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In illustration, I go back to the example given by the noble Lord, Lord Best, about typical, ordinary-perhaps very ordinary-accommodation in the East End. There has been lots of fancy new development in the East End in the past decade or two, but most of it is still not regarded as being the most desirable part of London. People living in other parts of London in particular usually find themselves paying a great deal more than £350 a week for an ordinary two or perhaps three-bedroom flat. According to the paper today, for

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a four-bedroom house in the least salubrious part of Kingston-I did not know that such places existed, but it appears that they do-£400 a week is not unusual. That is four times what you would pay for an ordinary, perfectly decent house in my part of the world, but there you go.

If as a family whose benefits are being capped you receive £500 a week, and you are paying out £400 a week for rent, that leaves you £100 for everything else. I challenge any Members of your Lordships' House to tell us how well they would do at bringing up a family of two, three or four-or perhaps more-children, plus one or two adults in the house, on £100 a week. It can be done, and many people in many parts of the world survive on far less than that, but this country is now almost the most prosperous that it has even been, if you take away the last five years. We are still incredibly well-off. If Members of your Lordships' House think back-most of us are getting on a bit-to our childhoods and the circumstances that we were brought up in, they will see that this country is now incredibly rich and well-off. To require families to bring children up on £100 a week for everything apart from their rent is unacceptable.

When the media are encouraged, I have to say by some politicians in this country, to rant and rave about how these people are getting £26,000 a week and that everyone ought to be able to live on that-I apologise, £26,000 a year; some people are on £26,000 a week, but they are rather different-the debate really ought to start at what you have left after your rent. The state of the private housing market, and indeed rents in the public sector, is not the fault of people who have to live in these houses. There is a scandalous situation in which commercial landlords are ripping off people-indeed, they are ripping off the state, if people are getting housing benefit-by charging ludicrously high rents that are not justified by the cost of maintaining those properties but that are what the market will bear. If the Government and the rest of us want to do something about the state of the private housing market, we should look at housing policy and perhaps at the way in which the private housing market works. But that is a different issue all together. It is not the fault of the people. To try to do this-to try to force rents down or to try to regulate the markets and move people around the country by capping the benefits of the people living in those houses so that they can no longer live there-is penalising the tenants when the people who ought to be penalised are the landlords.

I have digressed a little from child benefit. I apologise for that. Child benefit, as my noble friend and others have said, has always been a non-means-tested benefit that goes as of right to families with children. It has always been paid on a per capita, per child, basis. That is a fundamental principle. The first child gets more nowadays, then each child after that gets the same, in order to assist the work of bringing up that child. To abolish child benefit, which is what is actually being done in this Bill, for people who are at the benefit cap and who are getting other benefits that take them up and beyond that cap, as is highly likely, is a fundamental attack on the whole principle of child benefit.

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This ought to be resisted. Your Lordships ought to resist it, and we really ought to ask the Government very seriously to think again on this particular issue.

5.45 pm

Baroness Meacher: My Lords, I had not planned to speak in this debate, but the noble Baroness, Lady Grey-Thompson, put her name to this amendment, but has been detained and so cannot be in the Chamber. I think it is important to make the point that there is Cross-Bench support for this amendment.

I want to make one point. The Minister has made a great deal of the importance of fairness between those in and out of work. We know that there are problems in this Bill such as issues of fairness across geographical areas or between different sizes of household. I shall simply focus for a second on the fairness between those in and out of work. One thing that puzzles me is that not only will those who are in work get their average earnings-let us say, of £26,000 a year-they will of course also get child benefit. As I understand it, they will also, if they have three or four children, receive housing and other benefits under universal credit. The cap will not apply to those in work, so there is a discrepancy not only in that child benefit will go to those in work but not to those out of work but because it will be at the same level of net income. This applies to other benefits too.

I certainly do not want the cap to apply to those in work, but one does have to consider this. Presumably the argument for not applying the cap to those in work is that those families are really struggling-the so-called middle earners or middle-income people. It is very tough to live with three or four children on average earnings. Therefore, they need a whole range of benefits. If they need a whole range of benefits, it is very difficult to see how the Government and the Minister justify excluding any reference to all the benefits that those in work will have, and arguing that those out of work should be able to live on a level of income that no one in work would be expected to live on.

If you assumed, as I sometimes get the feeling the Government do, that anyone out of work can get back into work, and you really could find and get a job within a week, or two or three weeks, you could just about justify this. However, so many people who are on benefits are going to continue to be on benefits, and they have a range of disabilities that will not even entitle them to PIP in the future, because things are going to become very tough. The Minister knows the group of people I am most concerned about: people with a range of mental health problems. It is very difficult for those people to get any employer to take them on, yet they are going to be expected to live on a level of income that people in work will not be expected to live on. I would like to hear the Minister's response on that point.

Baroness Butler-Sloss: My Lords, I totally understand why the Government require it to be said that not everyone should get child benefit. There are two groups of those who are not employed and to whom the cap will apply about whom I am particularly concerned. I should declare an interest as the president of the Grandparents' Association.

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A considerable number of grandparents, particularly grandmothers, have been in perfectly good employment over a number of years and then for one reason or another find themselves obliged to take on the care of children, who are sometimes extremely young, in addition to their own teenage children. As well as grandparents, there are also other kinship carers, as they call themselves, who take on the care of other people's children, usually their nephews and nieces and sometimes their great nephews and great nieces. They give up their jobs. They have to, because they cannot care for these young children, who have in a sense been dumped on them without any prior warning on some occasions. They will give up their jobs for the care of their grandchildren or other kinship children, then find themselves in real difficulties with this cap.

We are not just talking about one or two children-this is my second point. There are families with a considerable number of children, not all of whom are their own. There are single mothers who have gone through a number of different partners by whom they have had a child. They end up sometimes with five different successive partners, and with more than five children. How on earth will that group of families cope if they are unable to have additional child benefit? I can understand their coping perhaps with one or two children but not three, four, five or six. Such families make up a smaller percentage; the figures were given in our previous debate. However, they do exist and they will be in real difficulty. Unless there is some sort of hardship allowance for families who cannot cope on this £26,000 cap without child benefit, I fear that I will go the way I would prefer not to go-against the Government.

Lord Kirkwood of Kirkhope: My Lords, this is a very important subject and this is the most important amendment as it seeks to deal with some of the problems that will flow from Clause 94.

I want to make it clear that I am implacably opposed to a household benefit cap in principle. People's eyes glaze over when I try to explain my main reasons. I tried it in Grand Committee and by the end people looked at me as though I was possessed. However, there is a point that has not been made and it is very important. I am talking to my own side as much as to anyone else. I have spent my entire life fighting for benefit entitlement to be enshrined in law. That is to say, if you meet the eligibility criteria you get the amount due. That has been hard fought for and it is a very important part of our social security set-up.

Clause 94 changes that. It is a ministerial override. The Chancellor of the Exchequer or the Secretary of State for Work and Pensions will decide, arbitrarily in my view, although the Minister says that it is to do with mean or median average income. These are not figures that are easily pinned down in our systems of legal entitlement in social security Acts. A Minister of the Crown now says that he can, by regulation, override who gets child benefit if it is counted in a cap and if they are over the arbitrary limit. That is a change. We are giving powers to Ministers that I do not think it is safe to grant them.

If the Government think that housing benefit is too high in some circumstances, let us reform housing benefit. I would be up for that. We have heard powerful

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speeches. My noble friend Lord Greaves just made a very powerful speech about the amount of money that is being diverted to landlords. It is £2 billion a year in housing benefit. Anyone sensible would want to take a look at that, but this is looking at it over too short a period and doing it in a technical way that strikes at some of the protections that we have in Parliament. When we set entitlements in the uprating Statement every year, we can be confident that if people meet those entitlements they will get that money. We cannot say that any more because a cap may be applied. Look at the regulations and look at Clause 94; it is very general. This is a very targeted debate, which it should be as it is about child benefit. I say to noble Lords that, in future, child benefit amounts can be attacked in a way that we will not be able to control. Local authorities will have to reduce child benefit entitlements to enforce this cap. That is not something that this House should accept casually.

What I should really like to do with Clause 94 is vote against the whole thing. However, my noble friend Lord German and one or two others took me into a dark room, sat me down and said, "That wouldn't be sensible because the great British public know the square root of next to nothing at all about the detail of the technicalities". He has persuaded me that I should mitigate Clause 94, and I am prepared to do that. This amendment is the best form of mitigation because it protects a universal benefit that people earning just shy of £80,000 a year will qualify for until we look at that. The Government say that they are on the case. Those people will get that benefit, while people subject to the housing cap in future may not. I do not see the equity in that situation and it would not be safe for us to run with the clause if unamended. I am grateful to my noble friend Lord German for showing me the error of my ways in getting the mitigation.

I want to say two other things as well. This does not attack universal credit. If I believed that the amendment did that, I would certainly vote against it. Why do I not believe that? The amendment is to Part 5 of the Bill, whereas universal credit is in Part 1. If this is an essential part of universal credit, why is it not in Part 1-in the first 43 clauses? It is not. It is there only because of something called the Treasury claw-back, which we discussed at great length in Grand Committee. I was absolutely persuaded that I would die in a ditch to save universal credit. I pay credit-universal and otherwise-to the Minister for achieving it. As someone said earlier, it is an achievement. It will transform and improve dramatically the way that the welfare and benefits system is rolled out. We will certainly be in a much better place when the economy recovers.

However, the Treasury claw-back is £18 billion over the CSR period. The amendment, give or take the new version of the impact assessment, which I have not yet studied, will save £113 million. My point is simply this: the deal was done by the department in 2010, when it was absolutely reasonable to expect that the green shoots of the economy would start to be seen in 2014. Is there anyone in this House who now believes that that will happen? The circumstances of 2010 are now changed, so we are not lashed to the mast. If you want

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to give some protection to the people at the lower end of household income distribution, this is the amendment to mitigate that affect.

There is a lot of misunderstanding in this debate about the difference between a poverty indicator before housing costs and a poverty indicator after housing costs. After housing costs, the families that will be hit by this household benefit cap will be as poor as church mice. When you measure the amount of income available to a household and divide it by the number of people in it-these are big households-they will get tiny sums of money. I saw an article in the Guardian today that referred to 62p per family member after the household benefit cap in one case that had been worked out. What are we doing here if we are approaching that kind of thing?

The Government will not be able to control this. The child benefit that will be withdrawn will be withdrawn by local authorities. Once the regulations are passed, we will lose control of what will happen to these households. I contrast that. Colleagues may know that the DCLG is running a very interesting programme on troubled families. The Prime Minister tells us that there are 120,000 troubled families-I am sure there are-just in England. We are spending just shy of £450 million on getting alongside them, getting them back into work and getting their kids into school. That is a much better way of dealing with some of this stuff. Why, on the one hand, are we helping troubled families? People who are hit by the housing benefit cap will very quickly become troubled. Maybe they will get help from this left-handed scheme. Meanwhile, they have to face the reductions that are being made by the right hand of the Government.

I am very worried about this. Child benefit is a universal benefit and a mitigation that is essential to protect the interests of children. It does not affect universal credit. If it did that, I would not vote for it. However, if it is pressed, I will vote for this amendment with enthusiasm.

6 pm

Baroness Corston: My Lords, I want to speak briefly about child benefit. I was very proud of the fact that in 1977 the then Labour Government, under Jim Callaghan, brought in child benefit. At the time, there was a huge campaign saying that it was taking money out of the wallet and putting it in the handbag. We said, "Yes, that's exactly what it is going to do and it is exactly what it should do". My noble friend Lady Gould, who was my boss at the time as chief women's officer for the Labour Party, and I played our part in making sure that Jim Callaghan knew what the women of the Labour Party thought about child benefit.

I want to address my comments to a particular part of this argument about child benefit being a benefit that is paid to the carer of the child. It is money that goes to women. In my work with women in prison, I have more than once come across a tragic phenomenon where a woman shoplifts. I know of a case in the south-west of England where a woman shoplifted 99 times in a year, each time for food for her children. Her husband had control of the family income-whatever that family's income is, and it might be benefits. The

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only money she had was the child benefit and all of it went on feeding her children, but it was not enough and she therefore stole food. I say to the Government: you think very carefully about the effect that any incursion into child benefit-as a universal benefit payable to the carer of the child, irrespective of income-will have, and that is a hugely important principle. If people do not need the benefit, then use the income tax system to make sure that there is a redress, but please do not, without thinking very carefully, attack a benefit that is the only means whereby some women can feed their children.

Baroness Lister of Burtersett: My Lords, the noble Lord, Lord Hamilton, asked questions about the morality of the current situation. I should like to ask this House, following the point made by the noble Lord, Lord Kirkwood: is it moral that we are deliberately pushing families with children below the level of income that Parliament has decided is necessary to meet their most basic needs? Research shows that that money is not sufficient to meet those basic needs, as determined by the wider population.

A number of noble Lords, including the noble Lord, Lord Fowler, on the government Benches, have asked questions about costs-I had a wonderful vision of the noble Lord wearing his "Action for benefits" badge in front of the mirror. In the other place, the Minister said that this is not primarily a cost-saving measure. What is it? He said it is primarily about changing behaviour, but my noble friend Lady Sherlock pretty well demolished those arguments.

The Minister also said that this is about restoring the credibility of the welfare benefits system. However, that credibility is being undermined by the misinformation being put out by Ministers about that system-in particular, the way that they slide between talking about average incomes and average earnings as if they are the same thing, when they are not. The median family in work receives £33.70 in child benefit as well as various other in-work benefits. The point was made that child benefit replaced child tax allowances. If that had not happened and we still had family allowances and child tax allowances, the median earnings of the average family would be that much higher because of the effect of child tax allowances. It is therefore really unfair that we are not comparing like with like and, as my noble friend pointed, when the Minister was pushed on this issue in Committee regarding how he could justify the fact that we are not comparing like with like, he simply did not have an answer.

Baroness Wheatcroft: My Lords, I did not join your Lordships' House in order to kick the underprivileged, particularly children, but I did believe that the Government were committed to healing the broken society. I do not think that any of us can doubt that society is broken, and we would all agree that there is a need to heal it and that dealing with the dependency culture is an important part of that. That is something that I believe in absolutely. That is at the heart of this legislation. To my mind, the worst sort of child poverty is poverty of aspiration.

Baroness Whitaker: I apologise for interrupting the noble Baroness, but she used the term "broken society"

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and said "I think we all accept that it is". I am really surprised to hear her say that. Can she give us her evidence for the broken society?

