So how can this be done? The vast majority of mentally ill people on ESA are suffering from depression or anxiety disorders. For all these conditions, NICE recommends the offer of psychological therapy. For severe depression and some anxiety disorders, it also recommends medication, but we know from the evidence that most patients would prefer psychological therapy. However, until 2008, NICE-recommended psychological therapy was hardly available at all on the NHS to this group of patients. Since then, however, the Improving Access to Psychological Therapies services have become available nationwide—partly due to the efforts of the noble Lord, Lord Lansley—and in the past 12 months these services saw nearly a million people.
Incidentally, the services have different names, and your Lordships may not always realise that what they are talking about and seeing is an IAPT service—I will just use the term IAPT. The key step, therefore, is to ensure that every person with depression or an anxiety disorder who is awarded ESA is referred to an IAPT service. I am planning to move an amendment—I hope in agreement with the Minister—to ensure that this happens. It should happen as automatically as possible, although we should allow the claimant to decline. We should make sure that this is an automatic part of the procedure.
The first step would be to get the claimant an assessment of his health problem. Your Lordships may not be aware of the extraordinary situation that, when people come on to ESA with depression or anxiety disorders, the vast majority will never have received a diagnosis of what is wrong with them and will have no specialist assessment of what their problem really is. They will have seen their GP, but for most of them that will be all, unless they have been referred to an IAPT service. What we need is a mechanism whereby all those coming on to ESA are automatically offered an assessment by the IAPT service locally and, following that, suitable psychological therapy. Ideally, this could all be arranged on the first day after the award of ESA, when the claimant is called to the jobcentre to be allocated to the Work Programme. Next they would be invited to go along the corridor to see Mrs or Mr So-and-so. This has to be the way to go.
By contrast, it has sometimes been suggested that we should create a separate system of psychological therapy for people whose mental health problems are affecting their employment. However, it would be extremely costly to build up a separate system; and when we have one system that is working well, that is what we should build on and use. But of course it needs improving. In particular, it needs to include professional employment support for those looking for work or at risk of job loss. This was a central feature of the original design for IAPT, which, in fact, prescribed one employment support worker for every eight therapists. Unfortunately, the Department for Work and Pensions objected to this suggestion by the Department of Health and said it was its own job to do it, but then it failed to get the money and the job did not get done at all. This is, roughly speaking, what has continued to the present day.
Fortunately, the Government—led by the Minister—have now piloted a system of individual placement and support, which will be introduced within the
IAPT services. That is excellent news. Obviously, the best location for employment support workers is within the therapeutic team so that they can exchange their understanding of the claimants’ problems. However, for any of this to work, the claimants must first be referred to an IAPT service. As I said, half of them are not referred to anything and are in no treatment of any sort, so the key issue is to make that happen. But could the IAPT services cope with the extra numbers of people? The answer is yes, if the resources are provided. Of course, no alternative system could cope either without the resources being provided.
Where we are now is that the IAPT services are seeing 15% of all the adults in the community with depression and anxiety disorders. The Department of Health has proposed to the spending review that this should rise to 25% by 2020. In my view, expansion on that scale is vital, on the grounds of parity of esteem for the claimant and of simple, common-sense economics. When people recover from depression and anxiety disorders, there are massive savings in reduced welfare payments, increased tax receipts and reduced costs of physical healthcare. Our calculations are that if the proposed expansion from 15% to 25% is allowed to happen over the next five years, the public debt in Britain in 2020 will be £1 billion lower than if we did not have the expansion that we need to have. This is because clinicians recognise employment issues as an indicator of clinical priority. Work can be a major therapeutic agent. We can confidently say that the IAPT services would respond if they were given the job of treating this group of patients. The bigger doubt is about the willingness of the jobcentres to refer people; we have had a lot of trouble trying to make that happen. That is why we need legislation to ensure that a rational system of referral is put in place.
I know that the Minister is very interested in this issue and I hope that he can help us to devise a practical solution for the present absurd situation. What we have is taxpayers paying billions of pounds to people who are unable to work due to a treatable condition, for which they are not being treated. This cannot make any sense. It makes no sense for the people themselves, for whom it results in terrible hardship, or for the Exchequer. It is time that these people got the treatment that they desperately need.
5.46 pm
Baroness Doocey (LD): My Lords, the Government's pledge to halve the rate of unemployment for disabled people is very welcome, but I question whether their proposals will deliver that promise. The Bill requires the Secretary of State to report back to Parliament on progress towards full employment, apprenticeships and work with so-called troubled families, but there is no mention of reporting back about progress on halving the disability employment gap. Why? What of the action the Bill proposes to support disabled people into work?
The biggest barrier to overcoming the disability employment gap is employer attitudes. Most disabled people lose out on a job because of the way employers perceive their disability. Employers may sign up to the guaranteed interview scheme for disabled people, and I
recognise that the public sector leads the way on this, but real-life experience suggests that this is all too often a tick-box exercise that simply raises false hope.
Take the example of a young man I know who is blind. He left university with an excellent degree. His interpersonal skills and his writing ability are second to none, and he has excellent computer skills, yet he has spent much of the last 12 years searching for paid employment. He could paper the walls with the rejection letters he has received in that time. His experience in interviews has left him convinced that even the most enlightened employers see disabled applicants as simply too risky. The Bill does nothing to tackle the discrimination that people like him face when looking for work.
The second barrier to work for disabled people is inadequate support to help them find work. The Work Programme has a very poor record of supporting disabled people to find work, and the feedback that I have received from disabled people suggests that disability advisers at jobcentres—if available at all—are less than good. The majority of employers are small enterprises, which will not necessarily have practical adaptions such as disabled toilets or lifts, which are essential for people with disabilities. Employers who employ disabled people therefore need to be certain that specialist support and accurate practical advice are available from government, easy to access and professionally delivered. A poor experience will simply reinforce employment prejudices against disabled people. Without a coherent, consistent and locally tailored service to support disabled people into and in work, Ministers will fail to make real progress in cutting the disability employment gap.
Not only does the Bill not do enough to tackle the barriers that disabled people face in finding work, it does nothing to fix the woeful record of the work capability assessment. The failure of the assessment has been bought home to me by the experiences of a close friend. Injured in a motoring collision, my friend Ann has endured years and years of successive operations and chronic back pain. Her pain clinic judged her unable to stand for more than three minutes at a time, yet, despite that, she was classified by the government system as fit for work until her consultant was so concerned that he waded in and helped to get her reassessed.
While doing nothing to confront the frequently inaccurate assessments, the Bill does address those who are considered unfit to work now but who may be fit to work at some time in the future—the work-related activity group. For the sick and disabled people in this group, Ministers plan a £30 a week cut in the employment and support allowance, claiming that this will incentivise them to find work. If the Government’s tough, not to say harsh, assessment regime has judged them unfit to work, what do Ministers expect the £30 a week cut to do? Do they think it will act as some kind of miracle cure for their illness or disability?
The language of the Bill, and that used by Minsters, in talking about incentivising disabled people to work is patronising in the extreme. Disabled people want to work; disabled people do not need to be incentivised. What disabled people need is for government, and society as a whole, to work at removing the barriers
placed in their way—barriers that hundreds of thousands of disabled people who are in work overcome every day, often with Herculean effort, energy and patience.
The Bill as drafted will move disabled people further away from the workplace and act as a disincentive for people in the work-related activity group. In addition, it does not answer the fundamental question: what do the Government plan to do to educate non-disabled employers and recruiters about employing disabled people? I look forward to addressing these issues further in Committee.
5.53 pm
Lord Rix (CB): My Lords, first, I must apologise for being absent from your Lordships’ House for the last 18 months, but a touch of cancer, a pleural effusion and other ghastly things which can happen to people approaching their 92nd birthday have, understandably, kept me otherwise occupied.
It is of course people with a learning disability with whom I am most concerned. While there are some things to welcome, a number of clauses in the Bill will hurt many people with a learning disability, together with their families and carers. There are 1.5 million people with a learning disability in the United Kingdom and, while we have come a long way in building a more inclusive society, understandably many are on the margins, few are employed and many live in poverty or close to it. The Government have said that they will protect vulnerable and disabled people, and indeed it was clear in the Conservative manifesto that that was their intention, but I fail to see how the Bill meets that commitment.
One should of course give credit where credit is due, and it is extremely welcome that the Government have chosen to protect the disability living allowance and its replacement, the personal independence payment, from these cuts. Many people with a learning disability rely on these payments to make ends meet. However, those with mild and moderate learning disabilities are not always in receipt of DLA and PIP and so would be adversely affected by the benefit cuts and benefit freeze. The majority in this group are on employment and support allowance, a benefit specifically for people found unfit for work on account of their disability or illness.
Regrettably, the Bill also proposes cutting employment and support allowance for new claimants in the work-related activity group by around £30 a week. Currently, there are half a million sick and disabled people in this group, almost a quarter of a million of whom have mental health problems, autism or learning disabilities. These are people found unfit for work, albeit encouraged to take steps towards work, training and the like. Cutting their benefits from £102 to £73 a week is going to have a huge impact on this group. Fewer than one in 10 people with a learning disability are in work and are reliant on this much-needed income in order to make ends meet.
The Government have stated that the cut is to remove financial disincentives to work. This seems to imply that people with a learning disability are living a life of luxury on benefits, free from the desire to work.
This is, frankly, insulting. There are of course barriers to work for people with a learning disability, ranging from employer attitudes to a lack of support in finding work, integrating and staying in work. The Government have pledged additional money to support people into work by the end of this Parliament, which is a welcome commitment. I hope that the Minister can confirm that a proportion of this money will be spent on those with significant barriers to overcome, including those with a learning disability.
I look forward to Committee on the Bill. Alas, I do not know how much of a role I will be able to play in the House over the coming debates, but I certainly hope that my colleagues will speak on behalf of those with a learning disability if I am unable to do so.
In conclusion, I wish to ask a question to which the Minister may find it a little difficult to give an honest answer. Where is the evidence that cutting benefits results in more people with a learning disability getting a job? I rest my case.
5.58 pm
Lord Lupton (Con) (Maiden Speech): My Lords, it is a great honour to stand here as a Member of this House and to speak for the first time. I begin by expressing my thanks to noble Lords on all sides of the House for the warmth of the welcome I have received. The huge amount of support available to newcomers such as myself from your Lordships, the doorkeepers, the clerks, the Library, the IT support staff, the Pass Office, the dining rooms and all the members of staff have greatly eased the rites of passage, and I thank your Lordships and them warmly.
I should also like to thank my supporters for their advice and encouragement: the noble Baroness, Lady Kennedy of The Shaws, whom I first met three years ago when I joined the board of trustees of the British Museum—an arrival she immediately celebrated by announcing her departure—and my noble friend Lord Rose of Monewden, who has been a business friend for many years. I could have no finer supporters, spanning, as they do, my interests in business, the arts and the not-for-profit sector.
Finally, I give thanks to my noble friend Lord Borwick, who has approached his duties as mentor with exemplary zeal. Two weeks ago, I made the mistake of mentioning to my noble friend that I was about to spend an early Friday evening with my pass and a map familiarising myself with this building. Within minutes, I received an email from him listing six obscure rooms that I had to find—a very upmarket sort of treasure hunt.
I am glad to make my maiden speech on a subject so vital as the Welfare Reform and Work Bill. I support the Minister’s aims for the Bill, and in particular I want to highlight the work of the troubled families programme, which the Bill seeks to enhance. Based on my family’s active interest in the welfare of those children right at the bottom of the social pile in the UK, I feel that the troubled families programme is on the right track but still has a lot to do. I suggest that more focus be brought to the needs of the most troubled children in our society.
I should like to put my speech in context. My two brothers and I grew up in a beautiful part of north Lancashire, where my father ran our long-established textile engineering business from a dark, satanic mill in Accrington, until the de-industrialisation of our UK cotton industry put it, and its many employees, out of business some years after my father’s retirement. We were brought up in an environment where love and mutual respect were strong; where hard work was expected; where ambition and, yes, competition were encouraged; where knowledge was held precious; and where the concept of community service was regarded as the expected norm. We lacked for nothing but we were taught not to want everything. It was a perfect childhood, and it gave me the foundation and all the tools to make the best of my life. Would that every child in Britain should be so lucky.
That brings me back to the Bill. It is right to highlight that income may be important in measuring poverty, but it is not the only measure. The Centre for Social Justice report, Reforming the Child Poverty Act, highlights the five measures of worklessness, family breakdown, educational failure, addiction and serious personal debt as elements of an interconnected problem that income-only based definitions of poverty fail to cover. To end poverty in this country, we cannot afford to just play with statistics; we have to strike at its underlying causes.
That is what makes the work of the troubled families programme indispensable. This programme aims to identify families in difficulty who have complex needs at a local level, and to intervene to help them directly. Three years ago, the Prime Minister set local councils the challenge of joining up services to help 120,000 such families. By now, 116,000 such families have been helped, but we simply cannot stop here. In its 2012 report, the riots panel estimated that there are around 500,000 “forgotten families” experiencing multiple disadvantages that require intensive intervention. This is a major problem of our age and of our society.
I want to go further: I have a concern that there is a whole class of young—sometimes very young—damaged children effectively growing up alone, in that they are not even part of what we think of as a family. They are not in families at all. I have met teenagers with six siblings, each from a different father. I have met children who have been physically and emotionally abused by their mother’s boyfriends. I have met children who have been excluded from school aged 13 because they have never been given a concept of boundaries and acceptable behaviour, and children who have turned to committing sexual acts on the street at that young age to fund their mother’s heroin addiction.
Why would children as young as 12 or 13 be on the street alone? Because they may have been excluded from school for their almost feral misbehaviour, caused by their lack of any upbringing. The school will have complied with DfE guidance by notifying a parent of their exclusion, whether or not any mother, father or guardian was capable of picking them up, due to their own inadequacies. Surely, that is a case where the law is failing in practice in its primary duty of care to the child rather than the school.
One might consider such a child to be beyond hope. However, it is remarkable how the human spirit can overcome impossible obstacles in the desire to survive and thrive—given help. I saw this last Friday afternoon, when my wife and I visited the Mulberry Bush School near Oxford. I declare an interest, as our family charitable foundation has recently made a small initial grant to the school. We saw first-hand the inspirational help that that school gives to some of the most damaged children in the UK, from the ages of five to 13. These are children who, in the school’s own words, have,
“been so constantly deprived and frustrated that they are full of helpless rage, which one day will manifest as panic, violence and destruction, and we must find ways to intervene early to break this destructive cycle”.
