It is hard not to feel a sense of disappointment when listening to the noble Earl—first, because a Statement on a subject of such importance was briefed to the media before Parliament; because the Government have abandoned any efforts to build a cross-party consensus before rushing to announce their proposals; and because they have chosen to rewrite the Dilnot report with figures of their own, breaking the careful logic so apparent in Dilnot’s report.

There are four problems with what has been announced today, which I will address in turn. First, it fails the fairness test. We will have a durable solution to the problem only if we can answer this question: will it help every person and every couple to protect what they have worked for, whatever their wealth and savings? This package falls way short. According to Demos, the £35,000 cap, as recommended by Dilnot, would benefit about 3.2 million pensioners. A per person cap of £75,000 will benefit only 1.4 million. For the average couple, the cap is £150,000. That might be enough to protect detached houses, but it will not protect the average semi-detached home in large parts of England.

The Secretary of State selectively quoted Andrew Dilnot and, specifically, what he said about the £75,000 cap. I remind the House that Dilnot said that the cap was,

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“higher than we would have wanted—£11,000 higher than the top end of our range —and I regret that”.

Will the noble Earl confirm that people with modest to average homes and savings are not protected under this plan? The Secretary of State claimed that insurance companies will step in with new products so that more people can protect their assets but, in oral evidence to the Health Committee, the Association of British Insurers said that it did not believe that the capped-cost model would result in a market for pre-funded care assurance. I would be grateful if the noble Earl could say what confidence he can give the House that a market will emerge. What discussions have been held recently with the insurance market?

The second issue that I am concerned about is that this addresses only a small part of the overall social care funding problem. With this decision, the Government have prioritised the funding of a cap on care costs with new money, over and above addressing the crisis in council social care budgets. Will the noble Earl confirm that this was against the advice of Andrew Dilnot to the cross-party talks? What it means in practice is that vulnerable people will continue to face rising charges as councils put up fees to cope with the growing shortfall in their budgets. This is the effect of the Government’s care policy in practice: they are asking people to make up the councils’ shortfall, making it more likely that they will have to pay right up to the new £75,000 cap. To many people, that will not feel like progress.

More than £1.3 billion has been cut from local authority budgets for older people’s social care since the coalition came to power. Care charges are rising well above inflation and councils are warning that by 2024, they will be overwhelmed by the cost of care. Does the noble Earl accept that forecast and, if he does, how will the plans announced today help to address it? It is true that the Government have raised the capital threshold to £123,000, and we welcome that, but can the noble Earl give the House any confidence that the extra support people will receive through a more generous means test will not be more than offset by increasing care charges, caused by collapsing council budgets? Many people may not know that the cap does not reflect what people actually pay for care but a local authority average, and does not include accommodation costs. As the noble Earl will know, accommodation costs can be considerable. Do the Government have any proposals at all to cap those costs, given the risk that they might rise as care home owners take advantage of additional state support?

The third element relates to inheritance tax. In 2007, a flagship pledge was made to increase the inheritance tax threshold to £1 million by the party to which the noble Earl has the honour to belong. Just eight weeks ago, the Chancellor said that he would increase the threshold in two years’ time, so what has happened in the past two months to make the Chancellor change his mind? The irony will not be lost that they are now increasing death taxes to pay for their plan. The noble Earl has said that the rest will be made up from national insurance. Does he think it is fair to ask the working-age population to pay for something else, rather than older people? Also, what safeguards will be available for people who have paid

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for their own care costs up to the cap and then have responsibility taken over by the local authority? What happens when the fees paid by that person are more than the local authority is willing to pay? Would that mean the person having to move from the home they are in to another and, if so, is the noble Earl aware of the risks involved in moving frail, elderly people from the environment that they have become used to?

What is the impact of this announcement on the considerations of the joint Select Committee that is now considering the draft Bill? I understand that it is shortly to report. Will it be asked to reopen its discussions and, if the noble Earl intends to publish further draft clauses, can he say what parliamentary process will be arranged for their scrutiny? I should also like to ask the noble Earl whether, through the usual channels, we might have an early opportunity to debate this announcement. The noble Lord the Leader of the House was very kind last week, when the Francis inquiry Statement was made. He said that he would see whether a debate on the Francis report could be arranged and, to his great credit, my understanding is that a Question for Short Debate tabled by the noble Lord, Lord Patel, has been prioritised for debate. I think it will be on 11 March. Could the good offices of the noble Earl be put to the same effect, so that we could indeed have a very early debate?

In conclusion, up to a point we of course welcome what has been announced today. It is a start but it will not lead to more integration of care. Indeed, it may well entrench the separation between two systems: of free at the point of use NHS and of charged-for social care. It is interesting that Demos described it this morning as being “unambitious” and “miserly”, and that it,

“will do little to solve one of the most vital social problems facing our generation”.

Would it not have made more sense, rather than developing these piecemeal plans in isolation, to have set them out as part of a single vision for a sustainable health and social care system in the 21st century?

5.36 pm

Earl Howe: My Lords, first, I thank the noble Lord, Lord Hunt of Kings Heath, for his positive welcome for at least some elements of the Statement, which I know reflect the view of his own party on some of the principles enunciated by Dilnot and which have not been a matter of disagreement between us. I am very pleased that those principles are reflected in the structure that the Government have announced.

The noble Lord began by saying that we needed a holistic approach to the funding and delivery of social care. I could not agree with him more but it is important to remember that the remit given to the Dilnot commission focused on one particular aspect of social care funding. It never pretended to give it an instruction to solve every problem that faces us over the next 10 to 20 years in funding social care, or indeed to tell us how we raise the quality of social care or give life to the prevention agenda, which I know is as close to the noble Lord’s heart as it is to mine. He rightly said that the NHS has an important part to play in that.

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The financing of local authorities is a major issue, which we still have to grapple with. I do not duck that and I would of course welcome cross-party consensus on that issue, if it can be reached. However, reading some of the public’s comments today on the Government’s announcement, they have been on the whole very measured. While some regret that we were not able to conform precisely to the parameters that Dilnot recommended in terms of the cap, nevertheless we have got reasonably close to them given the current economic circumstances that we face.

The noble Lord asked me whether the announcement we have made passed a key test, which is: will these arrangements help every person in the country? My answer is: yes indeed they will, because everybody in the country will now get the reassurance that, whatever their circumstances, they will get the long-term care and support that they need without facing financial ruin. People will benefit wherever they receive care, be that in a care home or in their own home, and they will be more in control—they will be more easily able to plan and prepare for the care and support that they might need at some time in future.

On that score, the noble Lord asked me about products that may be developed by the financial services sector. We have engaged very fully with the sector, and we are under no misapprehension that it has been as keen as anyone to see this announcement. The certainty that it gives firms in that sector will enable them to develop products that they can market to those who would like to provide for their old age and their care costs in an affordable way, and we are now giving them the freedom and scope to do that.

The noble Lord asked how the cap will actually work. It will cover eligible social care costs that the local authority assesses that it would meet at a price that the local authority would pay. Individuals would be responsible for meeting their eligibility care costs up to the cap. Where they cannot afford to do so, the local authority will provide financial support, as I have said, to those with less than £100,000 of assets in 2010-11 prices who are in residential care. This will rise to around £123,000 at implementation. The cap would cover the cost of social care. Someone in residential care will always be responsible for a contribution to their general living costs—that is, their heat, food and light—as they would when living at home. That amount would be set nationally at around £10,000 in 2010-11 prices, as recommended by Dilnot, but anyone who is unable to afford that will be helped by the local authority. We view that flat contribution to hotel costs, if I can describe them that way, as a fair way of implementing a rule around the country that is easy for everyone to understand and does not involve massive bureaucracy. Altogether, the design of the cap sets out what we believe is a fair partnership between the state and the individual that protects individuals from the prospect of catastrophic costs.

The noble Lord indicated that the Association of British Insurers was disquieted by this announcement, but in fact today the ABI said that the reforms were a potential step forward. Stephen Gay, their director of life savings and protection, said:

“This is potentially another positive step forward in tackling the challenges of an ageing society. The cap and the higher means

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test give people greater certainty and will enable them to plan ahead for later life. What is important now is to work through the implementation of what is a complex system, and we are looking forward to working with government and the care sector”.

I read that as a reasonably positive endorsement of this package.

The noble Lord asked me about draft clauses for the Care and Support Bill. It is not our intention to publish draft clauses designed to implement Dilnot. Instead, as and when the Bill is introduced to Parliament—and I cannot give any commitment as to when that will be—we will have inserted the relevant clauses for consideration by both Houses, and we believe that that is the right way to set about things. With regard to a debate in your Lordships’ House, I will willingly pass the noble Lord’s suggestion to our colleagues in the usual channels.

5.43 pm

Baroness Oppenheim-Barnes: My Lords, my noble friend may recall that when we previously discussed this problem on the Floor of your Lordships’ House, I voiced the very strong concerns that I have held for a long time. That is because when I was in another place, I faced a number of constituents in my surgery saying, “We’ve worked hard all our lives, we’ve done everything that we can do and we’ve paid for everything, and now they’re going to sell my house, whereas someone who has done nothing and saved nothing is going to get their treatment for free”. In his opening remarks, my noble friend has answered all those points, so they are extremely welcome.

On the other hand, when I raised these points with previous Governments, their reply was, “Well, the British taxpayer should not be asked to subsidise the inheritance of their future children”. I felt that that was a very harsh view to be taken, and my noble friend has put that right. This is an important step in the right direction. It may not be possible for the Minister to answer this, but if a person who has entered a care home, and made whatever provision they had to with regard to resources, unfortunately dies within a very short period, will any sort of rebate be given?

Baroness Northover: My Lords, I interrupt briefly to say that if noble Lords make brief contributions more of their colleagues will be able to get in this critical debate.

Earl Howe: My Lords, I am grateful to my noble friend for her remarks. She is of course quite right; many of us have heard for years the concerns of members of the public, friends and family about what might be the catastrophic burden of care costs in old age. If there is one thing that everyone should welcome, it is that aspect of this announcement. With regard to a rebate, no, that is not in our sights at the moment. If someone were to die in the circumstances posited by my noble friend, the arrangement would have to remain as set out to that person at the outset. We would not expect to move the goalposts after that person had died.

Lord Warner: My Lords, I should declare my interest as a member of the Dilnot commission. It would be churlish not to welcome the Government’s acceptance

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in large part of the Dilnot architecture for reforming the funding of social care for the medium and longer term.

I have a couple of questions for the Minister. As I understood what he was saying, the new capping system is likely to start in 2017-18. I understood him to be saying that a new national threshold for eligibility criteria would start at the same time. That would therefore mean that the present eligibility criteria, interpreted by local authorities, would stay in existence for another four years, so we would have four more years of the tightening of those eligibility criteria.

I remind the Minister of a paragraph in our report that drew attention to the fact that there was strong evidence of a major shortfall in the existing funding of social care that could not be put right by our recommendations, and that if those problems were not resolved on a cross-party basis, they would simply undermine the functioning of our recommendations in the medium to longer term.

Earl Howe: My Lords, I hope that I can put the noble Lord’s mind at rest. In doing so, I thank him once again for the work he did on the Dilnot commission. It is our intention that the eligibility criteria will be introduced from April 2015—so, in advance of the Dilnot arrangements. As he well knows, that national minimum eligibility will be set to make access to care more consistent around the country. In addition, carers will have a legal right to an assessment to care for the first time. I take his point about trying to achieve cross-party consensus on social care funding.

As for funding in the existing system, in the last spending review we made, as he knows, an additional £7.2 billion over four years available for care and support. Since then, we have provided local authorities with an additional half a billion pounds. We believe the challenge creates an opportunity for local authorities to innovate and to explore new ways of working better to meet the needs of their local populations and to optimise the use of the resources that they have. Many local authorities are already innovating, and we are committed to supporting them to deliver further service improvements.

Lord Sutherland of Houndwood: My Lords, I am pleased to welcome the Government’s Statement today. This has been a long time in the waiting, not simply from this coalition Government, who have done well to get this far, but from previous Governments. There has been prevarication for more than 10 years, and it is about time we got started. We have now started. As has been said, this is a first step on the way. There are many steps to be taken thereafter, and a great deal of discussion and, if possible, cross-party consensus would be useful.

Will the Minister confirm that an adequate length of time will be made available for that, not simply a Question for Short Debate, in the near future? Secondly, will he confirm that it would be open to any Government, perhaps his own Government, to look again at the financial thresholds that they are setting in this Statement as and when, as we all hope, the economy improves?

Earl Howe: I am grateful to the noble Lord, Lord Sutherland, and pay tribute to his work over many

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years in this field and in the royal commission some years ago. I will convey his wishes to my noble friend and other members of the usual channels. I agree that it would be unsatisfactory to have an unduly short debate on a complex and important subject.

As regards the thresholds, I hope I can reassure him. It is our intention, as I mentioned, to introduce clauses into the care and support Bill when it reaches Parliament that would embody the essence of the Dilnot proposals but to leave it to regulations to set the relevant numbers for the cap and the means test, for example, so that it would be a relatively easy matter for a future Government, if they so wished in brighter economic circumstances, to change those figures if they felt that that was the right thing to do.

Lord Lipsey: My Lords, better half a loaf than no loaf at all and, to that extent, I welcome the Government’s Statement. Does the Minister agree with all noble Lords who have spoken who have emphasised the importance of all-party agreement, if it can be obtained on this subject, so that old people know the background they have to plan against when looking to their futures? With that in mind, will he meet one of the points made by my noble friend Lord Hunt by trying to make this package slightly more favourable to the less well off and not, as it is, somewhat, at the moment tilted towards the better off, so that it is easier to achieve that all-party agreement and to go forward united to something that all old people will so greatly welcome?

