Welfare Reform Bill

Public Bill Committee, 31 March 2011.

Chris Grayling (Conservative, Epsom and Ewell)

I beg to move,

That the Order of the Committee of 17 March shall be amended as follows—

in paragraph (1)(e) leave out ‘10.30 am and 4.00 pm’ and insert ‘9.00 am and 1.30 pm’.

Welcome to your first sitting of the main part of the Committee, Mr Weir. Next Tuesday is the final day before the Easter recess, and the hours of the House are not normal Tuesday hours. Therefore, we have to adapt the hours of the Committee accordingly, which is the purpose of the motion.

At the original meeting of the Programming Sub-Committee, we discussed the possibility that the Committee would not sit on Thursday 5 May, because people have engagements elsewhere in the country. I shall therefore move a manuscript amendment to delete Thursday 5 May from the programme order. I do not intend to amend the programme order to put in an extra slot but, since Thursday morning sittings last an hour and a half, I intend that on another Thursday the closure motion should not be moved until an hour and a half later than the hour to which we would normally sit on a Thursday afternoon. We will have an informal discussion across the Committee to work out which Thursday would suit us all best.

Clause 9

Kate Green (Labour, Stretford and Urmston)

I beg to move amendment 3, in clause 9, page 4, line 25, at end insert

‘such regulations will make reference to an independently determined Minimum Income Standard.’.

Good morning, Mr Weir. The amendment proposes that, in setting levels for the universal credit, Ministers should make reference to an objective and independent minimum income standard. I will expand on this point later, but I say at the outset that the amendment should not be seen as a request for another spending commitment. The wording is careful—to “make reference” to minimum income standards. It is not necessarily to set benefits at such a level, although in the long run that might be an aspiration that we could all share.

For the uninitiated—I apologise for being something of a junkie for minimum income standards—I will explain a little of the background to what the amendment is substantively about. I do not know if this is still the case, but in the old days people used to receive, with their benefit payment, a statement from the Government: “This is what the Government believe you need to live on”. The figure was never actually true, but only more recently have we been able objectively to test the accuracy of such statements.

It is important that we understand how much a person needs to live on if we are to construct a social security system that delivers a minimum safety net, through which we would not want anyone to fall. In moving the amendment, my contention is that we need to be aware, as we develop the universal credit, that current levels of out-of-work benefits fall well short of what that safety net should be. As we move into a totally new world of social security and financial support for families and individuals, we have an opportunity to rethink what we mean by safety net benefits. At the same time, we will, rightly, think about what we mean about levels of in-work support and the appropriate balance between rewards from working and the financial support offered to people who are either unable or, in some cases, unwilling to work.

The minimum income standard seeks to answer the question of how much people need to live on. For clarity, I should say that that is not the same as the official poverty line, although they are clearly connected. It is worth noting in passing that adult out-of-work benefits fall well short of the official poverty line, too.

However, I am not talking about setting benefits in relation to the poverty line this morning. This point is a little different. Most crucially, what is different and what is important and valuable about considering a minimum income standard, is that the work done to develop such a standard has been based on what the public think. That is a crucial point, which is about not only the legitimacy of the benefits system, but how to build popular support for a benefits system that is adequate, as well as being about removing the stigma from the benefits system—[Interruption.] It is nice to have a little applause for my argument. As we all agreed earlier this week, removing that stigma is an important objective of what universal credit could achieve.

Work that was done to identify a minimum income standard for this country in 2010 stated that for a single adult with no children, the income required to meet an acceptable minimum standard of living is £14,400 a year—and it will be uprated shortly, of course. For a couple with two children, that amount is £29,200 a year. It is clear from those figures that the minimum income standard is able to take economies of scale into account. It does not give the same amount per head, then add and add, for each member of the household. It is a subtle measure. In a few moments, I will explain what goes into it and discuss some of the things that get counted into the minimum income standard, as well as how it can be subtle in assessing the needs of different kinds of households and their different characteristics.

George Hollingbery (Conservative, Meon Valley)

Is the minimum income standard set at a national level?

Kate Green (Labour, Stretford and Urmston)

Yes, it is. I should say that the minimum income standard is still a work in progress, which is another reason why we might not want to use it as our direct read-across for benefit levels now. Benefit levels are, of course, set on a national basis. We do not have regional benefits, except in the case of payment for housing costs, which reflects the variations of local housing markets now, and will reflect them to some degree in the future, although we are concerned that that will be to a lesser extent.

Charlie Elphicke (Conservative, Dover)

I am listening carefully to the case advanced by the hon. Lady, who said that the minimum income standard for single people is £14,400, and for couples, £29,200. Is her case that benefits should be set at those levels in a similar way to the minimum income guarantee for pensioners?

Kate Green (Labour, Stretford and Urmston)

With the greatest respect to the hon. Gentleman, I do not think that he listened to my opening remarks, because I was not suggesting that we should use the minimum income standard as a level for benefits payments. It might, however, be a long-term aspiration, and I put on the record that it is a long-standing aspiration of mine. Those who have watched my campaigning efforts over the past decade will be aware of my personal commitment to the minimum income standard, but that is not what the amendment proposes. We are merely saying that Ministers should make reference to the minimum income standard when determining what benefit levels should be, for the reasons that I have mentioned—public buy-in, legitimacy, and so on—which I will develop as I go through my arguments.

It is important that we understand how far short basic out-of-work benefits levels leave families, compared with the minimum income standard. That might interest the hon. Member for Dover, because he will see the extent of the gap that we are talking about and why it might not be realistic, even for those of us who are very keen on the minimum income standard, to move straight to it in one big, expensive jump. What we see today is that a minimum income standard for an adult with no children is more than twice the rate of existing out-of-work benefits. Families with children, who are on out-of-work benefits only, would achieve an income of about two thirds of the minimum income standard that has been assessed, as at April 2010—I am using April 2010 figures. We have not uprated the minimum income standard, or the benefits levels—we will do the latter next week. The standard does not jump significantly from year to year—although, as I will show, it does move significantly over time—so the figures will be in that broad ballpark.

Interestingly, the income that pensioners receive from pension credit and other sources brings them pretty much up to the minimum income standard, provided that they take up all the benefits to which they are entitled. That is a big caveat, however, because they are often reluctant to claim means-tested benefits, and concern about that is shared across the House. Labour Members very much look forward to seeing Ministers’ detailed proposals for a foundation pension, and to seeing how well that might address some of the concerns.

Stephen Timms (Labour, East Ham)

I pay tribute to my hon. Friend’s expertise, and to her campaigning in this area. I was aware of the relativity between family income and the minimum income standard, and between the pension rate and the standard. Can she tell us how much contention there is about the levels? Are they broadly agreed on, among people who have looked into the matters? Who is the current custodian of the figures, and who uprates them? Are they uprated every year? I think she is indicating that they are.

Kate Green (Labour, Stretford and Urmston)

Perhaps it will assist my right hon. Friend if, in answering those important questions, I talk the Committee through the methodology for constructing the minimum income standard, and talk about who has been involved in its construction, what has happened in the past with seeking to uprate the standard, and what it is hoped will be the case for the future.

On the question of whether anyone in this country makes use of this kind of approach to setting income standards, it is interesting to note in passing that the Mayor of London, in setting the London living wage, is adopting a similar philosophy. He is not necessarily using the standard but he is saying that the minimum wage is plainly not a living wage, that it does not mean the minimum living standard in London. We have there a sort of philosophical example, at least, of practical use being made of the approach in this country, and I will come on to examples from other countries.

How do we construct the minimum income standard? That is an important question, because it would clearly be difficult for me to advocate for a standard in which people do not have faith and about which they can feel sceptical, believing that it is a standard for a life of luxury on benefits. I fully acknowledge that that would present a serious concern. A team at the university of York has managed the construction process, with input from teams at a range of academic institutions, and it is important to understand how the standard has been built up under that team’s leadership.

First, the public were asked. I know that there is some scepticism about focus groups. Some concerns were raised in last week’s evidence sessions about qualitative research, but I think that it has been well accepted, over many decades of academic research, as a valid way of advancing and testing policy theory. Representative samples of the public—focus groups—from the different kinds of family structures for which the attempt has been made to construct a minimum income standard, are brought together. They are asked not to say how much money they think X, Y or Z family needs, or how much money their own family needs, but to construct, bottom up, what items of household expenditure they think particular kinds of households need to incur: for example, an adult and two children, a pensioner, and a young man who is not working but is looking for a job.

Not surprisingly, the focus groups say some obvious things. They say that households will need to buy food and drink, items such as cleaning goods, furniture and bedding, and electrical appliances. I know that electrical appliances are contentious, with people saying, “Oh, they’ve all got flat-screen TVs,” and this research helpfully asks the public what electrical items they think a family with two children needs.

Charlie Elphicke (Conservative, Dover)

I am fascinated by the case that the hon. Lady advances for asking the public about how much money is needed. Might setting the level of benefits be a matter on which the public ought to be consulted? Perhaps it could go to a public vote. Is that her case?

Kate Green (Labour, Stretford and Urmston)

That is an interesting question. I suggest that it would be wrong to ask the public that question today without their having the benefit of a very wide understanding of the minimum income standard approach that I advocate. An educated public are likely to make a better assessment, and that, fundamentally, is my argument. This is an opportunity for all of us who care about a valid and legitimate social security system to begin to bring the public onside. We should, and will, all welcome that. The hon. Gentleman and I anticipate a rosy future on many fronts, given the sittings over the past couple of days, and perhaps, in some rosy future, we may have such shared understanding of minimum income standards that it becomes possible to arrive at a consensual agreement on what the levels of benefits ought to be. I regret to say that we are a long way from that position today.

I was explaining what items the public would use to construct a minimum income standard. I have said food and drink, basic household goods and electrical appliances, which are contentious. Someone might not feel that a DVD player was necessary for a family with two children, but today the public think that it is. Interestingly, and perhaps not surprisingly, they also think that a computer and internet connection at home are essential. In 2008, researchers asked the public why they thought a household needed a computer; the response was that it helped children’s education. In 2010, the public said something a bit different. They still said that it helped children’s education, but they also said that it was vital for a job search. That is an interesting reflection of the labour market and economic circumstances in 2010.

It is interesting that all the groups, except pensioners, agreed that a computer and internet connection in the home were necessary for education, job search or whatever. The public, including pensioners, do not believe that home internet access is a necessity in constructing a minimum income standard for pensioners, and based on the experience of my father crossing the road to the local library to access the internet, I think that is probably right. However, we are concerned that that service is about to be removed from the library because of the cuts. It will be interesting to see what happens to the internet connection element of the minimum income standard when it is next reviewed.

Also in the standard, which, again, is possibly contentious—it is what the public say—is the idea that there should be opportunities for social occasions, tea parties for children, birthday presents and a one-week, self-catering holiday once a year. That is not perhaps an absolute necessity to escape destitution, but the public see it as essential to an acceptable minimum standard of living today.

George Hollingbery (Conservative, Meon Valley)

The hon. Lady makes a very powerful case, and I do not think that anybody on the Government Benches or elsewhere would disagree that those things are what families ideally wish to have. However, I have enough experience of market research to know that how the question is framed is desperately important to the answer. Were the questions put in the context, “If you found yourself in financial difficulties, what are the minimum things you ought to have?”, or were they more broadly framed, “Ideally, what do families need to live a modern life?”

Kate Green (Labour, Stretford and Urmston)

I will be perfectly frank. It was an open question of, “What in today’s world constitutes an acceptable minimum standard of living?” It was not, “If you were really struggling and on the breadline, what would you do without to get by?” That too is a question that can vary for different families. It might be a short-term situation, and we could all forgo a holiday for one year, and I suspect that many of us would in difficult financial circumstances, provided we could see the way out. We are talking about a more abstract construct of a life course: what should happen in a year of a life course? I accept exactly what the hon. Gentleman says, but this does not mean that families will not cut their coat according to their cloth in some years. These are what families in general circumstances today see as necessities, but that is in the context of the current economic situation.

Interestingly, I am reminded by the hon. Gentleman’s question that when people were asked in 2010—a time of straitened circumstances for many families—what items they would put in the basket as minimum essential items, they did not take anything out just because times were hard. They sought necessities such as phones and an internet connection, and one week’s holiday remained, even in difficult times. That is because the public understand that it is a more objective assessment. It is meant to assess not a particular crisis point but general needs.

George Hollingbery (Conservative, Meon Valley)

May I press the hon. Lady a little further? Does she not believe that context is extraordinarily important to the questions being asked? I repeat that nobody would deny that the basket that she describes is what everybody would wish to have as a minimum if they found themselves in certain circumstances, but how those circumstances apply to the family is crucial. I contend that she would receive a different answer if she changed the nature and context of the question.

Kate Green (Labour, Stretford and Urmston)

I am sure that that is correct, but that does not mean that the question asked is the wrong one. Quite the contrary: I venture to suggest that it is the right one. It is about identifying the norm for today that delivers a minimum but acceptable standard of living. I suggest that a civilised and large economy such as this country’s would want to offer safety-net benefits at a level that enables people to participate in the norms of society. That has been the view of economists as far back as Adam Smith; I know that Conservative Members will be pleased to hear me cite him.

Ian Swales (Liberal Democrat, Redcar)

I admire the hon. Lady’s expertise and experience in these matters. I am finding her speech extremely educational. If we take the figure that she mentioned for the couple with two children and add tax and national insurance for somebody in work, we arrive at an income somewhere north of £40,000 a year for a family. She mentioned a net figure of £29,000, which is presumably a net figure of cash in hand. There are many families in this country living on an income of less than £40,000 a year.

Kate Green (Labour, Stretford and Urmston)

I will have to come back to the hon. Gentleman on that point, as it is an interesting one. I am absolutely clear that the methodology does not suggest an income of £40,000 a year. I will come back to him on exactly what the treatment of tax is.

Ian Swales (Liberal Democrat, Redcar)

That is a key point. Is the figure pre or post-tax and national insurance?

Kate Green (Labour, Stretford and Urmston)

With respect, we are missing the point. We are discussing families who are likely, in many cases, to be below the net for tax entirely, although not all will be. That is why we are trying to set safety-net benefits. I think that we all share an aspiration— I must admit that it has not been particularly well achieved in recent years—not to allow people in and out of the tax system so that they both receive benefits and pay tax. The hon. Gentleman raises an interesting but probably a minority point.

Charlie Elphicke (Conservative, Dover)

Will the hon. Lady give way?

Kate Green (Labour, Stretford and Urmston)

I will not, if the hon. Gentleman will forgive me. I want to finish telling Members what is in the minimum income shopping basket, as I sense that they are interested.

Transport costs are also in the shopping basket, although not cars, interestingly. Cars have never gone into the shopping basket for any kind of family. I find that interesting. We might all think that most families would tend to regard it as a necessity for taking their kids to school, doing the weekly supermarket shop, visiting their parents and so on. However, cars are not in the minimum income standard and never have been.

Mobile phones are also in the basket. Some items in the basket, it must be admitted, push the level up. That is important, too. It answers the question asked earlier by the hon. Member for Meon Valley about how one would cut expenditure in bad times if one had to. It is recognised that the standard is transparent. People understand what goes into the basket. In speaking to the amendment, I am saying that we have the opportunity for that public debate, which is important.

Sarah Newton (Conservative, Truro and Falmouth)

This is an incredibly important debate, but I wonder whether this is the appropriate forum for it. The hon. Lady is asking what a living wage and an acceptable standard of living are in Britain, a civilised society, today. Does she agree that it would be more appropriate to address the issue through the work of the Cabinet Office under the Prime Minister’s leadership on well-being and measures of well-being in our society? It is an evolving agenda that is still being developed by academics and people working in this field, so we should be continuing the debate in that context, rather than in this Bill Committee.

