Universal Credit Regulations 2013 — Motion to Approve

– in the House of Lords at 3:55 pm on 13th February 2013.

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Moved by Lord Freud

That the draft regulations laid before the House on 10 December 2012 be approved.

Relevant documents: 17th Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument), 24th Report from the Secondary Legislation Scrutiny Committee.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions 3:57 pm, 13th February 2013

My Lords, I shall speak also to the Universal Credit (Transitional Provisions) Regulations 2013. This is the first of our debates this afternoon on a series of welfare reform regulations that together will bring forward fundamental changes to the welfare state.

First I will say how grateful I am to the many Members of this House who have taken a close interest in these reforms. Many noble Lords have attended various briefing sessions intended to explain and debate key policy details, keeping up the dialogue that started during the passage of the Welfare Reform Act 2012. This House has been, and will continue to be, invaluable in shaping our reforms, whether on PIP or universal credit.

While some areas of the regulations are necessarily quite technical and detailed, at the core of our reforms we are creating a new relationship between the individual and the state. These regulations will introduce the universal credit that lies at the heart of our welfare reform programme-a single, income-related benefit for working-age adults.

Universal credit is intended to be radically simpler than the complex web of tax credits and benefits that it replaces. We have made a deliberate choice in this. It would be all too easy to replicate the current system in all its complexity. Some noble Lords have criticised us for relying too heavily on a rational model of human behaviour. We know that incentives work only if people can understand them and can see that with each and every hour of extra earnings they will be better off. Therefore, these regulations deliver a single taper of 65% instead of multiple and sometimes overlapping tapers, and an end to people cycling between different benefits and tax credits when their circumstances change.

Given the undoubted importance of these reforms, when draft regulations were ready in June last year, my right honourable friend the Secretary of State invited the Social Security Advisory Committee to undertake a special exercise to scrutinise them. The committee undertook a public consultation exercise as part of its review and produced a very helpful report. In our response, published on 10 December, we accepted most of the committee's 36 recommendations and welcomed the acknowledgement that the Government's proposals for simplifying the benefit system have the broad support of a significant number of consultation respondents.

At the same time, the department undertook extensive stakeholder engagement in workshops and smaller meetings with individual bodies. As a result of this valued input, the policies expressed in these regulations take account of the views of many interested parties. I will give a couple of practical examples of where we have listened. We discovered that claimants found the phrase "earnings disregard" incomprehensible, so I can announce that this phrase has been abolished. I suspect that the only people who understood it are in this Chamber today. Noble Lords will be pleased to note that the regulations now provide for "work allowances". With regard to self-employment, the Government have decided that where a claimant has been self-employed for fewer than 12 months, a start-up period will be granted. This means that claimants will not be required to satisfy work search or availability requirements, and the minimum income floor will not be applied, giving them time to concentrate on developing their business. The Government have also decided to allow further start-up periods for self-employed claimants -one new start-up period every five years. I can further announce today that when we migrate people over to universal credit who are already running their own business, we will provide a similar six-month grace period before they need to make any adjustments under universal credit. In addition, the regulations now provide that 100% of contributions to an occupational or personal pension scheme will be disregarded when calculating earnings.

The Universal Credit (Transitional Provisions) Regulations will enable the universal credit pathfinder to be launched from 29 April 2013. That is six months earlier than we previously said universal credit would start, so we are not just on time but, in this case, ahead of time. However, it is important to stress that the pathfinder is a deliberately limited first step. Its purpose is to enable us to test basic processes and systems, and to make sure that the core around which universal credit is built is working effectively before being rolled out nationally. That is a sensible approach to such a large-scale programme of change. It is an approach that we have planned for and have always intended to take. Many noble Lords have urged that we do not rush into implementing reforms on this scale, and organisations such as the Child Poverty Action Group have made a similar point. I am pleased that we all agree on that.

During the pathfinder, a restricted group of people will be able to apply for universal credit, limited to the more straightforward cases. The Universal Credit (Transitional Provisions) Regulations specify those cases in detail. Broadly speaking, we will accept claims from jobseekers, including people with very low earnings, who are single and fit for work and who have no children, are not homeowners and do not have any awards of existing benefits or tax credits. The pathfinder will operate in four local authority areas in Greater Manchester and Cheshire: Oldham, Tameside, Warrington and Wigan. Noble Lords will have noticed that the regulations do not include those locations. That is because the order commencing the relevant provisions of the Act will do so.

We anticipate that we will accept around 9,000 claims for universal credit during the pathfinder. That will be our first step towards our phased approach to the national rollout. From October, we will see the scope of universal credit extending beyond the pathfinder in three ways. First, a wider group of people will be eligible to apply. We will also extend incrementally the geographical scope of universal credit, and we will extend and enhance the capabilities of the online service. We will make adjustments and refine our plans as we learn lessons from each stage of the rollout from the pathfinder onwards. That means that we will make further sets of transitional regulations as we move through the delivery phases. Later this year, therefore, regulations providing for the national launch will be laid in good time before it starts in October.

I turn now to the Universal Credit Regulations 2013. These set out provisions for universal credit including entitlement, elements of the award, calculation of income and capital, and claimant responsibilities. For claimants in paid employment, the automated link to the real-time information on earnings from the HMRC PAYE computer system is a key innovation. DWP and HMRC officials have worked closely together on the requirements and delivery of RTI and its support for universal credit. The RTI pilot is going well. HMRC is on track to expand the pilot and expects to have around 6 million individuals' records reported in real time by March 2013.

The department published an updated impact assessment on universal credit in December 2012. An estimated 3.1 million households will be better off by an average of £168 a month under universal credit. This includes an expected improvement in the take-up of benefits where people do not currently claim all their entitlements. Potentially, the equivalent of up to 300,000 additional people will be in work from the improved financial incentives. The extra investment with childcare costs to people working fewer than 16 hours per week is now expected to help 100,000 additional families at a cost of £200 million. We are investing £2 billion upfront on the development and delivery-for example, on new IT-of universal credit in this spending review. Over the longer term, this will help to deliver annual administrative savings estimated at £200 million per year.

There is rightly a lot of interest in guidance to decision-makers. I am grateful to the Secondary Legislation Scrutiny Committee for its report on the Universal Credit Regulations which drew this to the attention of the House. On 31 January, I placed sections of the draft guidance in the Library of the House. These cover key aspects including childcare, the claimant commitment, good reason, hardship payments, and exempt and temporary accommodation. My officials have worked with stakeholders to produce the guidance and, having consulted the Social Security Advisory Committee, have taken into account its feedback. We were also pleased that the Commons Work and Pensions Select Committee supports the principles of universal credit, and we welcome the work it has done in its recent report.

The main route to accessing universal credit will be through digital channels. Supporting channels such as telephony will continue and face-to-face support will still be available to claimants locally. The department has worked closely with HMRC and local authorities to develop these arrangements, and on 11 February we published details of the local support services framework. Universal credit will generally be just one monthly payment per household, making it easier for people to understand their entitlement and to take responsibility for managing their own finances, but in order to support people in vulnerable situations we have developed a payments exception service. This service includes budgeting support and the facility to pay some people on a fortnightly basis, with a view to moving over time to monthly payments. I know there is a good deal of interest in this House about how the arrangements will work for claimants with the most challenging circumstances. Let me reassure noble Lords that the guidance sets out the factors we will consider, such as where someone has a history of rent arrears, a drug, alcohol or gambling addiction, or mental health issues. It places securing the rent payment to the landlord, where necessary, as the first priority. Crucially, it also explains that we will offer help to people to become financially independent wherever possible.

In the Government's view, the regulations are compatible with the European Convention on Human Rights. However, the House may wish to take note of paragraph 6 of the Explanatory Memorandum with regard to the judgment in the case of Burnip and others, which sets out the position pending the Secretary of State's appeal to the Supreme Court.

I commend the Universal Credit Regulations 2013 and the Universal Credit (Transitional Provisions) Regulations 2013 to the House and ask noble Lords for their approval.

Amendment to the Motion

Moved by Baroness Sherlock

At end to insert "but that this House regrets that the regulations will not achieve their aim of making work pay for all and in fact will provide lower work incentives for 2.1 million households; will have the effect of penalising savers; will result in a cut in childcare support for working families; will result in cuts to the income of some of the poorest and most vulnerable in the country and will have a disproportionate impact on women and lone parent families; do not meet the needs of disabled people; do not provide adequate treatment of small businesses and the self-employed; and risk pushing many families into arrears and homelessness".

Photo of Baroness Sherlock Baroness Sherlock Labour 4:00 pm, 13th February 2013

My Lords, in rising to move an amendment to the Motion, I thank the Minister for his co-operation and for the work that he and his officials have done to help us to understand the very complex regulations we have had to work through in preparation for today.

I believe that this is probably one of the most important set of regulations your Lordships will debate this Session. The main Universal Credit Regulations operationalise the workings of the new system of means- tested benefits for most working-age people. This is huge. They constitute the framework which supports the huge tent that is universal credit, into which millions of people will be moved over time. The Universal Credit (Transitional Provisions) Regulations provide the detail of how people will move into the tent. In working through this considerable amount of material, I have been impressed by and grateful for the detailed work done by many stakeholder organisations, including the Children's Society, Citizens Advice and many others. We on these Benches also broadly support the principle of a single structure for working-age support, but we have always said that the design and implementation are all. These regulations are too important to the many citizens who depend on the money that the state provides to them for us not to go over them in detail.

Now that we have most of the regulations and some, but not all, of the guidance, what was a pile of canvas on the floor is starting to take shape as a tent. It raises some very significant concerns, the first of which is money. In the Second Reading of the Welfare Benefits Up-rating Bill on Monday, we heard of the huge losses already being faced by many low and middle-income families, with more to come. We are about to find that significant numbers of people are going to be worse off as a result of universal credit. The impact assessment states that,

"3.1 million households will have higher household entitlement under Universal Credit", than now; but that 2.8 million will have a lower entitlement and that 300,000 households will lose more than £300 a month. These are significant sums. There is of course transitional protection at the point of moving across if someone is actively moved on to the new system. However, if someone claims universal credit because they have lost their job or had a baby, they will not get any protection. As the Welfare Reform Bill went through both Houses of Parliament, we were repeatedly assured that the new system would make sure that work always paid and that more work would pay more. I have been struggling to reconcile those assurances with the views of many experts outside the House who have made representations to most of your Lordships.

