Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Lord Colwyn)
My Lords, I shall make the usual housekeeping announcements. If there is a Division in the Chamber, the Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes, or at a time at my discretion if there is any problem.
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I also remind Members not to touch the microphones. They are all set and it will cause a nuisance if you play with them.
Welfare Reform Bill
(13 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Greengross
“( ) the fact that a claimant has reached the qualifying age for state pension credit.”
Baroness Greengross
My Lords, unsurprisingly, this is primarily about people who have reached, or have nearly reached, retirement age. We know that for a long time the means-tested benefit system has supported, and given greater support, to people who have reached retirement age. However, under this Bill, unless couples where one person has reached retirement age receive some additional support, the older person who might be, say, 80, who happens to have a partner of 59, could be worse off financially than someone with a partner of the same age. My amendment seeks to remedy that anomaly.
Not allowing couples, when one has reached state pension credit age, to get working age benefits is an important change from the current rules because the way in which couples have been treated in the past for benefit entitlement has been based on the age of the youngest partner. In the Bill as it stands, one of the basic conditions for entitlement to universal credit set out in Clause 4 is that someone is under the qualifying age for state pension credit, which, by the way, is gradually increasing in line with rises in women's state pension age. However, Clause 12(2) allows for exceptions to that. The Government have said that the age limit will not apply where one of a couple is above the qualifying age for state pension credit and the other is younger. That is necessary because Schedule 2 to the Bill will prevent pension credit claims in the future from couples where one is under the qualifying age.
In some situations, couples where one is above and one is below pension credit age may be better off financially receiving universal credit and I am really pleased about that. That could apply, for example, where one is working, as an important aim of universal credit is to make work pay, and benefits will gradually be withdrawn. However, by contrast, a couple receiving the pension credit guarantee have only a £10 disregard from earnings. After that, any earnings are counted in full as additional income, which will reduce benefit entitlement. If neither partner is working, a couple relying on universal credit will receive a lower level of payment than a couple receiving the pension credit guarantee.
I fully accept and agree with the fact that the Government want younger partners who are claiming benefits to be seeking work, but I believe that when neither partner is able to work or, if able, is unsuccessful in finding work—we know it is rather difficult for people who are near retirement age—the basic level of benefit should reflect the fact that one of the partners is older. The addition of this minor age exception to the list in Clause 12(2) would achieve that aim. I trust that this amendment will be acceptable to the Minister. I beg to move.
Baroness Drake
I support Amendment 50A. I am very concerned about the implications of the change of the rules on pension credit because the effect of the proposed change is a severe restriction on the availability of pension credit. The most recent impact assessment which updates that provided in February to take account of a more recently announced policy confirms that the number of households with lower entitlements under universal credit has increased relative to the previous version of the impact assessment. That is primarily due to the announced policy changes to disability payments and the treatment of couples with one partner under and one over the qualifying age for pension credit under universal credit.
I find this change in policy a peculiar form of couples penalty, when the Government are on record, I understand, as being against such a penalty. It is a couples penalty that disproportionately impacts on the poorest of couples because the recent impact assessment reveals that the number of households with lower entitlements under universal credit will increase as a result of this particular treatment of couples with one partner under and one over the qualifying age for pension credit. As a consequence of these changes, although not wholly attributable to this one, 70 per cent of the lower entitlement is concentrated in the bottom and lower quintile.
Although the figures in the impact assessment do not separately show the impact of the pension credit changes, the impact assessment states quite clearly that:
“Some of the heaviest notional losses … are in cases where one member is of working-age and one is currently eligible for Pension Credit”.
I see in response to a question from Stephen Timms in the other place, Steve Webb answered that as of February 2011, 93,200 pension credit recipients had a partner aged below 60. A not insignificant group of people, no doubt in low-income groups, will be impacted by this change.
When one looks at previous impact assessments that the department has released, in many of these couples when one is a pensioner and one is not, the partner below state pension age may well be caring for children or somebody with a disability or who is ill. Now those households would be subject to the new in-work conditionality requirements. We know that older women are less likely to be employed outside the home, so this is another example of a policy that will impact on women—exactly the kind of policy upsetting the Women's Institute according to this weekend's papers. I am sure that it will be onto the case with this one as well
I notice that the Minister, Mr Grayling, commented in Committee in the other place that it should be acceptable to say to someone:
“‘Your household is on a low income, you need more money, get a job’”,—[Official Report, Commons, Welfare Reform Bill Committee, 28/4/11; col. 553.]
as a defence of this change to the pension credit rules. Perhaps he should have reflected on the characteristics of the community affected by this change, such as the number of older women in such households who are undertaking valuable non-wage caring work or the fact that disabled people are more likely to be reliant on pension credit at minimum qualifying age. Those facts and figures are freely available in impact assessments from the department.
We now have a policy that is discriminating between pensioners on the basis of their spouse’s age and producing some quite arbitrary outcomes with poorer households having significantly different experiences because of what could be quite moderate differences in the age of their partners. Let us be clear: the effect of this policy is to disentitle someone under the current rules who would otherwise receive pension credit and place them, because of the age of their partner, into universal credit.
This policy will impact on a lot of low-income households. The noble Baroness, Lady Greengross, detailed that when she moved the amendment. I know that Age UK is particularly concerned. If, for example, a couple received an amount of universal credit equivalent to the basic level of income-related jobseeker’s allowance that would be just £105.95 compared with pension credit for a single person of over £137 and £209-plus for a couple.
The other point that causes me concern is that pension credit provides an automatic passport to benefits such as health benefits, Christmas bonus, home improvement grants and free school lunches—I was looking the list up—and any cared-for children’s access to school lunches. Will all these fall away now for these couples, even though one of them reaches the qualifying age?
The other impact is that this change in policy will also mean that these older couples, with one at the PC qualifying age, will find that any savings that they have are now subject to the more aggressive capital rules, rather than the gentler rules under pension credit. That strikes me as particularly harsh as a consequence of this change. I feel that this Bill is being used to change the rules on pensions, yet it is not a pension Bill, because the population most impacted on by the change in this policy will be subject to a series of government policy changes, the accumulative effect of which would be quite significant. They face an accelerated increase in the pension credit qualifying age, consequent on the state pension age changes, and the impact of that has been clearly detailed. The savings credit element of pension credit has been frozen until 2015, and now a new policy of disentitlement has been introduced, whereby a qualifying age of entitlement to pension credit will be dependent on the age of the partner. When one stands back and looks at the cumulative impact of this on these individuals, the impact of the rules on their savings and the characteristics of this demographic, one can see that this is a very harsh change of rules. Yet the Government’s own impact assessment for the Pensions Bill shows that women under 55 on low incomes, who are most likely to be the people under the qualifying age, whereas their male partners may be at it, are the hardest hit by any changes in pension credit policy because of caring responsibilities, ill health or availability of work. They are now going to be caught up in the conditionality requirements under universal credit.
Pension credit is a very effective policy for targeting pensioner poverty, which was confirmed by the recent PPI research commissioned by Age UK and launched at an event supported by the Minister, Steve Webb, who came to speak. Here we are, tampering with the rules of pension credit when it is probably the most effective mechanism that we have for immediately addressing pensioner poverty. The effect that it will have is simply to disentitle people who have previously been entitled to pension credit and put them through a discretionary work conditionality process when we know that the characteristic of this particular group should not be subjected to those kinds of policies. The amendment tabled by the noble Baroness, Lady Greengross, will allow the Government to address my concerns on this issue.
Baroness Hollis of Heigham
My Lords, may I just ask a question of the Minister in support of the amendment? As I understand it, if someone is on pension credit above the age, they pull a younger person up to their age. In future, if someone is of a younger age, they will pull someone over pension credit age back down again. How will that interact with the proposed new state single pension, which will of course embed pension credit into the pension, so that somebody over the age of 65 or 66 will get the whole lot? Could he confirm that the timing of this, which I thought was 2014-15, will be precisely when some of this is due to be implemented? Would it not therefore be wise to rethink that, in terms of those proposed changes?
Lord McKenzie of Luton
My Lords, I support each of these amendments. Perhaps I could start with a reply that was given by Mr Chris Grayling to Stephen Timms in the other place about the cost of this. He said:
“It is estimated that this policy could save up to £100 million over this spending review. Because of the interaction with other changes to support pensioners, which are still being developed, we are not yet able”,
to produce,
“a firm estimate for a long run figure for savings”.—[Official Report, Commons, 18/10/11; col. 936W.]
Notwithstanding the fact that the Government have apparently argued in favour of this policy, because it brings working-age claimants within the conditionality regime, that is the thrust behind this as I understand it.
We heard from my noble friend Lady Drake and the noble Baroness, Lady Greengross, about the possible cost implications for individuals who would have been within the pension credit regime now being forced into the universal credit regime and the losses that could produce. There are not necessarily losses for everyone. Yet the original proposition in the White Paper, as I understand it, was for there to be a choice: that in these circumstances a couple could choose universal credit if they wanted to, or otherwise stay within the pension credit regime. This matter was raised in the other place and I do not think that a satisfactory answer was given for that change of policy which was, by and large, unannounced. A number of points arise. I think it has been confirmed that those who are already in receipt of pension credit when these provisions are introduced will not have to back out of it. Perhaps the Minister can confirm that, but what about if there is a change in circumstances for somebody in that position? If they were perhaps dipping in and out of pension credit because of the savings threshold—or for any other reason—and if they were in at one stage, would they be able to stay in?
My noble friend Lady Drake dealt with the impact of savings. You could have somebody who has just retired and who would have been within the pension credit regime, and maybe just taking a tax-free sum from their pension scheme, now being precluded from being within pension credit and forced out of universal credit as well. On that point, there is a provision in the Bill—I think it is Clause 64—which lays the groundwork for caps to be introduced on capital amounts within pension credit. I am not clear whether that is just to address the issue of housing benefit being attached to pension credit in the future, which has a capital limit attached to it, or to bring the generality of pension credit within the regime that is otherwise going to operate. Perhaps the Minister will take the opportunity to clarify matters on that.
We heard about the impact of passporting, particularly with pension credit currently being a full passport to housing benefit and council tax benefit. However, if in fact the working-age partner does not have to be subject to any conditionality because of a caring responsibility, or for any other reason—perhaps they are subject to no work-related requirements under the assessments that take place—why then would the Government still force that couple through universal credit? If the rationale of using the universal credit to bring people within conditionality falls away, why should those couples not then have the opportunity of remaining in pension credit if they choose? It does not make any sense to say, “We are doing this because we want people to be subjected to conditionality”. If the conditionality rules do not impose any work-related activity or requirement on those individuals, why should they not be able to remain in the pension credit regime?
As has been mentioned, this provision is discriminating against somebody not on their age but on the age of their partner, which is somewhat of a departure from previous policy. I hope that the Minister will address these issues. I fear that this is something which we will have to come back to at Report, because it cannot rest as it stands.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, Amendments 50A and 53 concern couples where one member is above qualifying age for pension credit, and the other below. The Bill provides that such couples will in future claim universal credit rather than pension credit. I should stress that this change will not affect couples already in receipt of pension credit. It will apply only to new cases. The effect will therefore build up slowly and existing cases will not be disturbed.
In response to the point made by the noble Lord, Lord McKenzie, we still need to decide how to deal with cases which move on and off pension credit in future. To pick up on the point made by the noble Baroness, Lady Drake, about the impact assessment, this shows the long-term effect, and not the immediate impact.
I am grateful to the noble Baroness, Lady Greengross, for clarifying that she is not opposed to this change of emphasis in principle. The rationale is that while one member of the couple may be over the qualifying age for pension credit, the other member of the couple is of working age. Since all people of working age who can work should be expected to do so and there are no work-related requirements associated with pension credit, it follows that universal credit is the appropriate benefit. I should stress that the work-related requirements would apply only to the working-age partner.
I am grateful to the noble Baroness, Lady Greengross, for also acknowledging that in some cases the more generous earnings rules in universal credit may mean that it is a more advantageous benefit than pension credit. The disregards and earnings tapers in universal credit will mean that if one or both of the couple does work, they will keep much more of their earnings than they would in pension credit where earnings over £10 a week are deducted pound for pound from the guarantee credit.
The issue is about the rate of universal credit and how this compares with pension credit. Noble Lords will be aware that the levels of support through pension credit are significantly higher than levels of current benefits for people of working age. This is due in particular to the way in which pension-age benefits have been uprated at a faster rate than working-age benefits in recent years.
Lord Foulkes of Cumnock
As usual I am not up to speed on everything. Could the noble Lord say exactly what he means in this context by “working age”?
Lord Freud
My Lords, I am not often baffled, but by “working age” I mean someone below the state pension age, which is moving currently. But that is a formal definition.
Lord Foulkes of Cumnock
I am grateful to the Minister. In other words, as the age of eligibility for a state pension increases, under the definition in this Bill “working age” will increase at the same time with it. Is that right?
Lord Freud
Yes, I can confirm to the noble Lord that that is absolutely what is happening here. Clearly, we have debated the changes in pension age. That is to do with the very welcome increase in longevity and the length of people’s healthy lives. Returning to the point, the noble Baroness’s amendment would deal with the difference between pension credit levels and universal credit levels by including an additional amount in universal credit where a claimant is over the state pension qualifying age. I understand the reasoning—and indeed there are currently pensioner premiums along these lines in income support and jobseeker’s allowance. In designing universal credit, however, we have not included any additions specifically for people over pension age. There are two main reasons for this.
First, we think that it could reduce the work incentives for the working-age partner if they are paid a higher rate of benefit simply because they have an older partner. We are already including additions for specific reasons such as caring, or limited capability for work, where people are likely to have longer durations on benefit. Clearly, we are raising some of those levels appreciably. If in a particular case these additions are not appropriate, there ought, in principle, to be as much scope for the working-age partner to work as in any other case, so it is not clear why a higher rate of benefit should be paid.
