Clause 12

Welfare Reform Bill – in a Public Bill Committee at 6:15 pm on 24th February 2009.

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Maternity allowance and carer’s allowance

Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

I beg to move amendment 56, in clause 12, page 16, line 43, leave out subsection (b).

The amendment would remove the adult dependency increase for carer’s allowance. The proposal in the Bill will allow the removal of adult dependency increases for the state pension from 2010. Existing claimants will continue to receive the adult dependency increase, but that will be phased out from 2010 to 2020. What effect will that have on those affected by the change? The impact assessment says that some carer’s allowance customers will receive £30.20 per week less in benefit income than they would under existing rules. That is £1,570 per year for 17,400 people currently receiving adult dependency increases. About half of the new claimants would also receive income support or pension credit. The Government say that carers who lose their adult dependency increases in 2020 would potentially see a reduction in their income if they were not receiving IS or pension credit. However, the Government say that they are committed to ensuring that future support will be tailored to meet the needs of individuals.

I know that the Minister may think that he is getting fed up of having to give assurances. When I dealt with a statutory instrument a few weeks ago, I learned that an assurance was given by the Minister during the last welfare reform Bill that those on contributory ESA  schemes would not lose out. That ESA scheme was introduced last October, no changes have been made, and those people now have a reduced income. So I believe that it is a fair question to ask: given that there will be a loss of income and that 17,400 people are affected, the Minister should place it on the record, and hopefully act on it and ensure that these people do not lose out.

Mr. McNultyrose—

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

Sit down, Minister. He did not want to do all those assurances but now he seems keen to do another one.

I do not want to support the amendment. I just have some questions for the Minister; I am not asking for assurances. The justifications for getting rid of the adult dependency increases for carer’s allowance are not primarily based around saving money, although they do. They are primarily based around recognising the changes to assumptions about family life that were in place when this element was introduced in 1948. Looking at the list of justifications, it is not about saving money. Given that the Government estimate a net annual saving from abolishing adult dependency increases for carer’s allowance, and taking account of compensating increases in means-tested benefits—£3 million in 2010-11, rising to £17 million in 2014-15—it would be interesting to know whether they plan to use any of those savings for those who will, as the hon. Member for Rochdale said, lose out.

The Government have acknowledged that some households will lose out. The Department’s view is that those on lower incomes will receive additional support in their means-tested benefits, but it is not entirely clear whether the Government expect that to be full compensation, and it does not take account of those who are not on means-tested benefits. It would be interesting to know whether the Department believes that there is any way of compensating them in a different way that would be simple and straightforward, or whether it is just one of those things that to make the system simpler some people must lose out.

My second question concerns the effectiveness of the information that is given to carers about the change. The Government argue that the negative impact of abolishing the adult dependency increases for carer’s allowance can at least be mitigated by ensuring that adequate information is available in the run-up to the change, and that there is greater awareness of income support and pension credit to ensure that those on lower incomes take advantage of those. It would help if the Minister would tell the Committee what arrangements are in place, or are planned, to ensure that carers who receive carer’s allowance are given the information and that it is made as easy as possible for those who lose out to receive extra support from income support or pension credit, acknowledging that the complexity of both benefits and the fact that they are means-tested means that a significant number of people who are entitled to them do not claim them.

If the Government put in place a good regime, at least those on lower incomes will be compensated. How many people will lose out and will not be compensated  because they are on lower incomes and will receive other means-tested benefits, and what arrangements does the Department have in place, or will it put in place to ensure that people are fully informed about the change?

Photo of Tony McNulty Tony McNulty Minister of State (Employment and Welfare Reform; Minister for London), Department for Work and Pensions

I fully take on board the hon. Gentleman’s statement that those who will be directly affected by such changes should have as much information and awareness as possible at the earliest opportunity, and I shall ensure that that happens. If information is already available, I will certainly pass it on.

As the hon. Member for Rochdale said, the change has a 10-year transition period, and the average length of awards is about six years. Although no new awards will be made from April 2010, we will not end existing awards until April 2020. As has been alluded to, some 4 per cent. of the total carer’s allowance payments to some 17,400 people include an adult dependency increase. As the hon. Gentleman said, about half of carers who receive the increase are no better off because it reduces the income-related benefit payable to them in other ways.

There is a lot to be said for the simplification, and the hon. Gentleman alluded to that in terms of income support and pension credit. Using savings from the change in that regard would pre-empt what we are trying to do with the income taskforce, and all that we are doing for carers, but it would be a useful element to consider. As the hon. Member for Forest of Dean said, allowances for carers were introduced in 1948, and even the densest Members of the House—I am sure that there are none in the Committee—would agree that family patterns have moved on ever so slightly since then. That is as may be, but the point about taking something away from people without them knowing is a fair one. None the less, simplification for all the individuals concerned and the ability of the poorest to access other benefits outweigh the concerns of a small number of people who potentially, depending on the length of the award, could lose out. In that context—along with the clearer picture on the ADI for maternity allowance—simplification is a public policy goal to which everyone should agree.

Question put, That the amendment be made.

The Committee divided: Ayes 2, Noes 9.

Division number 3 Nimrod Review — Statement — Clause 12

Aye: 2 MPs

No: 9 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Clause 12 ordered to stand part of the Bill.