Regulation 22 sets out the way in which income from work will be treated for the purposes of withdrawing universal credit. To understand what that will mean in practice, we have to go through the impact assessment, which contains details of what are called "participation tax rates"-which reflect how much a claimant would gain from moving into work-and "marginal deduction rates", which reflect how much better off they would be from increasing their earnings once they were in work. When I read this, I was astonished to find that more people will see their marginal deduction rates rise than fall; so some people will get to keep more of every pound that they earn than now, but more people will get to keep less of every pound that they earn than now. Some 1.8 million first earners will have higher marginal deduction rates under universal credit and 1.3 million will have lower ones. Similarly, most second earners will face higher marginal deduction rates than now, and couples with children are generally likely to see an increase rather than a decrease in those marginal deduction rates. How can this be in a system that is designed, surely, to make work pay? I think the culprits are found in different places.

First, there is childcare. Currently, the childcare element of working tax credit covers up to 70% of childcare costs for children in working families. However, many low-income working families can currently get up to 96% of their childcare costs covered through the tax and benefits system. The extra 26% comes through an allowance within housing benefit and council tax benefit. Around 100,000 families-about 20%-who get help with childcare through the system get this extra money. But under universal credit, that will not be around. The Children's Society estimates that this will leave some of the lowest-income working families paying more than seven times as much out of their own pockets.

Barnardo's did some detailed figures and discovered a whole series of circumstances in which parents could be worse off by doing more work-precisely what the system is not meant to do. For example, a lone parent with two young children ends up in effect paying to work once she starts having to use paid childcare rather than free childcare. Does the Minister accept that there is a problem in making work pay for parents who pay for childcare?

The second area is mortgage interest. The regulations provide for claimants to receive help with mortgage interest in certain circumstances. But paragraph 4 of Schedule 5 states that once that claimant does any paid work at all, all help with mortgage interest stops immediately; at present they can get help if they do up to 16 hours' work a week. Aside from being rather ungenerous, this creates a huge cliff edge for someone wanting to move into work and goes against the grain of making sure that under universal credit work-even a few hours-will always pay. The new work allowances are little or no help if you want to do only a few hours' work.

This is not just an issue for rich people who own houses. I spent some years running a charity working with single parents, which has now merged with Gingerbread. Over the years I met many women who had to give up their jobs when their partner left because all the childcare arrangements had been predicated around having two people to look after the children. They were usually desperate to stay in the marital home for a time to try to give the children some stability when they had just lost one parent, but when that single parent began to try to get a foot back into work she would instantly lose all the help with her mortgage, which could put her home at risk. Surely that does not make any sense. Can the Minister tell us whether the Government will think again on that? In particular, can he reassure the House that in those circumstances somebody would be deemed as having what is called "good cause" in the regulations not to take a job if the result was that, for the sake of a few hours' work, they could lose their home?

The third area is the self-employed. I believe that my noble friend Lady Donaghy will once again take up the cudgel on behalf of the self-employed people of Britain, for which I am sure they are enormously grateful. We have been very impressed by her in this. I will not linger, given that she will do that. I am very grateful that the Minister has made some concessions but it is still the case that the way universal credit treats the self-employed is really very problematic. It could create serious disincentives to starting a business. Given the lack of growth in the economy, we should not be doing anything to discourage anyone from starting a business or trying to develop it.

The Social Security Advisory Committee recommended that the Government review their approach to self-employment, including introducing more flexibility. In particular, it noted:

"The inability to roll forward losses from an earlier assessment period is likely to disadvantage unfairly those self employed individuals and small businesses whose income flows are irregular and/or seasonal. The Committee recommends that this is looked at again".

Can the Minister tell the House if this is one of the things on which the Government have moved and, if so, how that will work in future?

The next area is disability. There have been some very harsh consequences of the way the Government have chosen to distribute the money available for disability through universal credit. The details and likely effects were catalogued in great detail in Holes in the Safety Net: The Impact of Universal Credit on Disabled People and Their Families, the report of the inquiry chaired by the noble Baroness, Lady Grey-Thompson. Now that the regulations have given us the final details of the levels of entitlement, it is clear that a great many disabled people stand to lose often significant sums. I am sure that other noble Lords will comment on this, but does the Minister accept the figure in the report by the noble Baroness, Lady Grey-Thompson, that 230,000 severely disabled people who do not have another adult to assist them could lose up to £58 a week as a result of the abolition of the severe disability premium and the failure of universal credit to provide a counterpart to this?

Then there is housing. Regulation 26 and Schedule 4 contain details of the new size criteria for social housing-the much criticised bedroom tax, which will penalise some 660,000 households, two-thirds of which have a disability. Despite the Government claiming that this was about freeing up larger housing, we all know that smaller properties do not exist, a point underscored by the original impact assessment, which made clear that the Government were assuming that most people would stay put and just take the hit in their benefit. People could lose an average of £14 a week. I know that this is something to which my noble friend Lady Hollis intends to return.

When reading the regulations, I was disappointed to find that the Government had not responded to any of the specific hardships that were highlighted during the passage of the Bill. Has the Minister addressed the problem of foster carers, who need a spare bedroom to be able to undertake emergency fostering, or of families with disabled children?

On work incentives, it is impossible to know whether anybody will be better off until we know what will happen to passported benefits in universal credit. The Secretary of State for Work and Pensions indicated at the start of proceedings on the Welfare Reform Bill in another place that he would announce proposals on eligibility for free school meals before that committee finished its work. We are still waiting. Can the Minister tell the House what is happening with passported benefits and can he assure us that the new regime will protect the incomes and work incentives of claimants?

Then there is conditionality. The regulations seem on the face of it to contain a serious tightening of the conditionality rules applying to single parents. I shall give just a few examples. At present, a single parent with a dependent child aged 13 or over can limit the hours that he or she is available for work according to their caring responsibilities. Under the regulations, they can do so only if they can show that they have reasonable prospects of finding work. How will that work? If I were a single parent in that circumstance and the only jobs in my area were night shifts in a petrol station, would I be required to take that job? Or would the fact that I could not leave my 13 year-old at home alone be definitely good cause for my being allowed to turn that job down? What would happen to a single parent whose child was excluded from school or who was made the subject of a parenting order? At the moment, the regulations provide that a lone parent is allowed to limit her work-search requirements in those circumstances in the interests of the child but, again, there is no such counterpart in the regulations. What if she could not afford or find suitable childcare? Again, the current regulations could give her protection; the new ones do not. A single parent who refused to take a job for any of those reasons could be sanctioned for three or six months, or even three years, of her benefit.

The Minister will say that this is all in guidance, but guidance is not legally binding. It is entirely down to the discretion of the individual Jobcentre Plus worker. We have seen some very bad cases in the past where, even with the existing regulations, Jobcentre Plus advisers have made decisions that are against the spirit of the regulations. Will, even at this last moment, the Minister reconsider this? If not, will he confirm for the record that no single parent will be sanctioned for the reasons that I have cited? Will he agree to guarantee that all the flexibilities currently in regulations for single parents seeking work will at least be spelt out in the claimant commitment, so that both the adviser and the lone parent can see together what she is or is not required to do?

Finally on conditionality, Regulation 32(2)(b) states that claimants who become sick and receive statutory sick pay can be treated as meeting the work condition for receiving universal credit, but self-employed people cannot claim SSP. Can the Minister confirm what happens to them?

I turn briefly to the transitional provision regulations. The Minister will be aware that there has been much concern about the timetable, but I am delighted to hear today that all is going to time. There have been concerns also about logistics. When the regulations were debated in another place, my right honourable friend Mr Stephen Timms asked the Minister how the IT was going. In particular, he asked whether the universal credit IT had been taken off the "at risk" list maintained in the Treasury. He did not get an answer, but I know that the Minister here is the man who will know, so I look forward to hearing all about that.

Will everyone in the pathfinders make their applications for universal credit online? If someone in the pathfinder is employed but her employer is not in the real-time information system, how does she get her monthly income information to the DWP to support a universal credit application?

We have heard from the Minister and read in the regulations who will be able to get universal credit in the transitional stage when the tent first opens its flaps for business. There are to be four pathfinder areas, but you really have to be very special to get through that flap in the first place. The Minister mentioned a few criteria but, in fact, you have to be between 18 and 60.5, single, British, and not pregnant or just have given birth. You must declare that you are fit for work and not be entitled to any existing benefit or tax credit. You must not have children or young people living with you; not be liable to pay maintenance under the CSA; not be a carer; have no self-employed earnings; not be in education or training; not be awaiting a decision on entitlement to a relevant benefit; not be deemed not to have mental capacity; and be deemed fit for work. Your capital must exceed £6,000; your earned income in the next month must not exceed £270 for those aged under 25 or £330 for those aged over 25; you must not be homeless and you must be living at your normal address. You should not be in supported or temporary housing and you should have a national insurance number and a bank account. I think I know him, his name is Mr Smith; perhaps I could introduce him to the Government. I am glad to hear that there are 8,999 other Mr Smiths, but how much does the Minister believe will be learnt from this?

It is true that universal credit is opening ahead of time, but not for many people. When will the Government be able to test that those systems work well with claimants who are inconsiderate enough not to meet all those criteria? That could be important. For example, how many people will be in the system by, say, next April? How fast will this progress?

Finally, I have a specific question. Regulation 13 covers what happens if a claimant makes a mistake filling in the form, is invited into the pathfinder and then discovers, not unreasonably, that they did not meet one of the conditions and therefore should not be included at all. They can then go off to claim another means-tested benefit or tax credit, but the new system is very ungenerous on backdating. I understand that DWP will deem the claim as having been made on the date that the universal credit claim was made, provided that it is not more than a month later. Will the claim definitely be processed in a month? Although that sounds a small point, if for some reason it takes longer than a month to process the claim, can the Minister guarantee that someone would have their claim backdated to the date that the universal credit claim was made?

There is so much more that I want to ask, but I know that other noble Lords want to speak and we have much to get through. There are some major questions to be answered about the way that the regulations operationalise universal credit. Is the IT up and running? Will work pay for all? Will doing more hours always pay? Will claimants be sanctioned for not being able to find decent childcare? Can disabled people afford to work? There is so much more. I very much look forward to questions from other noble Lords and to the Minister's answers. I beg to move.

