framework; and that last December the local government Select Committee recommended that they should be included. With the Redgrave Theatre in Farnham threatened with demolition and the Greenwich Playhouse closing its doors, will the Minister put on record the Government's specific resolve to protect cultural interests?

Baroness Hanham: My Lords, the Government intend to see protection for all cultural interests but, as I have explained to the noble Baroness, under the draft national planning policy framework, cultural interests have been included under community facilities, rather than under a specific heading of "cultural institutions". If that needs reinterpreting, it will come about as a result of the consultation on the national policy planning framework that has taken place over the past three months.

Lord Tope: My Lords, I welcome the Minister's statement in recognition of the important role that culture and cultural services play in the nation's quality of life and well-being. Can she tell us when we will see the national planning policy framework in its final form so that we may judge the Government's commitment to that?

Baroness Hanham: My Lords, the Government are committed to producing the final version by the end of March. It is very much hoped that it will be ready before then. I am sure that the noble Lord will take a lively interest in it when it is.

Baroness McIntosh of Hudnall: My Lords, I wonder whether the noble Baroness agrees with me that cultural institutions in most areas represent rather more than just community facilities. In particular, they have been very important in the regeneration of certain key urban areas that have suffered from the loss of manufacturing industries or where other kinds of activity have gone into decline. In view of that, will she consider how the language of the national planning policy framework might be strengthened to give a little more than just a nod in the direction of cultural institutions, as is presently apparently the case?

Baroness Hanham: My Lords, there have been representations about this in the course of the consultation and I know that consideration is being given to them. We will see what comes out of the final result.

The Lord Bishop of Lichfield: My Lords, will the Minister explain how well assets of cultural, wildlife and landscape value will be protected in those non-designated areas that make up the greater part of the English countryside?

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Baroness Hanham: My Lords, it is not usual for me to be at a complete loss but I am afraid that I do not understand how the question relates to the Question. May I write to the right reverend Prelate?

Lord Davies of Oldham: My Lords, may I ask the Minister an easy question? This is meant to be the year of not just the Olympics but the Cultural Olympiad, with an enormous amount of energy being invested in the development of cultural opportunities across the country. Does it not therefore behove the Government to be somewhat more positive about this aspect with regard to planning?

Baroness Hanham: My Lords, the Government are very positive about cultural aspects. At the moment we are discussing whether that is properly put forward within the national planning policy framework. I can assure the noble Lord that it is very much at the heart of what the Government believe to be an important aspect, particularly of the Olympics and of people's lives. There should be proper access to the institutions of the arts, such as museums and leisure centres, which people in this country value.

Lord Avebury: My Lords, is my noble friend aware that many important cultural events are held in Clapham Library, which is now threatened with closure? What help do the Government propose to give to important, historic libraries that are the subjects of national preservation orders, and to the local communities who wish to take them over and look after them?

Baroness Hanham: My Lords, the funding of libraries and museums is a matter for, first, the local authority and secondly, by and large, the Arts Council. We have kept the budget of the Arts Council and the grant in aid at a level, with a reduction of just 11 per cent, which is not as much of a reduction as there has been in many other areas, and we expect support to be given. I do not have an answer to the specific matter raised by the noble Lord but, if required, I will write to him.

Lord Colwyn: My Lords, is the noble Baroness aware that the Live Music Bill of my noble friend Lord Clement-Jones successfully passed through the House of Commons last Friday, and will certainly go a long way to protecting musical cultural institutions?

Baroness Hanham: My Lords, I am delighted to hear it.

Lord Campbell of Alloway: My Lords, is not the answer to the Question on the Order Paper "yes"?

Baroness Hanham: Yes.

The Earl of Clancarty: My Lords, developing on the supplementary question of the noble Baroness, Lady Bakewell, will the Minister take particular note of recommendation number 5 of the Communities and Local Government Committee's report, which recommends that the framework adopt a more inclusive definition of sustainable development, particularly considering that culture has previously been defined in planning policy as one of the four main components of sustainable growth, alongside economics, social inclusion and environment,?

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Baroness Hanham: My Lords, the answer to that is yes, again. As I say, the Government are seized of the importance of culture and of its value within sustainable development. There are questions about the interpretation of sustainable development, and that issue is being looked at with regard to the result of the consultation that has just taken place.

Lord Brooke of Sutton Mandeville: My Lords, I recall that my noble friend rejected certain amendments to the Localism Bill which included culture and heritage in this context. Does she have a scintilla of sense-? I shall rephrase that. Does she have an inkling that this subject may be returned to quite frequently in the future?

Baroness Hanham: My Lords, just that scintilla of sense would tell me that this is likely to reappear.

Protection of Freedoms Bill

Order of Consideration Motion

3.07 pm

Moved By Lord Henley

Motion agreed.

Jobseeker's Allowance (Jobseeking and Work for Your Benefit) (Amendment and Revocation) Regulations 2012

Motion to Approve

3.08 pm

Moved By Lord Freud

Motion agreed.

Special Educational Needs (Direct Payments) (Pilot Scheme) Order 2012

Motion to Approve

3.08 pm

Moved By Lord Hill of Oareford

Motion agreed.

23 Jan 2012 : Column 803

Welfare Reform Bill

Report (5th Day)

3.08 pm

Clause 94 : Benefit cap

Amendment 58C

Moved by Baroness Donaghy

58C: Clause 94, page 63, line 22, at end insert "except for industrial injuries benefit awards"

Baroness Donaghy: My Lords, as I said in Committee, I appreciate that this is by way of an interval in the big picture, but it is on a subject that is work related. There has been insufficient consideration of work-related issues in the Bill and I have consistently raised issues such as: what happens to the self-employed; what happens with the redeployment of 20,000 local authority staff on housing benefits; and, the third area, what happens to those who have worked hard all their lives, have been injured at work and have received an industrial injuries compensation-a civilised scheme that is jointly agreed between trade unions and employers, where it is likely that the benefit cap will affect those in receipt of such compensation.

I think that this is about signals. If the Government want to emphasise that this is about concentrating on people at work and encouraging and giving incentives to those on work-related benefits, consideration should be given to my amendment, which covers those on industrial injuries disablement benefit. After Second Reading and Committee, the Minister was unable to say whether they would be exempt, so as far as we know they would still be included. The only part which would be exempt would be the constant attendance allowance within this benefit. However, that is only 1 per cent of the total figure. Although we are very grateful for that concession, it does not cover many people or much money.

Benefits under the industrial injuries scheme are different in character from the rest of the benefits system. Whereas other benefits are designed to prevent or ameliorate poverty, help people to cope with extra costs or substitute for lost income, the industrial injuries scheme is a system of no-fault compensation. In November 2010, the Industrial Injuries Advisory Council wrote to the Minister to argue that the industrial injuries disablement benefit should not count towards the cap for just that reason. As I said, employers and unions both support the industrial injuries scheme, which eliminates the need for an adversarial approach to compensating a large number of injuries and diseases that are agreed to be a risk of employment. Damages won through civil litigation are a closer parallel to the industrial injuries scheme than disability or other benefits. Including damages awarded by the courts in the total that is subject to the cap would be plainly unfair, but industrial injuries disablement benefit is also a form of compensation, and including it is just as unfair. Payments under the vaccine damages payment scheme are not to count towards the cap, but they, too, are a form of compensation.

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The Government have put forward three reasons for the benefit cap, and all of them are weak arguments for including the IIDB. They have said that they are introducing the cap partly to reduce the benefit expenditure, but IIDB accounts for a very small part of social security expenditure: 0.58 per cent of DWP annually managed expenditure last year. IIDB will account for an even smaller proportion of benefit cap savings, most of which will affect large younger families, especially those in receipt of housing benefit. Claimants of benefits from the industrial injuries scheme tend to be older-50.9 per cent of expenditure is on people over pension age-and will therefore account for significantly less than 0.58 per cent of the budget. It is unlikely that counting IIDB towards the benefit cap would save as much as £1 million a year.

The Government's equality impact assessment states that a further purpose is to "improve work incentives" for those on benefits. It must be emphasised that industrial injuries disablement benefit does not create a work disincentive. Half of all spending on it is accounted for by pensioners, and working age claimants can continue to receive the benefit if they stay in or find work.

Ministers have given greatest prominence to the argument that it is not fair for a workless family to receive more in benefits than an average family would receive in wages. In last year's spending review, the Treasury listed the benefit cap under the heading:

"Fairness ... Reducing the deficit fairly while protecting the vulnerable",

but a working family one of whose members had suffered an industrial disease or injury would not be in a worse position than a workless family; they would have the same right to IIDB.

The Government have not said a good deal about why IIDB should count towards the cap. The Minister has made a distinction between recipients of disability living allowance and IIDB claimants. People do not get industrial injuries disablement benefit to meet extra costs, which can be dealt with by an award of DLA if necessary. He has used this difference to justify excluding DLA but not IIDB. The argument is not a sufficient rebuttal because it fails to address the point that I have made about the nature of the industrial injuries scheme. Furthermore, if having extra costs were the reason for excluding a benefit, how would we explain the decision to exclude retirement pension and pension credit?

3.15 pm

Informally, officials sometimes argue that excluding IIDB would open the flood-gates for a long list of special cases that would complicate the benefit plan. I hope that tidiness is never the deciding factor in matters like this and that simplicity is not a sufficient reason for proceeding with an unfair change. I hope very much that the Government will agree with me that industrial injuries disablement benefit should not be counted towards the benefit cap. I beg to move.

Baroness Turner of Camden: My Lords, I support my noble friend in her amendment, and also urge that industrial injuries disablement benefit should not count towards the cap. This benefit is not a cost benefit or an

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income-replacement benefit; it is a form of no-fault compensation for the victims of industrial diseases and accidents. Counting this benefit and other benefits paid under the industrial injuries scheme towards the cap would, in effect, reduce the compensation paid to the most needy and vulnerable victims. It is no more reasonable than counting criminal victims' compensation would be, and it should certainly not be included. As my noble friend indicated, many employees who sustain industrial disease or injury often spend a lifetime in pain as a result. It is unreasonable to expect ordinary working people, who are caught in an environment that is not of their own making and in a situation for which they are not responsible, to have their compensation-an industrial injury disablement benefit-counted against the cap under welfare. I fully support everything said by my noble friend, and hope that the Government will respond benevolently to what we are saying.

