Employment and Support Allowance (Transitional Provisions, Housing Benefit and Council Tax Benefit) (Existing Awards) Regulations 2010

Tuesday 20th July 2010 Lords Chamber

Motion to Take Note

17:17

Moved By

[Baroness Thomas of Winchester]

That this House takes note of the Employment and Support Allowance (Transitional Provisions, Housing Benefit and Council Tax Benefit) (Existing Awards) Regulations 2010 (SI 2010/ 875). First Report from the Merits Committee

[Baroness Thomas of Winchester]

My Lords, these regulations are about transitional arrangements for the gradual migration of people from incapacity benefits—that is, incapacity benefit, severe disablement allowance and income support on the grounds of incapacity—to employment and support allowance, which will begin in October this year with a small trial run and then, from next February, will be rolled out nationally over the next three years. At the outset I should make it clear that I support the direction of travel of these regulations. My reason for drawing them to the attention of the House is simply that they are very important to the lives of many of the most vulnerable in our society and there are questions that need answers—not least because Citizens Advice, in its evidence to the Social Security Advisory Committee, said that the goalposts appear to have shifted since the introduction of ESA. Another good reason for having this debate is that these regulations were in the previous Government’s pipeline and we need to know where we are now.

Under the regulations everyone on the old incapacity benefits will be retested by an Atos Healthcare professional for the work capability assessment, after which, according to the revised impact assessment for the regulations, 23 per cent of the cohort are expected to be found fit for work and therefore not entitled to any component of ESA. Another reason I was encouraged to table this take note Motion was the Merit Committee’s helpful report—its first report of this Session—and, in particular, Appendix 1, which has a very useful question-and-answer section. The Merits Committee drew attention to these regulations on the grounds of interest to the House. I only wish that they were of interest to more Peers—although I must say that there is a much fuller House now than there usually is when we discuss social security regulations. Although I am extremely pleased to welcome the noble Lord, Lord Knight of Weymouth, to the opposition Front Bench—for these are really his regulations—I wonder where are all the other Peers who might be expected to speak up for the disadvantaged.

We owe a debt of gratitude to the Social Security Advisory Committee, which has published a thoroughgoing report into these regulations. The more I read the committee’s report, the more I realised that there was a lot of complication in the system, although I accept that things will eventually be simpler. Even the Explanatory Memorandum says:

“The introduction of a Transitional Addition to ESA will add some complexity to the benefit system on a short term basis”.

It can say that again.

The House will be delighted that I am not going to list all the complications arising from the different permutations of benefits, tax credits and pensions. Nor will I mention various anomalies resulting from migration, some of which the Government have addressed as a result of the SSAC’s report. However, I will mention just one complication. Contributory ESA is a taxable benefit, whereas for those who were migrated in 1995 from the old invalidity benefit to incapacity benefit there was an income tax exemption. There is a cohort of about 500,000 claimants who theoretically could find themselves liable to pay tax, although it has not yet been decided by HMRC whether to continue to exempt them. As time goes on, that number will drop.

One glimmer of light is that the Budget has increased the amount of tax-free allowance, so I would imagine that the number of claimants owing tax by the time migration is complete will be small. Perhaps my noble friend can tell us when he expects a ruling on this. However, I accept that income tax rules are not part of the regulations but a consequence of them. One reason why this is important is that, as the Explanatory Memorandum says:

“Ministers have committed on several occasions that no existing incapacity benefit customer will see a cash reduction in their benefit on conversion to ESA”.

Turning back to the SSAC’s report, I note that the committee is calling for a delay in the rollout of ESA until various conditions are met. The conditions are that there is a stronger evidence base on what works and whether ESA is achieving its aims of helping more people into work; that the new regime for claimants with a health condition has bedded down; that changes have been made to the WCA as a result of the review by the DWP; and, finally, that there is an upturn in the labour market.

Not surprisingly, this Government are even keener than the previous Government to get cracking with the migration. The last thing that they want is to wait any longer, which I understand. However, the SSAC is not the only body warning about trouble ahead if changes are not made. Professor Gregg, the architect of the sanctions regime in the two most recent Welfare Reform Acts, has now added his voice to those who urge the Government to make radical changes to the way that ESA operates before the migration of IB claimants begins. In particular, he criticises the way in which the system leaves large numbers of failed WCA claimants to languish on jobseeker’s allowance with no prospect of work. Professor Gregg is reported as saying:

“To start moving people who may have been on incapacity benefit for years straight onto jobseeker’s—

allowance—

“is ridiculous. Before wading into the stock, the system has to be right”.

This sentiment is echoed by many groups, including Citizens Advice, which gave valuable evidence to the SSAC. It states:

“ESA was welcomed by many as offering support to those who face significant barriers to working, because of an illness or disability. There seems to be considerable confusion, however, as to whether it is effectively offering help to those who may be able to work with a lot of support. The goalposts appear to have shifted since its introduction, with the current implication being that if a person is able to work at all, they will not be eligible for ESA even if their illness or disability presents a very significant barrier to their finding work”.

It goes on to point out that those who are found to be ineligible for ESA will be moved on to JSA, which offers a lot less support, or perhaps on to no benefits at all, and will therefore be much further away from the help and support they need if they are to return to sustainable work.

