Di Stubbs: Thank you for the opportunity to come here and talk to you in person about our concerns. We have concerns about the way in which two of the clauses in the Pensions Bill will have an effect on future claimants with bereaved children. We feel that the way in which the changes will take effect will be very unfair and will disproportionately be against families that have bereaved children.
I guess that we have slightly explained our concerns in the shorter statement with which I hope you have been provided. We will provide a much longer briefing at the beginning of next week, which will give you some of the references, some of our thinking out, and perhaps some draft amendments, but I am very happy to answer any specific questions, or to give you more background if that would help.
Debbie Kerslake: One of the big concerns is that the period is being shortened, and that will be particularly seriously negative for those with younger children. For example, those who at the moment would be able to receive benefits until the child was no longer eligible for child benefit would be getting benefits for only 12 months. This is a drastic reduction in the length of time over which families are supported, and we are concerned because we believe that more than 90% of families with dependent children will lose out under the proposals.
There is a very small percentage of families that would benefit, but they would be those with older children, for example 16 and 17-year-olds, whereas a mum whose partner had died leaving her with a one-year-old and a three-year-old would be significantly affected. We are talking about very large sums here, for those families.
Thank you both for coming in. This is not an issue that has had a lot of attention so, partly for the benefit of the Committee, on the issue of losers you will understand that we are increasing the lump sum from £2,000 to £5,000 for families with children, and then paying a monthly amount of about £400 for a year. Obviously, the figures are not in the Bill; it is the structure that we are debating.
We do not recognise the 90% figure that you give, on the basis that if someone gets £5,000 not £2,000, that is an extra £3,000. If they get £400 per month for a year, which is roughly similar to the current rate, the extra £3,000 is gain, and therefore the only bereaved families with children who will get less will be those who would otherwise have been on the benefit for several years and, as you rightly say, this is focused on the immediate bereavement. Could you just talk us through why you think 90% lose, when we just do not recognise that?
Di Stubbs: Certainly. I will talk you through the figures that we have used from the impact statement. In fact, the way in which the impact statement is worded makes it sound as if only a small percentage would be affected because of their making a longer claim. But, taking into account the lump sum and the monthly payment for a year, the break-even point, at which it begins not to make a difference, is at about the two-year mark for families in work—that is from your own figures—and at about three years for families out of work. That means that people whose child was 15 or 16, or 17 or 18 if they were in work, are the only ones who would gain under that system.
The other point to make about the lump-sum bereavement payment is that perhaps it was in your minds that that would be able to be eked out over a period of time. We are very aware of the increase in funeral costs and things like that. Given the chaotic situation that exists when a parent has died and the other parent is trying to support the children and doing other things, it will be very difficult to protect that lump sum from all the immediate demands.
I think that that may be a misreading of the numbers. Clearly, if you are bereaved when you have a newborn and would otherwise have got 16 years’ worth of benefit—clearly, you would get far more under the current system. That is clear, but we know that, typically, people flow off the benefits for bereaved parents after three or four years—that is the median—so is it not a misunderstanding of our assessment to say that only those who are on for a couple of years gain and that is hardly anybody?
Di Stubbs: I do not believe so. Admittedly, I was talking about the percentage of parents. There are figures. Your own projections go forward about 12 years, because the Department was talking about the widowed parent’s allowance and that is how long that has been in existence for. Even if you take it up to that point, your figures show a cumulative difference of about—it is difficult because there is no actual loser; it is a hypothetical loser under the new system. They would be cumulatively about £18,700 worse off out of work and about £26,000 worse off in work. That is the last one of the figures in the impact assessment.
Perhaps I can offer to sit down with you and go through this, because the 90% number that you wrote in your letter to The Times is, I believe, wrong. We will publish our own analysis very shortly with some quite different numbers.
On the wider issue, you will understand that, at the moment, bereavement payments are taxed and are knocked, pound for pound, off your means-tested benefits.
