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The Welfare Reform and Work Bill has to be seen in the context of the announcements on the living wage and the increases in tax allowances. The overall theme of increased pay, full employment, lower tax and reduced reliance on the state is one that I support. I particularly welcome the commitment to apprenticeships and the support for troubled families. At the same time, it is vital that support is maintained for those who cannot work or who need help to get into work. It is therefore right that the DLA and PIP are excluded from the welfare cap and the freeze on benefits, and that, contrary to some pre-Budget reports, they will not be taxed.
I shall address some of the details of the Bill, but before doing so I want to highlight one part of the interplay between pay, tax and benefits that must be addressed, and that is savings. One of the great advances of the 20th century was the growth of various kinds of social insurance to guard against or smooth out the risks of everyday life. In the UK, the NHS is our health insurance, and our free primary and secondary education system is our insurance against the school fees that most parents in the world have to pay. The question is how to insure against the other basic costs of life, such as food, housing, energy and transport. The benefits system is designed to do that, but it is increasingly at the level of a safety net, as many Members have said. Benefits provide a minimum and are expected to be a stopgap until someone is able to return to work.
That being the case, we need to support people to make additional provision for the times when they are out of work, for whatever reason. That is why I believe that we should look closely at lifetime savings accounts that provide substantial incentives for people to save and that can be drawn down in times of need to supplement benefits.
I shall now look at points in the Bill or relevant to it that constituents have raised with me. There are many, but I shall focus on five. First, I would like to see clear action on making the use of sanctions fair and consistent. Benefits are, as I have said, a safety net and if that safety net is withdrawn, albeit temporarily, the situation becomes unsafe. Sanctions must therefore be used only where there is a deliberate and repeated failure to comply with conditions.
Secondly, we need to know more about the conditions surrounding the removal of housing benefit from the under-21s. Although that proposal is not covered in the Bill, the rules may be brought forward in the near future. I know that the Department is working closely with young people’s housing providers to ensure that vulnerable young adults are protected. My major concern is over reaching a fair and workable definition of “estrangement” for situations where young people can no longer live with their parents because the relationship has broken down. We must ensure that proper provision is made for their housing in such circumstances.
Thirdly, we need to examine carefully the proposed removal of the work-related activity component of ESA and the equivalent in universal credit. It was my understanding —others have said the same—that the component was designed to meet the additional costs that someone who has a health condition may need to pay. I do not understand what has changed.
Fourthly, the replacement of the child poverty measures with the life chances indicators means that there is no clear assessment of the position of families who are in work but on low incomes. I welcome the additional measures on worklessness and educational attainment, but we also need a realistic income-based indicator for those who are in work.
Finally, we have to appreciate the impact that the reduction in rents will have on the building of additional social housing. Perhaps we need further capital investment by the Government to offset that.
A combination of higher wages, lower taxes, incentives to save and a lower dependence on welfare, with proper support, is the right way to go, but, as always, the details are essential, as is the phasing of the measures.