Despite escaping one major ambush, Lord Freud cannot have been looking forward to Amendment 59, moved by the Bishop of Ripon and Leeds. A short amendment;
Clause 94, page 63, line 25, after “benefits” insert “with the exclusion of child benefit”
it addressed issues of child poverty, as the Bishop noted,
The Government’s assessment of the impact of the cap is that some 67,000 households will be affected. The Minister spoke of that earlier as not a massive number. It is pretty massive for those involved, but the fact that it is not massive in the overall terms of Welfare Reform Bill means that it ought to be possible for us to pass the amendment without seeing ourselves as fatally damaging the Bill itself. Those 67,000 families will lose on average £83 a week. Analysis from the Children’s Society shows that those households contain around 220,000 children. Three-quarters of those affected by the cap are children, yet Clause 94 says nothing about children at all.
From the Liberal Democrat benches, Baroness Tyler of Enfield, in whose name the Amendment also was, asked a key question;
Is it fair that children born into small families with earnings in excess of £80,000 a year receive child benefit while those born into larger families with a benefit income of £26,000 a year do not?
and pointed out a fundamental contradiction in the Government’s proposal;
It is about families feeling, rightly or wrongly, that they will have to split up because if they created two households instead of one, parents would then be entitled to £26,000 a year in benefits. That cannot be right. Experts in the field have said that there is a substantial couples penalty built into the cap that is completely at odds with my own view, and that of the Government, of the need to support strong and stable families.
Lord Greaves, returned to the House after a period of ill-health, was quick to draw attention to another attack on the principle of universal child benefit;
Child benefit, as my noble friend and others have said, has always been a non-means-tested benefit that goes as of right to families with children. It has always been paid on a per capita, per child, basis. That is a fundamental principle. The first child gets more nowadays, then each child after that gets the same, in order to assist the work of bringing up that child. To abolish child benefit, which is what is actually being done in this Bill, for people who are at the benefit cap and who are getting other benefits that take them up and beyond that cap, as is highly likely, is a fundamental attack on the whole principle of child benefit.
Lord Kirkwood of Kirkhope, with five rebellions on the Bill under his belt already, picked up on the same point;
This amendment is the best form of mitigation because it protects a universal benefit that people earning just shy of £80,000 a year will qualify for until we look at that. The Government say that they are on the case. Those people will get that benefit, while people subject to the housing cap in future may not. I do not see the equity in that situation and it would not be safe for us to run with the clause if unamended.”
It required a bravura performance from the Minister to persuade enough Liberal Democrats and crossbenchers to save the day or, alternatively, a sizeable concession. None was forthcoming. In summing up, the Bishop of Ripon and Leeds spoke for many in the chamber when he said;
I do not think we have heard any real response to the basic point that the Bill means that a childless couple has the same cap as a couple with a number of children. It does not seem logical to say that we have to put a lot more pressure on families with children than on those who do not have any.
It was enough to win the day, with as reported yesterday, twenty-six Liberal Democrats voting against the Government, four of them (Ashdown of Norton-sub-Hamdon, Benjamin, Redesdale and Tyler of Enfield) doing so for the first time in this Parliament.
This represents the biggest Liberal Democrat rebellion in this Parliament so far, and with so many having voted against one or other element of the Bill already, it may not be the last this week, with Day 6 of the Report Stage due tomorrow.
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15 Comments
A few points that need clearing up… a childless couple should never be able to get anywhere near the £26k cap in the first place. There’s no way that just housing benefit and income support should ever amount to that much; if it does, surely we should be looking at a much smaller cap for those without children.
The core argument is that £26k should be enough for any family as it’s equivalent to more than twice the London living wage… the only people who could find themselves over the limit are those in expensive city centre houses.
Even if you take a reasonably expensive area of the country, such as Mid-Kent, you can get a 4 bedroom house for around £10k per year, leaving £16k (more than the minimum wage) just for living costs. Add on £5k for food, £2k for utilities and you’d still have £3k spare for other expenses.
One effect of including child benefit in the long run would be to reduce family size, which would be a good thing, but involve a bad cost. On the other hand, child benefit, and council housing by family size, can be seen as a perverse incentive to have more children.