Photo of Lord German Lord German Liberal Democrat 4:15 pm, 13th February 2013

My Lords, I congratulate the noble Baroness, Lady Sherlock, on asking a broad range of questions. I was going to ask some of them myself and so I will not repeat them. A lot of other questions need to be raised. I am grateful also to the Secondary Legislation Scrutiny Committee, which advised us:

"We ... hope that DWP will ensure that sufficient time is allowed for members to absorb fully the content", of the regulations,

"prior to the debate".

My absorption rate may be generally high, but having received about an hour ago a further five and a half pages of information, I am doing my very best. We have had so much material to look at and so it is very important that we discover very swiftly the intentions of the regulations.

The support that we as Liberal Democrats give to the introduction of universal credit is constant, but the architecture now being put in place raises a large number of questions about much of the detail. I appreciate that much of it has been in guidance rather than in the regulations themselves. We do not have all the guidance at present and some of it is stamped "Not official" but is guidance for guidance that may well become official in days to come.

I start with the back end of the regulations, which is monitoring and evaluation. Noble Lords who sat through the process of the Welfare Reform Bill becoming an Act will know that that is an issue with which we vexed ourselves greatly at the time. I am pleased to have received the programme produced by the Government, which tells us that we will be engaged in what is called the theory of change model. How far does that proposal vary from the traditional route for evaluation methodologies used by the Department for Work and Pensions-in fact, used by the Government as a whole-particularly in respect of behavioural change? If there is one thing that we must learn from the regulations, it is that they need to be continually reviewed and changed. I am pleased that the guidance on some of the sets of regulations that we are debating today says that they will be continually updated. However, we need to know what the process is for that and particularly to have some sense of a timeline and of how Parliament can be engaged with the outcomes, and not just in the set-piece debates and milestones that have been the fairly traditional route for this Parliament to deal with these matters.

I may be starting at the rear end but there are a number of very important questions, some of which were raised by the noble Baroness, Lady Sherlock. I start with the question of the claimant commitment. I must ask my noble friend what the effect is on universal credit of the new regulations that were laid last night and the court ruling which preceded them. It seems that on the regulations which the court ruled to be not in accordance with the primary legislation, that was not about the content but rather in respect of the primary legislation to which they related. I should be grateful if my noble friend could reassure us that these regulations in no way impact on that court decision or on the new regulations which were laid last night by the Government and are now in effect.

More importantly, in respect of the claimant commitment and the worked examples, which I found very useful indeed, is there not clearly a difference between commitment and a contract? They do not appear as a contract but do appear to be very much a commitment by the claimant, without any recognition of what level of support Jobcentre Plus, and the Government as a whole, will provide for that claimant. I wonder whether there might be an element of expression of the sorts of services that a claimant could rightly expect to receive to assist a claimant through the process laid out in the claimant commitment.

I turn to the sanctions regime, on which we have now had some detail. The guidance we have received refers to "good reason" as opposed to good cause. The guidance on good reason says that it is not defined in law but that good cause has been considered in case law. I wonder whether there is a deliberate reason for choosing those different words because that might then avoid the case law, which has already been gone through, in order to provide what might cause a reasonable person to act as they did. The guidance itself seems to draw heavily on the good cause experience as provided through the courts. I wonder whether there are significant differences within the guidance provided on how good reason might be shown and how good cause can be shown under the current legislative procedures.

The issue of monthly awards has concerned many Members of your Lordships' House as has the issue of direct payments to landlords. On the monthly awards, there is clearly a need for extensive money advice. I looked at the guidance we were given on the local support services framework. It states in outline only that it starts to draw up a programme for a relationship between central and local government on welfare issues. I wonder how far that debate has gone and what the Government's intentions are in order to be able to deal with, and react swiftly to, difficulties which individuals may have. We could think of many examples where it might be necessary either to shift payment between one claimant and another in a household or to move to a more frequent system on a time-limited basis. I wonder whether there is pressure in the guidance on the decision-makers to be able to implement that fairly rapidly.

We have also been given a set of criteria that are the factors to consider for alternative payment arrangements. There are tier one, which is headed with a red bar, and tier two, which is headed with a green bar, but no weightings are given to those factors. For transparency purposes, I wonder whether my noble friend would like to outline some of the weightings that are to be given to those factors so that people would know when it might be appropriate for them to be able to find exceptions to the monthly awards and direct payments regime.

My noble friend made strong play, and I think he was supported very widely, of finding new financial products to be able to help people to manage their money on a monthly basis. We have frequently talked about jam jars and jam-jar accounts, and about the difference between prepayments and direct debits. The evidence at paragraph 57 in the response from the Government to the SSAC was that 1.3 million potential new universal credit claimants do not use a transactional bank account. I should like to hear some more today on what is going to happen to these new products. Are we going to see them in time for the pathfinders, and certainly for the rollout in October, to be able to take advantage of them?

On direct payments to landlords, an issue that I know many social housing associations are concerned about, the pilot studies so far show that 92% of the due rent has been collected on time-but of course that means that 8% has not been collected on time. When the pilots end in June, which is not far short of the October introduction and full rollout, will my noble friend be publishing the final arrangements as close to the June date as possible so that there will be some speed of engagement with individuals' difficulties? Will he be indicating how third parties, such as landlords and so on, will be able to make an intervention as swiftly as possible to ensure that rent is paid and collected?

In his introduction, my noble friend mentioned compatibility with the European Convention on Human Rights. This relates, of course, to the additional bedroom for a disabled child and overnight carer, and to paragraphs 10, 25 and 36 of Schedule 4 to the Universal Credit Regulations before us. Guidance will be relied on to supplement these regulations, but the guidance states that local authorities under the current regime, which is the one where the legal case stands, may wish to consider suspending the part of the housing benefit relating to the additional room. Does my noble friend accept that that puts people in a very difficult position as some local authorities may decide, as it is purely advisory and it is a consideration that they can make, that they should pay for an additional bedroom for a disabled child? That is what is being challenged by the Government but it is the current legislative position that they find themselves in. Some local authorities may provide the cash and others may not, but they are obliged to consider it. Therefore, it might be in the award but not paid or it might be in the award and paid.

I notice from the Explanatory Memorandum that new guidance is to be issued, with the Government saying that all this will not be decided for some time. With regard to the timescales that my noble friend often provides to your Lordships' House, when late autumn often becomes Christmas and early spring often becomes summer, the words "decided for some time" mean that it may be some years before the courts reach their final conclusion on this matter. I wonder whether we need to have that certainty now in regulations, or certainly in the guidance, to support those issues.

I shall conclude with the issues about digital. The Government are persuaded, of course, that "digital by default" is where we should be for applications and submissions regarding universal credit. I understand that only 14% of main benefit claimants currently put in a new claim online-that is in the local government briefing-but 45% said that they would need help or support to apply online in future. That is a very substantial number of people. The arrangements for supporting people are crucially going to be conducted through agencies, including local government. I notice that the Government have been working with the Local Government Association, the Scottish local government association and the Welsh Local Government Association to find a route forward on these matters. The document that the Government have provided us with, Universal Credit-Local Support Services Framework, states:

"This framework is the start of a conversation".

Can my noble friend say when the conversation is likely to end and when local government is likely to know how much money it will get in order to be able to provide those services? It seems to me that those supportive services need to be in place in advance of a rollout so that people know where to turn. For example, on online applications, where libraries will be the obvious place for undertaking such work, I wonder whether the conversation needs to come to a rapid conclusion. Will my noble friend indicate when that might be? There are also data transfer and data protection issues because people will need to be able to share information between one group and another.

That may all sound very negative, but the thrust of these regulations is in the right direction. However, when we are having such an enormous change to the structure of our welfare system, it is crucial that the necessary architecture is in place. I hope that my noble friend will be able at least to provide us with some indication of how Parliament can engage in the journey that is likely to take place over the next two years to ensure that we get the best out of the universal credit. That is the ambition we all want to achieve.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour 4:45 pm, 13th February 2013

My Lords, like my noble friend, I thank the Minister and the Box for the papers and seminars that we have found so helpful. I congratulate my noble friend on her powerful scrutiny of some very extensive regulations that effectively took 17 days in Committee to debate.

The noble Lord, Lord Freud, admitted that the regulations assume economic rationality. As a result, they are heavy on sanctions-in my view, appallingly heavy sanctions in Regulation 102 lasting for up to three years-believing that they can sanction people into the behaviour they want. However, as abundant research shows-I am sure that the Minister is familiar with it-and as the Trussell food bank network confirms, most people do not know why they have been sanctioned. It is as though it has happened to them. They live chaotic and confusing lives, to the intense irritation of the benefits staff. The CAB says that the claimant does not understand the responsibilities and the adviser does not understand the claimant. The personalised claimant commitment will, we hope, introduce an essential flexibility and headspace into the regulations, but I fear that the very clarity produces a yes/no, either/or approach to regulations and guidance that is not reflected in real life. Some of these issues have been raised by the noble Lord, Lord German.

The second issue is that we face major delivery problems, an issue perhaps associated with transitional arrangements. I want UC to work. I fear that on delivery we will be heading for a train crash. At one and the same time, the Minister is rightly introducing a new benefit architecture that will, however, confuse most people with its new rules, new conditionality, new sanctions, new tapers and new backdating rules and that has most benefits in, but some, from DLA to council tax benefit, out. That is the first thing that is happening.

Then, on top of that, come the cuts. Some benefits, such as HB, will be cut because of the bedroom tax. Claimants will think that it is DWP error and will go frantic trying to correct it. Thirdly, in the past they will have received their benefits weekly or fortnightly, but now it will be monthly in arrears. As nearly half of those in the bottom two quintiles are in work paid weekly, many will not cope and debt will grow.

Fourthly, for the first time, they will find their housing benefit paid to them and not to their landlord. Inevitably, on a monthly basis, it will be raided before the month is out to meet other bills. The DWP's demonstration projects show that 40% of tenants will find it difficult, and a quarter will need substantial, long-term support. The chief executive of Wakefield, one of the pilot areas, is reported to have said that people are now ceasing to pay their rent at all. That is from a pilot area where tenants have had considerable support. It is worth reminding ourselves that this demonstration project showed that 40% of tenants were in debt, already excluding rent arrears. Over 90% had no savings as a buffer. Over a third had sought help from the CAB.