Earl Howe: My Lords, I thank the noble Lord. I am with him in spirit. I say that because not only do I believe in cross-party consensus on a matter as important as this, but I hope he will accept from me that the way we have tried to structure this package, taking the cap and the means test in combination, has precisely been to target those of more modest means. Currently only those with assets of less than £23,250 and a low income receive help from the state with their care costs. Our changes will mean that those with property value and savings of £100,000 or less in 2010 prices will start to receive financial support. That means that the most support will go to those in greatest need. I am advised that had we, for example, opted for a higher means-test threshold, it would not in practice have brought into the net that many more people. We felt that the fairest way of cutting the cake was to try to concentrate the benefit on those of lowest means while also removing the fear of catastrophic care costs from everybody in the system.

Baroness Jolly: My Lords, we on these Benches are delighted that the Government decided to implement the principles of the Dilnot report. The care and support Bill places a duty on local authorities to provide information and advice. In addition, there will be a need to set up some sort of taxi-metering system in order to achieve that outcome. Has the Minister any idea about how that might be achieved?

Earl Howe: My noble friend is absolutely right. One of the tasks that faces us over the next two or three years is to ensure that every member of the public has

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easy access to information which enables them to make plans and take decisions about their own or their family’s future. We will therefore be working very closely with local authorities on that front. It is important that there are websites. My department is already devoting a section of its website to appropriate information on this front. More generally, we need to ensure that the system is not only fair to people, but clear to people.

Baroness Pitkeathley: Following the question from the noble Baroness, Lady Jolly, I believe it is the Chinese who say that a journey of a thousand miles starts with a single step. We have certainly made more than a single step today, on which I congratulate the Government. Two major problems remain, as other noble Lords have said. First, there is not enough money in the system, and secondly, people do not know about it. They do not know that they have to pay for social care, never mind up to £75,000. Is the Minister confident that what he said about information and advice—and this is yet another responsibility for local authorities, which are already strapped for cash—will enable people to plan in the way to which he is so clearly committed?

Earl Howe: I quizzed my officials very closely on that very point only this morning and received very firm reassurances on that front. I completely agree with the noble Baroness about how important this is. She is right; there is a widespread lack of knowledge among the general public about what they are entitled to and what they may not be entitled to. Collectively, we need to put that right. I take her point about additional burdens on local authorities, but ultimately I hope that they will see it as in their own interests to inform the public before they are inundated with questions that will take them a lot of time and effort to answer. I can assure her that work on these lines will be very vigorous, and I will be happy to keep her up to date on the work we are doing over the months ahead.

Lord Cormack: Does my noble friend agree that it is a pity that so many details were given to the media this morning before we had them in Parliament? Will he clarify one point that he made in his answer to the noble Lord, Lord Warner? He said that the eligibility criteria would change as from 2015. The new system will not be operative until 2017. What precisely does that mean?

Earl Howe: First, I completely agree with my noble friend that the leak to the media over the weekend was highly regrettable. I do not know how it occurred. It certainly was not of my making or that of my ministerial colleagues in the Department of Health. We wished to make this announcement to Parliament first of all, and I am sorry that that did not happen.

My noble friend’s second question relates to the national minimum eligibility threshold. We believe that that can be introduced in advance of the Dilnot package because what it is designed to do, as I explained earlier, is to give people greater certainty about their access to care wherever they live around the country, particularly for those who move from one place to another. That is a separate issue from those covered by

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Dilnot, although it was one of those which the commission considered. It is separate from the issue of the cap or the means test, which we believe can logically come in at a later date.

Baroness McIntosh of Hudnall: My Lords, as one of those in the Chamber today who is not an expert on social care matters, I ask the noble Earl whether he can reassure the great many people who are hearing about this for the first time as to what it means in practice for them when they have to start paying for social care—or, more particularly, when they become in need of social care. When we have a Budget, newspapers often produce ready reckoners, showing the impact of tax rises, reductions or whatever is being introduced on people in particular circumstances. Will the Minister encourage his department, and encourage his department to encourage local authorities, to produce the kind of information that ordinary people can understand, which will show them in easily understood, ready-reckoner terms what they will be in for if they need long-term care?

Earl Howe: My Lords, I absolutely agree with the noble Baroness on how important this is. It is quite complex to explain the whole system in words. The system will depend on the operation of a sliding scale which, by its nature, is difficult to describe other than pictorially. Nevertheless, the basics of the rules of these funding arrangements are straightforward and can be described. They are, as the Statement described, two essential elements, being the maximum level that people have to pay for their care—which we are setting at £61,000 in 2010 prices; £75,000 in 2017—and the means test, which is £100,000.

Of course, there are nuances around that, such as around couples and how the system will work for them. That is a question that the noble Lord, Lord Hunt, asked me which I did not answer. At present, a couple could potentially face two sets of unlimited care costs. By protecting them from these costs, the reforms offer them significant benefits which need to be spelt out. In most circumstances, even if a couple both had care costs at £75,000, the level of the cap, they would contribute less than this because housing assets do not count towards the means test if one of the partners remains resident in the home. All those sorts of things need to be made clear. We will do our very best to work with others to ensure that these messages have not only the greatest clarity but the greatest coverage.

Lord Pearson of Rannoch: My Lords, I do not want to make a European point so much as to ask the Government whether they have not got their spending priorities tragically wrong. In our previous debate, I asked the noble Lord the Leader of the House how he could justify sending £11 billion in net cash annually to Brussels to be filtered away. Here we are, with this debate on the Dilnot commission, and, from the remarks of the noble Lord, Lord Hunt, we have made a step forward. However, clearly this is not adequate to look after the needs of our old and infirm for many years.

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How can the Government throw away £11 billion with one hand and then say that we cannot afford more than £1 billion by the end of the next Parliament to look after our old and infirm? Are we a civilised society?

Earl Howe: My Lords, I hope that we are a civilised society. While I understand the noble Lord’s point of view on the European Union, the fact is that if we are fully paid-up members of the European Union we have legal obligations to contribute to the Community budget. That is a given.

However, like any Government, we need to look at the totality of government commitments in the round. We have decided that, against competing priorities, this is a very high priority. That is why we have brought forward these proposals.

Horsemeat and Food Fraud


6.05 pm

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley): My Lords, with your Lordships’ permission, I will repeat a Statement made today by my right honourable friend the Secretary of State for Environment, Food and Rural Affairs in another place. The Statement is as follows:

“Mr Speaker, I would like to update the House on recent developments on horsemeat and food fraud.

The events we have seen unfold over the past few days in the UK and Europe are completely unacceptable. Consumers need to be confident that food is what it says on the label. It is outrageous that consumers have been buying products labelled beef but which turn out to contain horsemeat. The Government are taking urgent action with the independent Food Standards Agency, industry and European partners.

Let me turn first to the facts. On 15 January, the FSA was notified by the Food Safety Authority of Ireland of the results of its survey of processed beef products on the Irish market. The Irish study identified trace amounts of horse and pig DNA in the majority of the sample, but identified one product, a Tesco burger, where there was evidence of flagrant adulteration with horsemeat. Investigations in Ireland are ongoing.

On 16 January, in order to investigate implications for the UK market, the FSA announced a four-point plan. This included telling implicated food businesses to test their processed beef products. It also included launching a full scientific study of processed beef products on the UK market.

On 31 January, the Prison Service of England and Wales notified the Food Standards Agency that traces of pork DNA had been found in a selection of meat pies labelled as halal. While trace contamination does not necessarily indicate fraudulent activity, any contamination is clearly of concern to faith communities, and the affected products were quarantined and contracts suspended.

On 4 February, the FSA announced that it had tested a consignment of frozen meat that was being stored at Freeza Meats in Northern Ireland for horse

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DNA. This consignment had been detained by the local authority in October 2012 because of labelling irregularities. The consignment is under the secure control of the local authority. None of this consignment has entered the food chain and so no recall is necessary. As part of the investigation, Newry and Mourne local authority has tested current products from Freeza Meats, and neither horse nor pig DNA has been found in any of these products. The FSA is undertaking a detailed investigation, which includes following the supply chain of Freeza Meats and any other producers that are implicated.

On the evening of 6 February, Findus Foods informed the Food Standards Agency that it had confirmation of horsemeat in frozen beef lasagne products. The lasagne was produced in Luxembourg by a French company, Comigel, with the meat supplied by another French company, Spanghero. The test results were supplied to the FSA on the morning of 7 February. The Food Standards Agency is urgently investigating this in liaison with the French authorities and the police. The FSA has assured me that it currently has no evidence to suggest that the products recalled by Findus represent a food safety risk.

The 7 February announcement that very significant amounts of horsemeat had been found in Findus lasagnes moved this issue from one of trace contamination to one of either gross negligence or criminality.

On 8 February, Aldi withdrew two beef products after its tests found that they contained horsemeat. The products were supplied by the same company, Comigel, that supplied Findus. Asda and Tesco also withdrew products from the same suppliers on a precautionary basis.

Food regulation is an area of European competence. Under the European legal framework, the main responsibility for the safety and authenticity of food lies with those who produce, sell or provide it to the consumer. In the UK, the FSA was set up by the previous Government as an independent agency. I have sought to respect its independence. It leads the operational response. I am here today to update the House on progress with its investigations and on the action that I have been taking with the industry and with European counterparts. I have made clear my expectation that food businesses need to do whatever is necessary to provide assurance to consumers that their products are what they say they are.

The Minister of State and the FSA met food retailers and suppliers on 4 February, and made clear that we expected the food industry to publish the results of its own testing of meat products to provide a clearer public picture of standards in the food chain. In response to the Findus announcement on 7 February, the FSA in addition asked that all producers and retailers test all their processed beef products for the presence of horsemeat.

On Saturday 9 February, I called in the major food retailers, manufacturers and distributors to make clear my expectation that they needed to verify and trace the source of all their processed beef products without delay. At this meeting with the British Retail Consortium, the Food and Drink Federation, the British Meat Processors Association, the Federation

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of Wholesale Distributors, the Institute of Grocery Distribution and individual retailers, I made clear that I expect to see the following from them: meaningful results from this testing by the end of this week; more testing of products for horse along the supply chain and industry co-operating fully with the FSA on this; publication of industry test results every three months through the FSA; and them letting the FSA know as soon as they become aware of a potential problem in their products. I made it very clear that there needs to be openness and transparency in the system for the benefit of consumers. Retailers and processors need to deliver on these commitments to reassure their customers.

Let me reiterate: the immediate testing of products will be done across the supply chain. This includes suppliers to schools, hospitals and prisons as well as to retailers. The FSA issued advice to public service providers on Sunday 10 February in advance of the working week. I would also like to reiterate that the FSA has assured me that it currently has no evidence to suggest that recalled products represent a food safety risk. The Chief Medical Officer’s advice is that even if bute is found to be present at low levels, there is a very low risk that it would cause any harm to health. People who have bought any Findus beef lasagne products are advised not to eat them and to return them to the shop they bought them from as a precaution.

The ultimate source of these incidents is still being investigated, but it is already clear that we are dealing with Europe-wide supply networks. I am taking action to ensure that there is effective liaison with the European Commission and other member states. I have been in touch with the Irish Minister, Simon Coveney, on several occasions since 28 January. I have spoken to him again twice today and have also spoken to European Commissioner Borg, the French Minister, Stéphane Le Foll, and the Romanian Minister, Daniel Constantin. I emphasised the need for rapid and effective action. I am grateful for the good co-operation that there has already been. I have agreed with Minister Coveney that there will be an urgent meeting of Ministers from the member states affected, with Commissioner Borg. In addition, we agreed that this issue will be on the agenda of the Agriculture Council on 25 February.

At the moment, this appears to be an issue of fraud and mislabelling, but if anything suggests the need for changes to surveillance and enforcement in the UK, we will not hesitate to make those changes. Once we have established the full facts of the current incidents and identified where enforcement action can be taken, we will want to look at the lessons to be learnt from this episode. I will make a further Statement about this in due course.

In conclusion, I want to reiterate that I completely understand why people are so concerned about this issue. It is unacceptable that people have been deceived in this way. There appears to have been criminal activity in an attempt to defraud the consumer. The prime responsibility for dealing with this lies with retailers and food producers, who need to demonstrate that they have taken all necessary actions to ensure the integrity of the food chain in this country. I am in daily contact with the FSA. This week, I will be having

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further contact with European counterparts and will meet the food industry again, together with the FSA, tomorrow”.

That concludes the Statement.

6.14 pm

Lord Knight of Weymouth: My Lords, this is a very serious issue of public confidence in the food that we buy. I share the Minister’s outrage that horsemeat is being passed off as beef. Food prices are rising sharply and those having to buy cheaper food are therefore more likely to buy processed and cheaper sources of meat. We must particularly ensure that these people are confident that food standards and labelling are accurate.

Equally, food processing and manufacturing is one of the most important employers in this country. British food is an area of great potential growth for us and we must do all that we can to maintain and sustain confidence in our industry. In that vein, I am grateful to the Foods Standards Agency for its briefing and its work in providing reassurance that there is no risk to health.

However, I am concerned at the Secretary of State’s media performances over the weekend, which will have raised doubts in some people’s minds over health. For example, he said:

“We may find out, as the week progresses as the tests begin to come in, that there is a substance which is injurious to human health … We have no evidence of that at all at the moment. At the moment this is a labelling issue”.

He is sowing the seeds of doubt. For the sake of clarity, will the Minister be clear now as to whether he believes there to be any risk to human health from food sold as processed beef in this country?

Health worries focus on the traceability of horsemeat, and in particular any bute or other medicines consumed by horses entering the food chain. In 2012, the Food Standards Agency found eight instances where UK horsemeat was contaminated with bute, which is banned from entering the human food chain. In five instances the horsemeat was exported to France, in two it was exported to the Netherlands, and in one it was consumed in the UK.

There are 75 horse passport-issuing organisations in the UK, making it difficult to check their status. Each has a different design of passports, making it easier to produce forgeries. Last May, a truck was seized in this country and false horse passports were seized. I gather that abattoirs do not have to keep records of passports but should return them to owners or to Defra. Is it not time to rationalise this system so that we can trace horsemeat properly?

