My Lords, this group of amendments seeks to exclude specified benefits payable for children and widowed parents from the list of those included within the cap. As I mentioned in relation to the other
amendments, these amendments would undermine the fundamental principle that was established when the benefit cap was introduced: that there has to be a clear limit to the amount of benefits that a family can receive. That is a principle that has gained very broad support across the country and indeed from the Opposition.
The benefit cap is one part of our suite of welfare reforms which are restoring work incentives and fairness to the benefits system. That previous system was not fair on working taxpayers; nor was it fair on claimants, trapped in a life where it was more worth while claiming benefits than working. Our welfare reforms are about moving from dependence to independence, and the benefit cap is helping people take that important step into work.
We have always accepted that there should be some exemptions from the benefit cap. To incentivise work, the cap does not apply to those households in receipt of working tax credit, which, for lone parents, requires 16 hours of work a week. To recognise the extra costs that disability can bring, households which include a member who is in receipt of AA, DLA, PIP or Armed Forces independence payment are exempt. Those who have limited capability for work and are in receipt of the support component of ESA or the equivalent in universal credit are exempt. War widows and widowers are also exempt.
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As I have already mentioned, to further emphasise the work incentive and fairness principles of the cap, we have also provided for a nine-month grace period for those who have recently left sustained employment. I am very grateful to the noble Lord, Lord Best, who is not in his place, for the idea.
We must not forget that our welfare reforms are about transforming life chances as well as promoting fairness for those families who are in work. I cannot see why we would want to exclude all specified benefits payable for children and widowed parents from the cap, as would be the result if the amendments were passed. Like other welfare benefits, child-related benefits are provided by and funded by the state. It is therefore right that they are taken into account along with the other state benefits when applying the cap. Those cap levels are not insignificant, being equivalent to annual pre-tax incomes of £25,000 and £29,000. Removing these benefits from the cap would effectively mean there would be no upper limit on the amount of benefits that out-of-work households could receive.
The noble Baroness, Lady Sherlock, asked what I expected people to do to avoid the cap. Millions of households are balancing their caring responsibilities with work, and since the cap was introduced in April 2013, nearly 9,400 capped lone parents have moved into work and claimed working tax credits, joining the 1.25 million lone parents in employment in the UK. By going out to work, parents show their children the importance of a strong work ethic and reinforce the message that work is the best route out of poverty, while improving their longer-term life chances.
The Government have a strong record on providing support for children; parents receive support to help with the costs of childcare, which is being extended
further to help working parents. To support those with younger families, the childcare offer is increasing to provide 30 hours of free childcare per week.
Two of the benefits that noble Lords are seeking to exclude from the cap are the widowed mother’s allowance and the widowed parent’s allowance. I acknowledge the important part that these benefits play in supporting widows and widowers in the months following bereavement. The death of a spouse or civil partner is a life-changing event, emotionally, socially and economically, and there is an important role for the Government to play in providing some relief from the financial pressures in the short term to support people while they adjust. However, the Government should, at the right time, encourage claimants receiving bereavement benefits, who are without employment, into a supported return to work. Noble Lords will recall that, following a public consultation in 2012, we will be replacing the current suite of bereavement benefits in April 2017 with a new bereavement support payment which will focus on the financial support in the period immediately after bereavement by paying an initial lump sum, followed by 12 monthly instalments.
The noble Baroness, Lady Sherlock, asked why maternity allowance was to be included. Recipients of maternity allowance and guardian’s allowance will be affected by the benefit cap only if they are in receipt of a significant amount of other welfare payments. If the claimant or their partner has worked for 50 out of the 52 weeks prior to becoming unemployed, the household will be awarded a 39-week grace period before the cap will be applied. Clearly, we have the discretionary housing payment system to support those in the short term while they adjust.
I urge the noble Baroness to withdraw the amendment.