Baroness Wheatcroft: I would refer only to the recent riots as evidence of a society that was not entirely at ease with itself. If the noble Baroness is content and happy with the state of society, I am happy for her. I have qualms myself, particularly when I look at the number of children who have no aspiration to education or a career. That is one of the things that I believe the Ministers who are pushing this legislation through are committed to.

As I said, the worst sort of child poverty is poverty of aspiration, and in this country there are many households with no experience of paid employment. That is a terrible condemnation of what has been allowed to grow up in the name of a welfare system.

One of the greatest welfare benefits that we can bestow on children is an aspiration to acquire education and then a career. Growing up in a household where the concept of working for a living is understood and embraced is important for starting youngsters on the right path. A cap on benefits is a sensible step towards encouraging people into work. If we are going to have a cap, in the end we have to have a cap. There is no saying where child benefit is spent. It may go to the women but, I am afraid, not every woman devotes her time to spending her money on her children. That is what we might like to think, but there are others who have drug habits to fund and so on. Women are not infallible and I would be the first to agree with that.

The Government have assured us that they are not approaching welfare reform in a truly one-dimensional way. This is not just about cuts and saving money. The problem households that are locked in a cycle of benefits dependency are known to the authorities. We are told that the authorities are ready to work with those households between now and when this legislation comes into force. They can produce results. I can believe the Government when they say that they are committed to doing that. If they do, and they produce long-term benefits for children in those households, it will be a far more caring result than just handing out cash.

Baroness Farrington of Ribbleton: My Lords, I also had not intended to speak in this debate, but I have just been reminded that we are celebrating the work of Charles Dickens. I do not know why that came into my mind in the last few moments. Is it the deserving poor or the undeserving poor?

In answer to the noble Baroness, I actually stand in the middle as regards the broken society. To me, as an individual, parts of our society are broken, and the ones that are the most broken are those who lack empathy for those less fortunate than themselves. That is the root of our problem: whether the lack of empathy is the teenager who is incapable of understanding that the pensioner at the bus stop whose handbag he tries to take is a human being like his mother or grandmother; whether it is someone who has made it in life and believes, "It is all due to me and other people could be like me"; or whether it is the elderly person who says-and we are all in danger of doing this-"It was not like this when we were young".

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When I fought against the threat to what was then family allowance many years ago, some of the people who said, "I don't agree with you, Josie", were people who said, "I didn't get it when my kids were young". They then went on to tell me about the miseries they went through because they did not get it. Today, we are debating family needs and the issue of what makes a good society. I cannot understand how, on the same weekend when this debate was around in the media, someone suggested that we should give a new tax allowance to people who were working, given that any tax benefit, any cut in taxation, benefits those who earn most at the expense of those who have least.

We have a Prime Minister who has talked about the importance of marriage. That is a matter for him. To me, the important issue is that of families with children: how we provide a society in which the next generation has more empathy. I know that I am not alone in coming from a large family. There is among large sections of this country, certainly in focus groups, the view: "Why did they have all those children? They didn't need to". Among some people, there is prejudice that there is something morally wrong about having children. You can argue that case, but the child born into the large family should not be penalised. My work as a councillor leads me to know that there will be those who will blame their children for the fact that their income has gone down. They will say, "If I had not had you little devils, I would have had more money to spend on us". That is the harsh reality of some children's lives.

I cannot understand how the Minister is talking about fairness. We need to be fair to families with children. Anybody who believes, as was hinted at on the radio this morning by a member of the Government, that people have children in order to get money, has never brought up a child. Child benefit does not cover the cost, however little you give those children. We are facing a system that will penalise children to appease those who think that the children ought not to have been born. There, I have said it. That was what made me remember Charles Dickens. He knew that there were huge sections of society who believed that the undeserving poor ought not to have children.

The Minister has told us that large chunks of the people who will lose their child benefit are people who cannot work, by the Government's own admission, yet sweeping changes will affect them. I appeal to everyone who knows what is fair and what is right. We did not fight the issue of income tax allowance; we must fight to keep child benefit. We know that we are not dependent on those children for our old age, because they are too young to be supporting us; most of us will be long gone; but we need them for a good future and we do not want to inculcate in them grinding poverty, and grinding poverty is what we will be condemning them to. I remember in my childhood that the best meal of the week after Sunday was Tuesday night, when the family allowance was paid out. That was a very common experience. We need to ensure that those people who have children can provide the basic necessities-they are basic necessities-and support the right reverend Prelate the Bishop of Ripon and Leeds.

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6.15 pm

Lord Newton of Braintree: My Lords, I had not intended to speak again, having had my say earlier, and will not repeat what I said, although I cleave to the view that this is not a sensible way to deal with these problems; they should be dealt with in secondary legislation. In that, I embrace the comments made by the noble and learned Baroness, Lady Butler-Sloss, about people taking in other people's children and the need to be sensitive to issues that could arise there. Indeed, I remember noticing while I was in not another place but another location during the first week of discussion on the Bill that a lady in Huntingdon, I think, was reported to have taken in five children of friends of hers, both of whom had died in a short space of time. Others may have noticed the story. Such a case, and others raised in an amendment by the noble Baroness, Lady Drake, need consideration in detail, but we cannot do that on the Floor of the House in discussing amendments to primary legislation.

I need no encouragement in willingness to hold Ministers' feet to the fire about addressing some of those detailed problems, but I question whether it can be done in this way. My noble friend Lord Kirkwood is a real friend. I cannot remember the last time that I disagreed with him. He is clearly out to be more reverend than the Bishops' Bench in his defence of no benefit cap at all. He makes his case. He suggests that it is not incompatible with his support for universal credit. Fundamentally, his position is hostile to the intention of universal credit, which is to diminish the number of people who cannot afford to work.

I must say to the right reverend Prelate that the basic point about the amendment is that it raises the level of the benefit cap. There may be an argument for that, but that is what it does. There is a knock-on effect of that. It must increase the number of people who cannot afford to work. That is a matter of logic. It must do. The more children you have, the less likely it is that you will be able to afford to work, because you will not necessarily be able to command earnings which will replace the benefit. That is the core of the problem that we are seeking to address.

The right reverend Prelates may want to do that; they may think that it is right; but it needs to be straightforwardly stated, in the context in which many people have said-I do not make a judgment on this-that the worst thing that can happen to children is to be trapped in a household which cannot afford to work, in which they have never known anyone in the household in work. Keith Joseph used to have a phrase for that: the cycle of deprivation. We are not free of it. We need to take account of it. People can draw their own conclusions about the right level, but we need to know what we are doing.

As I said, I hesitate to challenge the right reverend Prelates, but they are making life easier for some in financial terms but worse in what I would regard as a sensible way to approach social policy. They may have put figures on that; they may not; but that is my view.

Lord Greaves: Does my noble friend accept that the logic of what he is saying is that child benefit should be abolished for everybody who does not have a job?

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Lord Newton of Braintree: I meant to say at the beginning, but I do not think I did, that if anyone can be held responsible for the continued existence of child benefit in this country, it is me. In the late 1980s, it had not been uprated for two or three years. I became Secretary of State for Social Security. I fought tooth and nail to reintroduce the uprating of child benefit.

I had a lot of battles with a lot of colleagues and managed to do it in the form of introducing the increased rate for the eldest child-the first child-which was laughed at at the time but appears again to have stood the test of time. I yield to no one as a defender of child benefit and I certainly do not want to abolish it. I have reservations about the Government's proposals on taxing it-they will come up at another time-but I will not be accused of being hostile to child benefit. I am simply saying that I support it but I also support the objective of ensuring that children are in households where it pays for the people involved to work if possible.

Lord Ashdown of Norton-sub-Hamdon: I am most grateful to the noble Lord for making the point. Indeed, he deserves all the credit for child benefit-he does not claim it as he is not an immodest man-and millions in this country owe him a great debt. The question that puzzles me, and perhaps he can help, is: how is it right, morally or otherwise, to deny child benefit to somebody on £26,000 a year when they get it on £80,000?

Lord Newton of Braintree: The issue is at what level the benefit cap should be set, and whether to set a different level that automatically puts people with children, depending on the number, in a position in which fewer of them can afford to take jobs at the rates they are likely to be able to command. It is a matter of judgment not of fact. It is an issue that cannot be evaded, but it has been evaded in a lot of the discussion we have had tonight. I will not vote for the amendment but I will not dismiss the concerns, particularly those addressed by the noble and learned Baroness, Lady Butler-Sloss. They need to be addressed by Ministers in working out the detail. I repeat my phrase that I will join in on holding their feet to the fire but I will not join in on this rather hasty and ill considered amendment today.

The Lord Bishop of Chichester: My Lords, I was very tempted to intervene in the middle of what the noble Lord, Lord Newton, was saying when he accused the Bishops of suggesting that we wished to have no cap at all. I have not heard one of us say that, but I am glad that I did not intervene as he then admitted that he did not really mean that and talked about us trying to raise the level of the cap. I am glad that I was patient.

I do not want to intrude on what my friend the right reverend Prelate the Bishop of Ripon and Leeds will say later, but I want to address something that has not come up yet. Quite a lot has been said about the popularity of this Bill, particularly the cap. One has to be fairly careful about being too quick in response to vox pop when making legislation. If we were debating capital punishment, for example, I suspect that many

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of the same things would be said. If we were to tease out what public opinion was concerned about, I suspect that we would probably find a remarkable unanimity of view within the House about the end we want, but the question of limitation is important. There have to be limitations on benefits and there have to be limitations on all sorts of other things, such as rents, but that point has already been made. I suspect that there would be a remarkable degree of agreement about the need to incentivise people to work and encourage a culture in which society as a whole sees the point of work, and particularly that young people are educated with a vision and the desirability of a career.

Finally, I suspect that there would be considerable sympathy and recognition of the dependency culture that we have inadvertently allowed to develop, and out of which we need to enable society as a whole to grow. The question is: who bears the price of that change and in what time does it change? I agree entirely-I suspect that I have the mind of my colleagues on this-that we need to change the mind of society on how we address a number of things. This Bill, properly refined, could well contribute towards that. We also have to help to educate public opinion in the way in which it responds to vox pop surveys. I suspect that another thing on which people would agree-we might find a high degree of popular agreement-is that in the provision for children in their homes, their education, and the stability of their family lives lie the best possible foundation for the future. If you ask people that question rather than some others that get knee-jerk reactions, I suspect that we would find much greater unanimity in the country about what we are trying to achieve. I suggest caution on having too easy a reliance on popular opinion polls.

Lord Brooke of Sutton Mandeville: This will be not a Second Reading speech but a Second Reading remark, I hope said quickly enough to save my noble friend the Whip getting up gently to rebuke me. It would not have been relevant on the previous amendment but it is on this one.

The noble Lord, Lord Best-I almost called him my noble friend-indicated that homelessness was already on the rise. This debate is about homelessness as much as it is about fairness to children, and will be used as a quarry for homelessness policy in the future. Homelessness can still occur under this amendment in the future where the previous amendment sought to prevent it.

I shall make a counterintuitive comment. For 24 years I represented in the other place what was almost certainly the most poverty-stricken Conservative seat in the country by the proportions of standard household criteria. A lot of my homeless constituents were moved from hotel to hotel, frequently outside my constituency, and often from constituency to constituency. I do not recall anyone talking before about this diaspora but there is no policy, no rule and no mutual convention as to who their MP is as they move to different places. If MPs are not agreed about who their MP is, the poor homeless family cannot be expected to know. In the process, beyond the price their children pay educationally and socially by moving, the whole family pays a democratic price in not knowing who represents them. Believe me,

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as a former inner-city MP, I know that they stand in considerable need of representation. As a London Member, the present Secretary of State can almost certainly recognise this problem but I reward my Whip's silence by saying that I am in favour of the cap.

Lord McKenzie of Luton: My Lords, this is an important amendment that we can wholeheartedly support. I pay tribute to the right reverend Prelate for his leadership and support for this proposition that has come from many quarters, especially the faith communities. Far from being out of touch, we know that it is the faith communities that so often reach the most disadvantaged people and that statutory services, for all the want of trying, simply cannot reach them.

The debate is fundamentally about fairness. I do not propose to repeat or answer all the points that have been raised. That is the Minister's job but I agree with the noble Lord, Lord Kirkwood, that if this were about undermining universal credit we would not support it. That is not what it is about; it is a completely separate issue. It has become very confused in the debates we have had both before and now.

I shall speak a little about the dependency culture issue. As I said before, I thought that universal credit was the mechanism to encourage people into work, into the labour market, and to make it clear that being in work paid. That was the key government policy. If that is not sufficient and if it is a deficient policy that needs another component, as said by my noble friend Lady Sherlock, perhaps the Minister can explain that. If this is to drive everyone who is caught by the cap into employment, how does the Minister deal with the point that fewer than half the people on the updated analysis of those who will be caught by it are, on the Government's own assessment, not required to work, not fit for work or have responsibilities for young children that place them outside the properly constructed category of those who should be expected to work and not rely on benefits? Does the Minister say that somehow the broad policy and all the assessments that have been put in place as a result of universal credit have to be torn up and rewritten for this specific category of 75,000 households? If so, perhaps he can tell us precisely why.

6.30 pm

The new impact assessment, which we received just a few hours before this sitting, sets out the choices people must make: work more hours, even though most of them are deemed not fit for work; reduce their non-rent expenditure; or reduce their rent expenditure. We have just debated how, in large measure, reducing rent expenditure is not an easy option or an option at all for most people. What about reducing non-rent expenditure and what does that imply? Does the Minister accept that that concept means spending less on children too? As the new impact assessment identifies, the number of children to be affected by the cap is 220,000 by 2013-14. A third of those affected will lose £100 a week or more, so can the Minister tell us what sort of items he thinks can be excluded from the family budget to save even the average of £83 a month? Would he accept that, particularly as the cap will bite hardest on

23 Jan 2012 : Column 852

large families, children will be affected and caught up by that? What is his understanding of how these families affected by the cap spend their income? Where does he see the scope for this massive saving that is needed if this cap proceeds as is recommended? Removing child benefit from the cap would at least preserve a stream of funding for families and a source that is supposed to be focused on the needs of children.

As the right reverend Prelate has explained, this amendment would not remove all the savings that the Government wish to make from the cap. It does not fatally undermine the thrust of the Government's argument, whether one subscribes to it or not, but it would provide some protection for children who are most affected by this measure. It would introduce greater fairness in the construction of the cap. It is not in conflict with a range of other amendments that we have yet to consider, but it will be supported with enthusiasm both by the Benches behind me and by my colleagues on the Front Bench.