Secondly, as the noble Baronesses, Lady Drake and Lady Hollis, rightly pointed out, there is a significant programme of change under way for people over pension age. Following the Chancellor’s announcement in the Budget of 23 March, the Government published the Green Paper A State Pension for the 21st Century in April. That paper set out options for reforming the state pension system for future pensioners. In the light of the responses to the Green Paper, we are currently developing proposals for changing the state pension system and at the same time are considering how pension credit may need to change to best meet the needs of future pensioners under any reformed state pension. It would clearly be important to make sure that any arrangements for pensioners dovetail closely with universal credit to ensure a smooth interface and also to ensure that we deal fairly with couples where one person is over pension age and the other is under it. Until our thinking is further developed, we have only one side of the equation. We need both sides of the equation to consider this issue fully. I should just add that clearly once there is a migration on changing pensions the migration strategy into universal credit and the timing of how we take different groups into it will also be hugely relevant. That goes to the heart of the very perceptive question asked by the noble Baroness, Lady Hollis.
Baroness Hollis of Heigham
I am grateful for the Minister’s very full reply on that. He clearly anticipated the question coming up. When will he be in a position to tell the Committee about the two timetables? There is the universal credit timetable and people coming over to that and the new pension timetable. When will we be in a position to see? Frankly, if there is only a year or so’s difference between them, that raises a question mark about putting this extra weight on to the complexities of UC for a very short period before it is overtaken in turn by the changes to pensions, at least for the older partner in such a relationship. Can he give us some indication? I suspect that this is probably not worth doing.
Lord Freud
My Lords, I do not think I can give a precise time on this because there are quite a lot of moving parts at the moment. All I can do is assure the Committee that we really do have this issue front and centre if we have these two sets of changes. I hope I have explained how we are planning to proceed, and I ask the noble Baroness, Lady Greengross, to withdraw her amendment.
Lord McKenzie of Luton
Will the Minister follow up on two points? First, in a situation where the Secretary of State cannot impose the work-related requirement on a claimant because the claimant has limited capability for work and work-related activity, there is nothing in forcing people away from pension credit and into universal credit because the working-age partner is not going to be subject to conditionality in any event. What is the rationale then for preventing people being in pension credit? It seems to me that it falls away completely.
There is a separate question about the impact of capital. My noble friend Lady Drake made the point that currently there is a big difference between the capital rules in pension credit and the capital rules that will operate in universal credit, but there is a provision in the Bill that looks as though a capital limit will be introduced for state pension credit. I do not know whether it is intended that that capital limit will mirror the £6,000 and £16,000 limits that are going to operate generally. If it is, I am not sure that I had cottoned on to that fact before. Or is it simply to deal with the housing component that is obviously going to be brought in and will work alongside pension credit?
Lord Freud
I think that I am safe in confirming to the noble Lord that we are bringing in capital limits. They are related to the housing issue, although I think that my colleague Chris Grayling said that they will be at a substantially higher level than those for universal credit. The noble Lord also probed the issue of people where no work conditionality is imposed. Clearly, within universal credit, other additions are going on. It is not a straight comparison. Under universal credit, the other person is likely to have a series of additions as well, so the imbalance is nothing like as great as the simple one.
Lord McKenzie of Luton
I accept that point entirely. But under those circumstances why should the option not be available to people, to couples, to go into one or the other, which I think was the original proposition in the White Paper?
Lord Freud
That is the nub of the change. When we looked at it, we thought that the appropriate policy was to put everyone below working age in that category. On looking at the noble Lord’s question of why do it when there is not work conditionality, there we have support in universal credit through the additions and the ability to keep a rather simple set of definitions working. That is the rationale.
Baroness Greengross
I thank the Minister for responding. Obviously, I am disappointed because I think that it would work in a society where at the age of 55 one could just go and get a job, but we know that that is not the case. Unfortunately, there is a still a lot of discrimination and barriers to older people who try to get a job. More flexibility would be very welcome. I think that the noble Lord said that he cannot do more but that he is still looking to see if things can be improved for these couples. I have hopes that he will look at this again and try to improve on something that seems fairly minor but which would help a lot of people.
Lord McKenzie of Luton
Perhaps I may come back on a point with the Minister to make sure that I understood an answer to an earlier question. In relation to the proposed changes to capital limits for pension credit, did the noble Lord say that that would apply only—I am not sure how it would be worked out—to the housing component or that it will apply to the totality of the package?
Baroness Hollis of Heigham
While the Minister is consulting—because he spoke about the additions and so on—it would be very helpful if he could send a letter around giving worked examples of various pensioner couples, or a couple who bestride the pension credit line, indicating what the implications might be, including the cases that my noble friend mentioned. We could then see what it would be. I have no reason, obviously, to doubt the Minister’s word but it would be useful to know whether the discrepancy is £10 or £50.
Lord Freud
I am happy to send a letter around. We should deal with capital limits in its entirety when we come to Clause 74, which we may get to if we hurry along.
Baroness Greengross
My Lords, I apologise for the fact that I am about to chair a meeting on health and rather rudely have got to go. I hope that noble Lords will excuse me for rushing off to Millbank. I beg leave to withdraw the amendment.
“School meals
(1) The amount in respect of other particular needs or circumstances, under section 12, shall include an amount in respect of school meals for any dependents of the claimant.
(2) The maximum award of the amount under this section shall be 100% of the cost that the claimant would expect to incur in respect of school meals, up to a prescribed maximum value per child.
(3) Regulations shall specify the circumstances under which a claimant shall be entitled to an amount under this section.
(4) Under no circumstances shall any amount payable under this section be included in the “relevant amount” specified in section 93(5) of this Act.”
Baroness Hayter of Kentish Town
My Lords, I shall speak also to Amendment 51C. These amendments seek to ensure that free school meals and health costs, which are the core of passported benefits, are included as part of the universal credit. They also seek to ensure that any amounts included for universal credit are not included as part of the benefit cap.
In May, the Minister deftly devolved the tricky matter of how to deal with passporting to the Social Security Advisory Committee. In a Written Statement earlier this month, he updated the House on the committee’s consultation and its information gathering. It reported that the SSAC had had more than 60 responses from individuals and a wide range of organisations, including disabled people, offenders, schools, children, housing bodies, medical bodies, the NACAB, local councils, debt advice bodies and, of course, the devolved Administrations. That was alongside a trawl of relevant research and some qualitative research, which included focus groups with welfare rights advisers, and a few in-depth interviews and discussions with individuals who either have or are claiming passported benefits. The research identified more than 25 different passported benefits provided by government departments or local authorities, some of which were mentioned by my noble friend Lady Drake on the previous group.
Perhaps more significantly, although hardly surprisingly, the committee found that passported benefits are viewed as fulfilling important needs. Respondents’ views on the withdrawal of passported benefits were mixed, with some supporting a tapered withdrawal and others more of a timed withdrawal when a claimant moves into work. At the moment, we would argue—I think that this would go across the Committee—that passported benefits should be designed to incentivise people both to move into work and to stay in work. The committee has now been asked to develop guiding principles for such a design of passported benefits in relation to universal credit. I think that it has been given until the end of January to do that. My understanding is that we will see that report and the DWP’s response only in the spring of next year, which makes it difficult for this Committee and the House later to judge whether the Bill will ensure that work always pays.
Furthermore, I am slightly unclear as to how the new “app” foreshadowed by the Minister last week will be able to deal with things such as free school meals and other passported benefits if these are to be subject to any sort of taper or awarded only to certain UC recipients. Perhaps the Minister will spend a moment exploring this in his response, especially now that my noble friend Lord Knight who understands these things is in his place and will understand, I hope, the response better than I will on things like that.
The Social Security Advisory Committee unsurprisingly found that passported benefits provide a vital support to many. Free school meals can have a significant impact on the well-being of children. In its response, the CPAG stressed that access to school meals has a range of positive well-being, health and educational outcomes for children, from improved classroom behaviour to increased key stage 2 performance. It also pointed out that school meals tend to be far healthier than packed lunches: only 1 per cent of packed lunches meet the nutritional standards set for school lunches. We know that for a number of children, this is the only hot meal that they get in a day.
Similarly, the support available under the health costs criteria provides vital help to people on a low income. People who meet various criteria can get support with dental charges, optical costs, wigs and travel costs. In England, some get free prescriptions. Unlike Scotland and other areas where prescriptions are free, they are paid for in England. Passported benefits thus provide a means of safeguarding the health of children and adults, and can be worth substantial amounts in cash terms. The CPAG in its evidence gave an example of a lone parent aged 37 with two school-age children and a two year-old, and her passported benefits were probably worth about £37 a week from the mixture of free school meals, prescription, dental costs, bus fares and eye-care, along with some discounts on travel, phone bill and leisure activities. So, knowing which of these benefits she will still be able to be entitled to as she moves into work will be absolutely vital in judging whether or not she will be better off in work, and whether work really does pay.
We know that the current system is not perfect. Some 20 per cent of children in poverty are not entitled to free school meals. But for those who are, the current loss of free school meals when the parents move into work is really quite a significant cliff edge; but at least at the moment that loss of support is offset by the extra payments in working tax credits, because the current system provides an income boost when parents move into work of 16 hours or more. But by contrast, the welfare White Paper suggestion that passported benefits would be withdrawn once the family reached a certain income level seems to have two problems. The first is in replicating the cliff edge. If entitlements were suddenly lost at an income threshold, that could have a disastrous effect on work incentives as well as family budgets, and a family with two children earning an extra pound a week could be in a state where they lose £18 per week in free school meals.
Secondly, if it was to be an income threshold, that appears to take no account of family size. So a mother of three would stand to lose much more as she reached the cliff edge than—for example—a mother with one child. The first mother’s work incentives would obviously be much worse.
Now we know that, again, the canny Minister has asked the Social Security Advisory Committee to consider these issues, which are clearly pretty challenging. So we may not have the answers today. Nevertheless, we would ask for two assurances and clarifications. First, will the commitment made by the Secretary of State in the White Paper that universal credit,
“will ensure that work always pays and is seen to pay”,
apply after the loss of passported benefits has been taken into account? Because it is unclear at the moment whether passported benefits have been included in the current impact assessment of work incentives under universal credit. As Citizens Advice says, the Government really do need to ensure that decisions about who is entitled to free school meals and help with health costs does not undermine universal credit principles—which we are all signed up to—of making work pay.
Secondly, can the Minister confirm that any calculation of total benefits for the purpose of the benefit cap, will not include amounts paid in lieu of passported benefits—or the value of those benefits—if they continue to be provided in kind?
Perhaps I may add two points of clarification. First, will the IT system be able to deal with passported benefits? Secondly, could the Minister help me with the definition of “spring” as he has rather helpfully done over “soon” and “very soon”? It does seem that unless we are clear before the Third Reading whether work really will pay—taking passported benefits into account—then it will be very difficult to measure whether this whole Bill will achieve the laudable aims that the Government have for it. I beg to move.
Lord Boswell of Aynho
My Lords, I shall respond briefly to the helpful introduction from the noble Baroness, Lady Hayter of Kentish Town. Two points occur to me. The background to passported benefits is a wonderful mish-mash—an attempt, in effect, to meet certain social needs and then, possibly, to avoid the interaction of malign or unfortunate consequences by trying to dovetail them in some way, which produces an acceptable outcome. It would be a brave person who said to this Committee that they fully understood them—and I certainly do not rate myself among them—or who thought that there was a sublime, overarching concept that reconciled them all. Even the Social Security Advisory Committee will have some difficulty with it.
I simply want to distil my concerns, and I hope that the Minister will respond to them. The first is the simple point, which the noble Baroness has already mentioned, that if one believes that the whole principle of universal credit is making work pay and that benefit is withdrawn on a smooth taper, it is clearly very important to consider the consequences for other kinds of benefit when people come in or out of the system. In other words, the anomalies, inconsistencies and differences in coverage become, if anything, more critical under the new regime.
I feel very strongly about the second point, which the noble Baroness did not bring out perhaps quite so clearly. The two benefits that she produced, school meals and health costs, are very salient and important, but there will be others—including some attachment to disability, which may relate to transport costs or otherwise—which may be less obvious. However, what is clear, and was clear when I did a little work on this, is that a very large number of government departments become engaged on this. It is very difficult for anybody, even with the erudition of my noble friend the Minister, to stitch these together and get an overall view of what is going on. One can be quite sure that the Minister’s transport colleagues, admirable though they may be, are not taking that overview, although the particular benefit in question, whether health costs or school meals or otherwise, may be very important to the individual or family concerned. So that must be looked at.
I hope that the Minister will approach this in the spirit of giving assurances in principle, and in the determination of the assistance of the expert advice that he will receive, to achieve sensible solutions. It would be absurd to set out the admirable and agreed principle of universal credit, with a smooth taper and making work pay, and then find that we had left this, because it was in the “too difficult” category. Some of the consequences of the withdrawal of any of these benefits might be very damaging to individuals.
Baroness Sherlock
My Lords, I, too, support the aims of this amendment, which are primarily about protecting certain key benefits but also making sure that they are not subject to the benefit cap, which we will come to later. My noble friend Lady Hayter of Kentish Town carefully set out the challenge that the Minister will have in squaring a circle, in making sure that work pays but also dealing with the consequences of a quite important specific provision. I ask the Minister to reflect briefly in his reply on the fact that free school meals, for example, have more than one public policy aim. How does he go about squaring that? They clearly are a means of effectively transferring a benefit that has a cash value to some of the poorest families in the country, but they also have the effect of making a hot or at least good, nutritious, meal available to children within all those poorest families. That feels like a separate and quite specific policy aim. How will he ensure that that policy aim will be achieved within whatever solution he comes up with?
As the Minister will know—and I certainly support the view of his erudition, which is obviously legendary—the evidence of the efficacy of free school meals goes back to the 1960s. If anything, the evidence suggests the extension of breakfast clubs rather than going in the opposite direction. Some noble Lords, perhaps more on this side of the House, may have read the Observer yesterday, in which there was a piece specifically on breakfast clubs. It looked at both, mentioning in passing that one in four school children in the UK are in a position where the only hot meal that they have in the day is their school lunch. It was talking in particular about breakfast clubs. An interesting head teacher in a very poor area described the benefits of breakfast clubs as being way beyond any cash benefit and being in the energy of children, improving their behaviour and improving their learning. She said:
“It helps with their socialisation skills too. School is about life chances and unless the children have something in their bellies then they are not going to get those life chances they deserve. There is very little money out there in our community and for many it's cheaper to feed the family on takeaway fried chicken than anything else. You see the leftovers in lunchboxes, or rice; we get a lot coming in with just rice.