Kate Green (Labour, Stretford and Urmston)

I am grateful to the hon. Lady, because she brings me to my next point. I am conscious that this is a debate that goes wider that merely setting the level of the universal credit, but in a consideration of where the universal credit fits in and the implications of the financial support that we provide to families through it, well-being is important, exactly as she says. It is important for health outcomes and to enable children to participate in education—I mentioned earlier the reasons the public believe people need computers and so on. It is also a very important issue when we think about helping families to avoid falling into debt, which I know is an issue of great concern across the House.

Jobseeker’s allowance, currently £51.85 a week for a young person aged 18 to 25, will rise to £53.45 next week. For a working age adult of 25 or over it is currently £65.45 a week, which will go up to £67.50 in the next few days. Hold those figures in mind, because the minimum income standard says that a single adult needs £45.65 for food alone. So, if a young person aged 18 to 25—currently on an income of £51.85, going up to £53.45 next week—is spending the minimum income standard correctly, then £45.65 of that is going out on food bills.

That food bill has been validated. I said earlier that the minimum income standard was constructed by asking the public, “What do you think people need?” Obviously they said that people need to eat, among other things. I am sure that there will be questions in hon. Members’ minds as to what people are eating. Is it all junk food, takeaways, and far too much booze? The answer is that the food standard in the minimum income standard has been validated by independent nutritionists. They went out and asked, what is the minimum needed for a young person, a working age adult, and so on, to have a healthy diet? So the food standard is objectively validated, and then it is price-checked at Tesco—I can tell you—both in the supermarket and online. It was observed that it is cheaper to shop in the supermarket than online, so the minimum income standard can reflect all of that; it is a very subtle standard and I like it a lot, as hon. Members will notice.

It does allow for alcohol in modest amounts, which I am sure is in the minds of hon. Members. It assumes—rather worryingly—that if you are a single adult you will drink at home rather than go out. It assumes couples might go out socially to the pub, but the amounts allowed for alcohol are actually very modest—around £4.50 a week. It is a transparent index, which is important because it addresses concerns such as “Oh, well, they’re burning it all off on booze and junk food.”

A young person aged 18 to 25 gets £51.85, of which £45.65 is spent on food if they meet the minimum food standard. That would leave them with considerably less than £20 a week for fuel; for the household items and transport costs that are in the standard; for the computer and phone, which the public say are essential, whatever hon. Members might feel; for the essential electrical goods; and for the social and holiday activities, which, again, hon. Members may feel are not essential. My point is that benefits already completely fail to allow for those potentially debatable items from the standard, so I venture to suggest that we have a wide margin in which to operate.

John Glen (Conservative, Salisbury)

I am interested in what the hon. Lady is saying, and I understand what she is driving at, which is to establish a benchmark that all Governments can be measured against. However, in order to establish clearly what this means I think we need an assessment of what the aggregate cost to the country would be. Given the current state of the public finances, in order to have credibility we need a clear case of where that money would come from, and where it would not be spent. She has been very careful in the amendment not to say what those levels should be at this point in time, but in terms of broader public understanding it would be helpful to know the opportunity cost of going down this route.

Kate Green (Labour, Stretford and Urmston)

This has been a refrain from members of the Committee. As the hon. Gentleman rightly says, I am not proposing that we spend money on this benefit and put such a restriction in the Bill today, but we have a real opportunity to compare the cost of securing an adequate safety net for people when they are out of work with the information that we also have available about the costs that fall to society as a whole from poor health, poor educational attainment and the strain on our other public services such as criminal justice and so on, for which we have some estimates. One estimate in 2006 suggested that the cost of child poverty on that sort of assessment was some £25 billion a year. So I agree with what the hon. Gentleman said: it would be right to cost out what it would cost to get all the way there today and to cost out, if we wanted to do this over time, steps on the way to achieving it. But that cost would need to be offset by the evidence of costs saved elsewhere in the public expenditure on families and households.

I am trying to push our social policy thinking a little further this morning. Here is a whole area of research for which the hon. Member for Salisbury opens an argument, which is not there to support us at all. I am simply trying to open a debate. We are probably not ready with the science yet to put the whole measure in place, and that is why, in part, I am not proposing it today.

Paul Uppal (Conservative, Wolverhampton South West)

Nobody doubts the hon. Lady’s expertise in this area—obviously, she is very knowledgeable—but I have to say that my heart has sunk as the debate has gone on today. Specifically in relation to one of the points that she raised, one of my constituents recently approached me. She is one of two families in her road who work. She has not had a holiday for three years. Both parents work to support their children. Neither of their children has a mobile phone, and yet neighbours next to my constituent have children who continually tell her children that they have mobile phones. I come from a humble background. My parents never had a holiday and I did not have a holiday until I was 18. We will probably not agree, but I honestly believe that the very ethos of the hon. Lady’s idea about expanding the debate on social thinking actually entraps in poverty the people that she seeks to help.

Kate Green (Labour, Stretford and Urmston)

I would say two things to the hon. Gentleman. First, it is wrong to extrapolate policy on the basis of two families in one street. We politicians have a tendency to do that because it gets us popular support. It is how the public currently view the experience of poverty and disadvantage in this country, but it is unfortunately an overall misrepresentation of the way in which families in poverty live.

Paul Uppal (Conservative, Wolverhampton South West)

I specifically referred to my constituents because I did not want to refer to my personal experience. I am being genuinely honest and speaking from experience, but I will broaden it out. I meet youngsters from abroad, particularly those from the Indian subcontinent, who experience genuine poverty. I will quote my grandmother, as I frequently do in the House. When I was a young child, she would say that nobody in this country is poor compared with the childhood that she had when she would not know where the next meal was coming from for the next 72 hours. Poverty is always relative. We are talking about the poverty of ambition and aspiration.

Kate Green (Labour, Stretford and Urmston)

As the hon. Gentleman says, I am afraid we are going to disagree. I do not think that we are talking about a poverty of ambition and aspiration, but a poverty of resource. I mentioned Adam Smith earlier, because the point that hon. Gentleman makes about poverty in other countries is one that we hear often, and it is an important one to address, but we address poverty in this country by making sure that people can participate fully in the society in which they live. That is why Adam Smith has always explained to us the way in which we need to think about poverty in time and in place. In talking about how necessity should be defined with reference to present-day standards within a particular country, he says:

“By necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can fall into without extreme bad conduct.”

Sheila Gilmore (Labour, Edinburgh East)

Does my hon. Friend agree that one of the reasons why the previous Government introduced the tax credit system—to a large extent, some of the issues around the universal credit are a development of that—was the understanding that people who were working and were trying to do so on low wages should also get support?

Kate Green (Labour, Stretford and Urmston)

My hon. Friend reminds me of another point that I wanted to make. We are all aware of the discrepancy, perceived in many cases, between the lifestyles of people who are out of work and the lifestyles of those in work. Many people on low incomes and in work are also in receipt of benefits, and rightly so: they get housing benefit and tax credits under the current system, and they will be in receipt of universal credit under the future system. We should look at this minimum income standard not as something that simply determines what happens to people when they are not working, but what happens to people on low incomes as a whole.

Karen Buck (Labour, Westminster North)

The hon. Member for Wolverhampton South West made an important point about the extent of absolute poverty in the developing world and sometimes in this country. Is it not also the case that the Conservative party signed up to and continues to endorse the Child Poverty Act 2010, which commits us to continuing to deal with the issue of relative poverty? Will my hon. Friend reflect on that?

Kate Green (Labour, Stretford and Urmston)

We are very much looking forward to the Government’s child poverty strategy. It is a few days overdue now, but I believe it is heading our way very shortly. We expect it will reaffirm the Government’s commitment to the targets and the definitions of poverty in that Act which, pleasingly, secured cross-party support during its passage in 2010. We can be confident that we will see that reaffirmation from the Government because the Prime Minister himself said in 2006:

“We need to think of poverty in relative terms—the fact that some people lack those things which others in society take for granted.”

I want the message to go out loud and clear that the Conservative party recognises, will measure, and will act on relative poverty. I think the hon. Gentleman will find that his party leader is perhaps in the same headspace as I am on defining poverty, not in a global context but in the context of what is going on in this society.

Charlie Elphicke (Conservative, Dover)

The hon. Lady speaks movingly about child poverty. Will she confirm that the latest figures show that in 2004-05, relative child poverty was 3.6 million and in 2008-09 it was 3.9 million. Is it not the case that the previous Government’s child poverty strategy was a total and utter failure?

Kate Green (Labour, Stretford and Urmston)

I am so pleased to have the opportunity to talk about this. The hon. Gentleman has done me a tremendous personal favour. He is absolutely right. We had several years of substantial progress in reducing child poverty under Labour Administrations and then we had two very bad years when child poverty rose. It is crucial that hon. Members understand why that happened. Child poverty fell until 2006-07 because we were pumping money into family budgets. We were using tax credits and benefit increases to lift more and more families with children above the poverty line. The two years when poverty rose are the two years in which, regrettably, the previous Labour Government did not significantly increase benefits or tax credits either for families in work or out of work.

Conservative Members can often be heard saying that the Labour Government’s strategy is completely discredited, but what I think is completely discreditable is the years in which Labour failed to apply its own strategy. The strategy works and the years in which it did not work are the years when we were not using it. We need to get back to using it again if we are to have any chance of meeting the target to which I am very pleased the Government parties are signed up.

My right hon. Friend may wish to defend the record of the Government of which he was a part before my entry to Parliament.

Stephen Timms (Labour, East Ham)

Indeed. I am keen to do so. Will she remind the Committee that there was a substantial net fall in child poverty over the term of the previous Government? Is she looking forward, as I am, to the next update on the child poverty statistics, which I think are due any week now? They will, I think, provide an interesting additional data point to the series that the hon. Member for Dover was referring to.

Kate Green (Labour, Stretford and Urmston)

My right hon. Friend is absolutely right. After two years of fall, we flat-lined for a year. I hope that we will start to see a slight improvement as the effects of Labour’s realisation of its error and actions to begin putting money back into families are fed through. We have a long lag in receiving the child poverty data; as my right hon. Friend says, next week we will receive the figures that will take us up to the end of 2009-10. We are always looking a long way back at our child poverty figures, and we will not know for some considerable time—until 2012—how well Labour did overall in working towards the target to halve child poverty by 2010. Hon. Members are raising a thousand important points, but we are perhaps still in slightly unknown territory.

Sarah Newton (Conservative, Truro and Falmouth)

This is an incredibly important debate about poverty and about how we can help people get out of poverty. There is a lot of strength of opinion from everyone in the room today. However, is this forum the right one? Because of the importance of the issue, hundreds of Members in the House would like to join the debate, not just the 13 of us privileged enough to serve on this Committee. Will the hon. Lady join me in making representations to the Backbench Business Committee to see whether we can secure a debate in Parliament, perhaps at the publishing of the report and the Government strategy? That would probably be a more appropriate way to tackle such a fundamental issue.

Kate Green (Labour, Stretford and Urmston)

I am extremely grateful to the hon. Lady for that suggestion, which I would certainly like to pursue with her outside the Committee. I think such a debate would be widely welcomed in the House. I take her point about the much broader front that I am opening up, so perhaps I should draw my remarks to a close by highlighting one other aspect of my arguments for looking at the minimum income standard as part of the way in which we set the levels of universal credit. That is quite salient—it is not on the wider and interesting social policy territory that we have been treading on over the past few minutes, but the issue of the level at which the universal credit is not just set, but uprated.

I suspect that we will have quite a lengthy debate later on uprating, but to inform that debate, it might be of interest to hon. Members, who I know have been taking a keen interest in my description of the minimum income standard, to know what effect its uprating over the past 10 years has had. In the year to April 2010, the items in the minimum income standard, and therefore the standard itself, rose by between 3% and 4%, which was broadly in line with general inflation. In one year, it was a good indicator of rising living costs for families and households. However, over the whole of the preceding 10 years back to 2000, because of patterns of rising food costs, public transport costs and the costs of some other items that were in the basket, the minimum income standard’s budget came in at 38% upwards of the 2000 figure, compared with a general inflation of 23% over that time.

That is my other argument for using the minimum income standard in the context of the way in which the universal credit will be managed over time. We are, as I said, looking forward to a debate later this morning or this afternoon—depending on our speed—on uprating, and it would be useful for hon. Members to bear that fact in mind and, when we discuss the right measure of uprating and how we approach uprating of the universal credit, be aware of the socio-economic context that the minimum income standard helps to expose. I know that hon. Members would like the debate to continue extensively, but we have others matters to address.

I am not proposing today that we set benefits at the minimum income standard, although hon. Members will be interested to know that some in other countries are exploring such a thing, including the mayor of New York, who has been doing some interesting work on it. Inevitably the Nordic countries are looking at it, as are a number of other European countries, New Zealand and Australia. It is an important debate to have when introducing a radical change to our social security system, which the universal credit undoubtedly is. It is an important opportunity for us to open up a wider debate about the purpose and the structure of our social security system. To do that in a way that genuinely involves the participation of the public, as the minimum income standard has done, I would argue, very effectively, helps to lower the stigma of the benefit system. It helps to legitimise in the public’s mind the way in which we structure and pitch financial support for families, and, importantly, it will give us the opportunity to compare the input costs of benefits with the returns on outcomes.

Chris Grayling (Conservative, Epsom and Ewell)

Let me respond to the issues that the hon. Lady raised in her lengthy, thoughtful and knowledgeable contribution. No one in the Government doubts her experience and commitment or the passion and energy that she has put into these causes over the years. We value that experience, and the Committee will benefit from it.

On this matter, however, we simply do not agree with the hon. Lady. Most fundamentally, the purpose of the changes, and the intent of the introduction of universal credit, is to deal with poverty by moving more people out of the benefit trap in which many of them live and into the workplace. There is no doubt that some of the figures that we see in this country are scandalous, such as the number of children who are being brought up in workless households. The cycle of generational worklessness has a hugely damaging effect on the generations as they come through—young people who have grown up in an environment where their parents and grandparents did not work—and in many of our most deprived areas the generations pass pretty quickly these days. The received wisdom of life as it perhaps once was—the working day, elements of family responsibility and the kind of structure of life that most of us have experienced to a greater or lesser degree—simply is not there. We have a big challenge to help those young people and their families to take a step into what for many is the unknown: a life of work, where there is a different focus in their days and their weeks and they are taking a step out of the poverty trap in which they now sit.

That really is the core purpose behind the Bill. At its heart, and I suspect that there is a philosophical difference between us and the Opposition, we are passionately of the view that the best and most powerful way to deal with poverty and deprivation in our society is to help people to make that move into the workplace. That is why we are moving ahead with the Work programme and the universal credit, and why they are so central to what we want to do.

Karen Buck (Labour, Westminster North)

I completely agree with the Minister about the centrality of work and the value of the universal credit, among other things, in improving taper rates and incentives. Is it not true, however, that half of children in poverty live in households where someone is in work? That is also something that we have to address, which is why the fundamental arguments that my hon. Friend the Member for Stretford and Urmston is advancing are important.

Chris Grayling (Conservative, Epsom and Ewell)

I have never doubted the importance of the issues that the hon. Member for Stretford and Urmston has brought before the House. Although it is always a delight and a pleasure to see a newly elected Conservative—indeed, now Liberal Democrat—Member of Parliament, the hon. Lady’s arrival in the House has added genuine value to it. She has brought expertise from outside that will inform debates in the House in the years ahead, and we welcome her being here.

That does not mean, however, that we shall always agree. The central point in the hon. Lady’s proposal is that it would have a significant adverse effect on the likelihood of people moving from benefits into work, and my hon. Friend the Member for Wolverhampton South West set out the position clearly and plainly. The hon. Lady helpfully provided some figures for the Committee. She talked about an income of £29,000 for a family, and my understanding is that that is net of tax and national insurance. Whether or not it is net of tax or national insurance, the figure is higher than the typical wage of the average household in the UK. Likewise, the figure for a single person of £14,400, or some £270 a week, which is equivalent to 45 hours work on the minimum wage, is higher than would be experienced by someone moving into the workplace. We have recognised that in the structure of the universal credit, which is designed to address the point that the shadow Minister made about poverty in work.