I also understand that the FSA carries out rigorous inspections in abattoirs. Does it inspect further upstream in manufacturing and processing plants? If not, should that now be introduced as random inspections to increase public assurance up the supply chain? Will the Minister guarantee that cuts to the Food Standards Agency have not, and will not—the Secretary of State again was very uncertain about this in a Channel 4 news report that I saw over the weekend—compromise meat hygiene inspections and its ability to ensure that meat is legal and safe?

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The Minister will know that his Government removed responsibility for the labelling of product content from the FSA in 2010. Three government bodies are now responsible for ensuring that our food is correctly labelled, legal and safe: namely, Defra, the Department of Health, and the Food Standards Agency. Is that not incoherent and open to the sort of confusion that we all know can occur between different government departments? Would it not be sensible for the Government to centralise that function once more?

I understand that two types of tests are taking place—those carried out by retailers and those carried out by local authorities under the supervision of the Food Standards Agency. The local authority tests are of retail, wholesale and catering premises. Are the councils concerned being reimbursed for the cost of this work? The tests being carried out by retailers, which are due to the Secretary of State by Friday, will cover only the major retailers. Should he not ask large wholesalers and large caterers to carry out similar tests under a similar stringent timeline?

The timeline for the local authority tests is four weeks to collect and screen samples to ascertain the presence of horse DNA and another four weeks for confirmatory tests to give the proportion of other meats. As I understand it, the plan is for all those results to be published at once in mid-April. This seems an excessive timeline. I understand that we have to get the results right, but will the Minister consider releasing the results on a weekly basis as they come in, as part of his commitment to transparency? Can we also get a cast iron guarantee that schools and hospitals will be tested across the country? The Secretary of State is clear that the retailers are responsible for the food that they sell. Will the Minister tell us who he considers to be responsible for food served in schools, hospitals and prisons? Is it the head teacher or the chair of governors, the hospital manager or the prison governor? If it is the retailer who is responsible, we need to know who to hold account for food, should there be a problem in those circumstances.

The Secretary of State has also speculated in the media that there is a criminal conspiracy. Has the Minister involved the police, having acknowledged evidence of widespread criminal behaviour? Is he passing information on to the police if he has those suspicions? Can he reassure us that no UK companies are currently being investigated by Defra, the FSA or other UK authorities in respect of passing off horsemeat as beef?

Can the Minister tell us, given the Government’s growing influence as committed Europeans, how he is working with the Commission? The Irish appear to have blamed the Poles for the first case back in January, the French appear to blame the Romanians for the Findus case, and the Poles and Romanians are denying responsibility robustly. Is the Commission going to get a grip and answer questions on where the horsemeat comes from so that we can begin the important work of traceability?

However, it is not just the Commission that needs to get a grip. We need the Government to give clear advice to people and public sector caterers on what they should do with their frozen beef products. Ministers

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need to stop sending mixed messages about whether they would eat beef lasagne or not. A full police investigation into the alleged criminal adulteration of meat products is needed. The European police are being involved. We have heard about an international criminal conspiracy. What is happening with the UK police? The Irish Government called in the police and special fraud investigators at the beginning of this month. Perhaps our Government must do the same.

A quicker testing regime is needed to reassure the public about what is happening. Supermarkets and food industry tests must be reported by Friday, but the Government need to speed up the official tests that they are conducting across 28 local authorities. We need some positive release around the horse slaughter tests that are going on at the moment. Those in the UK are testing for bute, which is banned from the human food chain. Given the concerns about the horse passport system and horse traceability, we believe that meat should be held in storage until proven clean.

With these sorts of measures and robust action from Ministers on the front foot, I think that we can get some reassurance back into our food supply. At the moment, I do not see that from Ministers. I see uncertainty in their media performances and their performances generally on this issue. Our British food industry needs them to step up to the plate and raise their game.

6.22 pm

Lord De Mauley: My Lords, the Secretary of State held an urgent meeting with food businesses on Saturday to get to the bottom of this unacceptable situation. The Government and the FSA insisted that more and tougher testing will take place. The food industry has accepted this, and we expect to see initial results from industry testing by the end of the week. Retailers and industry bodies will now work with the FSA on making checks further down the food chain. They have also agreed to let the FSA know as soon as they become aware of a potential problem in their products. At the moment, there is no evidence to suggest that there is a food safety risk.

The noble Lord asked about the split of responsibilities. By law, retailers are ultimately responsible for ensuring their products’ safety and accurate labelling. However, we join up across government to back this up with nearly 100,000 risk-based checks each year. The front-line testing regime checks that what is in the packet is what it says on the packet and was the same before 2010 as it has been since. There continues to be a rigorous risk-based system of checks by local authorities’ trading standards teams, overseen by the FSA. That is how the testing works.

The noble Lord asked about public sector purchasing, and he is right to do so. Public institutions are within the scope of the UK-specific authenticity sampling programme and, therefore, suppliers of meat products to schools, hospitals and prisons are included in the local authority surveillance programme. In addition, suppliers including caterers to public institutions are part of the extensive testing regime that the Food Standards Agency has established with the food industry, including food service businesses, to reinforce the integrity

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and confidence of processed beef supplies in Britain. This approach means that we will have an established industry testing approach, with the FSA undertaking additional verification and validation of authenticity, which ensures that industry takes responsibility for providing assurance to consumers, with the FSA providing appropriate oversight.

The noble Lord asked about local authorities and mentioned that results of testing were to come mid-April. My right honourable friend spoke to the chairman of the FSA today, and test results will be announced as soon as they are available, which is what the noble Lord asked for. He asked, too, about police involvement. The FSA is in touch with the police and Europol. We are investigating the food chain at the moment. The police have been informed and will take action if they find that people in this country have been deliberately defrauding consumers. If criminal activity has taken place abroad, the relevant authorities will be notified.

The noble Lord asked about collaboration with our European colleagues. The Statement mentions a certain amount about that. The Secretary of State spoke to EU Commissioner Borg today, and to Ministers in countries including Ireland, France and Romania. There will be meetings at official and ministerial level over the next few days and we will do all we can to assist in tracing sources of the meat in question.

The noble Lord asked about testing of horses killed in abattoirs for bute. Hitherto, under the regime that we inherited from the previous Government, we conducted risk-based testing, backed up by the passporting system. From now on, all horses going to abattoirs are being tested for bute and no horse carcasses can leave an abattoir until they are declared clear.

6.26 pm

Lord Clark of Windermere: My Lords, there are clearly various aspects to this problem—the criminality, misleading of the general public and the issue of food safety. The Minister has given us an assurance today that there is no risk to food safety. May I press him on this issue and ask him a question? I understand that the science of veterinary medicine as it might pass on to food consumption for humans is based on minimum residue levels, but there are a number of veterinary medicines that do not subject themselves to that classification, such as phenylbutazone, which he mentioned, and many others. These medicines pose a risk to human health. We have a very elaborate and rigorous system of testing for those medicines, but this problem has emanated, as I understand it, not primarily from the United Kingdom but from other parts of Europe. Do other European countries test horsemeat with the same rigour for veterinary medicines—because that is where the danger is—as we do?

Lord De Mauley: My Lords, I am confident that they do.

Baroness Trumpington: My Lords, may I ask the Minister whether he remembers or is aware of a debate on 1 May 1991? It concerned a Question from Lord Campbell of Croy, and I as the relevant Minister replied, using a few words written by the then Member for Penrith and The Border. What was his name?

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Lord Forsyth of Drumlean: It was David Maclean.

Baroness Trumpington: Absolutely. He said:

“A Scotsman’s beliefIs that mince must be beef.Imitations bring instant dismissal.But some people abroadWill contentedly plodThrough a plate full of horsemeat and gristle”.

Lord De Mauley: I thank my noble friend and point out to her that the occasion of which she speaks occurred no less than 14 years before I arrived in your Lordships’ House.

Lord Elystan-Morgan: My Lords, following the point made by the noble Lord, Lord Clark, does the Minister agree that phenylbutazone is an active carcinogenic agent? If within the next two weeks the FSA is satisfied that there is evidence of such contaminated horsemeat having come into the United Kingdom or, indeed, any other meat that is contaminated by veterinary processes in the way described by the noble Lord, will the Secretary of State ban forthwith all horsemeat products coming to our shores?

Lord De Mauley: My Lords, I share the seriousness with which the noble Lord takes the issue of bute. I have spoken about it at some length. He will know that imposing a ban is no small matter. Indeed, the onus is on the exporting member state to ensure that meat produced on its territory meets animal and public health requirements laid down in EU legislation. We have legislation in place to provide for a ban on imports where there are grounds for suspecting a serious threat to public or animal health. I hope that satisfies the noble Lord.

Baroness Crawley: My Lords, I am certain the Minister would agree that consumers have a right to expect that the food they eat is what it says on the label and that it is legal and safe. As president of Trading Standards, I know that trading standards officers across local authorities are doing all in their power to locate and remove any affected food in the current crisis. However, how does the Minister think it is possible for Trading Standards, working with the FSA and their partners in environmental health, to maintain proper targeted surveillance of the UK-wide food sector when food sampling budgets have been cut by approximately 50% over the past five years—most of it in the past two years—and when Trading Standards has lost 700 officers over the same period in local authority cutbacks? Something has to give.

Lord De Mauley: My Lords, it is right that industry should be responsible for the safety and authenticity of the food it produces and sells, which is why the Government work with it to maintain confidence in the food chain. All systems of standards and quality control depend to a certain extent on self-regulation and due diligence. While the Government have a role in checking and monitoring industry, particularly where there are public health issues, non-regulatory approaches and agreements can be just as effective and can be

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achieved faster than legislation. This can be seen in our approach over recent days, where government and industry have come together with a joint aim of maintaining consumer confidence in the food chain.

The Lord Bishop of Ripon and Leeds: My Lords, I return to the question of the contamination of halal meat, which got a brief reference in the Statement and has real implications for faith communities and faith relationships. This may not have been a matter of deliberate fraud but it must have been dangerously careless. Can the Minister give us more reassurance on the action taken by the food industry as regards finding non-halal traces in allegedly halal food, including in food supplied by government contracts such as prison suppliers?

Lord De Mauley: My Lords, I agree wholeheartedly with the right reverend Prelate that it is essential that people can have confidence that what they are eating is what it is made out to be. There is responsibility throughout the food chain. Suppliers are responsible for what they supply onwards to other organisations and businesses. We are reminding public bodies of their responsibility for their own food contracts. We expect them to have rigorous procurement procedures in place with reputable suppliers. We expect caterers and suppliers to public institutions to have appropriate controls, including testing and sampling regimes, in place to ensure the authenticity of their products. If caterers have any doubts about the provenance of their product, they should seek assurance from their suppliers.

Lord Forsyth of Drumlean: When I was Secretary of State for Scotland, I had to deal with an E.coli crisis, the BSE crisis and a problem with some radioactive gas being delivered to the Barr’s Irn Bru factory. Therefore, I have considerable sympathy with my right honourable friend in dealing with a food crisis of this kind. Will my noble friend accept our congratulations on the way in which the Secretary of State has handled it and reject the criticisms of the noble Lord, Lord Knight, who I am not sure realises that the chairman of the FSA is one of his colleagues—the noble Lord, Lord Rooker? Between them, the noble Lord, Lord Rooker, the Secretary of State and his colleagues have done an excellent job in balancing the need to give the public information with the need not to destroy businesses. Going back to the BSE crisis, the French unilaterally imposed a ban on Scottish grass-fed beef, which lasted for several years and did enormous damage. My right honourable friend is to be congratulated on not operating in a way that is damaging to the interests of businesses throughout the United Kingdom and, indeed, throughout Europe, while at the same time taking sensible measures which are required to protect the public interest.

Lord De Mauley: My Lords, I will pass on my noble friend’s comments to my right honourable friend.

Lord Harris of Haringey: My Lords, the Minister has repeatedly said that there is no evidence of a threat to food safety, which is obviously welcome news. However, he glossed over an answer to the question asked by my noble friend Lady Crawley. There have been massive

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reductions in the resources available to local Trading Standards to pursue proper food safety tests. Further, the number of food inspectors has been reduced. This clearly poses a risk. If there is potentially criminal fraudulent activity involving the substitution of one form of meat for another, could there not also be criminal activity involving cavalierly ignoring hygiene regulations or the rules on additives? What assurances can the Minister give us that those matters will be addressed properly in the future?

Lord De Mauley: My Lords, I can assure the noble Lord that the Government take these issues extremely seriously. The FSA has certainly not dropped its guard. As my noble friend Lord Forsyth, said, it has been doing an extremely good job in very difficult circumstances and the Government are supporting it in that. As I explained earlier, the nature of sampling is risk based and focused on protecting consumers. Staff reductions have not affected the level of testing carried out on meat. Meat produced in UK approved slaughterhouses is inspected by official veterinarians and meat inspectors working under their direction. They also ensure that meat hygiene regulations are complied with in abattoirs and meat establishments.

Baroness Miller of Chilthorne Domer: My Lords, does the Minister agree with me that the length of the food chain is part of the problem? For example, in one lasagne you can get four or five sorts of meat from different sources, even if they all comprise beef. There are all sorts of things that people could mistrust, such as salami made from donkey. Labelling is absolutely crucial. If I may say so, checking as much as we can is only ever going to be a case of shutting the door after the horse has bolted.

Lord De Mauley: My Lords, I have a lot of sympathy with much of what my noble friend said. She is right: our supply chains are complicated nowadays but that is how the market has developed and we have to work with that. She is also right that labelling is absolutely key. We must ensure that it is accurate.

Lord Palmer: My Lords, I have been involved in the food chain literally since I could walk, and an awful lot of people outside this Chamber or the other place would not know what bute was. Is it perhaps worth having a tiny statement by the Government telling people what bute is and the fact that it poses a very low risk to human health?

Lord De Mauley: Yes, my Lords. I have spoken at some length on bute, which, as I am sure noble Lords are aware, is a substance administered to horses with evidence of lameness or whatever to enable them to go about their business. The whole purpose of the passporting system is to ensure that a substance such as bute does not get into the food chain.

