Official Report: Minutes of Evidence

The Chairperson (Mr Maskey): I formally welcome Alison Penny and Anne Townsend. I thank Alison from the Childhood Bereavement Network, who has travelled from England to brief the Committee. Thank you very much for your care for and attention to the issue.

I also thank Gerry and his team from the Department, who are again sitting in on the evidence session to very quickly respond to any points and provide clarification afterwards. That has been of great assistance to Committee. I thank Gerry, Seamus and Rosemary for being here.

If we are happy enough to proceed, I formally invite Alison and Anne to make some opening remarks or present their argument on the back of their written submission.

Ms Anne Townsend (Cruse Bereavement Care): I thank the Committee for its invitation to provide written evidence and the opportunity to come here. I also thank you for allowing me to bring Alison Penny from the Childhood Bereavement Network, who, as you know, travelled over from England last night. Last year, when these changes were being made in Westminster, Cruse and the Childhood Bereavement Network presented evidence together.

As you will hopefully be aware, Cruse is the largest bereavement organisation in the UK. In Northern Ireland, we provide support to anyone who has been bereaved by death, regardless of the nature of the bereavement, and we provide our services to young children from the age of four right through the whole age spectrum. Obviously, bereavement is a taboo subject in our community, and we very much welcome the developments in improving care for bereaved people and the development in DSD in recent years to have a bereavement benefits services. I think that that has very much enhanced the available support.

As the author of some of the figures and the evidence, Alison will be able to give you some more detail about our concerns. As leading bereavement organisations, we would like to bring to the Committee's attention today the impact that some of the changes in the Bill could have on a particular group of parents with young families. The key impact is the change in the lump sum in the first year and people having entitlement to those benefits for only one year. I am sure that everyone around the table has been touched by bereavement, but I stress that we cannot set a timeline for bereavement and the journey afterwards and say that, by a year afterwards, a person should be in a certain position. The journey that we are on is an individual experience, and we are especially concerned with the impact on those people with young families who may need to depend on the state for their support.

I know that Alison has facts and figures to present to you, so at this point, I will hand over to her. We would obviously be happy to answer any questions after that.

Ms Alison Penny (Childhood Bereavement Network): Thank you, Anne. I also thank the Committee for its invitation. I coordinate the Childhood Bereavement Network, which is a UK-wide organisation of member services that work directly with families with grieving children. We are hosted by the National Children's Bureau, which, as you know, has an office in Belfast.

We want to raise our specific concerns about the impact of the changes in the bereavement benefit clauses, specifically the impact that they will have on families with dependent children. We want to very specifically look today at the impact on widowed parents. We understand that the current caseload of families who are claiming widowed parent's allowance here is just under 2,000, at 1,920 families.

We have four main concerns. I will perhaps take them in turn, so please raise any questions that you have.

The Bill sets out that the rate of the benefit and the duration of payments will be set out in regulations. So, we are particularly concerned about the detail of the regulations rather than the Bill. We are very concerned about the impact, particularly the duration of payments. Currently, widowed parent's allowance is paid to families until the youngest child stops qualifying for child benefit. In the most extreme cases, it could be paid for up to about 20 years, but the median claim is between five and six years. Under the proposals, the bereavement support payment will be paid for just one year, which means that the majority of families will receive support for a shorter time and will be worse off. Our figures, which are based on figures from the Department for Work and Pensions (DWP), indicate that 75% of families will be worse off under the new regulations. That is 88% of working families and 57% of those who are out of work. I can provide the workings for those figures if that is helpful.

As I said, the current median claim for widowed parent's allowance is between five and six years. Families who can claim for that length of time under the current provision will be up to £16,800 worse off. The average loss for working families would be about £12,000, and the average loss for out-of-work families would be about £6,500. We are very conscious that the provisions will disproportionately affect those with younger children who can currently claim for a longer period. So, there is a particular impact on younger children. The benefit will be withdrawn around the first anniversary of the death. We know that that is a time of great difficulty and stress for families, and we think that having the anxiety of further financial change at that point will be very unhelpful for families.

