Welfare Reform Bill — Report (5th Day) (Continued)

Part of the debate – in the House of Lords at 9:00 pm on 23rd January 2012.

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Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions 9:00 pm, 23rd January 2012

My Lords, Amendment 60 would require us to provide for a period of 26 weeks during which we could not apply the benefit cap. The period would start from the date that a claimant's welfare benefits first exceeded the level of the cap. It would therefore not only apply to new claimants, but also to existing claimants who have a change of circumstance that results in the level of the benefits that they receive exceeding that of the cap. We have said all along that we would look at ways of easing the transition for families. We do not want families to be taken by surprise by the cap or to create problems that people can avoid by taking appropriate steps. We want to ensure that people who might be affected by the cap know what to expect and can consider the options open to them.

There has been a lot of speculation in the press about whether a grace period is what the Government have in mind. Clearly, a grace period could be a way of easing transitions, especially for people who have recently been in work and can be expected to return to work within a short period. A grace period would mean that their benefit entitlement would not be affected when they first leave work. This would avoid the risk that they would be prevented from looking for work because of the need to adjust their circumstances because of the cap. That point has been made in the debate.

However, people who have recently enjoyed a high income are better able to deal with temporary shortfall and can and should be expected to have made their own provision if they know that there are limits on benefit entitlement. A grace period also carries the risk that people are likely to stay on benefits for longer than they would otherwise simply because a higher rate of benefit is temporarily available to them, so while the grace period approach is clearly one possible approach, it needs careful consideration. Issues with run-ons and things like that would need to be looked at very carefully. We also need to consider whether other approaches may be just as effective or indeed more effective for some groups. What I can say today, as I said in Grand Committee, is that we are well aware of the issues, we are confident that we have the powers we need to ease transitions and we will consider the case for a grace period along with the other options that might be available.

Amendment 60A seeks to exclude carers from the benefit cap. For carers the benefit system is designed to provide financial support where caring responsibilities prevent carers working full time and, as such, carer's allowance should be treated in the same way for the purposes of the cap alongside other income maintenance benefits. However, households which include a member who is in receipt of DLA, PIP on its introduction, attendance allowance or constant attendance allowance, will be exempt from the impact of the benefits cap. Households where a member receives carer's allowance but no members receive DLA, attendance allowance or constant attendance allowance, will not be so exempt. As the noble Baroness, Lady Lister, who is a fast reader, pointed out, the revised impact assessment states that 5,000 claimants fall into this group. One of the reasons that the number is rather less than one might have expected-or that I suspect the noble Baroness, Lady Hollins, expected-is because we are looking at two benefit units, so the disabled person retains all their disability benefits and the rest of the benefits are received by the other householder. That is one of the reasons why the figures net down to rather a small number.

I acknowledge and re-acknowledge the vital role that carers fulfil, but I must return to our belief that it is not right that those on benefit can receive more than the average family wage. In response to the question on behavioural change from the noble Baroness, Lady Lister, one thing we are not looking to encourage is a change in the carer's behaviour so that they stop caring. That is absolutely not where we want to go. However, if the person being cared for is in a separate household, there is no obvious reason why the cap should not apply. Many carers of working age want to retain a foothold in the labour market where possible, not just for their financial well-being but to enhance their lives and the lives of those for whom they care. Universal credit will provide support for carers and improve their opportunities to maintain links with the world of work. Carers who move into work and become eligible for working tax credit will be exempt from the cap.

Amendment 61 seeks to place in the Bill an exemption from the benefit cap for households who are provided with interim or temporary accommodation by a local authority. I have already said in my response to Amendment 58D that it is too early to say how we are going to treat people in temporary accommodation for housing costs purposes in 2013 and beyond. Following our informal consultation with key stakeholders last year, we are considering the policy design for temporary accommodation and will share more details about our plans before too long.