Welfare Reform Bill

My Lords, I start with the amendments of the noble Baroness, Lady Flather. I find them confused on a number of levels. I should explain that during Second Reading—the noble Baroness referred to my comments about not wishing to hear what she said again—she said that Pakistani and Bangladeshi communities have lots of children because of the money. I objected to that and I thought I objected in about as gentle a way as one can, without being rude, and that is consistent with how we do business in this House. The noble Baroness has just made reference to Luton and supposed problems there. I know Luton well; I live there. One of the strengths of Luton is its great diversity. We have a range of communities and—I almost called him my noble friend—the noble Lord, Lord Hussain, would attest to that as well. Having diversity brings challenges but also joy and I believe that is a great strength of Luton. I do not believe the proposition that people in any community, particularly the Pakistani and Bangladeshi communities, have lots of children because they believe it will be beneficial in terms of child benefit. If people had children only on the basis of a cost benefit analysis, I suppose there would be no children at all, given all the challenges that come with them. My experience of communities in Luton, particularly the Bangladeshi, Pakistani and Indian community, is that there is great aspiration for their children. If you sit down with people, you hear them speak with pride about their children just having qualified as a doctor, or a lawyer, or even some as an accountant, which brings particular pleasure. I honestly do not see the picture painted by the noble Baroness. Technically, it seems to me that the amendment that she moved is flawed. As I understand it, the ““relevant amount”” is that which is based on estimated average earnings and effectively sets the level of the cap. It does not, therefore, specifically include amounts in respect of children. If it were based on income, rather than earnings—depending on the definitions—of course it would. It could, for example, involve child benefit, but this is not how the Government wish to proceed and it is not how they have constructed the cap. Universal credit will be, as we have discussed, an in-and-out-of-work benefit and we still do not know what the cut-off point will be for those treated as in work. Perhaps the Minister can give us an update on that. Presumably the calculation of earnings would not include any amount of universal credit. If the noble Baroness is arguing that an award of universal credit should involve reduced amounts for third and fourth children, in terms of the cap, of course, that would clearly lessen its impact. However, the family cap of £26,000 applies regardless of the number of children in the household, so larger families are likely to be particularly affected, as we have just discussed. Estimates are that 80 per cent of the households likely to be affected by the cap will include three or more children. We know from the DWP impact assessment—certainly the original one—that children from BME groups are more likely to be disproportionately hit by the cap. It would seem that what the noble Baroness intends would drive these families further into poverty and that is not something that we could countenance or support in any way. The noble Baroness, Lady Howe, introduced some interesting amendments. Certainly the issue of the impact on London, particularly of high rents, featured in our earlier discussion and that is recognised. The broader issue of whether one could have benefits constructed on a regional basis is a very wide debate—we would be unwise to tick that through tonight—although we should recognise that it is done, for example in local housing allowances done on a local basis, structured by reference to local market areas. I repeat that we support the cap. We support the £26,000 level, but the way it operates brings some perverse consequences, and high rent levels in London are a particular driver of some of the unfortunate outcomes. I think that I would just hang on to the point, to which the Minister has not given us an answer, that if this is about changing behaviours, what is it that makes proportionately more people in London—this is what the data show—in need of changing behaviours than people in other parts of the country? We know that is not to do with changing behaviours; it is about rent levels and how those impacts on the cap. The noble Baroness, Lady Howe, has advanced some interesting ideas and arguments, but before we embark more generally on a regional benefits system, we need a lot of discussion.