Welfare Reform and Work Bill — House of Lords, 2016-01-27
Topic: Labor
Maeve Christina Mary Sherlock (Labour, Centre-left): My Lords, Amendment 46A, in my name and that of my noble friend Lady Hollis, would require the Government to produce and lay before Parliament a report assessing the impact on work incentives of the Universal Credit (Work Allowance) Amendment Regulations 2015, which passed through Parliament last year. In particular it would require the Government to analyse data on income and hours worked by household type, and the impact of the regulations on the levels of awards of in-work support payable to claimants who have moved, or will move before 2018, from tax credits to universal credit as a result of changed circumstances I shall address the matter of substance first and then move on to the politics of the matter. I raised these matters in Committee to get the Minister to tell the House what would happen to people who were moving across from tax credits to universal credit. The answers were deeply worrying. It is now clear that two big and distinct problems are emerging in relation to universal credit. First, the incentives to enter and progress in work have been severely damaged by a succession of changes made by the Government. As the director of the Resolution Foundation observed, universal credit was set to be £2.3 billion more expensive than the six benefits it replaced. Indeed, versions of the policy early in the last Parliament were even more expensive than that. No wonder the Treasury was nervous about a fast rollout—not, I suspect, the chief concern facing it at the moment. But after repeated chipping away, it seems that universal credit will now actually save the Treasury money—more than £2 billion a year once it is fully in place. Of course, if it saves the Treasury money, it costs claimants money, so universal credit is no longer going to do the job it was meant to The final straw was the reduction in the work allowances that went through Parliament last autumn. After weeks of pressure from all quarters and being asked to think again by this House through the Motion of my noble friend Lady Hollis, the Chancellor announced that he was scrapping the equivalent planned cuts to tax credits. I unreservedly welcomed that change. However, the Government decided to press ahead with comparable changes to universal credit. These various changes have done serious damage to work incentives, and, furthermore, the way that universal credit is now structured means that there is a significant problem with lack of work incentives for second earners and the position of self-employed people is a major problem Then we have the second problem: transitional protection. Iain Duncan Smith declared on "The Andrew Marr Show" in the wake of the tax credits change that no one would lose a penny from universal credit cuts. That is by no means clearly so. We know that if you take two working families with children in identical circumstances, but one on tax credits and the other on UC, the one on UC could be almost £3,000 a year worse off. How can nobody be a penny worse off? It depends on the transitional arrangements. Evidence given to Members of another place by the department suggests that there are two ways that people could end up moving from tax credits to UC. The first is "managed migration", as the jargon has it. These are people who are moved over en bloc by the department, but that will not happen until 2018. They will get transitional protection The second way is by what is slightly oddly called "natural migration". This happens when someone who is getting tax credits has a change in circumstances and is forced by the department to move across to universal credit. We now know that this can happen through all kinds of changes, some of which were alluded to by the noble Baroness, Lady Manzoor: if someone loses their job; has a baby or adopts a child; if a lone parents gets remarried or repartnered; if a couple splits up; if someone becomes a carer or ceases to be a carer; or even, slightly oddly, if a lone parent’s child reaches the age of five As I understand it, in all of those circumstances and indeed in more, a tax credit recipient will be forced on to universal credit and overnight could see their entitlement fall by up to £3,000 a year. Can the Minister confirm that that is the case? Further, can he tell the House whether any transitional protection will be forthcoming for the group of people in the category called "natural migration"? How many people does his department anticipate will be in that position during the first year of the new work allowance regime? We have a problem of transition and a problem of seriously damaged work incentives. Above all, there is an unacceptable lack of clarity about the impact on low-income working families I should probably have declared an interest as I was an adviser to Gordon Brown as Chancellor of the Exchequer when tax credits were invented. He hired me away from the single-parent charity where I was toiling to support him in trying to work out what to do about the fact that we had the second-highest child poverty rate in the developed world. Child poverty had trebled under the previous Tory Government. We also had significant problems around lone parents not working. I worked with Gordon Brown to work out how the Government should tackle what was then a very low rate of single-parent employment. Tax credits made a massive difference. They helped to lift millions of British children out of poverty and led to the most dramatic rise I know of in the proportion of single parents in work. To see this Government damage work incentives that were so hard won breaks my heart I fully accept that the noble Baroness, Lady Manzoor, truly cares about the plight of working families, but I do not think that those families are helped by leading them to believe that this House can do things for them that it cannot do. It is clear to me, and I am sure it is really clear to Liberal Democrat Peers—I understand that we have to go with the politics of the age—that there is a distinction between opposing something and feeling that this House should vote it down. I oppose this entire Bill, but I did not vote against it at Second Reading because as a revising Chamber it is not our place to do so. As I say, we are a revising Chamber, and, if that is the case, we should do our job properly Rather than using primary legislation retrospectively to repeal regulations which have only recently passed through both Houses of Parliament, and are not even regulations flowing from this Bill, let us focus instead on taking appropriate action to hold the Executive to account. Let us not let the Government off the hook by playing politics with this issue. Let us not pretend that we all take the same view on tactics, but that does not mean we have different views on substance I understand that during the tax credits debate, the noble Baroness, Lady Manzoor, wanted to run a fatal Motion against all the conventions of the House. We did not back that; we backed my noble friend Lady Hollis in running a delay Motion which had exactly the right result but in an appropriate constitutional manner. That is the position we are in today. The Chancellor’s cuts are going to do significant damage to working families in Britain. Those people and this House have a right to know what that damage is. That is what we are pushing for today and that is what we on these Benches will be voting for.