Lord Freud:My Lords, the right reverend Prelate the Bishop of Ripon and Leeds made the point that the job of a member of the church is to look after children in need, but one needs to ask the question about children in need at a slightly different level. For instance, if we leave families with rents that they could never afford in work, what does that do for the children? What does it do for the children in those families when there is no working role model in them? We know what happens to those children. What does it mean to leave them in workless families given the much higher level of poverty that we know exists in them? What does it mean for the generational worklessness that we see in those families? The question that, from a religious point of view, you need to come from is much wider-what is the best thing for those families?-rather than looking at it from a narrow financial basis.

Let me supply the figures because they were just slightly misquoted. We estimate that the savings generated by the cap will be £120 million in 2013-14 and £130 million in subsequent years. I think I heard £113 million. Putting those figures to one side for the moment, the reality is that the savings on this measure are not the core point. We are trying to change behaviours. If we do not cut the benefit bill by the amount we have in the estimate, that is a good thing because we will have got people into work and changed their behaviour.

This measure does something different: it cuts the number of families affected by the cap from 67,000 to about 40,000. That is the real cost of this amendment. It takes the pressure away from those 20,000 families that will go on in the same way that they have been going, and we will not have the behavioural change that we want and need from those families.

Lord McKenzie of Luton: The Minister is not dealing with the point. On the latest updated assessment, something like a quarter of the people who will be caught by this cap are on employment and support allowance. Depending on which category they are in, it requires people to move closer to the labour market, but does not require them to work. Why are the Government using this leverage on people in that group? Thirty-eight per cent of them are on income

23 Jan 2012 : Column 853

support, which is again a category of people who, for all the reasons we have debated, are not required to work. For people on JSA, you could see this might be an extra spur, but why does this measure cover those people who, under the Government's assessment and on the basis on which they are going to construct universal credit, are not required to work?

Lord Freud: My Lords, on the figures in that new impact assessment, the majority of people have full or partial conditionality in ESA, given the proportions of ESA. Most people on ESA in the support group will, in practice, be on DLA and therefore will not be affected by this cap, so we can look at the majority looking for work. Even if there is no formal conditionality, the message to families is that work is a solution in this circumstance. I need to remind the House that the coalition Government firmly believe that there has to be a limit on the overall level of benefit it is appropriate for the state to provide for those who are not working. Let me be absolutely clear about the structure because this is a point raised by several noble Lords. The noble Baroness, Lady Corston, made the point most emphatically. The structure of this does not take money out of the carer's pocket because we are not stopping payments of child benefits. Those families will still continue to obtain their child benefit, and there is an offset in the other benefits to get the cap to work. It will not work through child benefit. I know all money is fungible and households will operate within the same overall money, but there is no need for this concern that the money is taken away from the carer directly.

Baroness Farrington of Ribbleton: My Lords, will the Minister just give a categorical assurance to the House that those affected by this government proposal, who the Government assess as not able to work at that time, will keep their child benefit? Then we can all go home.

Lord Freud: My Lords, I am obviously not going to make that commitment because that is not how this cap is structured. It is based on the premise that payment at unrestricted rates ultimately serves nobody. It does not serve those who are paying the taxes to fund it, and it does not help those who are trapped in dependence by providing little or no incentive to move off the benefit.

Let me answer a point about how it works that was raised by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie. They asked why we need it when we have universal credit. Universal credit is designed to provide an incentive to get people back into work or to reduce the disincentive. The cap does two things. While UC is the carrot, the cap is the stick, but it also provides the message to people much more widely than the families that are affected that a life dependent on benefits is not the way to go. There are other solutions, work being the main one.

It is vital that the benefits system is seen to be fair. We do not believe that households getting out-of-work benefits should receive a greater income from benefits than the average weekly net wage for working households. That is why the cap is set at £26,000 a

23 Jan 2012 : Column 854

year net or £35,000 a year gross. Even there, significant amounts of financial assistance will be available from the state.

Like other welfare benefits, child benefit is provided by the state and funded by taxpayers. Therefore, we believe it is right that it is taken into account along with other state benefits when applying the cap. The effect of excluding child benefit would simply be that families on benefit would have an income higher than average earnings. There would be no upper limit to the amount of benefit a household could receive. Clearly, that would depend on the number of children. My noble friend Lord Newton hit on the head the point of why one would want to tell people that that is not a solution to a life on dependency.

We are trying to achieve a simple rule for the level of the cap and a simple set of exemptions. We have already recognised that there are some households for whom it would not be appropriate to restrict the amount of benefit that they can receive; that is, households in receipt of DLA, constant attendance allowance and PIP when it is introduced. We will also exempt war widows and widowers. These households do not need an exemption for child benefit as well.

For other households, work should be the way out of the cap. We have said that we will exempt households entitled to working tax credit and that there will be a similar exemption for working households on universal credit. This will encourage people who could be capped to seek work, reinforcing the improved incentives that will come with universal credit. Excluding child benefit will only dilute our aim that being in work, even part time, must always pay better than relying on benefits alone.

I want to pick up the important issue of kinship carers raised by the noble and learned Baroness, Lady Butler-Sloss. In Committee, I made clear that I am looking at kinship carers in the round. In practice, the numbers affected are pretty small. In dealing with those issues, clearly, we need to get it right in regulations. The most effective point made by kinship carers, at least where I am concerned, is that when you take on a child or children, there is quite a period-a year is suggested-during which a big adjustment factor goes on because many children being taken on are quite troubled by the time they are transferred. I am very conscious of that issue, which needs addressing generally. That is what we propose to do.

When we introduce the cap we intend to use a method which looks at median earned income after tax and national insurance for all working families. We believe that this will strike the right balance between providing support for families, promoting fairness between those out of work on benefits and those in work, and ensuring clear financial incentives to work. In summary, I repeat the fact that this is the kind of figure that the general public see as appropriate.

6.45 pm

My noble friend Lady Tyler raised family breakdown and splitting up. One of the key drivers of family breakdown is long-term unemployment, which puts considerable pressure on vulnerable families. One of

23 Jan 2012 : Column 855

the most supportive things we can do for these families is to make sure that work always pays and that the transition to work is as smooth as possible.

In this debate, we have talked a lot about children. I want to re-emphasise the point that children already have their life chances and opportunities damaged as a result of living in households where no one has worked for years and where no one considers work to be an option. Over the years, we have paid these families large and increasing amounts of benefit with the result that they have become dependent on the state to support their children and see no advantage to going out to work and supporting their children themselves. The cap, and the assistance to find work we will give households in the year leading up to the cap, will help towards freeing people from this benefit trap and giving their children a positive example. We will spend the next year putting an enormous amount of effort into helping these families move on and move out of dependency.

I know that the right reverend Prelate feels strongly on this issue but I would urge him to withdraw his amendment.

The Lord Bishop of Ripon and Leeds: My Lords, I am grateful to all those who have contributed to this debate and to the Minister for his comments. This amendment is not simply or even primarily concerned with generations of workless people. It will affect a significant number of people who have been put out of work in recent years, months and days. At times, it almost sounded as if the Minister thought that it was a bad thing to bring people out of poverty. But we are talking about children, and child benefit remains one of the great anchors, as the noble Lord, Lord Newton, reminded us, of the whole way in which we work with children and families.

I do not think we have heard any real response to the basic point that the Bill means that a childless couple has the same cap as a couple with a number of children. It does not seem logical to say that we have to put a lot more pressure on families with children than on those who do not have any. I was grateful to the noble Lord, Lord Greaves, in particular, and others, for speaking about the importance of universalism in terms of child benefit. We have ranged widely during these discussions but this matter is about children. As the noble and learned Baroness, Lady Butler-Sloss, and the noble Baroness, Lady Corston, said, this amendment is about children and the women and carers who care for those children. It is those who will be helped if noble Lords are prepared to back this amendment.

On that basis, I appeal to noble Lords to support the amendment or, if they cannot do that, at least to abstain. It would help children and I believe that it is right to test the opinion of the House.

6.49 pm

Division on Amendment 59

Contents 252; Not-Contents 237.

23 Jan 2012 : Column 856

Amendment 59 agreed.

Division No. 2


Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Allan of Hallam, L.
Alton of Liverpool, L.
Andrews, B.
Armstrong of Hill Top, B.
Ashdown of Norton-sub-Hamdon, L.
Avebury, L.
Bach, L.
Bakewell, B.
Bannside, L.
Barnett, L.
Bassam of Brighton, L.
Beecham, L.
Benjamin, B.
Berkeley, L.
Best, L.
Bichard, L.
Billingham, B.
Bilston, L.
Blackstone, B.
Blair of Boughton, L.
Blood, B.
Boateng, L.
Boothroyd, B.
Borrie, L.
Boyd of Duncansby, L.
Bradley, L.
Bragg, L.
Brennan, L.
Brooke of Alverthorpe, L.
Brookman, L.
Browne of Belmont, L.
Browne of Ladyton, L.
Chichester, Bp.
Clancarty, E.
Clarke of Hampstead, L.
Clinton-Davis, L.
Collins of Highbury, L.
Corston, B.
Cotter, L.
Coussins, B.
Crawley, B.
Davies of Abersoch, L.
Davies of Coity, L.
Davies of Oldham, L.
Davies of Stamford, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dixon, L.
Donaghy, B.
Donoughue, L.
Doocey, B.
Drake, B.
Dubs, L.
Dykes, L.
Eatwell, L.
Elder, L.
Elis-Thomas, L.
Elystan-Morgan, L.
Evans of Temple Guiting, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Finlay of Llandaff, B.
Ford, B.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Gale, B.
Gibson of Market Rasen, B.
Giddens, L.
Gilbert, L.
Glasman, L.
Golding, B.
Goldsmith, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grantchester, L.
Greaves, L.
Grenfell, L.
Grey-Thompson, B.
Griffiths of Burry Port, L.
Grocott, L.
Hall of Birkenhead, L.
Hameed, L.
Hanworth, V.
Harris of Haringey, L.
Harris of Richmond, B.
Harrison, L.
Hart of Chilton, L.
Haskins, L.
Haworth, L.
Hayman, B.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Henig, B.
Hennessy of Nympsfield, L.
Hollick, L.
Hollins, B.
Hollis of Heigham, B.
Howarth of Breckland, B.
Howarth of Newport, L.
Howe of Idlicote, B.
Howells of St Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Stretford, B.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Hussain, L.
Hussein-Ece, B.
Hylton, L.
Irvine of Lairg, L.
Jay of Paddington, B.
Jones, L.
Jones of Whitchurch, B.
Jordan, L.
Kennedy of Southwark, L.
Kennedy of The Shaws, B.
Kerr of Kinlochard, L.
Kestenbaum, L.
King of Bow, B.
King of West Bromwich, L.
Kingsmill, B.
Kinnock, L.
Kinnock of Holyhead, B.
Kirkhill, L.
Kirkwood of Kirkhope, L.
Knight of Weymouth, L.
Layard, L.
Lea of Crondall, L.
Leicester, Bp.
Levy, L.
Lichfield, Bp.
Liddell of Coatdyke, B.
Liddle, L.
Lipsey, L.
Lister of Burtersett, B.
Listowel, E.
McAvoy, L.

23 Jan 2012 : Column 857

McConnell of Glenscorrodale, L.
McDonagh, B.
Macdonald of River Glaven, L.
Macdonald of Tradeston, L.
McFall of Alcluith, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
McKenzie of Luton, L.
Maclennan of Rogart, L.
Mallalieu, B.
Malloch-Brown, L.
Manchester, Bp.
Mar, C.
Martin of Springburn, L.
Masham of Ilton, B.
Massey of Darwen, B.
Maxton, L.
Meacher, B.
Miller of Chilthorne Domer, B.
Monks, L.
Morgan, L.
Morgan of Drefelin, B.
Morgan of Ely, B.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Manchester, L.
Morris of Yardley, B.
Myners, L.
Nye, B.
Oakeshott of Seagrove Bay, L.
O'Loan, B.
O'Neill of Clackmannan, L.
Paisley of St George's, B.
Patel of Bradford, L.
Pendry, L.
Pitkeathley, B.
Plant of Highfield, L.
Prescott, L.
Prosser, B.
Quin, B.
Radice, L.
Ramsay of Cartvale, B.
Rea, L.
Redesdale, L.
Rees of Ludlow, L.
Reid of Cardowan, L.
Rendell of Babergh, B.
Richard, L.
Richardson of Calow, B.
Ripon and Leeds, Bp. [Teller]
Roberts of Llandudno, L.
Rogan, L.
Rooker, L.
Rosser, L.
Rowe-Beddoe, L.
Rowlands, L.
Royall of Blaisdon, B.
Sandwich, E.
Sawyer, L.
Scotland of Asthal, B.
Scott of Foscote, L.
Sewel, L.
Sheldon, L.
Sherlock, B. [Teller]
Simon, V.
Smith of Basildon, B.
Smith of Clifton, L.
Smith of Finsbury, L.
Smith of Gilmorehill, B.
Snape, L.
Soley, L.
Stern, B.
Stern of Brentford, L.
Stevenson of Balmacara, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Taylor of Goss Moor, L.
Thomas of Winchester, B.
Thornton, B.
Tonge, B.
Touhig, L.
Triesman, L.
Tunnicliffe, L.
Turnberg, L.
Turner of Camden, B.
Tyler, L.
Tyler of Enfield, B.
Wall of New Barnet, B.
Walmsley, B.
Walpole, L.
Warner, L.
Warnock, B.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
West of Spithead, L.
Wheeler, B.
Whitaker, B.
Whitty, L.
Wigley, L.
Wilkins, B.
Williams of Crosby, B.
Williams of Elvel, L.
Wills, L.
Winston, L.
Wood of Anfield, L.
Woolmer of Leeds, L.
Worthington, B.
Young of Hornsey, B.
Young of Norwood Green, L.


Aberdare, L.
Addington, L.
Ahmad of Wimbledon, L.
Allenby of Megiddo, V.
Anelay of St Johns, B. [Teller]
Arran, E.
Ashton of Hyde, L.
Astor, V.
Astor of Hever, L.
Attlee, E.
Baker of Dorking, L.
Ballyedmond, L.
Bell, L.
Berridge, B.
Bew, L.
Birt, L.
Blackwell, L.
Bonham-Carter of Yarnbury, B.
Bottomley of Nettlestone, B.
Bowness, L.
Bridgeman, V.
Brinton, B.
Brittan of Spennithorne, L.
Brooke of Sutton Mandeville, L.
Browning, B.
Burnett, L.
Buscombe, B.
Butler of Brockwell, L.
Butler-Sloss, B.
Byford, B.
Caithness, E.
Carlile of Berriew, L.
Cathcart, E.