Lord Wigley: My Lords, I rise briefly to speak in support of the amendment. I do so against the background of the industrial injuries and diseases that we are very familiar with in Wales, from coal-mining, slate mining and many other industries. I know that all industrial parts of these islands have similar experience.

If the Government's line on this whole issue is that it is unreasonable that people who are working earn less money than some people get in benefits and that the changes are justified for that reason, surely this exemption makes all good sense. People have an industrial disease or injury by virtue of the fact that they have been hardworking members of the community and get this as a result of their efforts of working. What is more, in all probability they will not be in a position to return to the workforce, so that argument disappears as well. I realise that special pleading for any one group will cause difficulties-and it may for the rest of today's debates-but this instance stands out as clear-cut and deserves sympathy.

Lord McKenzie of Luton: My Lords, this amendment, moved so ably by my noble friend Lady Donaghy, goes to the heart of fairness. It does not challenge the concept of a cap or indeed the level of the cap. As my noble friend clearly said, it does not undermine the stated aims of the Government for its introduction-whether we agree with them or not. We have heard that the industrial injuries scheme is a system of no-fault compensation. As the noble Lord, Lord Wigley, said, to qualify for the benefit, the claimant must have had a personal injury in an industrial accident or he must have a prescribed industrial disease. That must have arisen when the claimant was an employed earner. The amount of the benefit depends on the extent of disablement. An award is made for a period during which the claimant has suffered or may be expected to continue to suffer from the relevant loss of faculty.

On the rationale for the cap the Government alternate between reducing benefit expenditure and changing attitudes. The cost of the industrial benefits scheme, applicable to working-age claimants, as my noble friend said in moving the amendment, is below 0.5 per cent of DWP AME. As for encouraging the benefits of work, claimants would have had to have been in work

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in the first place to get the benefit. In a sense, they would have had to have been exposed to both the benefits and the risks of work. This raises broader questions about health and safety, but perhaps that is a topic for another day's debate. The benefit would be payable to those able to return to or stay in work as well as to those whose loss of faculty prevents it. In essence, the Government are saying that the greater the suffering an individual endures from an accident doing what the Government want-being in work-the tighter the cap should bite. That does not have a ring of fairness.

In Committee, the Minister left the door slightly ajar and indicated the possibility of further consideration. It would be good to hear that the door remains open and that he will be able to make appropriate commitments today or at Third Reading.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, before I speak to the specific amendment, I would like to make some general points about the rationale for the household benefit cap. First, there is a principled point that households should not be able to receive more on benefits than the average working family in Great Britain earns in work. Secondly, people on benefits should face the same choices as working families, including about where they can afford to live. Thirdly, someone in work should always be better off than someone on benefits. The proposed cap of £500 a week is equivalent to an annual salary of £35,000 a year before tax. We have set the cap at the median earned income for working families after tax and national insurance. We think this is a reasonable representation of average household earnings.

I ask noble Lords to consider how well these principles are received by the public at large. They will have seen press reports of a YouGov survey that found that 76 per cent of the public are in favour of the benefits cap. The overwhelming majority of people think there should be a limit to the amount of benefit those out of work can receive. We have received many representations that we are pitching the level of the cap far too high. In fact, only 7 per cent of respondents in today's YouGov survey think that the cap should be higher than £26,000. Another 9 per cent think there should be no cap, so of the people who answered the survey, 69 per cent thought that the cap as we have set it or below that amount is the right figure. Of those who expressed an opinion, the figure is above 80 per cent, or above four-fifths. The truth is that people do not understand why we pay claimants more money when they are out of work than they could reasonably expect to earn from working full time.

I accept that arguments can be made for special treatment for a whole range of groups and benefit payments. Indeed, many such arguments were eloquently expressed previously in Grand Committee, and this amendment moved by the noble Baroness, Lady Donaghy, is an example. However, we must be wary of such arguments clouding the bigger picture of the need to reform a complex benefits system, which is failing those people on benefit who want to work but, equally importantly, is placing a costly burden on the taxpayers in work who pay for it.

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We have today published an updated impact assessment with more detailed and robust estimates for the numbers and characteristics of people who may be affected by the cap. The high-level figures are broadly in line with the figures in the previous assessment, but there are some important differences. In particular, we now estimate that in nearly 40 per cent of households the claimant will be subject to JSA conditionality. We also estimate that the proportion of social rented sector households is 44 per cent, which is substantially less than we thought previously. The new figures are derived from the administrative records held by the department on benefit recipients. Thus, they are much more robust than the previous survey-based estimates. They provide a much firmer basis than before for considering transitional measures. Crucially, the methodology here means that we know who is likely to be affected by the cap and can start working with them and local authorities to minimise the problems for individual households when the cap is introduced.

Amendment 58C would require us to disregard payments of industrial injuries disablement benefits when operating the benefit cap. The noble Baroness, Lady Donaghy, has argued that these payments are worthy of special consideration because they take the form of compensation payments in lieu of injury or disability caused at work. I recognise the nature in which these payments are made, but I am afraid that I do not believe that it should override the need for a limit to the amount of welfare payments households should receive. Disregarding payments of IIDB would serve only to undermine that fundamental principle and create a precedent for others to argue for such special treatment.

We have previously been asked to reconsider the position of IIDB recipients in light of the fact that we have announced that we will fully exempt from the cap recipients of disability living allowance, personal independence payment, attendance allowance and constant attendance allowance. I have to say that I do not find these groups analogous. DLA, PIP and equivalent benefits are paid to people to help with the extra costs arising from their disability. Their receipt provides an appropriate means of identifying those disabled people who should be exempted from the cap. Many people receiving industrial injuries benefits will be exempt because they get constant attendance allowance as part of their industrial injuries entitlement or DLA.

I take the point about vaccine damage payments raised by the noble Baroness, Lady Donaghy. These lump-sum payments will be taken into account as capital and not income in assessing means-tested benefits. In other words, vaccine damage payments are not comparable to weekly income payments through IIDB. But, as has been said in debate today, the basic IIDB payments are compensation payments and do not reflect whether the disability or illness necessarily brings extra financial costs. I cannot agree that there is any reason to provide an automatic exemption in these circumstances.

On the disincentive to work, any IIDB recipient in work who is entitled to working tax credit will be exempt from the cap, as will any households in receipt

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of working tax credit. The cap of course will not apply to pensioners. I therefore ask the noble Baroness to withdraw her amendment.

Baroness Donaghy: I thank the Minister for that reply. I was beginning to think that he had moved straight to the big picture and that my interval was not even going to be considered-that we were all off buying our popcorn and he had started the big picture. At least the last few minutes of his reply tackled the subject that I have raised. As I have said, this amendment is about signals and hard-working people who, through no fault of their own, have been injured at work and, with the support of unions and employers, have been given compensation. I do not suppose that that would have been easy to achieve or that the bureaucracy is particularly easy. Having achieved that compensation those people will now be told that it will not be exempt from the cap.

With all due respect, I think that the Minister is so concerned about undermining the principle of the big picture that these people are being victimised. I do not believe that any precedent whatever would be set as regards the debates that are going to take place later. They would probably be only too happy to go back to work, having spent their lives in work. If only the YouGov survey to which the Minister referred had asked a question about industrial injuries benefits, we might have got a clearer picture of what people really felt.

I am aware from a previous reply that there will be an opportunity to talk about regulations at some stage. In the circumstances, I shall withdraw the amendment, but we will come back to the issue when it comes to discussing regulations.

Amendment 58C withdrawn.

3.30 pm

Amendment 58D

Moved by Lord McKenzie of Luton

58D: Clause 94, page 63, line 22, at end insert-

"( ) Regulations under this section must provide for an exemption from the application of the benefit cap for vulnerable individuals, and individuals and couples with children, who-

(a) as a result of the application of the benefit cap, the relevant local authority would consider threatened with homelessness and in priority need,

(b) are owed a duty to be provided with interim or temporary accommodation under section 188, 190, 193 or 200 of the Housing Act 1996, or

(c) which the local authority has accepted as homeless and in priority need."

Lord McKenzie of Luton: My Lords, it seems that we are all, Lib Dems, Conservatives and ourselves, in favour of a benefit cap. Perhaps at some stage in the future, some analyst or academic might look back on these times and determine the origin of these policies, what analysis underpinned them and whether assuaging the court of public opinion played any role. It seems from what the Minister said a while ago that it played quite a considerable role.

But we are where we are. My party supports a benefit cap, but one based on fairness. A particular concern for us, as currently proposed, is its potential

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to drive increased homelessness, which is a major consequence of the cap-homelessness for vulnerable individuals, homelessness for families and homelessness for children. The way in which the cap is to be applied, albeit calculated by reference to a range of benefits, means that it is an effective second cap on housing support. It is a second cap on top of the range of reductions in housing support already introduced through the move to the 30th percentile of local market rents, uprating by CPI, a cap on rent levels and room sizes, and increases in scope of the shared room rate.

Not only will the overall cap dramatically increase the prospects of people becoming homeless but, in some cases, the Government will miss their target, and local authorities will bear the cost of the benefit cap, not the tenant. It will fall on council tax payers. If a family is already in accommodation provided for them under homelessness duties, no shortfall between housing benefit or housing allowance and actual rent will be payable by the tenant. Increasing the shortfall by the cap does not change this. There may be the opportunity to discharge the duty into cheaper accommodation, but this is increasingly unlikely to be available, certainly without significant migration to elsewhere in the UK, with all that that entails.

As Shelter points out, the reach of the household benefit cap goes way beyond the extreme cases generally associated with London, and it will be difficult for many households to afford to rent both in the private sector and at 80 per cent of market rents in the social sector across much of the south-east. It affects not only households with large families. Families in the private rented sector with just two children will be subject to the cap in all of central London. The DWP estimates that 50,000 households will be affected by this measure-I think that the estimate has been uprated to 75,000 households as a result of today's news-and lose £83 a week on average, with 90,000 adults and 220,000 children affected by the measures. Fifteen per cent of those households will lose more than £150 a week. The Children's Society has suggested that more than 82,000 children could lose their homes as a result of the cap. As the Children's Commissioner pointed out in a recent report, the DWP's own equality impact assessment sees homelessness, diversion of living costs benefits to housing costs and migration within the UK as primary effects of the cap. In a chillingly bland comment, the DWP states in the original impact assessment:

"The cap is likely to affect where different family types will be able to live".

