I do not think that I want to get into a debate with the noble Baroness on whether the reforms that she was responsible for and those that I am responsible for are better. Let me try not to do it in that context. I shall describe what these reforms are doing.
The design is for the bereavement and support payment to be a significantly simpler benefit and to provide specific financial support at a time when it is needed most without affecting access to further support through other parts of the welfare system. The evidence from independent social research and our public consultation exercise found that the financial impact of spousal bereavement is particularly acute in the first months. Bereavement support payment is designed to provide a significant cash boost for people in these early months, with a lump sum followed by 12 monthly instalments. We recognise that those with dependent
children need a greater level of support, so the Bill provides the ability to set out a higher amount in regulations, which is what we intend to do.
Amendment 61 is intended to allow us to pay a higher amount to those who have been caring for their spouse or civil partner prior to bereavement. Caring responsibilities at the end of life can be particularly difficult and distressing and we recognise this by continuing the payment of carer’s allowance for up to eight weeks after the death of the person being cared for. Under the new system, this will be paid in addition to bereavement support payment as opposed to being taken into account in widow’s parent’s allowance and bereavement allowance.
The Bill does not preclude us from specifying a higher rate in regulations for people who meet certain conditions. However, making receipt of or eligibility for carer’s allowance or carer’s credit a condition is neither targeted nor fair. It would be particularly difficult to prove that someone would have been eligible for carer’s allowance, or would have met any other such conditions, after their spouse had died. Moreover, while we are spending more money on bereavement benefits over the first few years of reform, clearly we are in no position to significantly increase benefit expenditure. Money for increased payments to certain groups would have to be taken from elsewhere in the bereavement benefit budget, either resulting in lower payments for those without dependants or lower payments for all.
On the duration of payment, the 12 monthly instalments are not intended to equate to the period of an individual’s grief, nor are they intended to provide ongoing income replacement; rather, they seek with an initial lump sum to provide support when it is needed most.
To pick up on the points from the noble Baroness, Lady Hollis, on the overall effect, the DWP ad hoc report shows that overall, 52% of recipients are better off under the reform and that 62% of those out of work, who are typically poorer people, are better off, while 100% of those who currently receive the least, the BPT group, who get the lump sum of £2,000 but no regular payment, are better off after the policy change. On average, out-of-work parents in the poorest 25% notionally gain for 12 years. Out-of-work parents in the next poorest income quartile notionally gain for up to eight years. On average, out-of-work childless people in the bottom 50% of the income range notionally gain irrespective of age. In-work childless people in the poorest 25% notionally gain, regardless of age. In the structure I am describing, bereavement support payment must be taken in the context of the provision of universal credit, which is efficiently directed at helping the poorest people.
5.30 pm
Moving away from a payment focused on immediate financial need would result in more but less generous instalments, as noble Lords have pointed out. Bereavement support payment would begin to resemble a long-term income replacement benefit. It would then become an overlapping benefit and could not be disregarded from universal credit and benefit cap calculations. Probably more important in terms of the tax implications, no
decisions have been taken on the taxable status of bereavement support payment. Any decisions will be taken as part of the annual fiscal process in the context of the wider public finances. However, the Treasury has indicated that because the lump-sum payment is intended to meet the costs arising from bereavement and is not intended to be a replacement for other income, it would not expect to levy income tax on this payment. It is unlikely that a payment with a longer duration could be exempt from tax. It is also likely that under EU co-ordination rules, payments with a longer duration could be classified as a survivor’s pension. This would mean that we could also be liable to pay sickness and family benefits to a survivor abroad. If the bereaved person or family does need ongoing financial support, then other benefits would be available to provide this support, primarily universal credit.
This brings me to the issue of conditionality. Bereavement support payment alone has no work-related requirements attached to it, which is very similar to the current bereavement benefits. Currently claimants on legacy benefits who are bereaved will only be exempt from the work search requirements for a maximum of eight weeks. However, under universal credit claimants who are bereaved will be exempted from work search requirements for six months, which is a generous improvement on the current system. When discussing conditionality, we should keep in mind that we purposefully designed a system where the requirements we place on individuals are flexible and personalised to their circumstances. For bereaved claimants of universal credit, including those in receipt of bereavement support payment, or those who have lost a child, we do not impose any work search requirements at all for six months. Following this, we may begin to re-engage with the claimant, taking into account their individual circumstances.