Q&A: Welfare Bill flashpoints

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The government's flagship Welfare Reform Bill, applying to England, Scotland and Wales, looks set to "ping pong" between the Lords and Commons. Peers have inflicted a series of defeats but the government says it will use parliamentary rules on "financial privilege" to get it through. Here's a guide to the main flashpoints:

CHARGES FOR CHILD SUPPORT AGENCY

Possibly the most significant Lords defeat for the Bill was spearheaded by a Conservative, Lord Mackay. Peers voted by a majority of 142 to exempt some single parents from being charged between £50 and £100 upfront to use the Child Support Agency.

The government says it costs £460m a year and leaves 1.5m children without effective support. They want parents to agree their own maintenance payments, without relying on the state.

Lord Mackay's amendment exempted parents who had no other choice but to use the agency - if their partner has resisted all attempts to get them to pay maintenance. He was backed by 33 other Tory peers. Lords amendment overturned in Commons by 318 to 257.

OVERALL BENEFIT CAP

The government wants to cap weekly benefits at the level of the average salary of working families - about £500 a week, or £26,000 a year - to encourage people on benefits to work and, they argue, make the system "fair" for the taxpayers supporting them.

Opponents say child benefit should not be included - as it would penalise larger families and is a universal benefit, also paid to working families. They argue it effectively denies child benefit to children in families who have already reached the £500 limit.

The Bishop of Ripon and Leeds put down an amendment - backed by 252 votes to 237, a majority of 15, to exempt child benefit from the cap. Lords amendment overturned in Commons by 334 to 251 votes.

EMPLOYMENT AND SUPPORT ALLOWANCE

ESA replaced incapacity benefit and comes in two types. There is "contributory" ESA, for people who have paid enough National Insurance, and income-related ESA, paid to those with little income or savings.

The government was defeated in three votes over plans to limit the amount of time people can receive contributory ESA for. Currently, it can be indefinite and is paid regardless of income or savings. The government wants it to be means-tested after 12 months for those judged capable of working at some point in the future. But peers backed amendments extending it to 24 months, exempting cancer patients and rejecting government moves to stop young disabled people who have never worked from receiving contributory ESA. Lords amendments all overturned in Commons.

UNIVERSAL CREDIT - SPARE ROOM PENALTY

Ministers had proposed that the new Universal Credit would include an "under-occupancy" penalty for council and housing association tenants living in homes bigger than their needs. Those judged to have one extra bedroom would lose about £11 a week, those with two or more extra rooms would lose on average £20 a week. The government said it was an important part of efforts to cut the housing benefit bill. Critics dubbed it a "bedroom tax" and said it would force teenagers to share bedrooms. An amendment moved by crossbencher Lord Best limited the penalty to those with two extra bedrooms - or one extra, if they had been offered suitable alternative accommodation. Peers backed him by 258 to 190 votes in December. Lords amendment overturned in Commons by 310 to 268 votes.

UNIVERSAL CREDIT - DISABILITY ADDITIONS

The seventh defeat for the Bill saw peers back an amendment to protect the amount of money disabled children, who do not require care at night, receive.

Currently poorer families with a child getting Disability Living Allowance can get a payment of £53.84 a week via the "disabled child element" of the Child Tax Credit. Those with children with the highest care needs get an additional £21.73 a week. Under the new Universal Credit, the government proposes that those on the higher rate will get £77 a week - £1.43 more than currently. Children on the lower rate would get £26.75 a week, a weekly reduction of £27.09.

Crossbencher Baroness Meacher's amendment would require the lower rate to remain at least two-thirds the amount of the higher rate. The government says that although about 100,000 children will have a "lower entitlement" as a result - those currently getting the benefit will get "full cash protection" to ensure they do not lose out. However future recipients will get less. Ministers say they want to "align" disability premiums for children with those for adults. Lords amendment overturned in Commons by 324 to 255 votes.

DISABILITY LIVING ALLOWANCE

The bill also replaces DLA, introduced in 1992 to help disabled people with extra costs in their everyday lives, with a new allowance: Personal Independence Payments (PIP). These would be introduced in 2013 for working people aged 16-64 and would involve upfront medical tests and regular assessments.

An amendment from Baroness Grey-Thompson, which would have delayed the introduction of PIPs until further testing was carried out, was defeated. The government narrowly won the vote by 229 to 213. It is unlikely to be debated again.

WHAT IS THE WELFARE REFORM BILL?

It's one of the government's flagship bills, applying to England, Scotland and Wales, which ministers say marks the biggest overhaul of the benefits system since the 1940s. It introduces the Universal Credit - a single benefit to replace six income-related, work-based benefits. Work and Pensions Secretary Iain Duncan Smith says it will simplify the benefits system and ensure that people are always better off in work. But it also includes other changes - which will help the government meet its target of cutting the welfare bill by £18bn by 2015.

HAS THE GOVERNMENT MADE ANY CONCESSIONS?

Yes. No 10 says the government has listened to concerns and amended its plans in certain areas:

  • The qualifying period for receiving DLA - the length of time recipients have to show they will be eligible - has been cut from six to three months
  • The mobility component of DLA - which pays for transport and travel costs - will be retained for those in residential care homes
  • Ministers to consider their proposed changes to ESA after recent Lords defeats but have said they will seek to reinstate them when MPs debate the bill.
  • Housing benefit caps delayed for existing claimants from April 2011 to January 2012.
  • It has also spelled out "transitional arrangements" to ease the impact of the overall benefit cap - including a 9-month "grace period" for those who had been in work for the previous 12 months and additional short-term payments to families who cannot move immediately for reasons such as child protection and education.

WHO IS OPPOSING IT?

In the Lords it is crossbenchers and bishops who have led the charge against the Bill. But Labour peers and some Lib Dems and Conservatives - notably former Lib Dem leader Lord Ashdown and former Conservative lord chancellor Lord Mackay, have also voted against the government at different times.

WILL IT GET THROUGH?

The government says it will. They want the bill to become law by the end of this parliamentary session in May. The bill has completed its Commons stages and is in its penultimate (Report) stage in the Lords. Work and Pensions Secretary Iain Duncan Smith says he is determined that his reforms will get through - and says MPs will overturn any defeats from the Lords, when the Bill returns to the Commons. But they may yet choose to offer some more concessions.

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