House of Lords

Wednesday 11th January 2012 Lords Chamber

Wednesday, 11 January 2012.

15:00

Prayers—read by the Lord Bishop of Gloucester.

Somalia: Piracy

Wednesday 11th January 2012 Lords Chamber

Question

15:06

Asked By

[Lord Naseby]

To ask Her Majesty’s Government what naval contribution the United Kingdom will make towards, and what advice they will give to British-registered vessels on, combating piracy near Somalia after the current monsoon season.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, the Government continue to provide support to the multinational naval operations off the coast of Somalia. For example, we provide the operational commander and headquarters for the European Union’s counterpiracy operation and we will provide a ship to the combined maritime forces throughout 2012 for counterpiracy tasking as part of the forces’ wider operation. The Government urge all shipping transiting the high-risk area to comply with the industry’s best management practice. The Department for Transport has also published interim guidance on the use of armed guards in exceptional circumstances to defend against pirate attacks.

[Lord Naseby]

Is my noble friend aware that despite the welcome news that he has given today the situation remains extremely worrying as the geographical area of the ocean covered by the pirates gets ever wider? Is my noble friend further aware that already 10 per cent of shipping is being rerouted around the Cape at a cost of £3 billion and it is forecast that that may rise to 30 per cent? Against that, should we not confront the pirates in two further ways: one by deploying UAV aircraft to pinpoint exactly where the mother ships are that support the pirates; and, having pinpointed them, surely the naval operations should go on the front foot and sink them rather than just react to situations?

[Lord Howell of Guildford]

My noble friend is quite right that this is a very serious situation spreading of course not only to the Gulf of Aden area, but out into the Indian Ocean and the west of Africa. He perhaps would accept that the statistics show—maybe because of diversion of shipping but for other reasons as well—that successful attacks fell dramatically last year. There were 127 attacks in 2010, 47 of which were successful, and by 2011 there were more attacks—150—but only 25 were successful. The success rate for the pirates in achieving their ugly objectives has been much reduced. Nevertheless, my noble friend is absolutely right that very firm action is required. The matter of UAVs is under consideration but there are difficulties, even for UAVs, in covering such an enormous area. We are talking about somewhere twice the size of Europe. On the question of vigorous action when these pirates are encountered, the Government believe that interim guidance is a strong first step, as initiated by my right honourable friend the Prime Minister, in his discussions on these matters in Australia a few months ago. The details laid down are definitely an advance in dealing with pirates in a most vigorous manner, and rightly so.

[Lord Boyce]

I welcome the Minister’s comment that the Royal Navy will be providing a ship to support the anti-piracy operations off Somalia. The Minister will also be aware that the Navy has been unable to meet its full-time commitments for a duty ship over the past few months. Noting such other contingencies coming up, such as the potential closure of the Hormuz Strait by Iran, will the Government now recognise that they have cut back too far on the size of the destroyer and frigate force?

[Lord Howell of Guildford]

My Lords, the noble and gallant Lord will not be surprised at my answer that these matters are kept under constant review. We need to deploy in the most effective manner the forces that our resources allow us to deploy, and we will continue to examine all needs and priorities in that light.

[Lord Davies of Stamford]

My Lords, I am very glad that I gave way to the noble and gallant Lord because I thoroughly agreed with his intervention. If we are half-serious about dealing with this menace, should not the first and indispensable step be to cut off the flow of funds to the pirates? Every week literally millions of pounds are passed to the pirates from ship owners and particularly from underwriters. The largest share of this probably comes from underwriters in the City of London. The means used to pass the funds may be unconventional but the payments are perfectly legal. If we were to criminalise the payments and use the existing apparatus of criminal assets seizure legislation and money-laundering legislation to interdict them, would that not be a very substantial step in the direction of dealing with the problem?

[Lord Howell of Guildford]

I say to the noble Lord that actually the first step is to deal with the conditions on land that give rise to the piracy operation by sea; that is where we start. However, he is quite right that the flow of cash and finance is a very important part of this. We are working with Interpol and with the UN Office on Drugs and Crime to see whether we can be more effective in tracing the patterns of finance. It is not easy but it is certainly an area where we should concentrate.

[The Lord Bishop of Gloucester]

My Lords, is the Minister aware of the work of the Mission to Seafarers, the world's largest provider of port-based humanitarian and welfare services for seafarers and their families, which has provided assistance to victims of piracy, especially in the region around Somalia? Will he consider engaging with the Mission to Seafarers to develop a model of support for families of hostage victims?