I ended our visit to the school having a conversation about shifting continental tectonic plates with a lively 12 year-old boy who only two years ago could not read or write a word; nor could he express himself intelligibly.
A good upbringing is not available to all children because, as the CSJ says in its report:
“Many of these parents received poor parenting themselves when they were children so the cycle continues unless the right intervention is given”.
We have a moral, social and economic need to intervene.
The children I describe seem, through no fault of their own, to fall between the lack of statutory duties of the DfE after they are excluded from school and the DWP, because of their young age. That is why the troubled families programme is so vital. It specialises in a whole-family approach, it cuts through jurisdictions and statistics, and it helps people who need it most. It uses many different models to fill the gap that I describe.
My point is that the new reporting requirements for the troubled families programme as set out in the Bill are a useful step in the right direction. But there is so much more to develop, not least whether there are more relevant ways to measure success so that the payment-by-results approach can be applied to greater effect and children who somehow survive in what is anything but a family unit are scooped up into the care net.
We owe it to the legion of “lost families” and “lost children” to intervene. I applaud the direction of travel of the troubled families programme, especially the renewed investment of a further £200 million to add to the £448 million already invested in this programme. I finish by quoting what Confucius is credited with saying some 2,500 years ago:
“The strength of a nation derives from the integrity of the home”.
Some things, my Lords, do not change.
6.08 pm
Lord Borwick (Con): My Lords, I first must congratulate my noble friend Lord Lupton for an outstanding maiden speech, in which he has carelessly set the bar very high indeed for his future performances. I have known the noble Lord for some years, and I know that he is widely respected in the City of London and by his colleagues. To have that combination of wisdom and friendliness is an awesome mixture, which will encourage no end of requests for him to volunteer
to help in this House. I predict that we will hear from him those words often muttered in this House, “I wonder why I volunteered for that”.
My noble friend Lord Lupton is clever enough to actually understand the welfare system, while not actually needing it. I recently saw a video on YouTube making the point that it would take the world’s fastest speed-reader more than five days straight to read through the entire UK tax code. The regulations and guidance on the myriad benefits that are available to claim may pose an equally difficult challenge, so much so that I am sure that the ability to really understand the benefits system is a skill that would make anybody employable at a very high level.
I noticed that the benefits cap puts a cap on a total of 14 different benefits. We have a structure so convoluted that I am not sure that anybody who administers it can really control it. Universal credit will do much to simplify the system but there are still dozens more benefits, which keeps things complex.
Perhaps much of the complexity came from a previous Chancellor, Gordon Brown, a man who is reputed to believe that anybody can understand this composite cat’s cradle. I am not sure how many claimants get all 14 benefits, but the sooner we get a simpler system in place, the better.
So, the benefit cap—at £23,000 in London and £20,000 elsewhere—has to be a step forward. I wonder, though, whether future claimants will regard it as a new measure of success to get the maximum rather than anything less. I am sure that we can rely on the benefits system to retain enough complexity to keep people employed.
I wanted to talk about Clause 20, an important clause which manages to take up 38 lines without using the one word which describes the subject of that clause—Motability. Clause 20 takes up those 38 lines, and only manages to improve the Government’s deficit by charging Motability a sum of about £1 million. Every million pounds counts, we are told.
The Motability scheme has been a great success over very many years. Founded by my noble friend Lord Sterling, it has enabled millions of disabled people to get a car—which would otherwise have been impossible. Indeed, it has provided finance to a group who may be described as being about the only big group in our society unable to obtain finance. This is partly because of the well-known fact that poverty is inextricably linked with disability. The regular stream of income from welfare payments is irrevocably diverted to the Motability scheme for the length of the finance term. Because of this, Motability has been able to obtain catering quantities of finance to lend to disabled borrowers. It has then been able to use its buying power, as the largest individual purchaser of cars, to obtain discounts unavailable to other people. Of course, there is a further enormous difference in the VAT position. VAT is not charged on vehicles purchased by Motability, but a second-hand car is generally sold without VAT.
I may have a certain advantage over other noble Lords in that I had the privilege of running a portion of the Motability scheme. That involved financing
wheelchairs and scooters, in partnership with a great charity called the Enham Trust, for a period of seven or so years until we sold it back to Motability Finance. So I have no interest to declare, but I do have a certain amount of out-of-date knowledge and a lot of respect for the people who run the Motability scheme. When I took over the powered wheelchair finance scheme, I little realised that I was entering a trade that made the fictional Arthur Daley look like an angel. The scams, rip-offs and downright fraud, with disabled people as the victims, were amazing. We sorted out the book and got rid of most of the bad dealers, promoting the good ones and serving the customers much better.
One thing always puzzled me about the car scheme—the way that the scheme provided the same sort of car, including insurance, everywhere in the UK. That was because the level of benefit was identical throughout the UK, despite car insurance varying widely in price depending on where you lived. Essentially, then, disabled customers in countryside areas, or perhaps with small mileages, were subsidising disabled customers who lived in London or Northern Ireland—places with historically higher insurance rates.
Given the immense problems which disabled people generally face, perhaps one group of disabled people having an unfair advantage over another is not the worst problem that can perplex noble Lords who are trying to do the right thing. Maybe we should try to do something about why disabled people are generally poor, or why poor people have a greater chance of becoming disabled. There are difficulties with both, but I feel that the problems of cross-subsidies could perhaps be ameliorated by the structure hinted at in this Bill—that of introducing more competition into the Motability scheme. If there were a choice of finance providers, such bias in the system would soon disappear. There is a king-sized danger of vulnerable customers being mistreated, as there is in any finance scheme, but competition and good regulation have a way of driving out the bad guys.
The great success of the Motability structure over the last 40-odd years of its existence is that it has really changed the market. It has moved disabled drivers from those horrible three-wheeler Invacare trikes, known to most people as Noddy cars—and usually mistaken for Reliant Robins—into a system where, if you were looking for the group with the highest percentage of new cars, it would probably be younger, mobility-impaired, disabled people. That they have more new cars, financed at cheap rates, is a triumph. So this partnership between a charity and a finance company is a powerful structure.
Why do we limit it to things with wheels? Could it not be widened to embrace parts of the health service and benefit distribution as well? Noble Lords on all sides of this House would encourage the Government to do more of what they do well. Noble Lords on this side would like to stop the Government doing things they do badly. Surely the Motability system is one of the best organisations that we have, so we should look at ways to widen the range of things it might do. I wholeheartedly welcome Clause 20 of this Bill, but I ask the Minister whether it could not go further forward on this point.
6.15 pm
Baroness Hollis of Heigham (Lab): My Lords, the wind-up speech on Third Reading of this Bill by the Minister of State at the Department for Work and Pensions, Priti Patel, in the other place on 27 October was remarkable. Much of it was echoed today by the noble Lord, Lord Freud. I believe that almost all her assertions were false, apart from the fact that she supported the Bill. Priti Patel said that welfare spending was out of control; she said it was “unaffordable” and that we needed to make cuts which were “fair to taxpayers”.
That is false. Tax credits did not rise from £1 billion to £30 billion, as was parroted down the other end, but they built on the almost £5 billion base we inherited from the admirable family credit of the noble Lord, Lord Fowler. Some 50% more lone parents entered work with the help of tax credits, and the income support bill fell from £15.7 billion to £2.9 billion between 1996-97 and 2012-13 as women transferred from out-of-work benefits to in-work benefits—tax credits. Add the fact that more than two-thirds of the jobs created between 2008 and 2013 were for people in self-employment with a median income of £10,000, who needed tax credits to survive, and that broadly explains the cash rise. Have we been told that at any point? Oh no, my Lords.
None the less, is the welfare bill unaffordable? No, my Lords, false again. The Office for Budget Responsibility report, Welfare trends, of October 2014, shows that welfare benefits, including pensions, as a share of national income —GDP—which is surely the true test, were 12% in 1983-84 and 12% in 1993-94, and are 12% now. They have not raced away, but have been broadly steady, fluctuating only a little in times of recession. Have Ministers told us that either? Oh no, my Lords.
The Minister in the other place says that we must be “fair to taxpayers”. This assumes that there are two tribes—benefit recipients and taxpayers. We heard something about this today. Professor Sir John Hills’ research shows that even the poorest pay for half the benefits they get back through their national insurance and taxes, especially indirect taxes. The mirror-opposite is true: most of us get back most of what we pay in over our lifetime. As my noble friend Lady Sherlock said, social security smooths out and supports us. This happens if we have children, through child benefit; if we experience a broken marriage, unemployment or under-employment, disability, caring responsibilities, bereavement or old age. Speaking personally, while paying taxes every year, I have also received benefits to help smooth five of those seven life-changing circumstances. That will be true for many of us here. Indeed, over the course of 18 years, half the population has needed and received a means-tested benefit. There are not two tribes of taxpayers and benefit takers. It is a fact that almost all of us are both, often at the same time, one with another. Shame on those who deliberately inflame social hatreds with such malevolent fictions.
The Minister in the other place also claimed that she was part of the “one nation Government”. Equally, the Prime Minister has talked about “compassionate Conservatism”. Really, then why are we loading these expenditure cuts on the backs of the poor? Why push
the poor into debt to help the Government out of it? Compassionate Conservatism? We have heard about ESA. Disabled people want to work, but DWP work programmes have failed, so now the Government are going to press them into work by cutting their benefit by £30 a week to JSA levels. Most of them will not work because they cannot. Instead, they will appeal, as nearly 40% of them do now, and more than half will win those appeals. They will move further away from work into the long-term support group of ESA instead.
Compassionate Conservatism? Let us take the benefits cap. Half the 120,000 affected families, larger families living in the private rented sector, will lose more than £50 a week. The Government cut local housing allowance because a couple of years ago the noble Lord, Lord Freud, believed, against all the evidence, that this would bring down private sector rents. He was wrong; it has not and it will not. Only an increase in the building of new social and affordable rented homes will check rents. Instead, with its 1% cut, the Bill does exactly the opposite. You could not make it up. It will remove around 19,000 prospective local authority homes and probably even more housing association homes from potential construction. Norwich, Milton Keynes and Cambridge are cities with high housing demand, but they will cut back their supply. From next April, a capped family of four will not get enough housing benefit to pay for any private rented home in London. I am told that a capped family of five will not be able to pay for a three-bedroom housing association property anywhere in the country. One nation? There is not even one city as the poor are moved on and out, destabilising the very family life that Mr Duncan Smith calls for.
Finally, in the name of compassionate Conservatism, let us take children. The Prime Minister and the Chief Whip told the country during the election that child tax credits would not be cut, but in fact they will be. In addition, the Government will remove funding of £3,325 from the family element for the third child and more, even if that child is disabled—from Catholic, Jewish and BME children; from families who have offered kinship care; from one in seven families. We do not refuse the third child his school place or her hospital visit because every child matters—except to the DWP. We do not even deny better-off families child benefit for the third child. Most European countries actually increase support for larger families because they care about child poverty, but not this Government. Suffer the little children in larger families—and they will indeed suffer, to our shame.
The Minister, Priti Patel, went on to say:
“This Government are committed to working to eliminate child poverty and to improving life chances”.—[Official Report, Commons, 27/10/15; col. 305.]
That is impossible. Every measure in this Bill will increase, not eliminate, child poverty. No doubt that is why the Government will no longer count the numbers; it is too awkward. Instead, we get “life chances”, allegedly determined by worklessness and educational attainment, along with addiction and other issues thrown in. This is grotesque.
Worklessness? Some two-thirds of children in workless families are not in poverty, while two-thirds of children in poverty are in working families. The research is
unambiguous. Life chances are determined by income, not, as the Secretary of State seems to believe, the other way around. In the 19th century there was a belief that if you could only remoralise the poor, there would be fewer of them, or possibly none of them. A few sentences later in the same debate, the Commons Minister insists that the Government,
“are absolutely committed to protecting the most vulnerable in society”.—[
Official Report
, Commons, 27/10/15; col. 306.]
Unless, of course, they are disabled and in a WRAG, or vulnerable children.
That brings me to the Government’s final claim: that they are the workers’ party. It is a pity, then, that working families on tax credits and UC will be poorer in the future. MPs swagger down at the other end, telling them to work longer and harder, but for what? After tax, national insurance, and HB and council tax tapers, low-income families on tax credits will lose 96p in the pound for every extra hour they work. They will keep 4p. Even with UC, which I support, the same family will keep just 19p in the pound. Does 4p in the pound per hour really make work pay? Would any lone parent, mother or indeed any of us trade an hour caring for our children to earn 4p an hour? I would not. Or does the DWP propose to sanction her into it? As the Spectator said, these are battles of choice by the Government, not battles of necessity. They do not need to do it. Please spare us unctuous phrases like, “difficult decisions” and “hard choices”. For whom, exactly? They are not for Government Ministers. The hard choices and harder lives will fall on the working poor, on disabled people in WRAG and on children as people struggle to avoid debt, arrears and eviction, as their health deteriorates and their families break up. That is the offer in this Bill from a self-professed one-nation Government. We can surely do better than this.
6.27 pm
Lord Low of Dalston (CB): My Lords, here we go again with another round of ideologically driven cuts to welfare. I say “ideologically driven” because we do not need all this austerity. This is not the moment to argue the point, but we do not. Even if we did, requiring the poor to bear the brunt of it reflects a highly retrograde sense of priorities. Be in no doubt: this Bill represents a clear government decision as to their priorities, which could have been otherwise. It is the brainchild of people who are on a mission to shrink the state. Welfare can disincentivise work and keep people in a state of dependency, and that is rightly being tackled, but overwhelmingly, welfare benefits are paid to people in need and are the product of a society which increased prosperity and increased state provision has made increasingly civilised. The Bill legislates for a raft of cuts to meet the Government’s target of cutting £12 billion from the welfare budget. That cannot but have a devastating impact on poor people who depend on benefits. We should remember that Tony Blair was reputed to have asked what you had to do to save £1 billion on welfare. He was told that 1 million people have to lose £1,000, so 12 million people will have to lose £1,000, which is an awful lot.
These cuts are likely to have a disproportionate impact on disabled people, which I begin by highlighting. Here I declare my interest as a vice-president of the RNIB. The Government have made a welcome commitment to protect DLA and its replacement, personal independence payment, from the proposed cuts. However, the Bill cuts a number of working-age benefits that disabled people are disproportionately likely to receive, such as ESA, JSA, housing benefit, tax credits and the new universal credit. Households with disabled members in receipt of DLA/PIP or who are in the ESA support group are exempt from the benefit cap. However, many disabled people do not fall into these categories. In particular, those in the ESA WRAG group would be subject to the cap, despite being found unfit for work and despite DWP research showing that only half of those in this group were also claiming DLA/PIP.