The integration of the in-work and out-of-work benefits system is designed to create a smoother flow with a clearer ladder. The taper is designed to constantly encourage people to take further steps in work, to have a dynamic effect that encourages people to work more hours, to be more ambitious and to end up with more money for their family at the end of the week. That will help lift more children out of poverty.

Ian Swales (Liberal Democrat, Redcar)

Does the Minister share my regret that figures show that of the jobs created under the previous Government, of which there were many, some 70% were filled by immigrants to this country?

Chris Grayling (Conservative, Epsom and Ewell)

The hon. Gentleman is absolutely right. That is one of the great challenges that we face. In many of our city centres, service businesses are manned by people who have come to the UK from other countries and found jobs. I could take Committee members to places in the UK where we could walk from those businesses to entire streets where no one is working. We have to end that. It was a scandal.

Sheila Gilmore (Labour, Edinburgh East)

We all recognise that there are completely workless households, but is there not a danger of conflating the arguments about the numbers of people on benefits of various kinds as all being generationally workless? I represent a seat where the fourth most deprived ward in Scotland happens to be situated, although there are lots of wealthy bits as well. My experience is that many of those people are in and out of work. Not all of them are, and I am sure we could all point to such cases. It is not right to imply—perhaps the Minister was not doing that—that the number of people out of work at any snapshot in time are long-term, intergenerationally workless.

Chris Grayling (Conservative, Epsom and Ewell)

The hon. Lady is right to say that there is a mix, but I stand by my comments. There are a large number of people out there, who are long-term, intergenerationally, out of work. She is right: some people move into and out of work. One of the strengths of the universal credit is that it makes it easier for people to move into and out of work without having to reapply for benefits every time, in a system that is much more likely to encourage them to keep looking for work and to keep taking the steps that will build up more substantial work in their lives and help lift their family out of poverty.

Karen Buck (Labour, Westminster North)

This is not fundamentally contradicting the Minister’s point, but in our evidence session with the Secretary of State, I asked him whether he would supply us with figures from the Department for Work and Pensions on the number of intergenerationally workless and put them in context. It is an important point, and one with which we totally agree. It is also important, as my hon. Friend the Member for Edinburgh East said, that we understand the relationship between long-term and intergenerationally workless, and the much larger pool of people who are on the borders and are moving constantly in and out of employment.

Chris Grayling (Conservative, Epsom and Ewell)

Both those problems exist. I do not have the number to hand. If I recall correctly, there are, for example, 900,000 people on incapacity benefit, who have been on benefits for many years. We would all agree that many of those people, with the right help, can get back into the workplace. That is what the Work programme will aim to deliver. We are describing a multifaceted problem, but at the core, the best way of helping all these people, whether they are intergenerationally workless—when nobody has worked for a long time—or whether they drift in and out of work and go through all the challenges of getting a job for a short term, losing it and reapplying for benefits, is the system that we are putting in place for a universal credit. What is common in all those cases is that if we have a welfare system that seeks to replicate the situation that a family might experience in working life, it will create a disincentive for people to move into working life.

George Hollingbery (Conservative, Meon Valley)

The hon. Member for Stretford and Urmston made a very telling point when she talked about the number of children being lifted out of poverty in the past eight or 10 years, and Labour’s success in doing that, which is difficult to deny, while regretting that they had not put in enough money in the past two years to continue that progress. Does that not demonstrate that pumping money into the system is an artificial way of dealing with the problem? When the money falls away, as it inevitably does in economic cycles, it is revealed that the structural problems of unemployment still sit underneath and that poverty is still there.

Chris Grayling (Conservative, Epsom and Ewell)

I have a simple view on the issue. I do not believe that the solution to poverty in this country lies in the welfare state itself; it lies in helping people to move out of dependency on the welfare state.

Kate Green (Labour, Stretford and Urmston)

We all agree that, wherever possible, moving people into paid work is the best route out of poverty. Does the Minister not agree, therefore, that one of the elements of success in Labour’s policies for reducing child poverty was the increase in the employment rate until 2008? Lone parent employment, for example, rose from 44% in 1994-95 to some 57% by 2007-08. Does the Minister not agree that it is a twin-track approach?

Chris Grayling (Conservative, Epsom and Ewell)

I am afraid that I do not agree. If people look at what happened under the previous Government, we went through a decade in which between 3 million and 4 million new jobs were created in the UK. Thanks to the determined work of the hon. Lady’s colleague, the right hon. Member for Birkenhead (Mr Field), who chipped away at it month after month and year after year, what emerged was a picture showing that the vast majority of those jobs had gone to migrant workers from overseas. Through those years we consistently had some 5 million people on out-of-work benefits, as well as the other underlying issues relating to children growing up in workless households, which the hon. Member for Stretford and Urmston has described. That is the point of difference between us.

Julie Elliott (Labour, Sunderland Central)

I am slightly confused by what the Minister and the hon. Member for Redcar are suggesting about migrants coming to do jobs in this country. I would be interested to know whether they are talking about people coming from the European Union or from outside. All the employment statistics for the European Union show that more people leave this country to work in other parts of the European Union than the other way round.

Chris Grayling (Conservative, Epsom and Ewell)

The hon. Lady needs to take a closer look at the migrant worker figures, because the statistics come from the previous Government when her party was in power. I remember a particular exchange with the previous Secretary of State after which he phoned me to apologise for getting the figures wrong and said that, actually, the number of jobs going to migrant workers was higher than the Government had previously stated. I am afraid the issue plainly exists.

That is not the key point; the key point is that over the next 10 years I do not want it to happen again. Between 4 million and 5 million people are still on out-of-work benefits. Our central goal is to begin to reduce the total of people on out-of-work benefits. The Office for Budget Responsibility forecasts that 900,000 new jobs will be created in this country, an increase in employment, over the next few years. As jobs are created, I want as many of them as possible to be taken up by people we have helped out of poverty, out of the welfare state and into employment, building a better for future for themselves and their family.

Charlie Elphicke (Conservative, Dover)

My right hon. Friend is being extraordinarily generous in taking interventions. When it comes to the 1.2 million people who in recent years have come from overseas to work in the UK, does he agree that half a million are from the EU8 states, and the other 800,000 are from elsewhere, particularly the Indian subcontinent? Would he not also agree that the influx of people from overseas has sold the pass on a generation in our country? Working-age relative poverty has risen from 6.5 million people in 2000-01 to 7.8 million on the latest figures. Is that not a disgrace?

Chris Grayling (Conservative, Epsom and Ewell)

My hon. Friend is right to raise those figures. The point about migration levels from outside the EU being higher than those from inside the EU is often missed. There is a belief that the issue is all about movements within the EU, when it is not. The focus now is on ensuring that over the next 10 years we move people off welfare and into work.

I am afraid the reason why I cannot agree with the hon. Member for Stretford and Urmston, and why I cannot support her amendment—I encourage her not to press it having made an articulate speech in defence of her point—is that we believe the measures would reduce the incentive to work, rather than increasing it.

Stephen Timms (Labour, East Ham)

I am a little worried about the way the discussion is going. Does the right hon. Gentleman agree that the UK economy has benefited greatly from the contribution of people coming from overseas, including the Indian subcontinent? He is right to draw attention to the fact that many people have come from the Indian subcontinent to the UK, as I was reminded when I got off the train at East Ham underground station last night and encountered two large crowds, one of Pakistani origin and one of Indian origin. One crowd was cheering and the other crowd was lamenting the upshot of yesterday’s cricket match. I am sure that he values the contribution that such people are making to the UK economy. It is important to do so.

Chris Grayling (Conservative, Epsom and Ewell)

Of course that is the case. There are some wonderful people living in this country who have come from other parts of the world. They do a really valuable job for us and for our economy. They have built successful businesses and provide excellent service. My frustration is that some people who have grown up here are out of work and sitting down the road from those who are doing an excellent job. I want to ensure over the next few years that we use the benefits that they could bring to our economy as well. We will generate huge benefits for society and our economy if we can move more people who are on welfare into sustained employment, and that must be our goal.

Sheila Gilmore (Labour, Edinburgh East)

We all share the aspiration that most people should be in employment, but is it not a fact that the Office for Budget Responsibility has predicted that unemployment will in fact rise over the next period? Does that not make it extremely difficult for the aims that the Minister describes to be achieved?

Chris Grayling (Conservative, Epsom and Ewell)

The OBR forecasts an increase in private sector employment between now and 2015 of 1.3 million and a reduction in public sector employment of about 400,000, which is a net increase in employment of 900,000. My goal is to ensure that as those 900,000 new jobs are created, a substantial number go to people who are on welfare in this country, and that goal is central to what the Government are trying to achieve.

I have listened carefully to the hon. Member for Stretford and Urmston and although we disagree, I know that she feels passionately about the issue. However, I hope that she will not press the amendment to a Division.

Kate Green (Labour, Stretford and Urmston)

I wish briefly to pick up a couple of points made by the Minister. However, for reasons of clarity, I should say that the purpose of our discussion was to air an issue about which I feel strongly. It was useful for us to have such an effective policy debate. I welcome the interest that members of the Committee have shown, and I do not intend to press the amendment to a Division.

However, the right hon. Gentleman referred to some important issues that coalesce around the argument that people should be better off in work, which is a point that Ministers have been making throughout the presentation of their proposals. We entirely endorse such a position and want to achieve it, but not at the expense of forcing people who are not able to be in paid employment into a position of poverty. Perhaps that is the real difference between our approaches.

The Minister said that he was worried that the £29,000-plus figure that I cited for a family with two children was way in excess of the typical wage of a low-earning household. Helpfully, I have received advice that enables me to respond to the point made by the hon. Member for Redcar. That £29,000 is a gross figure, so the stretch is perhaps not as large as might have been feared. None the less, the Minister makes the important point that we need to ensure that people are better off in work. The minimum income standard has a useful application for setting wage levels, and I have mentioned the work of the Mayor of London in that context, too.

However, I fundamentally disagree with the Minister that inadequate, low safety-net benefits propel people into work. All the evidence is to the contrary. If benefits are inadequate, people do not move into work, because the effort, the strain, and the drain on one’s personal resources and capacity to look for work are so substantial. A person’s health might be compromised. People’s time is certainly compromised as they seek desperately to make ends meet. They might be devoting themselves to fending off creditors and shopping around for the cheapest items that can enable them to feed their family. Mothers, in particular, will often go without food themselves in such situations, clearly depleting their own energy and damaging their health, and therefore their ability to move into paid work.

Paul Uppal (Conservative, Wolverhampton South West)

Will the hon. Lady give way?

Kate Green (Labour, Stretford and Urmston)

I will not, if the hon. Gentleman will forgive me, because we probably want to reach the conclusion of the debate.

There is a fundamental point that I want to put on record: far from increasing the likelihood that people will move off benefits and into work, inadequate benefits reduce the likelihood of that happening. It is very important that we bear that point in mind.

I will not press the amendment to a Division. I am delighted that we have had the opportunity for this discussion, and I am grateful to the hon. Member for Falmouth and Truro—I think that I have got her constituency right—

Sarah Newton (Conservative, Truro and Falmouth)

Truro and Falmouth.

Kate Green (Labour, Stretford and Urmston)

Geography has never been my strongest point. Nevertheless, I am grateful to the hon. Lady for suggesting that we should look for further opportunities to debate this matter in this House. If we can have such debates, it would help to support Ministers in their objective of legitimising our benefits system. I am very grateful for the time that we have had to debate the matter. I beg to ask leave to withdraw the amendment.

Stephen Timms (Labour, East Ham)

I beg to move amendment 18, in clause 9, page 4, line 25, at end insert—

‘and arrangements for its annual uprating.’.

Michael Weir (Scottish National Party, Angus)

With this it will be convenient to discuss the following:

Amendment 19, in clause 10, page 4, line 33, at end insert—

‘and arrangements for their annual uprating.’.

Amendment 20, in clause 12, page 5, line 40, at end insert—

‘and arrangements for its annual uprating.’.

Stephen Timms (Labour, East Ham)

I welcome you to the Chair, Mr Weir.

We have had an interesting opening debate, thanks to the contribution of my hon. Friend the Member for Stretford and Urmston. Amendments 18 to 20, which relate to the regulations to be tabled, are simple, so I do not imagine that we will spend very long debating them. It is worth making the point, however, that my hon. Friend was absolutely right to table amendment 3 and initiate our previous debate. If we look at the note on the regulations under clause 9 that has been circulated, we see that appended to it is a list of the current applicable amounts in jobseeker’s allowance. It is right that we reflect on the amounts that are currently being paid to people on benefit and the amounts that are likely to be paid in the future to people on universal credit in the light of the objective research that my hon. Friend described.

Amendments 18 to 20 relate to the question of how the amounts that are paid out will be updated in the future. They would oblige the Government to set out in the forthcoming regulations how the amounts payable would be annually uprated.

The Government and Labour take different views on this subject. Given the scale of the deficit, we have accepted that there should be a more modest formula for uprating benefits in the next three years that is linked to CPI. For many years, the uprating has been linked to RPI, but I understand that the Government believe that the CPI uprating formula should be adopted permanently. Will the Minister confirm that the Government intend permanently to use CPI uprating for universal credit? The procedure in the past, which was adopted by the previous Government, was an uprating in line with RPI, and it is important to draw attention to the fact that that is very different from uprating in line with earnings.

Let us look at the figures in the annexe to the note that has been circulated to us on the regulations. My hon. Friend the Member for Stretford and Urmston referred to some of these figures in her speech earlier. It is worth bearing in mind that the figures have most certainly not been uprated in line with earnings for many years, but they have been uprated in line with RPI. As I understand it, the Government want to move away from that form of uprating and permanently to put in place what has generally been a significantly lower index—the CPI—for the future.

All the amendments would do is to require the mechanism to be explicit in the regulations so that it would be subject to debate. If we felt, as Labour Members do, that a different procedure ought to be adopted, we could argue for that and have a permanent arrangement that everybody understood. The Minister circulated the current figures for jobseeker’s allowance as an indication of how the regulations under clause 9 are likely to look. Will he tell us whether he expects that the standard allowance for universal credit will be the same as the figure in the regulations that have been circulated? The present amount is £51.85 although, as my hon. Friend said, it is about to go up next week. Is that the figure that the Government have in mind for the standard allowance for universal credit? Does the Minister expect that the differential between the single and the couple rate in universal credit will be as it presently is for jobseeker’s allowance? Does he expect that the list of the different payments to be made—for example for dependants and for a couple with both members aged under 18—will be precisely the same for universal credit as it has been for jobseeker’s allowance? The substantial point is that permanently linking these benefits to a rate that is generally lower than the rate that households have to contend with due to inflation—that is to say RPI—is a matter of great concern.

Jane Ellison (Conservative, Battersea)

The right hon. Gentleman and I had exchanges in the House during the debate about the uprating. I invited him to say whether it was his intention to commit his party to return to uprating by RPI after this temporary period. At the time he refused to make that commitment. He sounds as if he is trying to have it both ways again. Will he make the commitment that that will be his party’s policy for the future?

Stephen Timms (Labour, East Ham)

I can affirm, as I did on that occasion, if I remember rightly, that tying us to CPI uprating for good would be a serious mistake. We have talked already about the real implications of the current levels of JSA. It would be a mistake to tie ourselves permanently to a rate of indexation that is less than the rate of inflation that people actually experience.

Kate Green (Labour, Stretford and Urmston)

As my right hon. Friend says, the amendment requires the Bill to provide for a mechanism for uprating. That is important, because even the mechanisms that have been used up till now—the retail prices index and the Rossi index—have been shown to have deficiencies. Earlier this month we learned that the consumer prices index should probably have been 0.3 of a percentage point higher each year between 1997 and 2009 than Office for National Statistics figures had stated. That was because of a discrepancy between the figures recorded by the ONS and the actual rise over that period in the cost of certain goods, such as clothing and footwear.