[Lord Howell of Guildford]

Yes, I say to the right reverend Prelate that that seems an excellent initiative and idea, and something that we will certainly consider most carefully.

[Lord Chidgey]

Will my noble friend reflect on the fact that in the past two years since 2009 there has been a sevenfold increase in the number of piracy incidents that have taken place off east Africa, according to the IMO; that there are some 2,300 crewmen being kept hostage at the moment, according to NAVFOR; and that the ransoms paid out in the past two years went up from $80 million to $135 million? In that regard, what will be the contribution of our Government to the conference on Somalia in London at the end of the month, and, more importantly, to the maritime security conference that will take place in Dubai next week?

[Lord Howell of Guildford]

My noble friend is absolutely right; these are two very important conferences. He was correct to mention the latter one, but I particularly emphasise his point about the conference on Somalia that has been organised for London on 23 February. It is a major initiative that will bring together all parties concerned not just with piracy but with the issues of what to do with the failed state condition we face in Mogadishu at the moment. The conference will be well attended and I believe that it will be extremely effective in focusing on the problems of the area, of which the piracy element is a very important part.

[Lord Tomlinson]

Will the Minister tell us something about what would be the greatest deterrent to piracy: namely, bringing pirates to justice? Deterring pirates is one thing but bringing them to justice is by far the most effective deterrent. Will he tell us whether the success rate in that matches the successes reflected in the earlier statistics he mentioned?

[Lord Howell of Guildford]

A considerable amount is being done but I concede that it is not enough. The aims have been to develop prison transfer facilities in the Seychelles, where progress is being made; and also in Kenya, which has taken the brunt of the problems of dealing with captured pirates and bringing them to justice. We are working with the Seychelles to upgrade all operations, with both financial and technical support. We are working with the Kenyans and with Somaliland, which are willing to develop both custody facilities and judicial facilities. All these things are going on and are a very important part of the overall aim of defeating the piracy infection.

Social Networking Sites

Wednesday 11th January 2012 Lords Chamber

Question

15:15

Asked By

[Lord Storey]

To ask Her Majesty’s Government what additional measures they are planning to take to prevent bullying on social networking sites.

[Baroness Garden of Frognal]

My Lords, the Government are committed to tackling bullying on social networking sites by working with industry, academia, charities and parenting groups to develop tools and information for children and parents aimed at keeping children safe online. The Government are pressing the internet industry in the UK and in Europe to implement clear and simple processes for dealing with abuse online. The Government have also recently reviewed their cyberbullying policy.

[Lord Storey]

The Minister will be aware of the hugely increasing problem of cyberbullying by and of children and young people, particularly in schools. She will also be aware of how easy it is for children under age to set up and operate an account without parental permission. Will she meet the industry, teaching organisations and children’s welfare organisations to discuss the problem and how further safeguarding of our young children can be put in place?

[Baroness Garden of Frognal]

My noble friend speaks with great experience from his distinguished teaching career. The Government are aware of how proficient young children can be at setting up accounts and using the internet generally. We are backing the launch by the UK Council for Child Internet Safety of a one-stop approach to advise on online safety which will occur on 7 February. On my noble friend’s last question, I should be very happy to go ahead with the meeting as he suggests.

[Lord St John of Bletso]

Does the Minister agree that schools have an extremely important role to play in ensuring that young people and children are aware of the risks of social networking, in building resilience, and in ensuring that young people are aware of the harmful impacts that their online behaviour can have on others?

[Baroness Garden of Frognal]

Yes, indeed; I entirely agree with what the noble Lord said. In July the Government published guidance to schools on behaviour and bullying that summarises legal obligations and encourages schools to identify the motivations behind bullying and encourage people to seek further help and advice as necessary. This is an issue that the Government take very seriously.

[Baroness Walmsley]

Is the Minister aware of the importance of stopping children wanting to bully in the first place? That is the best way of dealing with bullying. In the light of that, is she aware of the programme called Roots of Empathy, which has now been rolled out into two-thirds of the local authorities in Scotland? It is already very well evidenced. Will she undertake to look at the evidence of this programme in Scotland which is already reducing the incidence of bullying in schools, and see how the Government could encourage its rollout across the rest of the UK?

[Baroness Garden of Frognal]

Yes, I do indeed undertake to my noble friend to look at that programme. She and others in this House have been very involved with encouraging programmes such as PSHE which teach children self-respect and respect for others and identify the motives behind bullying. Obviously, legislation can only go so far. We need a change in the culture so that bullying is an unacceptable activity.