Housing benefit may no longer cover housing costs and some households may go into rent arrears. This will require expense and effort on the part of the landlords and the courts to evict and seek to recoup rent arrears. The impact assessment continues:

"Some households are likely to present as homeless, and may as a result need to move into more expensive temporary accommodation, at a cost to the local authority".

It is an awful admission that by deliberate act of policy people are to be made homeless, are to run up rent arrears and are to be evicted; an admission also that reduced costs for the DWP will add cost to local authorities. Can the Minister say whether these increased burdens will be met by central government?

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The Children's Commissioner's report concluded that the impact of the cap will be increased child poverty with associated poor health, educational and other outcomes. The report identified that in order to stay in their homes, parents who cannot or do not find work will have to divert large amounts of their living costs, the non-housing element of universal credit plus child benefit, to make up the shortfall. This will have obvious consequences for children's well-being. For those who cannot bridge the loss of housing benefit, the loss of the family home will be severe. Local authorities may well have an obligation to rehouse but this may be in temporary accommodation and may require a move to cheaper areas, if they exist. As 70 per cent of those affected by the cap already live in social housing-that percentage may have been updated by today's impact assessment-cheaper housing may not exist. Evicting families from such accommodation only to rehouse them in more expensive private sector or temporary accommodation would only add cost for local authorities.

The impact of such moves on families is traumatic, especially for children. We know that children from homeless and transient families are more likely to go missing from education. Uprooting families from support networks, friends and communities can have a severe impact on the emotional and physical well-being of parents and children, and for vulnerable people especially so.

There are a number of ways in which these dire consequences might be addressed and subsequent amendments cover a series of possible ameliorations. This amendment supports the amendment separately tabled by the noble Lord, Lord Best, concerning those owed a duty to be provided with interim or temporary accommodation as part of the homeless safety net. The amendment refers only to English legislation and I was advised today that it should also be extended to Scotland. We might bear that in mind for later stages. As the noble Lord explained in Committee, temporary accommodation tends to be more expensive than mainstream housing and local authorities will struggle to obtain suitable accommodation for homeless families. Our amendment goes further and seeks exemption from the cap for those accepted as homeless and in priority need and those threatened because of the cap with becoming homeless. This raises points of detail that would have to be settled in regulations.

If the cap was introduced, households for which a homeless duty has been assumed and which are in temporary accommodation face a shortfall in rent as well as council tax. Local authorities must either cover the shortfall from the general fund or secure alternative temporary accommodation elsewhere within the monetary limits. However, it takes a long time to procure temporary accommodation and some local authorities will be in longish contracts with owners. They will need a long transition and so it may not be possible. Any family in private accommodation entered into prior to the introduction of the household benefit cap that falls into arrears and is in priority need and threatened with homelessness will be able to apply as homeless to the local authority which can then discharge its duty into alternative private accommodation affordable for the family. In many areas there are already insufficient

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private rented homes that are affordable to people on the local housing allowance. But this does not relieve the local authority of its duty.

Any family with a secure assured tenancy and facing a shortfall-whether it is a council or housing association property-would in theory be able to ask the local authority to secure them affordable accommodation if they are threatened with homelessness due to arrears. However, as all local authorities have their own allocations procedure this would inevitably mean tenants in secure social housing exchanging these tenancies for assured shorthold private tenancies in cheaper parts of the country, again if they can be obtained. If not, the local authority will have to fund the shortfall.

What would be the effect of our amendment? It would relieve the pressure on local authorities currently housing homeless families which would face the cost of the shortfall in rent if there was no suitable cheaper alternative. It would avoid costs being transferred to the general fund, potentially costing some hard-pressed councils millions of pounds. It would stop some individuals and families being uprooted from their communities. This protection would apply not only to households with children but to vulnerable individuals; for example, those with mental health conditions, disabled people and people fleeing from domestic violence. It would not stop increased homelessness and migration within the UK driven by cuts already announced to housing benefits but it could help to stop it getting much worse. It would not facilitate people remaining in lavish up-market properties, so beloved of the press. The pre-cap housing support would be determined on the basis of the changes already being introduced.

The Minister will doubtless put another of his costings on this amendment. When he does, perhaps he will make sure that he includes the actual costs to local authorities in meeting rent shortfalls; the implications for a range of services in supporting the migration across the country which will flow from the cap; and, of course, the costs to landlords and the courts in pursuing evictions. Most of all, will he factor in the human misery that the cap will generate?

There are a range of other amendments suggesting carve outs for the cap, transitional measures and refining the basis of calculation which can sit perfectly well alongside this amendment. If for no other reason, this amendment can provide for those who seek, and have the leverage to encourage, concessions from the Government, but its primary purpose is to prevent the slide into further poverty and disadvantage that homelessness can bring and the multiple disadvantages that spring from poor housing to blight lives, particularly those of the young. I beg to move.

Lord Best: My Lords, I support the amendment. As we have heard, it would mean that families facing immediate homelessness because of the imposition of the benefit cap would be saved.

A major problem with the cap is that, as well as taking no account of the number of children in a family-a point which a later amendment in the name of the right reverend Prelate the Bishop of Ripon and Leeds and others will seek to address-it takes no

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account of the level of rent: that is, it takes no account of how much of the benefits within a £500 cap must go to the landlord not the tenant. The £500 cap looks relatively high in areas where housing costs are low. In Committee, I quoted £85 per week rent for a council house in the north-east or south Wales, leaving a headroom of £415 per week for benefits to cover all other expenditure. Indeed, the average cost of housing-the £500 is all about comparisons with average earnings-is some £87.50 per week. However, the same cap applies in all areas, including London and the south-east of England, where housing costs are much higher. I am not talking about the extreme cases of refugee families with 10 children living in Hampstead. A rent for a not very salubrious private sector flat in the east end of London can be £350 a week. A £500 cap will plunge a family with three children living there into poverty, with only, in this example, £150 per week left for food, clothing, ever rising fuel bills and the rest, instead of more than £300 as at present. It is not their fault that rents are so high in much of southern England, but clearly the family will have to move out if the application of the cap is not moderated as by this amendment.

However, it is very uncertain where those made homeless can be moved to. The logistics for local authorities of moving large numbers of families to cheaper areas will be extremely complex and expensive. Finding new homes for them, even in a much lower cost area, will not be easy. Most private landlords prefer not to take on tenants on housing benefit and local housing allowance, particularly those not known in the locality, not least because benefit is now seldom paid direct to the landlord. No one wants to send families to so-called benefit ghettos with the lowest quality housing which is bound to undermine the hopes, aspirations and life chances of those sent there. It should be remembered that the new benefits cap is in addition to the caps on rents in high-priced areas which have already been introduced and are now beginning to bite, as existing tenancies come to an end. Regrettably, we are just beginning to see a return to the use of expensive but seedy bed-and-breakfast hotels as the numbers of homeless families rise. The new cap will considerably compound the problem.

This morning on the radio I heard the Secretary of State, Iain Duncan Smith, suggesting that the definition of homelessness was that children would have to share a bedroom. That is a confusion with an earlier amendment which found favour with your Lordships concerning the underoccupation penalty-the so-called bedroom tax-which was not about homelessness at all. Families are deemed to be homeless if the local authority deems that unintentionally they have no place to go. That can happen if they can no longer pay the rent where they are because their benefits are cut drastically. The council is then required to step in to find them somewhere to live. Amendment 58D would avoid that miserable and expensive outcome for thousands of families and tens of thousands of children who will otherwise have to leave their current homes. Two later amendments in my name address two of the most extreme aspects of the imposition of the new cap. At this point, I am pleased to support Amendment 58D.

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3.45 pm

The Lord Bishop of Ripon and Leeds: My Lords, I have added my name to Amendment 58D for a number of reasons. The figure of 80,000 people who could be made homeless-really homeless-by the cap must be alarming to us all, not least because it comes when homelessness is, in any case, increasing across our country, partly because of the increase in unemployment at the moment. The number of homeless people in west Yorkshire is rising steadily and churches and others in the county are increasingly involved in providing night shelter accommodation for the homeless. Any arrangement which seeks to find accommodation for people is liable, in practice, to see some of them slipping through the net and finding themselves with nowhere to go at all. Just this weekend, churches in Halifax have begun to offer that particular service but those who are providing the service are frightened that an already inadequate service, as they would say, will be made hopelessly so by extensive homelessness as a result of the cap.

In addition, I support Amendment 58D because, at last, it gets children into Clause 94. I retain that major concern for children whose parents are made redundant and become unemployed. Such children are in danger of losing not only their home, but also their school, their friendship groups and their local contacts. Schools are very concerned about the possibility of children being moved from one locality to another as a result of their parents becoming unemployed and as a result of the effects of the cap. There is not only an effect on those children but also on their friends and the whole life of the school. Later, we shall debate the issue of child benefit, but this amendment will defend a significant number of children. It is those who cannot speak for themselves who are likely to suffer as a result of the cap. This amendment will go some way to preventing a spiral of homelessness and it will relieve the pressure on some of those vulnerable people who are affected by the cap. I hope that noble Lords will feel able to support it.

Lord Hamilton of Epsom: My Lords, I find it remarkable that the noble Lord, Lord McKenzie, says that the Labour Party in principle supports a cap, but in this particular instance thinks that somehow it should be alleviated. We face a considerable deficit in this country and the social security bill is certainly one of the largest elements of public spending. If we continue to find all sorts of ways of alleviating measures that the Government are taking, no savings whatever will be made to the social security bill.

This is also an opportunity to change attitudes completely. We are privileged in our House to have the right reverend Prelates on the Bishops' Benches. I think it was Alastair Campbell who said of Tony Blair, "We don't do God", but in this House we do not have to be inhibited in that way. We can talk about the morality of a benefits system that encourages single mothers to have more children, because the more children they have the more benefit they get. Is that moral? I have my doubts. Is it moral for a Somali family to move down from the Birmingham area to Hampstead because they wanted to live in a more

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salubrious part of London where it was extremely expensive to house them? Is it moral to have a benefits system that pins people in their houses and prevents them going out and looking for work, given that underlying this is the Government's intention that people should be encouraged to go and find work?

Of course people will have to move, but that is what people in the private sector do. I question the morality of having a benefits system that gives people infinitely more money than the take-home pay of people on average earnings in this country. It is the taxpayers who are paying for these very high levels of benefit. I support this cap and I hope that the House will vote against the amendment.