23 Jan 2012 : Column 858

Chadlington, L.
Chalker of Wallasey, B.
Clement-Jones, L.
Colville of Culross, V.
Colwyn, L.
Condon, L.
Cope of Berkeley, L.
Cormack, L.
Courtown, E.
Craig of Radley, L.
Craigavon, V.
Crickhowell, L.
Cumberlege, B.
De Mauley, L.
Dear, L.
Deben, L.
Deech, B.
Denham, L.
Dholakia, L.
Dixon-Smith, L.
Dobbs, L.
Eaton, B.
Eccles, V.
Elton, L.
Empey, L.
Erroll, E.
Falkland, V.
Falkner of Margravine, B.
Faulks, L.
Feldman, L.
Feldman of Elstree, L.
Fink, L.
Flather, B.
Flight, L.
Fookes, B.
Forsyth of Drumlean, L.
Fowler, L.
Framlingham, L.
Fraser of Carmyllie, L.
Freeman, L.
Freud, L.
Garden of Frognal, B.
Gardiner of Kimble, L.
Gardner of Parkes, B.
Garel-Jones, L.
Geddes, L.
German, L.
Gold, L.
Goodhart, L.
Goschen, V.
Grade of Yarmouth, L.
Greengross, B.
Greenway, L.
Griffiths of Fforestfach, L.
Guthrie of Craigiebank, L.
Hamilton of Epsom, L.
Hanham, B.
Harris of Peckham, L.
Henley, L.
Heyhoe Flint, B.
Higgins, L.
Hill of Oareford, L.
Hodgson of Astley Abbotts, L.
Home, E.
Hooper, B.
Howard of Lympne, L.
Howard of Rising, L.
Howe, E.
Howell of Guildford, L.
Hunt of Wirral, L.
Hurd of Westwell, L.
Inglewood, L.
James of Blackheath, L.
Janvrin, L.
Jay of Ewelme, L.
Jenkin of Kennington, B.
Jenkin of Roding, L.
Jolly, B.
Jopling, L.
Kakkar, L.
Kilclooney, L.
Kirkham, L.
Kramer, B.
Laird, L.
Laming, L.
Lamont of Lerwick, L.
Lang of Monkton, L.
Leach of Fairford, L.
Lee of Trafford, L.
Lester of Herne Hill, L.
Lexden, L.
Lindsay, E.
Lingfield, L.
Loomba, L.
Lothian, M.
Lucas, L.
Luce, L.
Luke, L.
McColl of Dulwich, L.
MacGregor of Pulham Market, L.
Mackay of Clashfern, L.
McNally, L.
Maddock, B.
Mancroft, L.
Maples, L.
Marks of Henley-on-Thames, L.
Marland, L.
Marlesford, L.
Mawhinney, L.
Mayhew of Twysden, L.
Miller of Hendon, B.
Montgomery of Alamein, V.
Montrose, D.
Moore of Lower Marsh, L.
Morris of Bolton, B.
Moynihan, L.
Murphy, B.
Naseby, L.
Neill of Bladen, L.
Neville-Jones, B.
Newby, L.
Newton of Braintree, L.
Northbourne, L.
Northbrook, L.
Northover, B.
Norton of Louth, L.
O'Cathain, B.
O'Neill of Bengarve, B.
Oppenheim-Barnes, B.
Pannick, L.
Pearson of Rannoch, L.
Perry of Southwark, B.
Popat, L.
Ramsbotham, L.
Randerson, B.
Rawlings, B.
Razzall, L.
Reay, L.
Rees-Mogg, L.
Rennard, L.
Ribeiro, L.
Risby, L.
Ritchie of Brompton, B.
Roberts of Conwy, L.
Rodgers of Quarry Bank, L.
Rotherwick, L.
Ryder of Wensum, L.
Sassoon, L.
Scott of Needham Market, B.
Seccombe, B.
Selborne, E.
Selkirk of Douglas, L.
Selsdon, L.

23 Jan 2012 : Column 859

Shackleton of Belgravia, B.
Sharkey, L.
Sharp of Guildford, B.
Sharples, B.
Shaw of Northstead, L.
Sheikh, L.
Shephard of Northwold, B.
Shipley, L.
Shutt of Greetland, L. [Teller]
Skelmersdale, L.
Slim, V.
Spicer, L.
Stedman-Scott, B.
Sterling of Plaistow, L.
Stewartby, L.
Stirrup, L.
Stoddart of Swindon, L.
Stoneham of Droxford, L.
Stowell of Beeston, B.
Strasburger, L.
Strathclyde, L.
Sutherland of Houndwood, L.
Taverne, L.
Taylor of Holbeach, L.
Tenby, V.
Teverson, L.
Thomas of Gresford, L.
Thomas of Swynnerton, L.
Tombs, L.
Tope, L.
Tordoff, L.
Trefgarne, L.
Trenchard, V.
Trimble, L.
True, L.
Trumpington, B.
Tugendhat, L.
Turnbull, L.
Verma, B.
Wakeham, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walton of Detchant, L.
Warsi, B.
Wasserman, L.
Waverley, V.
Wheatcroft, B.
Wilcox, B.
Willoughby de Broke, L.
Young of Graffham, L.
Younger of Leckie, V.
7.02 pm

Amendment 59A

Moved by Baroness Flather

59A: Clause 94, page 63, line 41, at end insert-

"(ea) make provision so that, prior to the application of the benefit cap, should the relevant amount include an award of universal credit under section 10(1) then the amount included for-

(i) the third child shall be reduced to 75 per cent; and

(ii) the fourth child shall be reduced to 50 per cent,

of that included for the first child;"

Baroness Flather: My Lords, this is a very strange juxtaposition of amendments, because your Lordships have just had your heartstrings pulled at over children and here is my amendment, which suggests that there should be fewer benefits for children for various reasons that I shall try to explain.

I should like to make two apologies, with qualifications. The first is to the noble Lord McKenzie of Luton, who said that he did not want to hear about this matter again in this Chamber. Well, I am sorry, but he will have to. I would also ask him, with respect, to look at what is going on in Luton, since it forms part of his territorial designation. There are a lot of things to be looked at in Luton and I hope that he will do so.

My other apology is to Pakistanis and Bangladeshis, because I mentioned only them in my Second Reading speech. I did not mention many white families or many single mothers; nor did I mention the Somalis. There are people in this country who have many children, and it is innocent to think that they would keep having those children were they not helped by the benefits system. They might not stop having children, but they would certainly not have as many if they were not sure of getting the money to look after them. It is extremely important that children are brought into this world because they are wanted and not because it is convenient, because you get a bigger house and

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because you get more money, which it is absolute nonsense to think is not happening. Your Lordships are kind but also very innocent if you do not know what is going on in this country.

One of the reasons why I moved this amendment is the support I have received from ordinary working people. I have had so much mail-e-mails and letters-asking me to suggest that benefits should stop after two children, not after the fourth. They say, "We cannot afford to have more than two children; we are working and can just about manage. We care for our children, we care about their education, we care about their future and it upsets us greatly to see others having seven or eight. Would these people continue to have so many children if the state did not provide for them?". It is a matter that should be seriously considered. The cap will take care of some of that, and I am pleased to say that it is time that it did so. I know there are many noble Lords, especially on the opposition Benches, who are against the cap and believe that we are moving in the wrong direction, but we have made this a country of people who rely on handouts and it is about time we stopped.

I was very pleased to hear the noble Lord, Lord Freud, talk about role models. There are no role models in families where there are six or seven children. There is no one who has worked and no one is expected to work. A lot of those parents do not even know which school their children go to; they do not know what they are doing at school. We have large numbers of young unskilled people, especially in places such as Yorkshire and Lancashire, and especially the boys. It is the boys we need to worry about; they need to be skilled and to attend courses that will teach them basic skills such as plumbing, electrics or carpentry; they must become skilled at something. They are neither educated nor skilled and they have no future. They will not work, their children will not work either, and it is very important that the cycle is broken at some stage. If we are to listen to people in this country, the sooner this happens the better it will be. Working people are fed up with the way some people manage to live on benefits.

In my Second Reading speech, I pointed to one other area that is not in this amendment: people being given money to pay for their drugs. That is disastrous. If you give money to people for drugs, why would they want to work? They are disabled because they use drugs, but they get money to buy their drugs, so why would they ever want to get off them and return to work? We are talking about getting people into work and I think we should look carefully at every area.

There is also a huge rise in polygamy in some Pakistani families. I was interviewed about this amendment on the radio and during the broadcast one man said that he had three wives. The interviewer asked him how he managed and he said, "On a rota basis". I am afraid that a lot of men have more than one wife. The latest fashion is to go to southern Spain, cross over to Morocco and bring back girls. They marry according to Sharia law and the wives live as single mothers in homes of their own. We need to look at what we are doing to this country. How do they get away with it? They have three or four wives and they presumably

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visit them-as this man said-on a rota basis. This should not be happening. We do not need this kind of behaviour in this country.

Some people seem to think they have no choice when having children: that they just have them. Children are a choice and a responsibility. They need to be looked after and they need to be brought up. Not only that, there has to be fairness between those who work and those who live off taxes. This drastic situation calls for action. I hope the Government will take action and discourage people from having large families unless they are in a position to look after them.

I was privileged to receive a letter from the Prime Minister two days ago. I wish it had arrived earlier. It states that this issue will be looked at under the provisions of the cap. I knew the cap was coming but I did not know exactly what was likely to happen. I wrote to the Secretary of State for Work and Pensions but he did not reply. However, I sent a copy to the Prime Minister and he did reply-I felt very privileged by that-and he has put my mind at rest about the issues that are important to the people of this country.

The sooner we tackle this kind of disadvantage-and it is a disadvantage for these children-the better. If you have five children, and even if you get benefits you do not look after them and do not give them education, they are disadvantaged all the way through and they will never work.

I leave your Lordships with two comments that you might like to think about. First, the recent British social attitudes surveyis very much against the benefits system. There has never been so much disquiet about the benefits system as there is this time. Secondly, the last time the children being born in this country were counted, 50 per cent were born to mothers born overseas. We need to think about that very seriously if we do not want this country to change totally in its attitudes. I beg to move.

Baroness Howe of Idlicote: My Lords, we are back again to groupings and, like the noble Lord, Lord Newton, I am very much in favour of them. Sadly, in this case it has meant that my amendment has been somewhat delayed. If it had been in the first group of amendments it would have been well and truly dealt with by now. However, I am pleased now to be in a group.

I listened with interest to what my noble friend Lady Flather has said and, although I cannot say that my sympathies are in the same direction, nevertheless it is her view that if you are paid less for the more children you have that will lead to a happier lifestyle. She may be right, but I do not agree with that approach.

Baroness Flather: I did not say that. I said that if people know that they will not continuously keep receiving benefits they might decide not to have so many children, and that if the benefit cap was to come, it would not come as a retrospective.

7.15 pm

Baroness Howe of Idlicote: I am grateful for being put right. However, I still have differences of opinion with my noble friend Lady Flather.

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However, my amendment was very much part, alas, of all the other amendments that have been debated. I have listened very carefully and, having had the benefit of being in the Chamber the entire time, I have been fully appraised before deciding which amendment to support and which not. The general impression that I have got from these debates is that there is a great feeling about families and about doing the best for children whatever household they are in. It is for that reason that I was happy to table the amendment for London-London Councils kindly provided me with the material-because London is such an obvious area where you have extremes of very expensive accommodation and fairly poor areas where it is not as easy to survive if you are living on benefits and are among some of the more disadvantaged and disabled.

All three of my amendments relate to the same issue which is why it is better to address them all together. If the Government want a benefit cap that fairly reflects average earnings, it would be logical and just for the cap to reflect geographical variations, not only in wages but in other important living costs such as those related to accommodation and childcare. The amendments would require the Secretary of State to take account of these variations: the average weekly cost of private rented accommodation, the average weekly cost of childcare and average weekly earnings.

By way of background, the most recent evidence regarding these factors shows that, as regards accommodation, London has the highest average private sector rents in the country at £222 per week. That is more than 36 per cent higher than the national average. Childcare in London and the south-east is at least 20 per cent higher than the national average. For example, a nursery place for a child costs an average of £113 per week in London and the south-east compared with the national average of £94 per week. Earnings in London are £31,935 compared with £26,133, a 20 per cent difference.

What would be the impact of the Government's proposals on the benefit cap? Independent research by Navigant Consulting, commissioned by London Councils-I should emphasise that London Councils is a cross-party organisation speaking on behalf of all London boroughs and the City of London-has estimated that the impact on London of the proposed universal credit cap would be as follows. A total of 73,000 workless households would experience a shortfall in their benefits against living and housing costs. In aggregate, the cap would produce a loss of £8.2 million per week for workless households and more than £427 million per annum across London. There would be a significant impact on families with children and on larger families in particular. While less than 3 per cent of households without children will find their accommodation unaffordable, that rises to more than 30 per cent for families with children. The average weekly loss across London for households affected by the cap is £105.

The majority of the London boroughs are already reporting that a significant number of households are having to move home as a result of changes to housing benefit caps. That has led to an increase in the number of homeless households placed by boroughs in bed-and-breakfast temporary accommodation. The use of

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temporary accommodation recently reached a three-year high after 25 quarters of reduction since 2003. Now almost 1,500 families are living in bed-and-breakfast accommodation in London. That effect will be replicated elsewhere and will undermine efforts to retain and build sustainable mixed communities, a point that has been made very effectively by others in other debates. There is a genuine concern that reductions in benefit entitlements for workless households may lead to an increase in child poverty and safeguarding issues. With children and young people's services already stretched, the fear is that vulnerable children might slip through the net.

The Government have argued that they need to cap household benefit entitlement in order to reduce the £20 billion deficit bill and to return fairness to the welfare state. Of course, both of those objectives are laudable and entirely understandable. However, simply fixing a national limit and attempting to apply it across all households, regardless of variation in individual circumstances, is not only unfair but it is also likely to usher in a host of unintended consequences. We have heard about many of them in previous debates so I shall not go into the detail of those.

The cost of life's essentials varies from place to place and family to family. One does not expect to pay the same to rent a two-bedroomed home as a four-bedroomed home. One does not expect to pay the same to rent a home in the south-east as one might in the north-west. If the welfare system is genuinely to support people and households, surely it is only fair that any support matches, in so far as it is possible, the scale of the challenges facing households, which, so often, through no fault of their own, find themselves in high-cost areas. I hope that the Government will agree to these very reasonable amendments.