In Appendix 1 of the Merits Committee report the department states that claimants on JSA with a health condition may restrict their availability for work provided that the restrictions are “‘reasonable’ given their condition”. It goes on to say that,

“the Department has been looking at what additional support may be required to help them return to work”.

Can my noble friend elaborate on whether that additional support is going to be forthcoming?

In general, something is clearly going wrong with far too many of these work capability assessments. Is it really the case, as we have read, that thousands of vulnerable people, some suffering from terminal cancer, Parkinson’s disease, multiple sclerosis and clinical depression, have had their applications for ESA declined and told to look for work? I have read the Chief Medical Officer’s report published in March this year in which he called for some changes to be made to the descriptors, particularly around fluctuating conditions where exertion is a significant component. He recommended quite a lot of other changes that will have to be legislated for. I hope that this will happen quickly and that the Government will not just rely on the mantra that work is good for people’s health. I, too, can quote Dame Carol Black’s excellent review, published two years ago, of the health of Britain’s working age population in which she says:

“Recent evidence suggests that work can be good for health, reversing the harmful effects of long-term unemployment and prolonged sickness absence”.

I agree with that, but she goes on to say,

“putting people on JSA, which is designed to be a more active benefit than IB by focusing on what people can do rather than what they cannot do, is not enough”.

She calls for more to be done not just to raise aspiration and motivation, but also to address health conditions. She also says quite categorically that:

“Help and support to find work will not be appropriate for all, especially those with more severe health conditions”.

What is needed is a full and independent review of the work capability assessment that looks at the full picture of who should be eligible for ESA and not just at the individual descriptors.

My main questions are, first, to ask my noble friend whether the many criticisms of the way in which the work capability assessment is carried out by Atos Healthcare are being adequately addressed and, secondly, whether he is confident that Jobcentre Plus will have enough trained staff throughout the country from October to give the right support not only to those on the employment side of ESA, but also to those who have been on IB and who may, after migration, find themselves in a very different climate on JSA. Many of these new JSA recipients are likely to have a health condition or disability. Has the department factored into staff planning the increased help that the new JSA recipients will need?

While we are talking about staff, can he tell us the position of the whole of the staffing of JCP? I was alarmed to read in last week’s Official Report for another place, in a debate about jobs and unemployment, that the Minister said categorically that JCP staff would be reduced by freezing external recruitment and not extending fixed-term contracts when they come to an end. Is it not the case that Jobcentre Plus will need all its staff on hand when the migration starts? Although we may be talking about what are now called “back office” staff, along with my noble friend Lord Kirkwood, I think that, in view of their open plan offices, all JCP staff are on the front line, which is splendid. Can my noble friend say whether recruitment into JCP is still going on or whether it is now up to full strength? From the impact assessment I see that a further 700 to 900 full-time staff will be needed for the migration. Does JCP ever advertise its own jobs in JCP offices? Is the sentence in the Explanatory Memorandum, “We are also discussing the allocation of additional funding”, any longer applicable under the heading “Support for Local Authorities”?

17:30

Another concern identified by Citizens Advice is that many of those currently on contribution-based IB or SDA may have no entitlement to an income-based benefit because they have a partner who is working, or a small occupational pension, or more than £16,000 in savings. If they are found fit for work, they will not be entitled to JSA and yet may be in great need of help and support to get a job. I am certainly not questioning the fact that someone in this position should be required to look for a job, but anyone who has been out of the job market for many years will need specialised help. My noble friend Lord Kirkwood will speak more about those who will provide that specialised help.

I assure my noble friend that I am in favour of the migration of people currently on the passive benefit of incapacity benefit to the more active benefit of ESA. However, it is important to get the migration right and to listen to the concerns of those who are dealing day to day with some of the most vulnerable people, who will be even more vulnerable if the WCA is not more flexible and if there is not more support and help in the system. We all want the same thing—namely, that as many people as possible should be able to do at least some paid work, with those most in need of help and support being able to access it—but how the Government go about this major step in the right direction is as important as the policy itself. I beg to move.

[Lord Kirkwood of Kirkhope]

My Lords, I am delighted to follow my noble friend. I declare an interest: as my colleagues may know, I am a non-executive, non-remunerated director of the Wise Group in Glasgow.

My noble friend Lady Thomas has an eagle eye for finding statutory instruments and Orders in Council which are of serious significance. Her experience in both the Merits Committee and now in the Delegated Powers Committee serves the House well and we are in her debt. These are important regulations. My spies, of whom there are many, tell me that, technically, they are legally ambiguous. If I did not know the noble Lords, Lord McKenzie and Lord Knight, as well as I do, I would think that this was a deliberate Labour spoiling tactic to leave a gremlin in the system to subvert the confidence of the incoming coalition Government. However, that is a quite unqualified and undignified accusation and I make it only in passing.

There are some technical ambiguities in the regulations. This serves to demonstrate how important it is to simplify some of these systems. If the professionals dealing with these regulations cannot make up their minds whether or not they are clear, I do not know who can.