Lord Wigley: My Lords, in Committee when we addressed this question, there was a suggestion that as many as 200,000 people-I have not heard the figure gainsaid-may have to move from areas of high rents to areas of low rents. The noble Lord who has just spoken said that of course people will have to move. But where will they move to? We have heard mention of Middlesbrough in the north-east and Merthyr Tydfil in south Wales-areas where unemployment is high, the chances of getting a job are very low indeed and where local circumstances place tremendous pressures on social services departments. If not just the generality of those who cannot afford the rent in expensive areas such as the south-east but particularly those with special needs covered by the amendment are moved to areas that may not have the resources to cope with them, we will inevitably build up pressures when we should avoid doing so. We will build up pressures in the communities to which those people may move. Even more seriously, we will build up pressures for families who will essentially be forced to move away from their relatives, grandparents and friends in school. Is this really the sort of policy that our Government support? I urge the House to support this amendment.

The Lord Bishop of Chichester: My Lords, I am extremely grateful to the noble Lord, Lord Wigley, for responding to the point made by the noble Lord, Lord Hamilton. I was feeling anxious abut what I should say but the noble Lord has largely made my case for me. One of the issues here is not just the moral and philosophical question of whether the benefits system needs to incentivise people to work and to take the initiative in their lives. We can all agree on that. The issue is that the Bill is going through the House at a time of unprecedented austerity when burdens are falling on families who are among the most vulnerable. There are times when one has the luxury of having a big social debate but this is not the time when we should burden poor families with more costs and burdens. We should debate these big philosophical questions on other occasions when we have more leisure to do so.

Lord Winston: I had not intended to intervene in this short debate, but I have just heard something that I feel is utterly wrong-the idea that people who are on benefit are having more children and thus keeping themselves on benefit. The evidence shows that this is simply not true. Populations expand when people are

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poor, women are ill educated and there is a lack of services to families. Surely, that argument cannot be used in this context in this Bill.

Baroness Walmsley: Like many of those who have spoken, I support the principle of the cap, and I think that public opinion is right to do so. I applaud the Government for grasping this particular nettle, which is a very difficult one and something that Labour has failed to do over 30 years. However, in my 12 years' career in your Lordships' House, I have always stood for the interests of children. I am not about to change that position now. In some cases, there is the potential for innocent victims to emerge from the Bill as it stands. The noble Lords, Lord McKenzie and Lord Best, and the right reverend Prelate have put their finger on the really serious issue-that is, homelessness. I am not one who feels that a workless family should never be required to move, because families in work very often move to follow their jobs. However, your Lordships should remember that children in families who are dependent on benefits and therefore are relatively poor, and where there is no work, are already disadvantaged. For those children, changing their school can, in particular, be a lot more serious than it is for any other child, because for many of those children school is the only stable thing in their lives.

There has been a lot of discussion about how much homeless this measure has the potential to create. The Government say zero, because they are going to put plenty of measures in place to make sure that that does not happen-and I do hope they are right. A lot of other people say that there could be a great deal of homelessness. If the Government are right, the measures in this amendment will not need to be called into play at all. However, if others are right, it could cost a great deal of money. Local authorities will have the duty to rehouse those families, which will prevent the Government making the savings that they need to make to tackle the terrible economic situation that we have inherited. Indeed, it could also interfere with the Government's very important and laudable objective of providing more affordable and social housing-another thing that Labour has failed to do.

It is for these reasons that, unhappily, I find myself having to speak and vote in a way that is at odds with my Front Bench, because I will support the amendment if it is put to the vote. I do not necessarily think that it is exactly the right amendment, but we need to send it back to another place and ask it to think again and tell us a little more about the measures that will be put in place-I hope that they will be, and know that the Government intend that they will be-to make sure that families with children are not made homeless. For those children who, as I said, are already disadvantaged, to be made roofless or overcrowded just adds to their disadvantage. It is going to be very bad for their education and is not going to be good for the Government. A life of dependency on benefits is also not good for those children, so I encourage the Government to do everything that they say that they will do to help workless families to get back into work. However, until those jobs are available and that work has been done, we need to be given more detail. If this amendment goes through your Lordships' House today, I hope

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that the Government will think carefully and come back to the House with a very clear strategy about what they will do to prevent innocent children being further disadvantaged by the life choices or life circumstances of their parents.

Baroness Gardner of Parkes: I intend to support the Government on the amendment, because I really think that the situation is quite unbelievable at the present time. However, I would like the Minister to clarify two things. Those people-I hope there will be few of them, but there will certainly be some-who do become homeless should never be classified as voluntarily homeless. That is very important because if they are classified as voluntarily homeless they have no claim to any help at all with housing, but if they are not, there is a procedure that they can go through. The other thing I hope the Minister will tell us is that there will be sufficient transitional arrangements to cover the circumstances, so we do not have sudden and terrible disruption.

Years ago, when I was on Westminster council, we had an offer from outside London to send people to another area where there was masses of housing, and we gave them the offer. They all agreed to go, but only about two-thirds actually arrived. The other third we never heard from again, so clearly their needs cannot have been as great as they made out. That was a particular instance. No one knows at the moment what is going to happen, but the important thing is that no one should be made voluntarily homeless under this arrangement.

4 pm

Lord Elystan-Morgan: My Lords, there is nothing inherently immoral or unjust in the concept of a cap. It all depends upon the way in which it is handled. It might be handled in an understanding, intelligent, sensible and equitable way, although it might not be so easy to save money in net terms or indeed eradicate a fundamental injustice; I accept that.

The Minister has quoted the court of public opinion, where there is, I accept, an overwhelming majority verdict in favour of the Government's attitude to a cap. I say with humility and the utmost respect that this depends entirely on how well founded that decision on the part of the great public was. It is possible, and I respectfully suggest, that it is a fool's gold concept of justice-and noble Lords will remember what fool's gold is. As a small boy I remember being handed a large lump of quartz, and inside that quartz was a gleaming vein of dull metal that seemed to be the real thing, but it was iron pyrite-utterly worthless and totally misleading. I ask the Government to consider very deeply whether this is not a fool's gold kind of justice.

If you deal with families that have arrived at a certain economic situation from very different directions in exactly the same way, are you doing justice? The Government's policy draws no distinction between a family that is totally workshy and has had no one working for the past quarter of a century, and another family that had an excellent work record until the head of that family, through redundancy and no fault of his own, lost his job in the past six months. A family with

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a small number of children might not be affected by the cap even though it is totally workshy, while another family with every merit possible in its favour might be totally impoverished. That is the injustice.

I do not know the exact answer, but I suspect it is in this direction: that one should look not just at the totality of income that comes into a household but at how much of that income is disposable. That, to my mind, is a much more real and indeed equitable test. That is why I support this amendment. It may well not be perfect-likewise the other amendments for that purpose-but it has the ring of justice about it.

Lord Fowler: My Lords, it is not my habit to trample on the territory of my Conservative social security successors, but perhaps I could just intervene briefly. First, by common consent, we are at a time when public spending needs to be drawn back. The total social security and pensions bill at the moment is £200 billion. The truth is that if the social security budget is to be subject to all kinds of exceptions, we might as well not start the whole process of looking for social security economies. I say this as a former Secretary of State who worked closely with my noble friend Lord Newton, to whom I pay sincere and undying tribute. We spent six years fighting battles on the one hand with the Treasury and on the other with different welfare groups, not always successfully. Rummaging through my desk at the weekend, I found a badge that was distributed when I was Secretary of State, which says, "Action for benefits-more not less from DHSS. Stop Fowler's cuts", so this is not remotely the first Government who have sought to limit the social security bill. Nor is it remotely the first Government who have run into flak. I would claim, and I think that anyone with responsibility in a department for social security would confirm this, that it is almost impossible to make changes in the social security budget without running into controversy and flak.

One of the most extraordinary things about the proposal which the Government are now putting forward is that, first, the public seem to be overwhelmingly on the side of making this change. Secondly, on the cap that is being set, £26,000 per annum-the equal of £35,000 a year before tax-is a not ungenerous limit, and most people in this country would regard it in that way. On the cap itself, we tend to get into figures that rather overegg the number affected. I am not going to downplay this, but we should accept that the number is 67,000 households, or perhaps a little more than that on the latest figures: that is, only 1 per cent of the total claimant population.

As I say, everything must be done to prevent hardship to such people. One of the rather irritating things about how this debate is being organised is that the debate on the next amendment will be very similar to this one, so, if I may, I will discuss during the next debate some of the measures that can be taken to prevent that hardship. However, first and foremost, this change will be introduced in 2013, so we have the time to sort out the problems before that change takes place. We really cannot have the situation in which beneficiaries living in houses that they cannot afford, or could not afford when in work, will never be able to get back into work because of that situation.

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Perhaps I may say this to the noble Lord, Lord McKenzie, who proposed this amendment. I am rather intrigued by where the Opposition stand on these issues. The noble Lord started with how much he supported the principle of the changes, but ended with words about human misery being caused by them. I had rather gathered from their Commons spokesman that the Opposition supported the changes and did not intend to try and vote them down. I simply point out to the House that they have so far supported amendments that, far from saving money, will cost, I am told, something like £5 billion over the next five years. I do not want to be offensive-or no more than usual-but their policy seems to be one of, "Now you see it, now you don't", and, frankly, mostly we do not. Goodness knows how much they would have spent had they not supported the principle of the Government's policies, so it would be fair for us to ask the noble Lord where precisely the Opposition stand on this issue.

Above all, I put it to the House that there is a very great prize in the Government's plans: that of universal credit, which both parties have been seeking to achieve for the past half-century. That prize is something worth fighting for and the benefit cap is a crucial part of it. There is no question that the Government's own plans allow us to deal with the 1 per cent who will be adversely affected. The amendment should be opposed and the Government's policy should be supported.

Lord Newton of Braintree: Irresistibly, in view of what my noble friend Lord Fowler has said, I find it necessary to make what I hope will be a brief intervention.

This is a rather grandiose claim but I am going to make it: probably I alone, but certainly I and my noble friend together, have more experience of social security and its reform than any other people in history, let alone currently present in your Lordships' House. We had our difficulties and our rows with the Treasury and, as my noble friend has just said, we would have given our eye teeth to have been able to bring forward this proposal for a universal credit, which is a huge achievement by the Secretary of State and the Minister on our Front Bench together. Everyone acknowledges that and supports it, yet now large numbers of people are trying to shoot it full of holes before it is even off the launch pad. That is not sensible.