The Bill freezes a number of key benefits that many disabled people receive, such as JSA, housing benefit and universal credit. Those on DLA/PIP are exempted from the four-year freeze, but specific elements targeted at disabled people, such as the basic rate and work-related components of ESA, housing benefit and the limited-capability work component of universal credit, are frozen. These are clearly matters we will want to pursue in Committee. I merely flag them up. I do not propose to pursue the impact on disabled people further this evening because, along with the noble Baronesses, Lady Meacher and Lady Grey-Thompson, I am carrying out a review, supported by a number of disability charities, of the impact of the cuts in ESA for those in the WRAG group and it is best that I do not anticipate the review.
Instead, I want to talk about two issues in the context of the Bill: first, how claimants might get the support and advice they need to adjust to the changes; and, secondly, how to protect against the worst effects of sanctions hitting the most vulnerable. For the past three years, I have been chairing a commission on the future of advice on social welfare issues, which has highlighted these issues for me.
Starting with information and advice, every time we debate new measures on welfare in this House, we find that the complexity of the regulations and rules around things such as conditions of entitlement, contributory and non-contributory elements, time limits, disability benefits assessment descriptors and differential withdrawal tapers baffle even the most expert. How much more baffling must the system be to claimants who have to grapple with long and unclear forms, technical language and shifting entitlement rules? For those in insecure employment or in and out of low-paid work, just calculating income accurately can be a nightmare. Even when claimants get all their information right, the system is prone to error. DWP estimates that just as a result of simple administrative errors, claimants are underpaid by £1.4 billion and overpaid by £2.4 billion. Then there is the vast number of decisions that DWP gets wrong. The success rate on appeals runs at more than 56%, despite the introduction of mandatory reconsideration.
Universal credit claims to tackle, and eventually remove, many of the system’s complexities, but, as it proceeds laboriously through stage-by-stage
implementation to absorb new rules and aggregate different benefit entitlements, new complexities emerge. For example, there is a misunderstanding of the rules or gateway conditions governing who is eligible to claim universal credit in the first place and whether tax rebates count as earnings under universal credit, and the regulations now differ significantly between digital trial areas and elsewhere. New residency rules and interaction with child benefit and child tax credits are a further source of confusion.
Universal credit implementation and the ongoing impact of the 2012 reforms affecting disabled people’s transition into either the new ESA or PIP regimes are generating additional pressures on advice agencies as more people seek support on how to claim, how changes to benefits calculations affect their household income and how to challenge decisions through the tortuous reconsideration and redress process. All but second-tier appellate tribunal issues have been taken out of the scope of legal aid and local government funding for welfare rights advice has also taken a massive hit. The availability and quality of advice has been adversely affected as demand has rocketed. More than one-third of the issues that present to the CAB network concern welfare benefits. Last year, there were around 1.8 million issues spread over nearly 650,000 clients, overtaking debt as the largest category of individuals that CABs deal with. Our commission argues that a new strategy for advice should be put in place on an invest-to-save basis and on the basis that early preventive rights-based advice, provided through CABs and other agencies, can save resources in other parts of our public sector welfare and support systems as well as in health and criminal justice.
Cabinet Ministers appear to recognise that intermediaries and advice can play an important part in the welfare system. As part of universal credit delivery, local authorities are expected to play a key support role by arranging provision for face-to-face services for those claimants unable to manage their benefit claim electronically or for those with more complex and multiple needs. The universal credit local support services framework, agreed between DWP and the LGA, has followed from a number of pilots. The model is based on partnership working between DWP and jobcentres, local authorities and contracted providers, such as housing associations, including in the voluntary sector, and with money advice agencies as key delivery partners. There is also some specific outcome-based funding support from DWP to local authorities for the programme, which I hope will be protected from the Chancellor’s cuts. Overall, this initiative is very welcome, although the stress is on financial capability, that is to say budgeting on benefits-supported lower incomes, and on supplementing back-to-work support rather than welfare rights, income maximisation and related social need.
How much help is this programme really delivering? How many delivery partnership agreements have been signed? So far the Minister has announced only 11 local partnerships, the same partnerships that were piloting this approach before. If this is the scale of the scheme, then it hardly qualifies as universal support. The Bill should address whether the information and advice support services’ framework for welfare reform should
be put onto a statutory and less discretionary footing or should at least form part of DWP’s statutory guidance, perhaps linked to the information and advice strategies that local authorities are having to prepare to meet their obligations under the Care Act 2014. This statutory guidance approach could also make it clear that expectations around delivery must be factored into local commissioning or grant-making arrangements that councils use to support their local advice sectors. The whole universal support process should be one of co-production between statutory agencies and the independent advice sector to underpin the proposed delivery partnership agreements.
The second issue is the growing concern about the use of sanctions in our benefits system. There are protections or safeguards in DWP guidance dating back to 2000 to prevent automatic sanctions applying to vulnerable claimants or to claimants with complex needs, based on social services data and mental health status and, if necessary, home visits. However, as legislation and regulations have become more complex while, at the same time, reinforcing conditionality and sanctions as approaches to encouraging work-seeking behaviours, this guidance is becoming increasingly outdated and weak. This is especially the case in respect of universal credit claims, new JSA claimants and clients of Work Programme providers. There is also often a lack of awareness of the safeguards among DWP and Work Programme provider staff. The Work and Pensions Select Committee report on sanctions after the Oakley review recommended that safeguards should be included in legislation. This Bill gives us the opportunity, and I shall be bringing forward amendments to bring that about.
6.39 pm
Earl Cathcart (Con): My Lords, this is the first time I have spoken in a welfare Bill. What caught my eye was the clause on social housing rents, under which the social housing sector, which provides affordable housing, must reduce rents by 1% a year for four years. My initial response was that it might cause some controversy, but I see that the social housing sector has increased its rents by 20% since 2010, which is more than double any increase in the private landlord sector. As a private landlord, I do not see how the social housing sector managed to get away with that. It is unfair on its tenants and, indeed, the taxpayer, who has to pick up the tab for these increases—so much for affordable housing. I support this measure.
Private sector landlords play an increasingly important role in the rented housing market. The number of properties rented by private landlords has doubled in the past 10 years and they now account for 4.2 million properties for rent, more than half the total rental stock. Private sector landlords also play an increasingly important role in housing those in receipt of benefits. According to Department for Work and Pensions statistics, as of August, around 32% of all housing benefit claimants lived in private rented accommodation.
As the market tightens due to increased demand, it is important to encourage and support landlords to house those in receipt of universal credit so that they are able to access accommodation, otherwise they will find themselves at the back of the queue. It is vital that
landlords have full confidence that they will be paid in full and on time if vulnerable tenants are to have access to the rented homes they need. This is especially important since the Government took away the option for tenants to ask that the housing element of universal credit be paid directly to the landlord, as was formerly allowed under housing benefit, even though many tenants want to do this. In October 2012, a survey of more than 1,000 landlords carried out by the Residential Landlords Association and the Scottish Association of Landlords found that more than 91% of landlords were less likely to rent to tenants on benefits as a result of the decision not automatically to make payment of the benefit direct to the landlord, even when a tenant reaches eight weeks’ worth of rent arrears. It would be good if the Government brought forward an amendment allowing the housing element of universal credit to be paid directly to the landlord. That is my first point.
There are two other measures that should be included in the Bill to assist with giving landlords the confidence they need. The first is that landlords need information on payment of universal credit. Landlords need assurances that tenants have the funds available to pay their rent. Without these, renting to them becomes a risky proposition. Currently, private landlords have no information about the level of payment of universal credit to tenants or about when it will be paid. To provide confidence to a landlord, tenants should be allowed to give their consent to their landlord accessing a limited amount of information to confirm that a universal credit claim has been made and to check the status of that claim. I understand that social landlords are able to gain such information, so why not private landlords? For tenants in work, landlords always ask for a reference from employers to establish their income to ensure that funds are available to cover the rent. It must surely be common sense for landlords to be able to do likewise for those in receipt of housing benefit. I hope that in Committee the Government will bring forward an amendment that will ensure that there is a clear legal power, where the tenant provides written consent, for the Department for Work and Pensions to disclose to a landlord information on the housing element of a tenant’s universal credit claim, including the amount and when it is paid.
My last point concerns universal credit claimants’ rent arrears. As benefit claimants may often move home, including to seek work, landlords need the security of knowing that tenants in receipt of universal credit cannot simply stop paying their rent and leave their property. Currently, rent arrears can be recouped where a benefit claimant is still living in the house to which the arrears apply. There is, however, little or no opportunity for landlords to recoup them when such tenants move house unless they are prepared to go through a lengthy and probably costly court process. It is important that measures are put in place to give landlords more confidence that they will not be left facing rent arrears. Knowing that the landlord could recover rent arrears from an ongoing universal credit claim, even after a tenant has left the property, would be a strong disincentive for a tenant to rack up arrears in the first place. I hope the Minister will bring forward a measure in the Bill that will ensure that rent arrears
follow a tenant in receipt of universal credit, and that landlords affected have a clear route to reclaim the lost rent in such circumstances. I hope the Minister will look favourably on my three points, but I shall not hold my breath.
6.46 pm
Baroness Bakewell (Lab): My Lords, in considering the implications of this Bill for our society, I invoke the judgment of Adam Smith, author of The Wealth of Nations and acclaimed founder of the economic theory that gave birth to economic liberalism and the free market economy, who is a hero in many people’s eyes. Adam Smith was not just an economist; he was also a philosopher. In his work The Theory of Moral Sentiments he expressed concerns that man in society had obligations other than to give free rein to his ambitions and self-interest. He wrote:
“How selfish-soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him”.
From this sprang what is called caring conservatism, a concept already referred today by my noble friend Lady Hollis. It has had a good run for its money, finding expression in Disraeli’s one-nation politics and, in our own day, in David Cameron’s big society.
That very concept is currently being gouged out and hollowed by the cruelties attendant on this Bill. We have been living for some time within a sea change of outlook on the part of our Governments to the public realm and the obligations of the state to care for its citizens. We have seen its impact on civic society. Even the Prime Minister has noticed. In his letter to the Conservative leader of Oxfordshire County Council, he expressed his concern at the cuts to services: elderly day centres, children’s centres, libraries and such. In response, the council leader, a Conservative, wrote:
“I cannot accept your description of a drop in funding of £72 m or 37% as a ‘slight fall’”.
Other local councils are similarly up in arms at the scale of what they are having to cut: libraries, museums, galleries, sports facilities, parks and playgrounds, children’s centres, youth clubs, after-school and holiday clubs, health and safety inspections. All and more are being stripped from the public realm.
Now with this welfare Bill claiming to promote employment we see real cruelty in dealing with people. In the service of whatever ideology or economic imperative these policies are promoting, their scale is now indefensible. This Bill deliberately hits those who are already poor, disabled or young. I ask the Minister to explain in what way this does anything to eliminate the prevailing direction of our society towards ever-greater divisions between rich and poor and how that is defensible in the name of caring conservatism.
Let me now refer to another ideology altogether. I was part of a cultural delegation to China in 1983 when the diktats of Chairman Mao were in full swing, including the one-child family policy. A Chinese friend I met there took me aside and explained that he and his wife had defied the ruling and had two children, for which he had been demoted and financially penalised. Our delegation was scandalised. I little thought that some decades later a Bill before Parliament would be discriminating between the worth of one child and
another in the same family. I am equally scandalised today and I am not alone. Faith groups across the country —Baptist, Jewish, Church of England, Church of Scotland, Quaker, Methodist, the United Reformed Church and the Caritas Social Action Network, which is the Catholic bishops—have expressed concerns about Clauses 11 and 12 limiting financial support to the first two children in any family. The government assessment estimates this measure will affect 640,000 families by 2020-21, which will mean at least 2 million children will be affected. We are not China but we are seeking by economic policies to limit family size.
Clause after clause of this Bill attacks the vulnerable. Clauses 7 and 8 lowering the benefit cap will affect 120,000 households forcing—so leaked DWP documents suggest—40,000 children below the poverty line. How can we then reduce poverty and its damning statistics? Clauses 6 and 4 will take care of that, by repealing the existing income-based measures of poverty and replacing them with so-called life chance indicators.
The whole area of disability and assessment, as we have heard from the noble Lord, Lord Low, will need to be carefully scrutinised. While welcoming certain aspects of the Bill’s intentions, Parkinson’s UK is worried, as are many charities, about the impact assessment for Clause 13 to cover the known problems with work capability assessment. We can begin with Clause 1 and ask that the reporting obligations are confirmed.
The Bill flies defiantly in the face of caring conservatism. Its measures, meant to promote employment, need to be scrutinised clause by clause against the damage they will do to the well-being of all our citizens.
6.52 pm
Baroness Maddock (LD): My Lords, I have three relevant declarations of interest. I am vice-president of the Local Government Association, vice-president of National Energy Action, which is a fuel poverty charity, and vice-president of the Sustainable Energy Association. I will confine my remarks this evening to two main areas—the almost wholesale repeal of the Child Poverty Act 2010, and how the fuel poverty strategy put in place during the coalition Government interacts with this Bill.
First, I have a general comment. In another place, the Secretary of State for Work and Pensions, Iain Duncan Smith, said:
“This is a Bill for working Britain … work is the best route out of poverty … being in work should always pay more than being on benefits … spending on welfare should be sustainable and fair to the taxpayer while protecting the most vulnerable”.—[Official Report, Commons, 20/7/15; col. 1258.]
Many of us might agree with quite a lot of that but, when we examine the Bill closely, we find that it does not quite live up to those aims. This is particularly so when we look at the sections on child poverty and life chances. The Bill removes the four poverty targets set out in the Child Poverty Act 2010 and thereby the Government’s duty to meet those targets. Under this Bill, the Secretary of State will have only to report annually on the number of children in workless households and educational attainment at the end of key stage 4. Other noble Lords commented on this earlier. Gone are any targets on income and material deprivation.
I recognise that, during the previous Parliament, coalition Ministers called for improved measures of child poverty that would better reflect the causes of poverty but we seem to be—and I apologise for this phrase but I could not find a better one—throwing the baby out with the bath water.