I would like to stress that I hope that the Minister will agree to meet London Councils and go through some of its real concerns about this issue. That would reflect on whether I might wish to bring this matter back at Third Reading

Baroness Tyler of Enfield: My Lords, I would like to add some of my concerns about the impact of the benefit cap in London. The noble Baroness, Lady Howe of Idlicote, has set out very clearly and eloquently all the facts and figures and I certainly do not wish to repeat them. I shall pick out one which is particularly relevant to me.

The level of rents in London means that families with just two children will be subject to the cap in many parts of inner London and also in some parts of outer London, including Newham, Haringey, where I live, and Hounslow. I am concerned about the impact of this on mixed communities, or looking at it the other way, one might refer to social segregation as poorer families are moved out of expensive areas. This is a very particular issue in London in terms of social cohesion. It also puts pressure on public services. I think that London Boroughs is right to be worried. The migration and concentrations of workless households in some areas will potentially have significant implications for the full range of local authority services. Boroughs with an inward migration of households are likely to

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face significantly increased service pressures very quickly and with very little time to plan for them in relation to unemployment, poverty, housing and so on. On the other side of the coin, boroughs that experience reduced demand for such services-again very quickly and without time for planning to adjust-will certainly face challenges and costs in adapting to different, if reduced, demands.

Families, particularly larger families, will be very much affected. In London it will also affect families with two children. I share the concerns that have already been voiced by the noble Baroness opposite. I also hope that there will be an opportunity to meet the Minister and London Councils to discuss further the sort of measures that could be put in place to mitigate some of the harsher implications that I have just set out.

Lord McKenzie of Luton: My Lords, I start with the amendments of the noble Baroness, Lady Flather. I find them confused on a number of levels. I should explain that during Second Reading-the noble Baroness referred to my comments about not wishing to hear what she said again-she said that Pakistani and Bangladeshi communities have lots of children because of the money. I objected to that and I thought I objected in about as gentle a way as one can, without being rude, and that is consistent with how we do business in this House.

The noble Baroness has just made reference to Luton and supposed problems there. I know Luton well; I live there. One of the strengths of Luton is its great diversity. We have a range of communities and-I almost called him my noble friend-the noble Lord, Lord Hussain, would attest to that as well. Having diversity brings challenges but also joy and I believe that is a great strength of Luton. I do not believe the proposition that people in any community, particularly the Pakistani and Bangladeshi communities, have lots of children because they believe it will be beneficial in terms of child benefit. If people had children only on the basis of a cost benefit analysis, I suppose there would be no children at all, given all the challenges that come with them. My experience of communities in Luton, particularly the Bangladeshi, Pakistani and Indian community, is that there is great aspiration for their children. If you sit down with people, you hear them speak with pride about their children just having qualified as a doctor, or a lawyer, or even some as an accountant, which brings particular pleasure. I honestly do not see the picture painted by the noble Baroness.

Technically, it seems to me that the amendment that she moved is flawed. As I understand it, the "relevant amount" is that which is based on estimated average earnings and effectively sets the level of the cap. It does not, therefore, specifically include amounts in respect of children. If it were based on income, rather than earnings-depending on the definitions-of course it would. It could, for example, involve child benefit, but this is not how the Government wish to proceed and it is not how they have constructed the cap.

Universal credit will be, as we have discussed, an in-and-out-of-work benefit and we still do not know what the cut-off point will be for those treated as in work. Perhaps the Minister can give us an update on that. Presumably the calculation of earnings would

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not include any amount of universal credit. If the noble Baroness is arguing that an award of universal credit should involve reduced amounts for third and fourth children, in terms of the cap, of course, that would clearly lessen its impact. However, the family cap of £26,000 applies regardless of the number of children in the household, so larger families are likely to be particularly affected, as we have just discussed. Estimates are that 80 per cent of the households likely to be affected by the cap will include three or more children. We know from the DWP impact assessment-certainly the original one-that children from BME groups are more likely to be disproportionately hit by the cap. It would seem that what the noble Baroness intends would drive these families further into poverty and that is not something that we could countenance or support in any way.

The noble Baroness, Lady Howe, introduced some interesting amendments. Certainly the issue of the impact on London, particularly of high rents, featured in our earlier discussion and that is recognised. The broader issue of whether one could have benefits constructed on a regional basis is a very wide debate-we would be unwise to tick that through tonight-although we should recognise that it is done, for example in local housing allowances done on a local basis, structured by reference to local market areas.

7.30 pm

I repeat that we support the cap. We support the £26,000 level, but the way it operates brings some perverse consequences, and high rent levels in London are a particular driver of some of the unfortunate outcomes. I think that I would just hang on to the point, to which the Minister has not given us an answer, that if this is about changing behaviours, what is it that makes proportionately more people in London-this is what the data show-in need of changing behaviours than people in other parts of the country? We know that is not to do with changing behaviours; it is about rent levels and how those impacts on the cap. The noble Baroness, Lady Howe, has advanced some interesting ideas and arguments, but before we embark more generally on a regional benefits system, we need a lot of discussion.

Lord Freud: My Lords, the effects of Amendments 59A and 61A would be to reduce the level of universal credit awarded in respect of children in larger families who would be subject to the benefit cap. Under this amendment, families who would not be subject to the cap would be able to receive the full amount of the child element of universal credit for their third child and any subsequent children. We recognise that families with more children do require more support and we believe that it is right that this is recognised in universal credit. However, as I have said, we also believe that there should be a limit to the overall amount of financial support that households on out-of-work benefits can expect to receive in welfare payments. That is why we intend introducing the benefit cap. We believe that this is the most appropriate way to address this issue as in future people will have to understand that there is a limit to the amount of benefit the state can afford to pay them.

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I move now to Amendments 61ZB, 61ZC and 61ZD. These would require us to replace the national cap based on median earned income earnings with regional caps based on the local average weekly costs of private rented accommodation, the local average weekly cost of childcare and the local average weekly earnings. Given that we will not take childcare payments into account, this part of the amendment is obviously unnecessary. More generally, while the Chancellor may be asking the independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets, we do not have a regionalised benefits system and it would not make sense to regionalise the cap without that. In addition, the approach suggested by the noble Baroness would be extremely expensive to administer, add considerable complexity to the benefits system and would be a recipe for confusion for claimants and staff.

On my noble friend Lady Tyler's point that the cap disadvantages people living in London, given that many working age households with adults in work cannot afford to live in central London-or, indeed, central-ish London-it is not right for the taxpayer to subsidise households on out-of-work benefits who do so. In answer to the point raised by both my noble friend Lady Tyler and the noble Baroness, Lady Howe, on whether I would see London Councils, I would be happy to see London Councils if it asks to see me-if it wants to see me-although it would probably be best to meet in the context of discussing the regulations that will implement this measure.

Both these sets of amendments are about how we set the maximum amount available to people. We believe our approach is fair and simple. When we introduce the cap, we intend to use a method that, by looking at median earned income after tax and national insurance for all working families, will strike the right balance between providing support for families-promoting fairness between those out of work on benefits and those in work-and ensuring clear financial incentives to work.

Before I ask the noble Baroness to withdraw her amendment, I would like to make it clear that the Government see Amendment 61A as directly consequential on Amendment 59A and Amendments 61ZC and 61ZD as directly consequential on Amendment 61ZB. So, if we divide on Amendment 59A, a further Division would be required should the noble Baroness wish to press Amendments 61ZB, 61ZC or 61ZD to a vote. I ask the noble Baroness to withdraw her amendment.

Baroness Flather: My Lords, I will just say a few words about what has been said about my amendment. I was very surprised to hear the noble Lord, Lord McKenzie of Luton, say that the Pakistanis, Bangladeshis and Indians all have the same aspirations. I am sorry to say that I do not agree with that. I am afraid the aspirations of Indians are very high, but the aspirations of Bangladeshis and Pakistanis do not come up to the same level, as they do not have as much interest in education as in Indian communities. The Indian communities are mostly in work-more in work than any other community except for the Poles. A survey by Channel 4 said that the highest number of taxpayers

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of the immigrant communities were the Indians and the Poles. I would like there to be a little more consideration of the fact that Pakistani and Bangladeshi communities in Tower Hamlets, in Yorkshire and in Lancashire are not doing well. Whatever way could be found to help them to do well would be a good thing.

Lord McKenzie of Luton: My Lords, I do not wish to be unkind, but we do not have to subject ourselves to this nonsense, do we? This is absolutely outrageous.

Baroness Flather: My Lords, forgive me, but I thought I was a Peer here, and being a Peer means being equal.

Amendment 59A withdrawn.

Consideration on Report adjourned until not before 8.38 pm.

Aviation: UK Civil Aviation

Question for Short Debate

7.38 pm

Asked By Baroness Gibson of Market Rasen

Baroness Gibson of Market Rasen: My Lords, I am very pleased to introduce this short debate this evening on this important and indeed timely topic. I thank the Airport Operators Association for its assistance with my speech.

Lord De Mauley: My Lords, will noble Lords leave the Chamber quietly so the noble Baroness can make her speech?

Baroness Gibson of Market Rasen: My Lords, in my capacity as a council member of the Air League, in my work with Youth in Aviation, as president of an air training corps, and as a member of the Air Cadet Council, I take a close interest in all matters relating to aviation. The civil aviation industry in the UK employs around a million people-352,000 directly, a further 344,000 people indirectly, and many more in its vital role in inbound tourism. It also contributes £50 billion to GDP and more than £8 billion to the Exchequer, according to a report published last year by Oxford Economics.

We are world leaders in designing and building aero-engines and airframes, in the design, construction and operation of airports, and in the safe and efficient management of scarce air space. Aviation is vital to any country and to any economy. However, it is especially vital to the United Kingdom for two clear reasons. First, and most obviously, it is because we are an island. It is the most efficient and sometimes the only way in which goods and people can get to and from the United Kingdom. Secondly, it is because we are and have been for many centuries a trading nation; a full 55 per cent of all our exports beyond Europe are

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carried by aeroplane, and we are all aware of the importance that the ever growing BRIC economies will have in the recovery of our nation.

All the nations and regions of the UK rely on good air links to connect them to the emerging world markets. Inward investors also need good air links not just to fly in essential parts and equipment but to ensure that their senior managers, executives and technicians have ready access to their offices and plants in the UK. Access to an airport with good global connections is vital, and there is another reason why we need to maintain and expand our aviation connectivity with the world. Tourism is already an important industry for the UK, with over 2.5 million jobs and £115 billion of GDP dependent on it. Shortly after he came to power, the Prime Minister expressed as one of his ambitions to make the UK one of the top five tourist destinations in the world. Given our heritage, our global positioning and the quality and quantity of the visitor attractions that we have to offer, this should not be an overambitious target. Indeed, the Tourism Alliance believes strongly that there is a need for aviation capacity to be expanded. It believes that that would support the goals that the Government have set for tourism growth, which should include consideration of current capacity, mid-term growth and an infrastructure for delivering long-term capacity.

Two big issues are preventing the aviation industry from playing its full part in helping to expand the economy and create more jobs. The first of these is taxation. I understand that the UK already has the highest level of aviation taxes in the world. The government standard or top rate of air passenger duty is up to 8.5 times the EU average, and the Chancellor has said that he proposes to raise it yet again by twice the rate of inflation during his Budget in March. This is at a time when aviation has just entered the EU Emissions Trading Scheme, which will add another layer of cost and complexity.

I urge the Government to think again about this tax rise. In the short term, it may raise extra revenue for the Treasury, but in the medium and long terms it will scare away airlines and routes and damage employment prospects for thousands of people. Other EU countries are lowering or scrapping their domestic aviation taxes as the EU Emissions Trading Scheme is phased in, and the Government should seriously consider doing the same.

The other big issue that is having a highly detrimental effect on UK civil aviation and preventing it playing its full role in boosting the economy and creating jobs is capacity. The whole of the UK and its regions rely on good air links to attract inward investment to facilitate the efficient deployment of key personnel, to open up access to new markets and to facilitate the export of goods. Airports are privately funded; they are looking not for government money, just for government support and permission to grow as and when extra capacity is required.

We are all aware that it is in the south-east of England that the problem is most acute. As European airports expand and plan for four, five or even six runways, Heathrow-currently our only hub airport-is stuck on just two. All three main parties have set their

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faces against additional hub runway capacity, but it is up to the Government to come up with a viable solution. There are a number of schemes requiring consideration relating to Heathrow, Gatwick and Stansted, through to a brand new airport in the Thames Estuary or, indeed, elsewhere. There are pros and cons associated with every solution and tonight I do not have a firm proposal to make. However, it is the job of the Government to examine all these options and come up with a speedy solution. The alternative will be that Schiphol becomes the UK's hub airport, just as Europort became our capital's seaport by default. This would result in the loss of tens of thousands of jobs and many billions of pounds of revenue, and all with no benefits to the environment.

Currently, flights and emissions are being displaced rather than obviated. Indeed, as people take connecting flights to Europe to avoid air passenger duty, the impact on the environment can be considerably greater. The Government need to take the lead on this issue, which is why the announcement last week that they will consult on the options for the creation of a new hub airport is welcome. A rapid and firm decision is needed that will ensure that the UK has a world-class hub airport fit for the 21st century.

We must support the UK's aviation sector, in which we are world class and which employs so many people, contributing so much not just in GDP and tax but in what it enables other key sectors of the economy to do. Finally, I ask the Government again not to bring in further swingeing increases in air passenger duty and make the highest aviation taxes in the world even higher. Failure to address these issues-taxes that are too high and airport capacity that is too low-will send a sad signal to the world that we are not truly open for business.

7.46 pm

Baroness McIntosh of Hudnall: I congratulate my noble friend Lady Gibson on introducing this debate. She is a very fine advocate for what we must all agree is a very important industry. That is about as far as she and I are going to agree in the course of this debate. Before I come to my rather more disobliging points, I recognise that a lot of what she says about the challenges facing the aviation industry and the necessity for government to be clear about its policies is absolutely right.

I have no expertise in aviation whatever, but I have some experience of the ups and downs of aviation policy, having serially harassed my own Government on the subject of airport capacity for a number of years, chiefly on environmental grounds, which my noble friend touched on, about which there is a great deal to say-but not by me in the little time that we have available this evening. I want to make just one point, or to ask one question of the Minister.

Despite welcome assurances from the Government early in their life that there would be no further runways at Heathrow, Gatwick or Stansted-and I declare an interest as a long-term supporter of the Stop Stansted Expansion campaign-runway capacity is still a major live issue, as my noble friend said, and an important matter for the civil aviation industry.

