Category: Welfare Reform

Welfare Benefits Up-rating Bill


My Lords, I welcome the Bill as it will restore fairness and simplicity to the process of social security payments. It will also deal with the question of affordability. It is important for a Government of any persuasion to show that they empathise with taxpayers who are essentially paying for welfare handouts. The concept of fairness is one of the reasons for proposing this Bill. It is worth remembering that the coalition Government inherited the biggest budget deficit of any country in the developed world. It is estimated that capping social security benefits in this manner will save the Treasury £3.7 billion in 2015-16 and that, thereafter, there will be permanent savings each and every year in our welfare spending.

Welfare spending increased by 60% under the previous Government but this did not produce the intended result of helping individuals to return to work. If we can get more people in work, some of them will receive salary progressions and improve their standards of living. In the years 1997 to 2010, when average earnings increased by 30%, tax credit spending increased by 340%. One of the aims of this Bill is to tackle the lack of aspiration and ambition among a number of those who have been trapped in poverty. I believe that the 1% uprating stipulated in Clauses 1 and 2 will improve incentives to work.

It is true that the welfare debate has been described in overly simplistic terms in certain quarters. However, it is a fact that a culture of dependency exists in some areas. Previous Governments have tried to tackle this issue with the best of intentions but the complexity and scope of the problem has often meant that past strategies have not been successful in addressing the matter. Children and young people who live in households where adults do not engage in any form of employment are not only the most deprived in our society but are most likely to follow this path once they leave full-time compulsory education. This generational cycle of worklessness is a key factor in the rising levels of welfare dependency and poverty in our communities.

I am sure that all noble Lords will agree that work gives people pride and confidence. Unemployment sometimes creates depression and has an adverse affect on people. Work is good for people’s mental health, their physical health and their general well-being. These benefits have been demonstrated repeatedly. Dependency is not liberating; it constrains people and prevents them achieving their ambitions.

Baroness Hollis of Heigham: I am grateful to the noble Lord for giving way for a moment. Would he not agree that, on the contrary, what welfare benefits such as tax credits have done, and what universal credit proposes to do, is to make work pay and thus get people back into the labour market, exactly as he wishes?

Lord Sheikh: I still feel there is a culture of dependency. Obviously, we would like to get more people into work and incentives must be given to people to go to work. People have become trapped in our welfare system and they need to be freed. This Bill will make a great contribution to their liberation.

The Government deserve recognition for trying to ensure that we have a fair welfare system to support those in genuine need. Social security should be for people who find themselves out of work and are trying to get back into employment. This House recently debated the success of the Asian community who were expelled from Uganda and came to settle in this country in 1972. My family was among those people who were expelled by General Amin and who came here. A number of these Asians came here penniless and were initially housed in Army camps. At the outset they received state benefits but they came off those benefits, and started to work and established small businesses. They have been successful and now offer employment to others, pay taxes and create wealth for the country. It is unfortunate that some people have chosen not to make a contribution to society and have opted to receive benefits as a way of life. The welfare system was created to ensure that people were not left destitute if they lost their jobs. It was viewed as a matter of support for those who were down on their luck. It is unfortunate that the original purpose of this safety net has been distorted.

I wholeheartedly support the Government’s decision to retain the uprating of long-term disability benefits at the rate of inflation. I also support the triple-lock guarantee for basic state pensions, which means that pensioners will receive an increase of at least 2.5%. A compassionate society is one that shows respect and understanding to the most vulnerable. I am proud that the Government have taken these steps as they are both a moral and civil duty. Further to erroneous reports about these measures, I would be grateful if the Minister could inform your Lordships’ House of the steps Her Majesty’s Government are taking to ensure that people are well informed and reassured about policy regarding disability and pension provision.

It is neither prudent nor fair to distribute welfare payments or benefits without question or regard for our economic situation. The uprating measures in this Bill will show considerable savings by 2015-16 and for years after that. This is essentially about taxpayers’ money. We have a financial deficit that we need to rectify and we need to put the country on a sound financial footing. We can achieve this by reducing our spending, applying appropriate taxes and undertaking more business at home and overseas. I have spoken on the latter point in your Lordships’ House previously. We cannot afford to continue paying welfare benefits as in the past.

The Government have reduced the deficit by a quarter since they came to power in 2010. Obviously, this is to be commended. More than 1 million jobs were created in the private sector in the same period. The FTSE 100 index has risen above 6,300 points for the first time since May 2008. If we can achieve more growth we will create more jobs, and if we can encourage people to work rather than be dependent on the state, more people will be gainfully employed. I support the Government on getting the economy right and we must be firm and keep on the right track. It will indeed cause pain to some people but, of course, if a person is ill it is necessary to take strong medicine. We should not borrow our way out of the current financial crisis. Borrowing is the easy way but it is the wrong way.

There are wider social implications at the heart of this debate. We cannot ignore the resentment and anger felt by hard-working families who see others making a conscious effort not to work being rewarded handsomely by the state. Failure to address this issue may cause tensions within communities. I am sure that some of us have heard the expression, “I cannot afford to go to work”. This is an absurd situation and we are perhaps the only country where people are better off not working.

