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‘(1) The amount in respect of other particular needs or circumstance, under section 12, shall include a childcare element for claimants who are in work, except in prescribed circumstances.
(2) The maximum award of the childcare element shall be a prescribed proportion of childcare costs (not less than 80%, or 90% where the element contributes to care for a disabled child), up to a prescribed maximum value (not less than £175 per week for one child and £300 for two or more children).
(3) “Childcare charges” are charges of a prescribed description incurred in respect of childcare by the claimant or claimants by whom a universal credit claim is made.
(4) “Childcare”, in relation to a person or persons, means care provided for any child up to the last day in the week in which
(5) Except in prescribed circumstances, the childcare element shall not be paid where a claimant is in work for fewer than a prescribed number of hours a week or, in the case of a couple, where one or both of the claimants are in work for fewer than a prescribed number of hours a week.
(6) For the purposes of this section, regulations are to provide for a definition of “work.”’.—(Stephen Timms.)
Brought up, and read the First time.
With this it will be convenient to discuss the following:
New clause 3—School meals
‘(1) The amount in respect of other particular needs or circumstances, under section 12, shall include an amount in respect of school meals for any dependents of the claimant.
(2) The maximum award of the amount under this section shall be 100 per cent. of the cost that the claimant would expect to incur in respect of school meals, up to a prescribed maximum value per child.
(3) Regulations shall specify the circumstances under which a claimant shall be entitled to an amount under this section.
(4) Under no circumstances shall any amount payable under this section be included in the “relevant amount” specified in section 93(5) of this Act.’.
New clause 4—Health costs
‘(1) The amount in respect of other needs or circumstances, under section 12 of this Act, shall include an amount in respect of health costs.
(2) The maximum award of the amount under this section shall be 100 per cent. of the cost that the claimant would expect to incur in respect of prescribed health costs such as prescription, dental and optical charges, up to a prescribed maximum value.
(3) Regulations shall specify the circumstances under which a claimant shall be entitled to an amount under this section.
(4) Under no circumstances shall any amount payable under this section be included in the “relevant amount” specified in section 93(5) of this Act.’.
New clause 5—Universal credit printed statements
‘The Secretary of State will provide a record to the claimant detailing the amount and composition of the award, including amounts in respect of each of the elements specified in sections 9 to 12 of this Act and of any appropriate sub-elements as specified in regulations.’.
New clause 6—Payment of housing costs
‘(1) This Section applies to payments of the housing cost element of the universal credit.
(2) Payment of the housing costs element of the universal credit must be made to a person’s landlord where:
(a) that person has requested or consented to such payment;
(b) where sub-paragraph (a) does not apply and the person is in arrears pursuant to the terms of the tenancy agreement between that person and the landlord of an amount equivalent to two weeks or more of the amount he is liable to pay his landlord as rent if in either case the landlord requests or consents to payment to him.
(3) Regulations made by the Secretary of State may prescribe the circumstances in which subsection (2) does not apply.
(4) Regulations made by the Secretary of State shall prescribe the person who is to be treated as the landlord for the purposes of this section and shall make provision as to the discharge of liability consequent upon the making of any payments to the landlord.’.
Amendment23, page 3, line 7, in clause 5, after ‘it’, insert
‘excluding any amount in an Individual Savings Account, up to a prescribed maximum of no less than £50,000, where the claimant is in work’.
Amendment 24, page 3, line 13, after ‘it’, insert—
‘excluding any amount in an Individual Savings Account, up to a prescribed maximum of no less than £50,000, where one of the claimants is in work’.
Amendment 30, in clause 10, page 4, line 36, at end insert—
‘subject to these amounts being not less than the additional support for disabled children provided through benefits and tax credits prior to the introduction of Universal Credit.’.
Amendment 27, in schedule 1, page 103, line 1, after ‘income,’, insert—
(ba) a person’s earned income from self-employment,’.
Amendment 28, page 103, line 3, at end insert—
‘(1A) Regulations under sub-paragraph (1)(ba) above may include provision for calculating profits and losses of a trade in accordance with generally accepted accounting practice, subject to any adjustments prescribed by regulations.’.
Amendment 29, page 103, line 20, at end insert—
‘(4A) Sub-paragraph (4) does not apply where a person has earned income from self-employment and the business from which the earned income in question is derived (or any larger undertaking of which the business in question forms part) is being carried on upon a commercial basis and with a view to the realisation of profits in the business or larger undertaking.’.
Amendment 68, page 103, line 20, at end insert
‘; and this will include an additional prescribed minimum level for claimants in receipt of the universal credit additional amount for caring responsibilities, and will be paid in addition to any other prescribed minimum level.’.
Amendment 33, in schedule 2, page 114, leave out lines 34 to 39.
Amendment 26, in schedule 6, page 123, line 10, at end insert—
‘(4) No less than six months before the appointed day the Secretary of State shall publish a report on the access to welfare advice, including advice for those unable to use the internet, that will be available at the appointed day, and shall satisfy himself on the basis of that report that provision is adequate to support migration to Universal Credit.’.
Government amendments 14 to 19.
Amendment 61, in clause 97, page 64, line 29, at end insert—
‘(3C) For the purposes of paragraph (3B), any element or sub-element of the universal credit award that is paid in respect of children, including childcare, shall be paid to the designated carer, except in prescribed circumstances. Regulations may provide further circumstances in which a proportion of universal credit may be payable to a particular individual.’.
Government amendments 20 and 21.
As this Bill returns to the Chamber on Report, it is astonishing how many policy gaps remain. This group of proposals addresses some of the worst holes in the policy on universal credit, and new clause 2 in particular deals with child care.
This is what has happened. Perhaps understandably, Ministers behaved naively, and with beginners’ enthusiasm they boasted that universal credit would solve all the problems in the benefit system: that it would always pay to be in work; that the system would be simpler; that thousands would be better off and nobody worse off; and that the benefits bill would be cut. In truth, one did not have to be Milton Friedman to work out that that did not all add up. That is now the Government’s problem: they cannot stand up their boasts. When it comes to the detail, they have been unable to deliver. Nowhere is that clearer than on child care support in universal credit.
Ministers have rightly recognised—as the Secretary of State did earlier—that support for child care is key to whether parents are better off in work or out of work. But the Secretary of State promised, in his evidence to the Committee in March, that the Government’s proposals on child care support would be available before the Bill left Committee. He promised the Committee on
“it will certainly be done within the Committee stage.”––[Official Report, Welfare Reform Public Bill Committee,
As I pointed out in Work and Pensions questions, that promise has been broken. No policy was announced before the end of the Committee stage and now the Bill will leave the House of Commons this week and we still do not have a clue what the Government’s policy is, because Ministers have not been able to work a policy out.
At the beginning of the Committee stage, we told the Government that we were worried by the lack of crucial details, and now the Bill has come back to the House and they are still missing. Ministers have failed to make this fly. We are talking not about minor details, but about whether parents really will be better off in work, as they generally are under the current system. Achieving the whole purpose of these changes hangs on the Government’s decision on child care, but Ministers have failed to reach a decision. That is why Oxfam, Barnardo’s, the Child Poverty Action Group and others wrote recently to the Secretary of State saying that for many families on low or middle incomes “the success of universal credit will stand or fall on the level of child care costs covered.” Those groups are right: the success of this policy stands on the Government’s decision, but Ministers have simply failed to come up with a decision.
At least with the NHS reforms the Government paused to work out a policy: on this Bill, they have not managed to work out a policy, but they are pressing on all the same. No proposals were presented in Committee and we have none in front of us today. Instead, we just had an informal seminar on options. We know that the Government want to extend provision for child care support to people working fewer than 16 hours a week, but they want to do that within the existing budget. That does not add up—it is a mess.
I thank the right hon. Gentleman for giving way on this extremely important issue. Is his solution the same as that of the groups he mentioned earlier—to put more money into child care?
No: our solution is the one in new clause 2, which we are debating. The priority should be to maintain the support currently being received by people working more than 16 hours a week. I understand why the Government say that they cannot simply find more money for supporting child care, but what will be disastrous is what appears to be the Government’s intention to give a lot more people support from the same cash-limited sum of money. If that proceeds, a very large number of people for whom work pays at the moment will find that work no longer pays.
If that would mean that people who are currently able to work for more than 16 hours had to give up their jobs altogether, I would not welcome it. That would be a seriously retrograde step. I accept that there is a case for supporting the cost of child care for people in mini jobs as well, but if the additional resources are not available to fund that, it would be a terrible mistake to press ahead and claw that money from people who depend on it to make work pay at the moment.
The Secretary of State set out at the seminar, at which I think Harriett Baldwin was present, some of the possible options. The Children’s Society has analysed some of the options and concluded that under one of them a family could pay out £1.56p for every additional pound earned. Ministers told us that that problem would be eliminated by universal credit, but it now appears that, if they proceed on the basis of that option, the new system will be a great deal worse than the current one, and will introduce a draconian new penalty for working parents. As I said to her, there is a good case for supporting child care for people in mini jobs, but it must not come at the expense of parents being helped at the moment.
The recent report from the Resolution Foundation and Gingerbread also underlined the point that spreading the same budget among a lot more people will mean families losing money for every additional hour they work. The Government are right to express the aspiration that it should always pay to be in work, but in this case, if they pursue the option set out in the seminar, something will be lost in translation, because families will have to pay out in order to work. The current system does a far better job; the new system that is envisaged will be a severely retrograde step, if it has the effect of taking more than £1.50 off people for each extra pound they earn. The Government appear poised, once they have finally worked out what their policy is in this area, to make work far less attractive than at the moment.
The Government have failed to come up with a policy, so our new clause 2 proposes one: it would retain the percentage of child care costs covered and the cash limits in the current system; it would ensure that work continues to pay for those for whom it pays at the moment; and it would allow the retention of the existing 16 hours’ threshold. The Government say that they cannot afford any extra spending on child care at the moment. My case to the House is that support for child care for those in mini jobs would need to wait until there is funding for it in order to ensure that jobs of 16 hours per week actually pay, as they do at the moment.
Does my right hon. Friend agree that it is disingenuous of the Government to make proposals to fund child care for mini jobs, given that the child care market is simply not designed in that way? Finding short episodes of child care for just a few hours a week is extremely difficult for parents, and could make child care provision even more financially unviable and drive providers out of the market?
My hon. Friend makes an important point and is absolutely right. People are worried about what the Government’s proposed changes will do to the child care market as a whole. It could make some providers uneconomical. If a large number of people currently using child care for more than 16 hours a week are forced, as a result of these changes, to give up their jobs and to withdraw from their child care places, it would put a huge dampener on, and cloud over, the whole child care market in the way she is right to fear. We feel strongly about this matter—the Government simply have not come up with a policy—so I will seek, if I can, to divide the House on new clause 2.
The Government’s failure to produce a policy on child care before the Bill leaves the House is a particularly abject failure. Ministers have not been able to turn their claims into policies. However, although child care might be the most spectacular and significant hole in the Government’s policy, it certainly is not the only one. In this group of amendments, therefore, we have tabled two further new clauses to fill the policy holes on passported benefits, such as free school meals and free prescriptions.
At the moment, people on out-of-work benefits are passported to those additional benefits, but the out-of-work benefits will be abolished, so who will be entitled to free school meals in future? Again, that is not an obscure, but a basic question and the Government have again failed to give us an answer.
My right hon. Friend is right to point out the importance of free school meals for many of our constituents whose children are sometimes in desperate need of the basic nutrition that they receive in schools. For the Government to have got to this stage in the Bill’s passage with no clarity about what triggers free school meals entitlement is confusing. Will they introduce a new means test? I am very glad that he has raised the matter.
I am grateful to my hon. Friend, who is absolutely right about the centrality of free school meals entitlement in the system. The Government have simply failed to work out who, under their proposals, will be entitled to free school meals. It is not that I am disagreeing with the Government’s policy: the problem is that they have no policy. We have no idea whom they believe should be entitled to free school meals. As far as we can tell, they have not got a clue, either.
As my hon. Friend points out, free school meals are an important part of the system. They can be worth more than £350 a year to a family with one child in a primary school and easily more than £1,000 a year to a family with three or more children at school. Clearly, that makes an enormous difference.
Families currently receive free school meals until they work for more than 16 hours, at which point they receive working tax credit so that they are not worse off as they move into additional hours of work. The universal credit White Paper suggested that the Government intend to remove entitlement to free school meals at a fixed income threshold. That may partially answer my hon. Friend’s question. However, if they do that, it creates precisely the sort of cliff edge that we were told the Bill would eradicate. I presume that that difficulty has prevented the Government from setting out their policy and is the reason for the Bill’s silence on the matter and the absence of notes on the regulations to explain the Government’s policy.
If a lone parent with three children lost entitlement to free school meals at some level of earnings—say, £150 a week or more—their net household income would fall unless they earned more than £4,000 extra a year. If the new system works like that, it will be a disaster. It is exactly the sort of disincentive that we have been told all along that universal credit is supposed to remove. If the Government introduced such a policy, universal credit would make the problem of work disincentives far worse than it is in the current system.
Our proposal in new clause 3 is that the value of free school meals should be paid through universal credit and then tapered away gradually as household income rises. I recognise that there is concern among many who follow these matters closely that that could mean that the cash is not used for school meals but other expenses. Given the pressure on household budgets, one can well understand how that might happen. I therefore suggest that the solution is for the cash to be paid on to an electronic card, which could be used only to purchase school meals. An arbitrary cut-off in income, whereby all support for free school meals was withdrawn, would be damaging.
Does the right hon. Gentleman accept that his proposal flies in face of the admirable position at the moment whereby, in the lunchtime school queue, there is no obvious and visible difference between those who receive free school meals and those who do not? A provision that would effectively give some, but not others, a particular card with money on it would surely stigmatise those kids who get free school meals.
No, the Minister is mistaken. All pupils in the school would pay for their meals with the card. The difference would be how the money got on to the card. Some would pay cash as currently happens and others would have the money placed on the card through universal credit. The Minister is right to raise the matter, which is important, but my solution would solve the problem.
If the right hon. Gentleman will forgive me, I will try to catch Mr Speaker’s eye in a moment to answer questions, but for now, perhaps the right hon. Gentleman can answer one for me. As different schools today use different systems—some use fingerprinting, some use an electronic card system and some still use cash—does he envisage his proposal requiring schools up and down the country to scrap their current systems and have a new, harmonised system? If so, has he calculated what the cost of that system would be and how long it would take to introduce?
On the important subject of free school meals, is the right hon. Gentleman suggesting that the taper would begin immediately someone went into work, or would it come into play once the earnings disregard had moved out of the way, and if so, what would be the cost of his proposals?
The point is that it is a zero-cost proposal; I am simply suggesting that the funding would be provided through the mechanism that I have described. It would be tapered away, along with the rest of universal credit, and would sit naturally on top of existing payments, so that there would be just an additional payment in respect of school meals, where appropriate, which would then be tapered away once the disregard had been exhausted. The budgetary cost would be exactly the same.
We have exactly the same issue with free prescriptions. The current system provides them to people on benefits and to some people with low incomes through the HC2 form, but once again, we have heard nothing from the Government about what will happen under universal credit. Our new clause 4 addresses that.
By the way, it is perhaps worth making the point in passing that the number of pupils receiving free school meals is an important indicator for education policy as well. The pupil premium depends on the number of people receiving free school meals. The fact that we have no idea at all who will be entitled to free school meals under the Government’s proposals will create serious problems with that, too.
Returning to the right hon. Gentleman’s proposals on prescription charges, is he not concerned about the evidence that we received at the beginning of the Public Bill Committee from a number of witnesses who said that there was a significant difference between school meals and prescription charges? School meals are an ongoing cost every day, whereas prescription charges tend to come in a batch. By tapering the amount of money that somebody received, they still would not be able to afford significant costs—potentially the cost of a number of prescriptions at the same time—because the amount of money concerned would be an ongoing amount, unlike under a system more similar to the current one, where all the prescriptions are paid for when they are needed.
I agree with the hon. Lady’s point, and to that extent the current system has a lot of attractions. The problem is that we will lose that system with universal credits. The question is: who will be entitled to free prescriptions? I do not imagine that she is arguing—as perhaps the Government will; I do not know—that there should be a cut-off point in income beyond which people suddenly lose all help for prescriptions. If that happens, we will create a serious and damaging cliff edge in the system, which everyone agrees is an undesirable feature. Our new clause 4 therefore proposes to address that problem, although there may be other problems as well. What I would dearly love to extract is a proposal from the Government, so that we can find out exactly what they intend to do, because so far they have been silent on that subject, as on all the others.
We have been told throughout these debates that the main point of the Bill is to ensure that people are always better off in work. Our task in Parliament is to scrutinise whether the Bill lives up to that laudable aim, but without knowing what the Government will do to provide help with child care, school meals or prescription costs, we simply cannot tell.
Frankly, it is an abuse of the parliamentary process not to tell this House what the Government’s policy is before the Bill leaves us. I do not accuse Ministers of withholding information from Parliament; the problem is that they have no more clue about their policy than we do. It is an astonishing and abject failure on their part. They made all these boasts at the beginning—their bragging ran away with them—but now they cannot deliver policies to substantiate those boasts.
Is it not a bit rich to put the case in that way when under the right hon. Gentleman’s Government, who were in power for many years, these aspects were not covered by a benefit? There was no child care benefit or a school meal benefit as such. They were dealt with outside the benefit system, no doubt in a way that he approves of, as I probably do as well, but why suddenly bring these elements into the benefit system?
The hon. Gentleman has a good deal more experience in these matters, if I may say so, than some of his Front-Bench colleagues who are dealing with them at the moment. Good provision, particularly for child care support, was of course made through the tax credit system. That strong support for the costs of child care is why there was such a dramatic rise in lone parent employment under the previous Government. I supported that and I suspect from what the hon. Gentleman just hinted at that he supported it and continues to support it today. The problem is that once tax credits are abolished and universal credit takes their place, we have no idea how child care is going to be supported in the future. That is why I am—rather modestly, I think—appealing for the Government to tell us.