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The credibility that is suddenly now being accorded to the proposal for a new airport in the Thames Estuary is interesting for a number of reasons. Although there are many attractions to a solution to our capacity problems that envisages most approaches and take-offs being over water, I am tempted to say to supporters of that scheme, "Good luck with that one, but if you think that the human population of Heathrow was a problem, try the birdlife of Kent".

My reason for being intrigued by the timing of this latest proposition to build a whole new airport comes from my experience that Governments of all persuasions have, I am afraid, a tendency to speak with forked tongue on the matter of airport expansion. I mean no offence to present incumbents when I say that. I am not a natural conspiracy theorist, but I can see the possibility, once the estuary plan has once again bitten the dust, as I fear it will-or sunk under the waves-of whoever is then in power shrugging a collective governmental shoulder and saying, "Oh well, then, we'll have to go back to Stansted, or Heathrow, or Gatwick, or maybe all three". The problem is that if I can see this, so can the airport operators-notably BAA, which has spent a great deal of time and money in its so far unsuccessful efforts to get new runways at Heathrow and Stansted. In doing so, it has effectively blighted whole communities by buying up land and properties, most of which it retains, despite, in the case of Stansted, being under instruction from the Competition Commission to sell the airport.

My question to the Minister is this: when the Government say no more runways at Heathrow and Stansted, what do they mean: no more for 30 years, for 10 years, until the end of this Parliament, or just until we change our minds? I am sure the Minister would accept that uncertainty about this question still hangs over communities in these areas, which are grateful for the reprieve they have had but nervous that it may only be temporary. I would be very grateful if the Minister could put them out of their misery.

7.51 pm

Baroness Kramer: My Lords, my noble friend Lord Bradshaw had hoped to speak on this issue and the House would have been very interested to hear him because he is clearly one of the leading experts in this field. I regret that I am only the understudy since he is unable to be here. I must also declare that I am a member of HACAN, the protest group that is made up primarily of residents but is now fairly international, which opposes further expansion at Heathrow and works closely with those of a similar view at both Stansted and Gatwick.

I am very pleased that the Government will be consulting, hopefully in the spring, on a sustainable framework for aviation, but it is absolutely crucial that green and environmental issues are at the forefront of that conversation. This House will be very aware that since 1990 the proportion of total UK carbon emissions from aviation has doubled and that we have serious climate change targets. Whether or not it is within the context of those targets or a broader context, climate change must surely be a real concern, and if we do not manage capacity in aviation as we look at those climate change issues, surely we make a mockery of being

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committed to the climate change problem at all. I stress that when we talk about airports, we are talking not just about carbon emissions from aviation itself but about the travel to and fro, which is overwhelmingly by car-and anyone who thinks that you can completely switch that in any circumstances to public transport has not looked at the behaviour of those who regularly use London's current airports and who insist, when they have many bags, on using road services.

In reference to some of the comments that have been made on tax, surely now of all times, when we are all under pressure, aviation ought to be carrying more of its own weight. The very favourable tax climate that aviation enjoys dates back to when it was a new industry. Those new industry tax breaks, given a generation ago, in essence remain with aviation today and are only gradually being countered. Like many others, I would much rather that we were not doing this on a per-passenger basis and I hope very much that the Government will achieve their goals in Europe of shifting to a per-plane basis and getting the tax associated with the emission levels for each plane. The very notion that we should be giving further tax breaks to an industry that is already paying less than other transport rivals strikes me as absolutely extraordinary.

Perhaps I can join some of those who see the estuary airport as something of an election ploy. I suspect that this project will bite the dust by the time we get to mid-May, but I will make a couple of comments on it because it addresses one of the issues raised: that of capacity. Even in their most aggressive forecasts, the Government are basically saying that 470 million passengers will be flying by 2050, but the estuary airport plans and similar raise that capacity to 700 million-way beyond even the most aggressive forecast. If you are looking at this from a climate change perspective and you want both to shift to rail and to eliminate unnecessary travel through the use of new technology, some would say that 380 million passengers per year is a much better target to work towards. We are looking at a lot of capacity around the UK, not at places such as Heathrow, but we are a country not simply a city, which I think people sometimes do not notice. As we look at putting in new capacity, here we are talking about rebalancing an economy that is looking to the north to rebuild its industry, jobs, prosperity and growth. Yet how can we look seriously at a mechanism that seeks to put all that additional capacity back down into the London area? I would argue that that is illogical.

I will not even talk about the price because no one, I think, is able to put a price on it yet, but we have issues of safety such as bird migration and the wreckage of the community that currently serves Heathrow and that is based around Ealing and Harlesden. All those people will be unemployed or will perhaps move to some new city out near the new airport. There are all those issues, as well as the environmental ones.

I realise that I am running up against my four minutes, so I simply say this: most of the problems that people have with aviation are to do with the fact that some airports, and Heathrow is one of them, are not passenger-friendly or very well run, and you cannot get through immigration. That is what drives everyone

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absolutely insane. The better operation of what we have and making innovations in aircraft-these are the things that would make a real difference.

7.56 pm

Lord Monks: My Lords, I start by declaring an interest as president of the British Airline Pilots Association, which organises for about four out of five of Britain's pilots. Of course, the debates about civil aviation are very much moving centre stage in many ways. We have heard different views from different corners of the House during this debate. I put myself on the side of those who say this industry is a success story for Britain, or it has been so far. It represents 2 per cent of GDP and something like half a million jobs directly and indirectly depend upon it. When it is not working properly, whether that is due to snow or Icelandic volcanic eruptions, you can see the effects on our national life. My question to the Minister is: what more can be done to recognise the importance of the industry?

We know about the capacity constraints, which my noble friend Lady Gibson referred to. I am afraid that those who are opposed to airport development have got to recognise that the demand for air travel is going to grow substantially over the next period. Capacity is going to grow either here or in Amsterdam or maybe Paris or Frankfurt. Those airports are gearing up for this growth and are no less environmentally conscious than we are-probably more so, particularly as far as Schiphol is concerned-so let us not think that they are polluters or carefree people who would besmirch the environment. It is very important, in this exercise that the Government have started, that we get a clear idea of the timetable for decisions soon. Whether they are in favour of expanding Heathrow, which I tend to favour, or building a new airport elsewhere, the key thing is that somebody has got to bite the bullet and take decisions.

The other point I would like to make briefly is concern about pilot fatigue. As the pressure for turnarounds and on planes and crews becomes greater as demand for air travel grows, airlines are putting pressure on some staff, particularly the pilots at present. As some of you will know, proposals from the European Aviation Safety Agency on pilots' hours would relax the present UK standards, which are pretty strict and I think exemplary, and align us with American standards. Usually I am on the pro-European side of these arguments, but on this particular one I do not want to see any watering down of the standards that have applied in Britain rather well. Pilot fatigue is still a problem. You hear some horrific stories when talking to pilots, and it is important that we take this issue seriously. I am interested in the Government's view on these EU proposals and how the EU can be persuaded to level up rather than down.

8 pm

Lord Soley: My Lords, in congratulating my noble friend Lady Gibson on securing this important debate I want to move on to make a prediction, if I may, which is that in due course the Government will reverse their position on airport expansion in the south-east.

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It is a matter of time. I do not expect the current Minister to do it today because he will stick rigidly to the government line, which I have discussed with him a number of times, but increasingly the Government are concerned about it. They ought to have been concerned about it before making that foolish promise before the election not to expand Heathrow, as the problem for Britain is now acute. Amsterdam, in effect, is our hub airport. Frankfurt is taking all the work from India and China. Madrid is taking it increasingly from South America and will increasingly move it from North America, which is why British Airways will eventually move more of its operations there than it has already. The situation is really serious.

I would simply say to the noble Baroness, Lady Kramer, who to my mind has always had her head in the sand on this, that when I spoke at a meeting in her then constituency there were a couple of hundred people, mainly from the Green Party, the Liberal Party and the Conservatives. As she will know, I was not given a welcome when I was speaking in favour of the expansion of Heathrow but the chairman, to his infinite credit, suddenly asked everyone to indicate who had flown from Heathrow that year- and everybody put up their hands. That is the hypocrisy which lies behind this. I say to the noble Baroness and to other people, yes, we have to address the environmental issue-I will touch on that in a moment-but remember that all the polling in the 12 local authorities around Heathrow shows a much more divided opinion about whether people are in favour of or against expansion. Why is it divided fairly evenly? Precisely because so many people work at Heathrow: 76,000 on the airport and another 100,000 dependent on its remaining a premier hub airport. However, it is no longer a premier hub airport. It is great that Heathrow can fly you to seven British regional cities, but Amsterdam will fly you to 21.

People say to me, "Well, we are going to have the high-speed link", but remember that the high-speed link is not coming until the end of the 2020s. Tell me what is environmentally good about producing millions of tons of concrete to create that line, each tonne requiring the production of one tonne of CO2, and what is environmental about knocking 20 minutes off the journey time to Birmingham. I am in favour of the high-speed rail line, but do not kid yourself that it is an answer to the environmental issues or to the problem of airport expansion.

Let us come to the environmental issue. Aviation was slow to respond to the pressure. One of the things I said when, many years ago, I took on the job-which I no longer have-of campaign director for Future Heathrow was that unless people upped their game on the environmental issue, they would not win on this case. They needed to up it and they have. As I have reminded people before, we would not know half of what we know about climate change if it were not for the aerospace industry. How do your Lordships think we measure it, and why is Britain so advanced in climate change science? Because we have the aerospace industry, the second most advanced in the world, producing the technology that tells us about it. What is the answer? It is already happening. Most of our new airliners coming on-stream are better not only

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environmentally-much better in terms of fuel efficiency-but in terms of noise. I still have a room in London, not far from Kingston. When the A380 flies over my old constituency, where I have lived for 30-odd years, why is it so much quieter? You can hardly hear the A380 when it goes over, whereas you could really hear the old ones. They are getting quieter and more fuel efficient.

This is my final point. As the Minister knows, I referred him to the new developments in fuel. Algae is a hopeful one. Virgin airlines, New Zealand airlines, American Airlines, British Airways and a host of others are flying now with a fuel mix. They do not use kerosene. The noble Baroness is out of touch on this. Most of the United States Air Force in Afghanistan uses algae as a fuel in its aircraft. Why? It is because it has strategic needs for it. There are scientific answers to this problem, and if we do not use them we will throw thousands of people out of work just to satisfy some people who will want to go on flying and still complain about the noise or the pollution.

8.04 pm

Lord Empey: My Lords, I congratulate the noble Baroness, Lady Gibson, on securing this debate this evening. It is very timely.

First, I agree with the noble Lord, Lord Monks, about pilot fatigue. I have a son who is in that sector and his schedule over the past month frightened me. I have been in contact with the department on this issue for some months and I hope that when the EASA is considering this, it will not only follow much more closely the CAA guidelines but take into account the representations of the people who actually do this job, not the people who simply treat it as theory.

With regard to what the noble Baroness, Lady Kramer, said, I would say to her that it will be the Thames estuary or Heathrow. We are not going to get both because airlines are not going to split their bases, their engineering, their back-up and so on. I suspect that they will be either at one or the other.

Following on from my introducing the Airports (Amendment) Bill to this House in December 2011, I want to draw the attention of your Lordships to the connectivity issues that exist in the United Kingdom, and to ensure efficient communications between our major regions and cities. We debated this issue in Grand Committee on 15 November, and I believe that there is a lot of support in this House to draw attention to the fact that, if you do not have adequate connectivity, it is not going to be possible significantly to build up your business efficiency and attract investment to the regions.

It is no use saying, "We can fly you to an airport in the basic region of the south-east or in London", which under European directions you can give a public service obligation to do. It has to be between the major cities in the region and the hub airport, wherever that may be. The issue for me at the moment is that my Bill would give the Government a power which they currently do not have: to ensure that the CAA can pass judgment. I hope to go to Brussels next month to see the chairman of the transport committee of the European Parliament and to lobby there, because there is a significant European dimension to this.

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Like the noble Lord, Lord Soley, I had a hub airport in what was my constituency and I have had issues with it over its opening hours and various other things, but we all use it. The fact is that the issue is not only the airport itself; it is how that airport is connected to the major centres of population. Unless you can get from the regions to the major hub airport, which for the foreseeable future is Heathrow, then we are doing a disservice to our country. We put large amounts of money, as does the European Union, into regional development. One of the key issues there is aviation connectivity. In Northern Ireland, for instance, we do not have a realistic alternative. We do not have rail connections. Yes, we have a ferry, but, realistically, that is not going to do the job.

As we move forward, I hope that the Minister will give us some guidance as to whether the Government will seriously consider the regional connectivity issue in the forthcoming consultation and the legislation that will be before both Houses later this year.

8.09 pm

Lord Lea of Crondall: My Lords, I, too, congratulate my noble friend Lady Gibson of Market Rasen, on initiating this debate at this opportune moment. The decision to look at expansion, including the "Boris Island" project, and to exclude a third runway at Heathrow, is the most disgraceful piece of misgovernance that I can remember in transport economics in my lifetime, and I did postgraduate work in transport economics after doing economics at Cambridge and have worked for the World Bank in this field.

With no cost-benefit or origin and destination analysis, this is banana republic demotics. Suddenly you have a so-called review of hub airports without being able to expand Heathrow. This is a disgraceful way to conduct business, and I ask the Minister how he can possibly justify it. Will he take note of some of the things that have been said in this debate that make it clear-if I can mix my metaphors-that this is no way to run a railway?

I have no axe to grind for the British Airports Authority, but Mr Colin Matthews, its chief executive, hit the nail on the head the other day when he said that London cannot have two hubs. How, other than by closing down Heathrow, can you say that Boris's island is going to be the hub? It is absurd, ridiculous-I do not know how many more adjectives one needs to use to get the absurdity of this understood.

This is not a question of transport and economics versus the environment. I am going to be personal: I have always been involved both in transport economics and in the environment-I started a sustainable environment project-and for many years I have tried to see how the two can be reconciled. I think it was my noble friend Lord Soley who made the point that many people make these "green" remarks about terrible things going on with planes in the sky, but it is exactly like the car-when you ask people, "How many miles did you drive last year when middle-class people were opposing a bypass?", the answer is normally 10,000 miles. That is how things are; there is a lot of middle-class versus working-class nimbyism regarding Heathrow and Richmond going on here.