The measures in the Bill are necessary to remedy the culture of dependency that is blighting some members of our population. The Bill is a sign of the Government’s commitment to ensuring that we live in a fair society. The fact remains that since the economic downturn salaries have risen on average by 10%, whereas payments for some individuals in receipt of benefits have risen by 20%. We need to look at all areas of expenditure for our well-being, which will of course include the welfare benefits. The present state of affairs is simply not sustainable. I am supporting this Bill as it is a step forward in dealing with issues relating to affordability and fairness.

Welfare Reform Bill

My Lords, this Bill is one of the boldest attempts to repair and restructure a welfare system that has essentially failed taxpayers and jobseekers. Welfare reform is an important plank of this Government’s programme. The current system has resulted in welfare provision that is not always distributed to the recipients who are most in need. It is also a system that favours reluctance among some people to work rather than to seek employment. That system is simply not sustainable.

The centrepiece of this Bill is the universal credit award. It has been reported that the universal credit has the potential to lift more than 350,000 children and 500,000 adults out of poverty. In streamlining the current system, the universal credit will provide clarity and accountability as opposed to the multifaceted approach. A simplified system will make a valuable contribution towards the fight against benefit fraud. It has been estimated that this type of fraud costs the taxpayer £1.5 billion per year.

I welcome the clearly defined boundaries within Part 1 of the Bill, as it details the sanctions that will be put in place if claimants fail to comply with the requirements of the universal credit award. I support the Government’s efforts to tackle the current situation surrounding housing benefit, which has seen claims rise by £10 billion over the past 10 years. A move towards an annual uprating in line with the consumer prices index will contribute towards greater stability in rents. It has been estimated that the change will generate savings of approximately £300 million a year. The current system unintentionally allows a number of registered social landlords to encourage welfare dependency among clients for their own financial gain.

It can be argued that the most significant aspect of the universal credit is its potential to encourage unemployed people to find work while ensuring that they are not left out of pocket by doing so. Much debate has focused on the conditionality to be introduced with universal credit, requiring claimants to look for work with appropriate sanctions. As an employer and chairman of companies, I feel that we need to encourage people to work. People should work principally for two reasons: first, to earn a living and, secondly, to obtain job satisfaction. I shall therefore concentrate on matters relating to work.

Our welfare system should align incentives to ensure that those who demonstrate a willingness to work are not less well off than those who resist opportunities to earn. It is a tragedy that nearly 5 million people of working age in the United Kingdom are on out-of-work benefits, with almost 1.5 million having received them for more than 10 years.

We have one of the largest workless populations in Europe, and just under 2 million children living in households with nobody working. The current system penalises people for looking for work. The majority of people on benefits do not wish to be recipients for the remainder of their lives, but we need to consider carefully the process of transition so that they are not penalised in the interim period.

The most effective mechanism for relieving poverty is work. Work is good for people’s mental health, their physical health and their general well-being. These benefits have been demonstrated repeatedly. Dependency is not liberating; it constrains people and prevents them achieving their ambitions. People have become trapped in our welfare system and they need to be freed.

This Government have shown their commitment to helping individuals find long-term employment through the work programme. Approximately 2 million children are living in households where those of working age are unemployed. Unemployment and a heavy reliance on benefits have devastating effects on our economy and our wider society. These adverse effects often include high levels of personal debt, anti-social behaviour and solvent abuse. The current system fosters a dangerous culture of dependency and lethargy.

The Department for Work and Pensions has estimated that the reforms proposed by the Bill could reduce by 300,000 the number of households where those of working age are unemployed. It is also thought that the changes could improve the net incomes of 700,000 of the country’s lowest paid workers, as they will be able to keep a greater portion of their earnings. The Bill encourages social mobility while tackling the causes and effects of poverty and unemployment.

I turn to the new sanctions regime in the Bill. I welcome the fact that all those claiming benefits will have to sign a claimant contract, including a pledge to turn up for appointments and interviews and take up reasonable offers of work. By introducing more appropriate financial sanctions, the new regime will provide the necessary spur to the minority of claimants who fail to comply.

The provisions in the Bill encourage social mobility while tackling the causes and effects of poverty and unemployment. These elements suggest that there will be wider gains to the British economy. The Bill raises questions not of political allegiances, but of fairness. I welcome the Bill and the Government’s resolve to get this right.


Welfare Reform Bill: Second Reading


My Lords, I support the Bill, as it is evident that the welfare system in this country is in urgent need of reform. Nevertheless, the Bill can be further strengthened during its passage through this House to ensure that we are as brave as we need to be in placing welfare reform at the heart of the strategy required to mend broken Britain. A welfare system cannot be simply a safety net; it requires a more fundamental support structure to bring the poorest in our society back into the productive mainstream. William Shakespeare wrote:

“’Tis not enough to help the feeble up, but to support him after”.