We tried to run a breakfast club ourselves, it was £1 a day, but the numbers just dwindled away and you realise that it doesn't seem expensive but it adds up, five days a week, three children or more. It's a lot. And you can't turn a child away if they arrive without their £1”.
The article also pointed out that breakfast clubs are starting to shut around the country as a result of a combination of budget cuts and the ending of ring fencing for wrap-around care. If we are not careful and end up with a solution that does not retain the provision of free school meals, we could end up with a double whammy, with the two potential sources of nutritious food available to children disappearing at the same time.
I am just as concerned, as I know everybody in this room is, that the universal credit system continues to make work pay and that we do not find ourselves in a position where someone who is now entitled to free school meals will not be entitled to them in the future. That would be a travesty of the anti-poverty element as well as of the work incentive element of universal credit. It means that we have to consider carefully the other policy implications.
In the years I worked with single parents, I became very aware that the vast majority of parents prioritise spending on their children. In fact, I often met lone parents who went without food themselves in order to buy things for their children. Indeed, there is research that bears that out. I suspect that my noble friend Lady Lister may have done it; she seems to do most of it. The evidence is very clear, but none the less there is a minority who, for a variety of reasons, are not in a position to put the kind of food in front of their children that we would wish them to do. In some cases there simply is not enough money to go round. Since it is cash, it is subject to an awful lot of other pressures: a huge bill coming in, debt collectors, being sanctioned or fined, or other pressures on the budget. At least this is money that is for the child, not simply for the family. I do not want to say any more than that. I am not pretending it is easy. When he replies, will the Minister reflect how he will do those three things: protect those families that currently get the benefit of free school meals; ensure that work continues to pay; and fulfil the other policy objective?
Lord Knight of Weymouth
I want to comment briefly on this. I say “briefly” because I have the next amendment, there is more I want to say and I do not want to take up too much of the Committee’s time today. I got a bit of billing from my noble friend Lady Hayter as someone who might know something about this, which daunts me somewhat as I had intended to make a contribution more in keeping with my noble friend Lord Foulkes than my noble friend Lady Hollis in terms of knowing something about it or being something of an expert. My noble friend Lord Foulkes is, of course, the master of the probing question, rather than the probing answer.
My noble friend Lady Hayter and others have set out the quandary that the Minister and the Social Security Advisory Committee are clearly in as regards issues around whether it will be included within the cap, for example. If it is going to be part of a tapering rather than a cliff edge, I hope that extra money is added so that you are not taking money away from those who currently get free school meals. I particularly want to focus on free school meals because if I know anything about any of these things, it is about free school meals, given the time I served as a Schools Minister.
Very much in keeping with what my noble friend Lady Sherlock said, I think there is great importance in ensuring that free school meals continue to reach the child. It is a finely grained argument, but I encourage the Minister to look at whether it is possible to get the money straight to schools rather than including this in universal credit. It is important to note that free school meals are used as a proxy within the education system for all sorts of things, and I am sure in other areas as well. In particular, the level of the pupil premium in England is set by the numbers on free school meals. That presents an opportunity to the Government, if they choose to follow the side of the argument that I would advocate in terms of giving the money to schools, and, through them, to children, rather than having it within the universal credit. If the pupil premium is set on the basis of knowing how many children are eligible for free school meals within a school, it ought to be possible to passport the money for those meals to the school directly, given that most schools now operate a cashless payment system. It will then be possible to passport that money through to children's fingertips, if they use fingerprint technology, in respect of paying for their school meals, or on to their cards, if they use a card system. Either way, if they do not operate that, it is possible to get the money into schools so that we can be confident that children are getting a nutritious meal every day, which is hugely important.
I represented a parliamentary seat in Dorset for some time where I found that the health inequalities were such that a child born in my constituency had a life expectancy 10 years longer than one born in Manchester. A lot of that was to do with issues like whether or not they were getting a decent start to the day as regards food and nutrition and the quality of the nutrition that they were receiving during the day. I know that school meals are a crucial part of that. That is why, in the end, my contribution on this is to encourage the Minister to think about that aspect in terms of the needs of children to get a decent meal every day, rather than how things work within the universal credit.
Baroness Lister of Burtersett
I have a quick point to make in support of the very strong case made by my noble friends Lady Sherlock and Lord Knight, even if he does not want to be thought of as an expert. If the money for free school meals is paid through universal credit, could the Minister explain how families will know what part of the universal credit is supposed to be for school meals? We know from research that money that is clearly labelled for a particular use is more likely to be spent on that use, but if it is swallowed up in the universal credit, that credit may not be paid to the person responsible for ensuring that the child has money for a school meal or a packed lunch. The danger is that the money will not be spent on the school meal, with all the consequences that my noble friend Lady Sherlock has pointed out.
Baroness Thomas of Winchester
A long time ago, during the last welfare reform Bill, when the noble Lord, Lord McKenzie, was the Minister, I moved an amendment in favour of free school meals full stop. I think it was the highest kite I have ever flown. I was very much in favour of the benefits that it had. One of them is the startling fact that research has borne out that children concentrate far more in the afternoon if they have a good hot meal inside them, which may be the only meal of the day. This is an extremely important issue.
The other day I discovered that some boroughs are giving children free school meals in primary schools and I think that Suffolk is one of them, so good for it. I shall be interested to hear the Minister's reply.
Lord Freud
These amendments would provide a cash amount for school meals and health costs within the universal credit award as opposed to the current system of passported benefits, which are often given as a benefit in kind. Clearly, I understand that to be by way of a probe rather than a specific direction. This is a very complex area and I think all of us in this Committee Room have agreed today what these problems are. Defining entitlement to passported benefits is the responsibility of several government departments and the devolved Administrations. Entitlement and the value of benefits can vary by county or by area. My department is taking a keen interest in the work under way to consider passported benefits across the piece.
Lord Wigley
I apologise very much to the Committee that my five-hour journey from Wales took six hours and that I was late in arriving. The Minister referred to a consultation with the devolved Administrations. Clearly, some of the criteria for passported benefits may vary within the responsibilities of those devolved Administrations. Will the report that he is referring to, and which he will be bringing forward shortly, cover that point in adequate depth to make sure that there is no falling between two stools?
Lord Freud
Yes. I thank the noble Lord for that question. I have specifically asked the SSAC to cover the point of working with devolved Administrations when it comes up with its recommendations so that will be incorporated in its original review, let alone in our subsequent review.
Baroness Hayter of Kentish Town
My Lords, having learnt last week that the Minister is not a bad man, this week we learn that spring comes after winter and before summer. I have discovered that my education is absolutely complete. We welcome very much the assurance that at the point when he gets the report, he will be looking at this firm of the view that passported benefits should not undermine the incentives to work in the rest of the Bill. It may be no surprise but it is nice to have that—and the acknowledgement of the importance of making sure that any such passported benefits are spent on what they are needed for. Of course, the comment that these will not count towards the benefit cap is particularly welcome. With that, I beg leave to withdraw this amendment.
Lord Knight of Weymouth
“Secretary of State obligations
Before the implementation of the universal credit system can commence, the Secretary of State shall publish a report to both Houses of Parliament demonstrating that the following have been fully tested and established—(a) the relevant Department of Work and Pensions IT system,(b) the relevant Her Majesty’s Revenue and Customs IT systems,(c) the integration of the necessary IT systems,(d) any necessary administrative agreements between the Department of Work and Pensions, local authorities and other delivery agents, and(e) other systems and processes necessary for the successful delivery of the universal credit system.”
Lord Knight of Weymouth
My Lords, forgive me for taking a little time in introducing this amendment. It seeks to address delivery concerns around the implementation of universal credit and requires a report to be published in both Houses demonstrating that there has been proper, full testing and establishment of things such as the IT systems, the “necessary administrative agreements” and other systems that are necessary to make the universal credit work. I know that, as discussed last week in Committee, we have a much fabled briefing that the Minister is going to give us on delivery. I think that is on 3 November; the sooner we get some detail on that, if nothing else, the better so that we can get the right time and place in our diary. However, I hope that the Minister, in responding to and thinking about this, can at least give us some thought that is on the record.
My intention in moving this amendment is to get some of my concerns about the delivery of universal credit on the record here in this Committee, in front of your Lordships and in the official record. As I have said on other occasions in discussing this Bill, I strongly support the principle of the universal credit as indeed I support the work programme. In many ways, they are both too important to fail but I am worried about failure. My worry is not about the strategy, which is right, but more about the tactics and timing given what else is going on in the environment around the introduction of these reforms, so that they in turn will then affect the reforms being delivered with any success.
My worry is that there is in some ways a time bomb set to go off around 2013-14, as universal credit starts to be introduced, and that we need Parliament to be able carefully to monitor the development of these reforms in order to have reassurance that my worst predictions are not going to come true. There is a high risk around this performance and, as I said at Second Reading, I would like to see the delivery milestones for this programme published. That risk is enhanced given that the additional funding for implementing the universal credit is capped at £2 billion, including the additional AME cost attached to the programme, as I understand it, from my reading of the Public Accounts Committee's recent report. There is a background to that, which I will go on to talk about, and which makes me very anxious.
The background is principally economic but it also involves some of the things that the department itself is responsible for. We are seeing housing benefit changes and planning reforms in the form of the Localism Bill, some that have been discussed in this Bill and others that have been moved in regulation that raise serious questions in my mind around housing affordability and homelessness. We will discuss in Committee the effect of the changes in this Bill on the disabled. There is also the effect of the failure of government economic policy in stimulating growth, which, as we heard last week, is leading to rising inflation and rising unemployment. We know from the Institute of Fiscal Studies’ recent report about worries that another 300,000 children will move into child poverty over the next two years despite the fact that median incomes will remain stagnant or worse, which is quite an achievement given the relative poverty measure for children. The IFS thinks that there will be such a disproportionate impact on poor people's wages and benefits that another 300,000 children will go into poverty.
This impact on unemployment in particular is leading to growing fears among providers of the work programme that there will be a collapse in the viability of that flagship programme in about two years’ time because there simply will not be the jobs for people to go into to be paid by results for. At the same time, the capacity of Jobcentre Plus is being reduced in order to deal with the fallout of an 8,000 headcount reduction over the comprehensive spending review period, which will lead to a loss of talent in the welfare-to-work area, which compounds the loss that has already taken place with people being moved from the flexible New Deal into the work programme. A survey that I saw in the Times last week said that that had led to a 50 per cent loss of talent in the industry already.
There is a £1.4 billion temporary allocation to the DWP to assist with the recession, which is now being withdrawn even though unemployment is going up. All of this, which sounds very rambling, leads to an external environment that will put huge pressure on the Department for Work and Pensions as it is seeking to implement this programme and huge pressure on DWP budgets at the same time. I cannot see that the assumption within the CSR of the DWP's funding settlement of unemployment falling to 1.1 million will hold true. No serious commentator would agree with it. That has implications around the risks to universal credit as a programme. I appeal to the Minister to get his head out from beneath the towel he has to hide under in order to think about these things and think seriously about that external environment.
I have real fears of significant social problems emerging over the next year or so and becoming more acute in two years’ time as a result of all these changes. They will increase the number of people dependent on universal credit and that in turn increases the pressure on it, hence the need for a report to Parliament on delivery to ensure that it is staying on track and that none of my fears is founded. It is worth reflecting on what the new Permanent Secretary at the department said in evidence to the Public Accounts Committee in the other place. When he was asked how risky the change was in respect of universal credit, he replied in Question 58 of the evidence that:
“There is substantial risk in it”.
It does not take a genius to say that there is substantial risk, but it is not just my opinion.
On some of those risks, we are reliant according to the programme on 80 per cent being able to apply online by 2017. I did a lot of work on digital inclusion during my time in the department. It is something for which I have a great passion. In many ways, it is right to be digital by default in the design of a programme like this and then to work hard at making sure that poorer families have access to online so that they can make substantial savings in their household bills, for example, in order to be able to do that.
The question for the Government is: have they allocated resource to get people online? I am sure that they will be working with UK Online and the excellent work that Helen Milner does as its head. Are they extending discussions with her to extend some UK Online centres into job centres? Will they extend the number of terminals in job centres so that people can use them, perhaps with assistance for those who are unable to do so?
Lord Boswell of Aynho
The noble Lord might like to know that when I applied online for my state pension, I got a very rapid response. It was so rapid that it set some alarm bells ringing in my mind. I put down a Question—one can look up the date but it would have been in 2005—and at that time only 2 per cent of applicants were applying for state pension, which admittedly is perhaps a skewed distribution, online. There is a long way to go.
Lord Knight of Weymouth
Certainly, it is important that individuals such as the noble Lord can apply successfully for their state pension online. We have seen some great successes across government in being able to use digital as the default route—in particular, the student loan application process, and vehicle licensing and road tax services are excellent. The Department for Transport should be a model on how this is being done. But still a significant proportion of the population is not online, despite the best efforts of Martha Lane Fox and the rest, who I wholeheartedly support. The Government need to set out what they are going to do. In education, I introduced a home access programme that got 167,000 families online but it cost quite a lot of money. It was a fantastic, fraud-free scheme using prepaid credit cards. It was great but, I repeat, it cost a lot of money. I would ask the Minister whether he has got the money in his back pocket.
There are big questions around the delivery of IT. I am looking forward to the briefing. The Minister is evangelistic in his enthusiasm for how it will work, which is impressive, and I want to know more. But, at its basic level, what concerns me is that in essence it seems that we will have three IT systems being developed. There is the IT system within DWP to integrate the benefits side of things. As I understand it, it is not much more complicated—it might even be less complicated—than the IT project that the department successfully delivered in respect of ESA, which gives the department considerable confidence. As I think I said at Second Reading, the chief information officer at the DWP, who is one of the better-rewarded civil servants across Whitehall, is an excellent official and deserves every penny of what he gets because he delivers for the taxpayer in this regard.