Does my right hon. Friend also agree that one of the real concerns we face as a result of universal credit forcing us to look at lumping all the different strands of financial support for families into a single payment is that all the eggs are in one basket, so if one thing goes wrong, the whole benefit—the whole structure of financial support for that family—could collapse?
My hon. Friend is absolutely right. For that very reason, the risks are great indeed. When I come on to speak to amendment 24 in a few moments, I will point out that if people go beyond a prescribed level of savings, they will lose all that help under all those headings.
Will the right hon. Gentleman clear up one point of confusion for me and, I suspect, for my hon. Friends? Over the past two or three months, he has said that he supports the universal credit in principle. However, his remarks and those of his hon. Friend Kate Green imply some distancing from the proposal. Does he intend to support the Bill on Third Reading or not?
The right hon. Gentleman will find out the answer to that question in due course. We have been consistent in supporting the principle of universal credit. We think that bringing in-work and out-of-work benefits together is a good idea that has a number of attractions. The problem is that the detailed work to make that policy fly has simply not been done by the Minister and his hon. Friends. There are desperate, gaping gaps in the policy and fundamental questions that he is unable to answer or explain about how the arrangements will work. As a result, the Bill, on departing this House, will leave many households, and many working families in particular, in a very precarious position.
Having talked about a lot of things that we do not know about, let me now deal with some things that we do know about. Clause 5, which I touched on a moment ago, will badly undermine the aspirations of people who are in work on modest incomes. Under the current rules—they have been a long-standing feature of the system—people who are out of work but who have above a prescribed capital sum are expected to use it to support themselves before claiming income-related, out-of-work benefits. If somebody has more than £6,000 in savings, the Government assume an income from them, which is then subtracted from the benefit entitlements; someone with more than £16,000 in savings will not receive means-tested, out-of-work benefits at all. Those two figures were increased from £3,000 and £8,000 by the last Government to help people retain some of their savings when they lost work. For people in work, the story has been very different. There is no savings cap at all on tax credits. Clause 5 will change that fundamentally by extending the rules on savings for those who are out of work to people who are in work.
The Conservative party used to tell us that it wanted to encourage people to save. Clause 5 will not just discourage people from saving; it will make it impossible for them to save. Anyone on a modest income who decides to save for a deposit to buy a house in the future, or for the cost of university education, will suffer an extraordinary punishment under the clause. It is impossible to buy a house today, or to obtain a mortgage for shared ownership, with a deposit of less than £16,000. However, if people have savings of £16,000 towards, say, the deposit for a mortgage—if, as Ministers seem to believe, they start to get ideas above their station—they will lose all their universal credit. Typically, that might be £5,000 a year. In addition, they will lose any support that they receive for the costs of child care, and on top of that they will lose any help that they are given with housing costs.
Those measures will add up to an extraordinary punishment for saving. They will make saving literally impossible, because as soon as people have managed to save £16,000 from their earnings, the Government will drain their savings away. The problem will start as soon as they have saved £6,000. Ian Swales—who, I am pleased to see, is present—said in Committee that the problem would not last very long because people’s savings would soon be gone, and he was absolutely right. These proposals mean that if anyone attempts to start building up a saving that would be enough for, say, a deposit on a house or a contribution towards higher education costs, the Government will take it away by withdrawing their universal credit. The message being sent to people on low incomes who are doing the right thing and working to support themselves could not be clearer: “This Government will not support you.”
Amendments 23 and 24 would change that. They would allow people to save money in an individual savings account—up to £50,000 if they are in work. Ministers have told us that it would cost just £70 million a year to exclude all working households from the savings cap, and this measure is obviously more modest than that.
Surely we should be encouraging people to save, not punishing them for saving. People work to improve their lives and the lives of their families. They are aiming not for a bit more spending money each month, but for the means to buy a house, to help their children through university, to start a business or to pay for a child’s wedding. If they are to achieve such aspirations, people need to be able to save from their earnings, but clause 5 denies them the chance to do that.
The right hon. Gentleman has stressed the importance of aspiration. New clause 3, which concerns free school meals, is also relevant to that. Does he not find it interesting that, according to an examination of educational attainment among different ethnic groups, the most successful sub-group are Chinese students, and the second most successful are Chinese students receiving free school meals? The issue is not just money, but how Government can encourage aspiration and ambition, which is the ethos of the Bill.
Certainly the Bill should encourage aspiration, but if it prevents people from saving in the way that I have described, as clause 5 will, it will undermine aspiration. That is the point: we want to change the Bill so that it will allow people, even those on universal credit, to save. We believe that everyone should be encouraged to save, rather than being punished for having saved.
The Secretary of State used to agree with us. In 2008, he said that
“poverty is not just about how little you earn; it’s also about how little you own.”
If we want people to work their way out of poverty in the way in which the hon. Gentleman suggests—and I agree with him about that—we need to offer them the chance to save. I am afraid that if the Government press ahead with making saving on a low income impossible, the phrase “compassionate conservatism” will be revealed as a sham.
For similar reasons, I hope that Government Members will share my concern about the Bill’s discouragement to self-employment. Schedule 1 provides for a minimum income floor when calculating universal credit for self-employed people. Under that provision, Ministers are making the assumption that self-employed people will be earning at least the minimum wage for every hour they work, but anyone with even a passing knowledge of what is involved in starting up in self-employment will know that that is absurd. While establishing their business, many self-employed people work extraordinarily long hours and earn hardly anything at all, and their income fluctuates hugely month by month. It is absurd to assume that they will earn the minimum wage for every hour they work, and that they should therefore have their universal credit reduced accordingly. That is why the Chartered Institute of Taxation has warned that this new system will be much less supportive of self-employment than the current one.
Our amendment 27 therefore seeks to align the universal credit definitions of income for self-employed people with those used in the tax system and in tax credits. The Chartered Institute of Taxation’s low incomes tax reform group has pointed out that allowances are made in the tax credit system for investment in business assets and equipment and for trading losses that can be set against other income or the profits on later periods of trading. Those arrangements reflect the reality of being self-employed. The idea that the self-employed are earning at least the minimum wage for every hour they work in self-employment is a complete illusion, and if the Bill is not amended it will destroy the very effective support that the tax credit system currently offers to self-employment.
The question of the income levels of the self-employed is not as simple as the right hon. Gentleman makes out. Under the current capital allowance system, a self-employed individual can invest £25,000 in a piece of machinery and immediately wipe off their profits, and it causes deep resentment when they are then able to claim family tax credit. The Government are trying to create a system that supports the self-employed but is fair to other taxpayers.
The problem is that the proposed system does not support the self-employed in the way that the tax credit system supports them, because it treats the self-employed as if they are earning at least the minimum wage for every hour they put into their business. I know that the hon. Gentleman is genuinely interested in the position of the self-employed and I think he is supportive of self-employment, but he will know that it is absurd to suggest that a person who starts up in self-employment will be earning at least the minimum wage from day one. That will not be the case, of course; there may be weeks, or perhaps months, in which they earn nothing at all. The current tax rate system reflects that, but the new system will not.
Obviously I support the self-employed and want the universal credit system to support them, but we need to recognise that there are situations such as the following: somebody sets up in business to breed angora rabbits for their wool and manages to make £80 in sales in the year. I have not made that up, and it is absurd that that type of business should be supported by the taxpayer.
I am sorry to hear the hon. Gentleman belittling self-employment. For many people, including people who have lost their jobs, a move into self-employment can be absolutely the right thing to do, and, over time, they might find that they are able to develop a serious business—not breed rabbits—and earn a living from it. We should be valuing, not ridiculing, such contributions to the economy. I am afraid that there are many problems with the Bill, and one of them is that it so badly weakens and undermines the support that is currently available for self-employment.
Does my right hon. Friend agree that one of the attractions of supporting self-employment is that it often particularly helps those who find it difficult to access the traditional labour market, such as women, because they need to combine work with caring responsibilities and therefore need more flexible hours, and disabled people, who may not be able to access full-time work in a structured workplace but can do some work on their own at home? We also certainly know that there is a long-standing tradition of some of our ethnic minority communities finding that self-employment is the best way for them to sustain economic independence.
My hon. Friend is absolutely right to say that self-employment is a crucial element of our economy for many people, including those with caring responsibilities; others who, for other reasons, are not necessarily able to commit to a full-time job; and, indeed, those who simply want the opportunity to build up a business for themselves—it is crucial that the system supports them. Tax credits have done so, but I am afraid that universal credit will not. That is a real worry and the approach being taken flies in the face of Government statements of support for self-employment.
I am surprised to hear those comments. I understand that the right hon. Gentleman is talking about supporting businesses and self-employed people perhaps working a day a week or two days a week. How does that fit in with his proposals on supporting child care in respect of micro-jobs and part-time jobs?
I have made it clear that the priority should be to maintain child care support for those who are currently receiving it. There is a case, with which perhaps the hon. Gentleman agrees, for extending that support to others. If that is to be done—and I can well see the case for it—the funding needs to be provided for it. What we cannot do is take support away from one group, making work impossible for them, in order to support another group. If we only knew the Government’s policy on child care support, we could have a proper debate about it, but that appears to be where they are heading. They simply have not had the ability to put a policy together and tell us what it is. The hon. Gentleman has suggested that perhaps too many self-employed people are either earning a negligible amount or are under-declaring their profits.
It is important to correct the record. I did not state that self-employed people were under-declaring their profits; I simply stated that the capital allowance system allows the self-employed, completely legally, to reduce their profits to nothing by purchasing an asset. That was the simple point that I was making.
That is a long-standing feature of the tax system for businesses generally, and we should be encouraging investment. I see it as a strength of the current system that such necessary investment is supported. The hon. Gentleman is right in the sense that universal credit will remove all that completely. I am afraid that, as the Chartered Institute of Taxation has pointed out, it will be a far less supportive system for self-employment than the current one.
Again, I need to clarify the record. It is important to understand that the capital allowance system has been changed fundamentally in the past two years as a response to the economic crisis that we are facing. Someone could not previously claim 100% allowances, but they can at this point in time. A 100% allowance on the purchase of an asset worth £25,000 results in the net profits of a small business reducing to nothing and therefore they are supported by the tax credits system. It is important that this Government support the self-employed, but not in a way that encourages them to make investment decisions for the purpose of universal credit rather than for the purpose and benefit of their own business.
I am not clear whether the hon. Gentleman supports the fact that we have had 100% capital allowances recently, although I hope he does. When the downturn hit, they were introduced for a very good reason, which was to encourage enterprise and investment, particularly on the part of small businesses.
One of the problems with the Bill is that in many cases self-employed people will be strongly pressured to lie about the hours they have worked. They are not going to admit to having worked 18 hours a day, as some are doing, because they will then lose pound for pound from their universal credit, as it will be assumed that for every one of those 18 hours they have earned at least the minimum wage. This is a bad policy and it needs to be changed.
Amendment 33 may cause some puzzlement. Many people will not know that the Government intend to remove pension credit from people over pensionable age who have a spouse under pensionable age. That has not been announced anywhere and the Pensions Minister has not stood up to tell us about it. We find it buried in, of all places, the middle of schedule 2, on page 114 of this Bill. If the older person were living alone, they would receive pension credit. Those people will in future be penalised because they have a younger spouse. This is a new couples penalty, but we have been assured that the Conservative party wanted to stamp out such penalties. Indeed, the Secretary of State said, once again, in DWP questions earlier that he wanted to remove couples penalties from the system—but here he is inventing a new one. That will change the pension entitlements for some couples with very little notice and, in some cases, by a substantial sum. If Ministers want to change the arrangements for pension credit, they should set that out openly, the provisions should be made in the Pensions Bill and there should be full discussion of the change. They should certainly not try to sneak it past us in the second schedule to this Bill.
We have now established that of the 610,000 recipients of pension credit with a partner, almost 100,000 have a partner aged under 60. The difference between the couple rate for jobseeker’s allowance and the pension credit rate is more than £100 a week, so for each year that a couple is in receipt of JSA rather than pension credit, those couples stand to lose more than £5,000.
The right hon. Gentleman will remember that we debated this matter extensively in Committee, so it is not quite the bolt from the blue that he suggests. Is it his party’s policy that people under retirement age who happen to have a partner who is over retirement age should, through that partner, be able to access means-tested support from the state without any obligation to look for work themselves?
In government, we set out the arrangements for pension credit as they stand. In our view, those arrangements made sense. If the Government want to make a case for changing those arrangements, I simply suggest that they need to announce that change and to stand up openly and say that they have decided that in future people cannot have pension credit if their spouse is under pensionable age. We could then have a debate. I would have thought that such a measure ought to be in the Pensions Bill. The Minister is right that we were able to spot the change in Committee and to discuss it then, but this is certainly not an example of the Government’s being open—far from it. They seem to have hoped that they could slip this measure through and nobody would notice.
For those couples for whom there is a substantial age gap—in 40% of those cases, the partner will be younger than 55, so the gap will be more than five years—this measure could represent an enormous cumulative loss of £5,000 a year for five years or more.
May I take the right hon. Gentleman back to the key question? We are talking about people of working age whose households would be in receipt of means-tested benefits from the state without being obliged to look for work. Is it his policy that those people should not have an obligation to look for work and that their households should be able to continue to receive means-tested benefits from the state?
As far as I can see, the arrangements for pension credit have worked perfectly well up to now, presumably with the feature that the Minister is now deprecating. My case is that if the Government want to change the rules for pension credit to discriminate against people who have a spouse under pensionable age, they should do so openly. They should announce the change: it should have been in the Budget, the welfare reform announcement or the Pensions Bill. We have a Pensions Bill going through Parliament at the moment—why was it not included there? Instead, the change was slipped into a schedule to this Bill and no Minister, until asked, said anything about it.
I am a little unclear about whether the right hon. Gentleman’s position is that this measure is wrong in principle and he disagrees with it, or he agrees with it but thinks it should have been announced with a fanfare. Will he explain which it is?
Let me understand fully what the right hon. Gentleman is saying. If a retired man, say, of 66 is married to a spouse who is 45, she should be able not to have to work and they should be able to double-claim pension credit—is that correct?
No, it is not. Any income to the household from a working spouse will be counted in the household income for pension credit purposes. My argument is that if there is a case to be made for a change to pension credit, it should be made openly, and it should have been in the Pensions Bill, which Parliament is currently considering.
Forgive me for probing. The right hon. Gentleman has rightly set out his case as an amendment, but I wish to press him on the following point. If a household is receiving elements of pension credit that gives them the wherewithal to survive, is he saying that a 45-year-old should have no obligation to work while the household receives means-tested benefits from the state? It would be helpful to understand that. If that is his party’s policy, will he say so clearly and unequivocally?
I do not recognise the policy that the Minister describes. We have had a long-standing arrangement for pension credit which appears to work perfectly well. If he has found abuses of pension credit, I shall be eager to hear those examples from him when he responds to the debate. I notice that when asked recently about this by my hon. Friend Rachel Reeves, the Pensions Minister stated:
“We recognise that it is important not to undermine the stability and outcomes for existing pension credit customers, so there will be no change for couples already in receipt of pension credit at the point of change.—[Hansard, 9 June 2011; Vol. 529, c. 422W.]
That is welcome and helpful. I do not know whether the Minister of State, Chris Grayling has satisfied himself that the abuse that he has just described is not a problem at present. But even that reassurance from the Pensions Minister is not on the face of the Bill. For many couples who have planned around receiving pension credit and been reasonably able to do so, and who are now approaching retirement, the change will come as a severe shock.
We will support the principle of universal credit, despite the holes in the policy about how it will work and despite the perverse incentives that the Government have added for savers and the self-employed, but this is not, as Ministers have frequently claimed, a panacea for all the problems in the system. It is therefore vital that sufficient welfare advice is available at the point of transition. People will find any transition difficult, even one which, unlike this, is to a simple system. Yet at precisely the moment when the Government are embarking on this massive upheaval to the system, funding for welfare advice is being cut.
A large part of the funding—for example, to Citizens Advice—comes at present through legal aid, and the Government have announced that there will be no legal aid funding for welfare advice at all in future. About a quarter of the current funding for Citizens Advice comes from that source and it is being taken away. Most of the rest of the funding comes from local authorities, and that is also being cut. Demand for welfare advice will rocket and funding will plummet. This is a perfect storm for advice services. Our amendment 26, therefore, requires the Secretary of State to report, before universal credit is introduced, on the availability of welfare advice, and to satisfy himself that it is adequate to support people through the transition that the Government envisage.
New clause 5 aims for clarity about how claimants will be informed about their universal credit. It stipulates that every claimant should be provided with a record of the amount of their award, including details of the separate elements that make it up. I understand that the Government intend to provide each claimant with the equivalent of a payslip. I hope the Minister will be able to confirm that when responding to the debate. Will that payslip be provided on payment, as with payslips for those in work? Will it be provided directly by the Department or through the employer, and will it set out the various elements of the award—child care, housing support, support in respect of children and so on? A full statement would ensure transparency between the Government and claimants and would be a welcome feature.
Amendment 30 addresses support for families with disabled children under universal credit. It amends clause 10 to ensure that the amount that those families receive is not less than under the current tax credit and benefits system. My hon. Friend Margaret Curran raised this important point in Work and Pensions questions earlier this afternoon. Under universal credit, a family receiving the higher rate care element of DLA for a disabled child will receive £74.50 through the severe disability addition. At first glance, that seems broadly in line with the current position, but there are worries, because we are told that the higher level of the disability addition will be uprated in future only as resources allow, so it is very likely that families with severely disabled children will lose out over time.
For families with disabled children not receiving the higher rate care element of DLA the situation looks a great deal worse. The amount available under the universal credit disability addition will be £26.75 a week, compared with the £53.62 available under child tax credit, so support will be halved. The Minister has justified that in terms of aligning the support given to children and adults and easing the transition, but we know that children helped under the disability addition will not automatically be helped under adult universal credit.