The Government’s evidence review, published in January 2014, indeed showed that long-term worklessness had a very high bearing on the ability of children to exit poverty, as did low earnings. It also showed that low educational attainment had a major effect on the likelihood of poor children becoming poor adults. It was also clear from the review that income levels affected many of the areas that keep children in poverty and lead to poor life chances. There are so many factors that affect children’s ability to do well educationally—not just housing but life experiences and the food they eat, which affects their health. All these are affected by levels of income.
I know that free school meals for all young children, which was pushed against the wishes of some of my Conservative colleagues when we were in coalition, have made a huge difference, not only to family incomes, particularly in my area of north Northumberland, but also to levels of attainment in those children. We have heard rumours that the Government want to close the scheme down. Can the Minister tell us whether this is true or merely a rumour?
In drawing up this Bill, how much attention have the Government paid to duties under the Fuel Poverty (England) Regulations 2014, particularly the legal requirement for the United Kingdom Government to declare how they will reach the new fuel targets in England within six months of the most recent general election? To date, this has not been done and the Energy and Climate Change Committee has already pointed out that the current resources are less than half those required to meet the targets set in that strategy. Has the Department for Work and Pensions looked at how its proposals will affect the numbers in fuel poverty? We know that reduced incomes will send more people—more families, more children—into fuel poverty. Has the Department for Work and Pensions looked at the interaction between any change in the warm home discount and its proposals, particularly any changes to the incomes of low-paid working families with children?
The warm home discount scheme provides automatic electricity bill support for low-income older-age house- holds. For other vulnerable and low-income electricity customers who are not of pensionable age there is a one-off payment of £140. This is not paid automatically but is available to people if they apply in the summer. The policy is paid for through a levy on energy consumers and delivered across Great Britain by obligated energy suppliers. Without an extension this scheme will expire in 2016. It is important to know how these measures will interact with each other. Can the Minister tell us whether his department has taken account of such matters? I realise that it is not directly his responsibility but we urgently need to know what plans the Government have for the warm home discount scheme.
In conclusion, we can all agree that the strategies put in place after the 2010 Act have not led to the level of changes that we would have liked, particularly around child poverty. We all want better results. We have had
two strategies with a review in between and now drastic changes to the 2014 strategy. I wonder if the Minister—I am sorry he is not in his place but I understand it is a long time to sit there—can tell us why he thinks we are going to do so much better with the proposals here today. Many think they do not reflect well enough what the 2014 review actually showed. They will certainly help the Government by reducing targets but will they help reduce child poverty? Will they improve the life chances of children in poverty? Having listened to contributions this evening I am quite sure we are going to have robust discussions in Committee and I sincerely hope this will lead to an improved Bill. I hope that we can look further at the issue of fuel poverty.
6.59 pm
Baroness Lister of Burtersett (Lab): My Lords, the title of this Bill is a misnomer. It will not enhance welfare in the true sense of, to fare well. Instead, it will undermine the welfare of families with children in particular—already hit hard by a succession of social security cuts—because, unlike the last welfare reform Bill, which included some genuine reform alongside cuts, this Bill does not. In so far as it promotes work, it does so through the punitive Poor Law, “less eligibility” principle and the devaluation of unpaid care work. A truer title would be the “denial and aggravation of child poverty Bill”. It effectively erases child poverty from the legislative lexicon, while together with other measures it could mean a further 600,000 children in poverty by 2020, according to the Resolution Foundation. The Joint Committee on Human Rights, of which I was a member, recommended that the Government should assess the impact on child poverty of any new law, as well as its compatibility with the UN Convention on the Rights of the Child. There is no such assessment, and that with regard to the rights of the child is written in a rose-tinted font.
Instead, as we have heard, the Bill removes all the statutory measures, duties and targets that underpinned this country’s child poverty strategy, which, under the last Labour Government, led to a significant reduction in child poverty. How will the Government now be held accountable for meeting their manifesto pledge to,
“work to eliminate child poverty”?
As for measures, the 2012 consultation balanced a preference for a multidimensional measure, with the statement:
“The Government is not playing a zero-sum game with child poverty measurement”.
This is from the coalition Government, but led by a Conservative in the DWP:
“There can be no doubt that income is a key part of our understanding of child poverty”.
The Government are playing a zero-sum game now. The 2012 consultation demonstrated overwhelming support for the retention of an income measure, as analysis of the responses by Kitty Stewart and Nick Roberts, of the LSE’s Centre for Analysis of Social Exclusion, demonstrates. They found general agreement that low income/material deprivation are the only factors that are reliably able to distinguish those in poverty
from those who are not. In evidence to the Public Bill Committee, respected academics branded the proposal as “silly” and warned that we are in danger of becoming “an international laughing stock”. A systematic academic review by CASE demonstrated unequivocally that family income is a key driver of children’s development and opportunities. As a CASE blog observed, not measuring income poverty while professing concern about life chances is little short of bizarre.
The Social Mobility and Child Poverty Commission called for,
“a clear commitment to maintain the centrality of income in measuring poverty”.
Perhaps that is why it is now going to lose child poverty from its remit. Will the Minister explain why that is the case? Given the replacement of the Child Poverty Act with a life chances Act, would it not make sense to call it the “life chances commission”, which would signal a broader remit than the narrow, meritocratic concept of “social mobility”?
Why, when the majority of children now live in households with a parent in work, is there to be no measure that can capture this alongside worklessness? Perhaps one reason is that some of the Bill’s measures, together with other tax credit cuts, are likely to aggravate in-work child poverty. In particular, families “supporting themselves through work”, to quote the Minister, could be hardest hit by the removal of means-tested financial support for third and subsequent children because of the interaction with the benefit cap for out-of-work families. The Children’s Commissioner is one of many who have voiced concerns, pointing out that this does not take account of the way family circumstances can so easily change. Yet, when introducing universal credit, Ministers placed such emphasis on the need for a dynamic understanding of family behaviour. Overall, children in black and minority ethnic families are likely to be disproportionately hurt. Their already high risk of poverty will increase, as will that of disabled children.
Another measure that will bear down particularly hard on larger and minority ethnic families is the reduction in the benefit cap. Now that it is being decoupled from average earnings, the rationale for its level is unclear. The original arguments against the cap have even greater force. As I argued when we last discussed the cap, it is unfair deliberately to reduce the amount of money some families will receive to well below the amount Parliament has determined is the minimum required to meet their needs.
It is even more unfair when, as my noble friend Lady Sherlock pointed out, the Government do not compare like with like when contrasting out-of-work and in-work incomes. No account is taken of the in-work benefits received on top of the comparator earnings, in particular child benefit and child tax credit, yet these benefits are included in the cap. This was pointed out in a recent Supreme Court judgment. Three out of five of the judges believed that the cap is not compliant with the UNCRC’s requirement to treat the best interests of the child as a primary consideration. Although the appeal was not allowed, the hope was expressed that the Government would address the implications of this finding when they review the cap—some hope.
One of the justifications for the cap is to increase work incentives, yet the House of Commons Library observes that,
“there is no general consensus”,
“proving an effective means of moving claimants into work”.
Instead, a Community Links study found that when you force people into what they call “survival mode”, it can make finding and keeping a job harder and less of a priority because all you can think about is trying to get by. Also, 6% of those already capped are claiming carer’s allowance. Carers UK warns that many,
“are not in a position to pick up work or further work without reducing or withdrawing the care they provide”.
It asks, as the Government have said that it is not their intention to encourage people to stop caring and go into work, why this policy applies to carers. I hope the Minister has an answer. Also, is it reasonable to expect the 15% of capped lone parents who have a child aged under one to work when they are not required to do so even under the Bill’s further extension of conditionality?
Finally, the benefits freeze comes on top of existing cuts in their real value, which is particularly marked for child benefit and has been described by the IFS as “highly regressive”. The impact assessment notes that women are more likely to be affected than men, which is true of many of the measures. Moreover, as the main managers of poverty, women will bear much of the burden, at the expense of their mental and physical health.
I end with two questions. Will the Minister explain how the family test—which the noble Baroness, Lady Altmann, assured your Lordships’ House would be “strictly applied” to “all new policies”—is applied to a Bill that will spell disproportionate hardship for families with children? Will he explain how this damaging and punitive Bill, which will increase child poverty, is compatible with the Prime Minister’s pledge of,
“an all-out assault on poverty”?
7.08 pm
Baroness Hollins (CB): My Lords, the Government have ambitious aspirations to halve the disability employment gap, to achieve parity of esteem for mental and physical health conditions, and to improve children’s life chances. My remarks will be particularly relevant to Clauses 1 and 13, and are intended to highlight some risks in the Bill and to propose some changes and different approaches.
Clause 1 obliges the Secretary of State to report on progress made towards full employment, but this full employment reporting obligation does not include a breakdown to show whether any progress is being made towards halving the disability employment gap. Such a breakdown would maintain focus on the Government’s welcome manifesto commitment. Does the Minister agree that the reporting duty in the Bill would be strengthened if it included progress towards their wished-for reduction in the disability gap?
The employment rate for people in all disability groups between July and September this year was 47.6%. The gap between unemployment for disabled people and the rest of the population has remained stagnant at 30% for a decade, although it seems to be
beginning to grow. People with certain specific disabilities are further underrepresented in the workplace. For example, just 15% of adults with autism are in full-time paid employment.
I have an interest and expertise in learning disability. There are 1.5 million people with a learning disability in the UK. As my noble friend Lord Rix mentioned earlier, fewer than one in 10 adults with a learning disability is in work. Supporting people with a learning disability back to work requires specialist skills. A number of approaches are known to help people with learning disabilities into work. These include skills development; buddying schemes and mentoring; improved access to apprenticeship schemes, especially traineeships and supported internships; and breaking down the structural and societal barriers that prevent people with learning disabilities entering or returning to work. Dr Knight, a psychiatrist colleague and researcher who has helped me with this speech, recently saw three patients with a learning disability. Each of them wanted to work and had experience as a volunteer. None of them, however, has been able to progress to paid employment. The workplace is where efforts should be focused to get people with learning disabilities into work. A good example of that is the recent announcement by NHS England that NHS employers will become model employers of people with learning disabilities. I shall watch that with interest.
The Work and Pensions Committee report Welfare to Work highlighted the ineffectiveness of the current work programme in supporting disabled people into work. It called for a separate, specialist employment programme for disabled people. Scope has produced a range of proposals for what specialist employment support for disabled people could look like. Will the Minister commit to developing detailed plans on specialist employment support for disabled people? The Government have committed an additional £100 million to support people into work by the end of this Parliament, and I join my noble friend Lord Rix in hoping that the Minister will pledge a proportion of the money to getting people with learning disabilities into work.
Clauses 13 and 14 propose to cut the money that new claimants receive within the employment and support allowance work-related activity group, to encourage them to seek work. This group includes more than 490,000 disabled people, the largest group of them having serious mental illness, learning disabilities or autism. Being in this group means that they are not currently fit for work. This might be because of frequent and uncontrollable episodes of aggression or disinhibition; an inability to travel independently outside their home; an inability to learn anything beyond a simple task, such as setting an alarm clock, or an inability to cope with a minor planned change.
The Royal College of Psychiatrists has pointed out that only 8% of people with mental health problems have been helped into work, compared to 24% of those who do not have a health problem. Furthermore, a survey by Rethink found that 78% of respondents said that they would require more support from their GP, community health services or in-patient mental health services if their benefits were cut. A survey by the Disability Rights Coalition found that almost
seven in 10 disabled people say that cuts to employment support allowance will cause their health to suffer. Between 2010 and 2013, just over 1 million recipients of the main out-of-work disability benefit had their eligibility reassessed using a new functional checklist, the work capability assessment.
Although reviews of the functioning of the work capability assessment have led to changes in the way that mental disability is assessed, the reviews have not looked at the mental health effects of such reassessments. Doctors and disability rights organisations continue to raise concerns that they have had an adverse effect on the mental health of claimants, but until now there has been no population-level study exploring the health effects of this policy. However, a new study by Dr Barr at Liverpool University was published online yesterday in the Journal of Epidemiology and Community Health. The researchers adjusted for factors known to influence mental ill-health and for baseline conditions. They looked for any association between the reassessments conducted and changes in local rates of suicide, self-reported mental health problems and anti-depressant prescribing rates, in 149 local authorities in England. The researchers found that for each additional 10,000 people who were reassessed there were an additional six suicides, 2,700 cases of reported mental health problems and 7,020 anti-depressant prescriptions, all in working-age adults, and this trend has continued after the economic recovery.
A report of this study in the Guardian today quoted a DWP spokesperson as saying that the researchers did not know how many of the suicides were by people who had had an assessment. This seems to me, however, to miss the point. It is, in the first place, a population-level study—a large epidemiological study. The whole system, however, puts additional mental stress on an already disabled and vulnerable group, and the anticipation of reassessments may be too much for some. The researchers concluded:
“This policy may have had serious adverse consequences for mental health in England, which could outweigh any benefits that arise from moving people off disability benefits”.
These important new findings add weight to the demands from a number of disability charities that Clause 13 should be left out of the Bill altogether. Does the DWP intend to link benefit data to mental health data, including suicide, and how and when will such information be made public? I also agree with the noble Lord, Lord Layard, that being assigned to the ESA WRAG group should trigger referral to IAPT for psychological therapy.
The Bill in its current form has missed a number of opportunities. A focus on welfare rather than help to get back into work misses the opportunity to deliver on the commitment to halve the disability employment gap. There is a missed chance to design proper support to get the 250,000 people with mental health problems who are out of work back into employment. In his eloquent maiden speech the noble Lord, Lord Lansley, suggested that critics of legislative proposals should suggest alternative ways to achieve their goals. I suggest that specialist employment support for disabled people would be more cost-effective than the non-evidence-based so-called financial incentives proposed in this Bill.
7.17 pm
Baroness Browning (Con): My Lords, it is always a great pleasure to follow my noble friend Lady Hollins. I hope that I will not repeat too much of what has been said. I refer the House to the register and my declaration of an interest as vice-president of the National Autistic Society.
I want to focus on the change to the work-related activity group ESA. One group of people has not been mentioned at all so far: the support group, who have been independently assessed and deemed not to have to apply for paid work, and the WRAG group, as we shall call them. For a year, they are required to attend interviews—they are not just left alone, they must attend interviews—but the activity side of it is meant to involve getting back into work. We have heard from across the House today: from the noble Lord, Lord Patel, speaking very knowledgably about cancer patients; from the noble Lord, Lord Layard, speaking about mental health; and from my noble friend, who spoke about learning disability. In that very large WRAG group are a considerable number of people on the autistic spectrum. I pay tribute to the Minister for the interest he has shown in and the time he has devoted to the problem of getting people on the autistic spectrum into paid work. I know that he cares about this issue and has put a lot of time into it since becoming a Minister. I hope he will not think me presumptuous when I say that, to judge by our conversations about this, he knows just how difficult that is.