I am not going to put a lot of weight on the point about deficit reduction. It is valid but others have made and will make it, and people can make up their own minds about how important it is. Personally, having caused some trouble for the Government on this on a number of occasions, I do not think it sensible or reasonable to go on voting twice a week, in whatever form, to make the deficit worse than it otherwise would be. That is all I will say; if people want to do it, they can.

I have a straightforward social security reason for being opposed to this and every other amendment on our agenda today. It is a great pity, as my noble friend said, that they are being debated in such a disorderly fashion; there are linkages between all of them. For example, the amendment of the noble Baroness, Lady Howe of Idlicote, on regional variations in housing

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clearly links with what we are discussing at the moment, and it would have been far better if these things had been discussed together.

For a long while as Social Security Minister-I was sometimes attacked for this-I made sure that social security legislation left wide powers in secondary legislation because you would never get it all right in primary legislation and you needed the flexibility to be able to respond to the things that you had not spotted in advance. However much work you do, that will happen. There is no doubt, though, that we have here a series of amendments, designed-some of them pretty hastily and off the cuff-to write requirements and restraints into the primary legislation that would certainly prove a drag when the detailed work was done.

As with the DLA last week, there is a right course for the House to take, and I will join it in taking it. Ministers know from me, privately and publicly, the importance that I attach to transitional measures and protection, but the place for that is in the secondary legislation. If the House wants to vote for enhanced affirmative procedures, as I said last week, I would be inclined to support that so that we would all get a proper opportunity to consider the detail when it had been done. However, I am not in favour of tying the Government's hands and writing anything into the concrete of primary legislation that we shall regret in six or eight months' time. I hope that the House will accept that and not vote to put this stuff in, in the way that is proposed today.

4.15 pm

Lord Ashdown of Norton-sub-Hamdon: My Lords, I feel that this debate is probably drawing to a close, and I want to address particularly the last point made by my noble friend about transitional measures. I fear that I do not agree with him.

I speak as somebody who has voted consistently with this Government for every single one of the very tough benefit reform proposals. I think that Mr Duncan Smith and my good colleague Steve Webb in the other place are doing something extremely important. They are at last reforming the welfare system root and branch. I agree with the point made by my noble friend that there is a huge prize to be gained here, namely the universal credit and genuine reform. I am strongly in favour of that, as indeed I am in favour of a benefit cap, contrary to what was said in certain broadcasts yesterday which inaccurately reported comments that I had made. It is important and I strongly favour it. But I believe that, before we vote for this, it is important-for exactly the reasons that have been given earlier-to have a look, at least in outline, at some of the transitional mechanisms.

I hope that the Minister in answering this debate will address that, not least because that was what was promised by Mr Duncan Smith in the other place. I shall quote what he said:

"We recognise that there must be transitional arrangements ... We will make sure"-

this is his promise-

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When he answers this very important debate I hope that the Minister will tell us whether those measures have been advanced and whether any proposals have been made. If they have not, surely it would have been better to consider this with at least some outline of what those measures-to fulfil a promise made by the Secretary of State himself-will be. If he cannot do that now, will he at least tell us when he will be able to bring them forward?

Like my noble friend Lady Walmsley, who spoke from our Benches a moment ago, I believe that this should be passed. But I cannot pass it without at least some sight of the Government's outline proposals for those transitional measures. If the Government cannot offer that to us now, let them at least say when those proposals will be published.

Lord Lester of Herne Hill: My Lords, may I ask the Minister a couple of questions, as a member of the Joint Committee on Human Rights? As I am sure he will have been briefed, the committee made a report on the Bill in which it raised a couple of questions which are in harmony with the points made by my noble friend Lady Walmsley about the effects on children.

The first proposal was to suggest to the Minister that instead of calculating the cap on the basis of all households, the fairer thing to do is to calculate on the basis of the income of households with children. Since we raised that in the committee, I would be grateful to know whether that idea has been pursued, and if so with what result. This proposal was in paragraph 1.59.

The second proposal that was made was to suggest that, where benefits are earmarked for children, this should be done in order to make sure that they are treated fairly. For example, it was suggested that,

That was in paragraph 1.82. Again, I would be grateful, on behalf of the committee, to know whether that idea has been pursued.

Baroness Hollis of Heigham: My Lords, I will be very brief, but I cannot resist the effrontery of trying to challenge some of the assumptions made by two people whose views on social security I very much respect, the noble Lords, Lord Fowler and Lord Newton.

The noble Lord, Lord Fowler, said that the social security bill is pushing £200 billion and needs to be contained and cut. He is correct, but the biggest single group driving that increase in costs are of course pensioners. There is an increased number of pensioners, who are living longer, sometimes with poor health. These cuts do not-in my view, rightly-impinge on them at all. We are making other people pay for the demographics that are not their fault.

The second point I would like to address comes from the noble Lord, Lord Newton. He says that there is a big prize in this: universal credit. He is absolutely right. I defer to nobody in my support for universal credit and my support for the Minister on the structure of universal credit. However, that structure is being contaminated by where some of the cuts fall. If we can keep those two things separate in our minds, we can

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fully support the Minister on his structure, as we do, while trying to protect those who are most vulnerable and affected by where the cuts fall.

At the end of the day, it is about political and moral choices. Noble Lords, including the noble Lord, Lord Hamilton of Epsom, said that we face a deficit and must bring it down-these cuts have to fall. May I gently suggest to him that I rather doubt that any of the cuts have affected him? Not one of them has affected me. Indeed, my council tax is being frozen at a cost of nearly £1 billion a year, which is very nice. Over five years, that equates to the very £5 billion that the noble Lord, Lord Fowler, cited. I get my council tax frozen while disabled children, cancer patients and vulnerable children at risk of homelessness carry my bills for me, even though we in this House have broader shoulders on which to carry the cost. It is about choices and the choice of every Member in this House today. I hope they will make a choice that most of us would regard as the decent one.

Baroness Butler-Sloss: My Lords, I say bluntly that I came here uncertain as to which way I should vote on this amendment today. I remain uncertain but I endorse the suggestion that the Minister should explain what will be done for the most vulnerable by way of the transitional provisions. Like others, I strongly support the cap. The amendment goes too far in my view but it has a nugget of enormous importance. Like the noble Baroness, Lady Walmsley, my main reason for being here today is because I support children. The transitional provisions may provide the answer but can the Minister tell us how the most vulnerable people will be protected? I should like to know that because it will have an enormous effect on which way I vote.

Lord Empey: My Lords, we have to be honest with ourselves in this House. There is no way that you can reform welfare without affecting one group or another in our community. I cannot think of any means or mechanism whereby you can leave people as they are and change the system at the same time.

There is a fundamental double standard running through some of our debate this afternoon. First, the noble Baroness, Lady Hollis, made the point that the demographics meant that older members of the community were taking up a larger slice of the social security budget. That is true. However, many Members here have said that they do not want to do anything to upset the housing situation because of the inevitable disruption that could arise, with implications for children. Yet we have no compunction-the welfare state has no compunction-in sequestrating the houses of older people to pay for their care. I put it to noble Lords that policy in the 1980s encouraged families to buy their homes. Indeed, we made enormous volumes of public sector properties available to encourage people to buy them. People scrimped and saved in the hope of perhaps passing on a small legacy to their children. They lived their lives, worked hard, saved and purchased a property. What are we saying now? "Oh, I'm sorry chaps. Well done. You did that but now that you're frail and need to go into care, we will pay for that by taking that property and reducing its value by £550 a week until it is £16,000, and then the state will look after you." What consistency is there in that?

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I do not believe that any current Secretary of State has come into office more prepared, and having done more homework, than Iain Duncan Smith. I saw at first hand a lot of his work with his think tank. He went to the States. He studied carefully and learnt the situation on the ground. I therefore believe that the fundamental drive behind this is based not simply on an ideological rant but on experience and a thoughtful purpose as to how we are to improve our community.

The other thing we have to face up to is that we are not as wealthy as we once were and we have collectively allowed the social security situation to grow out of control. We allowed circumstances whereby people could pay unlimited rents for homes and then we throw our hands up in horror and say that perhaps we cannot afford to keep them in these properties any longer. Whose fault is that? It is the collective fault of parties and Governments over decades.

I support entirely the idea of national insurance, whereby we provide a safety net if we are down on our luck. I have so much of it in my own area, where for generations people have not had the opportunity to work, and I know-we all know-that people abuse the system. However, we should not allow that to make our decision for us. The question is: can any Government advance any proposal that will not upset one particular group or another in the community? I put it to the Minister that it cannot be done. You cannot make changes to welfare without upsetting people.

It is also misleading to gross up the total benefits paid and say that that is the equivalent to a salary of £35,000 a year. I disagree with that.

The Countess of Mar: My Lords, I am sorry to interrupt the noble Lord but he appears to be making a Second Reading speech and this is Report stage. Would he kindly address the amendment?

Lord Empey: My Lords, I thank the noble Countess for the intervention, but because of the grouping I had thought that this was like a Second Reading and I am trying to address the issue of housing-the subject of the amendment. I agree with the noble Lord, Lord Newton, that the grouping is unfortunate.

The point that I am trying to get to is: it will not be possible to change the welfare system without upsetting some group or other in our community. I therefore believe that if we put the amendment in the Bill, the Minister and the Government, including their successors, will be hidebound by it. However, the Minister has also heard the widespread view in the House that we are confronted with an area of concern, particularly when children are likely to be moved from their homes, lose their schools and all that goes with that. Secondary legislation is the right place in which to put this issue but, if we believe we can go through a process of changing the welfare system and not affect a particular group in the community, we are misleading it as well as ourselves.

Baroness Hussein-Ece: My Lords, I also came to the Chamber intending not to speak but to listen carefully to the arguments. I feel moved to speak because of my personal experience as a local councillor in inner city

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areas such as Islington and Hackney, where homelessness and poverty have gone hand in hand and where over several decades we have seen the decline of affordable housing that ordinary families can rent. The two previous Governments have to take responsibility for not building enough affordable housing. That is the fact of the matter and the elephant in the room that is not being addressed.