Amendment 61 proposes that the elements of universal credit paid in respect of children must be paid to the designated carer of the children, except in prescribed circumstances. That is crucial for safeguarding the interests of children. Let me simply quote from the briefing that Oxfam has sent every Member: “We know from our work on the ground that money in households is often unevenly distributed and that women in poor households can have little or no access to money. As mothers usually take the main responsibility for feeding and clothing children, this affects both women and their children. This sometimes means that women themselves go without eating in order to pay the bills or put a meal on the table for their children. This lack of access to income in their own right leaves women open to the risk of financial abuse and can also reduce their chances of escaping domestic violence. As a crucial first step, the Bill must be amended to allow payments intended for children to be labelled as such and paid to the main carer, who is usually female. This change will make it more likely that this money is spent on children.” That would be the effect of the amendment.
Amendment 68 would provide for a minimum amount to be paid to any claimant who has caring responsibilities. It is vital that people who give up their time and energy to look after the most vulnerable in society, saving the taxpayer considerable sums in the process, are properly supported when they move on to universal credit, in line with the help currently available through carers allowance. I hope that the Minister will make it clear how he will ensure that that happens.
In rehearsing these concerns, I remind the House that the whole project of universal credit will depend on an enormous new IT system, which the Government claim will be ready in an implausibly short period of time. In truth, it will not be ready by October 2013, as claimed, which will give rise to serious problems as that deadline approaches.
I put it to the right hon. Gentleman, as I did in Committee when he made that point, that this Government’s approach to IT is far more thought through and better planned than the approach taken by the previous Government, who spent vast amounts of money without any consideration for the end, route or purpose of the policy. This Government are being far more direct and should get the IT ready on time and on budget.
I look forward to reminding the hon. Gentleman of that comment in September 2013.
The intention of universal credit is that work should always pay. Without decisions and policies on child care or passported benefits, we cannot know whether work will always pay, and all the indications are that the Government will in due course, when they finally put a policy together, introduce one that will mean that for many work will no longer pay.
On savings, I am afraid that the Government are heading to crush the hopes of many people in work. On the self-employed, the Government will crush the hopes of many who want to set up their own businesses. As Policy Exchange recently argued in its report, universal credit has been oversold by Ministers. I very much hope that the House will support our amendments so that universal credit can support the aspirations of families across the country.
I should like to start by making the same point that I made in Committee. I have listened to Stephen Timms setting out a vast range of measures and details that he wants us to write into the Bill. He is conveniently forgetting the first fundamental element of a Bill, and the lesson that he taught me 10 years ago, when I was first elected to the House, about the nature of primary legislation. I remember, as a new Member of Parliament, debating an education Bill in Committee and asking why there was not more detail in the Bill. I proposed amendments to provide certain details. I remember the right hon. Gentleman, as a Minister, arguing why that should not happen. He explained that it was a piece of enabling legislation to create a framework for the changes that his Government were seeking to put in place, and that my amendments were all unnecessary. Today the roles are reversed, and the right hon. Gentleman has conveniently forgotten everything that he, as a Minister, taught me all those years ago. Instead, he is telling me that I should put all kinds of new details into the Bill that I have introduced. I am sure that hon. Members will therefore forgive me if I take some of his proposals with a pinch of salt.
I am saying to him precisely what he said to me all those years ago—that many of the details will be dealt with in secondary legislation. The Bill contains a framework that will include, among other things, provision for a child care element in universal credit. That is fundamental, and we all agree that there should be such an element, just as there should be elements relating to disability and to other aspects of the current benefits system that need to be replicated in universal credit.
Why does the Minister expect us—and, indeed, the general public—to accept his statements about the impact of this huge reform when so much of the detail in unknown? Is it not reasonable for us to request the details that will tell us whether people are in fact going to be better off?
I expect it for precisely the same reason that the right hon. Member for East Ham expected me to support his education measures 10 years ago. He asked me to take on trust many of the same kinds of thing that I am asking the House to accept today. We have been completely transparent in setting out the different stages of the formulation of universal credit, and about the consultation processes that we have been through to fill in the details. We have also been clear and transparent in setting out the principles that we are following in trying to fill in those details.
I went along to one of the meetings about the Government’s proposals for child care to which the Secretary of State was kind enough to invite people. We were presented with three options containing some very selective figures, and it was therefore impossible to tell exactly what the Government were proposing. I am still none the wiser. It is very difficult to vote on a principle when we do not know what the Government are going to do to implement it.
The point is that we do not write numbers on the face of a Bill. I will speak in detail about the right hon. Gentleman’s amendments in a moment, but the fact is that primary legislation sets out the framework for such things. We have worked with the hon. Lady and her Select Committee members, with other Members on both sides of the House and with people and representative groups outside the House working in child care and other areas. We started a discussion process to determine which was the best of a number of options to fit into the framework that we are creating.
Government Benches criticising regulations for being late—not for not having been published, but merely for being late. Where are the regulations so that there can be parliamentary scrutiny of this important aspect of the Bill?
I have had this discussion within the Department. We have already brought forward a number of draft regulations—far more, I am told, than was the case under the previous Government, when, I was told, the instruction of Ministers was very much not to bring forward as many regulations. We have produced as much detail, if not more, about this measure than the previous Government did about their measures. They did introduce some sensible measures—for example, their reforms to introduce employment and support allowance, which was the project of the right hon. Member for East Ham himself—but they wrote a framework into their legislation and filled in the detail with secondary legislation.
One of the concerns raised by children’s organisations in Scotland is that not enough consideration has been given to the different statutory framework that pertains to child care in different parts of the UK. In particular, they are concerned that the existing child care infrastructure may not be able to cope with the increased demand that could arise from the introduction of universal credit. I appreciate that the Minister does not want to be drawn on the detail, but can he assure us that parents who are unable to access good-quality affordable child care will not face sanctions if, through no fault of their own, they are unable to find the child care that they need?
Of course, we already provide child care universally through our schools system. The truth is that no parent with a youngest child under school age can be subject to any job search-related sanctions. Only once their youngest child reaches school age are they subject to a work-search requirement and can face sanctions. Under the rules that are pursued at the moment, and under the provisions that we have clearly said will exist within universal credit, we will expect lone parents of children at primary school to do a part-time job only if that fits in with the hours of that school.
I am slightly surprised to hear the Minister describing school as a glorified babysitting service. The real pressure point pertains to older children, and particularly to out-of-school care. That is not covered across the UK by the Childcare Act 2006, which applies only to England and Wales. I urge him to take a closer look at that and to give the House the assurance that parents will not be penalised.
The point is that we do not penalise parents, particularly lone parents. We do not require them to pursue work; that is out of keeping with the reality of their child care responsibilities. I am not describing school as a giant babysitting service; I am saying that for a goodly part of the year children of school age are at school, and therefore do not need additional child care. The requirements placed on parents by Jobcentre Plus in relation to their job search and whether they take up employment are designed to work around what it is reasonable and what it is not reasonable for them to do. For example, we do not expect lone parents of school-age kids to work night shifts. I can certainly assure the hon. Lady that it is not our intention, nor will it be, to seek to sanction parents in relation to a job requirement that is unreasonable and unrealistic given their child care responsibilities.
As the right hon. Member for East Ham will know, I have tabled several Government amendments to address the concerns that he and other Members raised in Committee. I will deal with those before I talk in detail about his amendments.
Government amendments 14 to 21 will make certain regulation-making provisions for universal credit, employment and support allowance, jobseeker’s allowance and pension credit subject to the affirmative resolution procedure when they are first used. I recognise the hon. Lady’s point, and it is a point that was made well by the right hon. Member for East Ham in Committee. I do not think that it would be sensible to make the provisions subject to the affirmative procedure year in, year out, but it is right and proper that the House should be able to debate them fully when they are first introduced.
I thank the Minister for his important announcement on the use of the affirmative procedure the first time the regulations go through. The process that the Government have taken of consulting informally and sharing the consultation document so transparently, so that we could all sit down and discuss the options for child care, is a great and important step forward. I would have thought that the Work and Pensions Committee would have stirred itself to take a proper look at the document before the regulations come in, and make constructive comments to add to the process of reforming our benefits system.
My hon. Friend makes an important point. Some of my colleagues and I have been in the House for longer than he has—and when the Labour party was in government, I do not recall once being called in to discuss the policy-making process for one part of a piece of primary legislation. I was not asked to go in and discuss education or health options; the decisions were always just made. What is different is that we have extended the hand of involvement to the Opposition and said, “Please come and be part of the decision-making process.”
As another new Member, I ask my right hon. Friend to cast his mind back and consider whether Stephen Timms, when he was a Minister, ever consulted quite so extensively as this Government have with third sector organisations, charitable organisations and other organisations to inform their work in developing the benefits system.
I cannot remember the previous Government doing more than we have to engage people in Westminster, people around Parliament, third sector groups and members of the public. We are making a genuine attempt in a number of complex areas to get things right and to involve everyone in the decision-making process, and that will continue. Notwithstanding this afternoon’s amendments, we will continue to be delighted to seek and involve the input of Opposition parties, including the Labour party and the nationalist parties. As Dr Whiteford said, it is right and proper that we have full dialogue with the Administrations in Cardiff, Belfast and Edinburgh, and with the Members of Parliament who represent Wales, Northern Ireland and Scotland.
It is certainly the case that the previous Government never got to this stage in a Bill’s passage with such an enormous hole in the policy as there is in this Bill.
The technical response to that is, “You wish!” I remember many occasions on which we came to a debate and asked what the Labour Government were planning to do. Did we ever get an answer? Not at all. The right hon. Gentleman and I have different memories of the way things were.
It is important to remember that this Bill creates a structure for universal credit, and that the details will be set out in regulations. The Opposition amendments relate mainly to issues that will be dealt with in regulations, and which do not affect the structure of universal credit as set out in the Bill.
I have accepted certain recommendations from the Opposition. The Bill as introduced provided that the regulations will be subject to the negative procedure. In Committee it was suggested that that would not provide the right level of parliamentary scrutiny and control. The right hon. Member for East Ham identified a number of provisions that he thought should be subject to the affirmative procedure, and I gave a commitment in Committee on
There are two provisions, in clauses 22 and 25, relating to conditionality, for which we do not think the affirmative procedure is appropriate, because they do not introduce new principles. Although we intend that regulations will be much less prescriptive than the current jobseeker’s allowance regulations, the powers in the Bill will be used to create a regime for jobseekers that is broadly similar to the current one. We have therefore formed the view that there is no necessity to subject those two to the affirmative resolution procedure. Of course, it always remains within the gift of Opposition Members to pray against regulations if they want a matter to be debated. They could, of course, do so anyway, but we are making their life a bit easier by providing for the affirmative procedure.
I have thought long and hard, and apart from those two specific provisions I agree with the right hon. Gentleman’s suggestion that regulations should be made under the affirmative procedure in the first instance. I say “in the first instance” because it does not seem sensible to repeat the process year in, year out when the regulations are regularly renewed.
As set out in amendment 14, that principle covers all the key regulation-making powers relating to the universal credit, including the rules on capital, the calculation of income, the treatment of self-employed people’s cases, and the amounts of the elements within an award, including those for disabled children, housing and child care. Opposition Members might say that that is not enough to allay the concerns that they have raised on specific issues, and I shall deal with some of those specific concerns in a moment. However, I made it clear in Committee that we recognised the importance of getting the details of universal credit right. We are working hard to do so in consultation with key stakeholders, and we are listening to their concerns.
The Opposition amendments would pre-empt our considerations and tie the hands of this and any future Government with regard to areas of policy in which it is important to retain flexibility. I believe that it is perfectly reasonable to say that as we reach a final conclusion on what is right, involving Members of all parties, the Work and Pensions Committee, organisations such as the Social Security Advisory Committee, and third-party groups, we will bring regulations to the House by the affirmative procedure. There can then be a full and proper debate in Committee and a vote on Floor of the House.
Clearly the Minister has moved on this issue, but there is still the problem that the affirmative procedure is “take it or leave it”. The Work and Pensions Committee and other Members have no ability to amend regulations, so it is not the same as the line-by-line scrutiny that primary legislation receives.
I accept that, but that is precisely why we have extended the hand of involvement to the hon. Lady and her Committee and to Opposition Members, so that they can help us shape the details. This is a big complex project and there are challenging issues to deal with, and we want to work on a bipartisan basis and take views from all parties on how best to shape the system. In the end we will have to take a final decision ourselves, but it is our goal and intention to involve all those who wish to be involved in the thought process.
That brings me on to child care, on which we have been seeking to do precisely that. New clause 2 raises important points about how we intend to support people with formal child care costs within universal credit. Hon. Members will be aware that we recently held two seminars on the topic. Members of both Houses attended, and there were interesting and fruitful discussions. There was a follow-up seminar with a group of key stakeholders. I am aware that Members raised particular queries, and we have undertaken to look into them and provide more information. The seminars were part of an ongoing dialogue about how best to structure child care support under universal credit.
For now, I reiterate the point that I made in Committee. The Bill already allows us to include an additional element for child care within universal credit, under clause 12. We have made a firm commitment to provide such an element, but I make no apology for taking time over the details. We must get them right, and to do so we must listen to those with experience and expertise and consider the options.
As the hon. Lady would have known if she had listened to the debate in Committee, we are putting in place transitional protection for the introduction of universal credit, so that no one will lose out in cash terms as a result of the changes. That is right and appropriate. The problem with new clause 2 is, first, the cost, which the right hon. Member for East Ham did not mention.
Had we introduced new clause 2 with the current 16-hour rule, the cost would be around £200 million to £400 million, which would be additional to current expenditure of around £2 billion. The Opposition have therefore made a clear spending commitment, which appears to be a reversal of their policy—I was under the impression that the Leader of the Opposition and the shadow Chancellor had said, “No spending commitments without official sanction.” Perhaps this spending commitment has official sanction, but, if so, they need to say where the money is coming from.
Two or three Opposition proposals that we will debate today require extra spending. It is incumbent on a party that has just presided over the building of the biggest deficit in our peacetime history to say where the money is coming from if it proposes spending commitments that would take away some of the money that we are trying to reinvest to deal with the deficit. Do Labour Members want to borrow more money? If so, that £200 million to £400 million means extra public borrowing. Alternatively, will they increase taxes? They need to explain where the money is coming from.
Does the Minister understand that many women are frightened by the Bill’s proposals and nervous about their futures—about whether they can continue working and supporting their families? Women who are looking to move into work are not worried about artificial arguments on whether the Labour party has a new spending commitment. They want to know whether the Bill will give them the opportunity to move into work when they are capable of doing so, and whether the Government will give them child care support. In many cases, child care is the only thing stopping them making that step.
Women and men in this country have realised that the previous Government’s belief that money grows on trees is wrong. They have also realised that the consequence of the previous Government’s policies—they simply threw money at every problem—is that we are faced with the most monumental deficit challenge. If we do not deal with that, we will end up in the same position as a number of other countries. I would not want us to be in that place, because women’s chances of getting back into work would be much diminished by the state of such an economy.
I appreciate that there is concern about the deficit, but will the Minister assure us that women who are unable to work because the cost of their child care will remove all the benefit of them doing so will not find themselves harassed or pressured by the Department for Work and Pensions to take work that will leave them out of pocket? Will that be taken into account when their capacity to work is reviewed?
I am not sure whether the hon. Lady was in the Chamber a moment ago when I answered question on child care from Sandra Osborne, but the former seems to be forgetting the fact that there is no job search obligation for the lone parent of a child who is below school age. A job search requirement is made only when a child is at school, and the requirement is for a willingness to accept a reasonable job offer that fits around school hours. No draconian measure is waiting to hit a lone parent as their child grows older. Our system is pretty supportive, and we have been absolutely clear that child care costs will continue to be paid through universal credit.
Mrs Moon must also understand that our nation’s resources are finite. We cannot just turn on the financial taps because we feel like it. We must take pragmatic decisions on what the nation can and cannot afford. We set out very clearly in our announcement last year that there is a £2 billion envelope to fund child care. Parliamentarians now need to agree how best to spend that money.
As the Minister knows, I have supported the universal credit system for some while, but each of the proposed amendments address vulnerable people—people on free school meals, people living in near poverty or poverty, children with disabilities, and people who are sick and who incur health costs. Those real anxieties about the introduction of the new system need to be assuaged. When the Minister responds on those issues, could he at least give us some sort of time scale on which they will be addressed, so that those people can have more certainty in the run-up to the introduction of the new system?
The answer is that we will do it as quickly as we possibly can. We are not in the business of delaying these things. We are doing the consultation on child care now, and I hope that we will reach a resolution in a relatively short space of time. However, I want to take the time to get it right. I do not want to rush through under an artificial timetable something that is not necessary right now. We are still two and a half years away from the introduction of new claims for universal credit. We have got time to get these things right and we are trying to work with a fixed envelope of money for child care—we will talk about some of the other issues shortly. We want to take the time to look at the real costs of child care, the requirements and how we can best deploy the £2 billion available.
I am not trying to catch the Minister out—I am trying to secure clarity on each of these issues. What is an indicative time scale for addressing those anxieties, so that people can have some prospect of being able to calculate their futures in those areas?
I will endeavour to answer that. On the child care issue, we are in consultation at the moment. I would hope that we will get all the responses that we are going to get by the summer and be able to take decisions quickly after that. That would be my first answer to the hon. Gentleman’s question.
Does my right hon. Friend agree that it is unhelpful for Mrs Moon to talk about the Department for Work and Pensions “harassing” women who are considering going back to work? All these measures are an attempt to be mindful of the public purse and to encourage people to go back to work and do the best they can for their families—because being in work is good for their families.
My hon. Friend makes an important point. The whole purpose of universal credit is to provide assistance to people who are trying to get back to work and to ensure that work always pays. I hope that the women of Bridgend will benefit, like those across the country, from the introduction of universal credit and the extra support that it will provide to ensure that they are better off in work.