That complicated database is quite possibly within the capacity of DWP to deliver successfully. However, it has to integrate with another database which is being developed by Her Majesty’s Revenue and Customs for real time information around employers who will have to report in real time how much they are paying their staff. The two databases will have to integrate in order for universal credit to work. That is not just the complication of an integration of two databases.
I know, for example, from the SATs crisis—I was the Minister who oversaw it—that that crisis was as a result of three databases interlocking, corruptions occurring and the data letting us down. In developing this real time information system, HMRC is also developing something based on a tax system, which looks at our personal tax, that has to integrate with a benefits system database, which looks at household tax. You have to make sure that all the data have enough alignment around the identifiers to make sure that the right individuals and households all fit together properly. That seems quite a tall order.
Now I also understand that there is a contingency plan; at last the Government have a plan B. This is good. That is the contingency plan around whether or not the real-time information database at HMRC will work. It can then fall back on the third database, which has to be developed, for self-employed people, who will be self-reporting into a database at HMRC their changes in income and circumstances so that they can be eligible for universal credit. That might be fine in terms of database integration, but it raises a consequent question. If plan B is to work, it needs us to believe that all the employers up and down the land will happily self-report in real time without error or fraud to the HMRC in order for universal credit to be paid accurately. Of course, we all know what happens when either the database falls down or the information going into the database is inaccurate from our experience of tax credits, which in part we are looking to replace through universal credit. As a Member of Parliament, I found that quite a significant proportion of my case work and the work that my staff did for me and my constituents was chasing up problems with tax credits—over payments, when individual families were weighed down with debt to HMRC, which was then at times quite aggressive in chasing it and needed a phone call or a letter from an MP’s office to get it to calm down and be reasonable. We do not want universal credit to suffer reputational damage and cause real problems for families in that way.
If noble Lords are interested in any of this, they may be interested in the Public Accounts Committee report from the other place. Its third recommendation says:
“The Department admits that there are substantial risks attached to implementing major welfare reforms while at the same time reducing its costs. The successful transition to Universal Credit, for example, will depend heavily on the development of a new IT system with HM Revenue and Customs to a very tight timetable. We have often seen problems with delivering new IT to time, budget and specification. The Department should allocate clear responsibility for scrutinising progress of the welfare reforms alongside cost reductions, develop a clear understanding of the risks to each and how they will be managed and encourage staff to report any emerging problems early”.
That is at the root of this amendment. The Public Accounts Committee is saying that there should be clear responsibility for scrutinising progress of the reforms, and that is what I want for Parliament. I want parliamentary scrutiny of the progress of these reforms.
I have mentioned the efficacy of the self-employed database and the plan B for real time information in the HMRC system. I have, in a previous debate in this Committee, mentioned my worries about documentation and housing benefit local delivery, which will be answered in the famous meeting that we are going to have on 3 November. I am sure that there are many more delivery risks that others can think of, but I shall not take up the Committee’s time in going into them. I repeat that I want this to work, but I want it to work in a way that is fair. The Minister, understandably, has to spend time with his head under a towel working out the details, but he also needs to get out and have a look around at the environment into which he is going to introduce this. It is the worst possible economic environment in which to carry out this massive welfare reform; it adds huge risk, as the DWP has to lead the response to a worsening situation in the employment market with limited, effectively capped, resources. I believe that it is a perfect storm, and it is therefore right for this House to demand absolute transparency on the risk assessment and risk management and the delivery of the various milestones in the programme. Indeed, it may be prudent for the Minister to reflect and say, “Let’s get the legislation through, but let’s adjust the delivery timetable until the employment situation has stabilised and we can be confident that the work programme will be able to be delivered successfully, because jobs will then be created by the private sector in order to make that programme a success”. All my worries will then dissipate.
Finally, I want noble Lords to imagine the consequences of this programme going wrong, with people already moving from fortnightly to monthly budgeting having to manage without getting into rent arrears, and so on, then getting no money and facing recovery action. They are already the poorest and most disadvantaged, in part because of policies from other departments having no money; they will have to beg at the door of impoverished local councils for social fund money. That does not bear thinking about in human terms. We know that local authorities will run out of that social fund money and then where will they go? All of that is a scandal, a year or so out from a general election. I am giving political advice to the Minister: that it is in his best interests and in the coalition Government’s interest to take this seriously and to think about the delivery timeline, which may have made sense when it was first written, but I do not believe it makes sense now, given what is going on in the economy.
Lord German
My Lords, I thank the noble Lord, Lord Knight, for his self-declaration. He is an enthusiast for IT and the changes that it can produce, but he also recognises the difficulties which could overtake anyone who is trying to undertake such a major change as this. It is very difficult. I shall not repeat much of what he said, but his last point is: what happens if we fail with an IT structure that does not deliver the welfare reform that we are looking for? I think that, more than anyone else getting the blame, the political class as a whole will get the blame for a structure under which individuals would suffer. So it is very important to get it right.
Unfortunately, we tend to roll a number of words together. I suppose you might say that the universal credit depends on a substantial, reliable, appropriate and functioning IT system. I have used the phrase “IT system”, which is probably not the correct phrase because we tend to throw these words around. I use a series of analogies, and I hope that noble Lords will bear with me. I used the phrase “daisy chain” because it is the easiest way to describe linking between one system and the next. In essence, there is a number of inputs into the IT structure, some of them from employers and some from potential claimants, and all those pieces of data have to be linked together—hence the phrase “daisy chain”. If you break the daisy change, clearly you do not complete the circle and the person does not get paid at the end.
None of those changes will be possible without substantial shifts, in recent years, in the IT platforms that we have available to us in order to deliver such as programme. If we are going to make this work, we have to ensure that all those parts are working. Of course, there are—most noble Lords would recognise this—two substantial departments of government, both of which have a hand in ensuring that this works. I do not know, but there are plenty of people who will tell me, whether the relationship between the two big departments, Her Majesty’s Treasury and DWP, works as one might hope. If that were the case, you would be looking for the sort of regime where one department was trying to exercise responsibility over another. I hope that that has not happened. I hope that there is genuine cross-departmental working. My first question for my noble friend is: who is taking responsibility? Is DWP sitting in the driving seat, as that is the hub from which all this will happen, and is HMRC material coming across to it in the way that DWP prescribes in order to achieve the result?
My second question relates to the passing on of data. One of the lessons that we and the world have learnt about the passing on of individual items of data connected together is that there is now an international standard for data passing. I would like reassurance from the Minister that we are using the correct ISO standard for the passing on of data. If we are, we can be reassured that not only are we able to pass it on from one department to another, but that it can be passed on to any other part of the system in the public or private sectors, or whoever else wants that piece of data, and that it has the same level of acceptability from one to the other. I would like a reassurance—particularly on what happens at the end, the starting point of which is this data from employers—that we are going to be using and transferring the employer’s data at that ISO level, and that there will be no “Well, we’ll do it this way to start with and move on to a better way later”. I want to be reassured that that happens, because without it we would have some difficulty in achieving the result we want to see.
Lord Boswell of Aynho
My Lords, I hope that the noble Lord, Lord Knight of Weymouth, will not take it as an insult—I assure him that it is not intended to be one—if I say that he is genuinely an expert as well as an enthusiast on the use of the IT system in government. I warm to that, and I have a great deal of sensitivity to what he and my noble friend Lord German have said about the need to get the system right. I am perhaps a little less pessimistic than the noble Lord, Lord Knight, in introducing his remarks, which seemed a little apocalyptic at one or two points. Perhaps I may also say that they were not quite as differentiated as they might be between general concerns about the level of unemployment or economic activity, about which we could have a debate in another context, and specific issues about the impact on the universal credit system.
In that context, one of the three points that I would like to ask the Minister to comment on is his assessment of the extent to which the system is sensitive to variations in volume, with all the difficulties that he is putting together, which have been rightly touched on. Depending on the number of claimants, there could be consequences if it has been under-specified; it could be resourced for a lower number but the numbers turn out to be higher. There could be quite a small movement of the margin which could tip over the sensitivity of the system. That is the first point.
The second point is an extension or a reflection on the point raised by my noble friend Lord German about the transfer of data. I am not a great expert in this, although I have taken an interest in some of these security issues. Indeed, there has been a conversation about the dangers of discrediting the system or the political class more generally if all this went wrong. It would be helpful if the Minister gave reassurances, not only on the specification of the data transfer but on the security and understanding of the transfer of that data. I think there is a strong wish across the Committee that data that is publicly relevant and obviously impacts on people's housing benefit, as it now will, on their housing claim, on other aspects of their financial package, or on arrangements with the public sector, should be transferrable. As one makes that longer daisy chain, there is also concern that it might get out of control or get into inappropriate hands.
Perhaps I may take the analogy produced by the noble Lord, Lord Knight, about the Department of Transport system for vehicle licensing, a system which I used at the weekend entirely successfully and, to be honest, because it has rather good graphics, quite enjoyably. The first time I used it, I thought to myself, “Do these people really know that I am insured and did I give consent that they should know?”. Now, because it is extremely convenient, I am very happy to accept that. There are issues about public reassurance, not least about employment data getting out to the public sector, to which the Minister may wish to respond.
The third point—one could say it is my motive for making this speech—is having intervened in the noble Lord’s introductory remarks, I realised when I sat down that I had given the wrong date for my entitlement to the pension. I did not want anyone here or in the wider world to assume that just because I said 2005, as I did, that in some way Members of this House or Members of the other place had an inside track to get their pension two years early. So I am now putting it on the record that when I said 2005, I should have said 2007. I want to cap it with a specific point. That is the kind of error which, however well conceived the system is, whether it is a public input or, in this case, a private input, it can be wrong; it can be a verbal slip or a misreading. We get older and we do not read the digits as clearly as we might.
One of the biggest points—I come back partly to the experience of tax credits, as a former Member of Parliament, and no less to child maintenance claims under the CSA, as it was—is that there is a huge capacity either on the official side of the system or on the private side to make entirely innocent errors, which then need correction. They may appear and then need to be sorted out. One element that the Minister needs to bottom—perhaps my noble friend will speak about this—is a system that enables people to get such errors attended to when they are noticed, without huge bureaucratic difficulty or excess delay, otherwise people will often run away from putting them right. That is where the rubber hits the road and where, despite the macro concerns that have been set out in this amendment, we should equally recall that there are micro-concerns: “Is it sensitive to me? Do I feel comfortable using it?”. I would be very grateful if my noble friend could give us some assurances along those lines.
Baroness Sherlock
I want to intervene briefly to ask the Minister a couple of specific questions. There is very little to add to the speech made by my noble friend Lord Knight of Weymouth. The Minister should hope that this does not go badly because he may find that speech being quoted back at him. He has been warned, and very eloquently too.
I have huge sympathy for the Minister. As I have said before in this Committee, I was involved as a special adviser during the development of tax credits, and I watched Ministers seek and receive all assurances that it would be reasonable for a Minister in those circumstances to have. I would not for one moment suggest that the officials with whom they worked, all of whom I was hugely respectful of, did anything other than give the best assurances they could. However, until a system is up and running one never really knows how it will respond to the realities of the information within it, so we all know this is a risk.
I want to ask the Minister about what kind of assurances he has been seeking and receiving and, in particular, whether he has been getting any independent assurance on the development and management of this project. As I understand it, the DWP’s development of its system is going to be dependent on the revenue’s system. Has the Minister received any assurance from the Treasury that has enabled him to progress, given the interdependence of those two things? Has he received assurances from the Treasury or from HMRC, in particular, about the nature of their systems so that he can make plans on the back of them? Secondly, what assurance has he about whether his plans are robust enough? If he will not tell us what it is, what is the nature of the assurance that was sought and from whom was it sought? I am aware that by and large large-scale government projects of this nature often seek some kind of independent assurance, perhaps from an independent auditor, whether internally or externally procured. Can the Minister assure us that the department has been through that process and can he reassure us on the basis of the reassurance that he has been given?
Thirdly, I am interested in how plan B will work. I am very sorry to say that I cannot make the briefing on 3 November. That is a genuine disappointment on my part. I am in the anorak category as well. I am afraid I am engaged with a communities and victims panel looking at the impact of the riots, and that takes me elsewhere on that day. Can the Minister explain very briefly how plan B will work? For example, is it the intention that businesses will report real-time information manually monthly or that individuals will report? Is the assumption that the DWP part of the game, where it matches up the different packets of real-time information from different employers in relation to individuals or households, will be done automatically as it is now? How will that work? Is it the intention that the new child maintenance system will be dependent on the same HMRC real-time information system? If so, is there any priority about which of these projects gets first dibs on the HMRC data, should it come under pressure?
If the Minister can answer only one question, I am really interested in the assurance question, so he will save me getting up again. Finally, if there is reporting under plan B, has he been able to get advice on what additional pressure that will put on the system? I am conscious that automated systems often put on much less pressure than processing individually and manually entered data, whether from businesses or elsewhere. Is that something that has been factored in?
Lord Freud
My Lords, before I respond to the amendment, I want to deal with the issues about what universal credit does and some of its impacts because the noble Lord, Lord Knight, implied that it has a perverse impact on poverty when exactly the opposite is the case. The IFS noted that it is progressive and pointed out that the bottom two quintiles gain £11 and £10 per week respectively and that 80 per cent of the gainers are from those bottom two quintiles. In fact, its estimate is that child poverty will reduce by rather more than our estimate. Our estimate is 350,000 when the system is in; its estimate was 450,000.
I do not want to go over the economic stuff, otherwise we will stay here all day. I want to deal with this issue. I can assure noble Lords that as part of the work to build the universal credit system we are undertaking a level of testing fully commensurate with a programme of this scale. Prior to the main go-live date in October 2013, there will be significant levels of testing specifically focused on ensuring that the various components work effectively together, including realistic business testing. For this project, we are adopting the Agile method of development, which creates and tests working IT components at an early stage. We are actually testing them now, and I shall show them to Members who can attend on 3 November. Instead of building very big sections of the IT system slowly, we are building small pieces more quickly. We are confident that this approach will provide a stable and fully proven system that will allow us to successfully deliver universal credit. I assure my noble friend Lord Boswell that the system will be sized to cater for the worst case volumes and will be robustly tested for performance at peak times. But I do not believe that it is necessary to introduce the additional step of a formal report, with the additional cost to the taxpayer and inherent time delays this would entail.