The main point that we want to make is that we know that children's needs continue to emerge and that first year of bereavement, over which time the new payment will be made, is a year of firsts. It is the first birthday of the person who has died, the first birthday of the children without that parent with them, and they face the first anniversary of the death. Often families talk about the second or subsequent years of bereavement being even harder than the first.

We know from research that children's needs change over time and that there is a late effect of bereavement. From some of the longitudinal research, we know that there can be new effects up to two or three years after the death, which can be very difficult and challenging for parents.

The ongoing provision for widowed parents will be through universal credit. The reforms to the bereavement support payment are very much bound up with changes to universal credit. That is where the intention to continue support for low-income families will come from, but we are very concerned that that means, of course, that because there are work-search requirements, widowed parents will be obliged to look for and take up work within six months of their partner's death. That is very concerning to us.

Lord Freud made some suggestions about periods during which those conditionality requirements could be relaxed. The suggestion is that that would be for a period of one month, once every six months, for up to two years, but we are very concerned that that would place a great burden on widowed parents making representations to Jobcentre Plus. A relaxation for a month is not a very long time for families to get themselves sorted out.

We have developed cost-neutral proposals for the bereavement support payment to be paid for over three years, rather than one year. Again, I can provide workings for that if that is helpful. That would allow parents to continue to receive the benefit but without the pressure of having to go back to work. We know that most widowed parents will return to work within 12 to 18 months anyway, so we feel that the imposition of conditionality requirements on those families is not necessary, nor is it commensurate with the support that would be available for kinship carers. We would be in the odd position where if, following her mother's death, a child goes to live with a great-aunt, the great-aunt would not have to have work-search requirements for a year. The conditionality would be relaxed for a year, but if the child stayed with her father, her father would have to look for work within six months. So, that presents quite an anomalous position. We also think that it is counterproductive, as it is likely to increase stress and anxiety for widowed parents returning to work when they actually already find their way back to the labour market.

There are two further points that I wanted to make, the first of which is on the situation for unmarried partners. Unmarried partners are not eligible for widowed parent's allowance. That will continue, so they will not be eligible for bereavement support payment either under the current proposals for regulations. Given that the difference in the amount of bereavement support payment to those with children is there, we feel that the need to recognise the additional costs of having children and the fact that the need to attend to grieving children's needs makes it harder for widows and widowers to return to work. There is clearly an acknowledgement that children increase the difficulties that families might have following bereavement. It is not for children to determine their parents' marital status, so we feel that the children of unmarried partners are unjustly affected by the fact that their parent is ineligible. There are some examples of opportunities to recognise unmarried partners in the Forces Pension Society and other agencies, so we think that that could be solved.

My final point is that many reassuring statements have been made about the fact that current claimants of widowed parent's allowance, that is, those people who are already claiming, and those who start their claim up until the introduction of the bereavement support allowance will not be affected by these changes. However, we are concerned that, once those families who need to be claiming universal credit are moved on to that system, they will face a net loss through claiming widowed parent's allowance. The income from the widowed parent's allowance will reduce their universal credit pound for pound, but widowed parent's allowance is also taxed, so they will lose the tax, which we estimate will mean that low-income families will lose about £7·90 a week. That is going to be a very odd position for benefits advisers, who will have to recommend to families that they do not claim widowed parent's allowance because it will represent a net loss to their household income.

Ms Townsend: To add to what Alison said, I will conclude by looking at the human face, if you like, of all this. I will read you a short paragraph from a lady who was five months' pregnant when her husband died of cancer in 2009. Her widowed parent's allowance has been such an essential help. She was left with a baby to raise and a mortgage to pay as a single parent. Knowing that her daughter was going to be supported financially with this benefit was very comforting for her husband. He was only 27 years old when he was diagnosed with bowel cancer, and, like most 27-year-olds, he had not organised any life insurance. She said:

What this young woman is saying is that benefit for one year is just not enough:

In conclusion, we are saying that we appeal to the Committee to look, if it is at all possible, at the requirement to perhaps extend the one year, especially when the regulations have to be considered at this stage. We recognise the additional pressures that you are under with budgetary constraints at this time, but we really feel that this would make a significant impact on those families.

The Chairperson (Mr Maskey): Anne and Alison, thank you very much.