Baroness Browning: I very much welcome the Government’s recent announcement that proper cookery lessons are to be reintroduced into our schools, and I hope that there will be more home-made lasagnes

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rather than those that are pre-bought. However, given the fact that a lot of people rely on convenience foods and trust in brands, and if it is established that there is a problem with equine medicines in the food chain, is there an intention to look at foods such as stock, which is a concentrated product that is widely used domestically and commercially? Is any testing being carried out because of the obvious implications beyond those for beef?

Lord De Mauley: My noble friend makes an important point and I agree with her. I can add to my answer to the noble Lord, Lord Palmer. Phenylbutazone, known as bute, is a commonly used veterinary product and is a non-steroidal anti-inflammatory drug. Bute is not approved for use in food-producing animals because it is not known to be safe for human consumption. An animal that has been treated with bute is not permitted to enter the food chain.

Lord Judd: My Lords, is this whole sad saga not an exemplary indication that if we are to look to the well-being of the British people, we must put all our efforts into effectively working together with the people and Governments of Europe to resolve issues that can be resolved only on a basis wider than our own national frontiers?

Lord De Mauley: My Lords, I could not have put it better myself and, as I explained, my right honourable friend has been in touch not only with the European Commissioner today but with Ministers from the various other European member states involved. It is extremely important that we collaborate very closely with them.

Lord Martin of Springburn: My Lords, given that it was our Irish neighbours who notified us of this problem, do they have a better safeguarding system than ours?

Lord De Mauley: My Lords, the Irish were acting on intelligence. They conducted their test and, lo and behold, they found horsemeat. We had not received similar intelligence but I have no doubt that our testing regime is absolutely rigorous.

Viscount Ullswater: My Lords, under European Commission Regulation 504/2008, a vet must record in a horse passport all treatments with veterinary medicinal products, which determines whether a horse can enter the food chain. Are Her Majesty’s Government satisfied that this part of the regulation is being adhered to? The occupier of a slaughterhouse must hand the passport of a slaughtered horse to the vets at the slaughterhouse, who must record the microchip number of the animal, mark the passport accordingly and send it to the issuing authority. Are the Minister and the Government satisfied that that is happening in every case?

Lord De Mauley: My Lords, the appearance is certainly that that is the case, but that matter will be part of the ongoing investigations. Perhaps I may add to my answer to my noble friend Lady Browning on

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whether we test stock, as in stock cubes. It would be very difficult to test stock cubes because there will be little or no DNA present in them.

Baroness Donaghy: My Lords, can the Minister assure the House that food taken off the supermarket shelves in response to these revelations will not appear in food banks?

Lord De Mauley: Yes, my Lords.

The Countess of Mar: My Lords, in many ways, this is a sign of the times. Cheap food means that manufacturers are constantly chasing their bottom line. There is also a surplus of horsemeat on the market because people cannot afford to keep horses. Can we not somehow resolve this problem by putting horsemeat into pet, as opposed to human, food? Can he corroborate or deny a statement made today in the Daily Telegraph that we imported 9,000 tonnes of Mexican horsemeat into this country, and what are its safety implications?

Lord De Mauley: My Lords, what is important is that consumers know what they are buying and that labelling is done properly and honestly. Retailers are responsible for both the safety and the correct labelling of the products that they are selling, which is why government work with industry to maintain confidence in the food chain. All systems of standards and quality control depend to some extent on a certain amount of self-regulation and due diligence. While the Government have a role in checking and monitoring industry, particularly where there are public health issues, non-regulatory approaches and agreements can be just as effective and achieved faster than legislation. This can be seen in our approach over recent days, where the Government and industry have come together with the joint aim of maintaining consumer confidence in the food chain.

Lord Lucas: My Lords, in a city where you can get an extraordinary variety of meats such as crocodile, kangaroo and ostrich—not to mention snails, fish lips and other exotics—does my noble friend not feel that all this fuss about eating a bit of horse is seriously contaminated with bull?

Lord De Mauley: My Lords, I am not sure how to answer that, save to say that I, like my noble friend, enjoy a good variety in my diet.

Welfare Benefits Up-rating Bill

Second Reading (Continued)

6.46 pm

Lord Brooke of Sutton Mandeville: My Lords, I was never a good enough cricketer to have played all-day cricket before I was 20 but, thereafter, I played it for another 40 years, and I can still recall vividly how being the first batsman to face the bowling after the lunch interval was always a tribulation. On this occasion, I am conscious that it was the close of the innings of the noble Lord, Lord Low of Dalston, that occasioned

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the interval, but it remains very much a privilege to share membership of your Lordships’ House with him. On any matter, I should, in cricketing terms, always give him the benefit of the doubt. In the mean time, the lunch interval has been surprisingly long, but I assume that there is a possibility, as sometimes happens in English cricket, that snow has affected the wicket.

The precise subject of the Bill is a new wicket for me to play on. I do not think that it is mandatory for me to declare an interest but, once upon a time, I was a Treasury Minister for nearly four years. Among the seven Treasury colleagues with whom I shared the ministerial responsibilities in those years, I was the only one who had never worked in the City, although I was, for 24 years, its MP. My noble friend Lord Lawson of Blaby was generous in involving us all in the gestation of Budgets but, in practical terms, my direct responsibilities might have been described as Treasury housekeeping, with all three main subjects being housekeeping oriented, and I had up to a dozen minor ones, including—perhaps unexpectedly—the Central Office of Information. It is quite possible that no one else in your Lordships’ House knows the origin of the ministerial concept of “the line to take”, except the noble Lord, Lord Hennessy of Nympsfield—and he knows only because I told him. However, it was the Treasury that thought of the policy first.

The only relevance to today’s business that I can detect from those years is that the EU budget Council, on which I sat for all my Treasury days, had methods of computation every bit as complicated as those in the Bill. It is a nice complement to the Bill, and to my noble friends in charge of it, to have had today’s Statement, which has enabled us to get our eye in. However, my remarks will be brief.

The great excitement on the Bill relates to whether the noble Lord, Lord McKenzie of Luton, can be seduced during its passage through your Lordships’ House into sharing with us how the official Opposition propose to handle the problem that the Bill addresses, for which they were in no small degree responsible for creating. I lived through the 1969 to 1971 recession running a business in New York City, of which my chief memory is the “news in brief” item in the Wall Street Journal to the effect that the best index of the recession’s severity was that the Mafia had had to lay off two judges in New Jersey. However, I acknowledge that running anything during a recession is not in itself amusing.

I do not know how many others in the Chamber of your Lordships’ House today have had the stamina to watch the video which is currently available on one’s PC within the Palace through the kindness of MoneyWeek. It raises all sorts of financial nightmares that lie ahead of us. I stayed with it till it reached its conclusion only because I wanted to see how it would end and I was unsurprised when it concluded with a hard sell to buy MoneyWeek and its attendant publications. To conjure up a quasi-Richter scale of nightmare, it had to be painfully repetitious but from Lloyd George’s 1909 legislation onwards, no Administration avoided some of MoneyWeek’s blame.

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A more elegant prospectus was advanced by the article in the Times below the day’s cartoon on 17 January this year by its accomplished columnist Camilla Cavendish. Those who have approached Horse Guards on Whitehall from the Embankment will know that, pausing at the traffic lights when red at the Whitehall junction, enables one to read the Cavendish family motto on the back of a statue to the Duke of Devonshire, who served in Gladstone’s Cabinet: “Cavendo tutus”, a play on words meaning secure by being cautious. It promises well. I shall quote a single opening sentence and three paragraphs from her article, which was on current welfare expenditure. They will be marginally edited for clarity. The opening sentence reads:

“As the debate about welfare rolls on, … it is … revealing that far more working people get their income topped up by benefits than most of us ever imagined”.

The first paragraph I want to quote states:

“There is no official figure for exactly how many [working people] are on benefits. But what is clear is that their numbers increased dramatically under the previous Government: from 700,000 when Labour took office in 1997 to 4.7 million on the equivalent entitlements in 2010, rising to between 6 and 7 million people, once housing benefit and council tax benefit are included … in a period that was, for much of it, one of unprecedented prosperity”.

The second paragraph I wish to quote states:

“In the good times, it was possible to fudge the decision about which aim—rewarding work or rewarding children—should take priority. Now the decision is unavoidable. The coalition has broadly decided to prioritise work through the Universal Credit system, which aims to make paid work more worthwhile. But it is also sensitive to the risk that the rising cost of living is entrenching poverty. Until it imposed the 1 per cent cap last week”—

that was the week of 7 January—

“the coalition had continued its predecessor’s policy of uprating benefits in line with inflation”.

The third and final paragraph I want to quote—the last paragraph of her article—states:

“Poverty campaigners know that the public is unsympathetic to adults who don't want to work, so they have shifted the argument to defending welfare benefits for the low-paid. But the explosion in numbers in the past 15 years makes it difficult to defend the status quo”.

That concludes my quotations from that article.

When the noble Baroness, Lady Hollis, whom I am delighted to see in her place, chose and opened a debate on housing in the autumn of 2010, I said that I thought that subject, and those that we are debating today, were potentially the key endeavours of this Government. I reiterated that at the time of the Pensions Bill and the Welfare Reform Bill. I am without expertise in these matters but I regard them as so important that I sought to learn by attendance at the majority of Grand Committee proceedings on the Welfare Reform Bill where matters were, in my view, most admirably conducted throughout, although without, in cricketing parlance, my much troubling the scorer myself. However, I shall do the same on this Bill—this time, I gather, in this Chamber.

The great Claud Cockburn in his engaging memoirs said that the world was divided between those who preferred surprises and those who liked things to turn out as they expected. By illustration, he said that, if he were ever caught in an Alpine snowstorm, the mere sight of a St Bernard would restore his morale, even if the cask around its neck was empty of cognac.

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I shall go into Committee with an open mind and recognition that the Bill can perhaps be technically improved but in the hope that we shall learn more than a little of the Official Opposition’s intentions, which the noble Baroness, Lady Hollis, implied would be more thoughtful than political. She must forgive me if I have misremembered her precise adjectives, but I have tried. If, however, the noble Baroness thinks that her speech was other than political, I think she may deceive herself. Certainly one would need to know more of the thoughtful detail to appreciate what its economic consequences would be. It is almost 60 years since I was a soldier but, if, unlike Grand Committee on the Welfare Reform Bill, we are to listen to unremitted hostility, it will seem, at least for me, in military terms as simply being smoke. These matters are too important for that.

Finally I shall speculate in Committee on what the late Lord Russell—Conrad to most of us—would have made of all this. In your Lordships’ House both he and the late Lord Newton—Tony to many of us—were kind enough to remind me that I had given them respectively their first maiden speeches on the order paper in the Oxford Union. Indeed in the interests of balance, I shall speculate on what Tony Newton would have made of it all too. In the mean time, that is not a bad double barrel. I hope your Lordships’ House will forgive me hereafter, although I shall obviously observe the rubric, if I am briefly absent at the 90th birthday party of the noble Baroness, Lady Sharples.

6.56 pm

Lord Touhig: My Lords, I am very pleased to follow the noble Lord, Lord Brooke of Sutton Mandeville. Some years ago he contested the parliamentary constituency of Bedwellty in the Conservative cause. It later became the constituency of Islwyn, which I had the privilege of representing for 15 years. I am sure that from his experiences in the Welsh valleys and the fact that his mother was Welsh, he will certainly know where I am coming from in this debate.

Although we all recognise the difficult economic climate in which decisions around benefits are being made, we must ensure that families are never left unable to afford the essential costs of daily living. Our priority must always be to ensure that those who face financial difficulty due to illness, disability, low pay or unemployment are still able to pay their rent, heat their homes, and feed their children; basic necessities which everyone in this Chamber takes for granted.

The Westminster Catholic Children's Society works with some of the poorest families in London. Its chief executive, Rosemary Keenan, recently said:

“It is hard for many of us to imagine what it is like for a mother to only have £1 left and know she still has to feed her children”.

Yet this is the case for an ever-growing number of parents. They are being forced to choose between turning on the heating or putting food on the table. Over the past year, we have witnessed a 44% rise in the number of families relying on emergency bed-and-breakfast accommodation after losing their homes, and a staggering 79% increase in the number of people visiting food banks.

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By capping the up-rating of key benefits at less than half the rate of inflation, this mean-spirited Bill stands to further exacerbate the problems faced by some of the poorest people in our country. In short, it will widen the gap between family income and the price increases of basic commodities such food and fuel, further undermining people's ability to achieve decent living standards.

Kevin Flanagan, the director of St. Antony's Centre in Manchester, warns,

“We are already seeing increasing levels of family poverty and homelessness; any further real-term reduction of benefits will only worsen this situation”.

One particular concern widely held among the organisations working to support struggling families is the breakneck speed at which changes are being made. This Bill cannot and should not be considered in isolation; it comes as yet another blow to the poorest people, in a long line of already devastating cuts. Perhaps most worryingly, it comes at a stage when many key provisions of the Welfare Reform Act have yet to be implemented, including the capping of household benefits; cuts to council tax benefit; and new penalties for those deemed to be under-occupying social housing. The cumulative effect of these measures, which are being simultaneously thrust upon families this year, will create significant reductions to household incomes that are already under immense strain for many families. With such a widespread change under way, it is important that time is allowed for proper assessment and appropriate adjustments to be made.

However, the Government are already committed to further real-terms benefit cuts both for the immediate future and the next three years. It is irresponsible to legislate for a fixed annual increase of 1% when there can be no guarantee of how the rate of inflation will change between now and 2015. It is very possible that we will see families eventually facing an even bigger gap between incomes and prices in the years to come.

This rush to make short-term savings is not only unjust but economically unwise. It will inevitably increase homelessness, cause mental health problems for many and create higher personal debt. As a consequence, the cost of more family poverty will ultimately fall back on the taxpayer. This is not some Dickensian tale. In Britain in the 21st century, some 200,000 children will be pushed into poverty, growing up in unheated households or going to school hungry. They will face real risks to their education and health, which apart from the devastating human cost will almost certainly require expensive interventions by the state further down the line.