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My final remark is about how a proper inquiry should be carried out. The costs that have been mentioned in the press would mean that if the Government are going to claim-as a Conservative Government believing in the market economy-that we should have regard to commercial principles, how is it that they are not having regard to commercial principles about how to make a profit rather than trying to subsidise the outcome, if you are going to have a Thames estuary site with a cost as high as £70 billion, without any clue why these so-called sovereign wealth fund investments are more than just wishful thinking? Will the Government reconsider the basic fallacy of having two hubs or closing down Heathrow, and will they, even at this stage, put Heathrow and the expansion of its third runway-Schiphol and so on, as my noble friend Lord Monks and others have said-back into the mix?

8.13 pm

Baroness Dean of Thornton-le-Fylde: My Lords, I, too, thank my noble friend Lady Gibson for initiating this important debate at this time, particularly in view of the state of our economy. I also declare that I am a board member of NATS air traffic control, although obviously I am not speaking for it today.

We talk about aviation as though it is something that belongs to the industry, but actually our aviation policy is for our economy. It is the conduit through which we have been able to carry our exports. We are an island-nothing will change that-so we need aviation. We are a trading nation as well; over one-third of our exports by value go by aviation. That helps our economy.

Heathrow has been mentioned a number of times today. It is our pre-eminent airport, and until recently it was regarded as number one in the world. Other nations have caught up with us, though, and a number have overtaken us. Schiphol now proudly presents itself as London's fifth airport, with the runways that it has. Heathrow's Terminal 5 was first talked about 25 years before it opened. What happens in France, Germany and Amsterdam and across Europe? Within five years they conceive of an idea and they build it.

There is no doubt that our economy needs our aviation, especially environmentally friendly aviation. I would go so far as to suggest that the airlines have gone a long way to try to meet that; indeed, British airlines led the discussions in Europe on emissions trading, which has been a substantial help.

It is important that we recognise where we are. The Government's announcement about consulting on the proposed new airport in the Thames Estuary and on aviation is an important measure, and I welcome it for considering our long-term policy. However, with Heathrow working at in excess of 90 per cent of its capacity, I suggest that we cannot sit back and wait for the outcome of that commission's work. When we get the consultation document in March, will it contain what the Government propose regarding the protection of our economy, our jobs and our exports for the short term? We need capacity expansion in the UK in the short and medium term, and we cannot wait another 20-odd years to get a long-term policy in place. I ask the Minister that direct question.

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The third runway at Heathrow has been mentioned and it will not go away. We saw in excess of 30 Conservative MPs last week in another place sign a paper complaining about their Government's policy. I join them in complaining about my own party's policy; we, too, pulled away from a long-standing agreement that the third runway at Heathrow would be seriously considered. However, that would not provide all the capacity that we need. We have heard about Stansted, but what about Gatwick and Luton? I do not think that there would be opposition in Luton to expansion there.

We need a government policy that will answer these issues, not for the airline or airport industries but for our economy and our jobs. Two weeks ago the Chancellor of the Exchequer was in China. He wants us to do business with that country. In 2010, 3 million Chinese visited Europe. Do you know how many came to the UK? Four per cent. Therein we have the problem. Europe has direct flights from 22 cities to emerging markets; the UK has none. If we do not grasp this problem and do so quickly, we will see our economy go further into the mire. Aviation could certainly be a way of helping to pull us out of it.

8.18 pm

Lord Spicer: My Lords, I had not intended to join in this debate, but I would like to make one point. As has been said already, Heathrow has, for the past 40 years-certainly since I was Minister for aviation-been the number one international interchange airport in the world. Gatwick, as it happens, has been number three for some time. Heathrow is now full up. There is no doubt about it. It is full. The only question before us is what we do about it.

Various ideas have been put forward. One is to run trains to Birmingham. That will take a bit of time, if it comes about, and is not going to do an awful lot for international travel. Heathrow is an international hub interchange airport. The idea that the noble Lord, Lord Lea of Crondall, called "Boris's island" is a wonderful one, but has been around for the past 40 or 50 years. Maplin was the first attempt at it. Even if it is a good idea, it is going to mean a decision about shutting down Heathrow-the noble Lord was absolutely right about that-and it is not going to happen for the time being. It is not going to happen for another 30 or 40 years.

The solution to Heathrow, which is an immediate problem, has to be found pretty well immediately. The only solution available-and I have put this to Ministers in Questions several times in the past year or so-is that of a third runway. There is no alternative. I was the Minister who laid the first sod at Stansted. We attached to Stansted a 20 million air traffic movement condition, so Stansted is not available. Anyway, airlines do not want to fly to Stansted. They want to fly to Heathrow and change there.

The issue is, do we have an asset which is going to grow with the market, or do we allow ourselves to have the competition from Schiphol and all the other places that people have talked about? This is an immediate decision. It needs to be taken straight away and there really is no way round it, other than making a decision about the third runway.

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8.20 pm

Lord Rosser: My Lords, I also extend my thanks to my noble friend Lady Gibson of Market Rasen for securing this all too brief debate on the future of our civil aviation industry, a subject which has been thrust back into the limelight by the Government's announcement of a consultation looking at options for maintaining the UK's aviation hub status, including the possibility of a major new hub airport in the Thames estuary.

It is an interesting announcement, since, assuming its birth was not related to the forthcoming London mayoral election campaign, it represents a considerable potential U-turn from previous statements of no new runways at any of the three largest airports in London and the south-east, and a lack of enthusiasm for an airport in the Thames estuary. The Government's failure to set out a strategy for aviation which addresses capacity issues, among other things, is now putting jobs and growth at risk. The Government's call for airports to be "better not bigger" is a slogan, not a policy. The Government have no established policy around the future of the UK's civil aviation sector beyond a statement in the coalition agreement that the Government will refuse permission for new runways to be built at Heathrow, Gatwick and Stansted. Perhaps the Minister could tell us when he responds whether, in the light of the consultation just announced, that is still the Government's policy or not.

What we need is a strategy that works for the south-east as well as for our network of regional airports which are so crucial to our economy. The Government should have accepted our offer to work together on a cross-party basis to agree a long-term strategy for aviation. Setting an agreed long-term strategic direction for aviation is vital, particularly bearing in mind that our hub airport, Heathrow, is already working to virtually maximum capacity, that we are falling further behind our EU competitors, passenger numbers are projected to grow significantly, the industry needs to be able to plan with certainty for the future-not least to deliver investment to provide additional capacity-and the UK has 11 per cent of Europe's airspace and 25 per cent of its traffic.

Any new capacity must go hand in hand with tougher targets on reducing CO2 emissions from aviation to tackle the industry's contribution to climate change. The industry can be proud of the huge advances that have been made in this direction already. However, with the significant growth in air passenger numbers forecast, we will not achieve, by 2050, the broader 80 per cent cut in emissions on 1990 levels to which we committed in the Climate Change Act 2008 without aviation playing a greater role. Future aviation growth must, we believe, go hand in hand with a greater cut in aviation emissions than we agreed, when in government, of reducing to below 2005 levels by 2050, a target to which the present Government have not affirmed their commitment. The industry's own sustainable aviation road map makes clear that, by 2050, it is possible to get absolute levels of emissions down to levels seen at the turn of the century, even as passenger numbers are projected to grow very significantly, so there seems to be a measure of agreement that it is possible to do more.

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The aviation industry contributes more than £11 billion to the UK's gross domestic product. It supports up to 200,000 jobs directly and up to 600,000 indirectly across the UK. It is deeply worrying to the industry and the business world, among others, that while we know what the Government are against, there is still no credible strategy for aviation even on the horizon, which sets out the approach that this Government favour.

8.24 pm

Earl Attlee: My Lords, I start by congratulating the noble Baroness, Lady Gibson, on securing this evening's debate, in which we have heard articulated wildly opposing views. As all noble Lords know, aviation makes a huge contribution to our economy and our society as a trading nation, as pointed out by the noble Baroness. It generates economic output of up to £9 billion a year. The noble Lord, Lord Rosser, suggested that it was £11 billion; I do not know which of us is right. It supports thousands of jobs, drives our tourism sector and gives British businesses a vital gateway to the global marketplace. If this country is to grow and prosper in the future, aviation must be able to grow and prosper. I think all noble Lords are agreed on that.

Aviation provides regular connections not only to today's major world economies but to the emerging economies. However, we recognise that there is a price to pay for every flight-a price that is measured in noise, local air pollution and carbon. To continue enjoying the benefits of a growing aviation sector, we need to make sure that growth is sustainable. That is exactly why the Government are developing a new sustainable aviation strategy. However, in answer to the noble Lord, Lord Rosser, we cannot do this overnight. From the very start, the Government made clear that unsustainable aviation growth was unacceptable. We have maxed out on what the people surrounding Heathrow Airport can tolerate.

Instead, we have been working hard to make our airports more effective. We have a range of initiatives under way to deliver that ambition. For example, last week the Civil Aviation Bill was introduced to Parliament. This will give the CAA more flexible powers to respond to passenger issues and better target issues such as airport resilience. Our South East Airports Task Force, which was set up to improve operations at major airports, has explored measures for improving punctuality, tackling delay and strengthening resilience at Heathrow, which are being trialled. It has also endorsed plans to improve the current aviation security regime, on which we have consulted and are developing. We are also looking at how we can tackle delays and reduce the need for aircraft stacking through the CAA's Future Airspace Strategy and the Single European Sky.

As well as these initiatives, we still need to address the bigger question over future demand and future connectivity. The National Infrastructure Plan we published last year was clear that we must maintain the status of the UK as an international hub for aviation. We recognise that it is vital to maintain the UK's connectivity to improve our links to the emerging economies and promote inward investment and inbound

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tourism. That is why we are planning to launch a call for evidence on options for maintaining the UK's hub status alongside our draft framework. Through this we aim to reach an evidence-based conclusion on how to meet the UK's long-term connectivity needs. The noble Baroness called for rapid and firm decisions. However, the Government will consider these matters very carefully and make the right decisions, not necessarily rapid ones.

In the shorter term, we welcome the recent launch of new routes from Gatwick to Ho Chi Minh City and Hanoi, and the announcement that Air China will launch a Gatwick-Beijing route. These are the sort of global connections that British businesses need, and not just from London. We know how crucial our regional airports are in helping to balance growth across the country and to relieve crowding, where possible, at our south-east airports. We also recognise the importance of connecting the regions to London by air and rail to maximise the benefits.

To make this growth sustainable, we need to find new ways to decarbonise aviation. We will work with the industry to boost investment in and research into low-carbon technologies and fuels. For example, we welcome the research that countries such as the US have done in the use of algae-based sustainable fuels. Developing innovative fuel sources will be the key to enabling aviation to grow in a sustainable and successful way. We want to see Britain at the forefront of delivering greener air travel. The inclusion of aviation in the European emissions trading system from 1 January was an important step. Now we need to push for international agreement in ICAO on aviation emissions to get the level playing field that will ensure that aviation is able to grow globally in a balanced and fair way.

The noble Baroness, Lady Gibson, urged the Government to reconsider the issue of aviation taxation. The Government accept that the current economic climate is very challenging both for consumers and the aviation sector. However, if the Government are to meet their overall fiscal projections, we must balance the risk of growing competition from abroad with the Government's need to raise revenues from the sector. The rise in APD rates announced in the Autumn Statement does no more than keep pace with inflation and will give certainty to the industry for the two-year period to 2013. It is also worth remembering that it is important to look at the country's taxation as a whole. Unlike other countries in the EU, the UK charges no VAT on flights. My noble friend Lady Kramer talked about the favourable taxation status of the aviation industry.

We continue to believe that tackling climate change is one of the most important challenges we face and that all sectors, including aviation, should contribute globally to the 2 degrees Celsius goal. The Government continue to support emissions trading as one of the key instruments for reducing CO2 emissions from aviation.

Many noble Lords talked about the proposal for a Thames estuary airport. We are interested in innovative proposals for maintaining the UK's aviation hub status and we will consider all proposals submitted that meet

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the criteria set out in our call for evidence. A new airport in the Thames estuary is one idea that has been put forward in response to our recent scoping exercise, but we need a much more detailed level of evidence, in particular on costs, funding and wider impacts, before we are in a position to develop which approach the Government should support. That is why we need the call for evidence.

Lord Lea of Crondall: I am most grateful to the Minister for giving way, but I take it that he is not going to leave this point before answering the question: how can he possibly justify a review of the hub in Britain while excluding Heathrow? Is that not rather like, as someone said, reviewing the expansion of supermarkets without including Tesco?

Lord Shutt of Greetland: My Lords, the noble Lord has made his question clear.

Lord Lea of Crondall: I have and I am sitting down.

Earl Attlee: My Lords, first, I have explained that we have already maxed out on what the local people around Heathrow can tolerate.

Lord Lea of Crondall: That is not true.

Earl Attlee: Secondly, this Government have an open mind, which is the right way to go into a consultation. The noble Baroness, Lady McIntosh of Hudnall, effectively asked whether we are going to do a U-turn on Stansted. The commitment in the coalition agreement still stands.

Lord Rosser: In the light of what he said about the Government having an open mind, will the noble Earl confirm that the previous government statements about no new runways at any of the three largest airports in London and the south-east no longer stand?

Earl Attlee: Definitely not, my Lords. The noble Lords knows perfectly well that that is in the coalition agreement and will stay.

The noble Lord, Lord Monks, asked me what more can be done to support industry and its people. The Government recognise the value that the aviation industry brings through supporting a network of highly skilled workers that adds value to the economy. The sector is at the forefront of technological progress, delivering R&D projects and large-scale investments that drive industry and the economy forwards. It is important that the trade union sector fully engages in the consultation process. The noble Lord also touched on the important issue of pilot fatigue. On the matter of flight-time limitations, we will support the proposed requirements only if the Civil Aviation Authority determines that they provide an appropriate level of protection against crew fatigue.

The noble Lord, Lord Soley, touched on the 76,000 employees at Heathrow, plus those in related service industries. We have to take their position into consideration as well. The noble Lord also talked about biofuels. The Government are clear that sustainable biofuels have a role to play in reducing CO2 emissions from transport, particularly in sectors such as aviation where

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there are limited alternatives to fossil fuels. In recent years, the aviation industry has conducted research and carried out flight tests to help provide information on different fuels. This work has demonstrated that biofuels for aviation are technically feasible. However, there are currently a range of barriers to introducing biofuels, including sustainability, scalability of the feed stocks and commercial viability. The Government will continue to work with European partners, the wider international community and industry to explore how to bring about a significant increase in the use of biofuels in aviation. Advanced biofuels, such as those derived from algae, when commercialised, could offer particular advantages, such as reduced land use impact.

