My Lords, my name is also attached to all three amendments in this group. I thank the right reverend Prelate the Bishop of Ripon and Leeds for explaining the amendments.
First, I will cover Amendments 14 and 19 together. Households with children are much more likely to be affected by the Bill than households without children. Many families with children will be affected even when someone is working full time. A single person or couple with children obviously have much greater costs than those without dependent children. For this period of their life, the income they need to meet the basic living costs of their household is clearly greater. That means that the amount someone can be earning and still need extra financial support from benefits and tax credits stretches much higher up the income scale than for those without children.
The level of childcare costs and of rents—especially in the private rented sector— combined with the lack of a living wage means that people who can only find work at or near the minimum wage cannot escape from needing that extra financial support, for however much time they work. If they work more hours, they need more help with childcare. Many are already struggling to manage.
For example in a local paper in the north-east of England, where I live, Pauline Chambers, chief executive of Sedgefield and District citizens advice bureau in County Durham, said that the team had encountered levels of hardship not seen for 21 years. Telephone inquiries have increased by 100 per cent in the last two months, with many people struggling to pay for basic food and utilities. That view is repeated up and down the country. Julia Cornelius, manager of Luton CAB was quoted in a different paper. She said:
“Every day we see people who are struggling to keep a roof over their heads or put food on the table as wage squeezes, price rises and benefit cuts wreak havoc on household budgets”.
Those in work and on benefits gain little from their earnings increasing. A single person earning £250 a week who receives a £2.50 rise in their earnings will keep about £1.70 of the increase after deductions for tax and national insurance. If they have children, and so need to rely on benefits and tax credits, they will reduce as their income rises, so they will be left with a net gain of 10p from a rise in earnings of £2.50.
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The increase in the tax threshold gives much less help to families with children. In April, a single person with earnings of £250 will see a rise in their net earnings of £5.12 per week because of the raising of the tax threshold. It is clearly important that single people in this position are helped; they are likely to be near or below the poverty line if they are paying housing costs. However there is no equivalent help for families with children when someone in the household
earns £250 because they are likely also to be entitled to housing and council tax benefit. They will gain just 76p next April because of the way their benefits will reduce as their net earnings rise.
The cumulative loss due to changes in the uprating of child benefit also decreases work incentives. The real-terms loss between 2010 and 2015 due to child benefit uprating alone is about £6 a week compared with if it had been uprated as it used to be by RPI. However, child benefit also plays a role in determining the level of housing and council tax benefit paid for those on low incomes in work, which means a further loss of £5. So the total real-terms loss between 2010 and 2015, just due to the changes in uprating child benefit, for a family with someone in work but on a low income is almost £11 a week.
Many working families with children are already in poverty. Calculations by Citizens Advice show that a couple, both of whom are working, one full time earning £250 a week, the other part time earning £50 a week, who have two children aged 14 and eight and are living in rented accommodation have an income of £337 a week after paying housing costs. This is already £30 below the after-housing costs poverty line for a family in their situation. This Bill is going to pull them deeper into poverty. A couple with the same household but who are unable to find work will have an income of £259 a week after paying housing costs. This is already £109 a week below the after-housing costs poverty line for a family in their situation.
To summarise Amendments 14 and 19, households with children are much more likely to need to be reliant on benefits because of their extra costs. These families, even if working full time, gain very little from the raising of the tax threshold. Many of these households, whether working full time or unable to work, are already in poverty. This Bill is going to pull many households with children even deeper into poverty. Universal credit will help the family in work, but that will be too late for many of these children. Taking child benefit and child tax credit out of the scope of this Bill would go some way to mitigate the increasing financial pressures on these families in the next couple of years. It is surely time to do something for these families.
I shall briefly turn to Amendment 17. Many parents of disabled children face losses under universal credit. Support for the most disabled children is being halved. In my inquiry into the impact of universal credit on disabled people, the large body of evidence we received from parents of disabled children was that they face substantial additional costs as a result of having a disabled child. They include paying for specialist aids, adaptations to their homes, additional clothing costs and travel costs. Roughly two-thirds of lone parents who had a disabled child receiving the middle rate of the care component of DLA reported that they were unable to work because of their caring responsibilities. Their entitlement under universal credit will be about £28 less than current levels of benefit, as has already been mentioned by the right reverend Prelate. Roughly two-thirds of these parents said they were unlikely to be able to return to work for at least five years. The evidence we received was that these levels of benefit would create great hardship.
Freezing the disability element will mean an even greater loss. Current parents will receive transitional protection, but their award will be frozen until their entitlement under universal credit reaches that level. These families are facing a very difficult next few years because of the freezing of child benefit and child tax credit. If the disability element does not increase with inflation, these families will face an even bigger drop in real-terms value when they transfer to universal credit. They will face several years with lower-than-inflation rises. Their benefit will then be frozen on universal credit for an even longer period while food, housing costs and fuel prices continue to rise.