Baroness Sherlock
I thank the Minister for that. At the outset, obviously that kind of assurance will give confidence in the nature of the planning. Is he receiving independent assurance, as the programme goes on? The fact that he is, very unusually, a member of the programme board as a Minister, is certainly a sign of his own commitment to the project. It makes independent assurance even more important, because part of the point of independent assurance is to give an outside view in case those who are too close to the project may not see pitfalls as they develop.
Lord Freud
Yes, I am absolutely aware of that. The Major Projects Authority is looking at the process, and coming up in November or December is the next major independent look through the whole project. It is genuinely independent and quite a tough set of governance.
Lord Knight of Weymouth
I am grateful to the Minister. Can he tell us when those reviews will be published and whether they will continue to be published?
Lord Freud
The responsibility for those reviews is with the Cabinet Office. It is slightly hazy—I think that is the best word. They seem to get out, but I am not sure of the exact process. I take the point of that question and I will explore and report back to the Committee exactly how that information will be published. It may well be that we would look at extracts. Leave it with me. I take the point and will come back and say exactly how that information will be treated.
I want to clarify for the noble Lord, Lord Knight, his questions on costs because there are a lot of different figures flying around. One of the confusing things is that the figure of £2 billion has genuinely attached itself to two or three different parts of the project so it is easy to get confused. If you see £2 billion you think it is that £2 billion. The first £2 billion is all the costs associated with the implementation and operation of universal credit across the SR10 years, which is not just purely an IT investment. Some £1.5 billion of that is investment in systems, people, estates and other resources to allow the creation of the model. On top of that, there is another £0.5 billion for transitional and future running costs following the launch in October 2013. That £2 billion is a separate £2 billion to the net extra AME costs when it is all in operation compared with the current system. I apologise for the various £2 billions. There are some more running around but let us not get into those.
Baroness Sherlock
I am sorry, but I would like the Minister’s help in understanding which £2 billion the Public Accounts Committee was talking about in its report. It said,
“Approximately £628 million of the £2 billion set aside for Universal Credit is capital expenditure and a further £400 million is to cover the increased benefits … So less than half of the funds … will be available for staff costs”.
Is that the £2 billion that he was just talking about?
Lord Freud
Yes, that is the £2 billion of the implementation. The £628 million was within the £1.5 billion figure that I was talking about. I apologise for the confusion. There are a lot of figures. There are too many £2 billions. This is the oddest topic to joke about that I have ever come across, but there we are.
The noble Lord raised an issue about the complexity of universal credit in comparison with the ESA. This is a large project. There is no doubt about that. It breaks down to three different projects from the one that the noble Lord, Lord Knight, was talking about. The first is the universal credit administration platform. That is a DWP responsibility. That incorporates large elements that have already been developed, such as the payment accounting system. The next thing is the universal credit real-time earnings calculation and the payment and accounting system. That is basically the front end of the system and the rules engine behind it. Then there is the feed, which is the HMRC RTI system. You are looking almost at two components there: the supply of the information, which is being piloted—those pilots are getting going—and the data cleansing because, as the noble Lord rightly pointed out, getting the data through in a way that is readable and matchable is the key. Currently, the HMRC is working really hard on getting that right. It has got up to a data cleanse of 98.3 per cent and its aim is to push that higher and higher.
On data security, we will use our secure file transfer system, which is already in place between DWP and HMRC and is currently used for national insurance systems as well. We have recently had an independent assessment, which is an extra piece of independent scrutiny, undertaken by IBM on that technology plan. I should add on data sharing, as there was a question from my noble friend Lord German on data standards, that we are using the relevant information—the ISO standard. In fact, it is not a question of having it to be used for universal credit; we are already doing so and it is in place today.
We have a robust governance process with the Major Projects Authority. There is a commitment from me to keep noble Lords well informed on this matter, and I can make that commitment from a stronger position than most Lords Ministers because I am responsible for it. I make that commitment informally and I make it formally. The development can also be monitored by Select Committees in another place—the Work and Pensions Select Committee or the Public Accounts Committee—and they indeed look at it. All the structures are in place to ensure that the introduction of universal credit is properly scrutinised and on that basis I ask the noble Lord not to press this amendment.
Lord Knight of Weymouth
My Lords, in my view we have had a useful debate and I hope that others agree. Some helpful and important points were made. The noble Lord, Lord German, talked about the data daisy-chain. Clearly, I hope that he is one of those who will be able to attend at 11.30 am in Room 3A on 3 November to help us scrutinise this. The points that he made about bank accounts and financial inclusion are things that the Minister can take away and reflect on.
The point made by the noble Lord, Lord Boswell, about getting errors seen to quickly and easily—they will inevitably arise—is equally important. I was perhaps clumsily trying to make a point there in respect to the link with rising unemployment, although it is not perhaps directly relevant to universal credit beyond there being potentially more claimants and more volume. That may well not affect the systems but there may well be an increase in the individual cases of error that the system would have to deal with. The substantial worry in increased unemployment is of the capacity of the department itself to oversee the programme when it is distracted by having to deal with the recessionary impacts on it that I outlined. My noble friend Lady Sherlock's points about independent assurance went right to the heart of the issue.
I was reassured, as ever, by the Minister’s detail. The bit I am worried about is that that is what he is focusing on exclusively. I am trying to make the point that there are times when you need to rise above the detail and look at the overall environment in which this is being introduced, and to do your own health check on whether this is the right time—given the economic cycle—to introduce such an ambitious and important reform.
I am reassured by his informal and formal promises to keep this House up to date. In an ideal world, I would ask him, through a Written Ministerial Statement perhaps, to publish the major milestones of the project so that we could anticipate further Written Ministerial Statements in response to each of those milestones as they were reached so that we could have real transparency over the scrutiny. He said there is something hazy around the Major Projects Authority reviews being published and admitted that they tend to come out anyway, so when he looks at that, I hope he decides that, given that they are going to come out anyway, he might as well publish them, then he can take the credit for being an open and transparent Minister, rather than them having to dribble out. Finally, given the confusion around £2 billion and the succession of £2 billions, I would value a note from him to clarify how that works. My guess is that if he copied that to the Committee, it would be gratefully received. On that basis, I am happy to withdraw the amendment.
The Earl of Listowel
“(1A) The Secretary of State shall, when imposing work-related requirements with which claimants must comply, ensure that claimants have the necessary type and level of personalised support, and access to localised support, to enable them to obtain employment, or to undertake work or work related activity.”
The Earl of Listowel
The noble Lord, Lord McKenzie of Luton, and the noble Baroness, Lady Hayter of Kentish Town, have put their names to this amendment. I shall speak also to Amendment 71F. These amendments have similar ends. They ensure that hard-to-reach vulnerable claimants receive the support they need to find and maintain employment. Noble Lords will be aware of the currently very high rate of youth unemployment. The danger is that the hardest-to-reach young people will lose out the most in these difficult times. As vice-chair of the All-Party Parliamentary Group for Looked After Children and Care Leavers, I am particularly concerned for young people leaving care, but other young vulnerable groups are those with learning difficulties or drug or alcohol problems, black and minority ethnic groups, Travellers, those in the criminal justice system and others. Many of these vulnerable claimants may combine several of these tickets.
Good practice is out there. Action for Children’s Youthbuild programme assists such people into work in the construction industry. It provides one-to-one support and has a 70 per cent success rate in gaining employment for its young people. It costs £31,106 each year to keep a male in a young offender institution, so we are making an important difference in the cost to the taxpayer by finding these claimants work.
I shall give another example. Some noble Lords are already very familiar with the National Grid Transco young offender programme. I should declare an interest as a beneficiary of hospitality in the past from National Grid Transco. I was introduced to the programme about eight years ago, and I think it has been running for 10 years. It began at Reading young offender institution. In a nutshell, the programme carefully selects young people in young offender institutions and then provides them with training to NVQ level 3. Originally it offered forklift driving, but it moved on to pipe laying and so on and so forth. If the young person passes the NVQ, he is guaranteed a job in a company. National Grid Transco has been very effective in recruiting businesses such as Skandia, Anglian Water and other large companies to take on these young ex-offenders. Going to award ceremonies, I have seen young men with their partners, often with their young children, starting a life of work, earning money, providing for their family, being there for their young children and giving them an example of what it is to be a good father, and one can be fairly hopeful that their own children will follow that example. It makes a huge difference to reach out to these hard-to-reach claimants and get them into employment. Of course, National Grid Transco has reduced the reoffending rate in this group from well above 70 per cent to below 7 per cent.
However, the Commons Work and Pensions Select Committee’s recent report, entitled, Work Programme: Providers and Contracting Arrangements, highlighted the pitfalls in this area. It states:
“Previous contracted employment programmes have experienced ‘creaming and parking’, whereby providers focus their attention on the participants who are most likely to gain sustainable employment, at the expense of those who face greater challenges to finding work”.
We need to ensure that this Bill hits those groups. I hope that the Minister can accept these amendments or come forward with a similar change to the Bill. The Government’s reforms—I hope he agrees—will be disappointing if they do not reach these hardest-to-reach groups. I look forward to his reply.
The Deputy Chairman of Committees (Baroness Pitkeathley)
We have now had 14 minutes. The Committee should reconvene.
Lord McKenzie of Luton
My Lords, we have added our name to the noble Earl’s amendment and have Amendments 51CAC, 51CCA and 51EB in this group. These amendments relate to Clauses 13, 14 and 22, which refer to the introduction of the work-related requirements and the claimant commitment. The drivers of some of the work-related requirements or no-work-related requirements depend on whether the claimant has limited capability for work or work-related activities. These concepts are familiar to us from ESA deliberations and it is understood they are to be imported into the universal credit.
Lord McKenzie of Luton
My Lords, as I was saying, these amendments relate to Clauses 13, 14 and 22, the introduction of work-related requirements and the claimant commitment. The drivers of some of the work-related requirements, or indeed no work-related requirements, depend on whether the claimant has limited capability for work and/or work-related activities. These concepts are, of course, familiar to us from ESA deliberations, and are to be imported into universal credit under Clause 38. We will debate that in due course when we reach those clauses. The definitions are aligned to the provisions of Clause 12, and the additional amounts payable under that clause.
Amendment 51CAC seeks to ensure that the claimant commitment provided for by Clause 14 should be not only a record of a claimant’s responsibilities but a statement of the responsibilities of the Secretary of State with regard to the claimant. Amendment 51CCA is in similar vein and requires the claimant commitment to include a statement of the Secretary of State’s responsibilities and details of how the claimant can appeal the contents of the commitment. A similar proposition was advanced in the other place and received short shrift, but given the Minister’s clear commitment to transparency and to the universal credit actually changing attitudes, we are interested directly on these issues.
We had understood that there was a consensus around the proposition that welfare benefits systems should involve both rights and responsibilities for claimants. Those responsibilities clearly encompass compliance with work and work-related activity requirements and the rights obviously include, but are surely not limited to, receipt of relevant benefits. Much of the support for claimants will come via the work programme in which the Government are investing heavily and seem committed to providing personalised support to individuals. A black-box approach gives a framework for that flexibility, but not of itself individualised assurance to claimants. What contractual obligations will providers have to spell out for individual programmes and communicate this to the claimants? Although we accept that the incentivised payments structure will provide encouragement not to abandon the hardest to help—a point that the noble Earl, Lord Listowel, focused on—the obligation to be clear on what support would be provided should surely reinforce this. Of course, not all claimants will enter the work programme, or at least for a while, so there should be an obligation on Jobcentre Plus staff to particularise their side of the bargain.
It is fine having general customer charters, but they are no substitute for setting out what the Secretary of State will commit to in respect of individual claimants. Incidentally, could the Minister take this opportunity to take us briefly through the claimant journey, as it is now envisaged—those who will or will not enter the work programme and the related timescales for the claimant commitment? It is understood that the intent is that the claimant commitment would result from dialogue, although that does not necessarily mean total agreement in every case.
Amendment 51CCA would also have the claimant commitment set out information on how to challenge the contents of that commitment. The Minister in the other place indicated that appeals could arise only following sanctions for failure to comply and we will obviously be discussing those in due course. In respect of work search and availability requirements, the briefing note provided by the department indicated a right to object to what is proposed and an ability to have the position reviewed by another employment officer. However, that is stated not to apply to other requirements recorded in the claimant commitment. Why not?
The amendments yet to be spoken to by the noble Lord, Lord Skelmersdale, and the noble Baroness, Lady Meacher, are concerned in an important way with those involved in drawing up the claimant commitment to make sure that they are appropriately trained. That must involve access to specialists to cover the multiplicity of situations that will be encountered, such as dealing with those with mental health conditions, fluctuating conditions and hidden disabilities, to name just some. Will the Minister remind us what information from the WCA or indeed the work-focused health-related assessment—he might update us on that because it was suspended for a while—will be before those who have responsibility for inputting into the claimant commitment? So far as the work programme is concerned, what contractual commitments do providers have in respect of training and how is that to be monitored?
These issues of claimant commitment are very important, but in the words of the noble Baroness, Lady Campbell, who is not with us today, we believe that co-production is an important issue. If there is to be real commitment for individuals, it should not be something that is imposed: the Secretary of State should have some ownership of it. I beg to move.
Baroness Meacher
I rise to speak to Amendments 51CB, 51CC, 71C and 71D on behalf of the noble Lord, Lord Skelmersdale, who sends his apologies to the Committee because he cannot be in his place today. It is a little unusual for me to speak to amendments on behalf of a Conservative Peer, but it is a pleasure to do so.
Before I refer to the comments of the noble Lord on these amendments, I would like to support the comments of the noble Lord, Lord McKenzie, in relation to the claimant commitment and the importance of that containing the responsibilities of the Secretary of State as well as the responsibilities of the claimants themselves, and the importance of specialist Jobcentre Plus staff. I will also speak about those two points in the next group. The groups were together but now they are apart.