No, the current weekly ones. We are proposing that, for example, the lump sum will be tax free and that because these payments look more like a death grant than a weekly benefit, we can disregard them for universal credit, so have you taken account of the fact that as well as—on top of—a bigger lump sum and a substantial amount in the first year, people can have quite significant universal credit?
Di Stubbs: We appreciate that. One of the things that members of your Department have told us is that the great majority of families who claim bereavement benefits claim only bereavement benefits. They are not in contact with the Department for Work and Pensions for any other reason, so it would be adding people to universal credit. It would be people who are not automatically considering it. There has been a bit of an implication in some of the consultation documents that it is a way of encouraging families that it might be good for them to be back in work. In fact, three fifths of people who are currently receiving bereavement payments are in work. To add people to universal credit would be to complicate the system when I think the aim was to simplify it.
On the broad principles of what is proposed in the Bill, could you both say whether you think that it will help the system to be more understandable on the one hand—I am talking about simplification—and, on the other, whether you think that it will be fairer to those who have no children, who arguably are slightly disadvantaged by the current system? Lastly, could you say whether you think that a single contribution is the right sort of approach?
Debbie Kerslake: I am speaking on behalf of Cruse Bereavement Care. Because we represent anyone who has been bereaved, we do welcome the fact that it is a simpler system. I think we said in our statement that there are things that, as an organisation, we welcome and that is one of them. The system is very complex at the moment. It is hard for people to understand, so I think it is positive that we are looking for a simpler system. Is it fairer? As an organisation, one of the things we welcome is ending the age eligibility. It does not seem to make any sense that a 45-year-old should receive a bereavement allowance, and somebody of 44 does not. That is anachronistic in this day and age, so it is fairer in that sense.
Is it fairer that those without children receive an increase and those with children lose out? That is very difficult, because one of the things that we are aware of as an organisation is that there are ongoing demands and ongoing costs following bereavement. There are ongoing costs, whether you are an individual, but also as a result of having children, and we are conscious that those costs of bereavement are not just in the first or second years. Actually, they are throughout childhood, so it is a very difficult question. I am probably opting out of it slightly, because, as I say, it is good that we are recognising the needs of those without children, but I am really concerned that we are doing it at the expense of those with children.
Thank you very much for coming to see us and for giving up your time to come here and help us. The new benefit will be paid, as I understand it, to bereaved spouses and civil partners, but those who are not married, in some form or another, will not end up with it. Does that concern you at all?
Debbie Kerslake: Yes, it does concern us, because those families and individuals have the same needs as those who are not married. We had a widow, for example, saying that she and her partner were not married, but that they had lived together for 20 years and had children. Her partner had made contributions for all that time, and yet, it felt an injustice that she was not receiving those allowances. I know that there was an issue about how practical it was, but we know that the armed forces have found a way of setting criteria as to which relationships would be recognised. I think that more than 30% of children in 2010 were born to couples who were cohabiting, so a very significant number of children and young people could lose out, and we are concerned about the impact on those bereaved children of not being able to access it.
I represent a constituency that is a naval garrison town, and I have a lot of people who come to see me and talk about some of these issues, especially for stepchildren as well, who find that their mother’s partner, for example, might have gone. That is an issue, too, but thank you for that.
Di Stubbs: If I could just add an extra point, I know that your constituency has a strong and established child bereavement service in Jeremiah’s Journey. They key point that people who would go there or to any of the other child bereavement services would say is that children are not able to determine their parents’ marital status. If this benefit is to help children with the enormous additional costs that you could say come with losing a parent, such as the effect on their lives and the multiple losses, it is difficult to say that it has to be down to a legal decision as to who their parent is.
Di Stubbs: Of course, it is welcome to remove it, but if you are thinking in terms of the effect on children, you would lose it otherwise—supposing it was still in place, if you considered the chances of somebody getting round to remarrying the first year after a bereavement, you would imagine that it would probably be towards the end of that period of time, so it might be that they lose one month, or £400. They might lose two months, or £800. A very tiny percentage will actually be affected and by a very tiny amount.