Mr Wilson: I have one question. Initially, for the first year anyway, with the higher £5,000 towards funeral costs etc and then £400 a week, everybody should be better off. You said that most parents actually move into employment. What percentage of people who have been bereaved are still claiming after two, three or four years? Have you any figures on that?

Ms Townsend: I think that Alison can answer that, but one point that I want to make that perhaps we have not made clear is that those payments could bring challenges for a proportion of families. As that example said, in that first year, people feel that their minds are under pressure and they face challenges emotionally. They have to make decisions based on having those sums of money, so I think that having those lump sums and managing them is a challenge for some people in that first year.

Ms Penny: Only 6% of the current caseload of 2,000 families who are currently claiming widowed parent's allowance have been claiming for less than a year. We calculated figures for Great Britain, and we found that the Department for Work and Pensions went back and looked at the group that started claiming in 2002 when this benefit was first brought in. We found that less than 4% of families claimed for less than a year, so 96% of families claimed for more than a year.

Mr Wilson: Is there a big jump after that? I can understand that, in the first year, people are making the adjustment. I understand all the points that you made about that. People want to be with their children, especially if they are young. Maybe they do not even have skills. I can understand why, in the first year, you may well find that a high proportion of people are dependent on the benefit, but does it jump after that when people realise that they have to have an independent source of income? Maybe they get skills or get over their bereavement. Is there a huge jump at that stage?

Ms Penny: These are the numbers that continue claiming widowed parent's allowance, rather than the number on income support. My recollection from the Department for Work and Pensions impact assessment was that about three fifths of claimants of widowed parent's allowance are in work and two fifths are out of work. That is the whole caseload, so some of those people will have been claiming for up to 12 years at the point that the impact assessment was done. I am sorry, but I do not have figures that directly address that.

Mr Wilson: I take your point. Maybe people find it difficult to handle this money, but, if they have lost a source of income, the big drop should be avoided if you have more generous benefits in the first year. If most are moving into employment in the second, third or fourth years, you could see some sense in this policy.

That is why I was trying to establish the pattern after the first year.

Ms Penny: One of the issues that families have raised with us is the ongoing need for more flexible working arrangements. That could mean, for example, the possibility of taking time out, reducing hours or changing the nature of their work if the children's needs emerge over time or at the point that they transition to secondary school.

The other point about increasing the initial lump sum to £5,000 in the first instance is that we are very concerned about the rate of inflation of funeral costs, which is running much higher than inflation. I think that it is running at over 6% at the moment. So, we are concerned that even the estimates that have been made about the proportion of people who will feel better off or worse off in the first year assume that people can stretch out that initial lump sum over the first year, whereas we think that it is likely to be taken up with increased funeral costs in many situations. Certainly, the trajectory of funeral costs seems to be rising.

Mr Wilson: Has any work been done on the reasons why some stay out of work for longer than the one year, stretching out to the 12 years? One of the points for a lot of these changes is to try not to have people dependent on benefits. I can see the Government's point on that, but the danger is that, if benefits are available for a long, long time, people can become dependent on them and will maybe not look for the alternatives. What research has been done on the reasons why people continue to claim benefits for such a long time after bereavement, rather than move into work?

Ms Penny: Some qualitative research that the Department for Work and Pensions commissioned was done in consultation with widowed parents, and it looked at some of the reasons why people remain out of work. One reason was access to childcare and to flexible work that would allow them to meet their children's needs. The social policy research unit at York University has also looked at the financial impacts of the death of a partner, including looking at people's patterns of returning to work. For a small number, there are issues with a lack of skills, whether that is to do with having given up work to care for the person who died or because of not having been the main breadwinner before the death and so not being in work. That research found that most parents either retained or took up work within 12 to 18 months of the bereavement. That unit at York questioned the assumptions that were made in the paper that accompanied the consultation, as did Gingerbread, which said:

The social policy research unit at York said:

The DWP-commissioned research concluded that:

Ms Townsend: As is the case in these situations, some of it is dependent upon circumstances that families find themselves in. We have a young person who inputs into Cruse services development. I knew that I was coming here today, so I talked to her yesterday. Her mum died seven years ago. Her dad was left with a 17-year-old, a 15-year-old, a 13-year-old and a nine-year-old. His circumstances were such that he was able to take retirement. He needed to be there for them, especially when the youngest child was making that transfer. I appreciate that that is difficult if we are making policy, but the human face of it and the impact that is felt in every situation can be so different. So, bearing that in mind, I appreciate the challenge of policy development.