One particularly unpalatable aspect of the debate surrounding this legislation has been the rhetoric contributing to the isolation and stigmatisation of the vulnerable in our society. A number of noble Lords have spoken about this. Seeking to differentiate those in poverty as “deserving” or “undeserving” serves only to scapegoat those who are the victims of Britain’s stagnant economy. They are blamed. The implication is that if we did not have the people labelled “benefit scroungers”, everybody would be in work and the economy would be all right. This sort of rhetoric

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harms the vulnerable and clouds the fact that the majority of people who stand to be affected by the Bill are in fact hard-working men and women in low-paid jobs.

There are currently 6 million British workers in poverty. They rely on benefits to bridge the gap between a lower-than-living wage and rapidly rising living costs. These people will bear the brunt of the Bill when they are hit by real-terms cuts to their essential working tax credits and child tax credits. Furthermore, a below-inflation rise in benefits risks creating work disincentives, especially when working people face above-inflation rises in food and transport costs. For a worker receiving the minimum wage and facing a 4.2% rise in the cost of their commute, the Bill simply means that work will pay less than ever before. There are also more than 1 million disabled people who will be directly affected, adding to the pressures they already face from changes including the overhaul of the disability living allowance and the time-limiting of employment and support allowance.

The Government have consistently said that disability benefits are exempt from the 1% cap on benefit rises, yet the cap applies to employment and support allowance, which helps people who have barriers to work because of their disability. People with conditions like autism who are struggling to find work but who want to contribute will miss out under this legislation. Just 15% of adults with autism are in full-time work, yet research by the National Autistic Society shows that the vast majority want to work. Benefits for them are a necessity, not a luxury. The Government need to change their rhetoric to acknowledge the fundamental necessity of benefits to thousands of disabled people and their families up and down the country.

John Coleby, the director of St Joseph’s Pastoral Centre, which serves the Catholic Archdiocese of Westminster and provides specialist support to adults with learning difficulties, echoed the warning of many disability charities when he said that,

“the Bill should not be seen in isolation”,

from other cuts that were,

“creating a climate of uncertainty and fear”,

among disabled people for their future living standards and their independence, both of which are coming under increasing threat.

This debate has frequently and mistakenly been framed around the fairness of benefits rising faster than wages. It fails to acknowledge the fundamental issue at stake: namely, whether individuals and families are able to maintain their basic well-being. A comparison with wage increases is ultimately a false one to draw because in pounds and pence terms, families are struggling to make ends meet on a daily basis. The average weekly take-home pay in Britain is £395. That is five and a half times the jobseeker’s allowance of £71 and seven times the under-25s jobseeker’s allowance of £56.25. Faced with those differences, is anyone seriously suggesting that people labelled “benefit scroungers” would rather stay at home than be in work?

The average weekly shopping bill has risen by £5.66 in the past year alone, and is set to continue rising annually by at least 4%. Energy bills, too, have risen well above the rate of inflation, with the largest companies

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putting up prices by 7.6%. It is unthinkable that a mere 71 pence a week in jobseeker’s allowance, or a 99 pence a week rise in employment and support allowance, will come anywhere near bridging that gap. This is what a 1% rise means—71 pence and 99 pence—for people in these difficult circumstances.

Rather than focusing on misleading comparisons between benefits and wages, we should ensure that those who need support will still be able to afford the soaring costs of food, heating and accommodation. Overall, the impact of the Bill on vulnerable people and their families will be overwhelming. The decision to cap benefit increases so far below rising prices comes rapidly on the heels of a programme of widespread welfare cuts, the combined effect of which will further erode the ability of the lowest-income families to meet their daily living costs.

It is unjustifiable that parents and children will go hungry and that their homes will be put under threat through the misfortune of being ill, unemployed, disabled or simply working in low-paid jobs. The rush to make short-term savings will cause irreparable damage to those who are most in need of protection, and risks transforming our current economic challenges in this country into a very real poverty crisis.

7.06 pm

Lord Kirkwood of Kirkhope: My Lords, it is a pleasure to follow the noble Lord, Lord Touhig, who is an expert in his field and brings an interesting Welsh dimension, as does my noble friend Lord German, to this important debate. It has been an excellent debate so far, reflecting the rising level of apprehension that exists in the country about what the future holds, particularly for the low-income, working-age households that the Bill particularly affects.

I am in some difficulty with the Bill because, at the risk of sounding pedantic, I do not even agree with the title. The Bill’s Short Title is “Welfare Benefits Up-rating Bill”. The Long Title is “To make provision relating to the up-rating of certain social security benefits”. I have argued this etymological, perhaps pedantic, point before. There is a world of difference between statutory social security entitlements and welfare benefits. Welfare benefits were things that we inherited from our American cousins. They have nothing whatever to do with the statutory provision that we in the United Kingdom have enjoyed for the past 20 years.

I agree with noble Lords who made powerful speeches about the kind of language that we use to frame the debate. It is not just “drivers” and “skivers”, but goes more fundamentally to the point that since Section 150 of the Social Security Administration Act 1992, which the Bill seeks to amend, we have always had uprating. I was there when that Act was cast. It put the uprating debate beyond short-term party-political arguments. It stated that there were entitlements that gave people on various benefits a stake in creating the wealth of our country. That is a very important element in the social cohesion that we have enjoyed in this country to date. We are at risk of setting a very bad precedent with the Bill by disrupting this for a three-year period.

My noble friend Lady Stowell made a powerful but, I think, Treasury-influenced speech with important points that cannot be ignored.

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We need to try to have a more measured, long-term public discussion about what is going on. The public are ignorant about the facts of social security, and I mean that in the polite sense of the word. They are just untutored about what is going on. They are frightened to death by some of the gross figures because we always talk about cash as snapshot cash figures—and the quantities are truly frightening for anybody who does not know anything about it—instead of talking about percentage shares of the wealth of the country and the long-term longitudinal dimension to some of this debate, which tracks what families do in the course of a life, and looks at people going in and out of work and the contributions they have made through the national insurance contribution system, or what is left of it.

We should and could have a much more informed debate about what we think we can afford. If Britain is a poorer country, as I believe it is—I do not know for how long it is going to be poorer, but it is certainly not going to go back to sustainable levels of growth in the near future—we have to ensure that the country knows what that means for the future. It is an ageing society. We are all living longer and that is a success story, but we have to pay for that, too. We are talking not just about health costs but about costs across the whole public policy area. That debate is not happening to the qualitative level and the political extent that it should. That is the first point I wanted to make.

My second point concerns something that one or two colleagues have mentioned. On top of everything else, this Bill worries me. I could be persuaded that for the next 12-month period there is a case for looking at the uprating of benefits, and I would certainly want to engage in that. However, I am deeply worried that this is on top of everything else. I would like to think that I have been studying this as long as anybody, but I have no idea what the next five years are going to hold, particularly for low-income working-age families. The point that was powerfully made by the noble Baroness, Lady Hollis, was that the cumulative effect of all this has not been analysed by anybody. I would argue—and I think that the people sitting behind the Minister would probably say this—that the situation has been changing so fast that it has been impossible to pin down a cumulative analysis of what has been going on. I agree with her that this has to be done.

I want to make a connection between what the noble Baroness was saying and what my noble friend Lord German was saying, because he said something important with which I fundamentally agree: these cuts now have to stop. Between now and 2015, I will stand shoulder to shoulder with my noble friend Lord German, particularly in relation to low-income working-age households, in arguing that there should be no more cuts after this. Anything else would be to risk poverty and deprivation on a scale that we underestimate at our peril. If my noble friend Lord German and I get our way and stop any future change beyond this Bill, we could get on and do the arithmetic that the noble Baroness, Lady Hollis, is suggesting. Perhaps it is calculus, not arithmetic. If we do not do that, we will all be arguing blind. I certainly do not know what the full consequences will be of everything

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that has happened to date, and I do not think that that is safe. I want to come back to that in my final point.

I want to make one other point about fairness. I think the noble Lord, Lord Adebowale, made it earlier. There is a qualitative impact to these cuts as well as a quantitative one, particularly for low-income working-age households. The noble Lord said this powerfully; he has more experience in the front line than I have. The impact of a 1% cut for somebody in the lower two deciles of income is much more profound than for others. It does not matter what the cash effect is; it is the impact.

Another matter that deeply concerns me but that has not been drawn out enough is the residual level of unsecured debt that these households are carrying—estimates just shy of £6,000 on average. It worries me that this is what we are putting into households across the United Kingdom with an average unsecured debt of £6,000. The impact question has a qualitative as well as a quantitative effect.

In closing, I want to try to promote an amendment to this Bill because, as we have been saying, an inflation risk has been introduced in a way that we have never seen before. This Bill imposes a 1% uprating in 2014-15, regardless of inflation. I am sure that we all trust the Office for Budget Responsibility; I am not an economist, but it seems to me that their forecasts have been pretty dodgy in terms of some of the metrics in the economy in the past. If they are not right about a 2.6% increase in CPI, and a 2.2% increase the year after, in 2014, anything in excess of that will increase these cuts.

Nobody in this room can tell me what that increase will be. I have done these metrics but will get them checked before Committee, because my arithmetic is not great, but if inflation were to be 2% more than the OBR’s current forecast over the next two years, the savings in 2015-16 increase from £1.9 billion to £4.7 billion. Who can put their hand on their heart and say that they know that we are not going to face this kind of inflationary increase? With food costs, fuel costs and rent costs, some families will certainly experience a 2% increase over the OBR estimate. I do not know how widespread that will be, but some of them will face that, so it is just not safe for us as legislators. I know there might be some issues of financial privilege in some of this, but I think it is possible to amend this Bill in a way that says that in Clauses 1 and 2, subsection (1) shall be disapplied if inflation goes higher than 3% or 4%. I do not know. That is a political decision, and we will have to think about that.

Let me make it clear that I am not trying to take away the power of the Government eventually—as long as they stay within the envelope of the OBR’s estimates—to seek the automaticity of the 1% increase that is suggested in this Bill. However, if it goes anywhere above that, they have to default back and argue the case year by year using the 1992 Section 150 provisions. I think that would be a modest amendment. It would give people like me some comfort to know that there was some protection for these low-income households in future.

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I say to colleagues, having been thinking about this carefully over the weekend, that if we do not do that there are next to no other circumstances in which it would be safe to introduce this Bill the way it stands at the moment. It will impose an inflation risk that is a one-way bet for the Chancellor, because if it goes up he gets more savings, and if it does not he gets the savings in any case. Therefore, we have to think carefully about this in Committee. I will happily participate in any discussions around an amendment of that nature in order to ensure that we give some protection to some of these families in future.

7.18 pm

Baroness Grey-Thompson: My Lords, I have listened with great interest to the debate so far, and I, like many others, have a number of concerns with this Bill. Capping the uprating of most benefits to no more than 1% for the next three years will mean an exponential increase in the net losses each year. The Government have already reduced the welfare budget for working-age people, so this Bill will be yet another blow for low earners and unemployed, sick, or disabled people.

My first concern is that the impact of benefit uprating changes will swamp any gains from raising tax thresholds for low-income households. Uprating changes are less noticeable than other cuts but over the years can have a large impact on someone’s income. Between 2011 and 2015, the uprating changes to child benefit alone will result in a real-terms cut of almost £6 a week for a family with two children. Child benefit, in addition, plays a role in determining the level of housing and council tax benefit paid to those on low incomes in work. The real-terms cut due to child benefit uprating alone during that period is almost £11 a week.

Households with someone working full time on the minimum wage, if there are children, not only will suffer a real-terms loss of £11 a week between 2011 and 2015 but will gain less than £2 a week from the rise in the tax threshold, because a rise in net income means a drop in housing and council tax benefits. Also, the effects of this Bill will not be greatly eased by the change in the personal tax allowance. Low-income households will lose most of the increase in income through a reduction in benefits such as housing benefit and tax credit. Paradoxically, it is the middle and high earners who will receive the full benefit of this measure.

Secondly, uprating changes are not occurring in isolation from other benefit cuts. In considering this Bill, it is important to have in mind the full impact of all the changes. Very few people who rely on benefits or tax credits as part of their income, whether in or out of work, will experience a cut in uprating alone. There have been numerous other cuts to tax credits, housing benefit, council tax support and disability benefits as well as capping. Citizens Advice has analysed the overall impact for a household through a series of changes in circumstances on what we currently know. The analysis demonstrates in a small way the combined impact of the changes on some groups, assuming that this Bill is passed. The example I want to present is not at the extreme end as there will be many people who will be even more severely hit by the cuts and will lose much more.

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A couple, Mike and Anne, have two girls aged 12 and seven. They live in a three-bedroom property belonging to a local housing association and are both working full time with a combined income of about £46,000 a year. With this joint income they will be about £17 a week better off from tax and benefit changes in 2015 than they were in 2011. They will lose about £6 a week in real terms from the uprating of child benefit, but they will gain around £23 from the change in the tax threshold, giving an overall gain of £17 a week. However, this position rapidly deteriorates if the family circumstances change for the worse. If, say, Anne becomes ill and is diagnosed with MS, she may have to cut her hours because she quickly becomes exhausted.

The couple split up and Anne becomes a lone parent. She now has earnings of £10,000 a year, but is entitled to some help through benefits, including disability benefits and premiums in recognition of the extra costs she now faces as a result of her illness. Between 2011 and 2015, someone in her position will suffer a large loss in benefits, around £58 a week, while gaining only about £2 a week from the rise in the tax threshold as the gain in net earnings leads to a reduction in benefits. That is an overall loss of £56 a week. This is made up of an underoccupancy charge, loss of lower rate DLA, a £5 council tax payment and about £18 due to all the uprating changes.

That is the loss under the current system. The loss under universal credit will be even greater for someone in Anne’s position. If she moved over to universal credit at the point when her health deteriorated, she would not get transitional protection, and in 2015 would have a real-terms income of £95 a week less than in 2011. This is because under universal credit she will get no more financial support than someone who is not ill or disabled. If Anne’s condition further deteriorates and she has to leave work, she is awarded the middle-rate care component of DLA and is placed in the ESA support group. She now has a great many extra costs.