Fifthly, these arrangements come as a single electronic payment, paid probably to him, leaving her and the children potentially vulnerable, when claimants have been used the past to separate flows of benefit, particularly to the one with children, and to a cash economy for food. And all the claims are online, although 30% of the poorest have no access to IT at all. Citizens Advice, which would have helped them, has lost nearly half its grant thanks to coalition Government cuts. Claiming benefits online would certainly terrify me. However, in exceptional cases, there will be face-to-face support. Will the Minister tell us what percentage of people he expects to take up that proposal? As these tenants do not have and cannot afford a word processor at home, their benefit claims cannot be interactive. They go to a community centre and fill in their forms online with the help of someone present, and then they go home. And then what? How do they get any interactive dialogue going should there be any query over, or error in, their submission? How will DWP manage this?

I greatly welcome the local support service, but the obvious hard questions are how many centres there will be, how many claimants there will be and how much new money there will be. Or is it another slice off the HB under-occupancy test for someone else? It cannot be left to district managers to decide, as is proposed. As it is, my housing association will be employing and paying new staff out of tenants' rents to provide the self-same welfare advice that, hitherto, trained CAB volunteers offered for free.

The delivery of any one of these seven major changes to benefits would need careful implementation. To bring in all seven at the same time seems like folly. I think that we are setting up UC to fail, and causing much misery in the process-and that is before the IT plays up and falls over.

UC is for the benefit of claimants. I fear that most of the delivery changes which I have listed will destabilise it and are for the benefit of the department, making UC harder for claimants to embrace and understand. I have been through ambitious change programmes, but nothing as ambitious as this. I beg the Minister to sequence these seven changes properly-to introduce them incrementally on an agreed timeline so as to take people with him. Yes, claimants will come across in manageable cohorts; that is entirely right. However, once in UC, they face all these seven delivery changes simultaneously. Those changes need to be phased in, as well as the claimants themselves.

I beg the Minister to consider, even at this late stage, a transitional year for claimants to be able to opt for fortnightly payments, split payments within couples and direct housing benefit payment to their landlord, while the claimants get their heads around UC and learn to work IT-itself a big enough challenge over the course of a year. At the very least, we should ensure that those who are treated as exceptional or vulnerable for the purposes of housing benefit payment are passported to the exceptional payment grounds within UC and vice versa. What estimate has the Minister made of the percentage of people who will be protected in this way under the heading of "exceptional or vulnerable"?

Finally, the regulations that worry me most are sanctions, hardship and housing. First, as regards sanctions and Regulation 102, if you are economically rational, as the Minister surely is, you also surely reward people who become compliant. You reward them for good behaviour. With three-year sanctions, what is the point of the claimant changing his behaviour if nothing happens as a result and he continues to be sanctioned? What message does the Minister think he is sending? The concession on holding down a job for six months is empty in this situation. Will the Minister at least follow the SSAC recommendation that when a claimant has complied, the sanction should be suspended? That is the message to get across. It then can be reimposed if the claimant breaches his conditionality subsequently. Otherwise, I expect this to be judicially reviewed. Will the Minister also ensure that when one person in a couple-for these purposes, I will assume that it is a male-is sanctioned, the payment is automatically switched to the main carer to protect the children?

Secondly, I should like to make a few comments on hardship and Regulation 116. The guidance is really helpful and very worrying. I believe that there are three problems. At the moment, you are automatically entitled to hardship payments if you are vulnerable-for example, if you have children-but you will not be entitled in future. All expenditure is to be scrutinised to see if the family is truly and deeply in hardship. Should they return the TV? What about smokers, Christmas presents, or train fares to attend granny's funeral? None of those is covered in the four basic criteria of health, housing, hygiene, food and so on that the Minister has put into regulations and guidance.

Iain Duncan Smith, I think, believes that poverty is primarily a moral failing. Like the Victorians, he is insisting that the poor must always live in the light and display their income and behaviour for scrutiny by their betters; that is, young, local office staff with often little experience of difficult lives. The intrusiveness of it all appals me. What is worse is that the hardship handouts will be, as far as I know for the first time ever, clawed back. A hardship handout now is a loan and not a reduced benefit entitlement secured for the vulnerable. Paying it back will in future cut the UC a claimant gets and will further increase debt, which is one of the major problems that all claimants will face.

Most disgraceful of all is that under Regulation 116 (1)(b), households get hardship payments for the vulnerable only if they have met compliance conditions. So why are we still sanctioning them? Why do they need to claim hardship payments at all? We have never made hardship payments conditional in this way, nor should we. Hardship payments meet needs-above all, those of children. They are a safety net. Instead, in these regulations, they are being treated as another lever to make sanctions and compliance bite. It is ugly and indecent. Are we going to refuse hardship payments to a lone parent where she and the decision-maker disagree about her availability for work given the age and vulnerability of her children? That is the sort of example that my noble friend Lady Sherlock described so effectively. The lone parent is sanctioned and is not compliant. She is refused hardship money. I hope and expect that this will also be judicially reviewed.

Finally, on housing benefit and Schedule 4, we now find that the bedroom tax may affect one-third of working-age tenants. They will be fined-because they cannot move-£14 a week for accepting the home which was offered to them in good faith a decade previously, which is where they have brought up their family. As a result, unable to pay that £14-they have no savings-they will go into debt, arrears, be evicted, bed and breakfasted, children traumatised. Then they will be rehoused, either in the private sector at higher housing benefit costs or back again in the same size accommodation that they left, since that is all that we have. This is simply because the DWP and the coalition have so decided. The issue of overcrowding, which the noble Lord sometimes quotes, is, as my noble friend said, utterly irrelevant because they are in different places.

So why are the Government appealing the Court of Appeal judgment in the Burnip case, which allowed disabled children to have their own bedroom? A decent coalition Government would not fight on. If they lose, as I fervently hope-we will not know until December-what estimate have they made of the numbers who will then be protected? What are the implications for middle-aged couples, whose ill-health requires separate bedrooms, or do we need to judicially review that as well? Will the Minister tell us what level of disability aids and adaptions have to be fitted into a property and at what approximate cost before the Government accept that it makes no sense for the household to move and to refit another, but smaller, property in its place? Housing bodies need to know to make sensible forecasts. Foster carers have been mentioned and I am sure that the Minister will respond.

Turning to another issue, following bereavement the Minister is allowing only three months' grace if someone is required to move house. I think that I am resilient, but I could not have coped with finding a house, packing up and moving within three months of my bereavement. I was wiped out. The distress of a forced, speedy move from the home built together is like being bereaved twice over. SSAC called for 12 months' grace, not three months. Will the Minister, in all decency and compassion, please agree?

I have one final housing point. At the moment, households where an unemployed person under 25 years old lives at home getting £56 a week JSA do not incur non-dependant adult deductions. In future, they will lose £68 a month, the same as those on higher benefits or in work. That seems grossly unfair. If he is economically rational, as no doubt he is, he will increase the HB bill by finding separate accommodation of his own and leaving home.

We have more regulations to come in October and, I am sure, amending regulations of regulations. We are already starting to see them. We also have negative regulations, some of which I am sure we shall pray against. However, we cannot amend these regulations. Will the Minister at least attend to some of the concerns being expressed all around this House in regulations that we have yet to examine?

Photo of Baroness Thomas of Winchester Baroness Thomas of Winchester Chair, Delegated Powers and Regulatory Reform Committee

I have one small point to raise under these regulations, which I expect the House will welcome. Before I do that, whatever we think of the detail of these regulations I pay tribute to the Minister and his staff in the DWP, who have worked absolutely non-stop to get out these regulations and all the guidance. We might complain about having so many piles of paper, but somebody has had to prepare them. It has been a tremendous effort, so I thank him very much.

Noble Lords will be pleased to hear that the one matter I address in these regulations is a success story. It is possibly the end of a long road leading to the better treatment of all those service users and carers who are involved in helping to improve health and social care services. This is about having their expenses disregarded for benefits.

There is one matter to ask my noble friend about: the word "consult". When service users and carers report their involvement to Jobcentre Plus, they are likely to do so by using the terms that are used by the health and social care organisation that has asked for their help rather than the term "consult", which is used by the DWP in these regulations. We were told that the lawyers insisted on this word. In order to avoid misunderstandings in Jobcentre Plus offices, it would be helpful to explain that service user and carer consultation may be described as "involvement" or "participation" and "co-production" by the Department of Health. Other health and social care organisations also use the expressions "experts by experience" and "acting together". Will my noble friend ensure that the guidance for Jobcentre Plus staff will include an explanation about the terminology likely to be used? This will prevent a great deal of misunderstanding and I am sure will reap dividends.

Photo of The Countess of Mar The Countess of Mar Deputy Speaker (Lords) 5:00 pm, 13th February 2013

My Lords, I propose to confine myself to Part 5 of these regulations on the capability for work or work-related activity. The Minister will recall many occasions when he has assured me that people with ME/CFS are judged on what they can and cannot do on their condition. Memo DMG 1/13, entitled, ESA: LCW and LCWRA Changes, has been brought to my notice very recently. Part 16 of these changes, which I will read out completely so that we understand them, states:

"DMG 42114 advises that a claimant's LCW must be due to a specific bodily disease, mental illness or disablement. This means that a claimant could satisfy the mental, cognitive and intellectual function descriptors if they had a physical health condition, without having a mental health condition. The law is amended to make it clear that physical descriptors can only be satisfied by a person with a physical health condition, and mental descriptors can only be satisfied by a person with a mental health condition".

The document then indicates the difference between limited capability for work and limited capability for work-related activity. Both the sections are the same, so I will just read out one:

"when assessing the extent of the claimant's LCWRA, it is a condition that the claimant's inability to perform1

1. physical descriptors2 arises"-

I assume the figures refer to the notes-

"1. 1.1 from a specific bodily (i.e. physical) disease or disablement or

2. 1.2 as a direct result of treatment by a registered medical practitioner for such a condition and

2. mental descriptors3 arises

1. 2.1 from a specific mental illness or disablement or

2. 2.2 as a direct result of treatment by a registered medical practitioner".

In view of the fact that these regulations are running parallel with the ESA regulations-Part 4 and Part 5 -will the Minister please explain why this change has occurred? These people obviously have to have a mental or a physical condition, on a medical certificate presumably, before they can be judged to have one or other of the conditions that I have mentioned. We have a particular difficulty with ME/CFS, as the Minister knows, because many of these people will not have seen a doctor for years and cannot get a medical certificate. I would be grateful if the Minister could clear that up for me.