Mr F McCann: Thank you for the presentation. Grief affects people in many different ways. Sammy is right. Some can comes to terms with it and find that work may be the only way to bring some sanity into their life, but others may spend years trying to come to terms with it. Some may also want to get back to work.

Universal credit is about cramming all the benefits into one. While people may say there is an additional £5,000, the expenses that come with bereavement could eat up £5,000 very easily. Universal credit is not all about making things easy; it is also about cost cutting in the longer term. That needs to be considered.

What always gets me is that policymakers rarely sit down with the people who will suffer at the end of it and take into consideration the hard facts and realities of trying to deal with it. That poses two questions. First, was there any input by organisations such as Cruse when the policy was being drawn up; and secondly, was any of that taken into consideration when the final document was produced?

In addition, has transitional protection been built in to this so that people are not just cut off after a short time?

Ms Townsend: Yes, we did respond to the consultation here in Northern Ireland and nationally but to no avail.

Ms Penny: There were three options in the original consultation. One was to do nothing, which would be problematic because, if widowed parents continued and universal credit was brought in, there could have been a net loss. Net loss was not raised in the consultation paper — that has emerged over time — but I think DWP could see that there would be no net benefit to people.

The other two options were a one-off, upfront payment of £10,000; or option two, which was £5,000 up front and stretching out the additional payments for a year. There was no fourth option to extend payments over a longer period. So, that was the initial consultation document.

The Department for Work and Pensions has been welcoming to submissions, so we went to see it a number of times with colleagues from Widowed and Young (WAY), Cruse, Gingerbread and other organisations. However, little has changed, apart from the changes to the conditionality arrangements that I referred to, with Lord Freud allowing a bit more flexibility for three one-off payments.

Mr Wilson: Fra made an interesting point. If there are people beyond the one-year period who, for whatever reasons, find that they cannot get into work, would the support that comes through universal credit — Fra described it as bunching it all together — not be a replacement and almost a compensation? They may not get the benefit for having been bereaved any longer, but it would simply come in another form.

Does it really matter what it is called, provided the support is there?

Ms Penny: I agree with you that it does not matter what it is called. It is really about the conditionality requirements: they are the concern. If the bereavement support payments were made over a longer period, there would not be the additional pressure on parents to return to work before their children were ready for that. It is the conditionality aspect of universal credit that is of concern to us.

Mr F McCann: You talked about the nitty-gritty being in the detail of the regulations, but is any flexibility built in that would allow departmental officials to look at the circumstances in cases and make different decisions in different circumstances, or is it simply that the benefit is finished after a year?

Ms Penny: My understanding is that after a year, it would be finished, yes.

Mrs D Kelly: Thanks for your presentation. In your written briefing, you refer to the Tell us Once programme in England. My other question is on the conditionality, the work search requirements, and the difference between the allowances for kinship carers and bereaved parents. Will you elaborate a wee bit on that?

Ms Penny: There was a change to regulations that was brought in specifically to address concerns that those working with kinship carers, and kinship carers themselves, had raised about children's additional need for support when there has been so much disruption and they are moving to live with a family or friend carer. So, we think that the work search requirements will, very sensibly, be lifted for a year for kinship carers taking on the care of a child. By contrast, there is a six-month period of relaxation for those whose partner dies, which is why we have this slightly anomalous situation.

The intention is that there will be the opportunity for claimants to make a representation to Jobcentre Plus for the condition to be lifted for a short period, but it is a very short period — a month — which barely makes a difference. We understand that they will be allowed to do that for one month every six months for up to two years following the death. That was specifically to do with a review of situations in which children might be distressed, which could have an impact on the capacity of their parent or carer to seek work. It will also apply to children affected by domestic abuse and other situations. It is a very piecemeal approach, and we were hoping for conditionality to be lifted for a year in line with what is available for kinship carers.

Mrs D Kelly: I wanted to ask you about Tell us Once.