I’m of the opinion that there should be no state-backed incentive in either direction, so that other factors have a greater chance of having an effect.
However, the solution to this particular pickle is glaringly obvious – take the child benefit out of the cap, and reduce the cap accordingly – make it £12,000 or so for all benefits except child benefit. In the long run this cap should be reduced to the minimum wage, so any household gets benefits equivalent to one adult in full time minimum wage employment plus any child benefit. This could then be reduced at, say, 50p in the pound for any earnings from, for example, part time work or apprenticeships.
“Is it fair that children born into small families with earnings in excess of £80,000 a year receive child benefit while those born into larger families with a benefit income of £26,000 a year do not?”
Of course not ,which is why we should be ending universal benefits and ensure that welfare payments only go to people who are in need.
Mind you, I think all government thresholds and caps should be relative to the minimum wage – including income tax allowance and tax banding.
e.g.
Minimum wage is equivalent to 6.08 x 37.5 x 52 = £11,856pa
personal allowance = £11,856pa for those over 21
Basic tax rate X% between £11,856 and £23,712
Rate X% plus increment Y% between £23,712 and £47,424
Rate X% plus increment 2xY% between £47,424 and £94,848
etc. until rate reaches 100% (setting a top income, but as the bands double in width each time that depends on X and Y.
Governments can tinker with X and Y, and raise the minimum wage in line with inflation or more if they wish, but everything else remains constant.
Just a thought.
There are two main reasons why child benefit should be kept out of the benefit cap.
The first is to do with CB (inter alia for reasons I am quoted as saying above). It is not just that all children will get CB except for one category of children in up to 67,000 households if the government figures are correct. It undermines the whole principle of CB which has been one of the most successful benefits throughout the time it has existed – originally as Family Allowance. It’s also a benefit and principle that Liberals have fought hard to maintain over the past 50 years.
The second is to do with rents and housing benefit, which is the main problem for most of the 67,000 households. Housing benefit is related to the level of rent paid (and the WR Bill already restricts it to 30% of average local rents which in itself is going to cause real problems for many families). In high rent areas – much or most of London – the rent will form a high proportion of the £26,000 (say £500 a week) cap. £350-400 a week rent in much of London for a house or quite small flat is not uncommon and finding family accommodation for less than this is not easy.
So if you get £500 in benefit and pay out £400 in rent that leaves £100 for everything else. Try managing a family of two adults and one child on that – let along a family of four children.
This is partly the result of a benefit cap that has not been well designed. For households receiving benefits in otherwise identical circumstances, that consist respectively of two adults, and two adults and three children, the same cap will bwe the same. Yet it’s obvious that the one with children has far greater needs than the other. Paying child benefit on top of the cap (ite treating them the same as every other household with children – would help to alleviate this problem.
If the Government have any sense and any sense of fairness they will find a way of making this possible.
Of course, £26,000 is an arbitrary figure and it’s not clear why it has been chosen. But it is clear from what Lord Freud said that the cap is intended as a punitive measure (he said “encouragement”) to force people to try to get a job. (Speeches from other Tories were much more unpleasant with nasty overtones of the “deserving” and “undeserving” poor and the clear implication that long-term unemployed people are de facto undeserving so should be ground into poverty).
The problem is however that the area in which the cap will affect people most is where there may be more jobs (London) but in the meantime – short term in order to survive – people will be forced out to areas where there are fewer or no jobs available. In areas where there are virtually no jobs at all (eg northern towns) people will not be affected so much so will just stay put and nothing will change. At best it’s a very blunt instrument.
At worst it’s a pretty vicious attack by a prosperous ruling class on a socially and economically impoverished underclass backed by rightwing tabloid indignation promoted around a small minority of “scandalous” cases. Unfortunately it is unlikely that it will begin to sort out the serious problems of the long-term jobless and the culture of “benefit dependency” (and few people will not agree that there are serious problems with this) and there are real risks it will cost as much as it saves. For instance it only takes a family of four children to be taken into care for a year and that’s another half million or so spent, rather more than paying benefits to keep them at home.