I wish to make one or two brief points about the significance of the long-term implications of these regulations. I am an unqualified supporter of Professor Paul Gregg’s personalised conditionality concept. During the course of the Welfare Reform Bill last year, colleagues will have heard me expound this theory. Professor Gregg rightly captures the deal we will be offering people in future. Yes, there will be conditionality and people will have to be responsible for their actions, but the deal has another side to it: there will be a tailored, sensitive conditionality over which they will have a voice and which they will be able to help mould and shape for their own personal circumstances. That is the offer. The offer has two sides to it, both of which are important.

These orders should not to be considered in the context of the panic caused by the deficit-reduction problems that we face right now, because I hope that this system will sustain the support that we give to people in these circumstances not just for the three years of the next comprehensive spending period but for five, 10 or 15 years. If it works and can be made to work well and sensitively, it will serve us in the long term. Therefore, the regulations should not necessarily be shaded or influenced too much by the financial circumstances that immediately face us, although they are significant.

We need to be realistic about how many people we can expect to help in the short term. If we manage to get upwards of 1 million people back into remunerative work where they have some prospects of job retention and progression, it would be a marvellous success. If expectations are too high, particularly if they are driven by the perception of cuts and not of progressive policy changes, we will be in some trouble. We need to be realistic about what we can achieve. We shall get a better policy outcome in delivery if we do that.

We should work with the willing. Jobcentre Plus staff at the front line know this. I agree with my noble friend: everybody in Jobcentre Plus offices that I visit is in the front line. The only people in the back are the managers; perhaps we can get rid of some of them in order to support the front-line staff. The only people who are backstage are the big cheeses; it is the front-line people whom we are trying to support. We need to work with the willing. It is clear from my work in the Wise Group that there are people who are anxious and positively engaged in trying to get back to work. If you can have success with some of them early on, the word spreads and you get positive feedback. People then say, “Well, if it’s worked for my next-door neighbour, then I hope it can work for me”.

There is a spatial dimension to this problem. That is nothing new. Anybody who has studied these policies in the past understands that labour market conditions in Reading are different from those in Merthyr Tydfil or downtown Liverpool. When the policy is rolled out from October, and subsequently when it is rolled out nationally from February, that needs to be borne in mind. For the reasons that I gave earlier, conditionality must be sensitively applied in favour of the client as often as possible.

I am therefore confident that there can be a coherent policy. The direction of travel is absolutely right. Both Front Benches have made as much progress as they reasonably can. It is a very difficult area, and it is made more difficult by the financial circumstances, but it is the right thing to do. However, we need a coherent, long-term policy. We should think about a single working-age benefit. It is hard to get from where we are now to there; it will take time; but we should do nothing that gets in the way of that and makes it more difficult.

My noble friend spoke about providers. I think that some providers believe that the quality of the medical personnel who do the medical examinations which inform this process could be better. The decision-makers who take forward that work—it is crucial work for the individuals that it affects—need to have some responsibility for making sure that the quality of the medical reports is consistently good. If it is not, there needs to be something in the system that gives them the ability to say to Atos or their line managers, “I’m really not comfortable with the medical evidence that I am getting that informs my decisions”. That is an important piece of the business model that needs in the implementation to be carefully considered. I know that my noble friend is aware of it and I am confident that he is on the case. I hope that he will do everything that he can to make sure that those decision-makers get the best information so that they can make the best decisions possible.

The explanations given to people on incapacity benefit when they are first contacted, and subsequently when the policy is rolled out after February, need to be clear. I hope that the quality of the offer that is being made—I hope that it is an offer because as I said it is personalised and conditional—will be explained to them. The responsibilities that they have are different. Some of them fall foul of those responsibilities because they do not know what they are. In the past, that has been because some of the letters and communication strategies that have been used have been opaque. If you are confronting this situation for the first time and are in a vulnerable household, the last thing you need is ambiguity about what you are facing. We need to be crystal clear about what we now require—because “require” is the only verb that can be used in this new situation.

Also, from a provider point of view, there is a lot of concern about people who leave the system. There are people who should not have been in the system in the first place, but an estimated 30 per cent will exit the system. American experience suggests that a lot of those people become destitute, and that is not in anyone’s interests. In America you can move to the next-door state and start again. You cannot do that in the United Kingdom so we need some follow-through to make sure that people are not being dumped. The object of this policy is not to dump people: it is to apply it to people who are properly eligible. If my noble friend could give me some assurances about that I would be grateful.

This is not just about people getting people into sustainable jobs. I am pleased that we are talking about what I would consider to be sustainable jobs and not just jobs for 13 weeks, which was never sustainable under the old system. We are making progress in that direction, but we need to talk about job retention and advancement as well. We must not lose sight of that. We need to be able to say to people that, even if they are getting ready for work and nearer the labour market, this is all about giving them work experience from which they can benefit. Therefore, as my American colleagues all say, they start with any job, move to a better job and then on to a career. They are being offered an ABC system. That is part of the offer. If we can do that, and it is possible with the proper back-up, support and implementation of the policy, then this is a win-win situation for everyone.