I noted the Minister’s reminder a few moments ago that transitional protection would also be available in respect of child care costs. Can he confirm that one change in circumstances that can be predicted is that child care costs will vary between term time and school holidays and that that will not trigger a change in circumstances that would lead to the cancellation of transitional protection?
It is not our intention that routine or minor changes in circumstances would lead to the loss of transitional protection. The requirement for child care clearly fluctuates during the course of the year, but follows a set pattern. It is not our intention for a moment to remove transitional protection in that situation, nor is it our intention to remove it in an environment in which there is an annual increase—RPI or CPI—in the rate of child care. We are looking at material changes in circumstances, and I certainly would not envisage the change from term time to holidays as a material change.
The other issue that I have with the Opposition’s proposals is that they would remove the ability for people to take up mini jobs. For women re-entering the workplace after a lengthy time out of it, there is a bigger barrier than needs to be the case. One of the strengths of the universal credit system is the flexibility for people to take on mini jobs. The level of prescription set out in the Opposition’s proposals would set up unnecessary and inappropriate barriers to getting people back to work.
In Committee, we heard a great deal about these mini jobs. We have just heard the Minister say that we should not be worried about the effect on parents of children of school age because a job could be encompassed within school hours. Why is it so necessary to take money away from people who are trying to improve their families’ prospects of getting out of poverty in order to help people in mini jobs—although I do not fully understand the concept—because surely those would be covered by school hours even more?
The changes we made last year—the reduction from 80% to 70% support—merely returned us to the situation that applied before 2006. On the mini jobs, I want us to spend the money we have on supporting people from deprived backgrounds and in the most deprived situations into the work place so that they can make the most of their lives. The mini job is a perfectly reasonable way of doing that. I also happen to think that for many lone parents, a mini job during schools hours is a perfectly reasonable alternative that might mean that the need for child care is not great. None the less, the option should be there. We should not be writing—this is the key point about some of the Opposition amendments—into primary legislation rules that cannot be undone for two or three years, while we wait for a parliamentary slot. Instead, we need to set out straightforwardly a situation in regulations that can be amended if the situation requires. I could not possibly accept an amendment from the right hon. Member for East Ham that would write into primary legislation actual amounts of benefits that should be paid. The Labour party would never have done that while in government. It would not have happened, and I am not going to tolerate the idea now.
The detailed and comprehensive information that the Minister and the Department for Work and Pensions shared with members of the Bill Committee and the Work and Pensions Committee sets out clearly that joint working is the norm for couples in this country. In most families, mine included, with young children, both spouses or partners work. I, for one, resent the idea among some older people that mothers just sit at home and have primary responsibility for child care. Society has changed, and it is time people moved on from being old-fashioned and out-of-date and accepted that the reality of modern Britain is that both parents play a key role in bringing up children.
My hon. Friend makes his point in his usual forceful and inimitable way. He highlighted how Labour Members struggle to move on from traditional ways of things. Listening to the right hon. Member for East Ham, I am still not sure on which side of the argument he falls. Does he think that we are doing the right thing, but want to fine-tune it a bit, or is he trying to distance himself from the Bill, so that on Wednesday the Opposition can vote against it and so say to the pressure and lobby groups, “We are on your side”? I am genuinely not sure which is the case, although if they do vote against it, I will love it. I will look forward to arguing up and down the land that this Government have got it right on welfare reform, and that the Opposition have not. I wait with interest and enthusiasm to discover how they vote.
New clauses 3 and 4 provide an amount for school meals and health costs in universal credit. It is absolutely our objective to ensure that people on universal credit will continue to receive appropriate support for school meals and health costs, and that this support is withdrawn gradually to avoid damaging the incentives to work. However, entitlements to passported benefits are the responsibility of other Departments and devolved Administrations. We have been working closely with those responsible to consider the options, and we have commissioned the Social Security Advisory Committee to review passported benefits and how they interact with universal credit. The review was announced in a written statement on
On health, we aim to ensure that passported benefits are awarded to broadly the same number of people as now. However, passporting is not the only source of help with health costs. Income-related help is also available through the NHS low-income scheme, which can be claimed by anyone on a low income who has capital of less than £16,000. For people on medication, pre-payment options can also significantly reduce the cost of recurring prescription charges. With a 12-month pre-payment certificate, the maximum cost of a prescription is £2 a week, although of course that is an issue only for England; for those with constituencies in Scotland, there are no prescription charges.
That is precisely what we have asked the Social Security Advisory Committee to examine for us: how best we deal with that cliff edge. We accept that it is there. How do we tackle it to maximise the likelihood of people moving into work?
In most cases, health charges will be one-off or occasional costs that are unlikely to weigh heavily in people’s perception of the financial gains from working. However, for some disabled people in particular, there may be a more significant factor. The current passport from working tax credit together with the separate NHS scheme for people on low incomes should mean that health costs are not, in theory, a disincentive to work, but we know that the reality is often dictated by perceptions and issues about access. We will work to get that right for universal credit. However, we await the Social Security Advisory Committee’s recommendations with interest and we believe that it will be necessary to consider them with other Departments. We need to find a way in which to address the matter that maintains support without creating insuperable barriers to returning to work. It is a complex subject, which falls beyond simply decision making by our Department because we are not responsible for much of it.
New clause 5 would ensure that claimants understand how the amount of universal credit that they receive is calculated. I share that goal, but we do not need primary legislation to achieve it. We are designing universal credit to ensure from the outset that people have the information that they need in an accessible form that is clearly set out. We intend to provide a clear record of any award when it is first made and of subsequent changes, ensuring that claimants are always up to date with the latest position.
Universal credit will be a digital service by default that claimants will predominantly access online. However, we recognise that not all universal credit claimants have access to the internet and we will continue to provide notification through other channels. We are also working with the Government Digital Service—as well as other partners—to help people get and stay online by providing more reliable internet access and training in communities. Of course, we put in place some of the measures to increase digital access when we debated the appropriate regulations last week.
Kate Green was concerned that one part of the benefits system going wrong would bring down the whole deck of cards for a family. She is wrong in thinking that, simply because we have multiple channels, the system somehow works well at the moment and will be much more vulnerable under universal credit. The current system does not often provide that security. Outstanding questions can affect a wide range of existing benefits, particularly at key points of transition, such as moving into work. Many people do not even claim everything to which they are entitled. Rather than a patchwork of provision, with people thinking, “Have I got everything I’m entitled to? If I don’t know a particular answer, everything gets delayed”, a single point of entry, a single point of access and a single system of paying benefits makes it less likely that somebody will get into difficulties and not receive all the money to which they are entitled. I do not therefore believe that the hon. Lady has got that right. We are confident that universal credit will not have the effect that she suggests—it will make it easier to access benefits. Of course, we intend to introduce a system of payment on account, which will allow some payments to be made even if all the details of the claim cannot be sorted out straight away.
Amendment 26 on reporting would make it a legal requirement that we assess and report on access to welfare advice, including advice for those unable to use the internet, before we introduce universal credit. Universal credit will be a simpler system than we have today. It will be easier for potential and existing claimants to find out relevant information online, and easier for advisers to understand and advise.
Even if universal credit fulfils what the Minister describes—he says that it will be simpler, and although it will certainly be simpler superficially, in practice it may be more difficult—with any move from an old system, it takes time for people such as advisers to become familiar with the new system. Advice will be crucial at that pinch point. Will the Minister ensure that the organisations that provide advice are properly funded in that transitional period?
My view is that our partner organisations, such as Citizens Advice, need to be involved and informed of all the changes. We need to continue to be able to offer the valuable advice that they give to individuals. We provide quite substantial blocks of Government funding to Citizens Advice and similar organisations, and it will be for them to decide how best to use that financial support. In what are straitened financial times, I would hope that those organisations would see their priority as sending as much of that money as possible to front-line advice services, and spending as little as possible on central administration, central marketing activities and other head office functions. I would like those organisations to focus on providing every spare bit of cash that they can for front-line advice services—as well as finding ways of generating more spare cash for that purpose—because after all, that is where the money is most effectively and valuably spent.
We will seek to provide guidance, training and advice for advisers on the universal credit and the implications thereof. There is always a willingness on our part to talk to groups of advisers, including at some of the big conferences that Citizens Advice organises. I have not been able to do so yet—I have offered to do so on other matters—but we are always willing to provide such input to those organisations.
Does the Minister accept that the money currently given to Citizens Advice is spent centrally on vital services such as training advisers, the information system and support for those agencies? In fact, none of the money goes to local bureaux, which are extremely concerned about the effects of the cuts in 2013.
Every organisation has to look at how it operates in tougher times financially, and at how best to spend the money that it has available. I am sure that Citizens Advice will be no different in that respect.
Amendments 23 and 24 deal with the capital limit and propose that for claimants who work, the universal credit assessment should ignore savings that they hold in individual savings accounts up to a prescribed maximum of no less than £50,000. We fully understand the importance of saving. Working families should seek to provide for their future needs and larger purchases. However, families with substantial savings should draw on those reserves when their incomes fall, not look to the taxpayer for support. Our analysis suggests that in 2014-15, there will be up to 100,000 households on tax credits with savings over £16,000 who could be affected by the capital rules in universal credit. However, transitional protection will ensure that there are no cash losers at the point of the transition to universal credit where circumstances remain the same.
However, it is important to be fair to the taxpayer. Although nearly one in three pensioner households have savings in excess of £16,000, only 13% of households with a working-age adult in them have that much in savings. A typical working-age household has only £300 in savings. It cannot be right that people with significantly greater savings than the average family can claim universal credit. A maximum limit of at least £50,000 in ISA savings, as proposed by the right hon. Member for East Ham, is a large sum to be excluded from the capital ceiling. We are striking the right balance between protecting people with modest savings and placing responsibility for their own support on those with substantial resources. Once again, we are talking about an uncosted spending commitment. The right hon. Gentleman said that it would cost £70 million a year to uncap totally, but not that many people on universal credit would have savings of more than £50,000, so the majority of that £70 million would be spent on his measure. The reality is that this is a multi-tens-of-millions-of-pounds spending commitment. Once again, we have not heard from the right hon. Gentleman where the money would come from.
Amendment 30 to clause 10 would mean paying at least as much in the additional elements for disabled children as we did in benefits and child tax credit prior to the introduction of universal credit. As we announced in policy briefing note 1, “Additions for longer durations on Universal Credit”, we will retain two levels of payment for disabled children in universal credit. The higher element will be payable to more severely disabled children receiving the highest rate of the care component of disability living allowance. The lower rate will be payable to children receiving the other rates of the disability living allowance care component. The higher rate will be increased by £52 a year, with eligibility extended to children who are severely visually impaired, who currently receive only the lower entitlement.
The key change is that we propose to align the elements for disabled children and disabled adults. That means that the lower rate would be around £26.75 and the upper rate £74.50 a week in current figures. The lower rate for a less severely disabled child in universal credit would be less than now, but we have pledged that where universal credit entitlement is less, transitional protections will be put in place. Our aim is to simplify and align the additional elements for disabled children with those for adults. We do not think it right that when a young person claims benefits in their own right, the extra amounts payable for disability are different. We also want to focus resources on the most severely disabled children and adults. Savings from abolishing the adult disability premiums and changes in the child rate are not going back to the Exchequer. This is not a cutting exercise; it is about recycling that money into higher payments for more severely disabled people.
Amendments 27, 28 and 29 to schedule 1 relate to the regime for self-employment in universal credit. As I told the right hon. Gentleman many times in Committee, we are committed to ensuring that people in self-employment have the financial support that they need. Amendments 27 and 28 would take a power to allow “accruals accounting” of profits and losses from a trade to be used in the reporting of earnings from self-employment. Strictly speaking, that is unnecessary, as the power taken by paragraph 4(1)(b) of schedule 1 already permits such a regulation. Amendment 29 would limit the application of the power taken at paragraph 4(4), which allows for a minimum level of earned income from self-employment to be set. It proposes that the minimum level would not apply where the claimant’s business was conducted on a commercial basis with a view to the realisation of profits.
We recognise that self-employment is a vital element of the economy and will be an important contributor to the sustained recovery from recession that we all want. It is also an important route into work for many people. We are therefore giving careful consideration to the conditions that we set for people claiming universal credit who seek to make their living from self-employment. The enabling framework provided by the Bill allows the treatment of income from self-employment, including the definition of earnings to be taken into account, to be set in regulations. We therefore do not need to decide this question today; we can work to get it right. However, as I have said to the right hon. Gentleman previously, we have to deal with the issue carefully. It is not the intention to make it impossible for people to get into self-employment, particularly in the first few months, when they have difficulties and money does not come easily. However, in the current system, people can report no or very low income from their business activity and continue to receive the bulk of their benefit or tax credits entitlement. We want people to become progressively less reliant on benefits and universal credit. At the end of the day, we cannot have the taxpayer funding someone who is notionally self-employed—and on whom there is no job search requirement—but who generates little or perhaps no income at all from that self-employment. We have to apply a threshold to determine whether someone is credibly in self-employment or whether they are using self-employment as a reason for not looking for other job alternatives. We have to get this right.
My hon. Friend makes an important point. That is something that we need to address, because the current situation is not right. We need to ensure that the system is fair and justifiable in the eyes of taxpayers and other individuals. I share some of her anxieties, and although it is not in my remit to pursue the issue, I am sure that she will make her representations elsewhere in Government. It is not that we want to do anything that undermines that publication or others in a similar position; rather, we want to ensure that the position is not only fair and equitable, but defensible and justifiable.
My right hon. Friend knows that I have expressed some concerns about this issue in the past. Can he give us an assurance that self-employed income will be based on actual income, rather than deemed income? Linking self-employed income with an assumption that people are earning the minimum wage would effectively put most farmers in this country the wrong side of the line, because probably most of them earn less per annum than they would if they were paid the minimum wage for the hours they work. The same goes for young barristers, lots of people in the carpentry and building trade, and others building up businesses. Surely the system should be based either on actual earnings or on something else. If it is based on something else, that surely needs to be spelt out clearly, because there are rumours circulating that we are effectively imposing a minimum wage by the back door on self-employed people.
My hon. Friend makes a good point, underlining the complexity of these issues and why I believe it inappropriate to set hard-and-fast rules in primary legislation. If we find that we have not got it right the first time around, or if things need to be done to remove anomalies, which they might well be, it makes no sense to have written the fine print into the detail of primary legislation, therefore making it more difficult to adjust accordingly. This is one reason why it is important to maintain as much flexibility as possible.
As I said to the right hon. Gentleman in Committee, we are looking at the best way of doing this. We cannot have a situation in which people who are receiving an entitlement to the universal credit while generating no income at all over long periods of time still say that they are self-employed. We must ensure that that does not happen, and we are looking for the best way of doing it. If we wrote the rules into primary legislation, we would not be able to take decisions and fine-tune on the basis of experience, as we would have to come back to primary legislation every time. That is why I think it inappropriate to accept the right hon. Gentleman’s amendments.
Let me make some further progress. Amendment 33 seeks to remove the restriction on eligibility for pension credit for couples where one member is below and the other is above the pension credit qualifying age. Suffice it to say that although someone over the retirement age should be able to receive benefits for the household under the pension credit system, someone under the retirement age being able to receive the benefits of a means-tested system without having to go out and look for a job is just plain wrong. I am afraid we disagree on that, and I am comfortable with the changes. They are set out in legislation, which is where one would expect them to be set out. I am disappointed at the right hon. Gentleman’s disappointment that we have not issued a press release on the subject, but I do not think that this is the kind of change that would command the front pages of any newspaper. It seems perfectly reasonable to set out proposed changes in legislation, given that it is legislation that is laid before the House with accompanying explanatory notes that Members can read and discuss and into which they have an input.
Amendment 68 would add additional provisions for carers to paragraph 4(4) of schedule 1. It is not necessary to set a minimum level of payments to carers. The risk is that the incentives for carers to get into work are blurred by the automatic payment of an amount that does not relate to their personal circumstances. We all agree that work, not benefits, is the best route out of poverty, and we must ensure that payment levels are not set so high as to undermine that.
Amendment 61 takes us back to an issue that was extensively debated in Committee in respect of the payment of universal credit. Opposition Members suggest that that default position should be that payments made in respect of children are routinely directed to the carer. The amendment would provide powers to specify other circumstances for paying a portion of the universal credit award to a particular individual.
We have published a policy briefing note setting out our intentions for payments. We have already said that couples will be able to choose which of them receives the award and they could direct it to a joint account for both to access. It is a core principle of our approach that individuals are best placed to make choices about what is best for their own circumstances. There will, of course, be some exceptional circumstances and there are powers within the Bill to amend the Social Security Administration Act 1992 to allow the Secretary of State to pay all or part of an award to another individual. We do not need this amendment to ensure that. However, the default position should be that we make payment to the person chosen by the couple, not by anyone else.
Many of the concerns raised in this debate are, of course, about the possibility that universal credit might be less generous to some people than the current system of benefits and tax credits. We propose a radical reform and a simplification of the welfare system. In that situation, it is not possible to replicate exactly every aspect of the current system. That is why we will introduce a system of transitional protection to ensure that there are no cash losers as a result of the move to universal credit.
Will the Minister tell us how much will be available for the transitional protection? The figure of £2 billion was mentioned, but that included all the changes, all the administration and IT as well as the transitional protection. What is the spending envelope? How much will cover the transitional arrangements?
The £2 billion contains sufficient money for us to be able to deliver the transitional protection and the various changes. I do not have the numbers in front of me, but I will happily write to the hon. Lady to give her the more detailed figures we have published so far. We have given a clear commitment to transitional protection. It costs what it costs, but we have made a sensible projection of what we believe it will cost, which is contained in the budget for the spending review period. It is important to ensure that there are no cash losers as a result of the transition, but it is impossible to make a big change of this kind without finding that people in subsequent years are in a different financial position from their counterparts in previous years. Inevitably, some will move one way; others will move another. The only fair and proper way of dealing with the situation is to ensure that everyone is protected in cash terms.
