Welfare Reform Bill

My Lords, in moving Amendment 22C, I also wish to speak to Amendment 22D, which seeks to exclude amounts saved for a deposit on the purchase of accommodation from a single claimant’s or joint claimants’ entitlement to universal credit. These amendments are tabled as a consequence of aggressive capital rules being applied to in-work benefit, which is now the characteristic of universal credit. I have rehearsed in previous amendments the impact of integrating tax credits into universal credit and applying the proposed capital rules. We now have a situation in which an individual or a couple who are acting responsibly and trying to accumulate money for a deposit with which to purchase accommodation will find that that act of saving will be taken into account when calculating their entitlement to universal credit, so being responsible and prudent and saving for a deposit could now lead to a loss of income for some, which strikes me again as somewhat perverse. These ordinary hard-working people will face a combination of forces coming into play. Deposits for the purchase of accommodation will now need to be much higher to qualify for a mortgage. They will have to save in an environment in which private rents are rising due to increased demand and limited housing stock, and if they do try to save for a deposit this could result in a reduction in their income from universal credit. If ever I had an intergenerational empathy compared with my generation’s experience, it is in this area. We are putting barriers in front of hard-working lower and moderate-income families because of the approach to their accumulation of savings that the well-off simply will not face. If I may anticipate the noble Lord’s remarks, I have no doubt that he will respond that there are no ring-fenced deposit savings accounts for house purchase and there is no way of confirming the future intentions of claimants, to which I would respond that I do not believe it is beyond the imagination of government to facilitate such products or to create a process to identify such savings. Controls could be applied to ensure that any withdrawals from those deposit savings other than for accommodation purchase could trigger their treatment as capital that is not disregarded. I am sure the noble Lord will argue that the income of those in receipt of universal credit is unlikely to support a mortgage application in today’s world, but that rather dismisses the motivation of some hard-working people to save and own their own place. It sets a low aspiration for all those in receipt of universal credit, which is not justified. It ignores the possibility of change in peaceful circumstances. They may go on to lower earnings for a period in response to the labour market, but their earnings may improve over time. Nevertheless, they will have had to draw down on their deposit savings because of the capital rules. The purpose of the amendment is to say that a way should be found such that savings ring-fenced for the purchase of accommodation should not count as capital under the rules of entitlement to universal credit.