Statement by the Government on the Benefits Cap

The Minister of State, Department for Work and Pensions (Lord Freud)

My Lords, I will first speak to Amendments 1 and 2, which seek to pave the way for the introduction of an exemption from the benefit cap for all households where a member receives carer’s allowance or guardian’s allowance. We will bring forward regulations to give effect to these exemptions later this year. The exemption will mean that households where someone receives carer’s allowance or guardian’s allowance will be exempt from the cap. For carer’s allowance, this means that the claimant’s household will be exempt from the effect of the cap regardless of whether the cared-for person is part of that household or not.

Providing an exemption from the cap where a member of the household receives carer’s allowance fits within the wider government strategy to do more to support and invest in carers. Both carers and carers’ organisations have welcomed this change, with Carers UK, one of many organisations that work tirelessly to support the needs of carers, describing it as “fantastic news”.

Following the eloquent arguments on guardian’s allowance put forward by the noble Baroness, Lady Hollis, on 25 January, I said during the debate on Report on 27 January that this was an issue I wanted to explore further. Having considered the issue carefully, I can now confirm that we intend to exempt all households in receipt of guardian’s allowance from the benefit cap.

Guardian’s allowance is paid to someone who is bringing up a child whose parents have died, or in cases where one parent has died and the other parent cannot look after the child, for example where the other parent is untraceable, unknown or serving a long prison term. As noble Lords will appreciate, this is a very difficult time both for the guardian and for their family, who are not only dealing with their own grief over the loss of a family member or friend, but also helping a bereaved and possibly distressed child come to terms with their loss while settling them into a new family home.

By tabling this amendment we are leading the way for the introduction of an exemption, and we will bring forward regulations to give effect to that later this year. An exemption from the cap emphasises that the Government both recognise the difficult circumstances these families face and strongly value the role of guardians in enabling vulnerable and bereaved children to continue living with their relatives or close family friends.

Amendment 3, as I explained on Report on 25 January, was tabled in response to a recommendation by the Delegated Powers and Regulatory Reform Committee that regulations made under the powers introduced by Clauses 8 and 9 should be submitted to the Social Security Advisory Committee for consideration. We have decided to accept the committee’s recommendation in part.

During the debate on 25 January, the noble Baroness, Lady Sherlock, asked for a clarification of what regulations might be available to be sent to SSAC, as well as an explanation of why the Government do not think that the level of the cap should be referred to SSAC. I will explain that now. But before I do, I should like to put on record the fact that the Government greatly value the role that SSAC undertakes in providing impartial advice on social security and related matters. This is why consultation with SSAC may extend to cover regulations relating to the key features of the benefit cap policy. For example, we would discuss with SSAC any proposed changes to the grace period or exemption criteria, the introduction of new disregards, or changes to which level of the cap applies to the different household types.

Regulations relating solely to changes in the level of the cap are not included in this amendment. Changes in the level of the cap require a broad assessment of the most significant long-term developments and trends that might affect our economy and are important to households up and down the country. Factors such as inflation, benefit rates, the strength of the labour market, and any other matters that may be crucial and relevant at that time, need to be considered. This is why we have maintained throughout that it is important to allow the Secretary of State the ability to consider the context of the cap in a broad and balanced way. Maintaining this approach means that the Government can respond quickly in the light of any significant economic events that occur unexpectedly but will have long-term consequences for the national economy, and can take steps to adjust the cap level accordingly.

Equally importantly, let us not forget that any changes to the level of the cap are subject to the affirmative procedure, as agreed on Report on 25 January, when government amendments to that effect were accepted. So noble Lords will have the opportunity to ask the Government to explain any changes in the level of the cap before voting to accept those changes. I believe this approach substantially addresses the committee’s recommendation, but also enables the Secretary of State to respond to economic circumstances by considering a broad range of factors when considering the cap level.

Amendment 4 is a consequence of Amendment 3. Its purpose is to make clear that the new clause inserted by Amendment 3, which brings regulations under the benefit cap provisions within the remit of SSAC, extends to England and Wales, and Scotland.

As we draw to the end of debate on the benefit cap clauses, may I take this opportunity not just to thank noble Lords for their contributions on this subject, but to focus on the fact that they have helped to ensure that the work incentive principles of the cap are fairly balanced with that of protecting the most vulnerable. We will bring forward new exemptions for those in receipt of carer’s allowance and guardian’s allowance, and, as I have said, we have increased the level of parliamentary scrutiny by extending the affirmative provisions for any change to the cap level in the future.

Subject to the will of Parliament, the department will now press on with implementing these changes, and will continue to work with closely with local authority partners. In spring, after Royal Assent, we will notify households that may be capped at the lower level and advise them of the support available to move into employment, as well as budgeting and housing support that they can access. This will give households several months to take up any support they might need and prepare for the new cap coming in from the autumn. I beg to move.