Again I emphasise the point about ensuring that we have a benefits system that enjoys perceived legitimacy and credibility. When there is concern about inflation indices, as I think is the case is in the light of the information released earlier this month, it is important that the Government are absolutely committed to a mechanism for uprating that is accepted and understood by the public. Amendment 18 requires that the Bill is transparent about that, which is why I support it.

Chris Grayling (Conservative, Epsom and Ewell)

As the right hon. Member for East Ham has said, amendments 18 to 20 seek to link arrangements for annual uprating to the regulations on the standard allowance under clause 9; payments made in respect of children or qualifying young people under clause 10; and payments made in respect of other particular needs or circumstances under clause 12.

I begin by reassuring the Committee that we already intend to make such a link. Paragraph 22 of schedule 2 amends the Social Security Administration Act 1992, which is the current mechanism for the routine uprating of benefits, to provide arrangements for uprating universal credit. The mechanism that the right hon. Gentleman seeks to introduce will operate under schedule 2.

Under those arrangements, we are committed to reviewing the amounts of the standard allowance, and other additions within universal credit, to ascertain whether they have retained their value in relation to the general level of prices. Following such a review, the Secretary of State may decide to increase the amounts of universal credit in the annual uprating order. The arrangements are the same as those that apply to all existing out-of-work benefits and to the state pension credit. The Committee should be reassured, therefore, that the Bill provides suitable arrangements for the standard annual uprating.

Neither the amendment nor the existing provisions for uprating, which we will use for universal credit, specify how the general level of prices is to be estimated. As the right hon. Gentleman has said, in the past, the RPI has been the basis for uprating income-related benefits, excluding housing costs, and different elements of the tax credit system have been uprated in different ways.

We have decided that the best way to establish universal credit is to use a standard index, which should be the consumer prices index. Of course, however, the whole structure of the Bill is sufficiently flexible. My bookcase will make its first appearance of the morning—we built the bookcase to enable a future Government of whatever persuasion to do things differently, should they choose to do so. Nothing in the Bill would prevent that from happening.

For the time being, however, and certainly for the foreseeable future, we have formed the view that the CPI will be the basis on which we uprate benefits. We have no plan to change that, but the matter will be open for another Government to argue for something different in future, although they would have to explain how they intended to pay for such a change. I hope that my explanation reassures the right hon. Gentleman about the nature of the Bill and its intent.

The right hon. Gentleman has asked specifically about the standard allowance. Essentially, the standard allowance for universal credit is intended to mirror the comparable standard rates in JSA and employment and support allowance, which, as he has rightly said, go up in the next few days. In the standard adult rate of JSA and ESA, the basic component will be approximately £67 a week. That is the building block that we intend to use for the universal credit. In two years’ time, once the universal credit has been established, that amount will be different, because it will have been uprated. The intention is to transpose the elements that he has described into the universal credit system. I hope that I have reassured the Committee and that the right hon. Gentleman will withdraw the amendment.

Stephen Timms (Labour, East Ham)

The figure to which the Minister has referred—£67.85—does not appear in the annexe to the regulations.

Chris Grayling (Conservative, Epsom and Ewell)

That is because it has not been introduced yet.

Stephen Timms (Labour, East Ham)

I want to understand which figure the Minister is saying will be read across to be the standard allowance for universal credit. The figure that appears most frequently in the table that has been circulated to us is £51.85 a week.

Chris Grayling (Conservative, Epsom and Ewell)

If the right hon. Gentleman looks down the table, the number to which he refers is the young person’s rate. The rate for 25-year-olds in paragraph G is currently £65.45, which is the biggest number involved—and that is only one item in the list in paragraphs A to H.

Stephen Timms (Labour, East Ham)

The Minister refers to the figure as it will be uprated next week, I take it.

Chris Grayling (Conservative, Epsom and Ewell)

The figure is currently £65.45 and it rises to just over £67 when the uprating takes effect in early April.

Stephen Timms (Labour, East Ham)

I am grateful to the Minister. He therefore expects that to be the figure for the universal credit standard allowance, which will subsequently be uprated, too. I am a little disappointed that he is not inclined to place the mechanism that he proposes to use in regulations.

Charlie Elphicke (Conservative, Dover)

I understood the hon. Gentleman as saying there should be a change back to RPI after a temporary period. When should that change back to RPI take place, in his view? Is it 2012-13, or 2013-14?

Stephen Timms (Labour, East Ham)

As I have previously told the Committee, we have accepted that, for a period of three years, it is appropriate to use the lower index. Subsequent to that, we will review the position. I beg to ask leave to withdraw the amendment.

Chris Grayling (Conservative, Epsom and Ewell)

There is not much to add following the previous debate. I have explained the nature of the standard allowance so, if the Committee will allow me, I will leave my remarks there.

Clause 10

Margaret Curran (Labour, Glasgow East)

I beg to move amendment 21, in clause 10, page 4, line 30, leave out ‘may’ and insert ‘shall’.

Michael Weir (Scottish National Party, Angus)

With this it will be convenient to discuss amendment 22, in clause 10, page 4, line 31, at end insert—

‘(2A) Regulations shall make provision for the inclusion of an additional amount if such a child or qualifying young person is severely disabled, in addition to the amount referred to in subsection (2).’.

Margaret Curran (Labour, Glasgow East)

Thank you, Mr Weir, and may I say that it is a particular pleasure to serve on this Committee and to be here this morning under your guidance? We share many interests in our commitment to our country, so I am particularly pleased that you are chairing this morning as I speak for the first time on the Committee.

Since amendments 21 and 22 were tabled, there have been developments in Government policy, on which, if I may, I will comment, as it will explain the context. As a result of the significant change that the Government are proposing, the direction of travel of the amendments has altered. As Members are aware, during last week’s evidence sessions I raised with a number of witnesses the question of the importance of these provisions within universal credit. I hope that Members will recall that many witnesses said that these are vital provisions and will matter a great deal to the people concerned. The amendments are in specific reference to children, so I will refer specifically to the Government’s proposals about children as they have been indicated to us thus far. I have a range of questions, and the Minister’s responses will determine our response.

I am somewhat surprised by the Government’s approach to informing us about such significant developments. We had the Secretary of State’s statement at last week’s evidence session. It was perhaps not entirely his fault, but it was somewhat rushed and many of us were not entirely clear exactly what was being proposed. I therefore made it my business to dig out the detail of the Government’s proposals. I eventually found, on the DWP website, a paper, “Additions for longer durations on Universal Credit”, which details significant changes to universal credit and to the current provision. I was a wee bit concerned that I had to dig that out from the DWP website. I do not want to be self-righteous: I appreciate the scale of the changes the Government are introducing and the pace of legislation; I was a Minister for a number of years, as you know, Mr Weir, in the Scottish Government, and I appreciate that Governments sometimes have to work to perhaps not the most perfect time scale.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I must confess that I did not find it difficult to find the briefing document because the Clerk sent us an e-mail with a link to it on the DWP website. I found it quite simple to track down the information to which the hon. Lady refers.

Margaret Curran (Labour, Glasgow East)

I live and learn. I am new to this House and perhaps I need more guidance in these matters, but a number of charities found it equally hard. None the less, a link to the DWP website, however easily that can be uncovered, is not necessarily the best way for a Government to introduce policy of this order. I would have thought that it should have been formally drawn to the attention of the Committee in a much clearer and more substantial way, but, as I say, I will leave that standing.

There are many questions and substantial concerns about the Government proposals as I understand them. The central question I want to ask the Minister this morning—

Michael Weir (Scottish National Party, Angus)

I remind the Committee that with this we are discussing amendment 22, in clause 10, page 4, line 31, at end insert—

‘(2A) Regulations shall make provision for the inclusion of an additional amount if such a child or qualifying young person is severely disabled, in addition to the amount referred to in subsection (2).’.

Margaret Curran (Labour, Glasgow East)

Again, I am pleased to serve under your guidance this afternoon, Mr Weir. I spent lunch time trying to come up with a gag about bookcases and the Department for Work and Pensions website, but I failed to come up with anything. What an admission! How shameful for a Glaswegian not to be able to do that, but I will have plenty of time to work on it in Committee.

I had just reached the stage where I was asking the Minister whether the Government intend to table specific amendments at the appropriate time to enable hon. Members to scrutinise, decide and reflect. I want to get into the substance of what the proposals are about and explore some of their issues. I understand that the Government’s intention is to align arrangements for disabled children with those of disabled adults, to simplify the system. I appreciate the strong argument for that, but the most important element of our discussions this afternoon is about reprioritising existing resources to deliver more support for children with the most severe disabilities. I accept that that is the Government’s interesting intention, but it has many implications.

The Government therefore intend to introduce two new disability additions to replace the existing provision, and I am sure that the Minister will explain them in detail when he replies to the debate. There will be a higher and a lower addition. For families with disabled children, the higher rate will increase by £1.50 a week. The current rate is £74.50. There will be a qualifying benefit for children who currently receive disability living allowance at the higher rate. A new provision will extend entitlement to children with a severe visual impairment.

I am sure that all hon. Members of all parties appreciate the real challenges faced by families with children with severe visual impairments, and I understand the rationale of the Government’s thinking on the new provision. However, I want to focus on the other group of children, because there are severe implications for them. Children who currently receive the middle rate of disability living allowance will have the disability addition under the new proposals of universal credit significantly reduced compared with their existing entitlement to the disability element of child tax credit. It will be reduced from existing arrangements of £52 per week to £25.95 a week. That is a loss of about £26 per week for many families with disabled children.

Such a significant reduction will have an impact on thousands of families, and several families on the middle and lower rate of disability living allowance will be caught by surprise. We all need to think about the families who will be affected and the implications for them.

Kate Green (Labour, Stretford and Urmston)

Does my hon. Friend agree that one of the difficulties for families with disabled children is that the conditions are often less stable than for adults with disabilities? By narrowing the test in such a way, parents will face even greater uncertainty not only in respect of the financial circumstances, but in the context of a condition that could be changing or degenerating quickly.

Margaret Curran (Labour, Glasgow East)

Yes, my hon. Friend makes an important point, and as we consider the detail of the amendments and decide whether or not to go ahead with the proposals, we will examine the testimony of families and their experience, particularly families with the lower and middle-rate care, because we cannot easily dismiss their experiences. If children have such experiences, they still have significant disabilities that have enormous implications for their family’s income, lifestyle and quality of life.

I appreciate that the Government are bound to argue that transitional protection will be built into universal credit and will apply in this respect, but I ask Members to look particularly at the briefing from Every Disabled Child Matters, which refers to transitional protection in some detail. It states:

“Although existing claimants will be transitionally protected, in the future up to 63% of those children qualifying for DLA will…be affected by this”.

As we discussed in the evidence sittings, a change of circumstance could take that transitional protection away from people, and we are still to have many detailed debates about possible changes of circumstances. The fact that another child might leave the house or a partner gets a job could radically alter the family’s income and seriously undermine the income of people with children in such circumstances. I ask hon. Members to think about that.

Charlie Elphicke (Conservative, Dover)

I am listening to the hon. Lady’s argument with interest. She is talking with great passion. How many children fall into the category of severely disabled that is covered by the amendment?

Margaret Curran (Labour, Glasgow East)

As I think that I made clear at the beginning of my speech, the amendment is slightly out of kilter because it was tabled with reference to the Bill, but, with your permission, Mr Weir, I am now referring to the proposals that the Government have since announced.

I will come on to figures because we need to look at them. They are not yet conclusive, but we have received early indications from some charities and the Library, as well as the Department for Work and Pensions to which I shall happily refer later and perhaps in more detail if hon. Members would like me to do so. Many families will be caught by surprise by the scale of the Government’s proposal. I am sure that many hon. Members are now aware, if they have had time to read their e-mails in the past 24 hours, how many charities have equally been caught by surprise and seem to be fairly staggered by the nature of the proposal. For example, Family Action estimates that 100,000 families will be affected and lose about £1,366 per annum. That can equate to £20,000 in the lifetime of a disabled child. A family with two disabled children could lose £40,000. We are talking about a significant financial sum. Every Disabled Child Matters argues strenuously that the proposal will have a significant impact on child poverty, as we discussed this morning. I quote again from its briefing:

“Childhood disability is frequently a ‘trigger event’ for poverty”.

I have understood the debate and have listened with great interest to the Minister talk about how we actually tackle poverty and get people back to work. I am as passionate about getting people back to work as I am about anything else, and I fundamentally believe that it is the answer to poverty, but we must also understand that poverty is complex. If a child has a disability, it can affect their ability to work. Perhaps such children cannot work many hours and suchlike. I appreciate that universal credit is part of an argument to answer some of the challenges in respect of flexibility that it tends to provide, but Every Disabled Child Matters is now arguing that the scale of the change for families with disabled children undermines the universal credit proposal and could be serious in how it is moved forward.

Kate Green (Labour, Stretford and Urmston)

Like my hon. Friend, I am very passionate about work as a good route out of poverty for all who are able to take it, but does she agree that, even when parents of disabled children can move into work, they often face higher in-work costs than other parents, such as higher child care costs or higher costs of transporting their child to safe child care places to enable them to go to work. These premiums have helped families to close the gap when meeting such costs.

Margaret Curran (Labour, Glasgow East)

Yes, again, I strongly agree with my hon. Friend. Her knowledge is showing itself yet again and helping us to assess the proposals. All charities for the disabled, as well as all families with experience of disability, will talk of the extra costs of disability. I appreciate that there could be debates about how the extra costs of disability are met, and there is no doubt that people use the premiums and elements as a way of assisting them to meet some extra costs. Even child minding can be a different cost because the parent might need someone to put specialist equipment in the house.

Of course, children with several disabilities must get the support that they need. I do not want to get into an argument about people with severe disability, but they are being pitched against those with a lower disability and that can sometimes be quite pernicious. We have to be clear. I am sure that many constituents have made this clear to us. If someone is a mother or a father of a child who is on the lower and middle rate for disability, those needs and extra challenges cannot easily be dismissed. They are still significant disabilities; they still involve significant costs; and they still involve significant rearrangements and challenges for such families.

Yvonne Fovargue (Labour, Makerfield)

Does my hon. Friend agree that the difference between a disabled child who is on the middle rate and one on the higher rate is quite small? A child needs substantial or continued attention throughout the day to get the middle rate, which involves the parents in an awful lot of looking after. A substantially disabled child can get the middle rate, whereas a less disabled child might get the higher rate because of the need for attention during the night that is more than a child of that age would usually need. In my experience, it is very difficult for the parents of a disabled child to claim the higher rate. A much higher hurdle is put in their way.

Margaret Curran (Labour, Glasgow East)

I thank my hon. Friend for those comments, which illustrate the knowledge that she brings to our deliberations this afternoon. In fact, the briefing from Citizens Advice also makes the point in great depth about the experience of people on the middle rate and what that involves for such families. It is incumbent on us to appreciate what that is like, before making what the Government would argue are such necessary changes.

I have a number of questions for the Government. As I have asked already, will there be a specific amendment and when will we return to the matter? I am sure that the Minister has got that point. Will an impact assessment be attached, so that we can understand the full implications? Why has there been such a steep reduction—£26 a week is quite a loss—and why is it of that order? Paragraph 4(f) of “Additions for longer durations on Universal Credit”—the document to which I referred earlier—makes an interesting point:

“More generous uprating over the period 2003-10 has seen the child payments increase at a faster pace than the adult payments, leading to a lack of alignment in rates.”

Can the Minister give us more information?

The Government aim to align child and adult payments, so part of the problem would seem to be that between 2003 and 2010 more emphasis was placed on giving resources to disabled children slightly out of kilter with disabled adults. We need to argue the rights and wrongs of that, because the Government now seek to alter it. Is that the right policy? Was it right to give slightly more resources to families with disabled children than to disabled adults? There is still an argument for, and it would be interesting to hear the argument against.