Ms Townsend: Tell us Once was a service in England; the bereavement service was set up here later. The idea, obviously, was that people had to inform an agency only once when a death happened and did not have to go to all the different agencies.

Mr Allister: You have raised various concerns about the difficulties to be created by the reforms. Have you any insight into the cost of meeting what you would like done?

Ms Penny: We have developed cost-neutral proposals for the implications of extending payments over three years rather than one year. We need to check that those figures are also cost-neutral here. They were cost-neutral for Great Britain when I calculated them.

Mr Allister: What is the basis for the figures being cost-neutral?

Ms Penny: It is based on the monthly amount being reduced. The monthly amount that people will receive for that first year will be greater than the monthly amount that they currently receive under the widowed parent's allowance. So, if we brought it back to be commensurate with the amount that people feel in their pocket at the moment, we could, cost neutrally, extend payments over three years rather than one year. The other change that that would require is for the lump sum for those without children to be brought down from, I think, £2,500 to £2,250. We are conscious that the proposed changes, as they stand, represent quite a significant redistribution of funding from families with children to families without them. So, the people who will benefit from the overall changes to bereavement support payment are people under 45 with no children. The overall envelope for the reform represents a significant redistribution of funding from families with children to those with no children. So, our cost-neutral proposals reduce the monthly amount to that which people feel in their pocket at the moment, and they also slightly reduce the lump sum for those without children.

Mr Allister: Is the monthly amount constant throughout the three years?

Ms Penny: That was what we calculated, but it could be tapered. It would not need to be constant throughout the period. One of the difficulties raised during the discussions in Great Britain concerned the tax status of the payments. There was a lot of discussion about whether the payments would be seen, particularly under EU legislation, as a death grant or a survivor benefit, and that was likely to have implications for how the Treasury saw the payments. So, a lot of discussion was about whether, if the payments continued for longer than a year, they would be taxable, as the widowed parent's allowance currently is.

Mr Allister: Is that from the beginning?

Ms Penny: DWP did not make suggestions about that, but one of the proposals that we had made was that it could be tax-free for the first year and taxed in subsequent years.

Mr Allister: In saying that your proposal is cost neutral, are you taking into account the tax that the Government would take back from the benefit?

Ms Penny: That is a very good point, and I would need to check because that has been calculated into the impact assessment on the overall costings. I would need to check whether that is included in the cost-neutral proposals.

Mr Allister: Is reducing the amount to spread it over three years but making it subject to tax a win-win for the recipient?

Ms Penny: It would still, I think, represent an increase because of the longer duration of payments, but the significant difference would be in not having the pressure to return to work within three years, if they and their children were not ready for them to do so.

Mr Allister: I suppose that one might be interested to know how the net amount that the widow or whoever receives over three years compares with the net amount over one year.

Ms Penny: Yes, it would depend on the tax status and on the treatment of the payment with regard to universal credit. So, our costings are dependent on bereavement support payment not being taken into consideration as income against universal credit, which is what is in the current proposals.

Mr Allister: Are you saying that it is prescribed somewhere in EU law that, if you draw benefits for more than a year, they are subject to taxation?

Ms Penny: No, sorry, there were two issues. One was that the Treasury would be less likely to say that it could be tax-free if it was paid over three years because it looks more like an income replacement benefit. The EU concern was about who would be eligible under EU aggregation rules. I can get more guidance from the Low Incomes Tax Reform Group.

Mr Allister: So, Treasury has asserted that, if it crosses a year, it is taxable.

Ms Penny: No, it has not asserted that. In last year's autumn statement, there was a commitment that bereavement support payment would be tax free. That is based, we understand, on the assumption that it would be paid for a year. I do not know whether there has been a public statement about what would happen if it were paid for longer.

Mr Allister: You say that your proposals are cost-neutral. You mentioned at the beginning the disparity where the parents had not married. If extended to non-married situations, it will hardly be cost-neutral.

Ms Penny: No, that would bring additional costs.

Mr Allister: What are they?

Ms Penny: I know that, in England and Wales, around 31% of children are born to couples who are unmarried but cohabiting. It is unlikely that the figure is quite so high in the age group who might claim widowed parent's allowance. Extending it to unmarried partners would bring additional costs.