[Baroness Jones of Whitchurch]

My Lords, the Minister will know that one of the problems we face is that parents are way behind their children in keeping up with technology and are often oblivious to what is happening under their own roof. Does she agree that one small way in which the social networking sites could help, and should help, both parents and schools would be to ban children using fake names or multiple names to disguise their identity?

[Baroness Garden of Frognal]

The noble Baroness makes an interesting point. Some of these things are always much more difficult to implement than they are to suggest. Although the internet service providers are being extraordinarily helpful and supportive of the Government on ways of tackling this, and that will certainly be one aspect they consider, whether it is feasible to stop the worst cases of bullying is another question.

[Baroness Benjamin]

My Lords, will the Government consider having a campaign to make parents and schools aware of how social networking sites can also be used to groom children for sexual exploitation?

[Baroness Garden of Frognal]

My noble friend raises another interesting point. The initiatives which the Government are taking at the moment encompass parents as well as children to try to make sure that families are aware of the dangers of the internet. Of course there is no way that anyone wants to stop the spread of information and the freedom of information, but we need to get the right balance between that and things which are offensive and illegal online.

EU: December Council Meeting

Wednesday 11th January 2012 Lords Chamber

Question

15:20

Asked By

[Lord Soley]

To ask Her Majesty’s Government what, if any, changes they envisage in the United Kingdom’s relationship with the rest of the European Union following the summit meeting of 8–9 December 2011.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, Britain remains a full member of the European Union and will continue to work hard with our many allies in Europe to advance our national interests as well as those of all other EU member states. Nothing arising from the December Council meeting alters that.

[Lord Soley]

I am grateful for that reply but, intentionally or unintentionally, at the December meeting the Prime Minister gave the very strong impression that Britain could never accept the concept of the ever closer union spelt out in a variety of treaties signed by the United Kingdom over many years. Will the Government give a clear answer, not least for that section of the Government led by the Prime Minister, as to whether we are on board for ever closer union, or do we reject that concept?

[Lord Howell of Guildford]

I think that most people looking at the 21st century have found the concept of ever closer union implying more and more centralisation as, frankly, yesterday’s stuff. This is not the way in which the European Union will strengthen its cohesion and flexibility in the face of the new international landscape. While certainly the events of the December Council struck a particular view in regard to the safeguarding of Britain’s interests in the light of the plans which are now going forward and in which we are participating for the new fiscal union and possible fiscal union treaty if one emerges, I do not think that there is anything very revolutionary or new about recognising in the debate on the reform and development of the European Union that ever closer union as a simple integrationist concept is out of date.

[Lord Peston]

My Lords, I ask this question for future reference. Surely it is the case—perhaps the Minister could confirm it—that the central aim of Her Majesty’s Government in Europe is to make sure that we have no friends there whatsoever.

[Lord Howell of Guildford]

I am afraid that that is upside-down thinking, because the enlightened view in Europe is that we should move towards the reform of the European Union in all aspects. Everyone agrees that maybe the time has come to revise its great purposes in the 20th century. I was fascinated by a remark made the other day by the noble Lord, Lord Liddle, who I hope will speak in a moment on this issue. He rightly said that the old arguments for Europe will no longer do. We are in a new situation in which many intelligent people throughout the European Union realise that new approaches are needed. I am sorry that the noble Lord is not one of them.

[Baroness Falkner of Margravine]

My Lords, does my noble friend agree that the concept of ever closer union in the treaties was about an ever closer union of the peoples of Europe? Nothing that this coalition Government are doing would prevent a closer relationship between the peoples of Europe, but that does not imply the Governments of Europe for ever being bound in ever closer unions. On the financial transaction tax that France has agreed to pursue unilaterally, our understanding is that the German Government are reluctant to proceed unilaterally. Are we having conversations with the Germans on the effects of the tax should it be implemented more widely?

[Lord Howell of Guildford]

My noble friend is absolutely right about the first point. The peoples of Europe, the communities of Europe and the interests of Europe are binding more and more closely together in the internet age and in the age of the information revolution, but the question of how this resolves at governmental level is obviously much more complex. She is absolutely right about that. As far as the financial transactions tax is concerned—the so-called Tobin tax—Her Majesty’s Government’s view is that if this was a universal tax, the chances of which are frankly pretty remote, it would begin to make sense to apply it, but that if it was merely going to be for the European Union or even for selected countries in the European Union, it would not make much sense at all. That seems to be a view that increasingly the Germans are sharing.