Also on these paragraphs, Citizen Advice states in its briefing that Regulations 39 and 40 in Part 5 of the Universal Credit Regulations 2013, to which I have referred, set out,

"who is entitled to the Limited Capability for Work element and the Limited Capability for Work Related Activity elements. Regulations 89 to 91 set out who apart from those with LCW or LCWRA will have full work related requirements. Under Universal Credit, claimants with a disability and/or a health condition can be required to undertake 'all work-related requirements' before the outcome of their claim for the equivalent of income-related Employment Allowance ... has been decided, and whilst they are appealing that decision. ESA regulations (2013) Regulation 26 maintain current protection for those applying for contribution-based ESA ... This means that claimants with an equivalent disability and/or health condition applying for ESA ... (or the equivalent in UC) will face different work-related conditions through the assessment phase and any appeal, to those apply for ESA".

Will the Minister kindly clear that one up as well, please?

Photo of Lord Eden of Winton Lord Eden of Winton Conservative

My Lords, perhaps I may make a brief comment, but first I must apologise to noble Lords. It is quite clear from all those who have spoken that there is a great deal of expertise and deep knowledge of the subject and, as will become immediately clear, I cannot live up to those standards. However, there is one matter on which I wish to make a brief point. Before doing so, I congratulate my noble friend the Minister on the clarity with which he introduced this subject and on the immense work that has clearly been done on it.

I have one worry, which is that these are enormous and complex changes that will impact on and affect many people who by definition are extremely vulnerable. While I very much support the aim and objective of what the Minister is proposing, and I hope that the pathfinder work is a success, I worry about the implementation of such complex proposals in practice. I share quite a lot of the sentiments expressed by the noble Baronesses Lady Sherlock and Lady Hollis, and others.

It is therefore most important-perhaps this can be enshrined in guidelines-that those who will be advising the potential beneficiaries of the change are fully and adequately trained and fully understand what they will be talking about. More importantly, when it comes to actually carrying out the whole process of changeover, those who are at the decision-making end should exercise supreme patience and understanding. For me, patience is all important.

As the noble Baroness, Lady Hollis, said, many people will not have online access. I know, being of advanced years myself, how difficult it is to understand everything that is going on. I am reasonably but not fully conversant with all the complexities of new technology and new systems of communicating. I can often sense the impatience at the other end of the line in people younger than me, for whom it is second nature to handle these things. It is not so for everyone and it is most important that those who are in a commanding position assist potential beneficiaries to understand the process of changeover, and do so with extreme patience.

Photo of Baroness Lister of Burtersett Baroness Lister of Burtersett Labour

My Lords, the noble Lord, Lord Eden, said that he is not an expert but sometimes it is the non-expert who puts his finger on the key points, as the noble Lord did. I apologise to noble Lords in advance for the length of my speech but there are a lot of areas to cover, although I shall be leaving out a lot of important issues, including monthly assessment. I shall return to that, in case the Minister thinks he is getting off lightly.

I shall start with three general points. First, I add my thanks to the noble Lord for the work done by him and his team in providing us with so much information. It is only right to draw your Lordships' attention to the 17th report of the Joint Committee on Statutory Instruments, which has reported these regulations for four instances of defective drafting. Although the DWP acknowledges each of those defects, as I understand it, it did nothing to put them right before these regulations came before both Houses of Parliament. I am told that that is unprecedented.

My second general point was made by CPAG-I declare an interest as its honorary president-in its evidence to the Work and Pensions Committee and concerns simplification. That goes back to the point made by the noble Lord. This is a raison d'être of universal credit, as the Minister made clear in his introductory remarks. CPAG, having acknowledged that of course simplification is a worthy goal which we all support, warns that it is very difficult to achieve in a heavily means-tested and conditionality-based system such as universal credit. Noble Lords who have been grappling with these draft regulations will no doubt nod wryly in recognition of that fact. CPAG points out that many complexities will remain and new complications will be introduced with the advent of universal credit.

The draft regulations reveal that many of the rules that currently cause great confusion will simply be imported into universal credit, despite what the Minister said earlier. The group warns that without good advice, many claimants will struggle to comprehend either their entitlement or the new obligation that universal credit places on them. As a result, the Government's expectation that universal credit will be taken up more widely than the existing benefits could be misplaced, which also means that its estimates for the number of gainers could be inflated. The group argues that it is essential that the Government provide support for the advice sector as an integral part of the design, piloting and rollout of universal credit. That point is emphasised also by the Work and Pensions Committee, which calls for sufficient additional resources to be available to the advice sector to support a successful transition to the new system.

During the last major reform of social security in the 1980s-noble Lords who have been around a while will remember that time-welfare rights advice services were flourishing in local authorities and in the voluntary sector. Today they are a shadow of their former selves as the cuts take their toll. Could the Minister tell the House what resources will be made available to the advice sector?

My third general point concerns the very heavy reliance on guidance to put into effect the Welfare Reform Act 2012. Gingerbread, for example, argues that transferring details from regulations to guidance removes important safeguards, erodes accountability and transparency in decision-making and increases uncertainty for claimants. It has a particular concern about the over-reliance on guidance to put into effect the flexibilities available to job-seeking lone parents. My noble friend Lady Sherlock has touched on this already and I shall try not to repeat what she said in her able opening statement.

I raised this issue during Report stage of the Bill, late at night on 23 January 2012. The debate was very rushed for procedural reasons, but I thought that I had achieved something when the Minister assured your Lordships' House that,

"advisers will take childcare responsibilities into account when setting work-related requirements, and we intend to set out some specific safeguards on this issue in regulations".-[Hansard, 23/1/12; col. 915.]

He then referred to the right of claimants with a child under 13 to limit their work search to jobs that would fit around their children's school hours. He rightly emphasised that the best way to prevent the inappropriate application of sanctions was to ensure that the requirements were reasonable in the first instance. It is therefore incredibly disappointing that the regulations do not adequately reflect this wise principle.

Regulation 88(2)(b) stipulates that where the claimant is a responsible carer for a child under the age of 13, she can restrict her work availability to her child's normal school hours, including normal travelling time. A Parliamentary Answer in the other place confirmed that, as now, this group of lone parents will not have to show reasonable prospects of finding work. However, the new regulation does not say this, whereas the present regulations do.

Nor do the regulations provide the same protection against sanctions that the current regulations do-for instance, where there is no affordable or appropriate childcare available, or such childcare is not available in school holidays. I am sure that I do not have to tell noble Lords of the problems still faced by those trying to find affordable and appropriate childcare, in particular in rural areas or for disabled children. The guidance makes reference to such factors, but not in the same clear-cut way that the current regulations do.

These are just some of the 11 examples of instances where current flexibilities set out in regulations have not been fully transposed to the new regulations. Only one has been. Will the Minister explain why these crucial safeguards have been removed from the regulations, despite his assurances to me in your Lordships' House?

I did not find the justifications provided in the answers to questions circulated recently-for which I was grateful-at all convincing. They stated that the avoidance of detail was deliberate in order to support better decision-making by allowing advisers to consider the merits of each case rather than applying a tick-box approach. Of course, no one ever wants a tick-box approach. Gingerbread's response is that the current flexibilities in the regulations are not cumbersome to administer, and that multiple evaluations by the DWP have never suggested that they are anything but appropriate. The persistent problem has been a lack of adviser awareness, as well as inadequate training and performance. Again, that refers to points made by the noble Lord, Lord Eden.

This will not be addressed by making rights discretionary, thereby increasing uncertainty and weakening decision-making standards further. There are enough examples already of those safeguards being disregarded, even when they are in regulations. I fear that there will be many more examples when the safeguards no longer constitute clear rights. Although Gingerbread is pleased that the draft guidance has been strengthened in response to feedback, in order to provide greater clarity with regard to restricting work availability for lone parents with children aged between five and 12, it considers that the situation for those with older children, as set out in paragraphs WR064 and WR066 in particular, remain opaque and confusing. Will the Minister give a commitment further to review the guidance in consultation with stakeholders such as Gingerbread?

As well as the relegation of certain safeguards into guidance, there are a couple of examples of new regulations being more restrictive than the current ones. My noble friend Lady Sherlock referred to one of them, which concerned lone parents of children aged 13 or over who have no reasonable prospect of finding work. The second example is that lone parents will be allowed only 48 hours to attend a job interview, taking into account alternative childcare arrangements, whereas at present they are allowed up to one week, which does not seem unreasonable. Will the Minister explain why this provision has been made more restrictive?

Unfortunately, we are unable to amend regulations, so we must look to the Minister to ensure that the guidance provides adequate safeguards to protect lone parents with caring responsibilities; that these safeguards are written into the claimant commitment for lone parents; that advisers are properly trained to administer the flexibilities; that their ability to do so is included in the performance management framework; and that there will be adequate monitoring of the impact of the loss of regulatory flexibilities on the ability of lone parents to adhere successfully to the conditionality regime, and to find and remain in paid work. I would welcome the Minister's assurances on these matters, in the hope that they will be more meaningful than those with which he provided me on 23 January last year. It is all the more important that we get these matters right, because with universal credit we face a further ratcheting up in the conditionality regime and associated sanctions.

In relation to this, I want to raise three points, building on the powerful arguments that my noble friend Lady Hollis has already made. The first concerns a claimant commitment and couples, and it is a slight variation on her argument. There is a tension between the personalised individual conditionality, which requires both members of a couple to sign and adhere to a claimant commitment, and the refusal to allow both members of a couple to receive some benefit in their own right. We will no doubt return to the latter point when we debate the claims and payments regulations, when we would no doubt pray against them. In the mean time, I wish to raise my concerns that, according to the Explanatory Memorandum,

"if either eligible adult in a couple refuses to accept their claimant commitment, the claim for the other eligible adult will also end".

In the spirit of individual conditionality, should not the partner who accepts the commitment be entitled to benefit for themselves? This is one of the few issues to which the Secondary Legislation Scrutiny Committee draws attention, advising that, because of the volume of legislation, its usual degree of analysis was not possible.

Secondly, the Social Security Advisory Committee pointed out that in-work conditionality,

"is clearly different to the kinds of conditions that will be placed on claimants who are out of work".

It therefore suggested that it should be dealt with in a separate regulation in order to clarify the difference. The DWP rejected the suggestion, leaving the issue to guidance. Barnardo's,

"remains concerned that this could result in cases of unreasonable demands being placed on parents to apply for new and different employment even if the new employment does not suit them for other reasons".

