Welfare Reform Bill

My Lords, my name is also on Amendment 30A and I support it. The amendment simply requires the Government to consider independently researched minimum income standards before deciding on the maximum amounts to be awarded in each component part of universal credit. Like the noble Lord, Lord Kirkwood of Kirkhope, and as the Minister will be relieved to know, I am not asking that the Government suddenly uprate benefits to the level of minimum income standards. However, the amendment is gently worded and asks simply for consideration of this matter, and I hope that that would be acceptable to any rational person, not least to such an incredibly rational person as the Minister; and perhaps we might see it coming back as a government amendment on Report. I look forward to that. The noble Lord, Lord Kirkwood, gave us a good background into minimum income standards. Perhaps I may say that if he is going to have a bee in his bonnet, it is a good one to have, and I commend him. Long may it stay with him. I hope it buzzes around him for some years to come and does not sting him at all. One of the real benefits of minimum income standards and the way that the measure has been developed, which is unusual, is public involvement. It combines scientific research, and the JRF carried out good scientific research into the nutritional needs of families and worked out exactly what is needed for healthy living, and has looked at all the other things—the basket of goods that a family would need. It then sat down with members of the public, looked at different categories of family, and asked, ““What do people need to have a modest income?””. Interestingly, it is often found that the public are rather more generous than politicians are minded to be, perhaps because the public know exactly what it feels like—what goes into every day and putting a budget together. They are only too aware of how hard it is to make ends meet. That is one of the things that makes public involvement in minimum income standards helpful. The noble Lord, Lord Kirkwood, explained precisely what has happened to the cost of living over the past decade, compared with the minimum income standards. Certainly, the JRF has made the point that the earnings required to make ends meet have increased much faster than living costs, particularly for families with children. That is partly because child benefit has been frozen and tax credits reduced. It is also because tax credits helping low-income families to cover childcare have been cut. Noble Lords will have heard of two reports this week that give us even more cause for alarm. First, Wednesday's labour market statistics make pretty grim reading. We have all heard, I am sure, that more people are unemployed now than at any point since 1994. Youth unemployment is at 991,000, the worst it has ever been. Women’s unemployment is more than 1 million, 1,069,000, the highest since 1988. The second report—the report from the Institute of Fiscal Studies, also funded by the JRF, which contained the latest poverty forecasts—is even more alarming. On Tuesday, the noble Lord was kind enough to give us a glimpse of the impact assessment that he had just published. I was grateful to him for explaining to me—as someone who does not understand these things as well as he does—precisely what its forecasts were for what will happen to poverty. He kindly explained to us that he predicted that universal credit would lift 350,000 children and 550,000 working-age adults out of poverty. That is obviously after modelled behaviour on benefits. The IFS predicts that between the previous financial year and 2012-13, absolute poverty is likely to rise by 600,000 children and 800,000 working-age adults. The point is that universal credit will do its bit, but the IFS report states: "““However, the net direct effect of the coalition government's tax and benefit changes is to increase both absolute and relative poverty. This is because other changes, such as the switch from RPI- to CPI- indexation of means-tested benefits, more than offset the impact on poverty of Universal Credit””." The reason I raise this now is that the question of the adequacy of the level of financial support, which is embedded in universal benefit from the outset, will be fundamental to the way we address poverty over the next decade. The Minister has constantly urged us in briefings to focus on the architecture, not the detail. I will not follow him all the way: I am too much of an anorak to be willing to do that in its entirety, but if we are to focus on the architecture of universal credit we need to think about what is different about it from all previous benefit systems. One thing is that because it is a single system available to a whole range of people in different circumstances, it matters that we address questions of adequacy from the outset. I shall come back to that. If we look at what families have described that they think people need, they are quite generous. I can hear some people saying: ““Nobody said that benefits were meant to be cushy. Surely all you need are the basics to keep body and soul together””. That takes us back to the philosophical purpose of the social security system. There are those who see social security solely as a means of protecting people from destitution—a kind of safety net. Arguably, it does not even do that adequately. If we look at the data about what it takes simply to have a healthy diet, as the noble Lord, Lord Kirkwood, pointed out, pregnant women cannot even get a healthy enough diet to ensure that their babies are born with a reasonable chance in life, so arguably it is not even doing its safety-net job. That also has implications for the next generation. Leaving that aside for a moment, my concern is that the social security system in the past, and certainly not as it has developed now, has never just been about that. Beveridge never saw it solely as a safety net to protect people from destitution. The social security system is not the workhouse, and it never was. It is not the poorhouse, and it never was. It attempts to prevent people falling into destitution, but it also has a social insurance function. It has had that from the outset, in much the same way as the NHS has a social insurance function. Most healthy people happily pay taxes to support the NHS because they know that it is the hallmark of a civilised society that we look after other people who are sick; and we know that we may get sick and may well need it. There is a healthy dose of self-interest in that, and I encourage it. So it is with welfare. We support people who cannot work—because of illness, disability, unemployment, caring responsibilities or old age—because any of those things can happen to any of us. In fact, I very much hope that old age will happen to me, the alternative being even less palatable. If we accept that all those things could happen, the point of rehearsing the argument is that we understand why it matters that benefit levels are set at a decent threshold. There are those who are unable to work, and they should clearly have a decent standard of living. There are those who could work, with help, and they should be given help to be able to move into work and develop within it. There are those who need to balance work with other responsibilities, and the system should make that possible. I think that the Minister is with me all the way on that: I hope that I see him nodding, but perhaps I need my eyes testing. Finally, there is a small group, statistics tell us, who simply do not want to work. There are plenty who want desperately to work but cannot find a job, but there is a small group who simply will not work. I suggest that that is the point at which conditionality is brought into play. However, if the Minister is going to create a single system to cover all those people—and I commend him on trying to do that—we cannot use a tool of simply driving down the adequacy of benefit levels so low, to encourage a small minority into work, that it renders a range of other people unable to live a decent healthy life. That is a fundamental consequence of the architecture, not simply about the detail. It is important that, from the outset, universal credit is nuanced enough to take account of the very different circumstances in which people find themselves. I suppose it is in that light that I urge the Minister to consider taking this amendment on, not because I would expect him to act on it now but because, if the Government are genuinely to build a new social security system for the next age, they need to be able to consider how they support for quite long periods people who may never be able to work, who are raising children and whose health and life chances could be impaired; we all know that the scarring effects of poverty in childhood are to be found throughout someone’s life cycle. Would he consider this as a new measure against which we could judge whether benefit levels were adequate? There was an interesting letter from Reverend Paul Nicolson of the Zacchaeus 2000 Trust in the Observer on 9 October. He notes that without a minimum income standard, "““comfortable citizens with adequate incomes have no standards against which to judge the justice of the level of their taxation that supplements the incomes of the poorest both in and out of employment””." That chimes with my experience. If I talk to people with no experience of the benefit system, they often, if asked, significantly overestimate what benefit levels are and are often genuinely shocked when they find out what people are asked to live on. One of the things that this would do is help reconcile the interests of the population as a whole in supporting each other, and to look at justice as well as compassion on how well we support the poorest.