[Baroness Symons of Vernham Dean]

My Lords, if what the noble Lord says is true, that everyone throughout the European Union agrees that there are better arguments for the future, why were we left isolated on 8 and 9 December? Why did nobody agree with us then?

[Lord Howell of Guildford]

The precise issue was that the safeguards against additional incursions into financial interests, of which this country holds a very large proportion in Europe, were not going to be agreed. This led my right honourable friend the Prime Minister reluctantly to say that he could not agree to the kind of treaty being proposed. The other 26 countries are looking at it—as are we, in participating in the current operations and examination—and are finding out whether it works for them. I am not sure that in the end either the 26 or even possibly all 17 countries will be really prepared to go along with every detail of the treaty so far. However, a new draft has been produced that already begins to adjust somewhat to the concerns that my right honourable friend voiced and that other countries have expressed as well.

[Lord Pearson of Rannoch]

My Lords, was the European Union not supposed to bring peace and—

[Lord Campbell of Alloway]

Is the noble Lord aware that this question of ever closer union could not be agreed at the Messina conference and could not be interpreted in the Rome treaty? As a result, a compromise amendment was made that the Court of Justice could deal with the matter, which is where we are today. We are now in the twist of a federal demand that we should remove, with other people, our residual sovereignty for imposed financial restriction, to which I personally object.

[Lord Howell of Guildford]

Of course, the European Court of Justice is applicable and is an instrument of the European Union treaties. Ad hoc arrangements and other co-operation arrangements that are not within the treaties would not be covered by the European Court of Justice. I was interested to see in the draft of the fiscal union treaty that is now circulating that the proposition that the ECJ should have precedence over national laws has been removed. I appreciate that my noble friend’s long-term considerations go much deeper, but it may be that here and now some of the concerns that he has expressed are being recognised.

[Lord Liddle]

Will the Minister bear with us as we continue with an old argument? Will he confirm that it is the clear policy of the Foreign Secretary and the coalition that there will be no attempt to repatriate powers from the European Union during this Parliament? Will he confirm that that is the Government’s policy and, if it is, how does he justify the Foreign Secretary permitting civil servants in his department to work with the new All-Party Group for European Reform to explore what powers might be repatriated? How is this Conservative initiative consistent with the policy of the coalition?

[Lord Howell of Guildford]

I do not want to play with words but I understood that in all parties, including the noble Lord’s party, and in the think tank with which he is closely associated, clear and forward-looking minds were looking at ways of rebalancing powers between Brussels and the member states as a whole—not just between Brussels and this country but between the European Commission, the European Council, the European institutions and the nation states. Again, there seems to be a very enlightened argument—of which I thought he was part, although he seems not to be so at the moment—that certain powers, particularly social powers and other detailed regulatory powers, would be far better administered close to the recipients, those in need of social care and those on the workshop floor, than by central organisations in Brussels. This is a sensible way forward and I am very glad that our officials are studying it closely.

Democratic Republic of Congo

Wednesday 11th January 2012 Lords Chamber

Question

15:30

Asked By

[Lord McConnell of Glenscorrodale]

To ask Her Majesty’s Government what action they are taking in response to reports of violence in the east of the Democratic Republic of Congo following recent elections.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, I thank noble Lords for the break.

We are working to tackle the threat of armed groups in a number of ways. We have pressed to ensure that the protection of civilians remains the priority for the United Nations organisation stabilisation mission—MONUSCO. We are supporting the disarmament, demobilisation and repatriation programme to remove fighters from the battlefield peacefully. We have also supported UN sanctions against members of armed groups who breach humanitarian law.

[Lord McConnell of Glenscorrodale]

My Lords, I thank the Minister for reflecting the Government’s commitment to those actions. I had the immense privilege of being in the DRC for the recent elections as an international observer, and I praise the ordinary Congolese people for their determination to vote in secret and safely as often as they could, despite provocation at times. I also praise the ordinary Congolese people who conducted the vote at the local level, but the parties continue to dispute the result of the elections. Does the Minister agree that there is a need for maximum transparency in the election results so that any dispute is based on fact rather than accusation? There is also a need for reconciliation between the parties, perhaps led by the international community, to ensure that the country can move forward and develop rather than continue in conflict.

[Lord Howell of Guildford]

First, I salute and congratulate the noble Lord on the role he played in participating in EurAc, the network of European NGOs’ elections observation mission to the DRC elections in November. His questions are extremely apposite and are obviously backed by a deep hinterland of information.