I, too, remain concerned, and I would welcome assurances that the Minister will review this matter in the light of the piloting that is very sensibly proposed for in-work conditionality. The Minister started by referring to a new relationship between the individual and the state. I fear that this is not going to be a very happy relationship for many individuals in work, who are not used to being brought under conditionality regimes. This has become clear from the research that the department has already done with users. So the Minister stands warned.

My other main concern relates to the treatment of hardship payments. The CPAG points out in its evidence to the Work and Pensions Committee that,

"such payments will be both more restricted and recoverable", under universal credit. It goes on to say:

"Reclaiming hardship payments will mean that sanctioned claimants will continue to receive a reduced rate of UC for significant periods after the sanction expires".

This is itself likely to cause hardship, which does not make sense when the point of the payment is to prevent hardship, even with the concession that recovery will be suspended if the claimant is in work and earning above the conditionality threshold. Could the Minister please explain why the rules are changing on this? As my noble friend Lady Hollis has said, one of the main concerns about hardship payments, raised with SSAC, was the introduction of conditionality into them. SSAC cites Barnardo's in particular:

"Hardship payments ought to operate as a safety net to prevent families from entering destitution and ensure that children are provided with a minimum standard of living even when their parents refuse to engage with the system-imposing conditions on families could seriously risk the welfare of children".

SSAC suggested that,

"the government may wish to reflect further", on this. Unfortunately, they do not appear to have done so and make no reference to these concerns in their response to SSAC's report. I had a wry smile when my noble friend Lady Hollis kept saying how a judicial review would be used. I am not sure whether she is aware that the Government propose at present to limit the use of judicial review. I wonder whether that is a coincidence.

However, what I find most outrageous is the requirement that in order to qualify for a hardship payment, claimants must make,

"every effort to cease to incur any expenditure which does not relate to ... their immediate and most basic needs".

Those are defined as accommodation, heating, food and hygiene. That may sound innocuous to some noble Lords, but when I first saw a reference to it in an early briefing, it conjured up images of officials checking what claimants have spent their money on in ways that are resonant of the 1930s means test. When some of us expressed our dismay at such a prospect in the briefing session, the Minister seemed to be surprised, but I had understood that he would look at it again. However, it is still here. The provision shows no understanding of the social nature of needs.

When the Minister of State in the other place was questioned about this in relation to the Social Security (Loss of Benefit) (Amendment) Regulations 2013, he appeared to confirm that claimants would not be allowed to buy Christmas or birthday presents, or presumably incur expenditure in celebrating other religious festivals, and he seemed to find this perfectly acceptable. I do not. I would remind the Minister of what Seebohm Rowntree wrote back in 1937 in The Human Needs of Labour. Rowntree is of course associated with an absolute understanding of poverty, yet he showed a greater understanding of human needs than do the present Government, who profess to accept that poverty is relative. He asked why poor people spend their inadequate incomes on social recreational activities instead of food. The explanation is that "working people"-I think it is reasonable to include people who are not in paid work-

"are just as human as those with more money-they cannot live on a fodder basis ... they crave for relaxation and recreation just as the rest of us do".

But they can only do so by going short of something that is essential to physical fitness, and so they go short. There will be no social or recreational activities that cost money for today's poor who fall foul of these regulations. I would be interested to know whether the noble Lord agrees or disagrees with Seebohm Rowntree. Could he also explain exactly how this pernicious rule will work in practice? Having read the guidance I am not clear as to what proof will be required. Will claimants have to provide receipts for everything they have bought in the previous week? Will they be visited by officials to check on what is in their cupboards and the fridge? While food is allowed, will there be restrictions on what is permitted? We know that children often make it difficult to stick to the cheapest options by refusing to eat certain foods; will that be taken into account? Are children to be allowed no little treats?

Recently I hosted a wonderful evening in the River Room on behalf of the CPAG during which Simon Callow gave a moving and illuminating talk on Charles Dickens' anger over child poverty. Dickens would have recognised and condemned the mean spirit at work here all too well.

Photo of Baroness Stowell of Beeston Baroness Stowell of Beeston Lords Spokesperson (Department for Work and Pensions), Lords Spokesperson (Women & Equalities), Baroness in Waiting (HM Household) (Whip) 5:15 pm, 13th February 2013

My Lords, this is a very important debate and I know that many noble Lords have contributions that they wish to make. However, it is worth reminding the House that although this is a Motion, the guidance in the Companion still stands in terms of the length of speeches. Some noble Lords have been brief and I am grateful to them. However, the Companion states that speeches are expected to be kept within 15 minutes as a maximum. We have exceeded that on a couple of occasions this afternoon.

Photo of Lord Kirkwood of Kirkhope Lord Kirkwood of Kirkhope Chair, Information Committee (Lords) 5:30 pm, 13th February 2013

I am grateful to my noble friend for that advice which I will try to take into account. As always it is a pleasure to follow the noble Baroness, Lady Lister. Her speeches repay careful study and I am sure that colleagues will do that. I yield to no one in the pleasure I get from reading social security regulations. Nothing makes my weekend more than a wet towel around my head and a glass of malt whisky in my hand, but I will make my first plea to the Minister a simple one: can we have August off this year? The consultative process has consulted me all out, so I am just going to make some general remarks about what I think we need to watch out for carefully in these regulations.

I am absolutely supportive of the general political direction of these reforms, but they are very ambitious, so we have to be careful about how we implement them. The noble Baroness, Lady Hollis, was also correct to say that whether we like it or not, the financial austerity we are experiencing may prejudice the outcome of what I think is an essential and necessary architectural change. We have to be careful that we do not spoil the public's understanding of what is trying to be achieved here in the short term. I know the Minister is alive to that but we need to continue to be alive to it.

These regulations put us in a position of having fewer unknown unknowns, but there are still quite a lot of known unknowns. The question that I really want to ask more than anything else this evening is a process one, about how we can be sure that we use the expertise in this House and, indeed, some of its self-confessed non-expertise. The latter is just as effective, as the noble Baroness, Lady Lister, said, and the speech of the noble Lord, Lord Eden, was very refreshing and welcome in that regard. We in this House need to be sure that we have an ongoing and positive relationship that allows us to encourage the Government to continue to be flexible in the roll-out of this programme. It will take 10 years to get to a steady state in universal credit and for it to be really bedded in so that people are comfortable about it. We must hasten slowly to get the introduction of this policy correct.

I am very pleased that the Social Security Advisory Committee is so engaged. I remember getting quite a long look down a ministerial nose when I suggested that this might happen. However, to be fair to the Minister, he does listen and changed his mind. The SSAC report gives me more comfort than I would otherwise have had, so I thank him for that, as I do for some of the other flexibilities he has introduced. He has to persuade his ministerial colleagues, some of them in other departments, that some flexibility needs to be retained. Unless we do that, we will prejudice the implementation of this very important new area of public policy.

It is quite difficult to get the balance right with the next thing I want to say to the Minister. I believe what he says to me and understand that the Government's position is that the digital implementation-the agile computing process that has been deployed in this case, which is new, innovative and gives us better functionality, in theory-is all on track and that everything is under control. I have to say to him that that is not the signal that I am getting from sources close to the development of the project who are not Ministers. It is so important to make sure that we get the computer-based system-not just the digital application process but the underlying framework of ICT provision-to work. I believe it can be done but am very nervous about the timetable-a point that I think was made by the Delegated Legislation Committee-because I bear the scars of the Child Support Agency and many other horrors. There have been one or two successes but the experience has not been great. I hear the assurances that I am getting officially, but would just like to make sure that if things start to become unstitched, or the timing slips, that adult ways will be found to deal with that. If things start to go wrong, we need to know about it. There is nothing worse than Ministers covering up. I am not suggesting for a moment that that is being done, but if things go wrong, my plea is that the Minister comes and looks me in the eye and says, "Look, there's a glitch here, we're going to lose six months", or whatever it is. I would much rather have that than find suddenly that the whole project is in jeopardy because of the computers going wrong. I hope that he will take that message to heart.

I will just make a point in passing about pathfinders. There is a spatial dimension to the pathfinders as we roll this out. Coming from, and having formerly represented, a rural area, I know that the differences between the communities that this programme will serve are very important. In the evaluation of the pathfinders, I hope that my noble friend will pay very careful attention to the different types of communities that we are seeking to serve.

I want to make a very quick point in passing. The noble Baronesses, Lady Lister and Lady Sherlock, both made a point about guidance suddenly becoming a substitute for regulation. I say this in a considered way, but I was horrified by what Mr Mark Hoban said on Monday when the First Delegated Legislation Committee was discussing these regulations. He said:

"We think that it is more appropriate to rely on the discretion and judgment of our advisers to make the right decision for families. We will monitor that situation quite carefully and there will be training in place".-[Official Report, Commons, First Delegated Legislation Committee, 11/2/13; col. 23.]

That is dismissing the qualitative difference between the essential protection that regulations provide and slipping into guidance. If this is to be part of the new system, I think he will come up against serious objection in this place if not in the House of Commons-to be fair, Mr Stephen Timms made the point powerfully. That is something that I will certainly share with other colleagues in watching like a hawk.

My final point is about the importance of the exceptions service and the evaluation framework. We have just seen some encouraging signs that the exceptions service will be deployed properly. It will need money but if it is done in the way that I understand it will be done, I would be satisfied with that. However, there is always a risk that it falls down in the deployment because it does not have the capacity to meet the demand. Frankly, it is very hard to assess the level of the demand that it will be expected to meet, certainly in the early months and years of this rollout.

I am very encouraged by the members of the expert group that is looking at the evaluation framework. I have been looking at the evaluation framework very carefully. This brings me back to where I came in: the way in which we monitor and evaluate this implementation will be absolutely crucial. My plea is for honesty and a continuing relationship with this House because I am long enough in the tooth to know that things get much better consideration here than anywhere else. If we do that, we have a much better chance of getting this system in place in time and in a way that benefits the kind of people we are trying to serve.

Photo of The Bishop of Worcester The Bishop of Worcester Bishop

My Lords, I welcome the introduction of universal credit. I think it is a very important step forward. Like other noble Lords, I am grateful to the Minister for all the work that he and his colleagues have put into the regulations before us today.

However, I am concerned about the inadvertent hardship that might be caused to some of the most vulnerable in our society. The report of the inquiry led by the noble Baroness, Lady Grey-Thompson, Holes in the Safety Net: The Impact of Universal Credit on Disabled People and Their Families, has already been referred to by the noble Baroness, Lady Sherlock. It clearly sets out the concerns of disability charities and the millions of people they represent. I want briefly to highlight one of the issues about which I feel concern: the impact on families with disabled children.

