Welfare Reform Bill

My Lords, the principle of non-dependent deductions has been accepted by successive Governments since 1948. The principle is that adults who live in a household of people getting help with housing costs through the benefit system should be expected to make a contribution towards those costs. Universal credit will provide a streamlined welfare system that makes clear to claimants the financial advantages of taking work or increasing working hours. As part of this clear system, we will define simple rules for the benefit unit and the treatment of income other than earnings which some claimants will have. In many cases, the benefit unit will be the same as the household, but other households could comprise more than one benefit unit. An example would be an older couple with one or more adult children living at home. The older couple would be joint claimants, and the adult child would claim in their own right as a benefit unit. Another example would be two adult siblings sharing a home. In taking a claim for universal credit, one of the first questions is to establish what the benefit unit for that claim is. We have guiding principles for the rules on the treatment of income. Where claimants have income available, their entitlement to universal credit should be adjusted accordingly to meet some or all of their everyday living costs. The principle that available income reduces entitlement to income-related benefits is long established. However, when support for housing costs is considered, there are currently varying rules on the treatment of income in the welfare system which will be harmonised through the introduction of universal credit. As I have previously explained, we will define in regulations the full list of income types and benefits that must be declared under universal credit in order to be taken into account. The drafting of regulations will aim to provide a more accessible account of the system which claimants and their advisers will find easier to follow. The existing manner in which we treat non-dependants does not fit with the principles of universal credit, and I am considering how we refine the current rules so that we can bring forward proposals in due course. There are, and always have been, various factors to take into account in the design of the non-dependent deduction scheme: for example, transparency, simplicity, setting the rate of deduction at a fair level, the potential to affect household formation, as well as work incentives and fairness to the tax payer. These factors, as I am sure the noble Baroness will recognise from her time in government, have always meant that non-dependent deductions are a complex issue. We need to look at the treatment of non-dependants along with the treatment of boarders, lodgers and sub-tenants. Furthermore, we need to ensure that there is some sensible fit with the provisions for underoccupancy that we debated earlier this week. We want a scheme that provides incentives for tenant and non-dependants to work and at the same time preserve incentives for households to stay together. As we are still considering these issues in detail, I urge the noble Baroness to withdraw her amendment.