On UK connectivity with China, the Government recognise the importance of developing and maintaining good links between the UK and emerging economies. That is why this March we are calling for evidence on options for maintaining the UK's hub status. Heathrow currently has fewer scheduled flights to mainland China than Paris or Frankfurt, but more than Amsterdam. However, if flights from Heathrow to Hong Kong are included, there are more flights from Heathrow to China than from any other EU hub. Hong Kong serves around 45 destinations on the Chinese mainland.

The noble Lord, Lord Empey, raised the issue of connectivity with the regions, particularly Northern Ireland. The Government recognise the vital contribution that air connections make to regional economies and acknowledge Northern Ireland's concerns about the air service between Northern Ireland and Heathrow should BMI be sold to British Airways. However, airlines operate in a competitive commercial environment, and it is for individual airlines to determine the routes that they operate. The options for supporting regional air services to London are limited. Member states can impose public service obligations to protect air services to remote airports, which could permit slots to be ring-fenced. However, they can be imposed only between specific cities, not specific airports, a difficulty identified by the noble Lord, Lord Empey. We have written to the EU Commission on that point, but there is no other mechanism for the Government to intervene in the allocation of slots at UK airports. The noble Lord introduced the Airports (Amendment) Bill, which would provide for the protection of air services between Heathrow and the UK regions. The Government are considering in detail the measures included in the Bill.

The noble Lord, Lord Lea, got quite excited about a number of points. Although we are committed to not authorising additional runways at Heathrow, Gatwick and Stansted, we are looking at our aviation policy framework with an open mind. The aviation industry is vital to our country. Our next step is to publish the draft aviation strategy and call in March for evidence on hub connectivity. With that strategy, we want to move away from the polarised opinions that have dominated discussion in the past and develop a broader consensus for change.

Baroness Dean of Thornton-le-Fylde: I will detain the Minister for only a short time. Can he answer my question? Will the consultation document contain the Government's proposals for dealing with the short and medium-term issues on capacity?

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Earl Attlee: I will have to write to the noble Baroness on that detail.

With the strategy, we want to move away from the polarised opinions that have dominated discussion in the past and develop a broader consensus for change, one that recognises aviation's integral role in generating growth and jobs, in providing the global connections on which businesses rely, but also acknowledges the real need to address the impact of flights on local communities and on climate change, a consensus that supports both a flourishing and responsible UK air transport industry.

Welfare Reform Bill

Report (5th Day) (Continued)

8.38 pm

Amendment 60

Moved by Lord Best

60: Clause 94, page 64, line 5, at end insert-

"( ) Regulations under this section shall provide that the benefit cap shall not be applied for the first 26 weeks from the date on which the claimant's total entitlement to welfare benefits exceeds the relevant amount."

Lord Best: I shall speak to Amendments 60 and 61, which would constrain two of the more extreme aspects of the benefit cap proposed by the Bill. Your Lordships will not be surprised to hear me say that I note that most of those pushed over the cap are in that position because of their housing costs. They are paying high rents in London or the south of England. Why the Government's effort to change people's behaviour and psychology is concentrated almost exclusively on this part of the UK remains a mystery.

Let me take the amendments in turn. First, Amendment 60 would provide a period of grace of 26 weeks for those suddenly affected by the total benefit cap. The noble Lord, Lord German, said in Committee:

"People need the breathing space to be able to find a new job and get themselves back into work. The rationale behind this Bill is making work pay ... giving people time to find another job ... should be a first and not a last resort.-[Official Report, 21/11/11; GC 344.]

Such a breathing space is currently the pattern before housing benefit/local housing allowance is curtailed in other circumstances. If, by contrast, the new £500 cap kicks in instantly, the household will run into serious financial problems as soon as any savings they have are exhausted. Rather than having savings, many families may have loans and debts. Because of the new cap, many families in privately rented accommodation-or even some housing association accommodation-across the south of England who encounter unemployment or family breakdown that means loss of a breadwinner will run into difficulty immediately. They will find the safety net of benefits-the social security they have been paying for in national insurance contributions-is no longer there to see them through the transition. Without a period of grace, the cap will mean that the rent can no longer be paid and they are likely to face the prospect of having to leave their current home precipitously.

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If people become homeless in this way, the savings the Treasury seeks will swiftly be absorbed by the extra costs for local authorities in finding them somewhere else, which, as we discussed earlier, will not be easy. If they are moved away to a low-cost area, say from Brighton to Bradford, job opportunities are likely to be few and far between. Long-term unemployment becomes much more likely than if they had had the chance to get a job in the locality they know. The move will disrupt children's education, cut helpful links with grandparents, and all the other disadvantages we have heard of in earlier debates. The harm done can continue for another generation, all because of impatience in imposing the new cap too rapidly. Finding a new home, even in a cheaper area, will not be easy and it takes time to secure a rented property even if the council is trying to help. Surely the best approach is for the DWP to hold back on imposing the new cap long enough to enable the family that has run into difficulties to get back on their feet, rather than forcing them into a crisis with the double trauma of losing their job and losing their home in rapid succession.

I heard the Secretary of State say this morning-we hear it first on the "Today" programme-that hard-working families trying to get a new job would not be penalised. The Minister has dropped many hints that something will be done. I am hopeful, therefore, that the Minister will be able to accept Amendment 60. Colleagues from different parts of your Lordships' House have told me that in today's job market 26 weeks is not a long enough period of grace. They have urged me to press for 52 weeks before the total benefit cap takes effect. I have, however, stuck with 26 weeks in the hope that it will give the Minister less trouble. But, a shorter stay of execution would not seem either humane or sensible.

Amendment 61 also seeks to take the edge off one of the most extreme aspects of the total benefit cap. This amendment would exclude from the cap families placed by their local authority in temporary accommodation-normally a private rented flat when the council has struck a deal with the landlord. Rents for temporary accommodation, even though many local authorities send the homeless family some distance to the cheapest neighbourhoods they can find, are high and the housing benefit has to encompass an extra charge to cover the administration of the arrangements. A total bill for a family of three children could be £440 a week in London, even though a central London borough has despatched the family to the lowest-priced accommodation it can locate. If £440 goes on rent, a total benefit cap of £500 obviously leaves practically nothing for all the family's other costs, as the noble Lord, Lord Greaves, noted earlier. There is no prospect of them surviving on the remaining income within the cap, but the family concerned cannot do anything to rectify the situation. They have not chosen the accommodation but have been sent there by the council because nowhere else can be found for them. Yet, if they stay there, and pay the rent, they face destitution. We could bring back the bed-and-breakfast hotels that are becoming extinct, not least because they are so much more expensive than keeping people in rented homes, or we could revert to building hostels for these households, separating women and

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children from the men in the true "Cathy Come Home" style once again, but I know the Government are not thinking in such draconian terms, and anyway the problem would hit us long before we could recreate such hostels.

8.45 pm

By definition, temporary accommodation is a short-term solution to a crisis and has always been treated separately from payment for other accommodation. The restrictions of the cap should surely not be imposed in these circumstances, hence Amendment 61. In Committee, the Minister gave us some encouragement on both these issues. He told us that he would be looking at transitional arrangements and at ways of dealing with hard cases. He told us that he was exploring options for the treatment of housing benefit-help with housing costs within universal credit-for people sent to live in temporary accommodation. I was reassured by those remarks, and I am very hopeful that today he will be able to make an announcement, perhaps two announcements, about the idea of a period of grace of 26 weeks and about the exclusion from the cap of those placed in temporary accommodation. The noble Lord, Lord Newton, of whom I am a great admirer, thinks such matters should be dealt with through secondary legislation. If the Minister can be clear that such secondary legislation will be brought forward covering the points, as in these amendments, we would all be very much encouraged. I beg to move.

Baroness Drake: My Lords, I support Amendment 60, to which my name is attached. It would support hard-working people and their families with a clear work ethic to manage the challenges of today's flexible labour market and the consequences of losing their job through no fault of their own by allowing a transition period of 26 weeks before the benefit cap is applied. In integrating in and out-of-work benefits, universal credit has to be applied to two different constituencies: those who are out of work for long or sustained periods and those who are regularly in work. A single system has to provide an experience fit for both. I accept that a modern welfare system has to incentivise people to work and to address benefit dependency, but it also has to support hard-working people with a clear work ethic and their families in managing difficult economic circumstances. A benefit cap immediately applied can have a very negative effect on hard-working people and their children when the wage earner loses their job or work involuntarily, even more so where the loss of work happens quickly.

The Government have made clear that a driving principle of the Bill is that work should always pay more than out-of-work benefits and that a benefit cap is, first, a clear message that there is a maximum level of financial support that claimants can expect and, secondly, necessary to provide incentives to work and to reduce benefit dependency. When my noble friend Lord McKenzie questioned the Minister in Committee about whether, if it were established that the cost of the cap outweighed the benefit savings, he would still support the cap, the Minister replied:

"Clearly the message that we are trying to get over is a behavioural one much more than a cost-based one".-[Official Report, 23/11/11; col. GC 421.]

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What is the change in behaviour that the immediate application of the cap is designed to achieve in hard-working people who have lost their job and are desperately seeking another one? Where someone has a clear work ethic and a clear pattern of working and is desperately seeking another job, a grace period of 26 weeks will give them a fighting chance of re-entering the labour force before the weight of penalties comes into play and the cap bites. When faced with job loss, normal working people do not clap their hands and say, "Oh goody goody, I'm off to a life on benefits". They are more likely to be stressed, anxious and worried about their home, paying bills, their children and their future while they rush around trying to find another job, probably fighting feelings of depression while they do so.

It is higher housing costs that are most likely to push families over the cap. As the noble Lord, Lord Best, said, without a period of grace, many families in private rented accommodation, particularly those with children and living in the south, will see the benefits for their housing costs cut, potentially forcing them to look for alternative housing elsewhere.

The Government's impact assessment of the cap said that those affected will need to choose between taking up work, reducing non-rent expenditure or cheaper accommodation, but where someone who loses their job is clearly choosing to take work, they need time to do that. Finding a new job rarely takes days. It is most likely to take quite some weeks and even longer in difficult economic circumstances. The welfare system should provide this safety net, otherwise at the very time when a person needs to put all their efforts into finding another job, their efforts may be redirected to relocating to cheaper accommodation and relocating their children to different schools. In moving, they may lose, as has been said, their contacts, their local knowledge and their networks-all the routes that would most frequently take them back into work. The ultimate irony is that lone parents could face having to relinquish their childcare arrangements-their nursery place or their childminder-just as they need to keep them in place so that they are available to make an early transition back to work.

Currently, approximately 50 per cent of people on JSA get back to work within six months, 75 per cent in nine months and 90 per cent within a year. They clearly want to work. I accept that these figures might have been overtaken because of the rise of unemployment that we are now experiencing whereby 10 people are chasing every job in London, but the underlying argument holds good. They are chasing them because they want to get back into work.

The immediate application of the benefit cap would penalise those who have just lost their jobs-decisions about their rental costs or family size were made while they were employed-before they had even been given time to find another job. Rather than penalise people who are trying to make a rapid return to employment, universal credit should be supporting them. A grace period of 26 weeks does not contradict the simple message, as expressed by the noble Lord, Lord Freud, who said that,

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Rather, a transition period would ensure that hard-working people faced with an involuntary loss of work are assisted in making an early move back into the labour force and getting their family's lives back on track before the cap bites. That seems to be a fair, reasonable and decent thing to do.

The Government want to see an increase in private sector employment relative to the public sector to increase flexibility in the labour market through a reduction in employment rights and regulation, but they appear reluctant to transition the benefit cap to help hard-working people manage today's labour markets and economic realities-realities that will become harsher as global competition intensifies. As currently drafted, the benefit cap would undermine the expectation that if you work hard, pay into the system and play by the rules, there will be a safety net available to you if you hit hard times so that you have a chance to recover.

This Bill also sets the welfare rules for people who have no record of benefit dependency and are paying their national insurance contributions. When I made that point in Committee, the Minister commented:

"I shall bear that point very much in mind as we go through the next stages".-[Official Report, 23/11/11; col. GC 427.]

We are at the "next stages" and I encourage him to put flesh on that consideration. This amendment does not pose a principled challenge to the cap; it poses a 26-week transition for people who are rushing around urgently trying to find another job before the cap is imposed. I accept that the Minister has made a major contribution to welfare reform but I ask him to accept the case for a safety net. As I have said, that seems to me to be a fair, reasonable and decent thing to do.

Lord Skelmersdale: My Lords, would the noble Baroness, Lady Drake, accept that she is talking about those who have been earning more than cap and fallen on hard times rather than those with whom much of the legislation is involved: that is, those who in employment have been earning under the cap?

Baroness Drake: The Bill sets the welfare rules for people who do not have a record of benefit dependency. In the national insurance contribution system, one is trying to design something that gives people a cushion. Sometimes it will be because they will be earning higher than the cap; on other occasions it is because of the nature of their accommodation. Either way, instead of having a cushion so that they can concentrate on getting back into work as quickly as possible, which it is clear most of them want to do, there is a danger that the immediate way in which the cap will operate means that they will have to take defensive measures to bring down their level of expenditure rather than putting all their efforts into finding a job.

Lord Stoneham of Droxford: My Lords, I have a lot of sympathy for the amendment of the noble Lord, Lord Best. It is largely about the transitional arrangements, on which we are still working towards having more information. It would be helpful if the Government could spell out exactly how they are going to deal with the problem of the flow after April 2013-because everyone will have a year's transition. If they become

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unemployed after April 2013, they will in certain circumstances be hit by the cap. I think that there is some sympathy in the House for people who have not had a history of benefit dependency. We are not trying to achieve behavioural change with them. How are we going to help them back into work when they are suddenly faced with high housing costs and a cap being imposed on them?

In our debate on children, insufficient attention was given to the fact that one of the biggest problems is the differential in housing costs between certain areas. Fortunately, those who have the highest housing costs will normally be in areas where they are likely to get a job quickly, rather than in areas where housing costs are lower. Even so, it takes much longer to get a job these days, particularly in this market, than it has in the past. People need some help with that transition.

We need more information from the Government on the transitional arrangements, which we on our Benches are concerned remain imprecise. This particular issue highlights that.

Baroness Hollins: My Lords, I shall speak to Amendment 60A, which is perhaps slightly oddly grouped with the amendments proposed by my noble friend Lord Best. The amendment would prevent carer's benefit claimants being subject to the proposed household benefit cap by exempting households including a carer's allowance claimant and carers in receipt of the carer premium in universal credit.

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