The noble Lord asked what we can do to meet the particular problem that was reflected in the recently reported horrific FDLR killings in the east of the Democratic Republic of Congo the other day. Our strategy has three elements. First, we are funding the demobilisation, repatriation and resettlement programme, which helps to remove fighters from the battlefield. Secondly, we are very substantially supporting the UN force, MONUSCO, to the tune of £69 million, which represents over 8 per cent of its entire budget and is coming from us here in the UK. Thirdly, we are supporting sanction regimes that are aimed on a continuing basis at identifying leaders of armed groups and seeing how they can be removed from the battlefields. Those are the three broad aims that we are activating over and above the fact that the Department for International Development has a budget over the next four years of £790 million for development in DRC. This is a hugely effective programme.

[Lord Alton of Liverpool]

My Lords, does the Minister believe that the sheer scale of irregularities in the recent DRC elections and the violence and intimidation that has arisen could have happened without the complicity of the authorities there? In the east of the Congo—the Kivu and Goma regions to which the noble Lord’s Question refers—rape has been used as a weapon of war, and in a country where more than 6 million have died in what many call Africa’s first world war over the past 25 years, what can the Government do to assist MONUSCO, particularly in the protection of vulnerable women and the bringing to justice of those responsible?

[Lord Howell of Guildford]

The killings in the east of the Congo that we were debating a moment ago are one thing, and it is not for me to declare that they were to do with the undoubted violence that occurred during the actual elections. I fully concede that, as the noble Lord has rightly pointed out, there were reports of irregularities during the elections, and we are not going to just ignore them and pretend that nothing went wrong; it did. The Minister for Africa, my honourable friend Henry Bellingham, has called on the DRC authorities to investigate all irregularities promptly and fairly, and we have pressed the Congolese electoral commission—CENI—to make key improvements in the compilation process for the legislative count. We will also urge CENI to carry out with international help an in-depth review of irregularities raised by the observer missions, and will press it to implement any recommendations. We are not letting the matter rest. We recognise that there were some serious irregularities and that these need to be pursued and reviewed with great vigour.

[Lord Chidgey]

What will be the Government’s response to the UN group of experts’ report on the DRC, which highlighted the failure of the Mines Ministry to take control of mining out of the ICC-indicted military’s hands? This has resulted in increasing criminalisation and increasing funding streams to military groups, which are all part of the problems of violence in the Congo. What steps will the Government take to raise awareness among UK-based firms of the risks they run in the mining industries and of the international diligence standards for mineral trade? What has been done to put forward the UN conditions, which were introduced more than a year ago, on the trade in conflict minerals?

[Lord Howell of Guildford]

These are very detailed questions on which I would like to write to my noble friend in more detail. Generally, we recognise these problems and general approaches to them have been taken, particularly in our close work with MONUSCO and the UN, but I shall write to him in more detail on his precise analysis.

[Baroness Kinnock of Holyhead]

My Lords, does the Minister recognise that the systematic violence against women by police, military and non-state armed groups in the DRC that the engagement of women in security sector reforms is absolutely essential? Through UK funding to the DRC, will the Government ensure that women’s groups are provided with the knowledge, the skills and the resources they need to hold the security services to account?

[Lord Howell of Guildford]

Yes, we will. I think I can speak on behalf of my honourable and right honourable friends in DfID in saying that this is a central consideration in the substantial programme of aid, assistance and reform that the department is carrying forward, as well as in all our concerns in dealings with MONUSCO and the United Nations.

Inheritance (Cohabitants) Bill [HL]

Wednesday 11th January 2012 Lords Chamber

First Reading

15:37

A Bill to make provision for the property of deceased persons who are survived by a cohabitant.

The Bill was introduced by Lord Lester of Herne Hill, read a first time and ordered to be printed.

European Union (Definition of Treaties) (Republic of Korea Free Trade Agreement) Order 2011

Wednesday 11th January 2012 Lords Chamber

Motion to Refer to Grand Committee

15:38

Moved By

[Lord Strathclyde]

That the draft order be referred to a Grand Committee.

[Lord Barnett]

My Lords, before dealing with the Motion, will the Leader accept that there is something much more important affecting every Member of this House today—not in three months’ time, but today—which is our ability to get in here and get out again? The current restrictions on cars coming in and out are becoming nonsensical. I am told that it will take three months to review the situation; it should be reviewed today. We are supposed to be in charge of our own place; we can surely decide; we can tell Black Rod; we can do what the devil we like. I declare a personal interest: I had an operation a week ago and have been advised that I should do as little walking as possible in the near future. I find it very difficult walking across the road to get a taxi, and other Members are finding it even more difficult. Surely he can do something about that now.