Most charities so far are saying that the case has not been made for that change, as indicated by my hon. Friend the Member for Manchester—forgive me, my hon. Friend the Member Stretford and Urmston—my geography has improved enormously since I was elected to the House. The point has been made that there are particular stresses and strains in relation to children. Nevertheless, wherever we stand in that debate, we need to think and argue it through as we move forward.

The document that I referred to also makes a significant point that gives parameters to our discussion this afternoon:

“The Government does not believe it would be right for resources released from this reform to return to the Exchequer.”

To me, that is very welcome. We know clearly what territory we are in. The money will not be lost to the Exchequer, according to the paper. This is not about savings, the deficit or those arguments; it is about a transfer of existing resources within an envelope. I assume that the logic is a transfer to children with the most severe disabilities, but that raises some issues.

Given the scale of the reduction, the implication is that there will be significant savings. Where are those savings? What are they? What is their scale? Where will they go? Will they go to children with severe disabilities? If the savings do not go to that group, will they go to other disabled children or to a broader range of people in the universal credit system? On those details, the Government’s proposals stand or fall.

The provision is very controversial, and it needs more time and thought. It is of great import to the disability community, and it will have day-to-day significance to those families who are working hard to care for their children. I am sure that we have all received many significant representations from that community, and it is one that we all must listen to. Many of us may well have our own family experiences of such matters. This is of great significance. Mr Weir, I signal again that my amendment was tabled in a different context, so perhaps we can decide how to pursue that after we have had the debate if I may be permitted to put it that way.

Sheila Gilmore (Labour, Edinburgh East)

What we are looking at is part of the difficulty that we get into in simplifying. No one would say that they want to keep the complications in many current benefits. Although such benefits have assisted a number of families, including those with disabled children, they are complicated in how they operate and interrelate, so yes, simplification is a good thing. As we have said before, however, simplification has its own problems. Will people lose out as a result? Are they people who we might not want to lose out, and what is the exact qualification?

When people see the apparent unfairness of some people getting larger payments than others, they have a tendency to suggest that the answer is to level down. We are told that payments for disabled children have become out of kilter with payments for disabled adults and have risen faster. The answer, we are told, is to align with the lower payment. There are alternatives, however, even from the same financial envelope—we could align somewhere in the middle. It is not essential to level on the proposed basis.

In addition, it is not good enough simply to say that existing families with disabled children will be protected through the transition. We are still uncertain what a change of circumstances will be and how long transitional protection will operate. Obviously, such protection will lose value over time, even if circumstances do not change. Families will emerge constantly who did not expect to find themselves having to claim, whether owing to an accident, a developing degenerative disease or the birth of a child with disabilities. All those difficulties are unpredictable, and there will be a fresh flow of people in such circumstances. With a lower benefit, such people will lose out compared with the previous position. It is therefore not good enough constantly to say, “Well, it’s okay, because there will be transitional protection, so that’s fine.” There will be fresh examples of people falling into this group.

Universal credit will give people flexibility. My hon. Friend the Member for Glasgow East has discussed the importance of people getting into work and the difficulties that they may face, particularly if they have a disabled child. Being able to work shorter hours may assist such people in getting into work; nevertheless, the additional costs remain. Additional income will become available to many people who work these “mini-jobs”, which seems to be the trendy word for them. The problem, however, will be that such jobs will be pretty low-wage.

I understand that the thinking behind universal credit, which I do not disagree with, is that people should be enabled to progress—in the fullness of time, having has the taste of a mini-job, they could go on to do a midi-job and then a maxi-job. That is fine—they may or may not be able to do that—but where people have a disabled child, for example, the advantage of being able to work shorter hours is clearly that it fits in with those responsibilities. It could suit some of them, unlike some of the rest of us, who may well have fewer caring responsibilities as our children get older and as they get to secondary school age and no longer want us fussing around them quite so much. One’s freedom to work longer hours does improve, although there are some limits to that.

For the parents of disabled children, it is a particular issue that such arrangements continue. We are dealing with a group who may have the flexibility to do some work, where previously they could do none, and to earn a little more than they could have done previously, but in low-wage jobs and on low hours, the increase will not be significant. If other payments that were previously made to support that family are taken away, they will indeed be worse off.

What is always getting said in this debate is that, if we have not worked out the finances and do not know how that money will be paid, we should not make any suggestions. It is very difficult to use one subject area and say that that is where we must put all our financial eggs in terms of reductions or, we hope, future increases in expenditure. Choices must be made across the whole political board. Hon. Members, even some in the Opposition, will no doubt differ on how we do that and where we would make those choices. On that basis, it is not unreasonable for us to make proposals that will help people, even though they have a cost.

Chris Grayling (Conservative, Epsom and Ewell)

Let me deal with this debate in two halves. Clearly, the amendments focus very much on the nature of the clause, which will make provision for an amount to be paid within the universal credit in respect of a child or qualifying young person. Amendment 21 would write into primary legislation that we must include an increased amount if that child or qualifying young person was disabled. Amendment 22 would create a similar requirement if someone was severely disabled.

Let me deal with that practical issue first. It is absolutely our intention to have a two-tier structure of payments similar to child tax credit; one rate for a disabled child and a higher amount for a severely disabled child. The regulation-making powers in the clause will clearly allow us to that, so I can reassure the hon. Member for Glasgow East on that point.

One of the reasons for not writing this kind of thing formally into primary legislation is that doing so removes flexibility. We have had one or two cases in recent times—for example, over visual impairment—where it has been necessary to return to primary legislation to make a change if the direction of policy changes or something arises that requires us to do something slightly differently. In no way is this an attempt to derecognise severe disability or disability; we are simply maximising the flexibility to deliver the most appropriate system at any time. There is an absolute commitment from us to retain those two elements.

We also intend to retain the link with receipt of disability living allowance, so that the payment for a severely disabled child or qualifying young person is based on an entitlement to the highest rate of the care component of DLA, or what will come out when we move over to the personal independence payment in the future. We intend to expand eligibility to the higher addition, so that severely visually-impaired children can also receive the higher rate.

Kate Green (Labour, Stretford and Urmston)

I would be very grateful to the Minister if he clarified something that he said a moment ago about retaining the current DLA gateway arrangements when we move to universal credit. As the situation on DLA has been so fast-changing in recent weeks, will he clarify whether or not the intention is to replace children’s DLA with PIP in the future?

Chris Grayling (Conservative, Epsom and Ewell)

At the moment, we are simply moving ahead with PIP on adults. We have certainly not ruled out moving to PIP in the future for children. At the moment, that link will apply under DLA; if we move to PIP in the future for children, that link will be retained. We are not making big changes, and I hope that that will allay the shadow Minister’s concern about our intentions.

Let me turn to the piece that is not in the Bill itself, but that is a matter of concern, as articulated by the hon. Members for Glasgow East and for Edinburgh East. I will start with a simple, clear statement: this is not a savings exercise. We are reorganising what is there, so that it fits in the best way possible into the universal credit structure. What we are doing does not generate savings that move outside the disability world.

Margaret Curran (Labour, Glasgow East)

I thank the Minister for that reassuring statement about the disability world. What about the resources for disabled children?

Chris Grayling (Conservative, Epsom and Ewell)

Let me talk through what is effectively happening and what we are doing within this mix. We have decided that the current situation in which someone who reaches the age of 18 experiences a drop in the support that they receive is not right. We have decided to harmonise the rates throughout. As the hon. Member for Glasgow East has identified, that has the effect of releasing some funds. We have looked at this in detail, and 146,000 families currently get the disabled child element, of whom 58,000 get the severely disabled child rate. Our intention is that, for those affected by the proposed changes, transitional protection will avoid any cash reduction at the point of change.

The key point is that the savings generated will be recycled into a higher element at the support end of the spectrum. We are trying to create a simple, streamlined system for the bands that exist within the employment and support allowance for the middle, more severe group. We want to recycle any funds generated as a result of the changes that we are making into much higher support within the support group. That will benefit the most severely disabled, and all the funds generated as a result of the reorganisation of the system will be kept in that pot. I freely admit that what is there at the moment will change. This is a realignment. In many ways, as I said in my opening remarks about the universal credit, when we take an existing system and try to realign it into a streamlined, simple form, we get changes and consequences. Everyone receives transitional protection, but the resulting released funds will be recycled to those at the most severely disabled end of the spectrum.

Margaret Curran (Labour, Glasgow East)

I thank the Minister again; he has been very generous in giving way. May I ask for clarification? I am not sure whether I agree with his logic, but I understand it, and we may return to some of the principles of the scale of the change. The resources that severely disabled children get will increase by about £1.50 a week, from £73 to £74.50. I do not disregard that—it is welcome and it will matter to the families—but I do not think that it quite equates with the savings made by the deduction from those who are on the middle rate. Will the savings from the lower and middle rate all be given to children in the category of severe disability, as the Minister understands that category?

Chris Grayling (Conservative, Epsom and Ewell)

It is not our intention to realise savings for entirely unrelated purposes as a result of doing this. The aim is to recycle the funds into the top end of the scale, so I can assure the hon. Lady that our policy intent is to retain the money within the disability world and to provide transitional protection for those affected. Overall, the support that we provide to people with disabilities will not and should not change as a result of what we are doing. It will provide a welcome benefit for those at the support end of the scale—the most severely disabled—who are clearly among the most vulnerable and needy in our society.

Kate Green (Labour, Stretford and Urmston)

I am sorry; I am still not absolutely clear on the impact of the changes on children. Is the Minister saying that all the money that is released by removing the premiums from children on lower and middle rates will go to children in receipt of the higher rate, or is he saying that the money released may in part go to children but might go to adults with disabilities as well? If so, in either circumstance, what impact assessment in relation to children has been carried out?

Chris Grayling (Conservative, Epsom and Ewell)

The hon. Lady knows that we have carried out very detailed impact assessments on all aspects of the Bill. They are there for her to see. We have set out a plan that brings back into alignment the support that is provided for children and adults. The rationale is that, when a young person grows up reaches the age of 18, a family can experience a fall in their income, and we think that that is not right. People have needs related to disability throughout their lives, so we have created a single system going all the way through that has led to adjustments to what people receive. We are providing transitional protection where those adjustments reduce the amount of money that people receive. The money released as a result of those adjustments will be reinvested in support for the most severely disabled people. We do not make a distinction between children and adults in that system, and I hope that that provides clarification.

Kate Green (Labour, Stretford and Urmston)

I think that clarifies the point. The Minister describes a life-course approach for disabled people. Therefore, the pot of money available to support disabled people is, in effect, a single pot whether they are adults or children. Is that correct?

Chris Grayling (Conservative, Epsom and Ewell)

We will provide life-course support. We are trying to move beyond an artificial divide at the age of 18. When we talk to families with disabled children, one of the big anxieties is about what will happen to those children once they reach the age of 18. I am not convinced that there is a case for variation in the support received once children reach that age. We have thought through this matter long and hard, and believe it to be the right approach.

Kate Green (Labour, Stretford and Urmston)

The Minister has been generous in allowing repeated interventions on this point, but it is so important to families with disabled children and I am sure he will understand why I and my colleagues are pressing the matter. The case has been made repeatedly by parents that the cliff edge at 18 is difficult—the Minister is right about that. In part, that cliff edge is difficult because so many other forms of social support for people with disabilities change at that moment. In other words, the support available from social services for families with children who have disabilities is different from the support they receive when those children become adults. I am concerned that the Minister is saying that the financial support might continue completely unchanged, when all the other support that that person receives as they move from childhood to adulthood looks different.

Chris Grayling (Conservative, Epsom and Ewell)

With respect, I fear that the provision of services by local social services departments is beyond by remit, although I recognise the issue to which she refers. This is a small way to smoothe what can be an extremely difficult transition. We have sought a life-course approach to supporting disabled people. We recognise the issues raised in the two amendments about the need for differing provisions for less-severely and more-severely disabled people. We have included flexibility for future policy making in that area, and we have clearly said that we are taking that life-course approach. We will provide transitional protection where people are affected, and across the whole field of support for people with disabilities, a more aligned, simpler and more logical approach has been created. That is the right approach to take. I hope I have reassured Opposition Members and that the hon. Lady will accept the status quo and withdraw the amendments.

Margaret Curran (Labour, Glasgow East)

I thank the Minister for that interesting clarification. I will attempt to use the metaphor of the bookcase. If we cannot put anything on the bookcase, it will start getting a wee bit shaky and I do not think we have all the information that we need. I will take that no further—it is obviously beyond my wits to use that metaphor properly. I accept the Minister’s clarification about the Bill. From what he said, I understand that the Government do not intend to bring forward specific amendments to achieve the lifetime approach being taken.

Chris Grayling (Conservative, Epsom and Ewell)

It will be done by regulation.

Margaret Curran (Labour, Glasgow East)

I should have asked earlier whether the Committee could see those regulations. They will be a matter of some discussion, and should perhaps be subject to the affirmative procedure. I am not 100% sure of the procedures in this House, but I will pursue that with the Minister to ensure I get it correct. This is a significant change that will matter enormously to many people. A debate should be had in principle about the shift the Government are making towards a lifetime approach, particularly in context of the significant reforms made to existing benefits for disabled adults. If that were not changing, perhaps it would be slightly less contentious. Given that the system is changing so much and that so many adults will purportedly lose their entitlement to the disability living allowance, this is a significant step change. We must talk about the principle behind it, and hon. Members from both sides of the Committee should look at the detail of the legislation because of the scale of change it represents. I will try to find opportunities to pursue that appropriately during the Committee proceedings. I beg to ask leave to withdraw the amendment.

Stephen Timms (Labour, East Ham)

We have had an interesting debate on the amendments, and before we agree that the clause should stand part of the Bill, I would just like to clarify a couple of points.

First, the Minister has just made it clear that the changes that the Secretary of State announced to us during last Thursday’s sitting will be in regulations. Would we therefore need to receive a revised note in due course, or does the note that we have on regulations under clause 10 already incorporate those changes?

Secondly, I believe that the Minister has just told us that the Government intend to reduce support for disabled children in order to increase support for disabled adults. Did I understand him correctly? Lastly, he said that we have already received an impact assessment, but as the announcement is different from what was intended when the original impact assessment was published, I take it that there will need to be a revised one. Is that the case and, if so, when is it likely to be published?

Chris Grayling (Conservative, Epsom and Ewell)

Let me respond briefly to those points. First, on the last point, the measure will in due course be subject to regulations laid before the House, and under the rules that apply to such things there will have to be an impact assessment for those regulations, which will set the specific rates.

Stephen Timms (Labour, East Ham)

I am sorry to interrupt so soon, but it is important that we have the impact assessments for the entire Bill in time for us to debate them on the Floor of the House. Can the Minister confirm that we will have them on Report, at least?

Chris Grayling (Conservative, Epsom and Ewell)

I think that the right hon. Gentleman misunderstands the point. The regulations are about what I described at the start: the setting of individual rates. The legislation and the accompanying regulations provide a framework for establishing rates of support within the universal credit for people with less severe disabilities and for people with more severe disabilities—in this clause, children. The rates are set yearly—normally uprated—on the basis of a decision by the Government of the day, and are subject to regulatory approval and clearance by the House. At that time, the individual amounts provided are subject to equality impact assessments and all the various requirements of the legislation, but that is not what we are discussing today.

Both in what the Secretary of State set out last week and the papers provided, we have indicated to the Committee our policy intention, which is to take the steps we have indicated and to provide transitional protection. The shadow Minister is absolutely right; we have taken a decision to realign, and that involves shifting resource towards people with greater levels of disability. He asked about the reduction in support for disability. People who are more severely disabled in this support bracket will receive more support across the life course than at present.

Stephen Timms (Labour, East Ham)

I want to be precise about that. Does the Minister propose to reduce the support for children in order to increase the support for adults?