As I understand it, the regulations laid before us today propose to reduce the level of financial support to most disabled children from £57 a week under the current system to just £28 a week, or £124 a month-a reduction of nearly £30 a week. According to the Government's own estimates, 100,000 disabled children will be affected. Only the most severely disabled children who are on high-rate care components of the disability living allowance or registered blind will be unaffected.

Many parents of disabled children already struggle to find the money to cover the extra costs of having a disabled child, such as specialist adaptations to their home, access to disability-friendly services and higher travel and childcare expenses. Already, 28% of households with a disabled child are living in poverty, and this rises to around 50% if the additional costs associated with being disabled are taken into account.

For those affected by this further reduction in their income, the impact could be very serious. Two-thirds of them say that they will have to cut back on spending on food and more than half say that they will get into debt, yet on Monday we heard in the debate on the Welfare Benefits Up-rating Bill that the lower disability addition of universal credit, as well as being cut in half, will be now uprated by just 1% a year in 2014 and 2015, well below the expected rate of inflation. That is why one of my colleagues on these Benches will support an amendment to remove the child disability elements of universal credit from the 1% cap.

I highlight to your Lordships the serious concerns raised in the report on these and other areas produced by the inquiry headed by the noble Baroness, Lady Grey-Thompson. I urge the Minister to review and monitor the impact of universal credit on disabled people, and in particular on families with disabled children so that this policy can better meet its aims of supporting those in greatest need constructively.

Photo of Lord Touhig Lord Touhig Labour

My Lords, we have had a very good debate and I do not want to spoil it, so I shall not detain the House for more than a few minutes. As the Minister knows, I am supportive of the whole idea of universal credit, but have concerns about the IT system that will be essential to make it work. To be fair to the Minister, I have had some very helpful conversations with him about universal credit and I have tabled a number of Questions which he has answered, although I am not entirely happy with some of the Answers.

The implementation of universal credit has been described by Margaret Hodge, the chair of the Public Accounts Committee in the other place, as a train crash waiting to happen, a point made by my noble friend Lady Hollis a little earlier. Having served on the Public Accounts Committee when I was in the other place, I can testify that no major government IT project in 20 years has been successful. Every one has gone massively over budget and or been years behind in its date of implementation.

I share the concerns of those who are worried about the implementation of the IT system to support universal credit. As I understand it, it will require two separate IT projects to piggyback on a third. That is a real challenge if ever there was one. I am also given to understand that, to make universal credit work, at least 80% of claims have to be made online. When I discovered this, I also discovered that the only benefit that was then claimable online was jobseeker's allowance, which only 17% of claimants were claiming online.

As my noble friend Lady Hollis pointed out, 30% of the poorest families in this country do not have a computer and I presume that these are the people who need benefit support. What happens if 80% of claimants do not access the system and claim online? What happens to those who are unable to access the system on the computer? To make the system work effectively, it will require every employer to inform HMRC every month of how much they have paid every single employee and how much that employee has paid in tax. If any of those employers' staff are on benefits and the employer fails to file the information by the due date that universal credit requires, there will be real problems for that person's benefit because it is paid in real time.

I tabled a number of Questions about this. I asked the Minister,

"what assistance will be available to people receiving universal credit if their payments are wrong as a result of their employer failing to notify Her Majesty's Revenue and Customs of their pay and tax details".

In response, the Minister said:

"If earnings are not reported ... for any reason, claimants will be requested to declare their earnings to DWP through the universal credit interface".-[Hansard, 19/11/12; col. WA330.]

I then asked how the universal credit interface would operate. The Minister replied:

"The universal credit ... will allow claimants to provide ... details via a self-reporting tool".-[Hansard, 26/11/12; col. WA24.]

That tool is the telephone. It does seem a bit Heath Robinson if that is how it is going to operate.

There are then widespread concerns about the cost of the IT project for universal credit. We are told that the Chancellor of the Exchequer has put it on the Treasury's "at risk" list. That "at risk" status is given to projects that will go over budget or be late in delivery. I have asked a number of questions on this. Perhaps I may ask the Minister three brief questions about the cost of the IT project. First, of the £105 million total cost of universal credit in 2012, how much supported information technology development? I cannot seem to get answers to that point. Secondly, can the Minister give us exact figures for expenditure on developing universal credit's information technology for the years 2012-13, 2013-14 and 2014-15? Finally, how does the current total cost estimate for universal credit's information technology project compare with the Government's original estimate? All these questions are relevant to making universal credit work. All across the House, people want it to work, but if the IT project is wrong, it simply will not and people will lose out as a consequence.

Photo of The Earl of Listowel The Earl of Listowel Crossbench 5:45 pm, 13th February 2013

My Lords, I shall share some concerns with your Lordships about the regulations but, first, I underline my support for the principle behind the introduction of universal credit. I recall, when I first entered this House, the work of Louise Casey, who was then the rough sleepers' tsar, appointed by the then Prime Minister. A key part of her successful programme in reducing the number of rough sleepers on the streets was to find purposeful activity for those who had been homeless. It seems to me such a curse that many people are not finding useful things to do with their time and are allowed to fester, sometimes for generations, without being actively involved and engaged in productive work on a daily basis. I welcome the fact that the legislation will make that more possible for more people.

My concern is about vulnerable families. I recall for your Lordships what my chemistry teacher used to say to me. He talked about dynamic equilibriums. I suggest that vulnerable families are subject to a dynamic equilibrium. If they are given the right support, they can thrive and do well. We saw that recently again with the work of Louise Casey, who has been tasked by the right honourable gentleman Iain Duncan Smith, I think-or at least by the Government-with looking at the 120,000 most troubled families and making a difference in their lives. Through her work supporting those 120,000 families, she has managed to decrease significantly the level of domestic violence in their homes and to increase significantly the number of their children attending school on a regular basis. It is possible to act on the positive side of that equilibrium and make a difference to families.

On the other hand, one can see that if one puts those families under too much stress, they can fail. I was reminded recently of that experience when I visited Feltham young offender institution and spoke to prison officers. I had not visited for 10 years, but the same theme came through: so many of the young men with whom they were dealing had never known their fathers-had never had fathers-and the officers found that they had to adopt that role for those young men.

It is critical to support those vulnerable families in the best way that we can. I thank the noble Lord, Lord Eden, for his speech. In this extremely difficult time, when local authority funding is being cut by 28%-and there will be further cuts to services-which is impacting very heavily on services for vulnerable families and their children, a complex change such as this has to be carefully considered to minimise any adverse impact on those families.

So I welcome the principle, but I have concerns about various issues. They have all been raised this afternoon, so I need not go into detail. I was grateful for what the Minister said about the monthly payment of housing benefit to families. There is the payment exemption scheme, which he described, and he is paying particular attention to drug and alcohol misusing families and those with gambling problems. I welcome that, but I share the continuing concern of the noble Baroness, Lady Hollis, that that may well not go far enough. I found what she said very persuasive: there is a danger of underestimating the chaos in many of those families and their inability to manage their finances in the way that we and the Minister would like.

With regard to childcare, important questions have been raised about significant increases in the cost of childcare to families. The changes to housing benefit and the limit on the number of bedrooms that families can have is clearly putting a lot of stress on some of our most vulnerable families and may cause some of them to have to uproot and move to new areas and communities in which they know no one. They may easily feel isolated and, again, are at risk of collapse. I am particularly concerned about the ability of foster carers to keep a room open for a fostered child. In the past, the Minister has gone quite a long way in reassuring me on that point but I would be grateful if he could go further in reiterating that today.

Finally, the right reverend Prelate the Bishop of Worcester and others alluded to the concern raised by the Children's Society, and by my noble friend Lady Grey-Thompson in her report, about how this all impacts on children with a disability. He was concerned that these are often the poorest families, struggling to make ends meet. Given that 100,000 of these children will be up to £28 worse off under the new arrangements, that is a very real cause for concern. I hope that the Minister can say something about how he will monitor the situation for these children carefully and that he will go as far as he can in offering me reassurance on this point.

To conclude, in my experience vulnerable families exist in a dynamic equilibrium. Given the right support, many of them can do a lot better and their children may perhaps break through the generational failure that that family may have experienced. Without the right support, however, particularly in such difficult times, one will often find that their children will fail and possibly end up at Feltham young offender institution, costing the public purse well over £40,000 or £50,000 a year to maintain them there. It is crucial that we get this right and I look forward to the Minister's response.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, I give really sincere thanks to everyone who has spoken because I do not often hear a debate where people have worked quite so hard to understand the issues. I might not agree with everything that people have said but the quality of debate has been pretty extraordinary, given the complexity of the issues we are dealing with. I hope that your Lordships all know now that I listen very hard-and I steal or plagiarise as much as I can-so a lot of what your Lordships have said has fallen on fertile ground.

Let me deal with the amendment proposed by the noble Lady, Baroness Sherlock. There are some serious misconceptions in it about what universal credit will do. First, on work incentives, the fact is that universal credit will change them out of all recognition-and manifestly for the better because it will reduce participation tax rates and take away some of the scandalously high rates under the current system, which may be 91% or even 100% in some cases. There are some losers but they are losing, on average, a rather modest 4 percentage points. In many cases, the increased marginal deduction rate is because people are being brought into entitlement for UC, so they are actually better off. They may have a higher marginal deduction rate but have become better off because they have been brought into universal credit.

I do not agree that universal credit penalises savers. In practice, it corrects an overgenerosity in the current tax credit system. It must be right to focus our resources on those households with the fewest resources. Under universal credit, claimants will be able to save up to £6,000 without any impact on their entitlement, in contrast to the typical working-age household, which has £300 in savings.

We are not cutting childcare support; we are investing an additional £200 million in it when we remove the 16-hour rule, which we think will help an additional 100,000 families. The combination of childcare support, higher work allowances and a single taper rate will provide a clear financial incentive that rewards work.

We estimate that around 3.1 million households will have a higher entitlement as a result of universal credit. It is true that, on a static analysis, some households will receive less benefit; however, in practice, we expect that people will adjust their working patterns where they can and will be able to gain-as they can under universal credit. I cannot agree that universal credit is bad for women and lone parents. We know from the experience of tax credits that, in practice, lone parents are among the groups most likely to respond to the financial incentives in the system. In any case, even on a static analysis, in the 3.1 million households that gain there are 2.6 million women. Lone parents will on average gain around £5 per month.

