My Lords, I will speak to Amendment 62ZA, but before doing so I must apologise to your Lordships—I have already apologised to the Minister—because I am running against a very tight deadline. I tabled this amendment assuming it would come up on Monday. Before addressing the amendment, I give my very strong support to Amendment 59, moved brilliantly by the noble Baroness, Lady Hollis. I have no doubt at all that the replacement of the widowed parent’s allowance by the bereavement support payment has positive features, but the limitation of that benefit to one year is absolutely cruel. The noble Baroness, Lady Hollis, really got across the point that bereavement is not just a short-term problem. It brings several years of very considerable distress and discomfort for the children, as well as for the parent left behind.
The aim of Amendment 62ZA is to remove the widowed parent’s allowance and its predecessor, WMA, from the list of benefits treated as income other than earnings for the purposes of universal credit entitlement. I realise that that would be a very big step for the Government, but the result would be that claimants with no other income or earnings would keep the value of the WPA in full. Those with earnings in excess of the personal allowance would of course pay tax on it, but they would at least receive the majority of the benefit.
This is a probing amendment. The Children’s Society has calculated that, without the amendment, those entitled to widowed parent’s allowance could find themselves worse off by about £400 per year compared to those with no entitlement and no national insurance contributions. An important point is that WPA is a contributory benefit. It is only payable when the deceased parent has paid sufficient national insurance contributions. The clear assumption behind the benefit is that a surviving parent with all those contributions should surely benefit over and above surviving parents with no contributions. We regard it as an anomaly that under the universal credit rules this advantage from having national insurance contributions would be stripped away. Do the Government really intend that outcome? I do not think so. The proposed bereavement support payment, which will of course replace a number of benefits including the WPA, clearly identifies bereaved parents with national insurance contributions as being entitled to benefits which are not available to others. There is therefore a real discrepancy between the two basic assumptions behind the two benefits.
Although the bereavement support payment will be limited in time—hopefully it will be provided for at least three years, which seems to be an absolutely basic requirement—nevertheless it will be of greater value to most of those entitled to it than the widowed parent’s benefit. The contributory principle is well and truly recognised by this new benefit. At the same time,
as I understand it, those receiving the widowed parent’s allowance will continue to do so when bereavement support payment takes over for new claimants. The WPA will continue to be treated as income other than earnings, which again is a different principle. This means that the benefit will continue to be deducted pound for pound from the claimant’s universal credit entitlement. The result is that a widowed parent with no other income will experience zero benefit from his or her national insurance contributions, thereby entitling them to the WPA.
The situation is, of course, even worse for widowed parents who continue to work. The gross sum of the widowed parent’s benefit will be subject to income tax. I find that absolutely extraordinary. Working claimants may have their WPA deducted in full from their universal credit entitlement, but will also pay tax on the gross income that they have not received. Those are the parents who could end up £400 per year worse off. I would be grateful if the Minister could confirm that that is a correct reading of the situation.
Can the Minister confirm whether the Government really intend that those bereaved parents with a national insurance contribution record should be no better off than those with no such record and that those in work should really find themselves even worse off? Will the Minister confirm that many current recipients of the widowed parent’s allowance will continue to be disadvantaged in this way even after the introduction of the bereavement support payment? Finally, does the Minister accept that only relatively well-off bereaved parents, whose earnings take them above the ceiling for universal credit, will actually benefit from having a national insurance contribution record? Can that be right?