The overall real-terms loss between 2011 and 2015 for a household in this position is about £34 a week, and that assumes that Anne keeps DLA or the same value in PIP. This loss includes a real-terms loss of about £15 due to uprating changes, despite the protection for disabled people. Again, this is all under the current system. Under universal credit, if Anne does not get transitional protection, she will be £61 worse off in real terms in 2015 than someone in her position would have been in 2011. The extra loss is due to the loss of the severe disability premium offset by the rise in the support element of universal credit.

In summary, between 2011 and 2015, this couple with a joint income of £46,000 a year have a real-terms gain from tax and benefit changes of £17 a week; they would have a £23 gain if they did not have children. A disabled lone parent in Anne’s position who is working will have a real-terms drop of £56 a week overall, despite the gain from the raising of the tax threshold. The drop will be a real-terms drop of £95 a week between the current system in 2011 and universal credit in 2015. For someone in Anne’s position and in

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the support group, the real-terms loss is £34 a week, or £61 a week if on universal credit.

People are already struggling to manage, as has already been mentioned by my noble friend Lord Adebowale. The numbers going to food banks are rising steeply. These proposed changes impact disproportionately on those with a low income because more of their income goes on buying essentials, and it is these essentials such as fuel and food that are subject to high inflation. For many, this can mean making choices such as whether to keep the house warm or to eat properly. Disabled people who cannot work, those who are unemployed and cannot find work, and those on low earnings who are working are all being affected by other benefit cuts. Decisions on uprating should not be taken without recognising the cumulative impact. Many in your Lordships’ Chamber have asked about the cumulative impact of these changes, and I would urge the Government to look at this again.

I will not repeat the words of the right reverend Prelate the Bishop of Leicester, but I wholeheartedly support his views. We have to understand where we are going as a society and how we want it to be viewed. In the Welfare Reform Bill, the Minister, the noble Lord, Lord Freud, said consistently that the most vulnerable should get the most support, but I fear that as this Bill progresses, that may not be the case.

7.25 pm

The Lord Bishop of Ripon and Leeds: My Lords, my colleague the right reverend Prelate the Bishop of Leicester argued that in this Bill we are again putting pressure on those who are already the poorest in our society. We want to urge the Government to look again at the effect of the Bill on child poverty, not just over the next three years, but on into the future. I will not repeat my colleague’s arguments, but in that context, I want to ask three questions of the Minister.

First, will the Government make some commitment about benefits for asylum seekers, especially child asylum seekers? I ask this as a member, alongside the noble Baroness, Lady Lister, of the parliamentary inquiry into asylum support for children and young people, which has recently reported. I am told that benefits for asylum seekers are not welfare benefits, and that although they are benefits designed for the welfare of those in destitution, they are beyond the scope of this Bill. In that Alice-in-Wonderland world, I would nevertheless plead with the Government to give some comfort to asylum-seeking children and those who work with them.

Until 2008, these benefits were pegged at 70% of income support, but now they are not related to anything at all and have fallen to between 50% and 60% of income support. No increases were made in 2012 and we are told that there are no plans for any increases in the near future. I am thinking of a teenage girl in Leeds who has to look after her disabled mother as they seek asylum after fleeing from terror. She goes without meals herself in order to ensure that her mother is kept out of destitution. Will the Minister press her colleagues to ensure that the 10,000 asylum-seeking children who are at the most deprived end of our society are given a fair chance in life?

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It is always a privilege to follow the noble Baroness, Lady Grey-Thompson, in these debates. Will the Government look again at the effect of the provisions of this Bill on disabled children? While some disability benefits are to be protected, the lower child disability addition of universal credit is included in the Bill among the benefits to be capped at 1% per annum. I follow the noble Lord, Lord Low, in asking that this should be looked at again. This benefit will be halved under universal credit; families with disabled children will have that element of their benefit reduced from £57 a week to £28, and now that savage reduction will be compounded by an increase of only 1% rather than by inflation. Will the Government consider the cumulative effect of the various measures on disabled children?

Alongside that, again with the noble Baroness, Lady Grey-Thompson, I am concerned about the effect on families of the continuing erosion of child benefit. This benefit has long been the mark of our support for children in our society, but already we have seen a significant number of families being deprived of this universal benefit altogether. The social value of paying this benefit to the mother has, I believe, not been properly or adequately counted. It is a benefit that is widely used to support the next generation, but it is now being refused to many. The 1% increase in 2014-15 follows three years of freezing the uprate so that, over the five years from 2010 to 2015, the level of child benefit for a family with three children will have reduced by £380 a year—in addition to the other reductions for children in deprived circumstances. Child benefit is key to the welfare of our society and it needs to be protected.

Finally, other noble Lords, particularly the noble Lord, Lord German, have asked the Minister whether she will encourage her colleagues, and indeed everybody else, not to use derogatory or dismissive language when they refer to those who receive welfare benefits. I will go a bit further than that and ask whether she will make it clear that the vast majority of those on benefits are not shirkers, fraudsters or spendthrifts. The majority of those who receive benefits are in work and the majority of those out of work would love to work if they could find jobs. The stigmatisation of those who receive benefits is both serious and dangerous. In 2011, there was an increase of 30% in attacks on disabled people, fuelled by stories of how people were falsely claiming disability allowances. Politicians and journalists are accused of spreading a mythology that causes stigma. Will the Minister today begin the process of slaying that myth by declaring that responsibility for poverty does not lie with the poor, so that we can, together, seek to support one another in helping those in most poverty, especially those in child poverty, within our society?

7.31 pm

Lord Sheikh: My Lords, I welcome the Bill as it will restore fairness and simplicity to the process of social security payments. It will also deal with the question of affordability. It is important for a Government of any persuasion to show that they empathise with taxpayers who are essentially paying for welfare handouts. The concept of fairness is one of the reasons for

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proposing this Bill. It is worth remembering that the coalition Government inherited the biggest budget deficit of any country in the developed world. It is estimated that capping social security benefits in this manner will save the Treasury £3.7 billion in 2015-16 and that, thereafter, there will be permanent savings each and every year in our welfare spending.

Welfare spending increased by 60% under the previous Government but this did not produce the intended result of helping individuals to return to work. If we can get more people in work, some of them will receive salary progressions and improve their standards of living. In the years 1997 to 2010, when average earnings increased by 30%, tax credit spending increased by 340%. One of the aims of this Bill is to tackle the lack of aspiration and ambition among a number of those who have been trapped in poverty. I believe that the 1% uprating stipulated in Clauses 1 and 2 will improve incentives to work.

It is true that the welfare debate has been described in overly simplistic terms in certain quarters. However, it is a fact that a culture of dependency exists in some areas. Previous Governments have tried to tackle this issue with the best of intentions but the complexity and scope of the problem has often meant that past strategies have not been successful in addressing the matter. Children and young people who live in households where adults do not engage in any form of employment are not only the most deprived in our society but are most likely to follow this path once they leave full-time compulsory education. This generational cycle of worklessness is a key factor in the rising levels of welfare dependency and poverty in our communities.

I am sure that all noble Lords will agree that work gives people pride and confidence. Unemployment sometimes creates depression and has an adverse affect on people. Work is good for people’s mental health, their physical health and their general well-being. These benefits have been demonstrated repeatedly. Dependency is not liberating; it constrains people and prevents them achieving their ambitions.

Baroness Hollis of Heigham: I am grateful to the noble Lord for giving way for a moment. Would he not agree that, on the contrary, what welfare benefits such as tax credits have done, and what universal credit proposes to do, is to make work pay and thus get people back into the labour market, exactly as he wishes?

Lord Sheikh: I still feel there is a culture of dependency. Obviously, we would like to get more people into work and incentives must be given to people to go to work. People have become trapped in our welfare system and they need to be freed. This Bill will make a great contribution to their liberation.

The Government deserve recognition for trying to ensure that we have a fair welfare system to support those in genuine need. Social security should be for people who find themselves out of work and are trying to get back into employment. This House recently debated the success of the Asian community who were expelled from Uganda and came to settle in this country in 1972. My family was among those people who were

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expelled by General Amin and who came here. A number of these Asians came here penniless and were initially housed in Army camps. At the outset they received state benefits but they came off those benefits, and started to work and established small businesses. They have been successful and now offer employment to others, pay taxes and create wealth for the country. It is unfortunate that some people have chosen not to make a contribution to society and have opted to receive benefits as a way of life. The welfare system was created to ensure that people were not left destitute if they lost their jobs. It was viewed as a matter of support for those who were down on their luck. It is unfortunate that the original purpose of this safety net has been distorted.

I wholeheartedly support the Government’s decision to retain the uprating of long-term disability benefits at the rate of inflation. I also support the triple-lock guarantee for basic state pensions, which means that pensioners will receive an increase of at least 2.5%. A compassionate society is one that shows respect and understanding to the most vulnerable. I am proud that the Government have taken these steps as they are both a moral and civil duty. Further to erroneous reports about these measures, I would be grateful if the Minister could inform your Lordships’ House of the steps Her Majesty’s Government are taking to ensure that people are well informed and reassured about policy regarding disability and pension provision.

It is neither prudent nor fair to distribute welfare payments or benefits without question or regard for our economic situation. The uprating measures in this Bill will show considerable savings by 2015-16 and for years after that. This is essentially about taxpayers’ money. We have a financial deficit that we need to rectify and we need to put the country on a sound financial footing. We can achieve this by reducing our spending, applying appropriate taxes and undertaking more business at home and overseas. I have spoken on the latter point in your Lordships’ House previously. We cannot afford to continue paying welfare benefits as in the past.

The Government have reduced the deficit by a quarter since they came to power in 2010. Obviously, this is to be commended. More than 1 million jobs were created in the private sector in the same period. The FTSE 100 index has risen above 6,300 points for the first time since May 2008. If we can achieve more growth we will create more jobs, and if we can encourage people to work rather than be dependent on the state, more people will be gainfully employed. I support the Government on getting the economy right and we must be firm and keep on the right track. It will indeed cause pain to some people but, of course, if a person is ill it is necessary to take strong medicine. We should not borrow our way out of the current financial crisis. Borrowing is the easy way but it is the wrong way.

There are wider social implications at the heart of this debate. We cannot ignore the resentment and anger felt by hard-working families who see others making a conscious effort not to work being rewarded handsomely by the state. Failure to address this issue may cause tensions within communities. I am sure that some of us have heard the expression, “I cannot afford

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to go to work”. This is an absurd situation and we are perhaps the only country where people are better off not working.

The measures in the Bill are necessary to remedy the culture of dependency that is blighting some members of our population. The Bill is a sign of the Government’s commitment to ensuring that we live in a fair society. The fact remains that since the economic downturn salaries have risen on average by 10%, whereas payments for some individuals in receipt of benefits have risen by 20%. We need to look at all areas of expenditure for our well-being, which will of course include the welfare benefits. The present state of affairs is simply not sustainable. I am supporting this Bill as it is a step forward in dealing with issues relating to affordability and fairness.

7.42 pm

Baroness Donaghy: My Lords, I pay tribute to the noble Lord, Lord Sheikh, for being a hard-working and successful entrepreneur. I know several people who have two or three part-time jobs who work extremely hard and who remain low paid. I never cease to be surprised that the low paid are always blamed for being low paid and being eligible for tax credits, but low-paying employers are never blamed for their part.

This Bill is political and deserves a political response. The challenge has been issued by the noble Lords, Lord German, Lord Bates and Lord Brooke of Sutton Mandeville: “What would I do instead of this Bill?”. In the words of Yosser Hughes, “Gissa job” and I will tell you. This Bill is completely unnecessary, it is based on a misrepresentation and it is playing politics with people’s lives. All this will become apparent when the impact is actually felt by real people, when the jobless numbers rise and child poverty increases.

First, there was absolutely no need for the Bill, as has already been said by several speakers. The Government already have the power to uprate by 1% this year, next year and the year after at the appropriate time without new primary legislation. So why do it? The Work and Pensions Secretary, Iain Duncan Smith, said that it would,

“provide certainty for taxpayers, the markets and claimants”.—[

Official Report

, Commons, 8/1/13; col. 189.]

I ask the Minister: what certainty can there possibly be when the level of inflation in the next three years—a key ingredient, she must accept—is unknown? What certainty can there be when the markets are up and down like a yo-yo? I suppose it could be said that higher rate taxpayers have been provided with certainty, and claimants are certain that they will be a lot poorer. The real reason for this unnecessary Bill is to provide a symbolic dividing line between the coalition Government and the Labour Opposition—short-term political gain on the back of those at the bottom of the labour market—and this sleight of hand will be found out.

Secondly, the Bill is based on the false premise that this is about fairness between taxpayers and those out of work. The Chancellor himself stated that,

“over the last five years, those on out-of-work benefits have seen their incomes rise twice as fast as those in work”.—[

Official Report

, Commons, 5/12/12; col. 879.]

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Everything has been pitched to present this Bill as an act of fairness to working people whose earnings have risen by about 10% since 2007 while out-of-work benefits have gone up by about 20%, but we all know how misleading this comparison is. I negotiated wage increases for the poorest paid in universities for 16 years, 90% of them women, mainly part-time. Using percentages to present a case is designed to mislead. We used to say that 10% of nothing is still nothing.

The whole presentation by the Government is about employed versus unemployed, when the reality is nothing of the kind. It is actually about divide and rule. Thirty per cent of households will be affected. Those most likely to be affected are families with children, particularly lone parents, 90% of whom are women. The Government claim that many of those affected by the Bill could cope with the below-inflation benefits by moving into work, but 60% of those households affected are in work. The Government claim that the disabled will be protected, but disabled people in the ESA support group will see their basic allowance of £71 uprated by 1%. This represents almost 70% of their out-of-work support and 991,000 disabled people receiving ESA in 2012 will experience a 1% uprating, representing a loss of £87.65 a year, as has already been said.