Mr Allister: Thank you.

Mr F McCann: I know that the departmental officials will probably argue against some of the stuff that you have provided this morning. Is there any possibility that we could have all the information brought together, perhaps in some type of fact sheet that lays it out for us?

Ms Penny: Of course.

Mr F McCann: I would like it to include the stuff that Jim raised, Penny. I know that the cost of a funeral is heavily dependent on which funeral director you get to look after the arrangements. Has anything been done on the total cost? It is not just the burial; there are associated costs. Has any work been done on that?

Ms Townsend: There is some work available. In Northern Ireland, it is a few pounds more. I think that the cost at the minute is £2,900 plus £1,700 for extras.

Mr F McCann: Could we also have a breakdown of that? That would be interesting and give us an idea of what we are talking about.

Ms Penny: The cost of a basic funeral in 2014 was £3,590, and that is up 87% since 2004.

Mr Wilson: You made a point about people under 45 with no children being better off. I take it that that is just an accidental consequence of the way in which the policy is being applied, with the lump sum and then £400 a week going to everybody, or are you aware of a deliberate policy rationale for that?

Ms Penny: I think that there is a deliberate policy rationale. The figures will be slightly different. The consultation response sets out two separate amounts: one for those without children; and one for those with children. My understanding is that the policy rationale for bringing those under 45 into the fold for this benefit is to simplify it. At the moment, people with no children receive bereavement payment — a lump sum — and then bereavement allowance, which is tapered according to age. It is to make the benefit as a whole simpler to administer.

Mr Wilson: Simplifying it produces this anomaly that people with children finish up worse off.

I want to follow on from Jim's question. I did not quite understand the sums. Your proposal to spread the benefit over three years would be cost-neutral, unless you include the unmarried. People should be no worse off, yet there will be tax over the three years, so you have the same amount being paid. Presumably, under the Government's proposal, there is no tax; under your proposal there would be tax. How would people be better off?

Ms Penny: Our preferred proposal is for no tax over the three years.

Mr Wilson: Are you saying that, even with the tax, people would still be better off? I did not understand the sums.

Ms Penny: I am so sorry. Our proposal is based on extending the payment period from one to three years and what is currently understood from draft regulations, which is that it would not be taken into account as income under universal credit and so would not be taxed. Our assumptions are based on it not being taxed.

Mrs D Kelly: Have you made a distinction between cohabiting parents and separated parents for the purpose of determining eligibility?

Ms Penny: Yes, we recommend that it be extended to cover unmarried cohabiting partners.

Mrs D Kelly: Thank you.

The Chairperson (Mr Maskey): No other members have indicated that they would like to speak. Alison and Anne, unless you want to make any additional remarks —

Mr Wilson: Chairman, may I ask one final question? Have you tested the option of moving from a higher payment in the first year on the people whom you deal with? Maybe I am wrong, but, logically, the hardest time for someone who loses a spouse and, as a result, loses income is the immediate aftermath, when they are trying to deal with the bereavement and the financial consequences. Have you tested your proposal, under which someone would not get as much in the first year, but the money would be spread over a longer period? In your experience, would it not be a better option to have bigger payments at the time when the financial and emotional crises are probably hitting hardest?

Ms Penny: Our proposals would not affect the lump sum that people receive initially, nor would they mean that families were worse off than low-income families are under the current benefit. It would not represent a lower payment for those on low income. We brought together a group of organisations to discuss this, including Widowed and Young, and others working directly with families. There is an understanding that there are financial constraints. Although many families would like the widowed parent's allowance to continue as it is, given the whole suite of welfare reform, a three-year period of payments is preferable to a one-year payment, provided it does not represent a cut overall.

The Chairperson (Mr Maskey): No other members have indicated that they wish to ask a question. Alison and Anne, are there any other remarks you would like to leave with us? We will take up with the officials the issues that you have raised. Very kindly, the officials are on standby to address some of your concerns immediately. If you are happy that you have made your case — members queried a number of the issues that you raised, and you responded very fully — I thank both of you again for your attendance this morning, particularly you, Alison, for travelling to help us in our deliberations. We will take on board all your issues and try to tease them out.