I am certain that my noble friend on the Front Bench is having all sorts of frayed conversations with the Treasury. I would like to strengthen his arm—his hand, rather, because strengthening your arm is to do with drinking. To strengthen the hand is a Quaker concept which I understand is more beneficial to everybody. I hope that he will hold out. If this policy is to work, there will be a degree of invest to save across the broader policy front. If he does not win support from his colleagues in that direction, even if the policy is absolutely 100 per cent, with the best will in the world, he may still fail because we cannot do this if there is absolutely no money to give people the opportunity to train themselves off benefit and into work, which is the idea behind the policy.

[Lord German]

My Lords, I also rise to support my noble friends in welcoming the intention and general thrust of these regulations and changes. Supporting incapacity benefit claimants into work and making sure that people are on the right benefit with the right level of support is obviously the correct thing to do. There is no doubt either about the significance of these regulations. About 1.5 million people in our country will be affected and some of them are the most vulnerable in our society. The issues that I want to comment on, therefore, are not about the principle but about the process of migration—“it ain’t what you do, it’s the way that you do it”.

There are two outcomes that I am sure my noble friend the Minister will wish to avoid—the unexpected and the unintended. The unexpected might be failure somewhere in the process of change—perhaps a blockage in the appeals process or a group of vulnerable people who are marginalised by the whole process. Since it is unexpected, all you can do is ensure that the system is as robust as possible and that everything is in place before it migrates and is therefore able to withstand the shocks. The unintended consequences, however, can be guarded against more easily. For that we look to the reports of the Merits Committee and the Social Security Advisory Committee. They have produced a clear, evidence-based set of reports, which should help to steer the Government through the maze that is the migration process.

As I know from the dates given on the SSAC report and the Government response, it appears that the response is from the previous Government. I therefore offer a brief analogy to my noble friend the Minister, based on my experience. I took over a ministerial portfolio in Wales; one month beforehand, the previous Minister from another party in a coalition had thrown the switch on a new computerised payment system for farmers. The system was intended to surpass anything else in the past; it was all-singing and all-dancing, and introduced a new payment structure. Needless to say, it went terribly wrong in year one but was corrected and became an exemplar system in year two. I shouldered a large part of the anguish of the claimants while my predecessor escaped without a scratch. I hope that our noble friend will benefit in coming out of this without a scratch.

17:45

This is a new Government. I know that my noble friend the Minister can reassure me that the system as now designed is robust enough to deal with the unintended and the unexpected, but perhaps he can indicate where the changes have been made since taking office. After all, we would naturally expect a new Government to have a new approach in issues of this sort.

One critical factor on which I want to question the Minister is the success of the migration process by the quality of the assessments made by the healthcare contractors. I am concerned that we have only a single contractor, Atos Healthcare. While I appreciate the need for a tight contract, is it right that there should be a monopolistic provider? Surely some competition would create a better dynamic and improve the quality? Perhaps my noble friend could tell your Lordships’ House whether the contract was already complete when he took office and what room for manoeuvring Government he has in this matter.

My second area of concern is about the number of appeals. Between April 2009 and March 2010, the ESA appeal numbers quadrupled. Between April and June 2009, there were 10,100 appeals; between July and September 2009, the number had risen to 29,000, and by March of this year there were 46,500 appeals, which is 126,800 appeals in one year. That represents more than 37 per cent of all appeals for all benefits, and nearly double that of attendance and disability allowance appeals. Equally worrying is the fact that 40 per cent of appeals that went to hearing were successful, with many thousands more successfully dealt with without the need for a hearing. The previous Government’s response was that joint working on this was under way. Could my noble friend update your Lordships’ House on the current number of appeals and what conclusions he draws from the very large numbers going to appeal as well as the implications of that on the migration programme?

The third area that I wish to probe is certainty on a number of the conclusions and recommendations of the SSAC. First, there are concerns about the work capability assessment. The independent external review of the workings of the WCA is reporting its first findings later this year. I would be grateful if my noble friend would reassure me that this review will be available and in place in time to influence any changes before the migration process begins in earnest. Furthermore, I wish to probe levels of awareness. There is an enormous communications challenge here, and the Government’s response in the documents is to work to develop and test the communication strategy and state that it is ongoing.

As my noble friend has just said, many clients will find the migration process threatening and will be very wary of making mistakes. Some of them are in hard-to-reach groups, for whom traditional personal letters may be ineffective, either by virtue of the language used or by the simple fact that they may not be read either at all or accurately. I commend to the Minister the use of the third sector in making sure that the messages that you want to send are sent out widely, as well as the use of other forms of communication, preferably ones that are not concentrated on the written word in personal letters.

The next area on which I want to ask the Minister for clarification is taxation and tax credits, which my noble friend mentioned. The response in the documents is that the Government will consider further the taxation and tax credit position on migration to the ESA. Will the Minister give us an update on where we are with that?

The SSAC lays out its preferred option of delaying the migration, but it also helpfully lists seven criteria that it feels should be achieved if the Government are not minded to slow down implementation. The first is a six-month trial. The Minister has indicated that the process will start in October and be rolled out properly in February. Could the period be expanded slightly if the external evaluation were to give us some clues as to where improvements could be made? Improvements could be made in a number of areas, including the quality of the WCA, to which my noble friend referred. We do not know where we are with tax and tax credit protection. That information needs to be updated for your Lordships’ House. The next consideration is the customer information strategy. If we are to secure the confidence of those who will be engaged in this process, we need a robust strategy that we know will be read and understood. The whole area of targeting support—segmenting the cohort, as it is described—is also crucial. We need more information on that. The next criterion is special treatment for IB clients who are exempt from the PCA. The final point concerns the comprehensive evaluation programme. When you are engaged in such a massive change affecting so many people, you need to be able to evaluate what has happened rapidly so that you can make changes in a dynamic way as the process goes on. I would be grateful if the Minister could indicate where we are with these criteria.