The point about people on the autistic spectrum is that I know of no other group with disabilities who are so passionate about wanting to take their place in society and become independent, even if it is only working on a part-time basis. They are passionate about wanting to earn some money and be just like everybody else. This is not a group of shirkers or people who are “working” the system. It is not just children who are being newly diagnosed with autism; a lot of quite mature adults are still being diagnosed with it, very often because crisis points develop. I wonder what it is about people on the autistic spectrum which means that in 2017, they will be deemed to live on £30 a week less than the group who have been independently assessed as currently unable to work because of their disability or illness.
The impact assessment, which has been referred to today, is available in the Printed Paper Office. It says that the reduction in the WRAG level of payment will,
“remove the financial incentives that could otherwise discourage claimants from taking steps back to work”.
That is printed in a government document. I have to say to my noble friend Lord Freud that I am disgusted with those words. I am disgusted that they were repeated down the other end and I hope that when my noble friend speaks, he will not in any way pray in aid that concept. We have heard about people such as cancer patients and many people with behavioural problems, autism or mental health problems—and people with complex problems whose disability is often a mixture of more than one of those. Those are very difficult people to help back into work. It is not always impossible but it is difficult. Where is the evidence for that statement in the impact assessment? What evidence have the
Government identified from the people in the current WRAG group, who have already been independently assessed and put into the group? What is it about them that has given the Government sufficient evidence to change a policy in such a dramatic way? In 2017, this will almost certainly affect that whole raft of people we have heard about today, whether they are cancer patients undergoing chemotherapy or people newly diagnosed on the autistic spectrum.
I have a feeling that the reason why the Government have gone in this direction is not as obvious as the Treasury putting the DWP’s arm up behind its back and saying, “This is what you are going to do”. Everybody who has served as a Minister will sympathise with my noble friend Lord Freud, because we all know the Treasury’s ability in the art of arm-wrestling. However, the Government need to take a clear look at how they see disability, and to look first of all at the individual. It is quite striking that disability issues, and the Office for Disability Issues, are placed within the DWP—the Minister’s own department. That is considered the right place for them to be. Can the Minister perhaps share with the House in due course what exactly the Office for Disability Issues does? Is it looking across the piece and beyond that important point about getting people into employment, which I do not disagree with? My noble friend will know that I have banged on his door many times to talk about getting disabled people back into work, or into work for the first time. But what is the Office for Disability Issues meant to do?
If we are concerned about disability, surely we are interested in the individual in a holistic way—not just their employment opportunities but the help they receive, their well-being, their housing, their ability to take their place in society and their social environment. Surely that covers almost every piece of legislation dealt with by almost every government department. I wonder whether placing that responsibility in the DWP has made it become narrow and channelled. Perhaps it fails to look outwards at what the real, day-to-day living needs of disabled people are across the piece, particularly those with complex disabilities whom it is not so easy to get into work.
I have been so impressed by companies such as BT, which has made it its mission actively to employ people with mental health conditions. It has done a fantastic job. Right the way through that company’s culture, it now actively looks to employ people with mental health conditions. I have been impressed by what I have seen in some areas regarding the employment of people on the autistic spectrum, but it is patchy. It is hit and miss, unco-ordinated and not really as serious as it should be. I do not in any way hold my noble friend Lord Freud personally responsible, but I do believe that the Government have lost their way in making assumptions about people with disabilities and generalising about what living with a disability really means.
7.26 pm
Lord Smith of Leigh (Lab): My Lords, this has been a wide-ranging debate on a wide-ranging Bill, but I intend to concentrate on two aspects which I think I know something about from my experience, so I declare my interests as being leader of Wigan Council and a
vice-president of the LGA. The two areas that I want to concentrate on are troubled families and social rents.
The House may be surprised to hear that I am a great supporter of the Government’s troubled families programme. If anything, it is too timid, but the principles are the right way forward. Led by the rather formidable Louise Casey, the programme has assisted 120,000 or so families and helped to turn them around. It has worked as a cross-departmental scheme and it has worked well with local government. The investment of just over £400 million has, according to the Prime Minister, produced savings of £1.2 billion—and who am I to question the Prime Minister’s comments? There have been significant savings through the programme, as we know in my own authority. There are a lot of sceptics around who say that local authorities are in the troubled families programme because there is payment by results or because they have fiddled the figures. When we were asked to turn around exactly 755 families, they asked how we could achieve exactly that number. The answer is that we worked with more than 1,000 families to make sure that we had the 755. We did not charge for the others but made sure that we could charge for them.
The programme has worked because there is an emphasis on prevention and getting in there early, working with families to make sure that we can do it. It is a slow process because you need to get families’ confidence. Frankly, some of these people are used to having men in suits come around—people like me, as they told me—to give them advice, but not necessarily the advice that they need or want. I was pleased to see that a phase 2 is going on but perhaps not so pleased that the money is not there. I hope that in the Autumn Statement, a real amount will be invested in this programme because it is about investing in people.
I was surprised to agree with a comment that the noble Lord, Lord Lansley, made about school readiness in his interesting maiden speech. School readiness really is a factor that determines life chances. In my authority about a third of kids come to school when they are not ready, but in deprived areas it can be more than 70%. We need to turn that around. I am hopeful that in the Autumn Statement, the Government will start to reverse some of their changes to Sure Start schemes and early years work because that is where we need to put a lot of attention.
In a parallel universe, today in the Moses Room we have been discussing an education Bill. I am disappointed that that Bill does not recognise—as far as I can see, as I was not able to take part—the really important role that schools play as community assets. We need to use schools to work in our communities. Where we have done that, we have even helped people to get jobs simply because they trust what goes on in schools, they trust head teachers, and so on.
In Clause 3, we are expected to agree a typical Westminster or Whitehall reporting obligation on troubled families. That is pretty weak. I hope that the Minister can assure us it is not just making sure that my officers, who are engaged in this work, have to spend more time reporting in. We want it to be a way that innovation and good practice can be spread around so that we can get this working properly across the country.
Clause 21, as a number of noble Lords have mentioned, implements the Government’s policy on social rents—a reduction of 1%. Again, as my noble friend on the Front Bench said: how can you be seen to be opposing this, opposing a reduction in the rents roll? The answer is that, for councils, it is a reversal of regular practice, it is reneging on a policy the Government agreed to only three-and-a-half years earlier.
Three-and-a-half years earlier, the Government said to local councils, “We need to review housing finance, and we need to localise it”. So we went through it, and a big exercise was done by the Department for Communities and Local Government. It came up with a booklet of which I have only the front page, The Housing Revenue Account Self-financing Determinations. As an integral part of this, some councils had to borrow money. They said that in 30 years’ time the accounts looked as though they needed to borrow money. Some actually got paid money back. The total amount borrowed was £13 billion; £6 billion was paid back. So there is a net benefit to the Treasury there of £7 billion.
My local authority was encouraged to borrow a significant amount: £98 million? Why would we do that? The Government said, “Don’t worry. Under the scheme, you will be allowed for 10 years to have a 1% increase in rents to pay for the additional servicing of the debt borrowed”. Within three-and-a-half years, that deal has been reneged on, as I said, by the Government, so in fact we have a financial deficit in my authority of probably about £35 million. What do we do? How do we cover that? We cannot raise the rents. We cannot subsidise—not that we have any money anyway. The only way to recover that debt is to reduce activity, reduce the repairs, reduce the maintenance on the property or—probably more likely, of course—reduce house building, stop doing that.
So here is a policy that the Prime Minister was announcing at the conference, a crusade to get more houses built, and in one swoop they have cut off the building of council properties. It does not take long, does it, to change minds? Of course, the beneficiaries of this rent, as my noble friend said, are not the tenants; about 70% of tenants are on housing benefits. Actually, the social housing authorities, the LGA reckons, are paying about £2.6 billion a year into the Treasury coffers.
A local authority obviously meets at the front door, as it were, the consequences of some of the welfare changes. Unlike some authorities, I can assure the noble Lord, Lord Low of Dalston, that we have maintained our welfare advice sector. The Minister has been to Wigan and seen this for himself, but it would be instructive for other Members—we are always talking about theories in here—to come to see what we call the crisis desk in Wigan.
Over the past 11 months, to give the most recent figures, we have had more than 4,500 people coming to that crisis desk in Wigan. Seventy percent of them said that they had no money. It is a complicated thing. Most of them were referred to food banks. Most of them were given support. Often, of course, DWP issues have caused them to have no money—benefits not being agreed or refused, sanctions or slowness in dealing with cases. Really, we need to change that.
We have devised a programme—unfunded, but we do it—which we call Living Well. We are trying to understand what we can do to help people. The complexity of issues that people have prevent them from getting work. Really, the DWP does not always help. We have one young man who is homeless. I would have thought that the best thing for that young man would be to try to find him a roof over his head, but the DWP keeps telling me that he has to get 10 job interviews a week. He said that, really, he just wants to get a home.
There is a toxic mix of people who have mental health problems, probably suffering from domestic abuse and other issues. We need to resolve that. If we are going to solve poverty in this country, the DWP needs to become part of the solution, not one of the main causes.
7.35 pm
Baroness Meacher (CB): My Lords, I will explore just some of the concerns about this new wave of welfare cuts. We need to consider these cuts in the context of the £21 billion of cuts implemented in the last Parliament. Under this Government, we are witnessing the most dramatic rolling back of the role of the state and the deepest reductions in the security floor for our most vulnerable citizens ever seen, in my view, in the UK.
The Minister said, I think, three times that the Government will protect the most vulnerable. My Lords, I have to say that is not my perception. What, for example, will this Bill mean for disabled people? The Government’s justification for the cuts is, of course, that they want to make sure that work pays and to end benefits dependency as far as possible. This is certainly a fine theoretical position—no one could disagree with it—but it does not work for people with a disability or long-term sickness who cannot find an employer willing to take them on. This is the bit of the jigsaw that is missing in this Bill: the probably perfectly realistic position of employers. Whom will they employ? They will not employ some of the people who are going to be affected, and the results could be catastrophic.
Can the Minister inform the House whether his department has assessed the likely impact of the benefit cuts on the demand from disabled people for mental health services—for example, a bed in a psychiatric hospital or social services? The Royal College of Psychiatrists has expressed some concern about what that effect could be. In my view, it could be very worrying. The key issue is that if the DWP succeeds in cutting its budget, all that happens is an increase in the budget for the NHS and social services. Then, the Government’s objective of a smaller state will not be achieved. I really would be grateful if the Minister addressed that point in his wind-up speech.
There are many, many causes for concern, but the cut I find most cruel—other noble Lords have mentioned this—is the cut of nearly £30 per week for sick and disabled people placed in what is commonly known as the WRAG: the ESA work related activity group. These people—as, again, other noble Lords have pointed out—have been assessed by an independent assessor as unfit for work. The Government argue that the extra £30 disincentivises sick and disabled people from working. The noble Baroness, Lady Browning, mentioned
those on the autistic spectrum. I have worked with people with a variety of mental health problems and people with learning difficulties. In my experience, all these people desperately want, more than anything else, is to be regarded as normal. What does that mean? It means being able to go to work. They really do not need this sort of incentive or disincentive.
About half those in WRAG are entitled to DLA or PIP. These are people with serious disabilities who will find it very hard to find work or to keep a job if they get one. Does the Minister not find it appalling that people with Parkinson’s and multiple sclerosis—progressive illnesses, of course—are included in the WRAG because they are unfit to work now, and they will be subject to this £30 a week cut? If they are not fit for work now, the chances of an employer’s taking them on in the future, as their symptoms get worse, are surely remote. Will the Minister ensure that such groups with worsening symptoms, assessed as not fit for work, are in future placed in the support group, whatever happens to the WRAG group?
Further, over 50% of people affected by this cut will suffer from mental and behavioural disorders. These people long to be accepted. Their families, who themselves may be on benefits, will have to pay for their food and heating. Is the Minister aware that 70% of respondents to the Disability Benefits Consortium survey said that the cut would in fact mean a return to work later, rather than sooner? Obviously, that is a judgment, and it may be wrong—but job hunting costs money, including money for transport and clothes, since you cannot go to work or an interview without appropriate clothes. That is probably particularly true for disabled people. If a claimant cannot afford the fare to attend an interview, how will that promote his employment prospects? Does the Minister have any evidence of the likely consequence of this cut on the employment prospects of sick and disabled people?
The Disability Benefits Consortium welcomes the commitment in the Conservative manifesto to halve the disability employment gap. Again, we are all behind such an objective, but depriving disabled people of essential resources will simply not achieve it. A specialist employment support programme has been mooted, which really could make a significant difference. Again, it would be good if the Minister advised the House about progress in developing that proposal.
The exemption from the benefit cap for claimants of DLA, PIP and the support group level of ESA is very welcome. However, many sick and disabled people will be subject to the cap, along with a small but significant number of carers of those defined as non-dependants in the benefits system, such as carers of adult disabled sons or daughters. The four-year freeze of benefits, including JSA, ESA, WRAG, housing benefit and universal credit, will also severely affect many disabled people, so there are multiple cuts coming along for particular families.
Perhaps the most extraordinary fact, if I am right about it, is that the most drastically affected claimants are families with disabled children. As a result of a cluster of cuts to child tax credit, the disability component and the introduction of the two child limit, a new universal credit claimant would have a maximum annual
entitlement of just one-quarter of their current entitlement in the tax credit system. Will the Minister inform the House whether that is correct? Do the Government really want to penalise such families with a disabled child more than anybody else? I find that quite difficult to believe. What action are the Government taking to assess the impact of these cuts on those people? I would be grateful to know about the evidence behind that.
There are many other serious concerns, including the impact of the reduction in social housing rents on the provision of supported housing for a number of vulnerable groups, as explained by the National Housing Federation. On housing, it seems that there is one real opportunity for the Government to save billions without hurting anybody, which I have mentioned before: by releasing 10% of the greenbelt around the major urban areas. That would transform the cost of land, housing and housing benefit. Yes, we love our greenbelt, but we go walking in the greenbelt regularly, and there is never anybody there.