It therefore pains me when I hear people around this Chamber, whom I respect, saying, for example, that families are moving to upmarket areas such as Hampstead in order to live in a better area. I have never seen evidence of that. When families through no fault of their own lose their home, which might be because it has been repossessed or they have been unable to keep up with the mortgage payments, they naturally present themselves to the local authority. The local authority has to take a view in making an assessment of such families and, if the family is not dysfunctional enough, if the children or either parent do not have enough of a disability or they do not have enough points-because it is all done on a points system-there is not much that the local authority can do. Very often, those families or individuals are directed to the private sector. Local homelessness departments will usually give them a list of estate agents where they can go to find somewhere. Often, families who have lost their homes will end up in the private sector. The private sector has filled the gap, certainly where I come from in Islington, between the unaffordable private homes and social housing. It has taken up the slack there. Of course, prices have shot up because of demand. That is not the fault of people who have become unintentionally homeless.

I hear my noble friend saying that 76 per cent of the public support a cap. I do not think that anyone in your Lordships' House would disagree that there should be some form of cap and that it should not be an open-ended provision. It is the implementation, how this will work, that is worrying many of us here. We should not force out families from areas such as mine. People often think that Islington is a very rich area full of wealthy people, which it is, but it has the third-highest level of child poverty. We have the extremes: very rich people and very poor people. The very rich live in the houses that have become increasingly unaffordable for most people, and the rest live in social housing, apart from some in the middle who live in private accommodation. I want to live in a mixed community. I do not want to live in a Paris-style ghetto. I do not want ghettos such as in Paris, where the poorer families have been forced into the doughnut outside the city. We should support mixed communities. We want our children to have a healthy outlook and mix with people from all different backgrounds.

4.30 pm

Where exactly are we saying that people should be moving out to? For example, even the less salubrious areas of Islington and the neighbouring borough of Hackney have become incredibly expensive. That is not the fault of people who still live there, whose children go to school there, whose families are there and who may have lived there for generations. All their

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support networks are there. We are asking people to move outside London-I have read that more than 50 per cent of those directly impacted would be living in London-but where would they go? They would move outside to areas where, as was said earlier, there is probably not much employment. Over the past 15 to 20 years, as a Londoner I have witnessed people moving to London to find work. Are we now saying that people should move away from any possibility of getting work to areas where there is very little work? That does not make sense. I do not think that the full consequences have been properly examined.

I get irritated when I hear unfortunate comments, such as that families are having children in order to get more benefits. We are talking about people with a lack of education and support. Some of the women from those communities are not in a position to make such choices. It is unfortunate that that has been mentioned. We have poorer families who are entitled to social housing-but there is a lack of social housing-and then we have families who are not. Until we hear from the Government-

Baroness Garden of Frognal: I apologise for interrupting my noble friend, but I think that she is trespassing again on a Second Reading speech, and I invite her to bring her comments to a conclusion.

Baroness Hussein-Ece: I apologise. Although we have heard the assurances that there will be transitional arrangements, I have not yet heard what those protections will be for the families who will be most affected.

Lord German: My Lords, I start by making it clear that the concerns that have been expressed from these Benches are not around there being a cap. It is essential that there should be a cap; people find it manifestly unfair that claimants can receive in benefits more than the average working family gets in wages. The concerns expressed within the amendment are about two crucial issues: homelessness and housing; and the vulnerability of children. We are looking for discussion and reassurances from my noble friend the Minister on the issues raised by the cap. Our concern is about how those policies will be ameliorated-how to find a cap that fits.

I remind my noble friend the Minister that in Committee he said:

"The Government are looking at ways of easing the transition for families and providing assistance in hard cases. We recognise that there are households for which it would be inappropriate to restrict the amount of benefit that they can receive".-[Official Report, 21/11/11; col. GC 346.]

The Government have already announced in another place and here that transition arrangements are to be made. This is the opportunity for my noble friend to express the Government's views on those two crucial issues contained in the amendment. These details should emerge at this stage because it is appropriate that people know the Government's direction of travel. It is not simply a question of us accepting that you need flexibility for the future. I understand that the Government's regulations will follow from these debates, that there will be affirmative resolutions and that the House will have the opportunity to hear and vote on the detail. We need reassurances now in the broadest terms about the issues raised in the amendment.

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I appreciate that by DWP standards-the noble Lord, Lord Fowler has said this already-the numbers captured by this policy are small. However, they are small only in respect of the DWP's overall workload, not in terms of the 67,000 families or the 220,000 children who will be affected. We cannot put aside the fact that there is personal impact.

First, I turn to the issue of homelessness. I understand-we heard it this morning in a broadcast by the Secretary of State, and it has also been referred to in this debate-that the numbers of potential reported homeless households is based not on rooflessness but on the structure of how this is measured by the Department for Communities and Local Government. I wonder what reassurance my noble friend can give that we will not find families out on the street, that we will find homes for people and that they will be accommodated. If the numbers who are classed as homeless are those who are sharing rooms, which I heard from the Secretary of State, what methodologies and transition arrangements are being put in place? After all, if people are entitled to be classed as homeless by virtue of that definition, and are sharing a room, what is to prevent them presenting themselves to a local authority as homeless, thereby generating further cost to the public purse and creating no savings whatever? What transition arrangements will be put in place to ensure-what this House is asking for-that no one should be made roofless as a result of this policy. Any savings if they were to come by having to throw the balance to another department might be illusory. I am seeking reassurance from my noble friend the Minister. We want to hear the outline of the arrangements to be put in place to ensure that we do not sustain expenditure by simply passing costs from one department to another.

We are told that the department now has extensive information on the households that will be affected by the cap. I seek reassurance that there will always be a property available-not necessarily close to the same street in which the people have lived-for the people who will be displaced and that they will always have somewhere to live. Crucially, what help will be provided in the transitional period between now and April 2013 and perhaps, beyond, given the Minister's comments in Committee. I also ask him to outline the processes to be put in place during this transition period and to provide the reassurances needed to demonstrate that rooflessness and overcrowding are not options that the Government are considering.

A second issue, which we will come back to in another debate, is that of children. This issue is mentioned in this amendment and has been raised before. It is indeed a powerful statement that children are not responsible for the decisions of their parents, but in workless households the worst disincentive is not to aspire to work. Those of us with experience representing the poorest areas-in my case, the poorest area-within our country know that it is a dreadful stigma which we place upon our young people. I wonder whether the Minister can provide some reassurance and tell us what arrangements he is making. What support will be given to the longer term aspirations towards work for our younger people? Alongside this is the impact of a parent becoming unemployed without suitable transition arrangements.

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Perhaps all these issues need to be outlined in principle now, so that my noble friends on these Benches and noble colleagues around this Chamber can decide whether the Government are keen to ensure that the impacts are going to be ameliorated by this cap.

Lord Freud: My Lords, the noble Lord, Lord McKenzie, closed his remarks on Amendment 58D by saying that it is designed to prevent a slide into poverty, particularly for those who are young. The benefit cap is about changing psychology. It is about trying to get a change of circumstances in those families. Let me remind noble Lords-I know that they do not need any reminder-that the worst thing for youngsters is to be in a workless household. We need to change behaviours, and this benefit cap is designed to do that.

We need to move towards the cap in a highly organised way, and we will have a year to work with those families that are going to be affected. As my noble friend Lord Fowler pointed out, this affects around 1 per cent of the population that we deal with and we know exactly who they are. In the new impact assessments, we were working on the particular families. We can spend a year with those families making sure that they respond in advance to what the cap implies for them. It is a very simple answer for the bulk of them: we need to get you into work.

The Countess of Mar: My Lords, I gather that there are now more than 3 million people unemployed. Something like 72 people apply for every job in some areas. How are the Government going to get these people into work?

Lord Freud: My Lords, I will deal with that straightaway because it is a point that has been raised more generally. Two things are confused here. Levels of employment are, regrettably, too high. We as a Government regret that, and we are throwing enormous resources at ameliorating that position, but this is a different issue. This is about people and families who are, and have been, excluded from the workforce entirely. They have been inactive. We need to put in place arrangements to get them able to move back into the workforce. It may take a bit of time for them to get in, but that is a completely different order of issue from helping people who are unemployed and are waiting to get a job. We must not confuse snapshot numbers of vacancies available with flows. The problem is that the flow of people going into work is, on a monthly basis, slightly less than those who are moving out. That is the problem. However, there are still large numbers of people going into work every month and finding jobs. We just need to make sure that the excluded communities become part of that process. This is one of the ways to do it.

We need to make sure that that transition is organised. We need to put jobcentre staff and caseworkers on it to help those families. That is by far the most important thing we can do to make sure that this benefit cap has the effect that it needs to have. Clearly, we need assistance in hard cases, which we plan to have, but that is a second-order issue in terms of trying to work with families to get them back into work. In the Bill, we have all the powers that we need to get into the detailed design of the cap and to make sure that those circumstances are picked up and dealt with.

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Let me pick up on the point made by the noble Lord, Lord Best, about benefit ghettos. The reality is that 67,000 families could not create a benefit ghetto in this country. That would be 1 per cent of working-age recipients. We are not talking about massive numbers on any standards.

4.45 pm

The amendment seeks to place in the Bill an exemption from the benefit cap for households provided with interim or temporary accommodation by a local authority. It also gives local authorities the discretion to apply an exemption to people who are either homeless and in priority need, or those who are at risk of becoming homeless and in priority need as a result of the cap. In looking at the wording of the amendment, it is easy to see that any local authority could consider people threatened with homelessness and in priority need as potentially meaning any household with children. In practice, that is the same as not having a cap at all. For that reason, the Government regard this amendment as a wrecking amendment.

In answer to the question on costings asked by the noble Lord, Lord McKenzie, this is not a matter of costing but a matter of rendering the policy in practice unworkable. The Opposition tell us that they support the principle of a benefit cap, but is that the reality? When we have a complicated amendment such as this, which undoes the ability to run a cap of any kind, one is driven to ask what form of cap the Opposition think is appropriate. From what we have heard in debate here and in the Commons, it appears that the only cap that they would consider to be appropriate would be so high or would have such broad exemptions that it would apply only to a few people and most households would be exempt.

As I said in my remarks introducing the first group of amendments, in the court of public opinion-as the noble Lord, Lord Elystan-Morgan, referred to it-only 7 per cent of those polled would set the cap higher than £26,000 a year and only 9 per cent believed that it should not apply at all. The Government are well within the court of public opinion. We are looking at a benefits system that is desperately in need of reform. Many households receiving benefits find themselves trapped in the benefits system because there is little financial incentive for them to move off benefits.