The real weasel words come when we are told about child poverty. The Parliament Under-Secretary, Esther McVey, said that there would be,

“an extra 200,000 children being deemed by this measure to be in relative income poverty compared to uprating benefits by CPI … It is misleading to look at the impacts of uprating in isolation”.—[

Official Report

, Commons, 15/1/13; col. 715-16W.]

Note the words “deemed” and “relative income poverty” in an attempt to minimise the impact. Mr Duncan Smith went on to say:

“If we take the figures on that relative income point across the period covered by the spending review, we can see that some 350,000 children net will be lifted out of poverty, even if we take into account the effect of this Bill”.—[Official Report, Commons, 21/1/13; col. 131.]

So either we have 200,000 extra children in poverty or we have 350,000 fewer in poverty. In a recession we are all poorer so the poorest are comparatively better off—what unbelievable nonsense.

Thirdly, the Government are playing politics with people’s lives. They claim it is about rebalancing the economy and making work pay. Let us say for the sake of argument that the 60% on diminishing tax credits who are in work get better jobs, leaving room for the 40% who are not in work to do the lowest paid jobs. Where are these jobs coming from? Last year 300,000 jobs were lost from the public sector. The OBR predicts the loss of a further 900,000 jobs by 2017-18, while the Institute for Fiscal Studies predicts 1.2 million lost jobs in the public sector over the same period.

The Government think they are all going to come from the private sector, and so far they have, but there is no growth in the economy. People are spending what they have on energy, food and rent, and large retail chains are going out of business. Maybe they will all become self-employed. Between June 2008 and April-June 2012 the number of self-employed rose to 4.2 million, a rise of 367,000. During the same period, the number

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of employees declined by 434,000. Maybe this is how we are going to work our way out of poverty.

However, if you look at the figures, 80% of that increase in the number of self-employed were aged over 50 and more than likely to be male, according to the Office for National Statistics. So we are turning into a nation of 50 year-old entrepreneurs. When you delve even further, they turn out to be construction workers, carpenters, taxi drivers, et cetera. This suggests people who have little choice about their employment status, whose job prospects have diminished because of age barriers and who are probably bumping along on the bottom of the labour market, getting what they can but not continuous employment. It could also explain why output is flat while employment is growing. It is not the brave new world but more like a twilight zone.

The Government are not looking after the economy; they are looking after their own. The gap between rich and poor, already unacceptable, will widen. The Times Magazine last week said that a child born in Lambeth is likely to die eight years before their counterpart in Kensington and Chelsea. I presume that the latter need the extra eight years in order to spend their tax breaks. It is bad enough that we live in a society that tolerates these differences in mortality rates. This Bill is intended to be a propaganda coup for the Government. It will soon be seen for what it is: a gratuitous attack on the poorest and weakest in an unequal society.

7.50 pm

Lord Wigley: My Lords, I am delighted to follow a number of long-standing colleagues with whom I have campaigned on these issues over many years. I, too, voice my concern about this Bill, which will result in real-terms cuts in support for thousands of low-income people, including, despite government claims to the contrary, up to 1 million disabled people, particularly those endeavouring to work.

If the Bill goes through unchecked, the increase in welfare benefits will be 1% while CPI inflation stands at 2.7% and RPI inflation at 3%. As the noble Lord, Lord Kirkwood, mentioned, inflation may well increase substantially. This will lead to real-terms cuts during the next three years in payments to support those who are working and contributing to the economy. They are the very “hard-working families” so beloved of the spin doctors of those who want to underpin the concept of the deserving poor—deserving, apparently, of just 1% uprating. I cannot see how this will contribute to promoting a work ethic or allow working people to participate in a savings culture.

I shall refer to figures relating mainly to Wales, although I realise that the arguments will apply to many other areas, too. The effect of the measures in Wales will be disproportionally greater, since incomes per head in Wales are substantially lower than average incomes in England. Figures released before Christmas show that GVA per head in Wales stands at 75.2% of the UK average, so cuts to in-work benefits for the low-paid will hit Wales proportionately harder.

According to the most recent DWP data, as at 1 December last year, more than 125,000 families in Wales were receiving working tax credits. This comprises

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some 93,000 families receiving both working tax credits and child tax credits, and 32,000 families receiving just working tax credits. The 2011 census records that in my home area, the Gwynedd local authority area, 9,200 families were receiving one or more elements of tax credits out of the total 52,000 households. This means that 17.5% of all households were in receipt of tax credits. These people generally spend their money within their own local areas. The Welsh economy is made up overwhelmingly of small businesses. These working tax credit reductions will mean that demand is further sucked out of local economies as people have, in real terms, less money to spend.

The uprating will also hit those seeking work. The Government may intend this real cut as furthering workforce discipline, surmising that, as benefits will be even lower, so people will be prepared to take any job. In this, they are fundamentally mistaken. Many unemployed people, particularly in Wales, are seeking work in vain because the economic policies of the Government are failing. There are some parts of the west Wales and the valleys area whose GVA per head is only 65% of the UK average, with 21 unemployed people chasing every vacant job. Putting the morality of this on one side for a moment, starving people back into work has no prospects of success if the jobs are just not there.

If we are to combat this, boosting skills alone will not cut it; we must also tackle the demand side of the economy. We have to make sure that there is real work out there for people to do. The Government's Work Programme, allegedly designed to take people off benefits and into work, was utterly ineffective throughout the UK, but Wales recorded the worst figures, with the Department for Work and Pensions saying that only 1,380 of the 42,380 people on the programme entered long-term employment—a success rate of only 3%. In Wales, 77,377 people are looking for work and claiming jobseeker’s allowance, while just 20,310 vacancies are posted in jobcentres. This means that, across Wales, there are on average four people chasing every empty job

We are facing a vast increase in the number of the working poor—people who are now resorting to the food banks to feed their families. If this Government were serious about ensuring that work pays, they should legislate to ensure that work really does pay more in wages so that people do not have to resort to benefits to make ends meet. Legislating to uprate the minimum wage to the recommended living wage would be a good start, and I commend the points made by the noble Lord, Lord Bates, earlier in this debate.

It has been estimated that the private sector in the UK is sitting on a cash stockpile of as much as £700 billion, because it does not have the confidence to invest. Getting this prospective investment to create economically productive jobs is the challenge which the Government have so far failed to address successfully.

In Wales, although most economic powers are not devolved, we can take some steps to improve the situation. My own party, Plaid Cymru, recently successfully negotiated with the Welsh Government to secure £40 million of funding towards 10,000 new apprenticeship training places in Wales as part of a

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budget deal. We are also pressing for a new procurement policy that could create several thousand jobs through sourcing public sector contracts domestically. Such an approach might be beneficial also for the deprived parts of northern England which, like Wales, are suffering from ineffective economic policies.

Wales needs job-creating levers to improve our economy, not handouts and workfare. That is why it is essential that the powers recommended by part 1 of the Silk commission are implemented as soon as possible. Real work and training is what is needed, not temporary workfare schemes to take people off unemployment figures for six months. At the very least, the Government must make sure that increases in benefit rates reflect rises in the cost of living. Otherwise, this proposed cut will deepen inequality, increase poverty and further dampen the economic prospects of poorer areas.

7.57 pm

Lord Whitty: My Lords, the noble Lord, Lord Sheikh, said it and, to a large extent, the noble Lord, Lord Wigley, demonstrated it as regards Wales; namely, that this Bill has wider social implications, but they are not welcome implications. They are to put a big burden of the sorting-out of our economic situation on low- paid working people. I follow the noble Lord, Lord Kirkwood, in saying that it is quite a dangerous move, after 20 years of virtual cross-party consensus, that we should virtually automatically uprate our benefits system, to break that system in this way in a Bill which is legislatively unnecessary. The noble Lord also said that we needed some clearer long-term thinking. My main points will be about that because, as many others have said, this Bill is surrounded by hugely misleading propaganda.

It is supposed to be part of a strategy on the part of the Government to reduce benefit costs, simplify the benefits system and increase employment, but any such strategy is put in jeopardy by a government believing their own propaganda and that of their press allies. That propaganda seems to be all about the distinction between the deserving and the undeserving poor—those who work and those who do not—but the burden of the Bill falls on those who do work, who are already squeezed by a cut in real wages, particularly at the lower ends of income, and who will therefore be twice hit by a cut in the real value of their benefits.

The propaganda also suggests that benefit recipients’ real living standards have risen dramatically faster than those who are in work. As the figures that have been provided to us by the CPAG show, the real value of unemployment pay and other social benefits has steadily fallen over several decades. The reason why there has been a slight reversal in the past couple of years is the dramatic fall in real wages at the bottom end. That is not a reason to aggravate that unfairness and retrogression by the means proposed under the Bill.

If the Government were really telling the public that we need to differentiate between those who work and those who do not, they would have provided for a benefit system that differentiated between levels paid to those in work and those out of work. The Bill does not do that. The Government have, rightly, stuck with

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focusing on need rather than on whether you are in or out of work. Of course, the downside of that is that they have hit both equally. For those who are in work, the Government claim that they have offset that by raising the tax threshold at the same time, but the tax threshold hike has been offset by the cut in housing benefit, the abolition for many and the cut for others in council tax benefit and other benefits. The net effect on the working poor of the Government’s measures has not been positive compared to those who are on benefit and who are out of work. The supposed strategy is as much at odds with the propaganda as the propaganda is at odds with reality.

I hope that the Government will find my second point slightly more constructive, but it is equally critical, not only of this Government but of previous Governments. Elements of the Daily Mail propaganda, as I would call it—to save Ministers’ blushes—are correct. That relates to the soaring cost of housing benefit and, within that context, to occasional, admittedly much exaggerated, stories of ludicrously high levels of housing benefit for particular families in particular situations, especially in London. Those families are obviously chosen to highlight a point. For obvious reasons, they tend to be families who fit the Daily Mail image of benefit recipients by being large in the number of children, probably out of work and almost certainly foreign.

There are thousands of other less dramatic cases in which, inevitably, housing benefit has risen above the rate of inflation. The Government, and all of us, have to ask ourselves why. It is because of the failure of the housing market, compounded, in some cases by the failure of local authority placement policies. It is not, by and large, due to the failure of the benefit system.

I have been banging on about the failures of the housing market for at least 10 years, for the past two years as chair of Housing Voice—as I should have declared—but so have many other people for far longer. The reality is that all parts of the housing market—out-of-reach mortgages, soaring private rents, unaffordable leasehold charges, the inadequate quantity of new social housing, and increasingly expensive social housing at that—reflect a failure to build, a failure to refurbish and a failure to provide housing choice fit for our society at various levels.

Hence, in all forms of tenure, housing costs are rising. Inevitably, that leads to a rise in housing benefit payments. I repeat that that is a failure of housing policy; it is not a failure of social security policy. I predict that the pressure on housing benefit, or what is intended will become the housing component of universal credit, will seriously sabotage and possibly completely undermine what I think is universally regarded as the commendable aim of introducing universal credit, unless housing benefit and the pressures on it are dealt with first in the wider context of housing policy.

Looking back, the roots of this problem go to a serious mistake, made, probably unconsciously, decades ago. Until the 1960s, the vast bulk of government intervention in the housing market was on the capital side: help to local authorities to build social housing; and help to homeowners and landlords to improve

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their stock. A much lesser proportion was on the revenue side in subsidies to people, and much of that was through tax relief on mortgage payments. We now have a completely switched system, so that more than 90% of state support in the housing market is revenue based and very little is capital based. In the next five years, £90 billion will be spent on housing benefit; £5 billion, at best, on new and improved housing. Within government, the two aspects are dealt with by entirely separate policies and entirely different departments. CLG designs housing policy; DWP decides housing benefit. If the two sides were brought together in one pot with one policy in one department, we could perhaps, over a period of years, develop a sensible housing strategy: building more houses, improving those we have, and providing selective support to tenants and householders who are faced with unaffordable costs.

Unless we do that, unless we take housing benefit out of the plans for universal credit strategy and put it back into housing policy, we will not solve the housing crisis, the pressure on housing benefit and therefore the pressure on the social security budget in total. Unlike other benefits, housing benefit—and, I guess, council tax benefit—depends not on your income or your family circumstances but on the home and the area in which it is situated and on the state of all the housing markets in that area. As long as the housing crisis persists, the total benefit bill will inexorably rise faster than inflation. Then the Treasury will again insist on real-terms cuts to the income of many of the poorest in our society, such as the proposals before us tonight.

I appreciate that in calling for a single approach to housing policy, I am parting company with some of my usual colleagues who are housing and policy campaigners, but I say to the Government and the Opposition that unless they start looking at this in a more strategic way and put both sides of the housing issue together, they will solve neither the housing crisis nor the pressures on the social security budget. Unless we do that, we will be back here in a few years’ time with a Government of one complexion or another unfortunately forced to put the cost of our failure on those who are least able to afford it.

8.06 pm

Baroness Gardner of Parkes: My Lords, it has been a very wide-ranging debate, and many different aspects have been developed by different speakers. I start by taking issue with the noble Lord, Lord Whitty, for saying that we on this side have tried to make this a battle between the deserving and the undeserving. I do not think that there should be moral judgments like that, and I do not believe that our party is making them. I will start with the noble Lord’s speech because it was the previous one and therefore it is fresh in my mind. It is important to realise that housing benefit has been a great problem. He says that we need to address it. Of course we do. One way to address it is to restrict it, and that is what has had to be done.

I have seen people living in properties who have been getting housing benefit of about £80,000 a year. That is just the benefit. It is not their living costs or

11 Feb 2013 : Column 535

anything else. People in employment might be earning £20,000 a year in the same area. It is pretty hard to watch that happen. When I was chairman of social services on Westminster Council, many years ago, we discovered that housing in London was terribly expensive even then, and that there was plenty of space and lots of unoccupied properties in, I think, Liverpool. It was somewhere quite remote.