Welfare reform is desperately needed today. Five million people are on out-of-work benefits. At present, nearly 2 million people are unemployed and over two-thirds of jobseeker’s allowance applicants are repeat claimants. Indeed, as this country further falls into the throes of recession, now must be the time to reform our welfare system and to begin to repair our broken society. Let no one tell us that a recession is the wrong time to address welfare reform; it is precisely the current socio-economic climate that makes reform more urgent, not less. The recession provides a platform from which a new welfare consensus can emerge—one of real workfare, where rights are balanced with responsibilities, where the poorest in our society are given the skills and opportunities for upward mobility and where the notion of dependency culture is a thing of the past.

Many of the details of this Bill originate from Conservative proposals. There seems to be a growing consensus as to some of the steps required to address our current welfare malaise. More than 10 years ago, the Government came to power claiming:

“We will be the party of welfare reform … we will design a modern welfare state based on rights and duties going together”.

That is stated in the Labour Party manifesto of 1997. The reality is that this opportunity was missed, but now we are at a point where it is being addressed. Now is the time to seize the moment. William Beveridge saw the SecondWorld War as the opportunity to build a welfare state as part of the road to reconstruction; let us use today’s recession in a similar way to reform our welfare system.

To this end, I welcome most of Part 1 and the social security clauses of this Bill. It is important to have greater flexibility, conditionality and individualisation of benefit provision so that welfare becomes an effective tool of upward social mobility rather than simply a bureaucratic catch. “Work for your benefit” schemes are Conservative ideas that envisage back-to-work providers motivating their clients back into work by utilising their experience and working on an individual’s needs. This level of training will ensure that people do not quickly slip back into the vicious cycle of long-term unemployment and welfare dependency. Clause 4 particularly encouraged me, as it ensures that in case of couples where one is capable of work, he or she must take actions to seek work. He or she should make an effort to seek work. This will engender a sense of responsibility and create a culture of undertaking work. It will be more important if there are children living with them, as the children will be brought up in an environment where a parent is working. Parental responsibility is the ultimate key to tackling broken Britain, as the family unit is the primary institution in our lives.

It is also encouraging to see Part 1 making provision for the voluntary and third sectors to take over the payment of credit to Social Fund customers and in so doing to utilise their welfare support expertise. Therefore, why did the Government state in Committee in the other place that they did not intend to use this power in the near future? I urge noble Lords to push for pilot schemes as soon as possible for Social Fund loans.

However, will the Government, as well as instituting a payments-by-results system with these providers, be building in minimum numbers to get back into work into the contracts between the Department for Work and Pensions and the provider? What will be the limits to claiming out-of-work benefits for those people who may refuse to join a return-to-work programme? For those refusing to accept reasonable job offers on a consistent basis, will there be a punishment such as a requirement to “work for the dole” on community work programmes? When do the Government envisage these regulations being drafted under Clause 2 to detail the workfare schemes?

I, of course, welcome Clause 9 and Schedule 3, which will force drug users to comply with a rehabilitation plan and to undergo drug testing in certain circumstances. It is important that long-term drug use, and its connection with vicious cycles of crime and unemployment, is tackled in a holistic manner. Many long-term drug addicts have spent periods in prison, so will the Minister assure me that there will be links and proper joined-up thinking between those rehabilitation plans in prison and those outside prison?

I welcome Part 2, which will give greater control to disabled people over the provision of their individualised services. I am, however, concerned that Clause 34 places limitations on the individual budget pilot schemes. I urge noble Lords to ensure that the pilots are robust and give an accurate picture of how individual budgets would work in practice. We must also look carefully at Clause 29 to ensure that all relevant services are included in such individual budgets; for example, social care is currently absent from the clause.

Part 3 is important in ensuring that parents live up to their obligations by giving further powers to the Child Maintenance and Enforcement Commission to serve travel disqualification orders. However, we must ensure that such a power is used proportionately and that there are adequate checks on such a strong sanction.

Part 4 deals with birth registration and attempts to ensure that unmarried parents jointly register the birth of their children. We must ensure that the reasons for a father’s details not to be registered on a birth certificate are sufficiently robust and we ought to look at grounds for requiring participation in a paternity test. These steps are important in ensuring, where possible, joint parental responsibility in our society and I urge the Government to look at further opportunities to review elements of family law, including other ways of ensuring presumptions of equal parenting in law.

There is massive potential in this Bill and I strongly support most of its provisions. However, we must ensure that the overall correct workfare message of this Bill retains respect for those who simply cannot work. We therefore must make a clear distinction between those who can work and those who cannot physically work. Once this distinction has been made by virtue of a comprehensive needs-based assessment system, we must adopt a brave, individualised, results-based workfare model that makes welfare the catalyst of social mobility as opposed to a vicious revolving door of poverty, crime and paucity of aspiration.

I have quoted William Shakespeare and referred to William Beveridge. I would like to end with a quotation from Samuel Johnson, who said:

“A decent provision for the poor is the true test of civilization”.