Do you accept that in the system there is now, having that financial pressure—almost a penalty—for getting remarried is a negative element in the current system that will not be present in the new one?
Overall, how many of those who currently would be entitled to the support will end up losing it under the new system? Can you go back over the numbers? There was a disagreement with the Minister about 90%. Can you clarify that for the Committee?
Di Stubbs: I would like to say one thing straight on. I am working from the Department’s figures and, if we have misunderstood them in any way, we would be delighted to talk it through. It is its figures that we are using. We are amateurs at this, so please forgive me. The figure in the Department’s impact assessment in respect of the number of years of the claim was broken down into 12 years because that is the number of years widowed parents’ allowance has been in place. It depends on an assumption of how old the eldest child would be before a claim was made. If a person is claiming for, say, just over a year, it is likely that the child is at the upper end of child benefit. There is a point at which the lump sum and the monthly payment flip over.
Mr Webb, do you agree that about two to three years for those in work, and about the three years for those out of work, is when people would actually gain from the two added together? That is £800 for those in work, while it is £2,700 for those out of work. In respect of children of 15 years old or younger, and 16 years old or younger if the surviving parent is in work, less money would be received under the system. We have stories from people who were pregnant when bereaved or who had a very small child. They were potentially able to claim for 18 or 19 years, and were able to stay in work. That would be a difference of about £45,000.
If I understand you correctly, once people are claiming the bereavement payment for, say, more than three years, they are losing under the proposed system. You are talking about only those who make claims for less than three years. On the Department’s figures, how often do people on average or in the medium term claim bereavement payments?
Just for the Committee’s information, under the current brief on widowed parents’ allowances, the average length of claims is about four years. Only one in 14 last more than 10 years. Clearly, yes, if you are pregnant when you are bereaved and you go on claiming for 16 years, you would get a lot less of this payment, but you would get universal credit for that whole period. You said in your response that that makes it more complicated, but it is cash to live on. It is a substantial addition, whereas current bereavement benefits replace other benefits. It would be cash to live on. You are getting intensive help early on and long-term support if you have no other source.
The levels are not in the Bill—the £5,000; the £400 and all the rest of it. A future Government will decide the levels. We are giving them indicative levels. Let us park the levels. Can you say a little more about the structure? What bereaved families said to us and what your organisation has to some extent said to us in our consultation was that bereavement is a real financial hit. The original proposal was for all of the money to be a huge lump sum. People then said, “No, we couldn’t cope with a lump sum. We would spend it all,” so they ended up with a big lump sum and 12 monthly instalments. Do you have some sympathy with that direction of travel as opposed to quite a small lump sum and a stringed-out benefit?
Di Stubbs: “Yo,” I think. I definitely have sympathy with the idea of increasing the lump sum because costs have increased so significantly. There have been recent reports about the costs of funerals and things like that. So many families who we are in contact with talk about those chaotic first days when there would be pressure from people saying, “Oh, he would have wanted flowers or this or that.” It is very difficult to say “No” to anything at that point. The increase is indeed welcome, as is the principle of monthly support; I know that there is a sort of semantic difference between weekly and monthly support, but whichever way.
The thing that families like about receiving widowed parent’s allowance—I mean, they don’t want to be receiving it; they would do anything in the world not to be eligible for it—it is almost like, because the person who has died, by definition, has to have paid national insurance, and they are not going to claim their pension or incur additional costs for the health service in their later years and things like that, the actual, very small amount that you get for the allowance feels almost like a gift from that person; it is something that they have done for you. They have made the contribution, and now your children will receive that back.
Because we know that the first year is such a year of changes and difficulties, and that in many cases the impact on the children happens in the second or third year, or at times of transition, which is when you need your parent to be not only physically but emotionally present, not concerned with returning to work soon or trying to make complicated child care arrangements so that you always have the same person consistently, this little bit of money, over the period of the child’s life, really can make all the difference. Of course we welcome the fact that you have increased it. We welcome the concept of a monthly sum, but the duration needs to be longer for the children.