We think that we have put together a framework in part 1 that will give us the flexibility to introduce the universal credit and to fine-tune the proposals as necessary so that if we do not get everything quite right at the start, we can fine-tune as we go by, and that a future Government will have the flexibility to do that. We have made absolutely sure that we have the appropriate protections in place so that there is an element for child care, for parents, for those with disabilities, and so on and so forth.
We think we have created a sensible framework of the kind that in different areas of policy and in different ways were created through primary legislation by previous Governments, including the last Government. I do not believe for a second that it would be prudent to write into the Bill the sort of amendments that the Opposition have tabled. I have responded to their wish to see more measures brought forward on the affirmative rather than the negative procedure, which I think is right and proves that we will listen and make amendments where it is sensible to do so. I am afraid that the Opposition are seeking to write the sort of detail into the Bill that they would never have put in legislation when they were in government; they would never have followed that approach themselves. That is why I cannot possibly accept their amendments and why I ask the House to accept the Government new clauses and to reject the Opposition amendments.
The debate we have had—in Committee and this evening—shows some of the pitfalls of saying, “We are going to simplify benefits.” The Minister and his colleagues have said to the country generally, “We're going to simplify benefits. This is a simpler system, so it must, by definition, be a good thing.” They expected and, indeed, got from many people the answer, “We agree that benefits should be simplified.” The problem is that when dealing with real people and real situations it all becomes much more complicated, as our debates tonight and on previous occasions have demonstrated quite clearly.
The details of issues such as school meals, health charges and the even bigger matter of child care are extremely important, and will have a real impact on whether the new system works for people, will make them better off, and enables them to get into employment, stay in employment, improve their circumstances and get out of poverty. We all agree that, except for those who suffer from real and deep health problems, employment is the best way out of poverty. If, however, such an important element as child care is left so undefined, we cannot know the answer to that question.
Frankly, we are being asked to buy a pig in a poke. We are told, “If you don’t accept it, don’t vote for it or don't agree with it, you are throwing over the whole issue of welfare reform.” I do not accept that. Nor do I accept the Minister’s view that he was given that sort of response by the previous Government and that there should be simply a framework—an empty bookcase, as he was wont to say in Committee—as there was before. It seems to me that if he thought it was wrong then—and it sounds as if he did—it may still be wrong now. As I said in Committee, people should not be asked to buy that empty bookcase without knowing whether it contains classics or cheap comics.
The Government have gone to great lengths to engage all parliamentarians, including the hon. Lady, in discussions about the nature and design of child care. Is she saying that she would prefer the Government to present a fait accompli, rather than listening to her and giving her a chance to inform, and possibly change, Government policy?
In general, I should prefer legislation not to be pushed through all its stages until more of the details have been dealt with. When the original Bill was presented to the House, some of the consultations with the public were still taking place. An important consultation about disability benefits, with which we shall deal later, had not finished before the Bill was printed, and consultations about child maintenance did not end until April, when proposals were already in writing. There are other ways of doing things, and the fact that they have or have not been done properly by past Governments does not strike me as a reason for not trying to do them properly now.
Child care is particularly important to people who want to improve their position. Charlie Elphicke said that we had been consulted, and indeed we were invited to a briefing at which we were presented with certain scenarios, but I am not sure that I gained a very clear understanding from that session of exactly what the Government were proposing. I subsequently received briefings from other organisations, as no doubt has the hon. Gentleman, expressing the view that the new child care arrangements, such as they were—the proposals had not been finalised—would not leave people better off. It is a question of what we accept and what we believe.
It is difficult for us to form a view, but it is possible that if we do not get the child care arrangements right, many people will decide that work does not pay. They will feel either that they must reduce their hours considerably, or that they cannot afford to continue their work and must give it up altogether. I do not think that that is the outcome that the Government seek.
The hon. Lady clearly supports the fait accompli proposed by the Opposition—including, it seems, the ending of the whole principle of the mini-job, which would imprison people with child care responsibilities in their homes. Does she really think that that is the answer?
I am not convinced that the new clause does away with the entire principle of the mini-job, although I would certainly have liked—preferably before we embarked on the Bill—a debate about what was, for me, a new idea, possibly good and possibly bad. I do not think we have fleshed out exactly what we are doing in this regard.
As I said in an intervention earlier, if the idea is to encourage people to undertake work involving all hours of employment—given that they are able to obtain such work—I am not sure where the so-called mini-jobs will be found or what their quality will be. Are we talking about six or eight hours a week, as some people seem to be? Where will the jobs be, to what extent will they increase earnings, and will the necessary child care be available?
I am surprised that the hon. Lady refers to micro-jobs as if they were not important. I should have expected a Scottish Member to be delighted by the Government’s attempts to make work pay. Shockingly, the number of people who have never been employed in Scotland increased from 37,000 in 2000 to 40,000 in 2005, and to 45,000 in 2010. I think that, rather than being disparaging about micro-jobs, the hon. Lady should welcome the fact that the Government are serious about showing that work pays and gives people self-respect in our society.
I hope that those figures for Scotland are not like the figures for the whole United Kingdom, which, according to the Sunday newspaper that I read this week, included students. That was in the small print, but the fact remains that the wrong figure is constantly given.
I am not defending circumstances in which people are unable to work. However, we should examine the whole notion of the mini-job much more carefully than we have been able to do so far. We need to be clear about exactly what it will deliver. We already know that many people who have been able to start work over the past 10 or 15 years as a result of measures introduced by the previous Government, including families with children, are still living in poverty.
The mini-jobs, or micro-jobs, that we are discussing may indeed enable people to work, and being able to work for six, eight or 10 hours may be seen as some great moral advantage. I fear, however, that the jobs will be of such poor quality and so poorly paid that those people will remain in poverty, and the path out of that poverty does not appear to be very well mapped. I think that we should have given the proposal much more consideration before using it as a reason to remove child care provision from other people.
The hon. Lady seems to be digging herself into a hole. She has admitted that the measures taken by the last Government did not work, and that people were left in poverty. Surely she should welcome an innovative approach from the present Government, and surely she should stop trying to filibuster their proposal into the long grass by demanding so much blessed detail that nothing will ever get done. We owe our families more than that after the Labour Government’s failure to get people into work and out of poverty.
I cannot accept the hon. Lady’s premise. People were able to work as a result of the measures introduced by the Labour Government, such as the minimum wage, but we did not manage to take all families out of poverty because of the type of jobs that many of those people were doing and the levels of income that they received. It is wrong to suggest that a system allowing people to work for fewer hours will in itself deliver them from poverty.
Of course people have to work, and of course they have to be able to work in real, proper jobs. The hon. Members for St Albans (Mrs Main) and for Truro and Falmouth (Sarah Newton) should think, at times, about the type of jobs that they are talking about, and the kind of experiences that people will have. I want to be sure that those who go into work undergo a proper job progression rather than becoming stuck in a sideline meaning that a box can be ticked because they are now working and have some work experience.
Does the hon. Lady not accept that that is exactly what happened when people were stuck in jobs that paid them to work for 16 hours, so that it made no sense for them to work for 15 or 17?
I think that it often made a lot of sense for people to work for 16 hours and more, and issues such as child care were key to that. In many cases, child care costs kick in when hours like that are involved.
We should not try to justify reductions in child care provision simply by saying that they may help another group who need a certain amount of help—and, indeed, they may not do so. We need to examine the model thoroughly, because otherwise we will not know what will happen. Depending on which version of the proposals the Government decide to adopt, help for child care for people working 16-plus hours may be cut and there may not be a call on child care costs for people doing mini-jobs. If that is the case, money would be freed up. I am unsure as to whether there will be a call on it for the following reason.
Some mini-jobs will be at times such as 5 until 8 o’clock in the evening, and those doing them might not have another family member who can undertake child care at that time. Child care costs may therefore be incurred—although I am not sure from what source any child care might be found at such a time of day. When the hours of a mini-job fit in with nursery or school hours, however, child care costs may not be incurred. Therefore, if there is not a call on child care costs for people working fewer than 16 hours, I hope that the available money will be recycled for the people from whom it appears it is to be taken, regardless of whether we know there is a demand for it.
The hon. Lady speaks as though the idea that a woman looking after a child would work for fewer than 16 hours a week is novel and has never happened before. Let us consider the situation for one of the obvious age groups, however: for children aged five to six, some 61% of lone parents who are in work are in part-time work, and 65% of partnered mothers in work are in part-time work. Many of those people will be working for fewer than 16 hours as their children are so very young. Is it right not to help them with child care in those circumstances? Why does the hon. Lady want to persecute people who work fewer than 16 hours a week?
With all due respect, I think the boot is on the other foot. It appears that the people who are to be persecuted are those who work hours for which they require child care and who get assistance at present. Let us consider the proposals that were put before us at the briefing meetings—which I would not necessarily call fully consultative meetings. Under the proposals, it appears that people who currently get child care assistance will have that taken away, and that that will amount to a substantial loss which will lead possibly to their reducing their working hours. If they do that, their ability to move on with their work experience and their lives, and to get out of poverty, will be much reduced. I do not think positing one group against the other is helpful, therefore, and I would much rather we gave assistance wherever we can.
In Committee, Opposition Members were constantly expected to balance our suggestions against the costs that the Government have set up, but we would not start from that point. It is ludicrous to say that the Opposition have no right to make any spending suggestions as we do not support the Government’s model of deficit reduction. If we put more people out of work by cutting our deficit so quickly, as this Government seem intent on doing, benefit bills will rise and tax takes will fall, and we will not resolve the deficit problems in any case. That is one of the major reasons why we have opposed this Government’s stance. If we have a different view on how to tackle the deficit, the speed at which to tackle it, where to reduce spending and the impact of that, it is perfectly legitimate for us not to accept the spending envelope the Government have decided to impose.
I would hope that we would not just think about how we might take a little away from one group that happens to be a bit less poor than another group because we want to help the most needy. I noted in this afternoon’s departmental questions that Ministers were quick to take up one aspect of the Leader of the Opposition’s speech today: the comments he made about people on benefits. They were not so quick to mention his comments about the responsibility of those in our society who are a good deal better off, however. If we do not look at both those issues, we will be making the poor pay the cost of the economic crisis.
The hon. Lady speaks as though everyone is going to be terribly badly off under universal credit, but the figures in table A.2 on page 80 of the Red Book make it very clear that almost everyone is much better off, and that is especially the case in respect of part-time work. Does she not accept that that is positive, and that the Government have made sure that the transition will be managed in such a way that people will do better?
I shall try to unpick that question. First, it has almost been forgotten—I hope not entirely forgotten—that universal credit will be introduced after £18 billion has been cut from this country’s welfare spending, so many people will already be worse off before universal credit comes into effect. Secondly, we do not know when the transitional protection we keep hearing about will end. Will it end and begin only if somebody gets into work or falls out of work, or will there be other circumstances in which that transitional protection will cease, which would mean that many people would be considerably worse off? The third reason that I have concerns about the assertion that people will be better off under universal credit is to do with all the points raised in our discussion of these amendments. Unless we are clear about issues such as the cost of child care and school meals, and how they will be accounted for under universal credit, we cannot know whether the assumptions made, the figures given and the statements made about people being better off will prove to be true.
The hon. Lady has repeated the much-quoted figure of £18 billion being taken out of welfare spending, but does she acknowledge that £3.75 billion of that is coming from higher rate taxpayers such as myself who receive child benefit on a four-weekly basis? Would she like me to get my child benefit back after 2013?
In answer to that, let me give a personal view that I would not want to attribute to all my colleagues, as I am unsure whether they would all accept it. If we feel that we can no longer pay child benefit as it was previously paid and that we must make savings, it would have been much fairer to have made that part of taxable income. For many reasons, that would have avoided some of the anomalies that the Government’s proposal has set up. However, we have frequently rehearsed those reasons, so I shall not spend a lot of time talking about them now. If savings had to be made, we might have ensured that some of that money came back in the way I have suggested. I personally think that, subject to a fair taxation system, that would be a better way of dealing with this issue than having the suggested abrupt cut-off.
I want to talk about savings, and in particular the savings cap being introduced on people who work. It is astonishing that this change should be made by a Government who have so much to say about their wanting to encourage people to get back on their own feet, to be self-reliant and to save for their future. It is very easy just to say that the average amount of savings of a person of working age is only £300—and that is frightening and appalling for our society if it is true. However, for those people who currently—[Interruption.] I do not know what is so funny. Currently, people who have savings and receive tax credit have been able to get assistance without losing that money, but the Government’s view appears to be different for those who fall on hard times, no matter what their circumstances are, and no matter what situation they find themselves in. We will, no doubt, have this debate again on Wednesday when we discuss non-contributory and contributory employment and support allowances. The Government’s view seems to be that the first thing someone should call on in difficult circumstances is any savings that they have previously been able to make. There is a lot that is unacceptable about that.
People may find themselves with a certain amount of capital in all sorts of circumstances. They may have gone through a recent separation and received their share of a former matrimonial home, which they may then plan to use to put a deposit down on another property so that they can buy a home and no longer be as dependent on the state as they have been previously. That opportunity is being taken away by this provision. It is not at all clear whether the Conservative party thought it was entirely unacceptable that people were able to receive tax credits and still have savings—presumably Conservative Members did think that, but I do not know whether they said so.
We have had a system, which seems to have been working well, whereby people have been able to receive assistance to enable them to stay in employment and improve their circumstances without such loss of savings which they may have worked hard to accrue. They may have been asked to take reduced working hours, as many people have in the past two or three years, and they may have experienced a pay freeze and, thus, fallen, perhaps for the first time, into the position where they become entitled to universal credit. The first thing that will happen to them is that they will be told that they are not eligible until they have reduced their savings below a certain limit. Their prospects of using those savings, perhaps towards their retirement—these people may not be young, and they may be thinking that that money will give them a more comfortable retirement or they may want to buy a house to put themselves in a better position—are being taken from them. There is no good reason for changing the tax credit arrangements, which have been working well in getting people back into employment.
It is important in this debate to get away from the attempt to say that one group of people are hard-working taxpayers and another group do not pay tax and should have their rights diminished. The taxpayer may also be receiving certain benefits, if we feel that it is correct for them to do so. People pay taxes in all sorts of ways. They pay council tax, VAT and often income tax at various points in their life. They may do that while they are receiving benefits or they may have done so just before a change in their circumstances took them below the threshold for paying income tax; they may have had to reduce their hours or they may have been forced to do so. These are not different groups of people.
In our approach to these issues we need to consider the following seriously: we should see our welfare state not only as something into which all of us pay when we can, but as something from which we have an opportunity to take when things happen to us. These two groups of people should not be fighting each other. Someone should not say, “I am hard working; you are not. You should not be getting, because somebody else is working.” At a lot of the income levels that the hon. Gentleman mentions people probably will be entitled to benefits, be that help with their rent or council tax, or some other benefit. I ask the Government to think again about their attitude to people who are doing exactly what they have been asked to do, which is to get into employment, to work hard and to save. I ask the Government not to keep this savings provision in the Bill.
I welcome the opportunity to discuss the child care element of the universal credit. We did not have the chance to talk about it at length in Committee, but we all got invited to a discussion with the Secretary of State on the various different options for child care. This is an essential part of the equation that any parent considers when deciding the best way for them to approach the workplace.
I wish to talk about a slightly different approach from the one in new clause 2. I disagree with new clause 2, because I do not think that it takes the right approach, and I want to say exactly why. First, it retains the characteristic whereby someone has to work for a minimum of 16 hours to qualify for support with their child care. That fails to take into account an entire psychological barrier and frame of reference that a parent can have when they move into work. It is very hard to take the first steps into work, particularly when someone makes that choice—which, as we have heard, is optional, with smaller children. Those are large steps to take, so allowing parents to move into work by doing fewer hours—perhaps two days a week in the office or at work—is an extremely important part not only of encouraging a parent to move into the workplace, but, importantly, encouraging parents to maintain contact with the workplace when their children are small. That is a really important benefit of the approach that the Secretary of State has been discussing with us.
I agree with what my hon. Friend has to say, but does she think it is also very important for a mother to keep contact with her children? When a mother goes into work for three hours a day, she will know that she does not have to do more than that and that she can get back to her children. I think that that is terribly important. I wonder whether my hon. Friend agrees.
Yes. We were reassured earlier by the Minister that any kind of sanction regime would apply only once children joined school at the age of five.
This linear move into work is an important aspect here—it is probably even more important for parents than for any other group in society—so I am pleased to see that it would be possible under the Secretary of State’s proposals. I am also pleased that the £2 billion which has been mentioned will still be in place to provide support for families making that transition into work.
The hon. Lady is making a powerful argument. Will she confirm that Labour Members are not arguing that child care assistance should not be available to people working less than 16 hours? Of course if the financial envelope is large enough it is right that that assistance should be available, for all the reasons she is outlining. What would she say to people who live in high-cost areas, such as my constituency, to parents of larger families, and to parents who have no choice but to work longer hours? Their child care is going to be reduced or lost, because their child care is going to be capped to pay for the things that she is talking about.
I shall deal with some of those other points in my later remarks, because they are all important subjects for debate. Indeed, the proposals in new clause 2 suggest a figure of £300 a week for this element. I was genuinely surprised that there were people who were getting as much as that. I do acknowledge the cost of child care in central London: I have paid it for many years, so I recognise what we are talking about. However, £300 a week is a lot of money—it works out as £15,600 a year. It is indeed a generous cap.
I propose that we turn the child care element on its head. The initial move in what we might call the slide into work should be reimbursed at 100%. When people make the difficult first choice to go into work, the first few hours of child care, perhaps up to the earnings disregard—I ask the Minister to ask the Department to consider some of the maths involved—should be reimbursed at 100% as they make that important transition. When they reach the level of annual earnings represented by the disregards that we are talking about, the tapering of the contribution that the person in work would make to their child care would begin.
The hon. Lady has obviously given this matter very careful thought, and I have great respect for the way in which she is approaching it. Does she not see a risk that the mini-job would become a trap, and it would be impossible for people to be incentivised financially to increase either their earnings or their hours of work, because they would start to lose child care support?