Chris Grayling (Conservative, Epsom and Ewell)

We propose no reduction at all for current claimants; they will receive a transitional protection. For future claims—new people in the system—we intend to make adjustments so that payments are flattened out across a life course and that we focus support more on people who are more severely disabled. There is an important difference there. We do not intend to cut benefits for current child claimants. We are introducing a new system for the future and for future claimants, which is what we are doing across a range of issues related to the universal credit. That, however, is not what we are considering in the Bill today.

Stephen Timms (Labour, East Ham)

I am puzzled as to why the Minister is so reluctant to confirm what I think he is now clearly saying, that the Government are reducing support for children in order to increase support for adults. I do not criticise that—I simply want all of us to understand precisely what the Government are proposing.

Chris Grayling (Conservative, Epsom and Ewell)

I simply stress that we are proposing how we will operate the system in the future, not at present for existing claimants. As the right hon. Gentleman rightly says, in the future the balance will move so that resources are targeted more on those who are more severely disabled. We will remove the divide that exists at the moment between children and adults. That will be done through regulation and will be subject to impact assessments at the time, and we believe that that is a better overall approach to provide support across the lifetime. What we are discussing in the clause stand part debate is whether there should be an element of the universal credit to support children and families and the extra cost and responsibilities entailed, both for people who are disabled and for those who are not. That is the question of the clause stand part debate.

Stephen Timms (Labour, East Ham)

Can the Minister tell us whether the impact assessment that we have already received reflects the change that is being announced?

Chris Grayling (Conservative, Epsom and Ewell)

The right hon. Gentleman continues to misunderstand the difference between what happens under the regulation powers in the Bill as time goes by and the measures of the Bill itself. Decisions about the level of each element of the universal credit—the actual amounts—and the impact of the decisions about the amounts and the relationship between them will be subject to an impact assessment when they are brought before the House. We have set out in quite a lot of detail our initial intention for the things that we intend to put in place as part of the universal credit, so that hon. Members on both sides have a sense of what our policies are when we implement the measures in the Bill. The existing duty to produce detailed impact assessments, as we have done, probably goes far beyond the requirements of the Bill. We have put as much detail as possible before the House, and there will be further details when the regulatory powers come forward.

Kate Green (Labour, Stretford and Urmston)

I understand what the Minister is saying about doing a detailed impact assessment on rates at the time when we have firm proposals about them, but surely we can already make an impact assessment of the overall impact on children, on their outcomes and potentially on child poverty. Does the impact assessment that has been done for the Bill to date cover the proposal that we are currently debating in those regards?

Chris Grayling (Conservative, Epsom and Ewell)

We have looked at the proposals in the context of child poverty. We believe that taking this approach will make no difference to child poverty levels. I can give the hon. Lady that clear assurance.

Stephen Timms (Labour, East Ham)

Again, I am puzzled as to why the Minister is unable or unwilling to answer what I think is a straightforward question. The impact assessments that have been published contain many figures about people who lose and gain and assumptions about rates. Is the assessment that reflects this clause still correct, in light of the change in policy that the Secretary of State announced last Thursday? It is simply yes or no.

Chris Grayling (Conservative, Epsom and Ewell)

The answer is yes. As I keep saying to the right hon. Gentleman, the impact assessment that has been published for the clause is unaffected by the change of policy. In due course we will bring forward an impact assessment that relates to our decisions on disability additions, which will be available to the Opposition. Although impact assessments are not required until we table the regulations, we will bring them forward during the Bill’s passage through Parliament as early as possible, so that hon. Members on both sides understand the impact of what we have done. However, the impact assessment that relates to this clause is still valid. Furthermore, we do not believe that the package of proposals that we intend to introduce in due course will have an impact on child poverty levels—that is important. We think that this is a better way of doing it. On that basis, I hope that the Committee will accept clause 10.

Clause 11

Karen Buck (Labour, Westminster North)

I beg to move amendment 35, in clause 11, page 5, line 4, after ‘home’, insert ‘, including mortgage interest payments’.

Michael Weir (Scottish National Party, Angus)

With this it will be convenient to discuss the following: amendment 45, in clause 11, page 5, line 23, at end insert—

‘(4A) Regulations under subsection (4) shall provide that determinations of housing costs for the purpose of this section shall have regard to—

(a) rents and occupation charges within the locality in which the relevant property is situated; and

(b) the nature of the tenancy or occupation contract under which the liability arises, including any statutory protection of the letting in question.

(4B) For the purposes of subsection (4A), the “locality” means such area as may be defined in accordance with the regulations.’.

Amendment 24, in clause 11, page 5, line 29, at end add—

‘(6) Before implementing the regulations in subsections (3), (4) and (5), the Secretary of State shall publish a report on his method for uprating awards for housing costs, covering the effect of differences between actual rent and the amount on which the award is based.’.

Karen Buck (Labour, Westminster North)

It is a pleasure to make my first contribution to the Committee under your chairmanship, Mr Weir.

The amendments deal with housing costs. We would like the Minister to explain how he intends to monitor and review the relationship between housing costs and universal credit, and to inform us of his thinking on the extent to which universal credit will meet actual housing costs, which is a matter of great concern for both the housing sector and tenants. We also want further information about the treatment of mortgage interest and how that will roll forward into universal credit.

The amendments allow us to test a central element of universal credit, because housing costs are very significant to low-income households. In many cases, they constitute the largest element of a household’s budget, so it is extremely important that we get this right. The Bill gives sweeping powers to the Secretary of State through secondary legislation. From clause 11 and clause 68, which we will discuss later, we know some of the Government’s intentions for universal credit, and we wish to test them today.

In practice, clause 11 paves the way for the most fundamental change in the treatment of housing costs since the introduction of the contemporary welfare state. Beveridge struggled with, and could not find, an ideal system for treating housing costs, largely because of the enormous variation in housing costs in different parts of the country. That point is still germane today. The clause will make changes that affect that whole settlement, and we will move away from the existing structure of treating housing costs that was largely laid down in legislation in 1992.

There are regulations that give us some indication—we received that information on Tuesday—about how the Government intend to proceed. However, many of the key existing regulations that determine the calculation of awards, the method of payment, and so on, were not included. It is, therefore, a blank canvas, or an empty bookshelf—to continue what will be a recurring motif in the Committee. We fear that we do not have the construction manual. [Interruption.] There will be more analogies—the shelf, as constructed, will not be strong enough to bear the weight of the volumes that we intend to place upon it. [Interruption.] No, I have run out for the moment.

The concerns about whether the shelf will be strong enough to bear the weight take us back to an intervention on Tuesday by—I think, but I may be wrong—the hon. Member for Aberconwy. He made the point that unemployment is one of the worst and most devastating things that can happen to anybody, which is absolutely true. I put it to the Committee that the worst thing that can happen to people—setting aside human tragedies—is homelessness. Homelessness, which in the past has often been consequential on unemployment, is one of the most devastating experiences. We know all the information—volumes of it—about how homelessness impacts on families, children, and people’s well-being. We need to be absolutely sure that whatever we construct as a method of meeting housing costs will not lead to additional homelessness and will not mean that, when people lose their job or their income, there is a very real risk that they may also lose their home.

We know that the popular mantra of the Government over the past year has been that housing benefit, which will be rolled into housing costs under clause 11, is out of control. That phrase is frequently used, but housing benefit, as a principle—we can discuss the details of this—is something of which we should be proud. Housing benefit did exactly what it should have done. It acted as a stabiliser. During the recession, it acted as a means of ensuring that homelessness did not soar. Remarkably, given the scale of the recession and given what it did to people’s jobs and incomes, we did not see soaring homelessness. The last time that we had a recession, which was less grave, at the beginning of the 1990s, homelessness soared. It is worth reminding the Committee that, in 1992, homelessness peaked at 138,740 households, which is the best part of 500,000 people. In 2008, the figure was 14,000, and it was 11,840 in 2010. Housing benefit, therefore, worked. It acted as a stabiliser, and it is important, because we will possibly see a recurrence of those recession years. I hope that we do not, but we are projecting high levels of unemployment, so who knows what is going to happen in the future as the economy withers. We know that it is absolutely essential that we have a mechanism in place that ensures that we do not repeat the experience of 1992.

Priti Patel (Conservative, Witham)

The hon. Lady is making a clear case about the issues around housing and the impact that they have on people, but exactly which definition of homelessness is she using? It has clearly changed over the years since the recession that she has pointed out. Is she using, for example, the definition of two children sharing a single bedroom?

Karen Buck (Labour, Westminster North)

I am not talking about the definition of overcrowding, which is a completely different point. We are discussing homelessness, and it has been defined in legislation since 1986. It was amended in the Housing Act 1996 and again in the Homelessness Act 2002. It means people who are at risk of losing their home. The definition is clear. It can include people whose homes are repossessed, and it can mean people who are losing their homes as a consequence of, as is often the case, the end of an assured shorthold tenancy. If people have to move and downsize—I have no problem with that—we need to be sure that people will not go through the trauma of enforced homelessness.

Kate Green (Labour, Stretford and Urmston)

Does my hon. Friend not agree that the reason why we are so concerned about having this sort of definition of homelessness is because of the consequences of living in that situation? This applies particularly to young people, who may be forced to sofa-surf from one friend to another, which completely inhibits their ability to look for employment or to remain in education or training, for example. That is why we have a definition of homelessness that is about outcome in terms of what we are seeking to drive at.

Karen Buck (Labour, Westminster North)

My hon. Friend is right. We need to ensure that people have some stability. It is, above all, critically important for families with children, but it is also important for people seeking work that there is not a problem of enforced mobility, which is a dimension of homelessness.

Paul Uppal (Conservative, Wolverhampton South West)

The hon. Lady makes a specific point about the comparison between the figures of the early 1990s and those of the recent recession. If she is specific on that point about individuals and families at risk, she will find that, in the early 1990s, lenders were much more predisposed to going down the route of repossession, because of a different economic situation. I think she will find that that may answer the question.

Karen Buck (Labour, Westminster North)

That is not an unfair point. Part of the reason that lenders behaved differently were changes made by the Labour Government. Measures were put in place to discourage early intervention on the part of lenders. One of the issues, which I will refer to later on, is that there is concern among lenders over what will happen to their investments, and some of the uncertainty comes from measures that might increase arrears if actual housing costs are not met.

To be very clear, I am not arguing that the Government’s universal credit will see homelessness return to the kind of levels that we saw in 1992. I am merely saying that a range of measures were put in place after the peak in homelessness in 1992 that have been effective. One of those measures was the extent to which housing benefit helped to take the strain during the recession. We know this because the increase in the housing benefit case load during the recession was driven so extensively by in-work claims.

Sarah Newton (Conservative, Truro and Falmouth)

No one here would want to do anything that would add to homelessness, that would be a dreadful situation. However, my scepticism about the numbers and data the hon. Lady is reporting is because the manipulation of data under the last Government was so appalling, and never worse than in this area. As someone who, like many people here, has done voluntary work with homeless people, the miscounting and misrepresentation of rough sleepers has only recently been rectified by the current Government.

Karen Buck (Labour, Westminster North)

I do not have to hand the number of times the Conservative Government changed the definition of unemployment, and I am sure that you would instantly rule it out with regard to this debate, Mr Weir.

Yvonne Fovargue (Labour, Makerfield)

Does my hon. Friend agree that one reason why homelessness did not peak was the availability of advice through the court repossession desk and the funding given to advice agencies to expand the provision of early preventive measures? I worked in the advice services in the 1990s, and I work in them today, and the difference in the funding available now and in the number of people who can be seen by advice agencies has prevented considerable homelessness.

Karen Buck (Labour, Westminster North)

My hon. Friend is right, and we will come to amendments on welfare rights later. There are a number of reasons that help to explain why homelessness did not rise during the recession. I merely point out—this is beyond dispute—that housing benefit, as structured, was a very important component, as we can see from the number of claims made between 2008 and 2010 that were either from people in work who saw a reduction in their incomes, or from people who had become unemployed, for whom we ensured that a hopefully temporary period of unemployment did not lead to excessive debt and the risk of homelessness.

Given how little information we currently have about how housing costs will be dealt with, I am anxious to hear from the Minister how he intends to ensure that a housing component in universal credit will carry the strain and prevent unnecessary risk.

Lilian Greenwood (Labour, Nottingham South)

Does my hon. Friend agree that another reason why homelessness has not increased as it might have in previous years is the availability of Supporting People funding, which helped those who were at risk of homelessness and who perhaps struggle with independent living. That access to support and advice prevented them getting into arrears with payments, or finding other ways in which they might have put themselves at risk of losing their tenancies. The changes will come at exactly the time when many local authorities experience dramatic cuts in their Supporting People funding, and many services that have been available to people at risk of homelessness are being cut severely.

Karen Buck (Labour, Westminster North)

My hon. Friend is right. You would, Mr Weir, rule a discussion about Supporting People outwith the terms of the amendment, but all these issues interact. A recurring theme in my comments will be what I see as the incompatibility between the actions of the Department for Communities and Local Government and the DWP’s—in many cases, wholly desirable—aspirations. The undermining of provision for vulnerable people and the cuts in support are examples of that.

In defending the basic structure of housing benefit—I expected more interventions from Government Members, but I will try to pre-empt them—I am not defending every aspect of housing benefit as it currently is.

Harriett Baldwin (Conservative, West Worcestershire)

I hope that the hon. Lady will take the opportunity to put the record straight. I am sure that she will acknowledge that nothing in the changes to housing benefit would justify the comment that she is reported to have made at a public meeting that

“they don’t want black women, they don’t want ethnic minority women and they don’t want Muslim women living in central London.”

Karen Buck (Labour, Westminster North)

I was expecting that. I make it clear that I was not talking about housing benefit, or certainly not in isolation; I was talking about a whole round of housing benefit and local authority measures, which, as the Government’s impact assessment makes clear, will have a disproportionate impact on black and minority ethnic communities. But I was wrong. It has been a 20-year rule of mine not to write or say anything in public that I would not be prepared to see in the pages of the Daily Mail, and I have generally held to that. I made a mistake. In a very small political meeting, I was too lurid, and I accept that. What I should not have done was to have implied motive. I absolutely accept that that was an error.

Michael Weir (Scottish National Party, Angus)

Order. The debate is going far wide of the amendments under discussion. There are interlinked matters, and I have allowed a fairly free-flowing debate, but I ask Members to concentrate on the amendments before us.

Karen Buck (Labour, Westminster North)

Thank you, Mr Weir.

George Hollingbery (Conservative, Meon Valley)

I should like to acknowledge the gracious way in which the hon. Lady dealt with the last intervention. However, I do not know the shape of the graph of the figures in the impact assessment on housing benefit, but it is clear that the amount of housing benefit paid out has risen by 50% in real terms since 1999. Does she think that the Government are right to consider that that needs addressing?

Karen Buck (Labour, Westminster North)

If one looks at the overall rise in housing benefit, it is clear that several factors explain that driver, only some of which are problematic. Particularly during the recession, there was a significant—indeed, dramatic—increase in case load and a substantial real-terms increase in council and housing association rents, which are also factors. The extent to which it is landlords ripping off the system that explains the increase in housing benefit, which is the central point of the argument, is very small. We have to be careful not to throw the baby out with the bathwater, because housing benefit provides for 1 million people.

Michael Weir (Scottish National Party, Angus)

Order. We seem to have got into a debate about housing benefit. The amendments are specifically about mortgage interest payments. I ask Members to concentrate on that, because we have moved into what is basically a stand part debate.

Karen Buck (Labour, Westminster North)

I am sorry, Mr Weir. I understand that amendment 35 deals with mortgage interest payments and that the other two amendments deal with a review of overall housing costs and the relationship between the payment of universal credit and housing costs as a whole. I had hoped that it would be possible—that is certainly the intention of the amendments—to address the extent to which universal credit would take into account provision for housing for social and private tenants and, under amendment 35, for people who would receive assistance with mortgage interest, and to deal with those issues together.

