Welfare Reform and Work Bill — House of Lords, 2016-01-25
Topic: Social Welfare
David Freud (Conservative, Centre-right): My Lords, Amendment 25 seeks to remove child benefit and child tax credit from the list of those benefits included within the benefit cap, so that they are disregarded when calculating the total amount of benefits that a household can receive before the cap is applied. This amendment undermines the fundamental principle that we established when we introduced the cap: that there has to be a clear limit to the amount of benefits that an out-of-work family can receive. This principle has gained very broad support across the country The benefit cap is just one part of our suite of welfare reforms, which are restoring work incentives and fairness to the benefits system. The previous system was not fair on working taxpayers, nor on claimants who were trapped in a life where it was more worthwhile claiming benefits than working. Our welfare reforms are about moving from dependence to independence and the benefit cap is helping people to take that important step into work. Indeed, the evidence shows that the cap is working, with capped households 41% more likely to go into work than similar uncapped households. In fact, more than 18,000 households have entered work since the cap was introduced However, we have always accepted that there should be some exemptions from the benefit cap which support the cap aims of incentivising work and bringing greater fairness to the welfare system, while supporting the most vulnerable. To incentivise work, the cap does not apply to those households which qualify for the in-work exemption in universal credit. Nor does it apply to those households in receipt of working tax credit. For lone parents, this is just 16 hours of work per week; for couples with children it is 24 hours of work per week. In recognition of the extra costs that disability can bring, households which include a member who is in receipt of attendance allowance, disability living allowance, the personal independence payment and the Armed Forces personal independence payment are exempt. Those who have limited capability for work and receive the support component of employment and support allowance, or the universal credit limited capability for work- related activity element, are exempt. Furthermore, war widows and widowers are also exempt. Noble Lords should also not forget that if the claimant, their partner or a child for whom they are caring is in receipt of an exempt benefit, the cap will not apply As well as promoting fairness for those families who are in work, the welfare reforms are about transforming life chances. Since the cap was introduced in April 2013, nearly 9,400 capped lone parents have moved into work and claimed working tax credits, joining the 1.26 million lone parents in employment in the UK. By going out to work, parents show their children the importance of a strong work ethic and reinforce the message that work is the best route out of poverty, while improving their longer-term life chances As to the ECHR criticism about the rights of the child, the interests of children are best served by doing everything possible to get their parents into work and providing the right support to remove the barriers to work, such as employment support, training, budgeting advice and free childcare. DHPs are available to assist in hard cases, and the Government will make £870 million available in that area over the next five years The noble Baroness, Lady Lister, raised the family test, and the noble Baroness, Lady Sherlock, was kind enough to remind her that I managed to get a letter to her saying that the family test had been applied when considering the benefit cap changes. The way that the test works on the whole is that the department thinks carefully how the new policy can support family relationships. We have been very clear, as I have been this evening, that it is important that children grow up in households that are in work. The cap is a key way of delivering this particular policy and this particular change Like other welfare benefits, child-related benefits are provided and funded by the state, and it is therefore right that they are taken into account along with other state benefits when applying the cap. It is only fair that households receiving benefits should make the same choices that families in work do. The cap levels are equivalent to annual pre-tax incomes of £29,000 and £25,000. These are still considerable incomes, with around four in 10 households earning these sums in London and the rest of the country respectively It is a simple matter of fairness for those families with children who are in work to set the cap at these levels and to include child-related benefits within its scope. To be clear, households who go out to work and qualify for the in-work exemption in universal credit or for working tax credits will be entirely exempt from the cap and will receive all of these benefits over the cap level. For those households who need additional support in adjusting to the cap, DHPs are available: £800 million has already been made available and a further £70 million was added to that figure in the Autumn Statement There is of course a nine-month grace period in which the cap may not be applied to those have recently left sustained employment. This gives households, including those people who are receiving child benefit and child tax credit and who may have had to leave employment, time to adapt to their new circumstances or find work before the cap is applied to them For the reasons I have explained, I do not agree that we should remove child benefit and child tax credit from the cap, as would be the result if this amendment, as drafted, was passed. I ask the noble Baroness to withdraw her amendment.