As I said at the outset, the purpose and direction of travel are right. There is certainly a need to boost confidence and to develop personal motivation in this client group. We must not write anyone off and we must provide for the most vulnerable. That is, crucially, why we have to get this process right.

[Lord Knight of Weymouth]

My Lords, I am most grateful to the noble Baroness, Lady Thomas of Winchester, for tabling this Motion, which has allowed for an excellent debate. It also allows me to reassure the noble Lord, Lord Kirkwood of Kirkhope, that the regulations are not some kind of incendiary device planted by me and my noble friend Lord McKenzie to cause the Minister a problem.

The situation in which I find myself is slightly odd. This is my first time at this Dispatch Box scrutinising the legislative work of the noble Lord, Lord Freud, but I am afraid that it is not a chance to show my great forensic skills in unpicking the inadequacies of the regulations. That is, of course, because the regulations were inspired by the previous Government’s White Paper, which was written by the Minister before he jumped ship and joined the other side. They were then signed in March by my friend Jonathan Shaw, when he was working with me as a Minister at the Department for Work and Pensions. Therefore, the Labour Government’s regulations are now being tabled by the Tory Minister who inspired them when he was a Labour adviser. As the shadow Labour Minister, I can assure your Lordships that I am not opposing the regulations.

Instead, I want to ask the Minister a series of questions, similar to those raised by the noble Lords and the noble Baroness who have already spoken, about the policy context in which these regulations will now operate. That context has changed with a change of Government, in particular with the introduction of the work programme. The basis of the regulations, which we fully support, is that we should move people in incapacity benefit through a work capability assessment to then decide which sort of employment support allowance they should be on or whether they are fit for work and can go straight on to jobseeker’s allowance. I assume that, under the work programme, this would determine not only the level of benefit but also what support people would receive under the work programme. The contractors under the programme would then be paid on the basis of the numbers that they would get into work.

The first set of questions then arises. If you go through the assessment and are moved on to JSA, you suffer a benefit cut after a transition period, as set out in the order. The theory is that then you will be helped into work. However, given that, according to the impact assessment, 93 per cent of incapacity benefit customers have been on the benefit for over a year, what assessment has the Minister made of the numbers who will go into work, given their distance from the labour market? Has he allowed for a worsening labour market? Will he not listen to the Social Security Advisory Committee and wait until recovery in the labour market is secure?

I know that the right honourable Chancellor of the Exchequer, George Osborne, predicted that due to his Budget more than 2 million jobs would be created in the private sector in the next five years, but the OECD said two weeks ago that it expected the UK recovery to be,

“too muted to result in strong job creation”.

The OECD also said that Labour’s active labour market strategy had prevented unemployment from rising as rapidly as in previous recessions, and said:

“While the large fiscal deficit makes it essential to focus on cost-effective programmes and target the most disadvantaged groups, labour market policies should remain adequately funded. In this context, it may also be of concern that the new Budget ends funding for two crisis measures, namely, the Future Jobs Fund and the Six Month Offer”.

So it looks as if government action will make things more difficult for disadvantaged groups in the labour market because of the ending of those programmes.

Has the Minister convinced the Treasury that the market is able to raise the finance for the work programme, given that it is paid by results in a highly uncertain labour market? What assessment has he made of the impact on those communities, particularly former mining communities, where there is a high concentration of incapacity benefit claimants? Will those areas get special help as £25 per week is cut from many people’s benefit?

What is the Minister’s analysis of how the saving of £1 billion in the impact assessment will be drawn geographically? Has he then looked at how that will relate to the over £1 billion of additional savings in a few years’ time shown in the Budget through changes to the disability living allowance? Will those DLA claimants be protected under this order?

I have a few other concerns about how things are being planned in practical terms, especially given the Government’s fiscal position. First, the order is dependent on contractors being able to carry out the assessments, and a number of important points have been raised about these. I am pleased that the Government are so supportive of the changes for those going through chemotherapy, which we agreed before we left office, that they re-announced them in their Written Statement. I hope that they are also sticking with the changes that we were making for sufferers of ME.

Can we go further to meet the concerns of those with mental illness, especially given the worries faced by these individuals following the Government’s announcement of the ending of primary care trusts and the consequent breakup of the NHS? Has the Minister considered automatically moving those with complex mental and physical illnesses straight on to the appropriate ESA without an assessment, to relieve them of the concerns of going through such an assessment?

There is one other worry regarding assessments, which was raised by the noble Lord, Lord German. When I was a DWP Minister a few months ago, there was only one contractor capable of doing this work—Atos Origin. Does the Minister share my concern that that contractor is already struggling to do the current amount of work on time? What is he doing to get more contractors into that market? Can he guarantee that the capacity will be there, especially to meet the needs of the Treasury in scoring the savings on this programme and the DLA cuts? Perhaps the noble Baroness, Lady Thomas, was right to call for a review.