In conclusion, the level of anxiety among sick and disabled people and others about this onslaught on their modest standard of living is unimaginable. The future for them is truly frightening. I hope that, through debating this Bill, we can truly mitigate the effects of the Government’s plans.
7.44 pm
Lord Polak (Con) (Maiden Speech): My Lords, it is a great honour and privilege to sit in this House and to follow the noble Baroness, Lady Meacher. I am deeply grateful to my supporting Peers, the noble Lords, Lord Sterling and Lord Grade—both fine men with outstanding records in industry and public service. The noble Lord, Lord Sterling, has been and continues to be a source of wise advice and the noble Lord, Lord Grade, has been a great friend and is by far my favourite after-dinner speaker. I am grateful, too, for the courtesy and kindness of so many in this House: from fellow Peers, Clerks, Doorkeepers, restaurant and bar staff—in fact, everyone has been enormously welcoming.
At my introduction to this House just three weeks ago, so many thoughts and emotions were running through my mind. How did this sport-loving Scouser with a happy-go-lucky attitude arrive in your Lordships’ House? I was brought up in Liverpool, where we listened to Lennon and McCartney or talked of Shankly and Dalglish; it was and still is a city full of people with warmth and character, where, as a young member of the small but vibrant modern orthodox Jewish community, I was encouraged to play our part in the community, and to get involved in charitable projects in order to help others. This notion of giving of oneself for the benefit of others is central to my Jewish faith. As it says in the ethics of our fathers:
“Other people’s dignity should be as precious to you as your own”.
I moved to London in 1984 and took up my first job as a youth and community worker, and I have continued to be involved in communal and charitable endeavours. It is therefore fitting that I am delivering my maiden speech in your Lordships’ House on the Second Reading of the Welfare Reform and Work Bill—a Bill full of examples of the Government taking
their responsibility. However, like my noble friend Lord Lupton, I would like to concentrate on Clause 3, which introduces a duty to report annually on the troubled families programme. This clause demonstrates the Government’s commitment to supporting and improving the lives of families with multiple problems. The original troubled families programme improved the lives of 117,000 families by getting children back to school and significantly reducing youth crime and anti-social behaviour, with many of the families on the programme seeing an adult move off benefits and into continuous employment.
Families were mentioned nearly 100 times in the 2015 Tory manifesto, and we have an opportunity to develop a robust and comprehensive range of family policies. We need to match the promises we have made with economic support, particularly childcare, and with further policies to prevent family breakdown as a result of parents’ relationships faltering, or of parents and carers being unable to provide the safe, stable and nurturing relationships that children need to flourish. My rabbi shared a second quote from scripture, saying:
“A society and a family are like a pile of stones. If you remove one stone the pile will collapse—if you add a stone to it, it will stand”.
I hope to be able to support welfare, education and particularly health programmes and policies through which help can be given to those in need. Just over 27 years ago, I was given six months to live as a result of a brain tumour. It was discovered on the day in 1988 when I was organising a reception for the new Lord Chancellor, my noble and learned friend Lord Mackay of Clashfern. I did not get to the reception. Fortunately, the NHS and some wonderful people at the Royal Free Hospital saved my life. The dedication, professionalism and care displayed by the doctors, nurses and support staff was truly remarkable, and I know that these traits continue today. As a result of the surgery, I am 100% deaf in my left ear, which over the years has occasionally proved quite useful. I am aware that today, I have not been interrupted—but I am also aware that this courtesy is for today only. So I apologise if, in future, a noble Lord wants to intervene and I carry on speaking: it will just be that I did not hear them.
In conclusion, I could not help noticing that the Book of Genesis is full of family problems, family disputes and dysfunctional families. However, as you reach the end, Jacob resolves the dispute with Esau, Judah takes responsibility for Benjamin and Joseph forgives his brothers. It was only when individuals and families began to take responsibility—when they began to forgive and turn to reconciliation—that the families became a people and a nation. It is with the policies in this Bill, and particularly with the troubled family programme, that we can strengthen our families, our communities and our nation.
7.50 pm
Lord Farmer (Con): My Lords, it is a great pleasure and an honour to follow my noble friend Lord Polak—I am not sure he can hear me as his left ear is to this side—particularly after a maiden speech that was remarkable for both its humaneness and its humility.
The tone he struck rings completely true for those who, like me, have known my noble friend in his previous incarnation as director of Conservative Friends of Israel and now as the organisation’s unsalaried honorary president. I have always been moved and touched by my noble friend’s consistent work in improving relations between Britain and Israel for the common good of each country. He will, I am sure, make a uniquely valuable contribution to the work of this House. We welcome him to us.
I am pleased that this important debate has also enticed other new Peers to make their voices heard in this Chamber. I congratulate my noble friends Lord Lansley and Lord Lupton on their impressive contributions. Given her important role in designing universal credit, I am particularly looking forward to hearing the contribution from my noble friend Lady Stroud, and I want to acknowledge how fitting it is for to make her maiden speech in this debate. What better occasion to express the compassionate and one-nation conservativism—and I believe it is—that is not a new-fangled device cynically constructed to sweeten the bitter pills of difficult decisions? Rather it has a deep seam of tradition and a valued history in our party that goes back to Disraeli, Baldwin, Chamberlain and Butler—and today reaches Iain Duncan Smith and the Prime Minister.
As my noble friend Lord Polak said, government must take responsibility and it is vital to remember what the coalition inherited in 2010: a welfare system run by 35 different IT systems and a monster of complexity that constantly had to be fed and kept satisfied by myriad accretions of former Conservative and Labour Administrations alike. As he entered the last days of the 2010 election campaign, Gordon Brown promised a tiny toddler tax credit of just £4 a week, threatening to add further confusion to a system of 51 different benefits even highly numerate people found extremely difficult to understand.
In 2005, the National Audit Office said:
“Simplification is not an easy option. Radical reform is a rare, costly, time-consuming, and potentially controversial act”.
So it is hugely to their credit that the coalition Government embarked on the costly and ambitious project of root-and-branch welfare reform, so that we did not repeat the mistakes of previous downturns, when it became pointless for claimants who fell on hard times to get back into work. We urgently needed a system with an internal dynamic that responded to extra effort and other kinds of behaviour we want to see across the whole working-age population—and in the rising generation for whom they are role models—so that they benefit from the better health, social networks and sense of achievement and self-esteem that comes from earned, but not benefits, income.
The starting point of universal credit was the need to tackle relative poverty effectively. In the boom years of the mid-2000s, the DWP’s households below average income statistics showed that someone who had spent five years in low income had no more than a 10% chance of escaping poverty the next year. Large tranches of our population, often concentrated in poorer communities, were locked out of the record growth this country had been enjoying to 2008.
In 2009, by the time the recession had well and truly begun to bite, 5.9 million people were claiming out-of-work benefits, but throughout the preceding decade of high growth that number was only 500,000 lower. This speaks of a structural problem: high-participation tax rates preventing people in precarious economic circumstances moving into work and high marginal tax rates deterring them from working longer hours and progressing. Now, however, the British jobless rate has decreased to 5.3% and is at the lowest level since April 2008, when employment was at a record high.
Yet getting people into work is not the only priority. My understanding is that the ambition of ongoing welfare reform is to help people secure more hours and progress to better rates of pay so that they eventually no longer need tax credits at all. The 2009 Family Resources Survey showed that one in seven households were dependent on benefits for more than half of their income, and this may still be the case. Could the Minister explain to what extent underemployment, particularly as a result of working part-time, is contributing to low earnings, and not just unacceptably low wages? Surely progression towards full employment must distinguish between full-time and part-time work so that the Government hold themselves fully to account.
There were also penalties in the system that discouraged people from activities that could decrease their dependency over the long term, such as forming a stable family unit. Couples who had previously claimed as single people stood to lose far more income from benefits by moving in together than they saved through the economies of scale of sharing a home. If they were simply cohabiting, many continued to claim as single parents. In 2013, ONS and DWP figures suggested that well over 200,000 couples were pretending to live apart, with the couple penalty in tax credits a likely prime mover in this particular form of benefit fraud.
Married couples cannot hide their status and this is surely a major contributor to the social gradient in marriage. Wave 3 of the Millennium Cohort Study found that around half of new parents on a low income are married, compared to nearly 90% of those earning an annual salary of more than £52,000. Given the far greater stability of marriage, this has a terrible knock-on effect. Sadly, only half of children in poor families are still living with both their parents when they start school, compared with over 90% of those from higher income families. Can the Minister explain what progress has been made in reducing the couple penalty in universal credit?
While on the subject of fraud, which is, after all, stealing from the taxpayer, your Lordships should also be aware that a tax credits system that pays for every child has created perverse incentives—for some migrants, for instance. Social workers in the borough of Westminster have made known to me that some are bringing in a large number of children, at least some of whom are very unlikely to be their own. If children are being treated as cash cows by exploitative adults, this is wholly unacceptable and must be exposed. It also puts the two-child limit for new claimants into a somewhat different light from what we have heard today.
To conclude, I was encouraged that, at earlier stages of welfare reform, noble Lords across the House acknowledged how complex, burdensome and inefficient
our benefits system had become under successive previous Governments, and that universal credit offers a desperately needed runway out of poverty at a time when deficit reduction remains a pressing concern. The challenges predicted by the National Audit Office have been significant but surmountable. Universal credit is being relentlessly rolled out, and well below budget. I hope that the Bill will be similarly welcomed and given co-operative support, and that we can work together to ensure that this Government fulfil their elected mandate—for the common good.
7.59 pm
Baroness Donaghy (Lab): My Lords, I shall concentrate on an area in which the Government take some pride: the self-employed. The Bill will make the lives of the low-earning self-employed more difficult. The chasm between the Treasury and the DWP is more apparent in this area than in any other. There has been a huge growth in the number of self-employed since 2008 and the Government have favoured it as a viable route off welfare and into work, which is good, provided that it is not forced and that it is genuine self-employment.
Benefit claimants starting their own business are encouraged by the Government with a grant or loan under the new enterprise allowance, together with support from a business mentor. Perhaps the Minister could tell the House, if not today then in a letter that could be placed in the Library, how many loans or grants have been awarded in such circumstances together with their value, and how many business mentors have been involved. You never know, that may present a rosy picture, but things become a lot bleaker for the self-employed when one contemplates the effect of the tax credit and universal credit cuts without the counterweight of the new national living wage premium—which employees, but not the self-employed, will receive. It has also become tougher for the self-employed to secure working tax credits since April this year.
I am grateful to the Low Incomes Tax Reform Group, and to Robin Williamson and his colleagues, for the briefing that they have provided. As I said, HMRC has tightened up the rules for the self-employed claiming working tax credits. The decision was first announced in the Chancellor’s Autumn Statement in December 2014 that self-employed claimants whose earnings were below 24 hours a week multiplied by the national minimum wage would be asked to show that their self-employment was genuine and effective. At the time of the Autumn Statement, the Low Incomes Tax Reform Group said that the proposed test was likely to discriminate unlawfully against disabled self-employed people who might not be able to work 24 hours a week for health reasons but who qualified under existing legislation on the basis of a 16-hour week.
The actual legislation, SI 2015/605, effective from 6 April this year, creates a slightly different rule whereby a claimant must meet the condition of being either employed or self-employed, as defined. For them to be self-employed, their activity needs to be undertaken on a commercial basis with a view to making a profit and it must be “organised and regular”. What is interesting is that the additional conditions laid down in the Autumn Statement—namely, that a client must register as self-employed with HMRC for self-assessment
and provide their unique tax reference number with their working tax credit claim—have been postponed for introduction next year. Reading between the lines, I wonder if this was a minor victory for the DWP and the Minister.
In a briefing published in April 2015, HMRC offered some information about how the new condition will be applied. It refers to selecting cases on the basis of a minimum-earnings threshold equivalent to qualifying working hours multiplied by the national minimum wage. It appears from its guidance that it is using the declared hours of the claimant rather than the hours needed to qualify for working tax credit to select claimants, and that leaves many uncertainties. How will HMRC determine whether an activity is undertaken on a commercial basis? Will there be practical implications for the difference in tax and tax credit interpretation of status, whether employed or self-employed? How will claimants and prospective claimants be helped to ensure that they claim on a correct basis to avoid incurring an overpayment by mistake? Apparently, HMRC is still developing its guidance on this. No wonder the Bow Group has said that self-employed people may be pushed on to unemployment benefits as a result.
I turn to the minimum income floor and universal credit. I raised this during the debates on the Welfare Reform Act, and nothing has changed. The Government make the incorrect assumption that a self-employed person is running a viable business if they are making a clear profit equal to at least the national minimum wage. This ignores the fact that a business has to meet its own costs and expenses before it can declare a profit, and for an employee the salary that he or she is paid is clear of all those costs and expenses. The self-employed worker, though, has to pay for rent, heating, lighting, office equipment, a van, tools and so on, and can take home only what is left over. The two situations are not comparable. However, the DWP, in administering universal credit, deems that a claimant who is gainfully self-employed should be earning a clear profit equal in most cases to the national minimum wage for a 35-hour week, known as the minimum income floor. If they are not, their welfare payments will be restricted as though they were.
The exception is the start-up period during the first 12 months of a new business. This policy is unrealistic and impractical because very few self-employed people are able to make much, if any, profit in the early years of a new business, let alone the first 12 months. Many make a loss as a result of new premises, low receipts, bad debts, seasonal factors or taking on their first employees. This particularly affects the farming and hospitality industries. From April 2016, claimants will be allowed a limited carry-forward of cash trading losses made in any month, but this will not help to cushion the impact of the minimum income floor. Another rule will provide that if the claimant’s earnings in a month are high enough to no longer entitle them to universal credit, any surplus is to be treated as earnings in any of the next six months in which the claimant again claims universal credit. This rule is likely to bear more harshly on the self-employed claimant, again because of the impact of the minimum income floor.
Do the Government intend to align the minimum income floor with the national minimum wage, or the national living wage for the over-25s? This would raise the level of profit that they assumed a self-employed universal credit claimant was earning if their actual earnings in the month were less than that amount. With the cuts in tax credit levels and an increase in deemed income for universal credit purposes without any increase in actual income, this would be a double whammy for the low-earning self-employed worker and Britain’s pay rise would become another cut in welfare for the low-income self-employed worker.
Lastly, I want to raise the issue of the support for mortgage interest. According to the impact assessment, 170,000 households receive support for mortgage interest or SMI, 55% of claimants are of working age, and single females comprise almost half the case load. However, it is difficult for me to say how many self-employed would be affected because there is no reference whatever to the self-employed in any of the impact assessments.