Tony Greaves
The votes yesterday were as follows:
First division (a rather discursive Labour amendment to exclude from the cap families who are homeless or under threat of being homeless): Lost 222-250.
Bishops 5-0.
X-bench 31-52 (ie 3 to 2 for the government)
Conservative 0-148
Labour 161-1
LD 17-42
Other 8-7
Second division (Bishops’ amendment to exclude child benefit)
Bishops 5-0
X-bench 37-41
Labour 175-0
LD 26-39
Other 9-5
7 more LDs voted in the second division than in the first. From this and anecdotally I guess there were a dozen LD abstentions in the first and half a dozen in the second.
LDs voting against the government in the first division were:
Avebury, Greaves, B Hamwee, B Hussein-Ece, Kirkwood of Kirkhope, Maclennan of Rogart, B Miller of Chilthorne Domer, Oakeshott of Seagrove Bay, Roberts of Llandudno, Sharp of Guildford, Shipley, Smith of Clifton, Taylor of Goss Moor, B Thomas of Winchester B Tonge, B Tyler of Enfield, B Walmsley
LDs voting against the government in the second division were:
Allan of Hallam, Ashdown of Norton-sub-Hamdon, Avebury, B Benjamin, Cotter, B Doocey, Dykes, Greaves, Harris of Richmond, Hussain, Hussein-Ece, Kirkwood of Kirkhope, Macdonald of River Glaven, Maclennan of Rogart, B Miller of Chilthorne Domer, Oakeshott of Seagrove Bay, Redesdale, Roberts of Llandudno, Smith of Clifton, Taylor of Goss Moor, B Thomas of Winchester, B Tonge, B Tyler of Enfield, Tyler, B Walmsley, B Williams of Crosby.
Thank you, Tony, and well said.
“Housing benefit is related to the level of rent paid (and the WR Bill already restricts it to 30% of average local rents which in itself is going to cause real problems for many families).”
I think that should be the 30th percentile, shouldn’t it – not 30% of the average rent?
Lord Greaves. Thank you very much for posting this valuable explanation.
Tony Greaves betrays the thinking of (at least some of) the rebels in his second last paragraph. In order to fund the lavish lifestyles of London landlords, the London lords want to tax barmaids and check-out assistants in Halifax.
If there are less jobs in the north then that only makes it worse that, instead of funding regeneration in the north the “noble” lord and his Labour allies want to tax workers and businesses in the north, making them less competitive and then use the money to line the pockets of the rich in London.
If Londoners want higher benefits than in the rest of the UK, then there should be a London tax (say 9% on all Londoner’s earnings over £21k?) to pay for it.
While I do have some sympathy with the points about child benefit, uncapped housing benefit is a scandal and their lordships do themselves no credit by supporting it. The obvious solution is to cap housing benefit separately
“While I do have some sympathy with the points about child benefit, uncapped housing benefit is a scandal and their lordships do themselves no credit by supporting it. The obvious solution is to cap housing benefit separately”
Caps on housing benefit were introduced in April last year. Here’s some information for you:
http://www.dwp.gov.uk/local-authority-staff/housing-benefit/claims-processing/local-housing-allowance/impact-of-changes.shtml
I too would like to thank Lord Greaves for his contribution. I agree with him entirely…
Despite escaping one major ambush, Lord Freud cannot have been looking forward to Amendment 59, moved by the Bishop of Ripon and Leeds.
Oh, I don’t know. I find it hard to believe that there is any argument the Tories would be happier to have in public.
“If Londoners want higher benefits than in the rest of the UK, then there should be a London tax (say 9% on all Londoner’s earnings over £21k?) to pay for it.”
— You’re assuming that London doesn’t already pay proportionately more in taxes than the rest of the UK. I’d be very surprised if that were true.
“Housing benefit is related to the level of rent paid (and the WR Bill already restricts it to 30% of average local rents which in itself is going to cause real problems for many families).”
I think that should be the 30th percentile, shouldn’t it – not 30% of the average rent?
Yes, sorry. In the debate there was a lot of loose talk abour “average” earnings of families in work when the legislation says median.
One last footnote on the stats: there were 77 LD Peers who attended the House on Monday, though not necessarily all present when the votes took place.
Tony Greaves