Like the noble Lord, Lord German, I worry about appeals. The Tribunals Service is already overloaded, as we have heard from the noble Lord’s speech. This work will mushroom under the programme and the DLA changes. Has the Minister agreed with the Treasury and the Justice Ministry that the budget for the Tribunals Service will be protected so that he can guarantee a service? Otherwise, people will wait an age for their appeal and remain on the higher benefit, and the Treasury will not get its savings.

Will the Minister give us an update on how the extra work for Jobcentre Plus and its contractors, referred to in paragraph 10.2 of the Explanatory Notes, will be delivered and paid for? Is there new money for this? Is it contracted?

That work would currently be part of Pathways. In government, we found that in the end that programme was disappointing, after such a good start in the pilot phases. It showed no extra gain from using the private sector over Jobcentre Plus. Does this cause the Minister to pause and wonder whether the backdoor privatisation of Jobcentre Plus embodied in the work programme will work? Does he agree with our conclusion that we need to ensure that those who are moved straight to jobseeker’s allowance should get extra help, given that their health may not be perfect and their distance from the labour market may be significant? Will this be priced into the work programme? Will this in turn include specialist help for those with mental illness, as was so brilliantly provided by the mental health co-ordinators in Jobcentre Plus who were put in following the work of Carol Black? Will the access to work programme continue so that we can ease the ways into work for some of those customers?

I am sorry to ask so many questions—I note that the Minister was scribbling away frantically and I hope that he can answer them. I suspect that he may not be able to answer them all, but those that he cannot need an answer. I urge him, and those listening on his behalf, to ensure that, if he cannot answer them now, he does so in writing and places a copy in the Library.

18:00

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I thank the noble Baroness, Lady Thomas of Winchester, for initiating this debate and other noble Lords for their contributions. I am particularly pleased to welcome the noble Lord, Lord Knight of Weymouth, to the opposition Front Bench. I will do my best to respond to as many questions as possible, but I am under a time constraint and to answer them all would take most of the night. That pun was not deliberate.

No one denies that there is a fundamental problem with the way in which incapacity benefits have being managed. We want to improve the quality of life for the worst off in our society. That does not mean leaving people languishing on benefits which provide financial support but no way back into work. There are now 2.2 million people claiming the old-style incapacity benefits and many of these have had no contact with the department for many years. It is time to change this. We have announced plans for radical reforms of the welfare-to-work system and the implementation of the work programme. The work programme will provide the support that will help people to return to work and will be an integrated package of support, providing personalised help for people who find themselves out of work, based on their needs rather than the benefit they claim. The detail around the work programme will come out in the months to come and will answer many of the questions that the noble Lord, Lord Knight, has posed.

We will build on the strengths of the personalised support delivered through JSA so that all jobseekers with a health condition or disability, including customers converted from incapacity benefits, can access the appropriate support to help overcome their specific challenges. I make it absolutely clear that the point of introducing the work programme is to provide a service to people who are being transferred. My main concern about the previous arrangements was that there was no such national provision for those people who needed that extra support.

These regulations enable the department to reassess all those on the old-style incapacity benefits, using the work capability assessment, so that we can look at what they can do, not what they cannot do. This is a positive move and a fundamental change in the way we perceive the abilities of those who have barriers to work because of a disability or health problem. The regulations provide for the conversion of existing awards of incapacity benefit, income support on disability grounds and severe disablement allowance to employment and support allowance, and are designed to facilitate as smooth a move from incapacity benefits to employment and support allowance as possible.

Where a customer is converted to ESA, the regulations provide not only for the protection of their incapacity benefit, income support or severe disablement allowance but any housing benefit or council tax benefit which may also be in payment at the same time. I hope the House will agree that this is a generous transitional protection which will enable people on the old-style benefits to move over time to the same rate of benefit as new ESA customers. The regulations also make consequential amendments to housing benefit and council tax benefit provisions.

Before I get into the detail, I congratulate my noble friend Lord Kirkwood on his intelligence network. He has once again managed to discover that we need to highlight the fact that we have become aware of a technical legal issue relating specifically to commencement of some of the powers under which the regulations were made by the previous Administration. We will therefore be taking steps to correct the position before the Recess. However, this will not result in any changes to the wording of the regulations as laid.

Now let me turn to the concerns that have been expressed by this House and by others. The first is the capacity of Jobcentre Plus. The reassessment of 1.5 million incapacity benefit claimants will be a challenge for the department and particularly Jobcentre Plus, but is one that we are equipped to deliver. It is also one that is essential, if we are to give these claimants the help they need, and have been too long denied, to improve their chances of moving back into work.

Jobcentre Plus is well equipped to deliver incapacity benefit reassessment to the proposed timeframe. The business case has established the level of staffing required for all three arms of the business to deal with the impact of all aspects of reassessment. The business processes will predominantly be based on customer contact via the telephone, but allowance has been made to deal with the contacts expected in Jobcentre Plus offices.

