On 20th March 2018 the House of Lords debated the motion ‘that this House regrets Her Majesty’s Government bringing forward changes in entitlement to free school meals through the Free School Lunches and Milk, and School and Early Years Finance (Amendments Relating to Universal Credit) (England) Regulations 2018 which will undermine work incentives in Universal Credit and leave up to a million poor children unable to claim free school meals; and calls on Her Majesty’s Government not to implement the Regulations until a full poverty impact assessment has been completed and considered by both Houses, and not before six months has elapsed (SI 2018/148). The Bishop of Portsmouth, Rt Revd Christopher Foster, spoke in the debate:
The Lord Bishop of Portsmouth: My Lords, it normally gives me great pleasure to speak in your Lordships’ house, but this evening I speak with some sorrow. I am hoping that the proposals made by the Government—involving, I am sure, the Treasury, the Department for Education and the Department for Work and Pensions—are perhaps the result of the complexity of those interlocking interests and have inadvertently left what surely cannot be intended. The consequences of this policy run counter to everything that the Government have said about the principle of universal credit, which I and many others have supported. If the consequences are unintended then I shall be delighted and relieved to hear the Minister say so.
I have looked at these regulations and concluded that they drive a coach and horses at some speed through the defining principle of universal credit—a principle I wholeheartedly endorse—that work should pay. They create an arbitrary cliff edge at a low-income threshold, off which many risk falling. For working families just below the current threshold, this proposal would very clearly not make extra work pay. They would be better off not seeking more paid work and leaving their children on free school meals, unless their family income increased by some considerable margin. Those just above the threshold will be worse off under the regulations, facing school meal charges. They would be better off working less. That is at best an anomaly, but I am tempted to describe it as an absurdity.
I do not, however, see this as pointing to a flaw or a contradiction in policy design. Rather, it points to the real, pressing and increasingly difficult circumstances that, over the years, families will face. More often than not, this will affect people who are already in work who earn very little—people whose weekly budgets already have little or no slack.
Some Members of your Lordships’ House may recall that recently I chaired a briefing for Members of both Houses. A number of your Lordships may remember Clare, who spoke to us. Her oldest child currently receives free school meals. She and her husband do not want to live on benefits, credits or allowances; they want to get on and get up. Clare’s husband had been made redundant, and after 18 months volunteering in a local school he now works as a teaching assistant and earns £8,000. Clare had worked for 15 years as an NHS dental nurse, but her clinic closed. I quote Clare with her permission. She said:
“We both never, ever thought we would be in this situation. We feel terribly ashamed to have to rely on help”.
Clare is retraining as a solicitor. When she has done so, her husband will complete his own retraining as a teacher; both will incur significant debts. Hers will be £56,000. Clare told me that they have many working years ahead of them and look forward to a future in which taxes are spent helping the vulnerable in society. She feels blessed to live in a society that has a safety net in place for them and others facing short-term difficulties.
These regulations will not help Clare and those like her overcome these short-term challenges. They will add to them and hinder her from creating a long-term future for herself and her family, because Clare has no slack. She told us her family of four,
“survives on £10 a day for our food and petrol … with no luxuries”.
Clare does not understand how the figure of £7,400 has been arrived at. Nor does she understand how introducing an earnings threshold as low as that could possibly benefit people in her situation. I do not understand either. She knows her eight-year-old daughter will, for now, continue to receive free school meals, but what of her son, who starts school in September and other children of their ages? As she observes, initially it seems nobody will lose out, but in the long term more and more people—and more specifically, more and more children—will.
We are potentially creating anxiety, even despair, when we should offer hope and support. We are creating a cliff edge so that work does not pay. The job of this House is often to ask the Government to think again about what may be the unintended consequences of policy. The outcomes of this one are severe. I ask the Government to think again this evening, and I do so from the bottom of my heart.
Baroness Sherlock (Lab): …My basic concern is that this proposal—as the right reverend Prelate the Bishop of Portsmouth has said—drives a coach and horses through the whole aim of universal credit. The Government have taken most of the working-age benefit system, thrown it up in the air, at vast cost, at huge disruption, and for what? Just to bring back in the biggest cliff edge we have seen in the system in decades? Surely this cannot be right. Will the Government think again?..
Lord Freud (Con): …However, where I agree with the noble Lord, as well as the noble Baroness, Lady Sherlock, and the right reverent Prelate the Bishop of Portsmouth, is on the disincentivising effects of what is almost the only cliff edge—rather than a cliff edge, it is almost a waterfall effect; it is more waterfall than the cliff edge that we are used to. Nevertheless, it is there. SSAC produced a report four years ago, which I commend to the House, looking at what we could do with passported benefits generally in order to incorporate them within universal credit and eliminate not just free school meals—there are others, such as prescriptions—and put them within the taper in a way that did not have a cash-flow impact. The report suggested a structure that the DWP response endorsed.
Baroness Lister of Burtersett (Lab): …Many of these matters come down to how things work in practice, so perhaps I may ask a few practical questions. We know that the earnings of people at the lower end of the labour market fluctuate repeatedly. The Government have addressed how they are going to estimate what those earnings are, but if they are going to be recalculated every month—as in the briefing referred to by the right reverend Prelate from the representatives of the Children’s Society—this will be an absolute nightmare. I cannot see any reference to what will happen to people on zero-hours contracts or self-employed people. Can the Minister explain how their earnings will be calculated?
Lord Watson of Invergowrie (Lab): …The cliff edge caused by the introduction of an earnings limit will be the very antithesis of that work incentive, as set out clearly by the right reverend Prelate the Bishop of Portsmouth and I think—although he may say I am quoting him wrongly—by the noble Lord, Lord Freud.
Lord Agnew of Oulton (Con): …I want to address some of the comments made by the right reverend Prelate the Bishop of Portsmouth and the noble Baronesses, Lady Sherlock and Lady Lister, dealing with cliff edges. Universal credit is designed to be more generous to claimants who take on additional hours, and the smooth taper rate gives incentives to do so because, unlike under the old system, people see more money in their pocket for every extra hour that they work. As my noble friend Lord Polak said, change does involve some disruption, but in general we are seeing a better system for people who want to achieve more and to work harder or to be able to have the opportunity to work. In addition, the well-established links between employment and improved health and well-being mean that there are considerable non-economic benefits for parents who increase their working hours.