When we moved into office, more than 10.6 million working age people in this country did not work and around 2.6 million people had spent at least half of the previous 10 years on some form of out-of-work benefits. We find that situation unacceptable.

Lord Ashdown of Norton-sub-Hamdon: I have listened to the Minister very carefully. I take it from his answer earlier on-he will forgive me for interrupting at this point; I just wanted to wait and see whether anything else was forthcoming-that the Government are not going to say anything more about transitional mechanisms at this stage. Is that correct? If it is, can he tell us when those details will be made available?

Lord Freud: My Lords, I was going to come on to what we were proposing with regard to temporary accommodation. That is currently out for consultation

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and is the particular area which this amendment looks at. We are going through the process and will come up with proposals in due course-I am not sure that I can measure the months too precisely. The general regulations will need to be in the April to May period. That is the time by which we are looking to get our arrangements for temporary accommodation sorted out so that those affected do not find themselves being double hit by going into very expensive temporary accommodation.

We are looking at the very high rental costs associated with temporary accommodation. We are looking at tackling those levels while ensuring that providers' reasonable costs are met. Temporary accommodation rates, as your Lordships will know, are very often well above the market rate and the LHA rate due to the higher management costs. We are looking at stripping those management costs out of the temporary accommodation rates so that they do not impact within the cap. We have carried out an informal consultation with key stakeholders-local authorities, housing associations, government departments and some homelessness organisations-and their input will feed into the design of those temporary accommodation arrangements.

Perhaps I may pick up on one or two of the extra points that were made. The noble Lord, Lord Wigley, said that 200,000 people would have to move. I do not know where that figure comes from. The total number of households affected is only 67,000 and we do not expect that every household affected by the cap will need to move at all. We are aiming to get all these other options into shape.

Lord Lester of Herne Hill: I am sorry that the Minister thinks that this is a wrecking amendment. I thought that it was an amendment to make it easier to pass the Bill. Can he deal with the two issues raised on behalf of the Joint Committee on Human Rights as a means of alleviating the adverse impact on children?

Lord Freud: We have looked at the human rights issues, putting particular emphasis on households with children and making sure that the arrangements are effective. I shall speak later about payments for children being earmarked. The structure of the universal credit means that it is an overall payment and that there are not different segments going for different purposes. That will simply not be practicable in the universal credit world whereas it is practicable in today's benefit world. I ask the noble Lord to withdraw his amendment.

Lord McKenzie of Luton: My Lords, I should like to thank everyone who has participated in this very extensive debate. Given the time, I will not seek to answer each of the points raised but I will try to touch on some of them. I start with the noble Lord, Lord Freud, who talked about a change in psychology. A lot was said about the universal credit in the debate. We have made clear our support for the universal credit given that it can help people into the labour market but it is very unclear what extra benefit derives from this cap. If such a benefit exists, can the Minister explain the psychology that 54 per cent of the people

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affected by it are going to be in London and only 3 per cent will be in Wales? What is it about the psychology of those in London and Wales that causes such disparity? Is it possibly something to do with the cost of accommodation and nothing to do with a change in psychology?

The noble Lord, Lord German, asked for an assurance that there would always be a property available for someone who was not able to stay in their current home. I do not believe we heard one. I do not know whether the noble and learned Baroness, Lady Butler-Sloss, or the noble Lord, Lord Ashdown, will be comforted by the transitional arrangements; I certainly was not. I thought they were weak and generalised and have not taken us forward at all. I would say to the noble Lord, Lord Empey, that of course changes in the benefit system are bound to give rise to circumstances where somebody loses out. But the question is not whether you can avoid that; the question is who is losing out, is it fair, and is the construct of the change fair? We challenge whether it is, particularly in relation to homelessness.

The noble Lords, Lord Newton and Lord Fowler, focused on the universal credit. I have made our position clear on that. I was going to ask whether there were any spare badges, but possibly not. Of course, public spending needs to be addressed. We have made our position very clear both on that and on the cap. We support the cap and its level but it must be dealt with in a fair manner. We are perfectly entitled to probe when it is not and to challenge and seek change to its application in relation to homelessness.

The noble Baroness, Lady Hussein-Ece, made a very powerful speech which differentiated between what actually happens on the ground and what affects people's housing circumstances. The noble Lord, Lord Best, gave us the benefit of his huge experience to say what is happening in the housing market and what these changes can give rise to. The right reverend Prelate the Bishop of Ripon and Leeds reminded us that, quite apart from these changes, homelessness is on the increase. Let us be clear. We are dealing with all those housing benefit changes which we have debated previously. This amendment does not seek to challenge those; it seeks to challenge the consequences of the cap in relation to homelessness.

The points made by the noble Lord, Lord Hamilton, were very effectively addressed by the noble Lord, Lord Winston. The noble Lord, Lord Wigley, questioned how it helps the economy if people move to areas that are cheaper because there are no jobs. Part of the problem is that the Government look at only one side of the equation. They look at what they see as benefit savings forgone, not at the costs generated by the policies they seek to implement. That is the fundamental flaw on this aspect of the cap. I have detained your Lordships long enough. I wish to test the opinion of the House.

4.59 pm

Division on Amendment 58D

Contents 222; Not-Contents 250.

Amendment 58D disagreed.

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Division No. 1


Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Alton of Liverpool, L.
Armstrong of Hill Top, 4B.
Avebury, L.
Bach, L.
Bakewell, B.
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Aberdare, L.
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5.13 pm

Amendment 59

Moved by The Lord Bishop of Ripon and Leeds

59: Clause 94, page 63, line 25, after "benefits" insert "with the exclusion of child benefit"

The Lord Bishop of Ripon and Leeds: My Lords, Amendment 59 would allow families whose benefits have been capped to retain child benefit. It would do no more and no less than that. It does not challenge the basis of the cap. It does not challenge the amount of the cap. It is certainly no threat to the very welcome universal credit of which we have spoken a good deal this afternoon, but it would save some 80,000 children, according to government figures, from falling into poverty.

The Government's assessment of the impact of the cap is that some 67,000 households will be affected. The Minister spoke of that earlier as not a massive number. It is pretty massive for those involved, but the fact that it is not massive in the overall terms of Welfare Reform Bill means that it ought to be possible for us to pass the amendment without seeing ourselves as fatally damaging the Bill itself. Those 67,000 families will lose on average £83 a week. Analysis from the Children's Society shows that those households contain around 220,000 children. Three-quarters of those affected by the cap are children, yet Clause 94 says nothing about children at all.

The cap as it stands is not just, because it fails to differentiate between households with children and those without. It makes no provision for the additional cost of bringing up children, which is the purpose of our most successful and well targeted provision of family support: child benefit. The Government have decided that £500 a week should be the cap for a couple, and I have no quarrel with that; but if that is right, it cannot be right for the cap to be the same for a childless couple as for a couple with children. Child benefit is the most appropriate way in which to right that unfairness.

5.15 pm

Lord Mawhinney: I and perhaps others in your Lordships' House would find it helpful if the right reverend Prelate would tell us the cost to the public purse if this amendment were approved.

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The Lord Bishop of Ripon and Leeds: Thank you very much. The answer to that question is £113 million, which is a minute proportion of the total cost of welfare benefit addressed in the Bill.

This cap is not simply targeted at wealthy families living in large houses. It will damage those who have to pay high rents, because often that rent has increased substantially in the course of occupancy of that house. An out-of-work couple with four children between five and 12 and with £250 a week rent, which is nothing out of the ordinary in many parts of the country, and £20 council tax, currently has an income under present arrangements of some £373 a week after housing costs are deducted. After the cap, that drops from £373 to £230, or £5.50 per person per day-not the £500 of the headlines that we have been seeing. That is much less than 40 per cent of median household income, and I do not understand what a family in those circumstances is meant to do. I do not believe that a child can have a good childhood in circumstances such as that.

I had a letter the other day from someone who disagreed fairly strongly with me and said that surely £500 a week should be enough to bring up a family in normal circumstances. I would not disagree if we were talking about £500 rather than £230. But those whose benefits are capped are not in normal circumstances; they have particular reasons for being in need. Often that will be a substantial rent, and sometimes there will be several children who may not be their own and who may have been taken into the family to avoid their costs falling on the state.

Child benefit is a non-means-tested benefit paid to both working and non-working families. In setting the cap, it has been ignored by the Government. It should also be ignored in calculating benefit income against the cap. Those who are suffering from the cap should be allowed to retain their child benefit. I know that, from 2013, higher taxpayers will not be entitled to child benefit-that is a different issue-but anyone taking home £26,000 will be entitled to it, as will many of those earning a good deal more than that. The intention of the benefit cap is to promote fairness between working families and those who, however hard they try, cannot find a job.

I admire and salute those who bring up families on low pay. I am very aware of poverty in working families and see it through my own working life. We need to defend the interests of those who are poorly paid, but we do not do so by refusing child benefit to those who are out of work. This amendment declares the importance of child benefit both for working families and for the unemployed. Both should receive state support in bringing up their children. Child benefit is paid for the needs not of adults but of children. It has a massively high take-up rate and is used to benefit children whatever their situation. We are rightly proud of its effect in helping the next generation.

This amendment is a compromise between the present situation and the cap as proposed in the Bill. Child benefit is paid at a rate of £20.30 for the first child and £13.40 for every subsequent child. At present, a child born into a family with benefit income of over

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£500 a week-that is, income over the cap-will receive £62.40 in benefit support through child benefit and child tax credits. Under the benefit cap as proposed, there is no support for that child at all. This amendment restores only £13.40 of the £62.40. In that sense it is an extremely modest amendment, but it does mean that there will be some money coming in for children in this pressurised and often suffering environment, as we discussed in the previous debate. It means that there is some help for children while maintaining the principle of the cap. All of us who have used child benefit or family allowance know just how crucial it has been in our own lives to bringing up our children. It is entirely inappropriate that the only people not allowed to receive child benefit should be those who are out of work and whose benefits are capped.

Quite a number of people have asked, especially over the past few days, why Members on this Bench have been particularly concerned about the needs of children in these welfare debates. Christianity, along with other faiths and beliefs, requires us to think most about those who have no voice of their own. Children who are in most need are one of the most evident examples of that, and the New Testament shows that Jesus had a very special concern for children. Children have no vote in our society; they probably do not answer YouGov questions.