Michael Weir (Scottish National Party, Angus)

Order. That is certainly possible, but we have to concentrate on those issues and not continue with the wider debate that we have had.

Karen Buck (Labour, Westminster North)

I completely take that advice, Mr Weir, although to some extent I was making a response.

Charlie Elphicke (Conservative, Dover)

I want to touch on mortgage interest payments, if I may take the hon. Lady to that issue. The difference between this and the last recession is, first, that the interest rate was far higher last time, and it has been very low this time. That has helped to keep the repossession rate well down. Secondly, there is a two-year lag. Last time we had a recession, in 1991-92, repossessions spiked in 1994. Correct me if I am wrong, but I believe that is the case. In effect, we are most at risk of repossessions this year because of the time lag.

Karen Buck (Labour, Westminster North)

I accept that point. I think it is absolutely right, and I will address mortgages in this group of amendments. We need to know whether the element of universal credit that relates to mortgage interest will be robust enough to deal with any risk that may arise from higher pressures on home owners and mortgage payers.

Chris Grayling (Conservative, Epsom and Ewell)

Will the hon. Lady confirm that it was the intention of the previous Government, had they been returned to office, to reduce the rate at which mortgage interest support is provided to 2.5%? That level is considerably below even the Bank of England’s estimate for the average amount of support needed to meet the average level of a mortgage in the UK.

Karen Buck (Labour, Westminster North)

Had the Labour Government been returned, they would have looked at the prevailing conditions and made a decision. We are not, as I understand it, discussing what a Labour Government would have done. When I talk about mortgage interest, I am not making a profound criticism of the Government’s planned approach; I am merely seeking to test a little the way in which the mortgage interest element will be addressed within universal credit.

What we know so far about the framework in clause 11 on the treatment of housing costs is that the payment available to private tenants, which will roll forward into universal credit, has been reduced from the 50th percentile to the 30th percentile. We also know that the Government will introduce an uprating for private tenants, and tenants receiving a local housing allowance, into the universal credit element; the consumer prices index will replace the current structure. We know that the Government do not intend in all cases to pay actual rents in the social rented sector. I will ask a little more about those issues.

We do not know, of course, the Government’s longer-term expectations for the relationship between actual housing costs and what will be paid, which is what the amendment is probing. We also do not know the extent to which the Government understand and will reflect regional and sub-regional variations in housing costs and how those relate to the labour market. That is integral because we are all as one in agreeing the centrality of work and giving people effective work incentives. And we do not know how some of the proposals interact with statutory duties on homelessness laid out by the Department for Communities and Local Government.

We do not know how the Government intend, if they do, to ensure that at least 30% of the private rental market remains available to private tenants, broadly speaking, across the country, because there will be implications if universal credit is not able to guarantee that. We are not clear about the interaction between the universal credit housing cost proposals and the DCLG’s future rents policies. I will explore those a little further.

I turn first to the uprating of private rentals with the CPI. At the moment we know that rent levels in the private sector are adjusted according to local market variations in each broad market rental area. The level at which help is available will be restricted from the 50th percentile to the 30th percentile. That will kick in next week. Not including the removal of the so-called shopping incentive within the local housing allowance, which the outgoing Labour Government had announced an intention to remove, according to my reading of the impact assessment 640,000 households will lose between £7 and £130 a week under universal credit. That initial framework will move forward, but it raises fundamental questions such as to what extent the Government have considered the interaction between housing liabilities and how much money they intend to leave people to live on.

This morning, we had an aspirational debate about minimum income guarantees, but all Governments have within the benefit system an expectation that people should not have to survive on less than a certain minimum level, and rightly so. We need to know a little more about the extent to which reductions rolling forward from what the Government have already said about housing costs will interact with the requirement that families have a minimum level available on which to live.

As the proposed uprating with the consumer prices index kicks in, we also do not know in the medium term whether the Government have a clear expectation of where those who are expected to move to cheaper accommodation will move, and what the relationship is between that movement to cheaper accommodation and the labour market. Nor do we know how the Government view the reduced and reducing sector that will be available as a result of the measures being put into place and the CPI uprating. How do they plan to fit people currently receiving local housing allowance at the 50th percentile and below into the much smaller pool of properties available?

Kate Green (Labour, Stretford and Urmston)

Does my hon. Friend agree that another thing that we do not know is the impact on wider public services if families are forced to relocate? In some outer London boroughs that are receiving people moving from higher-cost areas, the strain on child protection services is already being felt.

Karen Buck (Labour, Westminster North)

My hon. Friend is right. That was one reason why we voted against the reduction from the 50th to the 30th percentile in the changes that prefigure and roll forward into universal credit. The Social Security Advisory Committee recommended to the Government that the changes should not go ahead and said that the cuts rolling forward into universal credit, as we now know, are high risk and will increase child poverty and undermine social cohesion, while being completely out of step, SSAC said, with the Government’s objective to make work pay.

Research by the university of Cambridge is extremely helpful to our understanding the medium to longer-term implications of the relationship between housing costs in the private sector and universal credit. It states that the changes set in place and that will be carried forward

“immediately reduce the incomes of households claiming a means-tested benefit and who are thus by definition already at or near minimum income standards. We find that the average reduction of claimants’ incomes after rents are paid will be approximately 7%...that between 42,000 and 84,000 additional households will be left with less than £100 a week, the lowest income level guaranteed by current welfare arrangements. Those so affected include low paid workers and retired people as well as the disabled and unemployed. The households who will be moved into severe poverty contain between 27,000 and 54,000 dependent children.”

The university also states that

“Using the simulation and data from past studies of landlord tenant behaviour, we estimate that between 136,000 and 269,000 households will find their rent payments unmanageable as a result of the measures, and project that half of those will be unable to sustain their tenancy”.

Harriett Baldwin (Conservative, West Worcestershire)

Can the hon. Lady clarify to what particular point in time that Cambridge study refers? My understanding is that it is some time in the 2020s, which assumes a long-run compounding of the effects.

Karen Buck (Labour, Westminster North)

I am not absolutely sure that what I am discussing assumes that. The university of Cambridge has certainly done research for Shelter that involves the longer-term implications of the CPI uprating on top of the measures that have already been introduced and the large extent to which the areas of the country available to people on local housing allowance will shrink. As the hon. Lady says, some of that research is carried forward to 2020, although the level of accommodation is starting to shrink.

We accept that in the short term, uprating by the CPI is acceptable. What I seek to establish in discussing the implications as we currently understand them and the projections is what the Government think are the longer-term implications of using CPI and whether they intend to build it into universal credit in the longer term.

Ian Swales (Liberal Democrat, Redcar)

The hon. Lady certainly knows a lot more about the subject than I do. To what extent has landlord behaviour been factored into the studies that she mentioned, particularly in areas of the country such as my constituency, where many rents are effectively fixed according to housing benefit levels rather than the other way around?

Karen Buck (Labour, Westminster North)

That is an extremely interesting point. I was just about to come to it. It is absolutely true that what happens will vary enormously in different parts of the country, and the Government’s own impact assessment makes it absolutely clear that although everybody loses— virtually everybody, anyway—not everybody in every part of the country will lose to the extent that they will have to move home. Indeed, it is entirely possible that in some cases, landlords will respond to the changes. The difficulty—we have rehearsed this; it matters, and it will roll forward into universal credit—is that although in some areas of the country, costs are already relatively low and a large part of the total private rental market is driven by housing benefit, or will be driven by housing costs under universal credit, that is not the case in other parts. It is in those parts that there is potential for serious impacts.

Harriett Baldwin (Conservative, West Worcestershire)

Does the hon. Lady recall from her statistics lessons at school that there is a difference between the 50th percentile and the average, as well as a difference between the 30th percentile and 30% of a distribution? I do not think that her earlier point about the study picked up on that difference.

Karen Buck (Labour, Westminster North)

The main point in terms of this element is that we know that the Government have shifted, or are introducing measures to cut, eligibility from the 50th to the 30th percentile. That makes a difference. We also know that the Government plan to go forward in the medium term and—this is what I seek to ask the Minister about—in the longer term by uprating based on CPI. The availability of accommodation is already ratcheting down due to measures taken, and there is potential for a further ratcheting down that, although it might not be particularly additionally damaging in the short to medium term, could be devastating unless we have a clear steer on what will happen in the longer term, as the university of Cambridge research pointed out.

Sarah Newton (Conservative, Truro and Falmouth)

The hon. Lady is painting a picture in which nothing else in the housing market changes. Is she aware of changes in the Localism Bill, such as the self-financing of council housing? All parties have worked on that together for some time. It could enable more council housing to be built, for example, or community land trusts to be developed. The Government are taking a range of measures to address the dreadful legacy that we have inherited. Not enough house building has gone on, especially affordable housing for people on low incomes.

Karen Buck (Labour, Westminster North)

I will turn in a moment or two to housing costs and the social rented sector, and I will address precisely that point. The hon. Lady should bear with me, because I fear there is a sting in the tail of her hope. Members may remember Monty Python’s chocolate box and its spring surprise—if someone put the chocolate in their mouth, springs came out and plunged through both cheeks.

I wish to concentrate for a moment longer on the private rental sector, which is growing rapidly because of the interaction between the private rental market and the housing market. The housing market is largely unaffordable at the moment, so more people are in the private rental market and there is more competition for private rental accommodation. Given that a number of people who are on housing allowance and who will be covered by the housing costs element of universal credit are in competition with other private renters, there are real risks, and I should like the Minister to respond to them.

Kate Green (Labour, Stretford and Urmston)

Does my hon. Friend not agree that another distorting factor in the market—this is probably a consequence of recession and pressure on family budgets—is that the landlords of those people who are moving into privately rented accommodation are unable to offer any flexibility in their rents, as Government Members have suggested, because they, too, are locked into buy-to-let mortgage arrangements whereby they must cover an interest cost or their lender will repossess the property? It is therefore impossible for those landlords to reduce the rent.

Karen Buck (Labour, Westminster North)

That is absolutely right, and it leads me nicely to the issue of landlords. It is absolutely true—I fear that it will remain so, to some extent, whatever system we have—that some landlords will take advantage of the system. Of course they will, and that is wrong. Some landlords will set their rents at the LHA. Some small anecdotal evidence in the two-year review of LHA shows that that is partly true, but it is not true everywhere and real risks attach to that in such areas.

The issue depends on the share of the total private rental market accounted for by those people who need assistance from the Government to pay their housing costs. I do not have the figures to hand, but the constituency of the hon. Member for Redcar may well be one in which housing benefit and, in future, the housing costs element of universal credit will account for a large proportion of the market. In Blackpool, the figure is, I think, about 80%, but if we drift back into large parts of the south-east and the south-west—I am prepared to be contradicted on that—and certainly London, we will see that the share accounted for by people who need assistance with their housing costs is very small. However, although the share is smaller, the amounts involved are much greater. The large private rental markets in much of London account for 10%, 12% or 15%, according to the different broad market rental areas, so the leverage available to the state to bring those rents down is vastly diminished. The problem is that the amounts involved are so much greater.

If the housing costs element of universal credit could bring down the cover given in the Blackpools or Redcars of this world, that would be fine and welcome. If we can save money in that way, that is fine. The amounts involved, however, are small and relatively little money will be saved. If we apply that to whole swathes of the country and look forward to 2013 and beyond, we see that the real risk and implications of the provision are not that it will save the money that the Government intend it to, but that it will end up costing money.

We know from the market survey of the Residential Landlords Association that one of the problems—I hope that the Minister will respond to this if we do not get it right in future—is that landlords have no obligation to be in the market at all. No law says that any landlord must make accommodation available for people on low incomes. If they do not, someone else must deal with the problem. What we are seeing is that the number of landlords not willing to let to people receiving financial assistance from the Government is already down by 16%.

George Hollingbery (Conservative, Meon Valley)

We received evidence last week I think that the direct payment element was extremely important. Does the hon. Lady have any estimates about how much of the increase in the problem was down to the removal of direct payments?

Karen Buck (Labour, Westminster North)

I do not know, but I do not think that anyone knows. We do know that, if the survey of landlords is being taken and landlords are conscious of the fact that the Government are prepared for greater flexibility on the private element at least with direct payments, it has not yet had a huge impact. The measure will have an impact, of course, which I welcome. It will ensure that some accommodation is available that might not have been available beforehand, but there is no sign yet of its having such an impact, partly because, even with a direct payment, the amount set by the state and the actual costs as we look forward are well below—now very well below—market levels. Therefore, in a market with competition for the private rented sector, that property is simply not available to people.

Charlie Elphicke (Conservative, Dover)

It is fascinating to listen to the hon. Lady, because she is so incredibly knowledgeable about the subject. She talked about the 30th percentile. Is her position that the change to the 30th percentile is flat wrong? Is she actively opposing it because she thinks that the change should not be made?

Karen Buck (Labour, Westminster North)

The Opposition voted against the reduction to the 30th percentile. Had there been interim or other measure to control some of the problems that exist in the market—and there are some—there would have been room for negotiation. However, to move from the 50th to the 30th percentile, to take away benefit to varying degrees from nearly 750,000 households and to leave all the risks to be dealt with is unacceptable. There are too many risks associated.

Chris Grayling (Conservative, Epsom and Ewell)

On a point of order, Mr Weir. I apologise to the Committee for interrupting, but I seek clarification from the Chair to establish how I should best respond to the hon. Lady’s comments. You know that her broad-ranging remarks address a number of the issues that will also be dealt with under clause 68. Would you prefer us to take the broader housing issues in this afternoon’s discussion and not to debate the other clause subsequently, or would it be more appropriate for me to confine my remarks to the tight issues in this clause, thus helping to keep today’s remarks by all Members short?

Michael Weir (Scottish National Party, Angus)

Clearly, I prefer to keep the debate to the amendments before us this afternoon. As I have indicated already, the debate has wandered wide of them and I would like to bring it back as much as possible to the amendments, although I appreciate that there are interlinked issues around them. However, I propose to have a debate on clause 68 when it is reached—if it is reached, at the rate we are going.

Karen Buck (Labour, Westminster North)

Mr Weir, my understanding is that clause 68 will allow us to discuss some of the transitional arrangements to be made before universal credit is introduced. We are covering some of the principles, which we will not need to rehearse under clause 68, but those measures, although transitional—as we understand it, and unless the Minister tells us otherwise—will feed into the baseline for the treatment of housing costs in universal credit. It is therefore critical for us to test and explore how the Government intend to deal with actual housing costs in the private and social rented sectors as we proceed.

Charlie Elphicke (Conservative, Dover)

I thank the hon. Lady for giving away again; she has been incredibly generous.

As an expert in the area, as the hon. Lady undoubtedly is, can she explain what I am struggling with? Why did housing benefit go up from £10.7 billion in 2005-06 to £15.7 billion in 2010-11? That is a £5 billion increase in five years. What has driven that massive rise?

Karen Buck (Labour, Westminster North)

I am not sure whether the hon. Gentleman was here when we discussed some of those points. The Chair was anxious for us not to spend more time discussing past housing benefit issues under previous amendments, which to some extent we did. There are answers, but we have discussed them before.

Kate Green (Labour, Stretford and Urmston)

As hon. Members have noted, my hon. Friend is an expert in the field, and it is a pleasure to listen to her. As she said, we are uncomfortable, and we voted against the Government’s proposals, which are now in legislation, to reduce the local housing allowance rate from the 50th to the 30th percentile. Does she agree that, although we accept that as the limitation with which we are now living, it is important that the Government guarantee that 30% of the private rental market will be available to universal credit claimants? Having set the percentile so low, it is not clear that even the 30% mark will be reached.

Karen Buck (Labour, Westminster North)

That is right. I asked the Minister to respond to that point earlier. We are where we are, but we have an indication of the future treatment of housing costs. They will be uprated according to CPI, and we know that that tends to be significantly behind actual rent changes. Therefore, it is important that we understand how he expects housing cost to be treated.