Throughout the passage of the welfare Bill and in recent months, we have debated at length the support for disabled people. We recognise the concern about the impact of the severe disability premium but our aim here is to target additional support on those who have the most severe disabilities or health conditions and who are unable to work, or to work full-time. On average, disabled households will gain by £8 a month. Responsibility for assessing and meeting significant care needs sits with local government. This week, we have set out proposals to put the longer-term funding of such care on a better footing. However, I put on record again my personal commitment to ensuring that we carefully monitor and evaluate the impacts of UC on disabled people.

Universal credit provides appropriate support to self-employed people but only in so far as self-employment is the best route for them to become self-sufficient. As I said in my opening remarks, we have carried out extensive engagement with groups representing businesses and the self-employed, and have responded to their concerns.

In relation to housing, universal credit provides fairness and responsiveness to the housing choices that working families faced already. The best protection against homelessness is a job. Universal credit will provide work incentives and support people in moving into work. Discretionary housing payments are available to help those at risk of being homeless.

The amendment implies that the objective of universal credit is as a savings measure. Nothing could be further from the truth. We are spending more and have huge ambitions to change people's lives. In any case, we will be monitoring outcomes very carefully. We published a high-level evaluation framework in December 2012, which sets out our proposed evaluation approach and our key aims and objectives. I am happy to reassure the noble Baroness, Lady Lister, that the evaluation of universal credit comprises part of a continuous programme of analysis. It provides real-time evidence and information, as well as a measure of overall impact and success further down the line, although it will take time to assess how different groups experience universal credit and to build up a clear evidence base.

Implementing a system that is dynamic and responsive is at the heart of these reforms. That is why the welfare Act contains a provision to enable the piloting of changes to the system that aim to achieve simplification or change claimant behaviour to improve their labour market outcomes. I am happy to reassure my noble friend Lord Kirkwood that I will personally value continuing the dialogue with this House. I know that this House knows how much it has put into the creation of universal credit.

There were a huge number of points and I will do my best in the limited time to touch on them. The noble Lord, Lord Touhig, requested a lot of detailed figures on IT. I think I will write to him with details, as I have dealt with quite a few of those points in recent PQs, but I will make sure that the noble Lord has an up-to-date list of exactly what we are spending in each year. As I said, I will not go into detail, but we are on time and on budget, we are pushing ahead and we are starting with a pathfinder, to make it work, in April.

The noble Baroness, Lady Sherlock, queried how self-reporting would work. Employers will be expected to provide earnings data at the same time as making the payments of earnings to their employees. If that does not occur, we will have arrangements in place to ensure that payments of the universal credit are not delayed. We can use either self-reporting or estimated earnings.

On the severe disability premium, it is estimated at just over 230,000 households are in receipt of that, as the noble Baroness suggested. We will not make any savings from the restructuring of disability support in the universal credit. As I said, we will be monitoring carefully the impact of this measure on disabled people.

On the related point raised by the right reverend Prelate the Bishop of Worcester about disabled children, we will be looking closely at the routes by which disabled children qualify for additions in the universal credit-there are two levels now-and when we debated this during the progress of the Act, the real concern that I took from it was that we might not be passporting children into the right groups. I have committed to looking at those passporting arrangements closely in time for when the bulk of people may be affected.

The hearing for the Burnip case, raised by my noble friend Lord German, is scheduled for 9 and 10 December. In practice there will be virtually no cases before we know what the answer is under the universal credit. Whatever happens, that is winter, unless someone moves the seasons on me.

My noble friend and the noble Baroness, Lady Hollis, raised the question of monthly payments. Clearly they will be a challenge for some, and we do not underestimate the difficulties of managing on a tight budget. That is why we have the exceptions process, which will allow the Secretary of State to adjust the payment frequency on a case-by-case basis.

On the point about weightings, they are not being weighted; rather, they are classed as level one or level two, with level one being an indicator of a high likelihood that the claimant will require an alternative payment while level two suggests a lower likelihood.

On the question from my noble friend on progress to produce new financial products, we have been working closely with financial providers across the private, social and third sectors, and we will consult them and other stakeholders about next steps, which I hope to be announcing in due course.

On the point raised by the noble Baroness, Lady Lister, about the claimant commitment and the refusal to sign-if one refuses to sign, that implicates the whole household-that underpins the policy principle that the universal credit is a household benefit, and it is a basic condition of entitlement that all working-age members of the household must agree to reasonable requirements to take up a job.

On the lengthy set of points about conditionality for lone parents, raised by the noble Baroness, Lady Lister, we are carrying forward 10 of the 12 current protections and have done so, where appropriate, through legislation. The primary legislation protects claimants' children under one and then the regulations protect those under five. Regulation 88(2)(b) protects parents of children under 13 to limit their hours to fit with the work. I see the noble Baroness shaking her head sadly; I suspect that we will go on with this debate.

I need to assure the noble Baroness, Lady Sherlock, that we do not expect lone parents to leave children to work a night shift, nor will lone parents be sanctioned if they cannot find appropriate childcare. We will ask parents do everything that they can to look for suitable work that fits with their caring role and to demonstrate that they have taken all reasonable steps to secure suitable childcare.

On the self-employment monthly reporting issue, raised by the noble Baroness, Lady Sherlock, I take her point about the carrying forward of losses. We are looking at the feasibility of introducing a carry-over function for self-employed income, and this will come a little later but in time for when it is required.

My noble friend Lord Eden made the overarching point about the need for, and the importance of, the adviser and the adviser's training. We have a huge investment in that training, and one of the things that we are testing in the pathfinder areas is getting the support systems for our staff right.

I assure my noble friend Lady Thomas on looking at ensuring that the word "consult" is appropriately interpreted. I also assure the noble Countess, Lady Mar, that the tests of limited capability for work have not changed substantially in the universal credit. The intention is to ensure that consistency is applied in these tests across the universal credit and the employment support allowance.

The noble Baroness, Lady Lister, was concerned about some of the technical points made by the JCSI. Out of three of them, we intend to amend the regulations at the next suitable opportunity. We actually feel that the explanatory element is valuable so there is still a slight disagreement between us on that, but the others we will sort out.

On the points about the kind of support for the advice centre sector, we are looking closely at the role, particularly in the light of the local support service network. The Cabinet Office and the Big Lottery Fund have created a £65 million advice services transition fund to support this period, and our aim is to work with the advice sector partners to share information with them and encourage them to help us with the successful introduction of universal credit.

The funding arrangements for the local support services are in place. They will be agreed locally with the local authorities that will be running the local partnerships. That is in phase one; in the pathfinder in phase two we are looking at how that is being done in practice. The DWP will be providing the funding for the appropriate local partnership network provision. Beyond that, we need to take the lessons of the local authority pilots that we are currently conducting and which will be completed in September.

The noble Baroness, Lady Hollis, was concerned about direct payments. I hope I can give her some reassurance that we are going to take a very prudent approach on this. I am not going to set any targets, but we expect a significant proportion to be able to handle this, and where they cannot, we will have mechanisms, which we are currently developing, to make sure that housing associations do not have an arrears problem. Interestingly, we are discovering in the pilots that it is not that people are not paying at all, but that they just do not pay quite enough. That is the issue.

We have moved the 52-week protection. There have been protections for different elements of benefits all over the place. For some, there has been no time protection, for some, there is 12 months, such as on housing. In practice, we have moved them all to the same three months. Do not forget that in the case that the noble Baroness was citing, there would be no change if a partner died. There would still be the same bedroom provision whether it was a single person or a couple.

On non-dependants, there is no deduction for any non-dependant aged under 21 whether they are on benefit or not, but we expect over-21s to make a contribution. The standard allowance in universal credit for someone under the age of 25 is £246 a month, of which they would be expected to contribute £68 a month for rent. Of course, a flat-rate deduction is very encouraging in terms of moving into employment.

The noble Baroness, Lady Sherlock, asked about mortgages and the zero-earnings rule. In practice, only about 5% of claimants who receive SMI work part time because people with mortgages know that they need to get into full-time work. Claimants will not have a good reason for refusing works on the grounds that they will lose their mortgage support.

We are working to produce a passporting strategy, and I hope to make an announcement pretty soon.

I cannot handle all the questions. I have got through a good two-thirds of them, I think. I will write where I have not answered. This is a huge topic, and that is why this is an overlong debate. I will be the first to admit that we might not have got every single detailed provision quite right. We have been given the task of reducing literally hundreds of pages of regulations into a set of just over 100 pages, so it would not be surprising if there were not room for improvement in some areas. I am always prepared to look at how we can improve it. The essential thing is that we have got a basic architecture that will be viable for the long term.

Finally, I should repeat the point that the Universal Credit (Transitional Provisions) Regulations 2013 are the first in a series of transitional regulations in keeping with the phased rollout of universal credit. That approach will enable us to adjust the exact timing and sequencing of the rollout as we learn from each phase.

Photo of The Earl of Listowel The Earl of Listowel Crossbench 6:00 pm, 13th February 2013

Before the Minister sits down, if it is in order in this procedure of the House, may I ask him a question? I was grateful for his reassuring reply to the noble Lord, Lord Eden, about the great efforts he is making in looking at the administrators and the support and training they need. If he will write to me with some idea of the minimum standards for the supervision of administrators that he might be considering, I will appreciate it.

Photo of Baroness Sherlock Baroness Sherlock Labour

My Lords, I thank the Minister for trying to answer our questions. Of course he could not answer them all in the time because there were so many. I have never been through a two-and-a-quarter-hour debate over one set of regulations with so many powerful speeches from every set of Benches in this House. I understand it is complicated, but we are running out of time. This is not simply a rough sketch of the architecture; these regulations describe what will happen to real claimants when the system starts operating in April. I understand that the Government are doing something that will revolutionise payments to all working-age claimants. We support that principle, but we cannot experiment on the lives of ordinary men and women in this country and on their children. The Minister has been unable to answer, despite his best efforts, concerns from all around the House about the impact on disabled people, childcare, free school meals, vulnerable people, of forcing people to claim online and so much more. We have to let these regulations go through because that is the nature of our House, but we do not have to allow them to go through without making a very clear signal to the Government that they need to get these things right. To that end, I wish to test the opinion of the House. I urge all noble Lords to come with me.

Division on Amendment to the Motion.

Contents 169; Not-Contents 239.

Amendment to the Motion disagreed.

Division number 1

See full list of votes (From The Public Whip)

Motion agreed.