The hon. Lady underestimates the extent to which the 16-hour job has already become a trap. I think we all know people who have been trapped in one. I am proposing that when people move on to that slide and have greater support in those initial steps into work, they will become much more familiar with the world of work. When they move into taking on more hours and so on—let us not forget that once somebody has moved into the workplace they often find themselves eligible for a promotion or for the next move up the employment ladder, which might coincide with their children rising five and going to primary school—the fact that they are on more of a slide will mean that because they have extra work they will be able to share more of the cost of their child care. I would like to see some experimentation with the formula so that the child care support for the first steps into work is more generous, and the tapering begins further down the line.
Does my hon. Friend recall going to the seminar where we were consulted about the child care costs, and does she recall, as I do, that the idea that people lose out when they work more hours is a fiction? The Government are funding substantially more money for the system, which means that people will be far better off than under the current system even if they are working all hours, as well as benefiting when they are in 16-hour jobs.
My hon. Friend highlights the complexity of this area, not just because of the formulae and the mathematics but because of the financial behaviours of individuals who are making the choice between working and not working. This is an important behavioural area for people who are not in the benefits system. We all know people who have left work, had a baby and taken time out of the workplace. They make the trade-off and ask whether it makes sense for them to go back to work and pay for child care or not. That happens outside universal credit, in the world of people who are not touched by the benefit system in any way. This is a complex area.
My hon. Friend is making an excellent case. In addition to the financial considerations for women who are returning to work, there are great psychological concerns. Women ask whether the necessary quality of child care will be available, whether their family will adapt and whether they will cope with the separation from their child. Enabling people to be supported to take those first steps into work, even for a few hours, would help families overcome that barrier and, I hope, go on to increase their hours and ultimately go back into work full-time.
I vividly remember going back into full-time work after maternity leave—and on that first day back, frankly, one is amazed that one’s child is still alive at the end of the day for which they have been left with someone else. The psychological transition is very important, and taking it in smaller incremental steps—perhaps with more generous support—is extremely important, because it builds up trust in the alternative child care while also allowing the child to get used to it in small steps. I urge the Minister to suggest that the Department consider some other iterations along those lines.
My other point concerns the review of the consultation put forward by the Secretary of State.
Will the hon. Lady consider whether, in this debate, we have got ourselves into the situation of being forced to contrast one group of people who are trying to work against another? Perhaps she would care to join me—I am not sure whether my Front Benchers would agree with me, and perhaps her Front Benchers would not, either—in saying that it would be better to give child care assistance to people who work all hours. Perhaps we should join forces to argue for that.
My point is that we should try to concentrate the support that the taxpayer gives into the early hours of going back into work. I would like the taper, and what can be afforded, to be announced annually by the Chancellor at the Dispatch Box, just like the overall taper in universal credit. The country’s potential to support people in those choices would go along those lines.
My second point about the alternatives to new clause 2 that the Department might consider concerns the need to recognise that the cost of child care varies greatly with the age of the child—although I acknowledge this goes somewhat against the simplicity of universal credit. Of course when children go to school the cost of child care out of hours drops dramatically from the cost of providing child care for an 18-month-old child. I suggest some form of annual review of child care support that takes into account the age of the child or children. We should also consider this in terms of the annual envelope, because that would address the issue raised by Kate Green about the predictable fact that holiday cover is an annual challenge for working parents, and reflect the fact that there is that fluctuation for parents of children at school.
I wanted to outline why I do not agree with new clause 2 and why I welcome the fact that the Government are having an open dialogue about the £2 billion that they are putting into child care support, and to emphasise that all families, whether they are on universal credit or not in the benefit system at all, have to make behavioural and financial choices about the world of work. I would like the support that the state gives to encourage people into work to be concentrated on those first few hours of child care.
I want to comment first on the proposed child care amendments. Owing to the funding envelope within which we work we face a difficult financial choice about which group of parents to assist with child care costs. I warmly welcome the implication in the comments of Harriett Baldwin. Obviously, one would want to support funding for child care as far as possible, and in making an early selection about which group of parents should benefit we do not want to shut off the possibility of financial support for child care for more parents being an aspiration over time.
In saying that we wish to protect the child care support available for parents who work more than 16 hours, we are certainly not saying that we might not aspire in due course to see child care supported beyond that. The loss of financial support for child care will make working completely unviable and will be a dangerous and retrograde step that I do not believe Ministers have fully analysed.
It is important that we do not see child care provision simply as instrumentalising the return of parents to paid employment. Nowhere in the debate today have we said much about the welfare of the child. We do not know what short hours child care, if any, will be available in the child care market. It certainly seems to be a complicated and unlikely form of child care for parents to be able to access and it does not reflect the way in which child care provision is currently organised. Of course, child care providers might respond if more parents were seeking to buy shorter hours of child care, but the question that arises is whether it is a financially viable model for providers. I am not aware of Ministers investigating that, and I would feel more reassured about the validity of their proposals if they had been able to say a little more about what they meant for the market, its resilience and its potential for growth.
I would also have felt more reassured if Ministers had analysed the extent to which very short episodes of child care are or are not good for children. I genuinely do not know the answer, but I have a sense that putting a child in child care for two or three hours on two or three days a week presents an unstable stop-go approach. We certainly know that, for younger children, one-on-one care with a single main carer with whom the child can form a stable relationship is very important. Although I do not rule out the possibility that shorter episodes of child care could be good for children, I have not seen any sign that Ministers have investigated whether that is the case. It is extremely difficult for us to support a measure that has given no attention to the well-being of children.
On the proposals—or lack of proposals—in relation to free school meals, I do not blame Ministers for seeking to pass the problem to the Social Security Advisory Committee because it is an extremely difficult one to solve. The previous Government had been concerned about the cliff edge that exists as parents move off benefits and into employment and free school meals are removed wholesale. Parents have repeatedly told us as politicians that that is an incredible financial shock to low-income families as parents move into work. We have no idea what Ministers will propose in due course.
We have been struggling to find the model that will work. Models have been bandied around that could leave parents able to afford school meals on Monday, Tuesday and Wednesday, but not on Thursday or Friday, or that might mean that they can afford school meals for some children in the family, but not for others. There is a real concern that what Ministers propose will still lead us to a cliff edge.
We need to be clear about the principles that we seek to achieve. I would like absolute clarity from Ministers that when they receive the recommendations and advice of SSAC, they will ensure that support is available for all children who need free school meals; that the system that is put in place will be simple for families, simple for schools to administer and simple for the Government, too; that child health will not be compromised because children currently eligible for free school meals and therefore accessing a healthier diet are in future shut out of such provision; and that the design of the system will not create work disincentives.
I have not yet seen any evidence that all those circles can easily be squared, unless Ministers are prepared to look again at the direction of travel that the Labour Government were following, which was, over time, to move towards extending the reach of free school meals. I accept that in the present financial climate it will be difficult to get all the way there, but Ministers need to think now about how they design the cliff edges and the tapers, because that is the foundation on which a future extension of free school meals to more children would be built.
The most comprehensive option would be to include a per child school meal element in the universal credit, which crucially would be paid directly to schools to provide meals, so that parents were not—by force, in many cases—obliged to use the money to meet other bills. I would like us to consider how a model could be designed that, when funding allows, would allow the money to be paid in full until the family reached their earnings disregard level, at which stage it would be withdrawn from universal credit at the taper rate, which we would like to have been maintained at 65%. That would mean that both DWP and families were contributing to the cost of school meal expansion. Entitlement could end when universal credit payments end, preferably when the imputed value of the school meal had been fully tapered out.
Achieving that vision immediately would undoubtedly create additional cost, which I recognise that Ministers want to avoid. Nevertheless, it is important that they give us assurances that they will seek at the outset to design a system that could be developed in that direction over time and as funding allows.
Amendment 68 relates to carers. A small group of carers seems to have slipped the notice of Ministers when considering the impact of the design of universal credit, specifically in relation to earnings disregards. We know that many carers can work only a very small number of hours because they are seeking to balance paid employment with substantial caring responsibilities. We also know that those few hours of work are very precious to them. They enable them to maintain contact with the labour market, they widen their social and external circles, and they provide a bit of a respite for the carers from the stress and strain of caring.
Where those carers are in receipt of income support, they can at present earn up to £20 a week from doing a few hours of paid employment without it affecting their benefit. In their proposals for universal credit, Ministers have provided for disregards for carers in a number of situations, but there seem to be some groups who will lose the benefit of that disregard as a result of the proposals before us. For example, some carers are caring for someone who does not live in the same home as the carer. Those carers may no longer enjoy the benefit of the earnings disregard. That seems completely at odds with the aspiration that Ministers have expressed for the universal credit, which is that every additional hour of work will pay.
I hope that Ministers will give careful attention to amendment 68 and consider what can be done to ensure that all carers are incentivised to take on even a few hours of work. What assessment have Ministers made of the number of carers who are left outside the ambit of the current disregard for carers, and of the cost of extending such support to all carers?
Finally, we cannot stress often enough how important it is that we ensure that payments for children go to the main carer of the child. Ministers seem to think it is good enough that couples have the option to make that decision, but very many families will, by default, allow all payments of universal credit to go to one member of a couple in a couple household, and we know from the evidence of the way in which the pension credit has been received in couple households that that is most likely to be the man.
I will, but the hon. Gentleman will tell me that life is different now and that families share child-caring responsibilities more equally. I am sorry to tell him that although I would love that to be the case, all the research evidence says that it still is not. This is not in any event a gender point, although it would mean more money for women, because women are the main carers of children. Therefore, if we want to ensure that money is spent on children, we need to route it to the main carers, and that primarily means that we need to route it to women in couples.
I am surprised that the Conservative party has been so reluctant to accept that. The last time we had such an attack on the principle of money being paid to mothers for the care of children, it was Conservative ladies who were the best defenders of the interests of mothers and families, and I do not think the picture has changed that much. I know that the hon. Gentleman has an idealistic and ambitious view on the issue, and it would be good to hear it.
I thank the hon. Lady for her generous introduction to my intervention. I take issue with her argument not in relation to who has primary responsibility for child care, but in relation to culture. In times gone by there was a much more divided culture, which is why older people see life very much in the way she puts it, but the reality is that joint working has changed that. My issue is not about economic power and management, but about sharing in the family unit as a whole, and that is backed up by the figures, which show that 76% of partnered mothers are working. Life has changed, and she should understand that the economics are much more shared these days than they used to be.
I am prepared to accept that life is changing, albeit rather more slowly than the hon. Gentleman suggests, but let us not forget that the partnered mothers who work do so largely in part-time jobs and that their incomes usually make the smaller contribution to family budgets. Let us not forget the extensive evidence that continues to show that women fulfil the bulk of child care responsibilities. Let us not take the risk that by removing money from the main carers of children, whether that is the fundamental intention or not, children become the losers in the drive to achieve the glowing future that the hon. Gentleman seeks to describe. All the evidence suggests that money is most likely to be spent on children when it is paid to their main carers, so
I am concerned that that should be built into our system as a default to ensure that that is where the money goes.
Other colleagues wish to contribute to the debate and we have had a full discussion on a number of issues raised by the proposed amendments, so I do not need to go into further detail on many of those points, other than to offer my strong support for amendment 26. As we move towards this fundamental change to our social security system, which Ministers themselves have described as the most far reaching since the introduction of the welfare state after the second world war, it is absolutely imperative that, if anything, more welfare advice is available, at least during the transitional period, as my hon. Friend Dame Anne Begg has pointed out, because it will surely be needed. Today’s debate is reaffirming the fact that this will not be a simple benefit to administer in practice. If we are to maximise take-up and ensure that people receive their entitlements, which I know from our discussions in Committee is the goal of Ministers, it is vital that proper advice is in place to support people as they navigate their way through the introduction of the new system under the Bill.
It is a great privilege to be called to speak in the debate. Having been here all afternoon, I feel as though I am back in the Bill Committee. My hon. Friend Stephen Crabb must again send my apologies to Downing street, because I have decided not to attend a party there in order to be here this evening.
I wish to speak about four specific issues and to new clauses 3 and 4 and amendments 23, 24, 27, 28 and 29. Before doing so, it is important to set today’s good and wide-ranging discussions in context. It is a privilege to follow Kate Green, who spoke with great knowledge and understanding on these matters in Committee and in her contribution to the House today, but an important point that we must bear in mind is this: the reason we need to look at changing the current welfare system is that it has not worked.
I challenged Sheila Gilmore on the figures for the number of people in the United Kingdom who have never worked, which worsened from 2000 to 2010, and the figures I quoted for Scotland were supplied by the Office for National Statistics. The figures for the United Kingdom are absolutely deplorable. The number of people who have never worked increased from 572,000 in 2000 to 841,000 in 2010, when the previous Government left office. As a Member who represents a Welsh constituency, it is disappointing to state that the figures in Wales also show a deterioration. The context for the welfare reform package, therefore, is the fact that the current system is not working.
Does my hon. Friend share my utter frustration that over the past 10 years, under the Labour Administration, so many of the new jobs that were created in the economy went to people immigrating into this country, rather than to those who were abandoned by Labour in long-term unemployment without the skills and support to get back into work?
Order. I say to the hon. Lady, and remind all hon. Members, that any interventions or contributions in the Chamber are supposed to address the whole House and that she should keep an eye on the Chair. Otherwise, she will not know when I am trying to get her to sit down.
My hon. Friend makes an important point. It is something that was reflected in the comments of the hon. Member for Edinburgh East, who, in relation to the aim of our welfare proposals to support people into micro-jobs, was quite disparaging of that type of job. Indeed, she stated on more than one occasion that we should consider the “type” of job that people will be able to take up as part of our reforms. I think that that is a symptom of the problem.
In my constituency of Aberconwy we have worked extremely hard to try to turn the tourism industry from something that is seasonal to something that is year-round. We have put a lot of emphasis on trying to ensure that the seaside resort of Llandudno is no longer somewhere that attracts people only for three months in the summer. By investing in conference facilities and so forth, we have tried to ensure that the hotel and service industries supporting tourism in the town work throughout the year. We have seen a huge growth in employment in the tourism sector in Llandudno over the past 10 years, yet that growth has been filled largely by people from eastern Europe who are willing to work hard.
From my point of view, the incredible sadness is that those individuals who have gone into what some Opposition Members would call “poor jobs” have ended up working themselves into positions of responsibility and management. I despair when I go out knocking on doors during election campaigns and meet people in the town who have lived there all their lives but have not grasped those opportunities. They live in a system that has allowed Opposition Members to forget their consciences because they have been able to say that they are providing money. There is more to the welfare state than providing money: we have to provide aspiration and a concept of self-reliance. We have to send out a message not just as a Government, but as a society, that work not only has to pay, but that it is the route to better oneself and one’s family. That seems to have been missing from the Opposition’s contributions to the whole debate.
Finally, it is also worth making quick reference to the comments made by Mrs Moon, who is no longer in her place. She said that she was sincerely of the view that the Department for Work and Pensions should make no effort to hassle and harass people who are unable to take up opportunities to work because of child care issues and so forth. I was intrigued by the use of the word “harass” in relation to trying to support people back into employment. One aspect of the Bill that we must understand is that it is not happening in isolation, but hand in hand with investment in the Work programme, which will try to ensure that people are not left to fester on benefits or have an existence on welfare. The Government are trying to reform the welfare state, but we are doing so in a way that tries to support people back into employment, and that aspiration should be shared by all Members of the House.
New clause 3 makes an important point. I disagree with it as it has been tabled, but I think that we will need to look very carefully at how we deal with free school meals in the system, because it is an issue of real concern to parents. Yes, of course they want to take the opportunity to have a job, and of course they are reassured by the fact that the reforms we are putting in place will make work pay, but as part of that, if they have three or four children, how we deal with free school meals is clearly appropriate and does not work against the proposals to ensure that work pays.
I fail to understand why the Government are being castigated for not providing enough detail in the legislation. The reason that we have not yet done so is that this is an incredibly difficult proposition to get right, as Members on both sides of the House have agreed. I see nothing wrong with saying that we will endeavour to get it right and that we are going to ask the experts to look at the issue on our behalf. I am reassured by the Minister’s comments in Committee, when he stated categorically that our aim was not to make any family currently in receipt of free school meals worse off.
The hon. Gentleman is arguing that the Bill will make work pay and that we should accept it without these crucial details. Does he accept that key child care charities, when making their submissions to the Government following the seminar, pointed out that 250,000 families would see their entitlements cut by £30 to £35 a week, that some would face a marginal rate of deduction of 100%, and that a lone parent on the minimum wage working for more than 24 hours a week would have a marginal rate of deduction of 94%? If we are being asked to believe that the Bill will always make work pay, we should be able to understand what its impact will be and have a chance to interrogate the Government properly.
That is an interesting contribution, but in truth I fail to see how those charities can make those calculations when we have not yet brought any proposals to the table. It is difficult to understand how those calculations were made, unless they were based on hearsay or assumptions.
Asking the experts to look at this on our behalf will enable us to introduce a set of proposals that will work. Also, hon. Members should be reassured by the fact that we will allow Parliament to look again at the proposals before they are enacted. That will allow scrutiny once they have been developed in detail. I agree with Opposition Members who have stated that the free school meals policy needs to work. Ultimately, there is no point in creating a reform to the welfare state to make work pay if it does not take into account the impact of the free school meals entitlement.
We need to be careful about new clause 4, because it fails to take into account the complexities that I have discussed with colleagues in the Department for Work and Pensions relating to the different arrangements for prescription charges in the various parts of the United Kingdom. Of course universal credit must take into account the need for some kind of support for prescription charges in England, but the situation is different in Wales and Scotland, where, for reasons best known to the Governments in Cardiff and Edinburgh, people do not need to pay for their prescriptions. I find that policy very odd. I can walk into a chemist in Llandudno and get a free prescription, whereas I would have to pay for it in London. Personally, I would be happy to pay a small contribution rather than getting support in that way.
