Welfare Reform Bill

My Lords, I shall speak also to the amendments in Motion G2. I accept absolutely the Minister’s assurance that he would have no part in seeking to demonise people on benefits. I have never thought that of him and I think that we would all accept that to be the position. In moving Amendment 47B in lieu, I should welcome the improvements to the working of the benefit cap which the Government announced in another place. While they might protest otherwise, it is clear that they recognise some of the unacceptable consequences of the cap which they are now seeking to ameliorate. This amendment goes with the grain of the Government’s thinking and announcements, and provides an opportunity clearly to embody that recognition in the Bill before it goes on its final journey. It sits alongside our further amendment which focuses on how the cap might anyway be constructed. The amendment encompasses the concept of a period of grace of nine months before the cap bites for somebody who has become unemployed and it enables the detail to be set by regulation, which will enable the Government to specify their announced requirement of 12 prior months of work for the grace period to run. When debating this exemption in the other place on 1 February, the Minister, Chris Grayling, also announced further exemptions in the ESA support group which the noble Lord, Lord Freud, confirmed a moment ago. These exemptions add to the existing list, which includes those in receipt of DLA, PIP, attendance allowance and, as we have heard, a war pension for surviving dependants when that is in payment. Further, we know that non-cash benefits such as free school meals, council tax benefit in its localised form and the childcare element of universal credit are to be ignored in what is included in the total benefits for the purposes of the comparison with average earnings—perhaps the Minister will confirm that to be the case. Moreover, again as we have just heard, there is the announcement of more money, £160 million in total, for the first two years to top up discretionary housing payments to help those facing particular challenges. Whether this will be enough remains to be seen. So far as it goes, it is all well and good, although having lectured us on there being no money, perhaps the Minister can tell us where this funding has come from. Is it new money, or has something else been cut and, if so, what? The cap will still hit tens of thousands of families hard, but the issue of who is in and who is out, and what is in the calculation, is at least a little porous under what the Government now propose. When announcing the period of grace, the Minister in the other place stated that it was always his intention to introduce this measure. One can only conclude that he went to some effort to disguise it. It did not appear in the impact assessment, including the updated document of 23 January. Indeed, on the basis of a response to an amendment tabled on Report by the noble Lord, Lord Best, pressed also by my noble friend Lady Drake, it seemed to be far from certain that a period of grace would be accepted. The Minister said then: "““What I can say today, as I said in Grand Committee, is that we are well aware of the issues, we are confident that we have the powers we need to ease transitions and we will consider the case for a grace period along with the other options that might be available””.—[Official Report, 23/1/12; col. 892.]" One reason for highlighting this issue in this way is to get on the record how the grace period is to operate. It is understood that if somebody becomes unemployed after or at the time that the benefit cap comes in, the nine-month period will run. I think that the Minister has now confirmed that the period will run also if somebody loses their job before the introduction of the cap, so somebody being made redundant in September this year will still get the benefit of three months’ easement from the cap until June 2013. Moreover, can the Minister confirm that the period of grace will operate when somebody has their hours reduced so that they fall below the threshold for the number of hours necessary to be considered in work and thus falling within the scope of the cap? Can he also confirm that, for so long as the prior-employment requirement is met, an individual may benefit from the period of grace more than once? What is the position where a couple claims universal credit? Will just one of the joint claimants have to satisfy the conditions for the period of grace to operate? What assumptions underpin the estimate that the period of grace will reduce savings by £30 million? I should make it clear that we support and have argued for a period of grace, and the amendment seeks clarification as to how it will work in practice. We are pleased that it will help to ameliorate the misery that the cap will bring and we want the period of grace to be meaningful and not just a gesture to get the Lib Dems on board. I turn to Motion G2. We support a benefit cap but do not consider the manner in which it is to be introduced by the Government to be sensible. As we did in the other place, we take the opportunity to set down our view of how a cap could operate. Our amendments approach the benefit cap in a different way. It is different because of the difficulty in particular in seeking to create a one-size-fits-all cap which could lead to at least 20,000 families becoming homeless, wiping out any of the £270 million savings that the Government have said their benefit will produce. Indeed, it would lead to the very consequences which the Government have had to recognise in providing the additional £160 million of funding announced on 1 February—which we have just discussed. They are the sort of consequences which the Government have recognised in a series of exclusions for individuals and exemptions for certain types of benefit from the calculation. The concept of a cap might be superficially very straightforward and, indeed, attractive: no household should get more in total benefits than the average net-of-tax-and-national-insurance earnings of those in work. A nice round sum of £500 a week for some might seem generous given that, for many, it is more than a family has to live on. We risk creating the impression that everyone on benefits is getting £26,000 a year; and, by dealing in generalities, we risk ignoring the differing circumstances that families face. Although only 1 per cent of benefit claimants may be caught by the cap, this still amounts to some 67,000 families. The sum of £500 a week might get you a one-bedroom apartment in London, but in Rotherham in Yorkshire it would get a six-bedroom, detached family house. Given that the largest single benefit received by those set to be affected by the cap is housing benefit, one cap, set nationally, cannot be fair. This is particularly—but not exclusively—a London phenomenon, as illustrated by the Government’s own impact assessment. Over half of those affected by the cap currently live in London, with 3,300 in Brent alone set to lose under the cap, so it is no wonder that Lib Dem MPs reputedly went walkabout when the vote came up in the Commons. We believe that our amendment in lieu offers a better way forward. The cap should recognise different housing costs, especially in London. As noble Lords will know, recognising different housing costs has been a localised part of the benefits system for over 70 years. Moreover, if a benefit cap is to become part of the benefits landscape, there is a case for appointing an independent body to advise on what the appropriate levels for the cap should be. The benefit cap is—or has certainly become—an emotive issue, but it would be bad policy if the structure of the benefit system were driven by public sentiment rather than evidence and analysis. A requirement for an independent body to have regard to safeguarding against homelessness should not be contentions. It is what the Government have just done in pumping £160 million into the system and would help avoid local authorities racking up millions of pounds of costs at a time of austerity. However, it does not mean that somebody should never move, nor does it give anyone licence to occupy the extravagant, upmarket properties so beloved of the media. Neither should this approach negate the Government’s belief that part of the rationale for a cap is to change attitudes. Having regard to child poverty targets is not just about income transfers, it is about a range of building blocks, including accessing the workplace, for those who can. We seek to support a cap that better reflects reality than that promulgated by the Government. We are of course dealing with some of the most vulnerable families in our country and we owe it to them to construct policies that are not driven by short-term political expediency. I beg to move.