Whether or not the proposal is justified, it will make life more difficult for the self-employed on low earnings. The SMI payments will be changed from a benefit to an interest-bearing loan, secured against the mortgaged property, from April 2018. Would the Minister consider a two-year grace period before SMI payments become loans secured on the property? This change, which would reflect an option previously given by the DWP during consultation, would ensure that SMI continued to act as a straightforward short-term safety net for homeowners in financial difficulty. I strongly believe that interest should not be charged on SMI loans, and that administrative costs should not be secured on property. I look forward to the Committee stage of the Bill.
8.10 pm
Lord Shipley (LD): My Lords, I declare an interest as vice-president of the Local Government Association and of National Energy Action. As has been said, this is a wide-ranging Bill, in which the housing elements should be seen in the context of the Housing and Planning Bill that we shall shortly be considering. I shall concentrate tonight on issues relating to the future of social housing for rent, the particular difficulties the Bill presents for supported housing and its potential negative impact on delivering welfare-to-work programmes.
I am becoming very concerned about what seems to be clear government policy not to prioritise the social housing sector, nor to support new build-for-rent adequately. In a recent report, the estate agency Savills found that the Government’s focus on boosting home ownership is set to exclude 70,000 more households each year from either buying or renting at a cost people can afford. I am unclear why the Government are so set on promoting owner-occupation, to the exclusion of social renting, and seek to deliver three-quarters of their promise to promote affordable housing through starter homes for sale with a 20% discount. In terms of providing homes to rent, this is not enough as a policy. It will not meet demand and it will not help those who cannot afford to buy.
In terms of supported housing, social housing providers play a critical role in keeping costs down, particularly for the National Health Service, but also for public
spending generally. The case of homelessness is an example. In 2012, the Department for Communities and Local Government concluded that an individual being homeless cost the Government between £24,000 and £30,000 a year. It is much cheaper to prevent homelessness arising in the first place and supported housing is part of the means of doing that. The cost of placement in extra-care housing is much cheaper than alternative placements or care packages. There is, therefore, a strong case for the Government to exempt housing for vulnerable people from the 1% cut in rents each year for the next four years proposed in the Bill. Without that exemption, the reduction in rent income could result in fewer refuges, fewer homelessness hostels, fewer homes for veterans and fewer homes for people with disabilities, with the additional public spending that would entail.
The Bill was amended in the other place to allow for the possibility of organisational waivers. Given that the Government have accepted, in their own impact assessment, published at the end of September, that,
“the rent reduction measures may disproportionately impact on supported housing and may cause a reduction in service provision”,
the case for housing for vulnerable people being exempt from the rent decrease provisions in the Bill is very strong.
I move on to local authority housing. There is a difference between the impact of the Bill on housing associations and on local councils. Typically, the rents are higher in housing association properties and housing associations generally carry more reserves. The level of annual surplus for some housing associations is very high—in some cases well into the tens of millions of pounds. This may well be one of the factors in the Government’s wish to reduce rents. However, council housing revenue accounts are different, with little or no annual surplus contributions to general funds. The view from this sector seems to be that it will have to consolidate and concentrate on core business with the extra services it provides, which in some instances can be very important, facing withdrawal. There will, therefore, be a slowdown in new building across the sector, which is most certainly not in the public interest. The noble Lord, Lord Smith of Leigh, alluded to this. Have the Government assessed the impact on new build, since councils need to be confident about their ability to borrow? Constant changes in rent income levels do not help them and, if they are not helped to build, more prospective tenants will be forced into the private rented sector with its higher rents and an adverse impact, as a consequence, on the housing benefit bill.
A further impact of the Bill relates to social housing provider schemes to develop employability for tenants. It may not continue in the way that it has, yet the outputs for the level of spend are impressive. An example is Your Homes Newcastle, which is where I live. In 2014-15, 64 people were employed through either the Your Homes Your Jobs programme or an apprenticeship programme, with 83% moving into permanent employment. Some 42 tenants were supported to create their own businesses and in excess of 200 tenants received employment support through training programmes provided by Your Homes Newcastle. All this could be in danger of being lost. There are many similar examples that could be provided and of which I hope the
Minister is aware. I hope that, in his reply, the Minister will explain whether the Government have plans to enable social housing providers to maintain and, indeed, enhance their welfare-to-work programmes, given the critical role they play in addressing low skills and barriers to employment and reducing social exclusion. These bodies deliver welfare to work, in line with government policy, for large numbers of people and I suggest to the Minister that it would be highly retrograde if this were to be lost.
8.16 pm
Baroness Howe of Idlicote (CB): My Lords, it would be wrong to discuss the measures in this Bill without highlighting the disproportionate impact the changes would have on people with mental health problems, and I am very glad to say that a number of your Lordships have already raised this issue as important. Just like physical health, we all have mental health. More of us are speaking out about mental health than ever before but, as has been mentioned, there is still a long way to go.
One area where people with mental health problems are still far too often unsupported and misunderstood is in back-to-work support. Over a third of people with mild to moderate mental health problems, and almost two-thirds of people with more severe mental health problems, are unemployed. Only 9% have been supported into work through the Government’s flagship back-to-work scheme, yet we know that the majority of people with mental health problems want to work. It is essential that this legislation looks at improving support to help people with these difficulties into work.
One problem is that mental health needs are not properly understood or acknowledged, which leads to the wrong support being provided. This does not help people get into work. The story of Lee, a 38 year-old man with mental health problems including depression, anxiety and a personality disorder, illustrates the difficulties. When out of work, in the employment and support allowance work-related activity group—the ESA WRAG—Lee attended a weekly self-help management course at his local jobcentre, which he had to attend or face his benefit being sanctioned. But the support he was provided with did not take into account his mental health. Lee said that,
“it was focussing more on people in pain, people who had bad backs and first aid ... and I did say a number of times at these meetings that this doesn’t apply to me. I’m not in pain as such, I have a mental health problem”.
Of course, Lee’s experiences are not unique. Another sufferer said that her adviser,
“simply did what I could already do on my own, put together a CV and look for jobs. There was not enough support geared to my specific difficulties. Every task was the same for everyone. Not everyone’s needs are the same”.
In addition, the conditionality and sanctions regime has become an unchallenged aspect of back-to-work support. Research by Mind, which does so much in this field, shows that people with mental health problems are three times more likely to have their benefit sanctioned than they are to be supported into employment. That is a clear signal that the system is not working for people with mental health problems, despite this group making up over half of all people on employment and support allowance.
The changes which this Bill legislates for—namely, reducing the amount people on the employment and support allowance work-related activity group receive by £30 a week—would have a serious impact on people with mental health problems, as others have said. We should all be concerned by the Government’s lack of assessment of the impact that these changes will be having on people and their families. I am pleased to hear about the review being undertaken by my noble friends Lord Low, Lady Meacher and Lady Grey-Thompson, which I gather will look at how the cut will affect the day-to-day lives of disabled people and whether it will help them move closer to work. We know already that 75% of people with common mental health problems, such as anxiety and depression, receive no appropriate treatment, and that many people use their benefit to pay for talking therapy treatments and well- being activities. There is space in this legislation to support people with mental health problems better and ultimately to move closer to the Government’s welcome commitment to halve the disability employment gap.
I end by asking the Minister two questions. One is a repeat of the question that my noble friend Lord Rix asked. The government impact assessment stated that the justification for the £30-a-week cut was to,
“remove the financial disincentive to work”.
Can the Minister present us with the evidence to show that cutting disabled people’s benefits results in more disabled people getting jobs? Secondly, the Equality and Human Rights Commission has said that the impact assessment accompanying the Bill does not,
“fully assess the impact on equality and human rights. This may make it difficult for parliamentarians to properly consider the implications of the measures in the Bill”.
Does the Minister accept this criticism? It would be good to hear his reply at some stage as the Bill progresses through your Lordships’ House, even though I do not expect much of an answer this evening.
8.23 pm
Lord Hodgson of Astley Abbotts (Con): My Lords, there have been 27 speeches so far and I want to avoid ploughing or reploughing ground that has probably been pretty extensively tilled already. Therefore, my contribution will draw on my experiences in the charity and voluntary sector and, in particular, on the work that I did for the Government in looking at effects on that sector in a report called Unshackling Good Neighbours. The report tried to find ways of removing barriers to the growth of the third sector, and the research for it gave me the chance to see the condition of some of our most disadvantaged fellow citizens. At times it could be slightly dispiriting but, by contrast, the activities of the volunteers in the third sector organisations—and they were mostly volunteers—were almost universally uplifting. Often with very little money and few assets, they set out to tackle some of the most deep-seated and intractable problems in our society. They were trying to provide a ladder up which our unlucky fellow citizens could climb.
It will come as no surprise to the House that one of the main rungs of the ladder was a job—regular, steady employment, often with third sector organisations helping to provide an introduction to the disciplines
and self-disciplines that the commercial world requires from people who perhaps have become unfamiliar with them because of a long period out of work. Self-evidently a job provides an answer to some of the economic challenges but it does much more than that, as my noble friend Lord Lupton said in his distinguished maiden speech. It helps to provide an answer to social challenges, because one of the pernicious effects of long-term unemployment is an erosion of self-confidence. By contrast, a job creates self-confidence. It creates a sense of self-worth, a sense of belonging and a sense of having a stake in society—above all, a stake in a society that values the individual. Thus, it contributes to social cohesion—the glue that binds us all together—the creation and maintenance of which I believe is one of the great challenges that we will face over the next few years. I will come back to that in a minute or two.
Therefore, it will come as no surprise to the House that I strongly support the direction of travel of the Bill, and in my few minutes I want to address briefly three issues: the apprenticeship programme, the troubled families initiative and the restriction of certain benefits to two children only.
The plan to create 3 million apprenticeships seems admirable. There is a pressing need for vocational training, and the noble Lord, Lord Young of Norwood Green, will, I know, follow me on that. It will provide people with more satisfying, better-paid and more secure jobs than—dare I say it?—a 2.2 in media studies. The Sutton Trust and Big Society Capital are only two of the many organisations that provide many concrete examples of the advantages of this policy. It is certainly not a policy that lacks ambition, but I have some concern that, as numbers expand to meet the 3 million target, the quality standards may be compromised and an apprenticeship may too often become not much more than basic training. So some element of quality control will be essential to keep faith with those joining the programmes. On that point, at least, I am happy to agree with the UNISON briefing circulated to Members of your Lordships’ House. The Skills Funding Agency, as the potential policeman, has a vital role to play in this regard. It should also consider establishing a confidential hotline so that those who feel that what was promised is not now being delivered can seek support and redress.
Secondly, I strongly support the initiatives in the Bill to help break the cycle of underachievement, underperformance and deprivation—that is, the troubled families initiative. The troubles faced by each family are unique. Themes there may be but the admixture is unique. Government programmes tend by their very nature to be broad brush—no other approach is possible at scale—but what many of these families need is the detailed attention that can often best be provided by smaller third sector groups. However, their role is often constrained by the commissioning processes. Commissioners can be highly risk averse, preferring to put their faith in large groups, for which smaller third sector organisations can too often become “bid candy”, being landed with the most challenging areas, which perforce carry a higher risk of failure, while the main contractor takes the “vanilla flavour” mainstream cases.
A Second Reading debate is not the place to discuss the details of the commissioning processes but I urge my noble friend to ask his officials to consider establishing
some commissioning yardsticks. The third sector deserves a level playing field and a series of yardsticks would help to establish it. It would also provide a means for more effective delivery of the Government’s admirable policy objectives in this area.
I turn thirdly to what I might call, in shorthand, the two children issue, which is possibly the most challenging. In my various visits and trips compiling my reports for the Government I have been struck by how many people, from every sector in every region of our country, emphasise the concept of fairness. It is of course true that the detailed aspect of what each thinks is fair varies according to the eye of the beholder, but the underlying principles are very often the same. This concept of fairness underpins the unspoken and unwritten contract that commits all of us to playing our part in preserving our social model, whether it be pay-as-you-go pensions, the method of funding the National Health Service or the issues that we are discussing tonight. However, the elasticity of the social model is not infinite and should not be taken for granted.
I have of course read very carefully the briefings from a number of organisations on this issue and, in particular, the one from the faith groups, signed by the right reverend Prelate the Bishop of Durham. I understand the point being made and, no doubt, we shall have some robust debates on this point in Committee. However, with great respect to the right reverend Prelate, and indeed to the noble Baroness, Lady Bakewell, who spoke very strongly on this matter half an hour ago, at this stage, I think that with the careful shaping given to this part of the Bill by the Government—for example, that it is a two-child rolling programme and disabled children are exempt—they have got the fairness balance about right.
In the last part of my speech, on the background of the Bill and the issue of social cohesion, I want to turn to a very different point: how we are going to preserve the social cohesion of this country over the next 20 years and the challenges that we face.
This country is undergoing an exceptionally rapid growth in population. I want to make it clear, as I always do when I speak on this subject, that this is not about people’s race, creed, colour or ethnic origin. It is purely about absolute numbers—and the numbers are stark. The ONS figures for 2014, produced in late September, indicated that the population of this country increased by 1,435 people every day—just under 900 from immigration, and around 600 from excess of births over deaths, or the natural increase. That is 10,000 people a week. We are putting a small town on to the map of the United Kingdom every week, 52 weeks of the year.
Think of the consequences of that. Take just one consequence that we always debate in your Lordships’ House, that of housing. Currently, we house 2.3 people per dwelling. I make the assumption that we would want our new arrivals, wherever they come from, to be no less well housed. To house 1,435 people per day means that we need 624 dwellings. That is 26 per hour or one every two and a half minutes, night and day, without any improvements being made to our existing housing stock, which I suspect most of us would believe are necessary.
I am afraid that this is not a temporary phenomenon. The ONS projections indicate a mid-point for the UK’s population in 2035 of a further 10 million people—that is made up of both immigration and natural increase. Twenty years from now, we are going to have to build three new Greater Manchesters. On the same metric of 2.3 people per dwelling, that is 4.4 million homes. If noble Lords do the simple arithmetic, they will see that that is one new house every two and a half minutes for the next 20 years.
I fear that the introduction of 10 million people and 4.5 million homes will pose challenges to our social cohesion that we have not really begun to think carefully about. This is 10 million people in a country that has just overtaken the Netherlands as the most densely populated in Europe, with 425 people per square kilometre—the Netherlands having just under 400 people per square kilometre.