We need to ensure that properties are available across the country at a reasonable spread to prevent homelessness, allow people to access local labour markets and allow people in work to claim housing cost allowance and not find that there is such a shortfall that they cannot continue in their homes. The Minister is right: the central thrust of universal credit is absolutely right in that we want people to take the jobs available. That means that they have to be able to live within a manageable and affordable distance of the jobs, otherwise, transport costs and distance will mean that the laudable aims of improving work incentives simply will not be achieved.

We know from the landlords survey that we already have a problem, and a projected further problem in that accommodation will not be made available to people receiving assistance with their housing costs from the state, due to the increasing risk of a shortfall. There is competition in the private rented sector from other sources, and landlords are under no obligation to provide accommodation, as we know. They may do so in areas where they are a large player in the market, but not necessarily in areas where they are not.

On the longer-term issue of uprating in respect of private rental costs, Ministers have made it clear that they do not expect the application of CPI to be a long-term measure. However, we do not know for certain. The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), said that if CPI is used

“for decades, it of course has the sorts of effects that”

we can see

“in the Shelter research…CPI is not for ever. We have said that CPI…will be introduced in 2013, and will be reviewed at the end of the comprehensive spending review period in 2014-15.”—[Official Report, Westminster Hall, 10 March 2011; Vol. 524, c. 324WH.]

That is after the introduction of universal credit. Lord Freud said that CPI is effectively introduced for the next couple of years, but the intention is that it will exert downward pressure in the medium term, but not necessarily in the long term.

Will the Minister give a very clear indication of the long term for universal credit? Given the overlapping prefiguring measures set in place, how will the availability of private rented accommodation at a reasonable level across the country be maintained? What is the future of broad market rental areas, which the CPI uprating effectively abolishes in any meaningful sense, and the rent officer service, which will not be needed in the transition period, but, as we understand from other ministerial comments, might be required at a later stage?

On the amendments, for the first time the relationship between the housing support available and actual housing costs in the social rented sector will change. Until now, there has always been a reflection of actual rents in the social rented sector and, very importantly, they have of course been adjusted for income. That has been the case because social rents are controlled and there is no market within the social rented sector. Allocations are made on the basis of need, even within the choice-based element.

We also know from the White Paper, “21st Century Welfare”, that that point was accepted last summer when we were first thinking about the structure of our bookcase, because the White Paper said that the housing component would build on the support that is provided by the current housing benefit system, which is based on actual rents. However, changes that are being introduced and—unless we hear otherwise—being rolled forward into the universal credit are telling us something fundamentally different.

For example, we know that the intention, for the first time, is to reduce the amount of support that is available for tenants in the social rented sector according to the size of their household. We know from the impact assessment that that will apply a benefit restriction to 670,000 households, a figure that will rise over time. We see that rise projected forward into the universal credit figures. I do not know the exact figure—I think it is about 760,000.

Charlie Elphicke (Conservative, Dover)

Does the hon. Lady not accept that there was an increase in overcrowded families from 1 million to 1.6 million in the last 10 years and that action is needed to deal with the part of the private rented sector that is operated by housing associations, to ensure that there is a proper allocation of space based on need?

Karen Buck (Labour, Westminster North)

I totally agree with that. Where it is possible to take measures that tackle under-occupation, help us to deal with overcrowding and save money, that is an absolutely good thing and I am entirely in favour of it. But I am not sure, which is why I am seeking clarification from the Minister, that that will be anything like the actual outcome of what he has proposed.

Kate Green (Labour, Stretford and Urmston)

I wonder whether my hon. Friend was as struck as I was by the evidence that we received last week from Mr David Orr of the National Housing Federation that, even if we were to force people out of under-occupied social housing, the social market could not provide alternative accommodation of the right size in the numbers that would be needed.

Karen Buck (Labour, Westminster North)

I thank my hon. Friend for that intervention. I will return to that point, if I may, because it is very important.

As we roll forward into the universal credit, we know that the Government intend to restrict the entitlement for actual housing costs in the social rented sector for 670,000 households, a figure that will rise over the early lifetime of the universal credit, including an impact on 440,000 disabled people and on 160,000 lone parents.

The question is this—can the objectives of the universal credit be met? If we look at the impact assessment of the universal credit that was published by the Government, it says that one of the stated policy objectives of the universal credit is to

“encourage greater mobility within the social rented sector”.

That is absolutely marvellous—I could not agree more. I have always been an advocate of doing that. The impact assessment says that another objective of the universal credit is to

“improve work-incentives for working-age claimants.”

That is absolutely right, although we do not know—forgive me if I am wrong, but I do not think that the impact assessment tells us—whether any of those people are currently in work. Perhaps the Minister could clarify matters, because I do not know the answer to that point. I do not know whether any of those people are receiving any housing support at the moment but are also working.

The Government also want to save money, but the impact assessment says:

“If a significant number of claimants chose to move address in the social rented sector”—

that is, if they do what they are being required to do—

“this could have an impact on these direct savings.”

In other words, if the Government achieve their objective of increasing mobility, that will cut the amount of money that is being saved. The impact assessment goes on to say:

“if 50% to 85% of affected claimants choose to remain in their existing accommodation, this would reduce the direct savings achieved by the deduction to somewhere in the range, £235m to £400m.”

There is a problem here and I would like the Minister to help us to understand it. The impact assessment appears to be saying two things. It appears to be saying that if the claimants move address the savings will not be made, but the next sentence says that if claimants remain in their existing homes the savings will not be made. If we add those two together we would probably get to 100% and there would be no savings, but certainly there is a fundamental contradiction in the impact assessment, because it appears to argue both ways.

I suspect that the Government’s proposed savings in the universal credit will be reduced the more under-occupation is tackled. It will cost more money when tenants downsize into newer, smaller housing association properties, because the rents are higher. The impact assessment explicitly states that moving into the private rented sector is an option for people to downsize. In my understanding of social and market rents across the country, invariably market rents are higher, so such moves will end up costing more. I do not understand, therefore, how the universal credit can build on the proposals rolling forward or how the Government expect the policy to work. All the objectives are in conflict with each other.

The equality impact assessment goes on to set out what it sweetly describes as non-monetised costs. They do not seem terribly non-monetised, however, because there will be costs to social landlords, local authorities and registered social landlords. There will be additional costs of rent collection and action taken against tenants in arrears, the cost of enabling tenants to be more mobile, additional costs of appeals, extra demands on discretionary housing payments, removal costs for tenants, and more. All those taken together make me wonder how the policy will work. The numbers of people who will be affected are projected to rise, so if the measure does not work in the shorter term, I do not see how the Government will meet housing costs in the social rented sector at all.

None of that has any relationship to the duties and costs beyond 2013 on local authorities when they have to pick up the fallout from people whose housing costs are not covered. The Localism Bill, to which we have referred, makes some important changes to the treatment of homelessness. Its equalities impact assessment on discharging the main homelessness duty states clearly:

“A strong homelessness safety net will remain in place, ensuring that local housing authorities are still required to secure suitable accommodation for all applicants who are eligible for assistance, homeless through no fault of their own and who fall within a priority need group…Local authorities will still be able to end the homelessness duty”

in the social rented sector

“where…there is no accommodation available in the private rented sector”.

If no accommodation is available for such people in the private rented sector, or if their property is unaffordable because a benefit cut has been imposed on them—which they cannot avoid—it seems crystal clear that there will be a duty on local authorities to provide accommodation for them. If such households become homeless, the local authority has a homelessness obligation, so it will not save money. The measure will not work; it will simply transfer an under-occupation problem to a homelessness problem. I do not understand the Government’s intention. As the numbers increase over time, how will the universal credit housing cost element deal with that?

My hon. Friend the Member for Stretford and Urmston has asked about the means with which we might deal with such a problem. The National Housing Federation said that it would not be able to meet the needs of people who sought more appropriately-sized accommodation in the short term. We know that only 181,000 transfers took place into all social rented accommodation last year, and that the Government expect 670,000 households to be moved by 2013 and onwards. We simply do not have the capacity—especially in smaller accommodation—to meet the needs of such people.

Charlie Elphicke (Conservative, Dover)

I am puzzled how it can be said that there is an amazing surplus of three-bedroom properties in the private housing association sector, and yet a massive number—1.6 million—of families live in overcrowded circumstances. How does the hon. Lady explain that?

Karen Buck (Labour, Westminster North)

I was about to move on to that. The Department for Communities and Local Government is saying that there is a surplus in three-bedroom accommodation but, in a way, that is not the point. The point is that the relationship between the universal credit, as prefigured, and actual rents for social accommodation requires people to downsize. The problem that we are facing over the coming years is the availability of smaller units of accommodation, not larger. However, an even bigger problem is the vast geographical mismatch that we will face in the coming years. If we look at the impact assessment and where the under-occupation occurs, there is an issue in the north-west.

According to the Government’s impact assessment, 120,000 claimants will be affected by the proposal. They will lose an average of £12 a week. Overcrowding is almost entirely a London problem. If we look at the match, 120,000 people have been categorised as needing to downsize in the social rented sector, so that they can meet the Government’s requirements to match their housing costs with the size of their accommodation.

Chris Grayling (Conservative, Epsom and Ewell)

On a point of order, Mr Weir. The hon. Lady is making an extended speech. It is important for me to state that overcrowding and over-occupation are clearly matters to be discussed in relation to clause 68. I seek your guidance, Mr Weir, on whether you would like me to respond on that now or whether I should wait until the appropriate time in the debate.

Michael Weir (Scottish National Party, Angus)

It is up to the Minister how he responds. This group of amendments covers a wide range of issues. The debate has ranged over the whole issue of housing costs, so I am minded not to have a stand part debate at the end. However, it is up to the Minister how he responds. The hon. Lady is in order in terms of her amendments and the issues that she has discussed so far.

Karen Buck (Labour, Westminster North)

I am grateful, Mr Weir. I understand the Minister’s point because there are transitional arrangements under clause 68 that we may not need to rehearse in the same detail. However, as I understand the matter, the Minister is making a flat contradiction. The expectation is that, as we move towards the universal credit, there will be plans to more closely match the payment for housing costs in the social rented sector with things other than actual rents. The figures in the impact assessment and the fact that those figures give us something to go on means it is entirely reasonable that we test how the Government think this will move forward.

Sarah Newton (Conservative, Truro and Falmouth)

The hon. Lady is describing in extremely good detail the current situation and imagining that nothing else will change. We are talking about the medium term. Thank goodness we have abolished the regional spatial strategy. All over the country, right now local authorities are developing housing strategies that will respond to local needs. That is something they could not do when there were restrictions imposed by the regional spatial strategy. In those housing strategies, local authorities will be tackling the issue of a lack of planning for housing for an ageing population, which fundamentally underlines the fact that there is not enough accommodation for older people and there is an issue with under-occupancy. Within the time scale she mentions for addressing the problems she is envisaging, a whole series of measures will be introduced locally that will start to address the lack of genuinely affordable housing that meets the needs of our populations in their communities all around the country.

Karen Buck (Labour, Westminster North)

I know, Mr Weir, that were I to stray into regional planning strategies and building new homes for older people you would rule me out of order. I am not sure—the Minister might contradict me on this—that even the Government’s most ambitious plans will involve constructing 670,000 new homes to enable some of the matching to take place that the measure requires. The hon. Lady raised an important question earlier about the Localism Bill and social rents. The problem is that the cuts in grant to housing associations has required—this is the stated expectation of the Minister for Housing—that new housing developments will be at 80% of market rents. If social housing is at 80% of market rents, it is hard to see how that squares with the Government’s not unreasonable intention of bearing down on housing benefit expenditure. Indeed, there is a wide range of assessments that has been made of this. The House of Commons Library did some modelling on this for me which indicated that the Minister and the DWP would be liable for £200 million more in housing benefit expenditure because of these market rents. The Chartered Institute of Housing has come up, in the medium to longer term, with a much higher figure even than that.

George Hollingbery (Conservative, Meon Valley)

I have a slightly different understanding of that clause. I may be wrong and I am delighted to be corrected, but I thought it was up to 80%, not 80%.

Karen Buck (Labour, Westminster North)

It is absolutely 80%. I do not have the quotation in front of me and I will be perfectly prepared to apologise to the Committee if I am wrong, but my understanding is that the Minister said that there is an expectation that it will be 80%. Indeed, if it falls below 80%, of course—and it may—not only does the point still remain at 60%, but the housing associations that are relying on this income stream in order to defend their development programme will not be able to develop the homes. It is impossible to have it both ways. Either rents have to be set at 80% of market values, which immediately impacts on housing costs in the universal credit, or there will not be a sufficient number of new homes built. Those two things are in contradiction.

Charlie Elphicke (Conservative, Dover)

Is it not the better case that housing associations do very well as landlords, but the evidence shows that very often they do very badly in developments? Maybe they should leave developments to developers, be good landlords and not jack up the rents.

Karen Buck (Labour, Westminster North)

That is, of course, a possibility and risks leading me to stray well outside the ambit of this debate, but I think it is true to say—housing associations often partner property developers in constructing properties anyway—that the Government are expecting housing associations to be a partner in delivering this accommodation. Even if it was a private developer, the issue would still remain about how the private developer can get an income stream through housing benefit, and rolling forward into housing credit, that would enable them to fund this new development.

We know that, whether it is 60% or 80%, the relationship between market costs and much higher rents in the social rented sector is the precondition of additional social house building, and that has implications for universal credit.

George Hollingbery (Conservative, Meon Valley)

I am not entirely sure that I recognise the picture that the hon. Lady has just painted. There is clearly a huge amount of equity in social housing stock—indeed, Mrs Elphicke wrote a very substantial journal on this very issue. There is a huge amount of equity built into the social housing stock and there are other avenues for building social housing, not just through rental streams, but also through the equity out there. We have used the money in our social housing stock to borrow more and build more.

Karen Buck (Labour, Westminster North)

I know, Mr Weir, that you would immediately get on your feet and roar me out if I start talking about ways in which social housing construction can be funded from different sources, so I am not going to. I am merely going to say that, as things stand—as the Localism Bill and the Government’s housing policy, driven by the DCLG, stand—there are implications for housing costs rolling forward.

Jane Ellison (Conservative, Battersea)

We heard from witnesses last week, a number of whom were honest enough to say they did not believe that the legislation should be framed in such a way that no one should ever have to move—that they should live where they want to live. It would be really helpful for the Committee to understand if that is essentially the point from which the hon. Lady is starting.

Karen Buck (Labour, Westminster North)

I completely support measures to encourage downsizing. I think it is an entirely good thing. Of course, what the Government are doing with this is concentrating exclusively on working-age households. I do not have the statistics, but I believe that a substantial element of voluntary downsizing takes place among pensioner households, which are the households that are most likely to be under-occupiers. The Government’s policy, driven by the changes in the treatment of housing costs, is to ensure that housing providers will have to concentrate, almost exclusively—and even then, they will not be able to—and move everybody who wants to move, in order to avoid the penalty that the Government are applying, which, incidentally, may then end up costing them more money. I have now completely lost the thread, because the point is much too complicated.

Jennifer Willott (Liberal Democrat, Cardiff Central)

On a point of order, Mr Weir. Given that the debate seems to be straying far from the amendments, and given that you have indicated that you are contemplating curtailing the stand part debate—I had intended to speak very briefly, you will be glad to know, in that debate—would it be appropriate for me to consider speaking in this debate since we are speaking more broadly, or are we trying to keep this debate more clearly focused on the amendments?

Michael Weir (Scottish National Party, Angus)

There are two further amendments to be considered, so the hon. Lady should decide which area she wishes to speak in. But given the length of the debate, I am minded not to have a stand part debate, so if she or any other members of the Committee wish to make a point, they should do so in this debate or they should speak to the two further amendments that are yet to come.

The rest of the debate is in Hansard.