Implementation planning in terms of Jobcentre Plus staff is progressing at local level to ensure that resources are in place in the run-up to the start of reassessment. Resource recruitment, capacity planning and provision for healthcare professionals continues to progress in line with delivery plans, and is on target. IT provision to support reassessment remains on target. When Jobcentre Plus is at full capacity, it will be dealing with 10,000 cases per week or 700 cases per processing site. To mitigate capacity issues, sites purposely have been selected where it is known that the required capacity can be built to undertake this work. As part of monitoring the reassessment process, Jobcentre Plus will be able to control the flow of cases and if required move cases around the network to ensure that cases are processed in good time.

My noble friend Lady Thomas talked about extending the introduction of reassessment in the context of freezing the programme. The early introduction of the reassessment programme in Burnley and Aberdeen clearly is good practice. It has been suggested that it is being conducted too close to the start of national implementation to be of any real use, but this is not the case. This is not a pilot in the normal sense, but a phased introduction, and will enable us to gain early feedback on claimant and staff experience in relation to the new processes. Valuable information will also be gathered to undertake early validation of estimates, such as the proportion found fit for work. We do not think however that we should extend this trial, as this would delay the reassessment process which is so urgently needed.

There has been criticism, which we have heard today, of the work capability assessment. In March this year, a DWP-led review of the work capability assessment found that generally it is accurately identifying individuals for the right support. That said, the review also made a number of recommendations for improving the assessment, and we announced on 29 June our intention to implement these recommendations. Among them were the mental health issues which the noble Lord, Lord Knight, referred to. We will now begin to revise the work capability assessment accordingly. Implementing the recommendations of the review will ensure that the work capability assessment is fairer, more consistent and transparent. In line with our statutory obligations, we have also commissioned an independent review of the work capability assessment which will be led by the highly respected occupational physician Professor Malcolm Harrington.

The noble Lords, Lord Knight and Lord German, both asked why we do not have a list of conditions exempt from the assessment. We want everyone to have the opportunity to engage in work and the support needed to enable them to do so. It is important that we assess someone’s capability for work not on the nature of their health conditions or disabilities but on how severely those conditions impact on each individual’s ability to function. Having a list of exempt conditions was entirely the wrong approach. It led to people being written off and parked on benefit.

The primary aim of the employment and support allowance is to enable as many people as possible to engage in work by offering them the right support, and to ensure that benefits are paid to the right people until they are able to engage in work. This applies just as much to people with severe conditions who may still be capable of work, given the right support. We know that being out of work is harmful to health and that being in work is generally good for health. We want as many people as possible to engage in work. It is important that individuals who are keen to work, despite the severity of their condition, have the opportunity to work and are not automatically parked on benefit. As I said, we want everyone to have the opportunity to engage in work and to have the support needed to enable them to do so. We recognise that there will always be some people for whom that is not possible because of their severe level of disability. That is why a support group was developed for people with limited capability for work-related activity, who should not be required to engage in that activity as a condition of getting benefit—and who will not be so required.

My noble friend Lord German and the noble Lord, Lord Knight, raised the matter of appeals. Joint work is under way across the DWP and the Tribunals Service to mitigate the impact of increasing workloads by focusing on four key areas: streamlining processes within both DWP and the Tribunals Service, including an end-to-end review of the appeals process; reducing the number of appeals by looking at the messaging we use to manage customer expectations and in particular the language in the disallowance letter; increasing capacity in the Tribunals Service through increasing administrative, judicial and medical resources; and strengthening the working relationship between DWP and the Tribunals Service. We believe that this will lead to an improved appeals service for our customers in due course.

My noble friend Lady Thomas raised the communications strategy issue. We will be developing additional sources of information for the reassessment process, focusing on how we will support our vulnerable customers in consultation with customer representative groups and advisory bodies. Details of these measures will be in place for the trials in October this year. We are also committed to engaging with customer representative groups so that they can support their customers through the migration journey. We have already consulted with national stakeholders over the development of key products for our customers. We also recognise the importance of working with local groups to support our customers through this process and are proactively engaging with third-party organisations in the trial locations.

Taxation has been raised by the Merits Committee and the Social Security Advisory Committee as a point of particular concern; it was raised again today, particularly by my noble friends Lady Thomas and Lord German. Currently, people who have been on IB and severe disablement allowance are exempt from liability for income tax. This provision was introduced in 1995 and has continued ever since. It means that, unlike all other IB claims and new contributory ESA claims, this diminishing number of claimants have never had to pay tax on their benefit if their income reaches the level at which tax becomes payable. We recognise that individuals in this position, especially if they also receive tax credits, could experience a significant reduction in their overall income, even if their benefit income is maintained by the regulations that we are debating today. On the other hand, they have received transitional protection for more than 15 years, which does not apply to more recent claimants, who have to pay tax on the same amount of income.

18:15

We have not yet come to a final decision on this issue. My colleagues in the Treasury, who have responsibility for all taxation matters, are considering the position and a decision will be announced in due course. I assure my noble friends that in making that decision we will take account of the points that they have raised today.

My noble friend Lady Thomas raised the question of those with health conditions moving to jobseeker’s allowance. Clearly, more customers with health conditions and disabilities will be moving to that allowance as a result of the conversion of customers from incapacity benefit to ESA. We recognise the importance of providing effective support to these customers, and that is why this Government have been looking at the help and support that they need to find work.