It is easy to put this issue into a box marked “too difficult” because it is difficult. I urge my noble friend on the Front Bench; I urge the noble Baroness, Lady Sherlock—this is not a party political matter—and, indeed, I urge the right reverend Prelate the Bishop of Durham to hold this question and its implicit challenges in their collective mind. For, if there are to be challenges to our social cohesion, it will not be those of us in your Lordships’ House who will suffer. It will be the poor, the ill-educated, the unemployed and, above all, the recently arrived—in many ways the people we are trying to help in this Bill—who will bear the brunt.
Twenty years from now, I will probably be dribbling into my cornflakes, unaware of what is going on around me. I believe our successors will be entitled to ask why, on this important issue, we always looked the other way.
8.35 pm
Lord Young of Norwood Green (Lab): My Lords, as the noble Lord, Lord Hodgson, confidently predicted, I shall focus mainly on the question of apprenticeships. I welcome the Government’s commitment in the welfare Bill to both full employment and reporting on the status of apprenticeships. It is hard to quarrel with a Government who announce the ambitious target of 3 million apprenticeships. I make my usual comment that I only wish they would disaggregate that figure and be more upfront in recognising that a significant number of those apprentices—probably about 60%-plus of them—are people already in existing employment who are retraining and reskilling. It is not that we do not have to do that, but I think that “apprenticeship” is the wrong label.
The real focus of attention ought to be on the lower end of the age spectrum—on the 16s to 18s, or even up to age 24. Notwithstanding the progress that has been made on employment, that is where the levels of unemployment are probably at their highest in many parts of the country.
My other concern is one which I have expressed on a number of occasions. In the drive to push up apprenticeships, which is laudable and with which the previous Government made a reasonable start, can you sustain quality as well as quantity? Take a situation where you have already had an Ofsted report which
said that, in a number of sectors where the largest volume of apprentices were in areas such as business administration and retail, the quality was manifestly not being sustained, the level of training was minimal and people were, quite frankly being exploited. We should be concerned about that. It is not more than a couple of years ago that a young apprentice went out to work one day and never returned. He died in an environment which was absolutely appalling. I make no apology for reiterating these concerns.
Recently I received a helpful response about some of these issues from the noble Earl, Lord Courtown. He said:
“An ‘approved English apprenticeship agreement’ carries the status of a contract of service. That means that employment and health and safety laws apply. The apprenticeship agreement confirms that the apprentice is undertaking an apprenticeship and specifies the standard they are working towards completing. For apprentices who have an employer, an apprenticeship agreement (whether based on the old frameworks or the new standards) must be in place in order for an employer to claim government funding”.
As a statement, it is okay, but does it really guarantee quality? Does it absolutely guarantee that that young person is going to a good quality, safe working environment? I am not convinced that it does. I issue this as a caution against being complacent if the Government are going to drive up the level of apprenticeships at the rate that they say they are.
The letter goes on with more helpful news—about the introduction of a,
“‘Statement of Commitment’ which is signed by the employer, training provider and apprentice … and sets out the key expectations, roles and responsibilities”.
All of that is good and I want to see it. I am not complaining about it, but I also want to see that the Government actually have in place processes that will ensure that the quality of apprenticeships is consistently monitored and reviewed. I do not expect the Minister in a debate as wide-ranging as this to have anticipated all these questions, but that does not make them unimportant or unnecessary to pursue them.
We are told about the Skills Funding Agency which “runs the apprenticeship helpline”. That is good, but in many cases young people are only too grateful to be in employment. They do not want to rock the boat, so to speak, so they are capable of being exploited. I merely make the point. Another paragraph really does worry me a little. It states:
“Beyond the quality guarantees inherent in the new apprenticeship standards themselves, quality is assured by the assessment process. Whilst employers are generally free to arrange whatever on-programme training they believe will be needed”—
as I say, that worries me a little—
“to ensure their apprentice reaches full competence, which will often include the completion of a qualification”.
If it is an apprenticeship, should it not always include the completion of a qualification? If we are talking about raising the quality of apprenticeships and convincing parents that the vocational route is just as good as the academic one, that ought to be addressed. If it is a quality apprenticeship, it means that the individual is acquiring skills, training and competence that ought to be tested by an external, independent source.
I am conscious of the time, but I want to turn to a briefing from the charity Leonard Cheshire Disability, which I thought was really interesting; I am grateful for it. It focuses on disability. I cannot deal with as much of it as I would like, but I shall cover some of the points made. It states:
“Given the Prime Minister’s commitment to implementing the manifesto in full we welcome the inclusion in the manifesto of a pledge to halve the disability employment gap”.
I think that we would all welcome that. The charity goes on to stress four key points:
“Reporting on the progress towards halving the disability gap …Ensuring that more disabled people can benefit from apprenticeship schemes by ensuring that they are as accessible as possible …Greater clarity from the Government around the specialised support that will be available for disabled people to help them secure and stay in work … Exploring how the Government can use its role as a public sector employer and commissioner to encourage its supply chain and other employers to employ more disabled people”.
Those are good, constructive points and I hope that the Minister will be able to respond to them.
The briefing then goes on in another interesting paragraph to address apprenticeship schemes and disabled people:
“Apprenticeships provide an excellent route into work for young people—including disabled people—and allow them to develop the skills they need to succeed in the job market. We welcome the Government’s pledge to fund three million new, high quality apprenticeships this Parliament. However too often apprenticeships are inaccessible to disabled people; indeed the number of disabled apprentices has declined from 11.5% in 2007/8 to 8.7% in 2014/15. During the passage of the Bill, we would like to see further commitments from the Government to support more disabled people to participate in apprenticeships, by ensuring that vital funding, such as Access to Work and training funding, remains available and can meet the demand”.
That is a helpful, factual and constructive analysis of what is actually going on. I believe that the Government are genuine in their attempts to seek to secure full employment, but if they are going to meet the target of halving the number of people with disabilities who are not in work, some issues are raised here that need to be addressed. I want the Government to succeed because I believe that getting people into worthwhile employment has a transforming influence on their lives.
8.45 pm
Baroness Greengross (CB): My Lords, in the time available I can consider only a very few of the many issues covered in this Bill. I think we all encourage measures that support people into work and to remain at work, so I welcome the clauses which cover the new reporting obligations the Government will have to commit to. They include annual reporting on the progress towards full employment, and this should assist in the task of halving the disability employment gap and recruiting and keeping disabled people in work.
I also welcome the measures that seek to remove income-related targets and replace them with new measures to improve the life chances of children. The new duty to create an annual report on children living in workless households in England and their educational attainment is also very welcome.
The re-emphasis of the importance of encouraging social mobility is also good, but I have some concerns that some of the measures contained in the Bill may,
in fact, drive up homelessness and consequently drive people further away from the labour market. In particular, I have concerns about the lowering of the benefit cap, which has been widely discussed by your Lordships. Most working-age benefits are to be frozen under Clauses 9 and 10. Some benefits, however, are not affected and are going to rise in line with CPI. Many of these are pensioners’ benefits. As someone who has worked for most of my adult life to ensure fairness for older people, I say that we must have regard to inter-generational fairness on some of these issues.
Some clauses will change the current provisions for help with mortgage payments. In the future, any assistance with interest payments will be in the form of a loan secured by a charge against the property. Under these regulations, the loan will also accrue interest and incur an administration fee. These costs will be recovered from the available equity in the property when it is sold, but this means that people could be left with nothing because they do not happen to live in the areas such as London and the south-east which enjoy the property prices that now prevail.
Clause 19 requires that registered providers of social housing must reduce the rents payable by 1% each year for the next four years, as the noble Lord, Lord Shipley, has illustrated. While this will be welcome relief to those struggling with the annual uprating of rents in the social housing sector, it is another blow to housing associations, which are still reeling from the plans to force them to engage in subsidised right-to-buy schemes. As a result of that, many associations are now selling off properties on the open market at full price and, if the rent is fair, they will also have to take the hit on any rent reductions. Not all landlords are exploiters of their tenants. While reducing social rents is obviously welcome, tackling the high cost of housing is the only sustainable way of reducing welfare spending in the long run. More housebuilding is the only way to bring housing costs down, and progress in achieving this aim must not be undermined. This reinforces the need for support in the latest round of the Affordable Homes programme, which aims to increase the supply of new affordable homes in England by March 2018.
Finally, as a former commissioner on the Equality and Human Rights Commission, I share the concern of the EHRC, which in its evidence to the Public Bill Committee felt that the impact assessments and human rights memorandum which accompany the Bill do not fully assess the impact on vulnerable groups, and that this could make it difficult for parliamentarians properly to consider the implications of the measures in the Bill. This Bill needs very careful consideration and the sort of scrutiny that only the House of Lords can give it.
8.50 pm
The Lord Bishop of Durham: My Lords, I support many of the principles underlying this Bill: the importance of personal, as well as collective, responsibility; the value of decent work, not just financially, but for human dignity; the role of the welfare system in encouraging positive behaviours; the recognition that poverty is not simply about lack of income; and the desire for fairness for those who receive from and contribute to the system, including the vast majority of us who do both at different points in our lives. None of these is completely
new, but the Government’s approach to welfare reform has certainly reinvigorated the debate about poverty, helping to challenge implicit assumptions and some very tired thinking. Governments naturally want to distinguish themselves, but in seeking to introduce a fresh perspective on old problems, there is always a danger of going too far or of throwing out the good with the bad. That is my concern about some of the measures being discussed today.
The first is the proposal to replace the existing child poverty measures and targets with an obligation to report on a set of life chances indicators. Where I agree with the proposal is that poverty is not simply a matter of economics and the possession of material goods. Unemployment, low skills, poor housing, addiction and family instability are all tied up with people’s experiences of poverty, so it is right to acknowledge this in some way in our understanding of poverty and our approach to tackling it.
However, to scrap all of the income-based measures ignores the importance of money in meeting people’s basic needs. It also ignores the wealth of evidence pointing to the damaging effects that income poverty has on children’s lives in terms of their health, education and future opportunities. Life chances are affected by a multiple of factors, and basic income is one of them. When the coalition Government carried out a public consultation on child poverty measurement in 2013, more than 200 public, academic and voluntary organisations responded. The overwhelming majority argued that poverty is defined by lack of income and that other non-income-based indicators should be used to supplement the current income-based measures. Only one respondent did not think that income should be included in the child poverty measures, yet this is what is proposed in the Bill.
If the Bill goes through in its current form, there will be no recognition of in-work poverty in spite of the fact that around two-thirds of children in poverty have at least one parent in paid employment and there will be no targets for the new indicators and no duty on central and local government to publish strategies to tackle child poverty, simply an obligation to report on the listed indicators. With child poverty projected to rise by up to a million over the next five years, it is convenient, but unacceptable, for the Government to abandon the commitment they made to these targets when the Child Poverty Act was voted through in 2010 with cross-party support.
Last week, I wrote to noble Lords to express deeply held concerns—I am grateful to the noble Lord, Lord Hodgson, for having read the letter and commented on it—about the limit that this Bill would introduce on the support for families with more than two children, so noble Lords will not be surprised that I am raising them now. We firmly believe that children are a blessing and strongly resist anything that implies that an additional child is unwanted or burdensome. Every child is valuable; every child matters. We are also very concerned about the practical consequences for the families affected who are already struggling to make ends meet. Larger families will lose up to £2,780 for each additional child beyond the first two. Two million children will be affected by the end of the Parliament, many of whom
are already in or at risk of poverty. The majority of these live in working families with limited scope to increase their income. Also affected will be many families who had their children in good times, but who are unlucky enough to lose their job, become ill or disabled or experience a divorce. The Treasury is unable to forecast its own finances accurately more than a year ahead, yet parents are expected to anticipate their own future income for the next 16 years.
As faith leaders, we believe that this measure is fundamentally anti-family and surely fails the Government’s own family test. In extreme circumstances, older children may be forced to leave home before they are ready and large families may break up in order to avoid the two-child penalty. Vulnerable parents who are bereaved or fleeing domestic violence often require extra support at a time of acute need, but they will not be adequately supported if they have more than two children. Kinship carers and private foster parents—there are around 215,000 in the UK—may be unable to take on this vital role if they are no longer eligible for additional support.
This measure will also have a disproportionate impact on particular faith communities where large families are the norm, perhaps because of parents’ devout desire to avoid contraception or abortion. If the two-child limit is designed to encourage lower-income families to have fewer children there is very little evidence that it will be effective. Instead, the impact will be to increase child poverty, penalising children in a largely futile attempt to influence the behaviour of their parents.
A parent from the St Chad’s Community Project in Bensham in my diocese had this to say about the changes: “I receive Working Tax Credit as a single parent with three young boys to support. I feel that making these changes would be adding more pressure to my family. I already have to be very careful with my spending budget — rent, council tax, electric and gas all have to be paid before everything else. My children would suffer as a result. The extra money I get goes towards the children’s school uniform, trips and extras”. She is worried that she will not be able to manage if her benefits are cut, having only recently turned her life around when she was offered a job as a part-time support worker. This particular family may be protected in the short term, but future clients will find life gets even harder if these changes are introduced. Already, this project refers five to 10 families a week to the local food bank, because they are struggling so much, even though the majority of its clients are in work.
This situation will almost certainly get worse as a result of this Bill. I therefore urge the House to support amendments that would relax the limit on support for larger families—or at least reduce its impact by protecting the most vulnerable families—and look very carefully at ensuring that income is included as a factor in child poverty.
8.57 pm
Baroness Andrews (Lab): My Lords, it is a pleasure to follow the right reverend Prelate the Bishop of Durham, even if he has made most of my speech for me—although I can hardly complain about that. I shall try to add a few points that he did not mention.
This is a very regressive Bill that plays fast and loose with language and is based on a series of false premises. The basic tenets of the Bill have already been demolished by my noble friend Lady Hollis and the cumulative impact exposed by my noble friends Lady Sherlock and Lady Lister, the latter of whom also offered the House an alternative and rather more accurate title for the Bill.
I will confine myself to two broad points. The whole tone of the Bill is based on the assumption that if we call poverty by other names or measure it in other ways it will go away. In fact, as has been systematically demonstrated this evening, the Bill cuts the incomes of the poorest, and the working poor in particular. It puts children inevitably at the greatest risk. It prejudices family life and threatens the most vulnerable. It is a prospectus for greater poverty and greater inequality. It is a deliberate policy choice by this Government.