Welfare Reform Bill

My Lords, there is great knowledge in this Room about this issue. I am grateful for the deeply thoughtful contributions that we have heard. Perhaps it will help if I start by explaining our overall approach to disability additions for both adults and children, based on the twin objectives of simplicity and affordability. First, on simplicity, instead of seven different components within the current system of benefits and tax credits for adults, and two further rates and child tax credit for disabled children, we intend to have two rates, one higher and one lower, for both adults and children. Before tax credits were introduced, the rates for children and adults were aligned, so the idea of common rates for adults and children is not new. It also makes sense in smoothing transitions to adulthood. Secondly, on affordability, we spend over £40 billion a year in total on disabled people and their services. We will continue to provide substantial support through universal credit. Indeed, we are not making any savings on our restructuring of disability additions. All the savings are being reinvested in the higher rate which, at around £77 a week, will be higher than both the existing support components for adults and the elements for severely disabled children in child tax credit. Under our proposals, families will receive more than £4,500 a year for a disabled child on the lower rate, and more than £7,000 for a severely disabled child on the higher rate. We are also extending eligibility for the higher rate to children registered blind. To respond to the important point made by the noble Baroness, Lady Lister, as noble Lords know, we expect a significant impact on child and adult poverty as a result of increased take-up due to the simplicity of universal credit as well as entitlement changes. The transitional protection will ensure that, where rates are lower than now, there will be no cash losers at the point of change where circumstances remain the same. In response to the query of the noble Lord, Lord McKenzie, we are currently working through the key definitions, which we will of course make available when they are completed. The noble Lord asked what happens to the rate for severely disabled children while the higher rate for adults is being phased in. We published in our briefing note on 12 September that the rate for severely disabled adults will be increased to £77 over time, but the initial rate for severely disabled children will not be less than the child tax credit equivalent. For a time, while the new adult rate is being phased in, the child rate is likely to be higher.