Welfare Reform - 29th January 2012

Last week for the first time I exercised my right as a Privy Councillor to sit on the steps of the throne whilst listening to a debate in the House of Lords. The debate was on the amendment moved by the Bishops to exclude child benefit from the benefit cap set out in the Welfare Reform Bill. In effect, this raises the cap on benefits for a non working household from the annual limit of £26,000 proposed by the government in the Bill. To enjoy that level of income after tax, a working household would need to be bringing in £36,000 annually. Under the Bishops’ amendment, which was carried by a majority of 15 votes, some £50,000 would be the equivalent income a working household would need to earn in order to match what can be had on benefits.

The debate was informed of all the privations that poor families must endure; and the temptation to get involved in crime that this presents. I think that this is a complete misdiagnosis of the problem. First, desperate measures are not necessary: we are proposing a limit of £25,000, not threatening families with starvation. Second, to suggest that poor people are more prone to criminal behaviour is to insult the poor. There is, and always has been, no shortage of upright people who are rightly and fiercely proud, who though they may have very little, they would never dream of cheating or stealing.

I think the Bishops missed the much greater moral danger presented by their own amendment. By effectively raising the benefit cap to £50,000 they multiply the number of households who couldn’t possibly afford to go out to work – with all the moral benefits and responsibilities that working for a living brings with it - because the jobs they might get cannot match the generosity of what can be had on welfare. The result of the Bishops’ amendment is to condemn many more children to the misery of living in a home where nobody goes out to work. That is why we have to reverse the amendment.

Another defeat inflicted in the House of Lords, was an amendment which removes the provision in the Bill to enable a charge to be made for using the services of the state to secure payments for child maintenance.

Overwhelmingly, the most common complaints I get are about the child maintenance system and my correspondents would be outraged at the prospect of being expected to pay for it. As usual the taxpayer pays, and it’s costing us £440 million per year (that’s in addition to the £6.5 billion annual bill for benefits supporting lone parents) yet half of children from separated families have no maintenance arrangement in place at all. It has two failing IT systems and an additional 100,000 cases the computers can't cope with. It costs 40 pence to move every £1 in maintenance from one parent to the other, but it fails to get a penny out of one fifth of parents. Cases that last from birth through childhood typically cost £26 000, and that’s without the cost of any enforcement action which can push the bill up to £40 000.

Psychologists tell us that children can still thrive after a separation if parents can work together – yet the maintenance system is more likely to be a cause of friction than collaboration. In short it is yet another example of embedded state dependency. We have to find a way of making parents take responsibility for their own children's welfare. Half of all parents using the current statutory system say they would prefer to make their own arrangements if they had the right expert support. The proposal is to give them that support. Otherwise, if they want the state to do it all for them then they should be expected to pay for the service, and by paying for it we will be able to make it a much better and reliable service.

If we fail to reverse the amendment passed in the House of Lords we will be stuck with the worst of all possible worlds, which is what we have now.