The noble Lord, Lord Skelmersdale, has given me his notes on these amendments, which I will try to reflect in my remarks. He says that we heard a lot on the Health and Social Care Bill about the myth that the Secretary of State for Health is in total control of the National Health Service. The situation is not very different in the DWP, is it, he asks. I emphasise the fact that the noble Lord said that because it is more interesting that he makes these comments than if I were to make them. We all know that, although technically it is the Secretary of State who is occasionally involved in tribunal and court cases, it is really one of his officers who does the work and occasionally is found to be at fault—or, says the noble Lord, in the case of the employment and support allowance, not so occasionally.
The noble Lord was alarmed to discover that for ESA alone, there have been around 518,000 fit-for-work decisions between October 2008, when it started, and November 2010. The rate of appeal was around 40 per cent and, in that percentage, 40 per cent were successful in their appeals. The reason for all those successful appeals is not solely the Atos computer; the desk officers and DWP staff generally share the blame, although perhaps not to the same extent. The noble Lord has, with difficulty, discovered the success rate of appeals against decisions relating to other benefits from April to August this year. They are 15 per cent for JSA and 27 per cent for income support. Those are probably the nearest thing we have to the universal credit arrangements in the Bill and they give us a guide to what we might expect, not least because the fault, if fault there is, will be with DWP staff rather than computers. This all brings us to the noble Lord’s amendments: it must be vitally important that staff are not only trained, which to some extent they are, but monitored as well. The 24th report of the Merits Committee also raises these issues.
I share those concerns of the noble Lord, Lord Skelmersdale, but perhaps I might add a few remarks of my own. I am aware that the Minister has been determined to reduce the appeals success rate and that he has in fact had some considerable success. If I understand it correctly, this has been in part as a result of introducing a review process, prior to appeal hearings, which has enabled errors to be picked up earlier. Perhaps the Minister can explain the average length of time between the initial decision and the review decision following an appeal, and how that average time gap compares with that between a benefit entitlement decision and an appeal hearing, as we had them before the reviews came into play—we still have them, of course. In other words, has the introduction of the review process significantly improved the position for claimants by providing a significantly earlier opportunity to have wrong decisions righted or overturned? Also, does the Minister know what proportion of successful appeals, whether at review or ultimate appeal hearing, apply to claimants with mental health problems?
Lord Freud
My Lords, the form and content of the claimant commitment is of the utmost importance and we are working hard to get it right. I hope that the illustrative claimant commitments provided to noble Lords have proved helpful in this regard. We are introducing the claimant commitment to improve compliance, bringing together in one place a clear statement of the requirements a claimant is expected to meet. What we need to bear in mind is that the claimant commitment is for every recipient of universal credit, many of whom will not be subject to work-related requirements. For these individuals the contents of the claimant commitment will be minimal, including the duty only to report relevant change of circumstances. In this case, the amendments we are discussing would not be relevant.
Even for claimants who have work-related requirements placed on them, certain requirements are simply not open to negotiation. A claimant in the “all work-related requirements” group must look and be available for work. A claimant in the “work-focused interviews only” group must attend work-focused interviews. These very basic requirements are not open to negotiation. When establishing the detail of requirements, for example, and the type of work that someone has to look for, I agree completely that there should be dialogue and consultation between the adviser and the claimant. This is not to say that we will not be tough on some jobseekers but, for the majority, we expect this to be done in co-operation. If a claimant is unhappy with specific requirements, they will be able to ask for another adviser to review them. This happens now under jobseeker’s allowance; there will be an appropriate review procedure under universal credit as well.
The basic work requirements, which are not negotiable—such as that the jobseeker must look for work—clearly would not and could not be the subject of such a review requested by a claimant. Similarly, in terms of the support we provide, we envisage there being a wide range of support available to help claimants prepare for and move into work. It is intended to meet the needs of individuals and target the right support at the right time. The issue raised by both the noble Earl, Lord Listowel, and the noble Lord, Lord McKenzie, of what we are doing for the hardest to help and on creaming and parking is one that we have endeavoured to answer in the structure of the work programme, where we are trying to deal with it by price differentiation.
We have minimum standards for prime providers. If they breach those it is treated as a breach of contract, so we do have some powerful tools. At the same time, we have much more active management provider performance than ever before, and to the extent that providers are under-performing, we will shift market share by claimant group to the best performing providers in each area. This means that claimants will be moved to where they are most likely to get the best support to help them deal with their particular barriers to work. These are systems that we have created within an overall black-box approach, which would clearly break down entirely if we then imported a series of regulations and requirements such as were implied by the noble Lord, Lord McKenzie.
Lord Boswell of Aynho
I am grateful to the noble Lord for the explanation he is giving. But in that context, while these decisions remain within the black box, can he give the Committee some assurance as to the extent to which they are inhibited by the law of contract, in respect of shifting the workload between different providers? If an issue develops about the level of remuneration—or level of difficulty against the remuneration—how much can he vire that within the contract? It is obviously desirable that he should be able to do these things, but equally providers need, I presume, some measure of stability and understanding.
Lord Freud
Yes. There are two or three issues wrapped up in that seemingly simple question around whether we got the differential pricing right when we set the contract terms up. The answer is that we do not know and we will not know. I doubt if they are completely perfect—that would be very surprising. But as we learn and get information, we will be able to adjust them. In practice, looking at the timescales of this, with the next set of contracts, which will be out in about five to seven years, you effectively have to start negotiating in four years’ time. By the time we have all the information on this, I suspect the reality is that it will not really be a question of changing existing contracts; it will go into the design of the next round. That is how it will happen in practice.
Let me now explain how much differentiation there really is, when you are looking at a regime for everyone. When you look at those who come off the system as jobseekers, half leave the benefit system within three months, and three-quarters within six months—the majority, to put it bluntly, with very little help from the state. So it would not be appropriate to offer support to all claimants early in their claim and, clearly, it would clearly be much too costly to do so. I am very comfortable in believing that those who have sat in my chair before me will be very aware of the dead weight issues of running that kind of system.
Baroness Hollis of Heigham
Does that mean that with the sharing of this insight, the Minister will therefore look more favourably at amendments trying to protect those who are temporarily caught in the housing benefit underoccupancy trap by virtue of suddenly losing a job?
Lord Freud
My Lords, I very much remember the debates we had last week. I am thinking very deeply about some of the observations made by noble Lords in this Committee, and I think that is probably as far as I should go today.
We operate in a world of finite resources, and we need to target them appropriately. Clearly, at the moment, we do not refer all claimants to the work programme until 12 months into their claim. We pull some further forward. So we need to ensure we continue to have flexibility to allocate resources in the most effective way.
The noble Lord, Lord McKenzie, asked what is happening to work-focused health-related assessments—WFHRAs. The suspension of the WFHRA allows us time to re-evaluate the assessment, particularly in the light of the new work programme, and to consider whether its operation can be improved better to support claimants or whether this support should continue to be provided in other ways. I do not propose to second-guess the outcome of that review or to place constraints on our ability to take the best course of action on that.
On training, we already have a system in place for the professional development and upskilling of advisers. This includes access to a learning framework endorsed by Edexcel, the UK’s largest qualification-awarding body, which will be updated to reflect changes in policy ahead of universal credit. We strongly believe that our advisers are up to the task of personalising requirements and support. We have some very experienced professionals in Jobcentre Plus and their decisions are supported by relevant training, tools and guidance. In a Jobcentre Plus customer survey carried out this year, 88 per cent of claimants reported that they were satisfied or very satisfied with their experience of Jobcentre Plus. The changes we are making in Jobcentre Plus are precisely intended to allow district managers and their advisory teams more freedom and autonomy rather than having to follow a tick-box, process-driven approach. It is critical that we maintain flexibility in legislation to tailor training and tools according to business need and developing strategy. For all the reasons outlined here, I urge the noble Earl to withdraw the amendment.
Lord McKenzie of Luton
I thank the Minister for his reply. I shall follow up on one or two points. I asked him if he would take us through the claimant journey at the moment, and he did that partially by saying that it is 12 months before claimants get into the work programme, although I am not sure whether that is right for everyone.
Lord Freud
I am sorry. I realise I did not answer that question fully. It is quite complicated, and it is probably easier to see on a graphic, which we have. I commit to making it available afterwards. I also realise that I failed to answer the series of questions asked by the noble Baroness, Lady Meacher, about the timing of the review process after the adjustments. It is pretty early days for those adjustments but, rather than detailing them again, I shall add them to the same letter and make that available.
Lord McKenzie of Luton
I thank the Minister for that. I revert to issues around the black box or the equivalent period before people are in the work programme. I was not arguing for lots of conditions other than, I guess, robust contractual conditions imposed upon providers, but providers within the flexibility that the black box gives them should be particularising in individual cases how they are going to support individuals. It is that that ought to be spelled out in some way.
Lord Freud
There is a genuine difference of approach with the work programme. I know that we agree that what we have done with it is evolutionary, and in some ways it is very evolutionary. We have learnt a lot from what has happened in the past decade. In particular, one of the things the work programme builds on is the employment zones, which were by far the best performing welfare-to-work programme in the past decade. That is the experience. The issue is that if you have a payment-by-results system, I strongly believe that it forces providers to provide an individualised service. What matters is that you get that one person in. I can say exactly what drove this insight for me, and it might have been someone from the Shaw Trust. They said to me, “If somebody needs these eight steps to get back into work, it is no good if you have a top-down system that says ‘these are the six things you have to do for everyone’. You can do those six things but that person who needed eight things will still not get into work”. That insight drove me towards payment by results as the model. If you want to get that person into work, you will need a particularised, individualised process to do that. You cannot legislate for that at the centre. It cannot be laid down. We must not put too many central requirements because it changes all the time. That is a difference of philosophy and the one that lies behind this issue.
Lord McKenzie of Luton
I do not think that we are apart on that issue. I am not arguing for six constraints to be placed on every provider which must be carried out in every case. The point is that if the black box enables eight steps to be provided in a particular case to get someone into work, that is fine, but why could not the provider simply ensure that those are set out for the claimant? What is so difficult in doing that so that the claimant has the reassurance of the journey that they will go through to get into work? There could be flexibility over that. It does not need to stay at those eight steps for ever. But if that is what the provider has concluded is needed to get someone into work, why should they not give an undertaking or commitment to the claims?
Lord Freud
My Lords, there is a simple answer to that. You start off on a journey thinking that there are eight steps, which you might write down. If it is a formalised process and you decide after three weeks that, “Actually, I do not need to do these two steps or I need to add another two”, you might change it. You might change it weekly, as people change. If we have an overformalised process, we just make that in management terms impossible and very expensive. I would resist it on those principles.
Lord McKenzie of Luton
I do not think that we are going to agree on this issue. But one is not arguing for rigidity: one is simply arguing for the fact that claimants ought to understand the process that they are being asked to go through. If some steps can be missed out or other steps added, that would be fine. No one is saying that that should not happen. Put simply, there should be some obligation as regards the claimants, who should know what is going on and what the provider is seeking to help and to support them with. Perhaps this is an issue on which we will not settle today and to which we will have to come back.
Part of the debate from the noble Baroness, Lady Meacher, who read the script of the noble Lord, Lord Skelmersdale, was about ESA. In a sense, it is a forerunner to the determinations that we are talking about because the categories that people find themselves in are a consequence of that WCA process. The claimant programme moves on from that, which I hope we will discuss in more depth later in our deliberations on Clause 38. On behalf of the noble Lord, the noble Baroness, Lady Meacher, made the point that Jobcentre Plus staff are well trained and highly qualified, which I accept entirely. We hope that providers would have robust training programmes. But what information from the WCA will they have before them when they are seeking to devise the individual programmes?
Lord Freud
The medical information in the WCA is sensitive and personal, which is gathered at an assessment. It informs benefit entitlement and does not provide comprehensive information about readiness or not. In practice, it is likely to be of limited use to advisers and, for that reason, is not shared.
Lord McKenzie of Luton
I understand and I thank the Minister for that. You will see the point that I am trying to understand. There was that initial assessment, through the work capability assessment, which determines what category people end up in. There has been much challenge and discussion about whether that process is an appropriate one, whether Atos is fit for purpose, and so on, and that debate will continue. Once that has happened and people are categorised, then support has to be given to those individuals by the claimant commitment, written down or not, by the providers and/or by Jobcentre Plus. When one is looking at the expertise that is available from those providers or Jobcentre Plus, do they have to go through the process again to understand people who have fluctuating conditions, for example, which is one of the recurring issues of the categorisation in the first place? Do they have to relearn what Atos may have devised, I hope, correctly in that original designation? If not, how will they best serve those claimants, particularly those who are most challenged as regards the labour market?
Baroness Meacher
I very strongly support the comments of the noble Lord, Lord McKenzie, because it seems to me that we are talking about oiling the wheels and enabling the system to work. It seems to me that part of that is transparency to the claimant, which is the noble Lord's previous point, but also transparency for the provider. If I understood this right, the assessment and the clinical report on the claimants will not be provided to the provider, who then has to prepare all this activity to enable the person to return to work. If that is really so, I appeal to the Minister to take that back and think about it because I cannot see the system working.
Lord Freud
Let me clarify what information goes over. The former WCA is confidential and does not go over. How does the adviser build the revised requirements with the claimant? The evidence that he uses includes the claimant’s fit note, advice from Atos—not the former WCA, but some advice can go over—and other medical evidence. Those things come together to form the basis on which agreement is reached.
Lord McKenzie of Luton
My Lords, we have probably taken this as far as we can this afternoon. I would certainly like to read the record and reflect on it. We ended on a high note. The Minister made reference to a fit note, which is most welcome. There is a conundrum here which I do not think that we have bottomed out this afternoon. We propose to take it away and I imagine that we will wish to return to it on Report.
Lord Freud
There are quite a few moving parts to this. I have talked about the WFHRAs reviewing that and there is also a review coming out on the sickness absence regime in the not too distant future. There are areas that need to be brought together, which impact on this reasonably specifically.
