Welfare Reform Bill

My Lords, the explanation that I am most looking forward to from the Minister, having taught us the difference between soon and very soon and that spring comes between winter and summer, is where on earth is the end of October if not yesterday, on Halloween night. We await that answer. Under universal credit, the support currently obtained by a tax credit will be obtained via disregards, hence their importance. The disregards will allow some groups to earn higher amounts before benefit starts to be withdrawn, thus household income will be held to similar levels as now via tax credits. However, as has been mentioned, at present there seems to be no mention of disability in such disregards. Amendment 52B would provide an additional disregard for one aspect—carers who are currently not set to receive any disregard. We support that amendment and I shall speak to Amendment 52DB, which stands in my name and that of my noble friend Lord McKenzie. It would include a disregard for a second earner, but we will cover that issue in Amendment 52C. It is also intended to ensure that there are earnings disregards for claimants who are disabled, lone parents or the second earner—often a woman. Further to the comments just made, as each disregard recognises the impact of the particular circumstance on the earning potential of the individual, and as such impacts are cumulative, it is proposed in the amendment that the disregards should also be cumulative, as each circumstance—whether being disabled or being a lone parent—makes earning that much harder to achieve and, perhaps, more costly, with extra travel times or other expenses. At least initially, it is foreseen that under universal credit we will have a 65 per cent taper for earned income, so a disregard improves the incentives to move into work by not applying the taper for the amount earned for the first disregard. That means that the value of the disregard for the claimant is 65 per cent of the actual amount written on paper, if you like. Someone with a £40 disregard who earns £40 can keep all their universal credit and will thus be better off by £40. Without the disregard, they would keep only 35 per cent of the £40 and so be only £14 better off. The figure of £40 that we use as the disregard is actually worth £26 in hard cash, which is the only way that I can think about these things. There is a little complication, of course. There will be a maximum disregard for each group. Those not receiving support for housing costs will receive the maximum disregard and those getting support for their housing costs will see the maximum level of their disregard reduced by one and a half times the amount of their housing support. I trust that noble Lords are all with me. Good. Most claimants in rented accommodation will receive the minimum disregard. We know that universal credit aims to, "““allow people in work to see clearly how much support they can get””." I just hope that they are better at doing that than I am. The 14 October briefing note referred to by my noble friend Lady Lister on disregards set out the new higher disregard levels to try to deal with the localisation of council tax benefit. It aims to ensure that income support for council tax is effectively disregarded. Whereas single people previously would not receive any disregard, they will now get the amount mentioned, £13.50, as a disregard. Similarly, the disregards for lone parents and couples have been increased. However, as has been mentioned, Citizens Advice points out two problems. The first, elaborated by my noble friend Baroness Lister, is that those earning more than the amount will still be subject to two earnings tapers until no longer eligible for help with council tax. What plans does the Minister have to deal with this two-taper issue caused by the localisation of council tax benefit? Secondly, although the level of disregard has been increased to reflect council tax changes for single parents and couples, no such addition has been given to disabled people. Perhaps the Minister could also explain in his answer why they have been overlooked. We note that in the Statement that came out this morning in the other place, the migration is going to be done in waves. The last of the three waves is going to be done by borough. I wish the Minister luck in rolling out a national benefit by borough. That is partly, I would think, because of the high complication of localising council tax, and we look forward to some piloting in those areas. We welcome the Government’s decision not to introduce a means test for the carer’s allowance, but we still feel some additional help is needed, especially for those 50,000 carers who would otherwise be worse off in work under universal credit than they are under income support. It has been mentioned that there are over 6 million carers and these are some of our unsung heroes. Nearly three-quarters of them are worse off financially as a result of caring, partly due to low benefits and reduced earning power and other higher costs. Many carers rely not just on carer’s benefits for actual living expenses but on the disability benefits going to the people for whom they care. Any reduction could have a serious impact on their capacity to carry on with their heroic work. I was not going to mention any case studies but, having heard of a dual couple, I remember my own aunt, who at one point had two elderly people to look after—her mother-in-law and her mother and later her husband. She was a carer for three different people. She supplemented her earnings in Ystradgynlais by working in the ““Con””, the Conservative Association Club. We are very grateful to the Ystradgynlais Conservative Association, which kept her going and enabled her to top up her caring. It is the only time I feel lucky that she is not with us any longer to hear me telling the tale. Despite contributing care that, if it were paid, is estimated to be worth about £119 billion a year, carers unfortunately receive the lowest benefit and are often in financially precarious situations. They struggle to pay bills, cut back on food and use their own income, and probably about half of them are in debt as a result of what they do. The existing proposals would see some carers have their earnings disregard reduced. Currently, as mentioned by the noble Baroness, Lady Howe, those in receipt of income support are eligible for an income disregard so they can earn £20 a week before their benefits start to be withdrawn, but that disregard is to go. There are new disregards for some people, as set out by the noble Baroness, but, as she explained, this does not apply to single carers who would only be able to access the basic disregard of £13.50 a week under the universal credit, as well as now being subject to the council tax disregard. This could leave carers juggling work and care while being more than £200 worse off because their benefits would be withdrawn earlier. As the noble Baroness, Lady Howe, said, that means that 50,000 carers on means-tested benefits would be able to take advantage of only the lowest disregard and thus probably worse off in work. I turn to Amendment 52DB. As I said, if we may, we will deal with the issue of second earners under a later amendment. The amendment is intended to ensure that claimants who have more than one barrier to employment see that reflected in their level of disregard. At present, barriers to work such as being a lone parent or having a disability are reflected in the relevant elements of the working tax credit—the lone parent element and the disability element. Any lone parent with a disability receives both of those, recognising her dual situation. Under universal credit, without our amendment, each household will be entitled to only one earnings disregard. Although, under working tax credit, a disabled single parent receives an additional £54 in support in respect of her disability, under universal credit she would receive only £27 extra through the work-related element of universal credit rather than through a disregard. Given the extra costs that a lone parent with a disability is bound to face in going to work, whether in transport costs or longer childcare because getting to work takes longer, the additional disregard is likely to make the difference in determining whether work pays. I am sure that the Minister will have been persuaded about the merits of the case of an additional disregard for carers by what other noble Lords have already said. Those issues apply also to carers who are themselves disabled or a lone parent. We welcome incentives to work, but the greatest incentive to those groups is the ability to retain more of what they earn as they gradually move off benefits and into work. We still keep hearing so much about the disincentives of a 50 per cent tax rate, so I am sure that we do not need to convince the Minister that high rates affect the poor just as much as they allegedly affect the rich. The disregards are vital to ensure that work pays for everyone.