This amendment goes some way towards protecting children by helping two groups especially. First, for children in families that are struggling to pay rent, it will mean fewer face homelessness-especially but not only in London. Secondly, it will help those in larger families. Children do not choose to be in large families and many are so because parents have taken in, and provided love for, those who would otherwise be a burden on the taxpayer. It cannot be right for someone who becomes unemployed not only to lose their job and have their assessed benefit cut but to be told that their children no longer have a right to child benefit.

This amendment declares our support for children, families and the next generation, and I beg to move.

Baroness Sherlock: My Lords, I speak in support of this amendment, to which my name is attached. I am grateful to the right reverend Prelate the Bishop of Ripon and Leeds for tabling it, and I pay tribute to both his and the Children's Society's long-standing work in support of children. My concern about this amendment is that the measure has some very poor consequences, whether intended or unintended. Perhaps the Minister can tell us which they are.

I want to suggest three ways in which this cap, as the Government have put it together, is particularly badly constructed and three problems that it will cause. First, as we have heard, this measure will seriously and disproportionately affect children. A new DWP impact assessment came out today, which significantly changed the figures that we were working with previously. I have been able only to skim read it but I see from the headlines that the official impact assessment says that 220,000 children will be affected, and the losses in income those families will face are not small amounts. Initially, 67,000 households will lose an average of £83 a week, while 17 per cent of those affected will

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lose more than £150 a week. Those are very significant sums, so the behavioural impacts which the Minister wants to see happen will have to be very big indeed to address losses of that size, and I wonder what we can do about them.

I am not clear what steps those parents are meant to take to be able to avert those losses. That impact assessment says that 44 per cent of households affected are already living in social housing-in other words, in the cheapest accommodation available in their area. These are not families who are living it up in Kensington mansions, sipping cocktails by the pool before dinner. Forty-four per cent of them are already in social housing and most of the rest are in the kind of private housing that the noble Baroness, Lady Hussein-Ece, described earlier. As anyone who has had cause to go knocking on doors in London will know, there is housing out there which is astonishingly expensive but of astonishingly poor quality. The nature of the private sector market in London and other very high-cost areas is such that it is depressingly easy to rack up rents of £350 a week if you have two or three children.

What will happen and what are those families to do? In Committee, I put down an amendment which sought to exempt from the cap specific groups of vulnerable children who, for example, had been the subject of child protection orders, and I asked the Minister what those families could do to avoid being forced to move. He gave me three ways in which families could avoid that. The first was that they could negotiate a reduced rent with their landlord, although he had the good grace to acknowledge that may not succeed. The second way that the Minister suggested was that they could move into work, but when we look at the figures, we find that some 60 per cent of the families affected-a majority-are not required to work, either because they have small children or because they are sick or disabled and have limited capacity to work. In fact the Government's own policy of not trying to push sick people or the parents of young children out into work is now suggesting that they do that, which does not seem like a great idea either.

The final suggestion which the Minister made was that families could use their savings to pay the shortfall. I believe that one of your Lordships mentioned in the previous debate that the average family in Britain had just £300-worth of savings. That would not go very far in paying shortfalls of this nature, and one has to suspect that these families are likely to have less than the average amount of savings. We therefore have to accept that what will happen is that these families will be forced to move.

Many children's charities have made representations to me, as I am sure to many noble Lords, saying that they fear that families would be forced to move not just once but repeatedly. If they move to a cheaper area and rents rise faster than the cap, they have to move again. What are the consequences of that for the children? Again, I looked into this in Committee. The initial DWP impact assessment highlighted the possible damage to children forced to move school repeatedly, and the evidence is quite clear of the impact-the negative impact, obviously-which that has on children's academic achievement. As I also pointed out in

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Committee, forced moves reduce the ability of child protection professionals to keep track of families where children are at risk of abuse. I asked the Minister to write to me on how the Government would address those particular categories, and he did. I am afraid that it was with no very satisfactory encouragement and, again, I hope to give him the opportunity to be more specific when he responds to this.

In research that looks into the case reviews that follow the serious events that happen to children who have faced abuse and sometimes death, certain themes come out again and again. One of them, and I have heard this said by Members of this House, is that when everyone gathers around the table for a serious case review, someone always says, "Do you know, I wish we'd all talked before. Maybe, if we'd all talked to each other, this wouldn't have happened". One of the things that make it less likely that that communication will happen regularly is if the families in question move house repeatedly. Are we really going to force more families to do so? I am very concerned about what will happen in that regard, but I can see no way around it. What else can we do? We have to press on.

5.30 pm

The Minister's next argument is that he is clear about what the policy is for. I am not at all clear about that. He said in Grand Committee that the purpose of the cap was to encourage work; the Secretary of State for Work and Pensions has said many times in the media over the past 48 hours that he will ensure that people will never be better off on benefits than in work; and I have sat through all the stages of the Bill so far and lost count of the number of times that the Minister has told us that the universal credit will ensure that work always pays more than welfare. If that is the case, will he explain why this additional measure is needed? If work is always going to pay, we do not have a problem-so that cannot be the issue.

My final concern is whether the comparison is fair, a point made by the right reverend Prelate the Bishop of Ripon and Leeds. The Government-unintentionally, I am sure-are misrepresenting the impact of this amendment. They declare that no one should receive more in benefits than the average family will earn, yet surely they are wilfully ignoring the fact that that average family would themselves be entitled to claim child benefit for every child in the household. They are deliberately and intentionally putting child benefit on one side of the equation and leaving it out from the other, thereby constructing a test that cannot be fair. We have tried many times in Grand Committee to get the Minister to explain that anomaly. My noble friend Lady Lister put the point specifically to him on 23 November: how could he justify this? Clearly, she said,

"We are not comparing like with like".

The Minister said:

"My Lords, I acknowledge that we are not comparing like with like. We are looking at a sensible level at which to put the maximum benefit payment ... I think that one can overelaborate the logic, which I will not attempt to do here".-[Official Report, 23/11/11; col. GC 419.]

There is not much danger of the logic being overelaborated. Rather, we have a logical deficit here, and I invite the Minister to explain it.

23 Jan 2012 : Column 838

Thankfully, we have some mitigation here. The cavalry has appeared cantering over the horizon in the form of the right reverend Prelate the Bishop of Ripon and Leeds, who has put down an amendment that allows us to address all these questions. In particular, he has pointed out that benefits specifically for children such as child benefit-a universal benefit, although recently some but not all families paying higher rates of tax have been excluded from it-are not means-tested. Originally it was a tax allowance, and it was always intended to be a transfer from the public in general to families with children, in recognition of the fact that children are a public benefit as well as a private one. Today's kids will pay my pension-at least, if I am ever old enough to claim it, although the age at which I will be allowed to is receding into the distance. It therefore seems reasonable that we all make a contribution to that, hence the nature of universal child benefit.

Once we start to decide that some benefits are not really for everyone and that some benefits such as this one are excluded, we have to understand the rationale for that. I struggle to do so. To be in a position where some families earning over £80,000 a year would get child benefit but the families that we are talking about would not is simply unjust.

The Minister has said that this is a matter of principle. Frankly, that is the one thing it is not. He has decided on a cap but he has told us-and we already know-that certain types of payment will be exempt, such as disability living allowance, attendance allowance and some payments to war widows. All we are suggesting in the ame benefit to that list and saying that payments of child benefit specifically should be exempt as well. If we cannot do that for the children of our community, what can we do? I am pleased to support the amendment.

Baroness Tyler of Enfield: My Lords, I support the amendment, to which my name is also attached. We have heard a lot today about fairness. It is important that people in work feel that there is fairness in terms of how much money can be received by those out of work and on benefits, and that there is a clear incentive for all those capable of work to do so in order to r themselves and their families. I place on record that I welcome the measures being taken by the Government, such as the work programme, to give intensive help and support to people needing a lot of help to get back into the jobs market.

There is another aspect to fairness, though: fairness to children, irrespective of the circumstances of their birth. I shall run through the reasons why I feel that child benefit should be exempt from the calculation of the benefit cap. First, as we have heard, it is a non-means-tested benefit paid to all households with children. We have already heard this question posed today, but is it fair that children born into small families with earnings in excess of £80,000 a year receive child benefit while those born into larger families with a benefit income of £26,000 a year do not? I do not think that that passes any fairness test.

Secondly, child benefit is paid to assist with the costs of raising children. In my view, it is not about sending signals or penalising adults who do not work-and I add that all adults who can work should do so.

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Thirdly, this measure would have a disproportionate impact on children. We have heard the figures from the noble Lord, Lord Wigley, and the right reverend Prelate, and I do not intend to go through them again. Fourthly, it is a question of a compromise solution between children in large families receiving the full current level of state support and receiving nothing at all, which I perceive to be unfair. Fifthly, reducing the impact of this policy on large families would reduce the couples penalty that is currently built into the benefit cap.

The reason why I am concerned about the current situation is the issues raised compellingly in the debate earlier by my noble friend Lady Walmsley. This is about families having to move abruptly to cheaper areas and the disruption that that will cause to children's schooling, often halfway through a school year. It is about families feeling, rightly or wrongly, that they will have to split up because if they created two households instead of one, parents would then be entitled to £26,000 a year in benefits. That cannot be right. Experts in the field have said that there is a substantial couples penalty built into the cap that is completely at odds with my own view, and that of the Government, of the need to support strong and stable families.

I am concerned about the impact on children who might find themselves homeless, perhaps in unsuitable and expensive temporary accommodation. With children and young people's services already very overstretched, there is a real danger of children at risk simply disappearing from view below the radar, which raises child protection and safeguarding concerns.

I will summarise by saying, as was said earlier today, that children should not be the innocent victims of this policy. The vulnerability of children is very important to people on these Benches, and I look forward to hearing what safeguards the Minister has to offer in this area. I heard him say in the previous debate that he saw the transitional issues as a second-order issue. I do not consider the welfare of children to be a second-order issue at all.

Lord Greaves: My Lords, I have not spoken in the Welfare Reform Bill debates so far and I will be brief now. On the specific issue of child benefit, the Government seem to have got it seriously wrong. What is being proposed undermines the whole principle on which child benefit-and before that, as many of us will remember, the family allowance-has been based. If the Government are going to do that, I fear that that is the beginning of a slippery slope, and they will have to explain to us very carefully why they think the basic principles no longer apply.

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