The Earl of Listowel
I thank the noble Lord, Lord McKenzie of Luton, for his support and the Minister for his helpful reply. Clearly, he has a great depth of knowledge of this area and I am grateful to learn from him this afternoon. I have a couple of brief points to raise. I also have an aside which is that his black-box approach sounds very familiar, in terms of the young offender programme for National Grid and Transco, to which I referred. It was developed for National Grid and Transco by Dr Mary Harris, who is an astrophysicist by background. Her approach was very much testing and incrementally trying things out until she got a method that seemed to work very well for young people. Maybe there is some read-across there to what is being discussed this afternoon.
The Select Committee for the Department for Work and Pensions looked at the work programme, and although it welcomed it, it had this to say:
“However, there is a risk that creaming and parking may still take place under this model”—
the work programme model—
“since it remains open to providers to continue to focus on the easier to help participants within each customer group”.
Perhaps the Minister could write to me, or say now to the Committee, whether he is aware of that particular problem and what needs to be done within each of the tranches.
The second issue that I would like to raise with the Minister—and I would like to think more about this—is where he talks about attending being a fundamental requirement. One just has to attend if one is going to get anywhere through this process. I can imagine for some young people that even attending would be a big step to take. I do not want to push it too far, but if you have someone coming out of the criminal justice system who is very oppositional and who has complete distrust for authority of any kind, you might need to woo them a little bit before you can even get them in a meeting—but it would be well worth while wooing them in terms of the outcomes at the end. That is the first point; I will go back and think about the second.
Lord Freud
To save the department writing a letter, I actually think that “creaming and parking” is not desperately helpful, although I know that it is a very popular phrase. I shall explain exactly why. Within a black-box approach, if you are a provider you are clearly trying to spend your money on an outcome that will be successful. Our job is to ensure that we put the amounts of money into the right level. There will be people who are ready and worth while investing in and people for whom it is not the right time—you need to wait. There is quite a sophisticated judgment there, and you can get those judgments too crudely wrapped up with what are basically terms of abuse in “creaming and parking”. That is how I would respond to that, and I hope that that has saved us a letter.
The Earl of Listowel
I thank the Minister and beg leave to withdraw the amendment.
Baroness Hollins
“(d) if the claimant has a long term health condition or impairment, the claimant commitment must specifically address any reasonable adjustments which need to be made.”
Baroness Hollins
What I am going to talk about is very relevant to the discussion that has just taken place. I shall speak about Amendment 51CD first, whose purpose is to require Jobcentre Plus staff who are drawing up an individual claimant commitment to specifically address whether the claimant has a long-term health condition or impairment. There is growing evidence that the current system often fails to take adequate account of specific health needs of some individual claimants. This is relevant when considering compliance with the conditions that the claimant has agreed to as part of the assessment in the claimant commitment. It is a concern both when looking at a person’s performance during the work capability assessment and with respect to their ability to attend and fully explain their condition at the assessment.
The policy intention is for staff to make reasonable and appropriate adjustments as required by the Disability Discrimination Act. I was going to give noble Lords a different example, but last night I had a phone call from an acquaintance who is autistic—a middle-aged woman, who rang up to ask my advice about something. She does this quite regularly on a Sunday evening. I thought last night, “I really don’t want to have this conversation”—but in fact it was very useful, because halfway through the conversation she said, “I’ve just had this work capability assessment, and they have said that I have to join the work-related activity group”. She does not know what I do, apart from being a psychiatrist. So I said, “That’s really interesting. What conditions have been suggested and what is happening? Did they ask your doctor for advice?”. She is autistic, she has epilepsy and at the moment she has a neurological condition which is leading her to be quite unable to move very far or fast. She does not have very much insight and she has a recurrent depression, which is really not good at the moment. I find it quite difficult to imagine what conditions one would be able to put in place. I would love to see her back in work but, knowing her as I have done for 20 years, I really wonder. She said that as far as she knew, her doctor and her psychiatrist had not been asked for their opinion, so I thought, “I need to tell the Committee about her”.
The claimant commitment really should include specific reference to a health problem and to the agreed adjustments which should be made to enable a person to meet the conditions which are set. Another example was given: if somebody had agoraphobia and was perhaps unable to travel by bus or outside their own familiar neighbourhood, that would restrict where they could reasonably be expected to seek work. Yet there is some evidence that many quite ill people are being sanctioned because they have not been able to comply with conditionality, when such needs have not been taken into account.
Understanding that particular candidates have particular needs is the first step to ensuring that the claimant commitment is workable, which is of course what we are looking for. That awareness could be built on through training Jobcentre Plus staff. Good training is clearly vital but it is not enough to rely on, so that is the reason for this amendment. Many of these people will be covered by the Disability Discrimination Act and there is a requirement for the DWP to make reasonable adjustments, but I want to make sure that the question is specifically addressed in the claimant commitment so that it cannot be overlooked. I hope that the Minister will agree that staff training is not enough but that through this amendment, the requirement to make reasonable adjustments as part of the claimant commitment would make it more likely that appropriate action would be taken locally. I suggest that addressing the responsibility to make reasonable adjustments would in fact result in improvements in treatment for a lot of claimants and should be put into law.
The purpose of Amendment 51CE is to ensure that the work-focused health-related assessment process takes into account:
“Evidence from the claimant's own”,
doctors, who will of course have much fuller knowledge than the independent assessor. The purpose of these assessments is to highlight what they can do and what useful steps they can take to get back to work. It is important that they give as accurate a picture as possible of the impact of the claimant's condition on their daily life but the assessments carried out by an independent assessor, without access to the person's medical history, often fail to pick up vital information. If the healthcare professionals do not know somebody, a 40-minute assessment really is not long enough to fully appreciate the nature of a claimant's condition, particularly if it is complex. I propose that medical evidence from the claimant’s own doctors should become a key part of any work-focused health-related assessment.
Mind has written about a client who attended a work-capability assessment and failed to score any points, but what was not taken into consideration was that the client had a serious mental health problem and had been in hospital under Section 3 for six months prior to the assessment. She knew very little about her own condition and had a long history of hospitalisation.
Baroness Hollins
Yes—she did not score any points. I would like to mention a small, recent study done by Citizens Advice and presented to the Select Committee looking into the personal independence payment proposals last week. It reviewed 37 reports. The claimants went through the report with the CAB adviser, looking mainly at the section where the healthcare professional is meant to record the claimant’s account of the impact of their impairment or health condition on their life. Sixteen of the 37 were reported to have a very substantial level of inaccuracy. The suggestion is that if information from the claimant's own healthcare professionals had been involved, the accuracy of those assessment reports would surely have been better. In another recent report commissioned by DWP, healthcare professionals working for Atos were interviewed and agreed that the provision of medical information from a claimant's own doctor is rather helpful in completing their own assessment.
Baroness Meacher
My Lords, I rise to speak briefly in support of Amendments 51CD, 51CE and 51FA and the related amendments concerning Clauses 44, 46, 49 and 56, which were all tabled by my noble friend Lady Hollins. As she said, they concern claimant commitment and sanctions. The objective of these amendments, as I understand them, is to ensure that claimants’ long-term conditions or impairments are understood by Jobcentre Plus. The claimant commitment ensures that the claimant’s problems are recognised and that the necessary adjustments are made and that when sanctions are being considered the likely impact of the health condition or impairment on the claimant’s failure to comply with some condition is fully taken into account.
I shall take these three points in turn. The first is the need for Jobcentre Plus to understand the long-term conditions and impairments of claimants. Here the training of staff is paramount. In view of the incredible range of disabilities to be dealt with and the precision of the assessments required, can the Minister confirm that people with mental health or learning difficulties will be dealt with by specialist Jobcentre Plus staff in those particular fields?
That has not been the case in the past, and the consequences have been absolutely appalling, yet the need for specialist knowledge will be even greater when this Bill comes into effect. I have referred in previous discussions around these issues to a conversation that I had with a Jobcentre Plus manager about people’s mental health problems. When I asked that manager what happened to those people, he said, “Oh, my staff don’t understand mental health problems”. I said, “Well, so what happens when someone with a mental health problem comes in seeking help?”. He said, “We can’t really help them, so what happens is that they become homeless and then they go back into hospital, and so then they get some help, and the process starts again”. That is such a statement about the failures of the past, and the reasons why I fear that with all this precision about what everybody has to do things will be very much worse for this group in future. We know that an awful lot of these people will fall into jobseeker’s allowance—and we know what happens then.
Many case histories have been sent to me, and no doubt to many other noble Lords, which illustrate the impossibility of the task and the consequences of mistakes being made. I want to quote one case to illustrate the point. Just as my noble friend referred to a case where a person had been given nul points—no points—I am also aware of somebody with a mental health condition assessed with no points a year ago. This person was placed on JSA and failed to cope with the conditions; her health deteriorated and she was reassessed and given 33 points. There is something terribly wrong about that. This lady, who was solely concerned to get back into work, complained that she had lost a year of her life. When she could have been getting the support that she needed and getting back into work, she has been sitting there deteriorating. This error, as I see it anyway, probably cost the taxpayer a year of benefits. That is one of my concerns. I have absolute respect for the intentions, and certainly the intentions of the Minister, but the fine-tuning on all these things will not work. I cannot see it working.
In that context, I support the comment of my noble friend Lady Hollins in asking for a medical opinion in relation to these complex cases. We are all aware that psychiatrists and their teams spend weeks and weeks assessing a person and their needs and what the problems really are—and even then they get it wrong sometimes. So how somebody in a single interview who does not have the experience or skill can do that job is really pushing it, I would suggest. That is not quite the language for this House, but I could say much more on that issue—and no doubt we will come back to it on Report.
I move on to the importance of the claimant commitment and recognising the claimant’s problems. The first step is for the Jobcentre Plus to understand—we have dealt with that. The next step is for something to be done about those problems. Here it seems to me that for claimants with mental health problems who are not under a secondary mental health trust—they are a different group altogether and I shall not talk about them here—but the million or so who are under a GP or not receiving any help at all, who are assessed as appropriate for RAG due to a mental health disorder, usually caused by anxiety or depression, it is surely vital that the claimant commitment includes very clearly the requirement that the person should be referred to a professional therapy or health service. IAPT is an obvious choice for many of these people, but not all of them. But my point is that it should be very clear in the claimant commitment—and this takes us back to the responsibility of the Secretary of State—that there is that responsibility there for the referral to be made. My concern is that this very substantial group will finish up with these providers, who probably will not have any real understanding of these kinds of issues.
They will quite likely refer these people to a rather cheap option. I know that they will have £14,000, which is wonderful, but you wonder what they might want to spend that money on. If these people are referred to a cheap or inappropriate option, they will not get back into work. Something relatively simple like a requirement that a therapy or health service that a person requires should be specified in the claimant commitment could transform a system from an incredibly ineffective one to one that would effectively get people back into work.
I know that the Minister has high hopes for Professor Harrington's work, and I share his optimism to some extent, having played a very peripheral role in that work. However, I do not believe that Professor Harrington's work will address the issue that I am raising here. His work should improve the quality of the assessments, particularly of mentally ill people and those with fluctuating disorders, but as I understand it, it will not at all ensure that the right help is available to this very large group of claimants. The whole edifice will fail if this crucial link is missing.
Another issue that I want to touch on is the need to take full account of the claimant's condition in considering sanctions following a failure to fulfil one of the benefit conditions, such as a failure to attend an interview, work-related activity and so forth. I was going to mention the agoraphobic claimant to whom my noble friend Lady Hollins referred. The crucial point is something that the Minister said a little earlier: everybody must attend interviews. They must do this and must do that. In my view, an agoraphobic claimant could not do anything realistically except, with help, get along to get their treatment—professional treatment, not a cheap option. If that happened, and their symptoms were brought under control, you could then start talking about other things that that person should do.
I understand the Minister's point about needing eight processes or whatever, but for some claimants it is vital to stick with the first one until that is done. Otherwise, sanctions will be applied completely inappropriately and destructively. It will not help. In fact, it would make things a lot worse. The extent of errors is well illustrated by the fact that 29 per cent of those in the work-related activity group are placed there only after reconsideration on appeal having originally been found fit for work. For 29 per cent of people, they get it wrong in the first place. The suffering those people go through is appalling.
I was struck by the level of fear in the voice of the carer who is herself a service user at a recent meeting of our service users and carers in east London. She had just attended a reassessment and said that it was terrifying. She said, “He had no idea about my disability”, and had no idea about her responsibilities to her mentally ill son. Under the new system, a claimant can obtain a report from a healthcare professional of their choice. That is great progress. However, there are major concerns, and I look forward to the Minister’s response.
Lord Wigley
My Lords, I intervene very briefly in support of the amendments spoken to by the noble Baroness, Lady Hollins, and to note the very eloquent way in which she presented them. The experience that she brings to this Committee is something phenomenal. There can be no doubt whatever that the Minister would not want to be in breach of discrimination law. However it is one thing to say that and another to provide the systems to ensure that does not happen. The point of these amendments is to ensure that there is a systematic approach and that the health dimension—the professional dimension—is brought on board to ensure that reasonable adjustments are undertaken where they can be. It is not enough for us just to hope that that happens. It needs to be built into the system.
In response to this group of amendments, I hope the Minister will be in a position to tell us how the Government intend to ensure that there is a systematic approach to this, that it is not left to luck and that people who need their situations to be explained and put over professionally get that opportunity. It is clearly going to be very difficult indeed for the system by itself to have the expertise that professionals would have at hand, and we need to make sure that all the information is fed in so that everyone has a fair crack of the whip.
Lord Boswell of Aynho
My Lords, it is very difficult to add anything to the most eloquent remarks of the noble Baroness, Lady Hollins, and I do not intend to do so. As I have already mentioned to the Committee, I have some experience of the Conservative Disability Group, but the remarks of the noble Lord, Lord Wigley, prompt me to add two more thoughts to the pot. I should declare that I am not a professional in this area. I am fairly familiar with disability law, and of course the Minister is absolutely right that reasonable adjustments are an obligation and, indeed, an equality duty within the Equality Act for the public sector.