The issue of passported benefits relating to prescriptions is an important one that needs to be looked at. We cannot end up with a system that builds compensation for prescriptions into a universal benefit for the whole United Kingdom without taking into account the complexity that I have just described. I applaud the fact that we are looking at this in detail and trying to introduce a policy that will be fair to all. I am surprised that the Opposition see the fact that we are giving these matters a great deal of care and attention as something to belittle, rather than something to celebrate.
As a Conservative Member, I would find it difficult to argue against the presumption of people saving for a rainy day. I find surprising some Opposition Members’ arguments that people who fall on hard times should not use their savings. If that had always been the argument in relation to every possible hard time, there might be some merit to it. However, we heard the bizarre argument from the hon. Member for Edinburgh East against someone who had had their working hours reduced having to use their savings rather than rely on universal credit, even though I suspect that she would be willing to continue with the current situation, in which someone who becomes unemployed, which is much worse, is expected to use their savings before being able to claim anything from the state.
Our proposals for universal credit are trying to be fair across the board, and I do not think that we can have a rule that someone will have to use their savings if they are unlucky enough to become unemployed, but that the state will support someone whose hours are reduced, even if they have £50,000 saved in an ISA. I cannot see the logic of that proposal. Never mind the cost of the £70 million that Opposition Members have talked about, I simply do not understand someone who becomes unemployed having to use their savings while someone whose hours have been reduced is able to call on the support of the state.
I sincerely hope that, in better times, as we see a transformation in the public finances, we will be able to increase the limits on savings. I want people to be self-reliant. I want them to save for a deposit on a house, for their children’s weddings or for their retirement. We must bear in mind, however, that we need to be fair to all taxpayers. There is nothing acceptable in amendments 23 and 24. I see nothing logical in a proposal that the state should step in to support someone with £50,000 in an ISA whose working hours are reduced, yet if that same person were made unemployed they would be expected to use those savings to pay their way until the savings were exhausted. The Government’s welfare reform proposals are much more logical, in that they try to ensure that people have an understanding of the importance of self-reliance.
Amendments 27, 28 and 29 deal with the situation for the self-employed. Stephen Timms noted from my contributions in Committee that I was supportive of small businesses, and he was astounded to hear me supporting the Government’s proposals on how universal credit will relate to the self-employed. I want to state categorically that the universal credit system must support self-employment. My constituency is highly dependent on small businesses and, indeed, micro-businesses. The definition of a micro-business is one that has between one and nine members of staff. Most small businesses in my constituency do not even have five.
I fully appreciate the importance of self-employment to the economy of Aberconwy and to Wales. I would not be standing here supporting a proposal that attacked the ability of the self-employed to benefit from the universal credit system. However, the system has to be fair and reasonable. The Department for Work and Pensions is trying to re-establish the enterprise allowance scheme, which is an indication of its commitment to encourage people to consider self-employment as a route out of worklessness. I do not for a second believe that the Government would encourage people into self-employment with one policy while penalising them for so doing with another.
I support the Department’s attempts to find a way of avoiding self-employment being used as a means of claiming universal credit payments when they are not actually justified. My example, which drew a degree of scorn from the right hon. Gentleman, is not made up; it is one that I came across in my previous life before being elected as a Member of Parliament. Someone set up a small business and, in an entire year of being self-employed, managed to generate sales of less than £80. It would be completely unacceptable for someone in that situation to get universal credit payments based on their being self-employed. Most people in small businesses work extremely hard, and they would not recognise £80-worth of sales in a year as running a small business. The key issue is that the Department must recognise the hours put into small businesses by their proprietors. It would be unfair to the self-employed if we ended up saying that somebody who ticked a box on a form saying that he or she had worked a 70-hour week in their business should have that calculated on the basis of the minimum wage. Having had discussions with the Minister, I do not think that that is the intention; rather, it is to have a clear level at which the self-employed are expected to perform before they can benefit from universal credit. That is reasonable and acceptable. I encourage the Department to continue to consult the small business community, who will be able to add a lot to the debate in ensuring that we get this right. The system must support small businesses, but it is not unreasonable to expect it to do so sustainably and fairly.
As a Government, we have to think carefully about what is deemed to be the income level of the self-employed and about the potential burdens that we might place on small businesses with a reporting system that is too demanding in terms of regular responses. I think the Minister alluded to the possibility of quarterly returns, and that is not unreasonable. Many small businesses in my constituency will not thank me for saying this, but they are quite happy to deal with their VAT returns on a quarterly basis. They would love to be without that requirement, I must admit, but they deal with it on that basis and are used to doing the same with their pay-as-you-earn returns. They would not necessarily find too unreasonable the burden of having to report their earnings in relation to universal credit on a quarterly basis. We need to take that into account.
Although using net profit as a means of calculating the income of the self-employed is equivalent to how the self-employed are dealt with for tax purposes, it might not necessarily result in a fair outcome in creating a system that provides support from the taxpayer for their living needs. An annual investment allowance of £100,000 for capital allowances does not sound like a huge amount of money for large concerns, but for many small businesses it means that they could invest in one piece of capital and immediately wipe out their profit. The frustration for other taxpayers when that type of thing happens is that they see somebody running a successful small company, investing in brand-new capital and getting a 100% tax allowance in one instalment, which means that they are reporting a zero income for tax purposes. I question whether that is an appropriate basis on which to calculate universal credit entitlement, because it is a means by which the self-employed have the capacity to reduce their earnings for universal credit purposes that is not open to those who are in paid employment. I believe myself to be a champion of the self-employed, but the Department is right to think carefully about how to ensure that we have a reporting system for the self-employed that is not only fair to them and encourages self-employment but fair to the general taxpayer and to other universal credit recipients.
Many of the amendments and new clauses are interesting, but when one considers the Bill in full, it is difficult to support any of them.
I listened with interest to Guto Bebb, who said that this debate reminded him of the Committee stage of the Bill. I feel a bit like an intruder, because I did not serve on that Committee. I am not sure whether he meant that he was enjoying the experience or enduring it.
I want to make a few remarks about new clause 6. I am not sure whether it comes into the category of superfluous detail to which the Minister referred—or blessed detail, as one of his hon. Friends described it—or deals with something that was considered in Committee. Last week, I had a discussion with people at Rutherglen and Cambuslang housing association in my constituency, who are concerned about the payment of the housing element of universal credit and the changes that are being made to the current arrangements on direct payments. As someone who is not an expert in these matters, the new clause seems to me to draw a good balance between the desire to try to ensure that universal credit gives people responsibility for the money that they receive and protecting the interests of tenants of social landlords and the effectiveness of social landlords such as the housing association I mentioned and, I am sure, many others around the country. The new clause would allow the housing element of universal credit to be paid directly to the landlord if the person in receipt of universal credit requests it or if the tenant is in considerable arrears.
Social landlords are worried that income streams might be significantly reduced because households facing financial constraints as a result of rising food and fuel prices and other calls on their budgets which may be greater in future choose to spend the money received from universal credit on items other than rent, for which the housing component of universal credit is primarily designed.
The hon. Gentleman is making a good point. Is he assured, as I am, by what the Minister has said—that the vulnerable types of household that the hon. Gentleman is so well describing can make those payments directly to landlords at the moment, and that because the Government do not want to disadvantage anyone in the transition to universal credit, that mechanism will be allowed to continue?
I am seeking an assurance from the Government that that system will be able to continue.
The proposed change has potential difficulties for the social landlord as well as for the tenant. On several occasions over the past year, I have heard the Government express determination to try to ensure that organisations in receipt of public money are as efficient and effective as possible. That is also important for social landlords and housing associations. If we move to a new arrangement whereby direct payment is not possible, there is a risk that they will end up spending a disproportionate amount of their time, resources and effort on attempting to get arrears from tenants instead of trying to be as effective and efficient as possible in prioritising and concentrating on improving their stock and dealing with the other issues that they face. That could constrain their ability to repay private finance that they have borrowed to finance new building. If housing associations are seen as higher risks, they may face even stricter conditions on their borrowing, which would affect their ongoing business.
There is also the question of whether tenants may resort to doorstep lenders or other loan sharks. I am sure that I am not the only Member present who has seen examples in their constituency of people being driven into that sector. I know that Members on both sides of the House have addressed that issue in debates on other measures. In seeking to ensure that people are responsible for the benefit that they receive, we must not put ourselves in a worse position by removing that direct payment.
As I said at the start of my remarks, I am new to this area of debate. I was not on the Committee and have not dealt with it in the same detail as others. However, it is important to protect a system of direct payments, particularly for social landlords. I hope that the Minister reflects on that, even if he thinks that the new clause is superfluous.
I will modify my speech to highlight some of the concerns expressed by Tom Greatrex on new clause 6. That will be the beef of what I will say. We spoke about this issue at great length in Committee and I spoke about it personally. Like my hon. Friend Guto Bebb, I feel like we are back in Committee. I assure the hon. Member for Rutherglen and Hamilton West that it was always a pleasure to sit on that Committee, and I am sure that Opposition Members will concur.
We received representations from various groups on the merits of paying housing benefit directly to landlords, principally from Citizens Advice, Crisis, the National Landlords Association, the Residential Landlords Association, Shelter and the British Property Federation. As the hon. Member for Rutherglen and Hamilton West said, and as was said in Committee, there are persuasive arguments about paying housing benefit directly to landlords. It is perhaps ironic that it was the last Labour Government who changed the system in 2008. Before that, rental payments did go directly to landlords.
As was rightly said in an earlier exchange, the Minister has highlighted that there is provision in the Bill for paying housing benefit directly:
“We recognise that in some circumstances, direct payments to landlords may be necessary, and the Bill makes provision for that.”––[Official Report, Welfare Reform Public Bill Committee,
I hope that that gives the hon. Member for Rutherglen and Hamilton West some comfort on his specific concerns. I hope the Minister will forgive me if I am pre-empting his response, but we discussed this matter at length in Committee.
I think that there is a deeper point on the issue of responsibility. The Leader of the Opposition raised this issue this morning as the cornerstone of his speech. I do not want to go over what has been said too much. The essence of my point is that it is easy to talk about responsibility, but the Government are actually delivering on it. I have my concerns about the payment of housing benefit, but having sat on the Committee, looked at the findings of the reports and considered the evidence, I have come to the conclusion that if we are sincere about the aim of this Bill of getting people off benefit and into work, the first step is not only getting people into work, but individuals taking responsibility. The concerns underlying new clause 6 are addressed by the Minister’s remark that the whole essence of the Bill is to tackle the issue of responsibility.
I am sure, Madam Deputy Speaker, that you were as enthralled as I was by the exchange involving Sheila Gilmore and my hon. Friends the Members for Aberconwy, for Dover (Charlie Elphicke) and for West Worcestershire (Harriett Baldwin) about the number of people who have not worked in the past 10 years—a time of plenty compared with the situation that we face now. The point that was missed in that exchange was the pernicious nature and corrosive effect of what we have seen over the past few years; this is not just about getting people into work. We have arrived at a situation in which not only are there people who have never worked, but there are whole families who have never worked. The exchange missed that point, but it was eloquently covered by my hon. Friend the Member for Aberconwy.
The hon. Gentleman is right that addressing worklessness that has crossed generations should be a concern on both sides of the House, and it is. However, does he agree that the number of people growing up in households where nobody has ever worked through two generations is 20,000 at the most, which is 0.1% of people on working-age benefits? That is far too many, but it is only 20,000 people.
I accept the hon. Lady’s point, but I go back to the corrosive effect that that is having on society. There are people living cheek by jowl with the 20,000 families that she has mentioned, who are aware of the situation.
A constituent spoke to me who comes from one of the handful of families on her road who actually work. The rest of the families on her street have made a conscious life choice to live off benefits. [ Interruption. ] Ms Buck may nod, sigh and take a deep breath, but I am faced in my weekly surgeries by people who live in the real world—people who have to deal with the hard reality of life. My constituent had to face ridicule for going to work. That is the situation that we have.
As I have said before in this House, I have experienced poverty in my life. I have not read about it in a book or dealt with it at arm’s length from behind a desk; I have seen it with my own eyes and experienced it in my family. That is why I am passionate about it and why I was proud to sit on the Committee. Too often, the issues that we talk about are detached from the reality of life. This legislation is not about appealing to red-top newspapers or making grand-standing statements, as was said in Committee, but about tackling the issue head-on. Hon. Members have talked about the number of jobs created over the past decade that were taken by foreigners who came to these shores with an ethos of working. My hon. Friend the Member for Aberconwy mentioned eastern Europeans. My family have gone through that experience. We came to this country with an ethos of working; that was our aspiration. The idea that we could claim benefits and use the system to support us was anathema to us. That idea is what this Bill tackles.
Absolutely; the intervention from the hon. Member for Westminster North was very telling. It missed the point about the message that Governments send out. Let me make it absolutely clear that I am not criticising individuals and families; it is the system that is corrosive. If the system is corrosive and, to quote my constituent, rewards idleness, what do we expect of human beings? I have faith in the British public. We have budding entrepreneurs and young people who have aspirations to achieve the best that they can. However, through unintended consequences, aspiration has been undermined, particularly over the past 10 years. I have seen that so often when I meet young people. They have a choice between work and a life on benefits. They have looked me in the eye and said that a life on benefits is not such a bad option.
I recently met a lady in my constituency who is a health visitor, and she told me of a trip that she had paid to a family living in Northamptonshire. The mother had just had her fourth child, and her eldest child was 15 years old. As the health visitor left, the older daughter chased her out and said that her mother was trying to persuade her to have a baby to improve their income, but she did not have a boyfriend and did not really want one. She asked what the health visitor would advise that she do. That is symptomatic of some of the problems that we have in this country as a result of our welfare system.
I thank my hon. Friend. Sometimes we in the House have to face uncomfortable truths. We may not like them, but they are the reality that we have to face. I believe that the Bill, in its entirety, goes some way to addressing such problems. I have said before, and will say again, that it is very easy to talk the talk in opposition, but the Government are walking the walk. We are delivering something that is popular not just with Conservative voters but with Labour voters. There is consensus across the board on the issue, and it unites most voters whom I have met, whichever party they vote for. They have seen the reality of what we have done to introduce an ethos of work, aspiration and ambition.
I am glad that I am part of a Government who are taking the difficult decisions and doing the important things. This is a seminal Bill, and people will look back on it as one that changed this country for ever. I know that I may have veered away from my original comments on new clause 6, and I am sorry about that, but sometimes we have to say it as we see it. I, for one, am glad that we have introduced the Bill, and I think it will make this country a better place.
I agree with one thing that Paul Uppal said, which was about taking responsibility. I therefore hope that he can support amendment 26, because it will mean that agencies can ensure that people know their rights and responsibilities following what has been described as the most fundamental change to the benefit system.
One of the first witnesses to appear before the Public Bill Committee said that although universal credit is a simplified benefit, the application for it will not be simple, because of all the different benefits that are rolled up together into it. I am old enough to remember when supplementary benefit changed to income support, and I saw the rise in demand for advice among people worried about what would happen to their income. For people who are on benefit, a small change in income means a lot.
That problem will be exacerbated in the current case, particularly given the fear of a civil penalty for a mistake or omission. People who go to advice bureaux do not want to know how to defraud the system; they want to know how to fill their form in correctly. An online application process will also worry people—particularly older people, but also some younger ones—who are concerned about filling a form out online and not seeing it until three, four or five days later. Support is needed to smooth the transition.
Universal credit will start in 2013—exactly the same time when the proposed changes to legal aid will remove help for the most complex welfare benefit cases. As my right hon. Friend Stephen Timms said, that is the perfect storm. Local authorities are examining every non-statutory service that they provide, and in some cases local advice agencies are losing funding. In fact, in a survey, 54% of local bureaux said that they were worried that they were unlikely to be around in 2013.
Let us scotch one myth. Local bureaux and advice agencies do not get any funding from central Government. The money goes to the central Citizens Advice, which provides a vital service in support of local bureaux. It provides information, training, support and IT services. Putting more money into local bureaux would mean that more would have to be charged for those services. It would be self-defeating. Local face-to-face advice is vital, along with the advisory telephone service. Many claimants are vulnerable, and such advice, provided locally, is of particular importance to them.
Does the hon. Lady agree that local citizens advice bureaux are probably one of the most important and good causes to whose funding local government can contribute? Will she therefore join me in applauding my city council in Gloucester for the valuable increase in funding that it has given to our local CAB, and recommend that action to other councils?
I will, but to say that local government is the main funder of CABs is to oversimplify the matter. I know of one bureau that had at least five different funding streams—the primary care trust, legal aid, the local authority, housing associations and a hospital. CABs rely on a mixture of funding streams, many of which are being reduced at the moment. Local authorities cannot take up all the slack, much though they should be continuing advice services.
Investing in early advice saves money. Avoiding costly tribunals and appeals is vital, and people who do not have access to advice are more likely to pursue their case to the appeal stage, costing them money and stress. Public confidence in any new system is vital. Advice on welfare benefits is crucial, and I urge the Government to accept amendment 26.
The hon. Lady is making a powerful point. The CAB in my constituency—in the Rathcoole area, which is very needy—does excellent work along the lines that she has described. Does she agree that whatever one’s views about the other amendments or the Bill, everybody should support amendment 26? Clear advice to constituents and clients is what it is all about, whatever one’s views.
I thank the right hon. Gentleman, and I agree totally. The amendment would simply give people the opportunity to receive advice about their rights and responsibilities. That is crucial at any stage, but particularly when a new welfare benefit system is brought in. I urge all Members to support the amendment.
I rise to speak against new clause 2. One of the major achievements of the reform of introducing universal credit is enabling people to have greater flexibility in taking on part-time jobs—so-called mini-jobs. I have made the point several times in interventions that it is critical that we enable people with child care responsibilities to have the maximum flexibility in how they organise their child care and for how long they wish to work, so that they are reintroduced to the world of work.
I praise the Government particularly for making the effort to consult all parties in their recent seminar. It was not just members of the Public Bill Committee who were there, but members of the Work and Pensions Committee. Such engagement is important, because it enables us to get everything right. The Government have introduced a Bill that is a bookcase into which the books will later be slotted, and they are making an effort to ensure that the books read well and effectively.