Moving to jobseeker’s allowance will give some incapacity benefit customers the opportunity to re-engage with the labour market. Many of them have long work histories and high skills and education levels, but they have been written off for far too long. Moving to work will bring benefits not only to them but to society and the wider economy. As they have been away from the labour market for a long time, they may only need help with current job search techniques, CV skills and job preparation. However, we recognise that some customers will still be managing their health condition or disability and may have greater challenges to overcome. We are therefore looking at what additional support may be required before they enter the work programme.

I am grateful to my noble friend Lord Kirkwood for his support and for providing power to my hand, arm or elbow—I am not sure which it was. I assure him that the Government are firmly committed to introducing the work programme by the summer of next year and we are working on its precise detail. The programme will provide greater freedom for delivery partners to give people the support that they need, rather than prescribing a one-size-fits-all programme from the centre. This freedom, along with an outcome-based payment system that rewards delivery partners for helping those with the greatest need, will ensure that they are well motivated to help all customers, including those moving from incapacity benefits.

My noble friend Lord German referred to evaluation of the programme. The department has commissioned a programme of research to examine staff and customer views on delivering and claiming ESA. The first report—of qualitative research examining staff and customer views and experiences of early ESA implementation in May to July last year—was published in March this year. Interviews for a large-scale representative survey of people’s experiences and views on claiming ESA were concluded in February this year, and that report should be published in the autumn of this year.

We plan to re-survey respondents on their ongoing experiences of ESA, and that follow-up will include people who were found fit for work at the work capability assessment. We will be conducting further qualitative research on customer and staff views on both the WCA and the work-focused health-related assessment, with, again, publication expected in the autumn.

I shall deal with as many extra questions as I can within a reasonable timeframe. Picking up on some of the negative comments on the work capability assessment, I assure noble Lords that the review that we conducted found that the assessment accurately identifies individuals for the benefit. As I said earlier, we are looking at implementing some of those changes.

My noble friend Lady Thomas asked about people on JSA who could not access help because of the change in the contribution basis. I am pleased to assure her that those not entitled can sign on for national insurance credits and then access all the help available via the work programme that those on JSA can access. On the issues around the quality of medical personnel, raised by my noble friend Lord Kirkwood, we are looking for very high standards in that service. There are strict criteria for recruitment, extensive training and robust quality monitoring.

A large number of additional points were raised by the noble Lord, Lord Knight. Rather than going through them one by one, the best way of handling them is to ask for his patience because we plan to make a number of further announcements throughout the coming months. Many of my responses would be in the nature of holding statements which are useful neither for him nor for us. I accept the level of his questions and I shall have the greatest pleasure in providing detailed answers as the weeks progress.

In conclusion, these are radical but necessary reforms. I am sure that all parties here would accept that they are necessary. It is clearly a major shift in the way in which we perceive incapacity benefits and how we provide support for people who need to claim them. I assure noble Lords that the intention is not to make things more difficult for those who have barriers to work because of illness or disability, but to enable us to provide more targeted help—both financial and back-to-work support—for those who need it. Bringing incapacity benefits into line by reassessing all those on the old-style benefit for eligibility to the new employment and support allowance is a long-overdue simplification to the benefits system and will create a fairer system for all. We believe that now is the time to push ahead with these reforms and I commend the regulations to the House.

[Baroness Thomas of Winchester]

My Lords, I am grateful to all noble Lords who have spoken in this debate. I think that it has been valuable and I particularly welcome my noble friend Lord German to the DWP brief. He knows that the Chamber is not as full as it is on some matters it deals with, but all the better for that.

I was grateful to the noble Lord, Lord Knight, for explaining that we are in an Alice-through-the-looking-glass situation: my noble friend was the architect of his Government’s plans and now everything is reversed. This debate has brought out some of the real problems. We understand that the medical reports are not disease-specific, as it were; they look at what the person can do rather than what he cannot do.

However, the other side of the coin is the fact that there are an enormous number of appeals and a lot of them are successful, so something is going wrong. I was glad to hear him mention Professor Harrington's review—I remember that I have read it before. Presumably, if he suggests changes to the work capability assessment, that will be factored into my noble friend’s plans for legislation later in the year. Will it be dealt with then?

[Lord Freud]

I am pleased to clarify. Clearly, we will have Professor Harrington’s report later in the year. Timing depends on the exact nature of any recommendations that he may make. Obviously, we would like as many of those recommendations to be included as we can.

[Baroness Thomas of Winchester]

I was interested when the Minister said that the programme would be a challenge for Jobcentre Plus offices. That is probably the understatement of the year. I was a bit worried when he said that they will move cases around the network. I hope that that will not be done quite as it sounds—it sounds a rather curious thing to do—and that there will be a lot of telephone recruitment. I hope that it will all work.

I end by saying that my noble friend Lord German had the right phrase when he said, “It ain't what you do, it's the way that you do it”. That should be applied to the regulations. I am most grateful to all noble Lords who have spoken in this debate; I look forward to the Minister’s reply by letter, if he has not been able to answer some of the questions.

Motion agreed.

House adjourned at 6.27 pm.