We gave all those people who had no housing rights at all the right to go there. We provided transport and everything else, and Liverpool was willing to provide the accommodation. One-third of those people arrived there. The other two-thirds vanished into the blue. They went off our housing list, but they never appeared anywhere else. Evidently they would rather do anything than leave London. When we now see these people living in a little shed in a back garden in Acton or somewhere, it is terrible that people so desperately want to stay in London, where housing is, I would say, at the top of the range in price, and the least available. We had terrible trouble then because all the bed and breakfast hotel accommodation, which is so widely used now, was taken up by tourists or new arrivals to the country. Even to get a bed and breakfast space we at Westminster Council had gradually to move out wider and wider. It got to the point where no one in London had any bed and breakfast space available.

I feel for councils now that have nothing to offer people. This problem has not arisen in five minutes. It goes back a long, long way. When I was on the Greater London Council, I remember that we had a Conservative housing chairman and a Labour Government at that time. The chairman said, “This is the time when we could solve the housing problem, because I know what we need in London and the Labour Government have good ideas on what they could do”. However, it never happened because each of those authorities changed. The Government and the council changed, so the whole scenario changed.

Housing is a major problem. What is very bad is the continuing increase in utility bills and fuel rises. People in council blocks have recently told me that they can manage to pay the rent—they were renting from people who had bought their leasehold because that was all that was available—but they could not afford to warm the flat because the fuel bill is so high. That is worrying, because we were told that every effort would be made to see that fuel bills came down to a level where a card payment at a prepayment meter, which most of those people have to use because it is the only practical way for them to budget, would not be more expensive than having a quarterly bill. Yet only last week someone told me that it is still 10% more. Of course, it is going up all the time. That would be something—there are many things—that could be done to help people. The housing issue is not such a battle now. It has been addressed by putting a ceiling on housing benefit.

I heard the noble Lord, Lord Wigley, talk about Wales and the shortage of work there. Surely a lot of those people who cannot get anywhere else to live in the country could go to Wales. If you are living on a benefit, it does not matter where you are living if it is fully paid for by someone else. I do not understand that position.

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Lord Wigley: I am listening carefully to what the noble Baroness says. Surely she would not uproot families—families with children in schools and with support mechanisms around them in south-east England—and move them to Merthyr Tydfil or Middlesbrough, where they have no links at all.

Baroness Gardner of Parkes: I do not know that I agree. I arrived in this country and knew nothing about it. I had no job or anything else. Particularly if you have come from another country, it really does not much matter where you settle provided that you have the school that you want. Wales has always had a marvellous reputation for literacy, and I am quite sure that the schools would be good there. You want to be able to live in a safe, clean environment. Again, Wales is a beautiful country. I am a New South Welshman myself.

I do not want to be frivolous in this very serious debate. The one thing that we all have in common in this Chamber tonight is that none of us wants to see restrictions on anything. However, we just have to be realistic and look at the common sense of it. If we do not have the money to afford things, we cannot attempt to do it. It is all very well to think that you can do everything for everyone. I read in the statistics, which I think someone else quoted, that there was a 60% welfare increase under the previous Government between 2003 and 2010. Every household had to pay more than £3,000 a year to meet that extra increase of 60%, and the fact that we went too far and spent too much then is of course catching up with us now. It would be lovely if these things did not happen. However, this has happened and we have to try to put a stop on it, at least to be sure that we do not go on for ever.

The noble Lord, Lord McKenzie, spoke early on about how we denigrate people as being workshy. Again, when I was in dental practice we had only a very poor catchment area near us because the only way people could get to work was by bus. There was absolute overemployment in the country, but we would go to the jobcentre and get nice young people to come and start work. We made the mistake originally of giving them keys to the surgery. That was a big mistake because most of them did not last a week. Then you would phone and say, “Where is Joanie? We were expecting her at work”, and someone would say, “Oh no, she never gets out of bed before midday. We can’t do anything with her”. So this is not a new problem. There have always been people who did not want to work, but there are others who do. That is the tragedy today; plenty of people desperately want to work but cannot find the work, as the noble Lord, Lord Wigley, suggested about Wales. It really is a major problem.

However, the more difficult the world and the more difficult these situations, the more we have to address them. We cannot go on believing that it will all work out all right in the end, just keep your fingers crossed. I was very impressed with the speech by the noble Lord, Lord German. I have never heard him speak before, but he clearly understands all the technical terminology, which I cannot claim to understand at all. The noble Lord said that at the moment all these taxes hit the richest hardest. That is true, because they are paying the biggest bit. Someone else, who I think

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was on the other side—no, it was that marvellous noble Lord in the back row here. I cannot pronounce his name; it is a bit too difficult for me—

Lord Adebowale: It is Adebowale, an old Yorkshire name meaning Adebowale.

Baroness Gardner of Parkes: Thank you very much. The noble Lord said that some are hit harder than others and that to be hit hard if you are rich is not nearly as difficult as if you are poor. Every one of us would agree with that statement, so these things are not simple.

There was talk about food banks. The other day we had a question about food banks, which are a good idea. It is a disappointment that you might have to use a food bank but at least there is something there. When people talk about the difficulty of having to choose whether to warm the house or feed their children, surely food banks are better than leaving your child hungry. I can see someone disagreeing with me, but whatever I say, someone will disagree with me because there are two definite views on this. However, we have to be realistic.

I noticed that the right Reverend Prelate—was it the same Lord Bishop who is in his place? No, I think it was the previous one—the Bishop of Leicester said that it was just a short-term saving and that people were having to pay some element of council tax for the first time. Again, I think that council tax is perhaps one of the better forms of tax and that councils take into account where people really need help. I notice that even in business rates there is a provision whereby you can apply to have your business rates reduced, and that might enable you to stay in business and go on employing people who are working for you. Things are not that easy. The internet is destroying lots of shopping centres. There are issues there.

The noble Lord, Lord Touhig, made points that I agreed with strongly. He talked about the deserving and the undeserving. That seems to be the tag that they are giving us today. I remember Keith Joseph, in the days when he was very involved, talking about the cycle of deprivation. I have always thought that that still exists. If you do not know how to live frugally and do things for yourself, you cannot teach your children the same things because you do not know them to pass them on. This is very important. When times are hard for some people, they tend to buy food that is expensive and not necessarily nutritious. We get all the talk about obesity even in the very poor, and that is because the food that they can buy that is cheap is the worst for health. All these things are difficult.

The noble Lord referred to the climate of uncertainty and fear that we are trying to create—I do not know whether he said that we were trying to create it or whether we had done so—but that is certainly not the intention. There are things that we could do. I am strongly supportive of old people having bus travel passes or of transportability for people. Again, we did a great survey when I was chairman of social services and we discovered that the best thing possible was for people to continue to be mobile and to get around. If

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they could not afford the fares, they could not do that, and that added to the national health bill. If we are looking for a good economic thing, one of the good things is to keep people mobile and moving around as much as possible. The other things that are much more difficult are how to occupy them.

We have created a culture of dependency. As I said, those benefits went up 60%. This is the realistic situation that we have to bring back into line. The Bill has been demonised today in a way that is not fair. This side cares very much about people. It is simply that the answers are not easy. We would all like to do everything to help everyone, but you just cannot have it all ways. For that reason, I support the Bill.

8.19 pm

Baroness Lister of Burtersett: My Lords, this Bill should really be titled the “Welfare Benefits Downrating Bill” because it will downrate the real value of the benefits and tax credits upon which the poorest members of our society rely. The Bill’s length, together with its effects and some of the divisive arguments that have been used to justify it elsewhere, make it—unfortunately my noble friend Lady Hollis got in first with my best line—nasty, brutish and short.

Among those who face greater hardship as a consequence are the 200,000 children who will fall into poverty as families with children and poor mothers are particularly hard hit. In the words of the Children’s Commissioner for England, it is unacceptable that children should have to pay the price for the economic malaise of our country. Could the Minister please explain how this projected increase in child poverty is compatible with the Government’s obligations under the Child Poverty Act 2010? Moreover, as a number of noble Lords have said, about one-third of households containing a disabled person stand to be affected, despite the claims to be protecting disabled people.

I wish to examine the two main arguments used by the Government to justify this nasty Bill. The Secretary of State told the other place that the arguments are,

“first and foremost about affordability”,—[

Official Report

, 21/1/13; col. 128.]

and that deficit reduction is at the heart of the measure. Oddly, he countered the charge that social security spending had risen faster than anticipated under his watch by rightly pointing out that,

“a huge part of that is spending on pensions”.—[

Official Report

, 8/1/13; col. 188.]

Yet pensions are not included in his Bill, which is supposedly “all about affordability”, as my noble friend Lady Hollis has underlined.

Ministers enjoy using the affordability argument to ask the Opposition what they would cut instead, as have the noble Lords, Lord German and Lord Bates today. I cannot talk for the Front Bench but similar sums could have been saved in a much less regressive way by forgoing tax cuts that benefit the better off the most. I am talking about not just the regressive cut in the additional rate of tax but also the increase in personal tax allowances, which are of no help to the one-fifth of workers too poor to pay tax, two-thirds of whom are women; of only limited help to those in receipt of certain means-tested support, which tapers

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away with higher post-tax income, and this will be even more the case under the universal credit; and of most advantage to higher-rate taxpayers. As a Gingerbread report put it:

“It would be hard to design a policy that was less well targeted on low income families”,

than raising personal tax allowances—the more so, given that the better-targeted child benefit has been frozen, as the right reverend Prelate the Bishop of Ripon and Leeds has pointed out.

In any case, if the policy is really about deficit reduction, cutting incomes at the bottom is counterproductive because, as the IMF has pointed out, this reduces demand. People on low incomes are more likely to spend their money, and in the local economy. According to the Office for Budget Responsibility, the multiplier effect of changing benefit levels, for good or ill, is twice that of personal tax allowances. So what is the sense of taking money out of poor people’s pockets in order to put some back into better-off people’s pockets in a way that is less likely to keep the economic wheels turning? Again, a number of noble Lords have made that point.

The second argument concerns fairness. There are two aspects to this. The first is that over the past five years out-of-work benefits have gone up by about double average earnings. In the debate in the other place, a Conservative Back-Bencher said that it,

“cannot be right ... for benefits to rise, year after year, faster than the wages of the low-paid”,—[

Official Report

, Commons, 21/1/13; col. 101.]

but the past five years have been an aberration. With the exception of a much needed boost to the real value of support for children achieved under the previous Government, benefits have year after year gone up by less than wages because they have been linked only to prices. The consequence is that, according to Professor Jonathan Bradshaw, the value of the basic safety net benefit received by a single person is now only 11% of average earnings compared with 18% in 1948 and 20% in the late 1960s. Moreover, the replacement rate of unemployment benefits is low comparatively, meeting only 53% of former net earnings for a couple with two children on average earnings compared with an OECD average of 76%.

A Joseph Rowntree Foundation study of existing uprating policies concluded that they,

“imply substantial long-term reductions in personal disposable income relative to earnings”.

Indeed, the Minister, Steve Webb, told the other place that,

“we think that average earnings in a couple of years’ time will be more than CPI, as is the case in many normal years”.—[

Official Report

, Commons, 21/1/13; col. 114.]

So even the Government do not believe that benefits were going to run away ahead of earnings, if they continued to be uprated in line with the CPI.

As has already been pointed out, the differential impact of inflation on different income groups due to big increases in food and utility prices means that people on benefits typically will have been hit harder by rising prices than the people on average earnings with whom Ministers like to compare them. They are also being hurt by cuts in housing benefit and are

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about to face cutbacks in council tax support. We can already see the consequences in the growing hardship documented by charities and the inexorable rise of the new alternative safety net of food banks.

I wish to refer briefly here to the findings of the independent parliamentary inquiry mentioned by the right reverend Prelate the Bishop of Ripon and Leeds. The inquiry,

“was shocked to hear of instances where children were left destitute and homeless, entirely without institutional support and forced to rely on food parcels or charitable donations”.

The asylum support system, which has failed these children, has not been increased at all this year, not even by the miserable 1% in this Bill.

Percentage increases, or what the noble Lord, Lord German, called a small amount, have to be understood in the context of the value of the benefits themselves. Analysis by my colleague Donald Hirsch at Loughborough University shows how working-age benefit levels are well below the minimum income standards that members of the public believe are necessary to live a decent life. It is sobering to reflect that if I were a single, unemployed person the £71 I would get a week in jobseeker’s allowance is less than a quarter of the allowance I can claim a day for attending your Lordships’ House.

The other fairness argument that has been put was articulated by the Chancellor in his Autumn Statement when he maintained that,

“fairness is also about being fair to the person who leaves home every morning to go out to work and sees that their neighbour is still asleep, living a life on benefits”.—[

Official Report

, Commons, 5/12/12; col. 669.]

As has already been said, this has encouraged the framing of the debate in the loathsome terms of strivers versus skivers in which striving is misleadingly treated as synonymous with paid work and skiving with out-of-work benefit receipt. With reference to this the Joint Committee on Human Rights, of which I am a member, has reminded the Secretary of State,

“of the importance of fostering respect for the dignity of the vulnerable, including benefits claimants”.

I am very glad that so many noble Lords have made the point about the importance of the language that we use.

I hope in this context that noble Lords will also have regard to a new Joseph Rowntree Foundation study, which debunked the conventional wisdom of an intergenerational culture of worklessness despite a search in the kind of areas most likely to produce it. The researchers found that typically young people,

“aspired to a life that included work”,

The study said:

“Without exception, parents also hoped for better for their children and, where possible, made practical efforts to help them towards employment”.

The noble Lord, Lord Bates and Lord Sheikh, are not in their places, but they might like to read that study because they seem to believe that a dependency culture exists widely in this country. Study after study demonstrates the work commitment of people in receipt of benefits, and I am sure noble Lords would not want

11 Feb 2013 : Column 541

to follow the example of the Conservative Back-Bencher in the other place who insisted during the Second Reading debate that,

“there is evidence of a culture of worklessness, whatever the Joseph Rowntree Foundation says”.—[

Official Report

, Commons, 8/1/13; col. 238.]

And what was the evidence? It was a caller to LBC radio.