My Lords, the three amendments in this group have two specific aims, and both concern the treatment of children under the Bill, which we have discussed under Amendment 12.
Amendment 14 seeks to remove child benefit from the Bill and Amendment 19 does the same for child tax credit, while Amendment 17 concerns the child additions within universal credit. I shall return to Amendment 17 later with regard to children with disabilities.
Amendment 14 concerns child benefit. Time and again in these debates on welfare reform, we face the challenge that our reforms have a disproportionate effect on children. Overall, some 30% of households are affected by this Bill. Of those with dependent children, 87% are affected; of lone-parent households, 95% are affected. For example, a single nurse on average earnings for her profession of £530 a week would lose nothing at all as a result of the Bill. If she had two children, she would lose £424 a year in 2015-16. Families with lower incomes are those who end up being the worst affected, whether by reductions in housing benefit or the freeze on child benefit, and so on.
I do not for one moment believe that it is the Government’s intention to target children, but it is the result of much that we do in welfare reform, and that is a matter of choice. The most powerful speech at Second Reading was that of the noble Baroness, Lady Hollis, when she spoke of the way in which she and I and the vast majority of Members of this House were not affected by the responses that we make to our fiscal challenges. We could be: my personal allowance, winter fuel allowance or bus pass benefits could be withdrawn or taxed if we took a different line. In this Parliament, £9 billion has been spent on the increases to personal allowances and £4.7 billion on fuel duty—an effective cut by not increasing fuel duty.
When we discuss matters here, I am always deeply impressed by the expertise brought on health matters by doctors and NHS trust chairs, on higher education by university professors and academics, and on defence by senior military officials. When we wrestle with issues of poverty, there is no one experiencing deprivation to tell us what it feels like. Many of us know, because of other people whom we talk to, of the pressures, especially on those in work with low incomes, but we do not experience that deprivation for ourselves.
The extension of the threshold for the personal tax allowance in 2013-14 leaves basic rate taxpayers £47 better off. If you do not pay tax, that clearly has no effect. If you are a working family eligible for both housing and council tax benefit, you will lose benefit so that your net gain is not £47 but £7 in 2013-14. There are alternatives to the pressure on the most deprived families.
I am particularly concerned about the continued chipping away at the value of child benefit. This has been frozen for three years and is now to be capped at 1% for two further years. That is a total increase of 2% compared with an estimated 16% in CPI. Again, the issue is the cumulative effect of the reductions. This is in addition to the cuts in other benefits experienced by those on low incomes. The impact assessment shows that some 60% of the savings from this Bill come from the poorest third of households, with 3% from the wealthiest third. These three amendments would mean a substantial decrease in the 200,000 children pushed into poverty by the below-inflation increases in children’s benefits and tax credits in this Bill.
I wonder whether we realise, and get hold of well enough, the considerable extent to which child benefit in particular is regarded in most families as being specifically for the children concerned. My experience
in West Yorkshire is of families on low pay struggling to make ends meet but quite clear that child benefit is to be used not for the general household expenses but by the mother to help her children. The points made persistently in debates on this Bill and on the Welfare Reform Act by the noble Baroness, Lady Howe of Idlicote, speak of the way in which it is women—often mothers—who are most disadvantaged by the measures we are taking because they are concerned particularly with the specific help of their children. Child benefit reduction fails to take account of the cultural and social support for children that this benefit provides, in addition to its financial obligations.
Reduction in child benefit specifically is also a disincentive to seeking work, so it is a direct challenge to the Government’s own desire, put forward powerfully by the Minister, to encourage people to return to work. Child benefit, rightly, is disregarded both from household income and in calculating the applicable amount before housing and council tax benefit are reduced. The result is that a low-income working family living in rented accommodation loses both the £4.80 a week in child benefit and a further estimated £4.10 a week because of the disregard rules. A loss of some £9 a week is a serious blow to working families, and that child benefit reduction in particular works against the Government’s aim to get people back into work.
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More specifically, on Amendment 17 and its effect in removing the lower disabled child addition within universal credit from the scope of the Bill, the Government have promised to provide protection for the most vulnerable families, specifically including those affected by disability. Many of the things that the Government have done have had the effect of protecting some of those with disabilities, yet this particular piece of support for disabled children is being subjected to the 1% cap.
There is already the cut in support for these children under welfare reform legislation from £57 a week under child tax credit to £28 a week under the disability addition of universal credit. We discussed that on the first day in Committee. This is in addition to the other reductions faced by all families under welfare reform. The Holes in the Safety Net review carried out by the noble Baroness, Lady Grey-Thompson, demonstrated how hard the changes to welfare benefits will hit disabled children who need specialist aid or clothing, for example. Enabling those children to play as full a part as possible in society benefits them and society as a whole. We must do all we can to achieve that.
In comparison with the Welfare Reform Act, the provisions we discuss today may seem in one sense minor but, again, they are cumulative. They add to the pressure on disabled children and their families. The Children’s Society estimates that if the lower child disability addition were uprated by CPI, the monthly rate in 2015-16 would be £130, whereas if it is capped at 1% it will be £126. The cost of the amendment would be some £4.2 million in that year. It would benefit 100,000 children by some £42 a year. That figure of £4.2 million is tiny in the context of the welfare reforms that we face. It would be a genuine
mark of support for disabled children if the Government were prepared to move on this particular item of the Bill.
Those in Leeds who work with disabled children, with whom I have discussed this, were as much puzzled as anything else by the inclusion of this particular benefit in the Bill, in view of the Government’s welcome attempts to support disabled people. On Amendment 17, will the Minister avoid this additional pressure on disabled children by looking to uprate the revised entitlement in line with the cost of living?
On Amendments 14 and 19, will the Minister look again at the effects the restriction on child benefit and child tax credit will have on the Government’s aim to move children out of poverty? Will he consider the disincentive to seek work involved in the reduction of child benefit? Will he look at other ways to raise the £0.9 billion that the removal of these caps would cost by placing responsibility on those of us who can afford to pay it rather on those who cannot? I beg to move.