One of the most telling parts of the briefing that we were given in the seminar was about what parents had told the DWP that they wanted. It informs the decision on whether new clause 2 is right. The DWP publication—“briefing” is probably a better description—is entitled “Childcare support in Universal Credit” and dated May 2011. It states:
“Recent findings from a survey of lone parents on Income support and with a child aged 5-6 found a strong preference for working part-time.”
Among those looking for work or expecting to do so in future, the majority stated a preference for 16 to 29 hours’ work a week, with 45% giving a preference of exactly 16 hours. Why exactly 16 hours? It has been drummed into everyone that they have to go out and work for 16 hours, not a moment less, or they will not get any help with child care. Subsection (5) of new clause 2 makes it clear that the Opposition want that prescribed minimum number of hours a week to remain. In other words, they do not want the mini-job, and yet we know that lone parents show a strong preference for working part-time, which should be respected. People are not here to dance to the Government’s tune: Governments should dance to the tune of the people, and be as flexible, helpful and enabling as people wish.
While the hon. Gentleman is on the subject of the survey of parents’ opinions, does he know how many of the 250,000 parents who are expected to lose between £30 and £35 a week under both options in the Government’s proposals said that they wanted less support with their child care?
I have not conducted a detailed survey on that. I am also unsure what the 400,000 or 430,000 who will win approximately £50 say. There will always be winners and losers, but what I like about this policy programme is that there are almost twice as many winners as losers, and they will win an awful lot more money, which helps the transition to the policy.
Let me return to the evidence of parents. The Government document states:
“Many out of work mothers, both lone and partnered, are looking for jobs that will fit in with their children’s schooling—i.e. jobs that are part-time and preferably within school hours.”
That is obvious and self-evident—any parent knows that—but it is important to have survey evidence so that the argument has an element of objectivity. The document goes on to say that out-of-work mothers
“tend to look for work that is local and flexible, so that they can be available if, for example, their child is taken ill.”
All of us parents have been there—have we not?—when our children get sick and we send them off in the morning, tying their scarves up tight and hoping that no one notices. When they do notice, we get a call. I have had to make that run—even though, as I am told, as a man I have no rights in respect of child care responsibilities. Some of us in the younger generation are new men, although I hesitate to apply that description to myself.
The document also states that those factors—locality and flexibility—
“are often seen as being more important than the type of job they move into.”
It is all about flexibility, which we need. All of us parents have been there and understand that. Child care is quite often a nightmare, and always a juggle. Half the time parents are terrified that they will get a call just when they have an important meeting to go to.
The document also states:
“A study of lone parents who had recently moved into work had overwhelmingly chosen jobs where their hours fitted with looking after their children. It was common for interviewees to be working between 16 and 29 hours per week.”
Again, there was almost certainly not the flexibility to have a mini-job. Mini-jobs are important in enabling such flexibility. It is not right for parents, particularly parents of little children, to be forced into endless hours of work, or to work for more than 16 hours. New clause 2(5) is therefore extraordinarily unhelpful, and a retrograde step.
On parental employment, what happens when children are five and six is telling. This is about the youngest tots. When children are that age, parents are just going out into work, having previously perhaps been full-time parents. Employment of lone parents of children that age is about 55%, but the employment of partnered mothers is 75%, which is the parental employment rate. We can see, therefore, that there has been a massive societal shift into joint working among couples. There has been a move away from the traditional old-style model, whereby the bloke goes off to work and the woman stays at home to mind the kid and the kitchen sink, to more economic sharing and greater equality, which is a positive thing.
My hon. Friend is developing a powerful case for greater flexibility, which is precisely what the Bill proposes, and which the new clause would not reflect. Does he agree that there is perhaps not enough understanding in the wider world of the flexibilities in the Bill that will help single mothers to take jobs on a flexible basis?
My hon. Friend makes an extraordinarily powerful point. Part of the reason for that is that a lot of scaremongering is going on. The scaremongers deny that the Bill provides that flexibility and say that people will lose out, but we know, from the detailed figures in the Budget and the briefing document to which I have referred, that most people will be far better off under the reforms, that they will have more money, and that work will always pay.
On the subject of scaremongering, is the hon. Gentleman aware that in their letter to the Secretary of State on this issue, the organisations that could fairly be said to have a good grasp of the issue—from the Daycare Trust to Gingerbread, Family Action, the Child Poverty Action Group, Working Families, the Children’s Society, Save the Children and the Resolution Foundation—said that they were concerned that the proposals could effectively end the prospect of full-time work for single parents and second earners, and for couples on low and middle incomes who need support with child care costs, and that that will have the result of hampering their ability to find work, and making it more difficult for them to lift their families out of poverty?
Charlie Elphicke supports the flexibility for people to work fewer hours—in principle, we all agree with that—but he wants to restrict the flexibility for people who want and need to work longer hours.
I do not make my money out of campaigning, and I never have. Anyone who has done that will know that maximum fear is the way to get the most subscriptions, the largest membership and the highest amount in grants. I make my money out of my only job, which is serving my 71,000 or so constituents and trying to do what is best.
Perhaps I am old-fashioned, but I occasionally open the Budget Red Book and look at the detailed figures. Table A2 on page 80 makes it clear that a lone parent with one child working 35 hours a week would have £105 without universal credit, and more or less the same with it. However, when parents work 10 hours, things change. A lone parent working 10 hours rises receives £20 without universal credit, and £53 with it. If we move to universal credit, those people will end up, broadly, with more money. That mini-job is massively incentivised by universal credit, which makes part-time working much easier.
Why does part-time working matter, and why should we give greater incentives for it? To answer that, we must look at the proportion of parents with child care responsibilities who are in work. Some 61% of lone parents who have children aged between five and six, who would find things difficult under new clause 2(5), work part-time, as do 64% of partnered mothers of children of that age: 64% of all mothers work part-time. The statistics are pretty clear that we have had a joint working revolution: there is much more sharing of economic power in couples, and more pooling of income. To a great extent, universal credit recognises that in the system.
There has also been a revolution involving women in the workplace. Often they work part-time, because even now there is a bias towards women having primary responsibility for child care. Finances might be shared, but the responsibility for child care tends to fall to women. That is what comes out pretty clearly from the figures. For that reason, we should allow women maximum flexibility. Why have a 16-hour cut-off, as new clause 2(5) proposes? I, for one, cannot agree with that. It is not the right way to go; it is a retrograde step.
I completely agree. That is the whole idea of consultations. The Government have reached out to all those groups. I am disappointed that the Opposition have used this opportunity just to throw rocks, when the Government have reached out to all parties in the House in designing the fine detail of the Bill, and truly sought to engage.
It seems extraordinary that Ms Buck, with whom I sat on the Work and Pensions Committee, does not recall the stream of anecdotal evidence from our constituents about how many women are at home on benefits because they have worked out that under the current system it is impossible to take a job and be better off. The whole concept of work paying, which drives this Bill, must surely unite Members on both sides of the House.
I would hope so. New clause 2(1) mentions
“a childcare element for claimants who are in work, except in prescribed circumstances.”
One of the problems with the current system is that 52,000 families already in receipt of tax credits are entitled to, but did not claim, the child care element in 2008-09, whereas 55,000 families were entitled to the child care element but did not claim tax credits in the same period. We need to ensure that real help is available for children. Universal credit will ensure that we do not have thousands of families who do not receive their full entitlement. That is a really important aspect of the Bill.
I am not sure that new clause 2 is the right way forward. I am concerned that it would cost the vast extra sum of £400 million in Government spending. It would be expensive, but retrograde, and it would make life harder for those who want to be in part-time work.
My other concern about the new clause is that the maximum award for the child care element is far higher than was set out in the consultation document. I can only assume that in drafting it the Opposition thought, “What high figure can we come up with that will be a substantial number so we can appear to our constituents to be much more generous in spending other people’s money?” That is not a sensible approach. The right approach is to have the consultation that the Government are having so that the book, when it is written, is slotted into the bookcase and is as effective as possible.
The Government have made a real effort to make strides on this issue and they have come up with a really great plan. They have also gone to considerable lengths to put up various options for discussion. Nowhere in new clause 2 does it canvass the possibility of a different rate for children under five, although the Government have canvassed that possibility. Nowhere does the new clause mention the differences between what people would get with 70% child care costs and with 80% child care costs: it just assumes that the figure should be 80% or 90%—figures that, on the face of it, appear to have been plucked out of the air. Nowhere does the new clause discuss the working of the hours rules, which would create great problems especially for lone parents and the parents of the youngest children who are just starting to find their way back into work. We must support them in going back into the workplace. That is the sort of discussion that we should be having, and I would hope that the Opposition would work positively with the Government to try to achieve a system that works for everyone.
These reforms are important because we need to reduce child poverty. In recent years, the figures have not been pointing in the right direction, if one includes after-housing costs. I will be challenged and told that that is the wrong figure to use and that I should use before-housing costs, but as I said in Committee people have to live somewhere. We cannot expect them to live in a garden shed or on a remote Hebridean island at very low expense where perhaps they could find shelter and the odd sheep. Indeed, Kate Green, who is no longer in her place, nodded in Committee when I said that this was the right measure.
In 2004-05, some 3.6 million children were below the 60% median for after-housing costs and now it is 3.8 million. I regard that figure as worrying in terms of the mischief that the universal credit and new clause 2 are aimed at combating. The Government’s plans would substantially reduce child poverty. New clause 2 and the Government’s plans are presumably aimed in the same direction, but the latter would reduce child poverty by at least 50,000 in 2011-12. I see that as a positive move. I asked the Secretary of State today about the effect of universal credit on poverty and he said that 90,000 fewer people would be in poverty. That is the right direction.
The Opposition have tabled amendments 23 and 24, which propose that the prescribed maximum should be £50,000. In other words, if someone has £50,000 in the bank but their earnings are very low, they will be able to claim under universal credit. Earlier, I put an example to Sheila Gilmore. If a person earns £50,000, has no savings—probably a young person—and pays tax, they will be subsidising an older person on lower earnings but with £50,000 in the bank. If we asked people in the street whether that was really justifiable, they would say no. The reason we save is to have a rainy day fund. The whole idea of such a fund is that when it rains, we should spend it—because we believe in taking responsibility for ourselves.
Today, the Leader of the Opposition gave a little speech about responsibility. He said:
“Labour—a party founded by hard working people for hard working people—was seen, however unfairly, as the party of those ripping off our society. My party must change.”
But I looked at the amendments and saw that Labour wants to give benefits to people who have £50,000 in the bank. Are we being ripped off? Is that a party that believes that hard work brings rewards and that believes in responsibility, in a messianic conversion, or is it a party that simply wants to hand out other people’s money like confetti?
I read on in the speech and I realised that the amendments had been tabled for the sake of a sound bite. The Leader of the Opposition said:
“Just take their current welfare reform bill.
It punishes people in work who save, denying them the help they currently get through tax credits.”
Well, there is saving and there is saving, and if we polled people I am sure that we would find conclusively that someone with £50,000 in the bank should not get any out-of-work benefits. They should take responsibility and seek to get back into work as quickly as possible.
As usual, my hon. Friend is making an excellent speech. Does he not highlight the fact that this is a moment for the Opposition to decide on which side of the fence they stand? They talk about reform, but it will be interesting to note how they vote today and on Wednesday.
I agree. In fact, let me use the words of the Leader of the Opposition, who said:
“Finally we will never encourage a sense of responsibility if society is becoming more and more unfair, and more and more divided.”
We know that Labour divided our country more between the rich and the poor when it was in office, and we know that giving people who have £50,000 in the bank out-of-work benefits would be deeply unfair to the ordinary working person in the street.
I apologise for missing so much of the hon. Gentleman’s speech. I am sure I would have been greatly entertained. However, I was not aware that the amendment before the House would give out-of-work benefits to people with savings. This is about people who are working and trying to get themselves back on their feet, which he said he wanted.
If we asked the person in the street, “Do you think that benefits, even universal credit benefits, should be paid to someone who has got £50,000 in the bank?”, they would give us a pretty robust response. I represent a constituency with a lot of deprivation. Average earnings are about £20,000 a year—£50,000 is a king’s ransom to the people whom I serve. Most people could never dream of having so much money in cash. They might have it locked up in their house, but they could never dream of having that kind of money in ready cash. It would be an astonishing position to be in. If I went down Dover high street and said, “Do you think that people should get universal credit if they have £50,000 in the bank?”, the response would be demonstrative, pretty conclusive and probably pretty rude—it would be expletive-laden.
In my constituency, when I knock on a door, like my hon. Friend Paul Uppal, and say, “What are your concerns?”, after expressing vehement concerns about the number of overseas visitors, 1 million of whom have taken jobs in recent years, and about the 5 million people who could work but do not, people move on and say, “And that person down the street has a plasma TV and so on, and they have not worked a day in their lives.” We have discussed this important and serious issue. We need to encourage people to take responsibility and to work, and not encourage them through amendments such as amendments 23 and 24, which would allow people to claim benefits despite having £50,000 in the bank.
This whole strand of thinking is symptomatic of a way of thinking that has caused the number of working-age people in relative poverty, after housing costs, to rise from 6.5 million in 2001-02 to 7.9 million in 2009-10. That is a staggering rise. We have to bear it in mind that in those years this country enjoyed the most massive boom, yet a whole load of our countrymen slipped further into relative poverty. It is not just a question of intergenerational poverty or of households that have not worked for ever and ever; it is a question of going into relative poverty. The message sent by amendments 23 and 24 is not one of responsibility. It is not a message that says, “Look, we are on your side. You’re hard-working. We will support you.” The message sent by the philosophy of universal credit is one of responsibility: “If you work hard, you will be better off, and you will not be subjected to the dependency culture.” That has to be one of the most important and essential messages that the Government can send, and it is why the Bill will, in my view, be the most important Bill in this Parliament.
I hope that the House will indulge me on one more amendment—amendment 33, which deals with pensions. If a man aged 66 is married to a woman aged 45, how can it be fine for that woman not to be incentivised to work? I am deeply troubled by this. I put this issue to the right hon. Member for East Ham, and the Minister asked him whether he supported the principle, and thrice the cock crowed, yet he would not deny it—or, indeed, not deny it. It was wrong to table an amendment defending that principle, and to say, when an argument was made saying, “How can it be right?”, “Ah well, isn’t it bad of the Government to sneak it into a schedule.”
The House deserves a better argument than that for why previously people were not incentivised to work, and why the Government are wrong to take action on it. The Government are right to take action, and they are right to send the message that work should always pay, and that, if someone is of working age, they really should work. We have a massive mountain to climb: there are 5 million people in this country who could work but do not, who have been encouraged to live in a dependency culture, and who would be worse off if they went into work. There is much evidence that that sucked in 1 million people from abroad and overseas to fill the 1 million or so jobs created during the recent boom, while we cast 5 million people on to the slagheap of welfare dependency.
I suspect strongly that encouraging the 5 million people who could work but do not, and making work pay for them, will solve the problem of people being sucked into the UK from overseas. The problem might well solve itself, however, through a demand for employment from our countrymen. When that day comes, and if universal credit achieves it, it will be a great day for this country. It is fundamentally wrong that we should sell the pass on the hopes and aspirations of millions of people in this country who could be working, achieving and fulfilling their potential, but who for too many years have been thrown on the slagheap of hopelessness, dependency and failure. I am a Tory because I like people to succeed; I like people to do well; I want people to make money; I want them to be rich; I want them to be captains of industry; and I want the economy to grow even quicker, and I think that universal credit is the way to help more people to achieve and succeed in their hopes and aspirations, to get into work and to do really well.
We have had an interesting debate, and I welcome the Minister’s concession on the affirmative procedure for the initial version of some of the key regulations that will be introduced under the Bill. I would have liked him to go further, but I welcome the extent to which he has changed the Government’s position and welcome the amendments he has tabled to effect that change.
Unfortunately, the Minister gave us nothing else that I can welcome. It is an extraordinary failure on the part of Ministers that we do not yet have Government proposals on child care, free school meals or concessions on prescriptions. The Minister said that it did not matter, because there were still two and a half years to go before universal credit was introduced, but actually it is only two and a quarter years now—it was two and a half years three months ago, but they failed to come up with their policy proposals and three months have passed. It is not simply an academic issue, because even if all the policies had been clear two and a half years in advance, it would have been a stretch to get the IT in place by October 2013. As it is, the Government have not decided on those key parts of the policy, and I suggest that there is now no chance that it will be ready. However, that is a discussion for another day.
Charlie Elphicke accused the children’s charities of throwing rocks at the Government. It is out of order to make that criticism of Barnardo’s, Citizens Advice and the Children’s Society. Let me quote their letter:
“We welcome the removal of the hours rule”— they welcome the provision that the hon. Gentleman supports—
“but the evidence shows it is not possible to do this. . . within the current budget without a significant negative impact on work incentives for those working longer hours.”
That is not throwing rocks but simply setting out obvious home truths, of which the Government need to take account.
No, I will not. Our position is that the Government need to listen to what people are saying to them and that new clause 2 provides protection. We do not want the work incentives worsened in the way in which charities point out.
It sounds as though the Government have abandoned the idea of a payslip for every universal credit instalment. I am disappointed—that was a good idea. Sadly, the Minister reaffirmed the Bill’s extraordinary penalties on saving. He gave no firm assurances on self-employment income, even though Guto Bebb recognised the importance of that. The Minister appeared to acknowledge that there was a problem, which, I suppose is progress from his previous position.
The Minister gave us no assurances on adequate welfare advice. My hon. Friend Yvonne Fovargue made a telling case about that. Many will be dismayed by his dismissal of the case for retaining support for disabled children. There is genuine worry about the impact of his refusal to ensure that benefit for children is paid to their main carer.
I wish to divide the House on new clause 2 on child care, on amendment 23 on the saving cap and amendment 27 on support for self-employed people in universal credit.