There are two other considerations the Minister needs to remind his officials to make sure are properly considered. One is the need at all times for public officials to act reasonably in administrative law and the second is for people, who are in a sense, when they go into an assessment, undergoing some kind of trial process, to be treated according to the laws of natural justice. The Minister has to take this trio and convince the Committee not only of his sincerity, but of his ability to effect the means by which they are delivered.
Baroness Thomas of Winchester
My Lords, the noble Baronesses, Lady Hollins and Lady Meacher, spoke most movingly about people with mental health problems and fluctuating conditions. What they said was extremely important. I want to add that people in manual wheelchairs are no longer automatically going to be on ESA after their work capability assessment. They may be on jobseeker’s allowance. That concerns me because we all want people in manual wheelchairs looking for a job and if they are otherwise healthy, of course they want to get a job. They may not be impaired in any other way, but they just cannot walk. However, if ever there was a group of people who needed reasonable adjustments made, this is it because around the country a lot of jobs will not be physically accessible for people in manual wheelchairs. With the Disability Discrimination Act, Jobcentre Plus officials will have to take that into account. However, if it were reinforced by the words “reasonable adjustments” in the claimant commitment, that would remind officials that it is an important thing that they have to have regard to because there must be an awful lot of jobs that are not open to people in manual wheelchairs, simply because of the difficulty of getting into a place of work. This amendment is an extremely good one for that reason, so there is another group of people who might need this reinforcement in Amendment 51CD.
The Earl of Listowel
My Lords, I am prompted to ask the Minister a couple of questions as a result of what has been said. Are the needs of care leavers being particularly taken into account? The Office for National Statistics reviewed the mental disorders and level of mental health of young people in care in 2004. The results were really shocking. It found that, on average, 40 per cent had mental disorders. The most vulnerable group, the 10 per cent in children’s homes, had 68-plus per cent levels of mental disorder. This is not surprising given the histories of these young people but when they leave care, and one hopes that some of those issues have been addressed while they have been in care, I am concerned that they might have difficulties with these meetings. I wonder whether some of them might even have difficulty turning up to a meeting and whether there needs to be somebody going out to them and making a relationship or whether they need to be worked with through some organisation, such as Action for Children, which knows them well and has built a relationship of trust with them.
Baroness Grey-Thompson
My Lords, I have a few words to add to those of the noble Baroness, Lady Thomas, about people in manual wheelchairs. I have been contacted by a number of disabled people recently who are very keen to get into work, but they have told me some heartbreaking stories of the hidden discrimination that they have faced. One young lady had very good skills and qualifications and she applied for more than 40 jobs but was turned away from each of them for some quite interesting reasons. It all boiled down to the fact that it would be too difficult to employ her. I think it was a case of providing a little extra support. We want to get that group of people into work and they want to be in work. It is important for them to be in work so that the rest of society can see their range of impairments and disabilities. That will encourage people to be much more open-minded. I am really concerned that we are not doing everything we can to ensure that that group of people get a fair crack of the whip.
Baroness Hayter of Kentish Town
My Lords, we support this group of amendments, which seeks to ensure that a person’s long-term health condition or impairment is taken into account, both when drawing up a claimant commitment and when considering compliance and, therefore, possible sanctions. Amendment 51CE requires that evidence from a claimant's own health professionals is part of any health assessment required in drawing up the work preparation requirements, along the lines set out by the noble Baroness, Lady Hollins, and emphasised by the noble Baroness, Lady Meacher.
The amendments affect both those claiming ESA and those who fail the assessment process and are asked to claim JSA instead. They apply to people with long-term physical or mental health conditions and impairments. I particularly bring to the attention of the Committee the fact that many of these long-term conditions also fluctuate, as has been mentioned, particularly things like multiple sclerosis. As the Committee will know, MS is twice as prevalent in women as it is in men, so it will excuse us taking a moment on it. Some long-term conditions, such as relapse-remitting MS, also happen to have what can appear to be very non-specific symptoms, such as fatigue, generalised pain and cognitive difficulties. It is vital that the assessors understand those, along the lines mentioned by the noble Baroness, Lady Meacher, and that the advisers take full account of the claimant’s own physician.
The DWP note states:
“Claimants with a health condition, or who are undergoing regular treatment to manage their health condition (but do not have limited capability for work) will be required to provide evidence of any limitations on what work (hours, nature of work, and location) they are capable of doing. This will be taken into account when setting … requirements”.
However, as has already been touched on, if a claimant raises reasonable objections to their work availability and work-search requirements, although those will be considered by the adviser, where there is no agreement, the claimant can only get them reviewed by another officer. That was mentioned earlier by my noble friend Lord McKenzie. That falls short of a proper right of appeal.
As we know, the process for assessing whether someone has limited capability for work is not perfect. It is not easy. Will the Minister update us on the implementation of the year 2 recommendations from the Harrington review following last month’s closing date for evidence? This continued process and the very real concerns that it is causing disabled people mean that it is important that long-term health conditions are considered when the claimant is asked to sign up to that claimant commitment or when good cause is being considered as to whether a sanction should be imposed for failure to comply.
Even if the review process is perfect, there will still be some people with long-term health conditions who are able to undertake work search but who need their conditions to be taken into account. They may, for example, be able to work very competently and fully but for only part of the day or a few days a week from time to time. In other words, they can work well but not necessarily on a sustainable basis. The resulting absences or the requirement for additional time to travel to work or extra support at work need to be taken fully into account when assessing both their search for jobs or subsequent work record. The descriptors relating to fluctuating conditions will be crucial in assisting the assessors.
Because the claimant commitment is new, we do not know the extent to which DWP advisers will take long-term or fluctuating conditions into account. There is a precedent for health conditions to be taken into account when good cause for turning down a job is considered. Those are already set out and include,
“any condition … that suggests that a particular job or carrying out a jobseeker’s direction, would be likely to cause you excessive physical or mental stress or significant harm to your health”.
The draft regulations do not list how this issue will be dealt with under universal credit. Will the Minister outline what is intended in this regard?
I want to finish by bringing to the attention of the Committee the concerns of Scope, which is very worried about the proposals as they stand. It fears that,
“there will not be adequate safeguards to ensure that sanctions are not applied to disabled people who are unable to meet the conditions due to factors relating to their impairment or condition”.
Scope is,
“not convinced that applying long-term sanctions … will incentivise those to comply after the sanction has been introduced”.
Moreover, Scope is,
“deeply concerned that the use of stricter sanctions will impact upon disabled people receiving JSA”.
After all, sanctions are most likely to affect those who did not fully understand that penalties could be imposed. This frequently involves claimants who already face multiple barriers to work, including various disabilities.
Scope also believes that there is little to suggest that sanctioning such claimants in this way will actually do much to change behaviour when a claimant, perhaps with a learning disability, has not understood why they were sanctioned in the first place. Scope is concerned that conditionality requirements and sanctions, as has been mentioned by other noble Lords this afternoon, will not be applied to disabled people until there has been proper consideration of need. A thorough assessment of need and barriers to finding work must be carried out before any decision is taken to apply a sanction. I look forward to hearing from the Minister how he responds to the concerns raised by the noble Baronesses, Lady Hollins and Lady Meacher, and other noble Lords who have spoken.
The Earl of Listowel
My Lords, I apologise. I should have put a couple of questions to the Minister. How will care leavers be treated in this system, and what additional support and flexibility might they expect to be shown? Perhaps he might prefer to write to me on those two points.
Lord Freud
Before I start on the amendment formally, it is worth making it crystal clear that the structure of the changes we have made bear in mind some of the real issues that we are talking about. I am particularly conscious of people with learning difficulties and fluctuating conditions, or a nest of other problems. I want to spend one minute on the design of the new welfare system, when it comes out like Aphrodite coming out of the sea near Paphos. The first point is the design of the work programme, where the rewards are not to get someone into a job and to keep them there, as it used to be, for 13 weeks. When you think about it, that is not what we want; we want someone to be in a long-term job. The structure, particularly for the hardest to help, is that the real rewards for the provider are when someone is in work for more than two years—it is two years and three months. You do not get someone into a job for two years and three months if it is inappropriate. That simply is not going to happen so when we are talking about the work programme, the incentive on the providers is to match people up with jobs that they can do in a way that the current system simply does not.
The second structural change that we are making, and which is really relevant in this area, is in how the universal credit works. By pulling together the two systems, the out-of-work benefits system and the in-work tax credit system, you do not have this desperate problem that we have today where if you take a risk and try to get a job and it did not work, you go back to go—and now try to get your benefits again. It is a nightmare but there have been bits of sticking plaster on it.
If you are in a fluctuating condition and this week you cannot work—let us say you have a job where there is a little flexibility—all that would happen would be that you would slide up the taper. Nothing would have changed in the nature of your benefit. There is just an adjustment in your universal credit payment and when you can work more, you get more. Those two things are big structural changes to bear in mind when we deal with these areas. They will help a lot because much of what people are rightly so concerned about are some of the incredible blocks that are in the current system and which make it so difficult for people to partake. It is why we have excluded so many people from having a full life, because in modern western society being part of the economy of the country is having a full life. They have been excluded and there is all the depression that results, so there are some really strong underlying changes that should help.
Lord Wigley
I am very grateful. Would the system that he is describing take on board the fact that the claimant may not be in a position to express, have the confidence to express, or know how to express the reasons that he or she cannot make that case? Therefore there is the need for access to professional advice.
Lord Freud
As I said in the previous debate, taking on board advice from a claimant’s own medical practitioner and other sources is part of the process here. To pick up the point raised by the noble Baroness, Lady Hollins, for claimants in the work preparation group, we intend to carry forward the current system of home visits to claimants with mental health problems to ensure we understand why they fail to comply. Of course, all sanction decisions can be referred to an independent tribunal, helping ensure we get it right. But equally, we intend to move away from extensive—and ultimately incomplete—lists and regulations. It is impractical for legislation to catch all the relevant matters that may arise in every single case of non-compliance, and the lengthy JSA regulations—which have matters that must and may be taken into account in determining whether a claimant has good reason—are not actually helpful for decision-makers or claimants.
To pick up the point from the noble Baronesses, Lady Meacher and Lady Hollins, on the work capability assessment, we do rely on the WCA and therefore Professor Harrington’s review is critical to help us get it right. Claimants should be placed only in a work preparation or a work-related requirements group where they are capable of meeting these very basic requirements. Once in those groups, clients will need to take account of their health condition. They are designed to take on board all the available evidence on that individual.
The noble Baroness, Lady Hollins, asked what happened with the Harrington review. As noble Lords know, we took on board the entirety of Malcolm Harrington’s first recommendations. The main thing was to empower decision makers to make the right decisions. In response to the question asked by the noble Baroness, Lady Meacher, we have introduced a mental health co-ordinator in each district who has an outward-facing role working with mental health services and an inward-facing role developing the knowledge and confidence of advisers. The other area of Professor Harrington’s advice that was taken up was on improving our communications so that claimants understand the process and the result and are able to add additional evidence if they need to. In response, we have also made improvements in mental health with mental function champions across the network at Atos. Professor Harrington is currently undertaking his second independent review. We are waiting for it, and we will then look very hard at what to do with those recommendations. We will take them very seriously.
Turning to Amendment 51E on work-focused health-related assessments, the noble Baroness, Lady Hollins, will know that these assessments have been suspended because they were not working as intended. We will re-evaluate, as I have already said. I have already offered to write to the noble Earl, Lord Listowel, on care leavers, and I will add that topic to that letter.
I do not want noble Lords to feel that I am being negative in this area, and it is over-easy to think that I am. I have valued the contributions noble Lords have made. I do not see these things as appropriate for the Bill, but I am clearly going to consider deeply the points that have been made today with the aim of applying them appropriately as we implement the system. I value what noble Lords have said. It resonates. We need to get it right. On that basis, I ask the noble Baroness to withdraw her amendment.
Baroness Wilkins
I totally take the fact that the Minister is setting out a system in which claimants should be confident that they are being helped and that that is the purpose of the system. However, does he accept that existing claimants have to overcome an enormous amount of negative experience because of the Atos system so there is an enormous mountain to climb?
Lord Freud
The noble Baroness, Lady Wilkins, makes a point, which we have actually discussed in the Chamber in the past. She knows my concern about this. I think that the Atos and WCA process is genuinely improving now, with the changes that have been made. A lot of the stories that we have are of the system as it was, unreformed. It is gradually improving. That is not to say that it is now perfect—that is not my claim. We are committed to getting the process right, and we inherited that process. I know the concerns that there are, seeing them at first hand in many cases. It is a terrible balance between abandoning people and saying, “You’re out of the economic life of this country” and then trying to pull them in in a coherent way. Getting that balance right, as all noble Lords here today understand, is complicated and a path that we are moving down. But I am determined that we will get to a position where we are doing it with the right balance.
Baroness Hollins
My Lords, I am grateful to the Minister for his response, particularly for saying that he is going to consider these amendments deeply as we move towards implementation. There were three things that the amendments were trying to do. One was to try to ensure that evidence from claimants’ own health professionals would be properly taken into account at an early enough stage to prevent some of the distress that is currently affecting some claimants. The second one was about reasonable adjustments, which are a requirement under the law but are perhaps not fully understood. It is about an individualised approach, is it not? The third one was ensuring that the impact of a health condition on a candidate’s ability to comply was properly assessed and understood. It is not about asking for a rigid list of things in the claimant commitment. What it is really about is asking for joined-up work between different departments with different responsibilities and joined-up care for people with health conditions with the NHS and the DWP. There is no reason why Jobcentre Plus staff and existing specialist NHS staff could not share some information for the benefit of the claimant, both at the assessment stage and during their progression into work, which is what we would all like to see.
Although decision makers are required to take information into account, there is evidence that they are not always doing that. Yes, of course people can appeal, but appeals are very distressing, not just for the individual but also for their families. These amendments were intended to make the system work better both for claimants, so that they are more likely to succeed, but also because it is much more satisfying for staff to work in a system that they know is working fairly. So I am hoping that the Minister will find a way to ensure that the spirit of the amendment is taken on board. I beg leave to withdraw the amendment.