[Noble Lords]

Hear, hear!

[Baroness Trumpington]

My Lords, may I support the noble Lord, Lord Barnett? I have just put down a Question to that very effect, but unfortunately it must wait a month before it can be heard in this House. I strongly support the point that the current arrangements are a total failure and should revert. Any suicide bomber who wishes to attack this place certainly could do so without somebody looking at the bottom of their car. Please will the Leader do something about it today?

[Lord Campbell-Savours]

My Lords, before we go down this route, could we just remember that we have a duty to secure the security of this institution? Difficult decisions have had to be taken and we should be very careful about rescinding them.

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, I am well aware, as are most Members of the House, that this week there have been some difficulties in entering the car park. I know that Black Rod has received many representations—I expect that, even after today, he will continue to receive many further representations—and I urge noble Lords who believe that they can suggest improvements commensurate with providing the security of the House, as the noble Lord, Lord Campbell-Savours, has pointed out, to do so as early as possible.

I will have discussions with the Chairman of Committees and members of the relevant committees that made these decisions to see whether the review can be speeded up. I understand the difficulties that have taken place.

[Lord Peston]

I think I am right in saying that we are still a self-governing House and therefore that what my noble friend has asked the Leader of the House to do is a perfectly reasonable request. However, the Leader of the House has shown no sign that he intends to respond to that request. I sit on the Joint Committee on Security. This matter is not being driven by the security of this House but by the other place. There is no pressure for this from this House whatever. The Leader of the House has been asked to find some space so that colleagues can at least express their opinions. This is all he is being asked to do. The people involved in this think this is a done deal and have no intention of backing off no matter what the experiment shows. It is therefore vital that the Leader of the House should tell us that he will find space early next week so that we can all express our opinions.

[Lord Laming]

My Lords, as a member of two committees that were involved in making this decision for this experimental time, I was not aware of any pressure coming from any outside source. The decision was taken sincerely and clearly within this House by the membership of this House. Should it be thought sensible, I am very happy to review the matter, but let us learn from the experience and see whether we can approach this in a spirit that is intended to make it as constructive and as safe as possible.

[Lord Campbell-Savours]

Perhaps I may slot into the minds of Members what could be a long-term solution. It is for us to reclaim our underground car park across the road, which we own, and build a tunnel which links the House to that car park.

[Lord Pearson of Rannoch]

My Lords, I am sure this has already occurred to any would-be terrorist, but what do the security arrangements of the House do about the river and the boats that go up and down it? My friend hired one of those boats the other day and was free to take suitcases on and off as she wished. If we cannot do anything about that, why do we carry on making entrance to this place more complicated and inconvenient?

[Lord Strathclyde]

I am not sure that the Floor of the House is the best place to discuss matters affecting the safety and security of the House.

In answer to the noble Lord, Lord Peston, nothing I said in my earlier reply was supposed to be discourteous to the noble Lord, Lord Barnett. This House is self-regulating. The decision was taken by various committees of the House that would not have been able to do so without its agreement. Perhaps the review could be done more quickly than in three months. Those noble Lords who have suggestions and ideas as to how we could improve the situation should write to Black Rod—or, indeed, raise it in their party meetings, which might be a better place than having a debate in this House.

Motion agreed.

Local Better Regulation Office (Dissolution and Transfer of Functions, Etc.) Order 2012

Wednesday 11th January 2012 Lords Chamber

Motion to Refer to Grand Committee

15:44

Moved By

[Lord Strathclyde]

That the draft order be referred to a Grand Committee.

Motion agreed.

Welfare Reform Bill

Wednesday 11th January 2012 Lords Chamber

Report (3rd Day)

Relevant document: 21st Report from the Joint Committee on Human Rights.

15:44

Schedule 3: Abolition of benefits: consequential amendments

Amendment 33

Moved by

[Lord Freud]

33: Schedule 3, page 126, line 3, leave out “and (2)” and insert “(2), (2A), (3) and (4)”

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

My Lords, I speak in support of the amendments tabled by the Government in relation to Clauses 51 and 52—namely Amendments 33, 34, 37, 39, 40, 41, 43, and Amendments 63 to 67.

The important issue of the impact of time limiting on those with deteriorating conditions was raised in Grand Committee. I outlined in debate the existing safeguards which would protect people in these circumstances. However, when we looked again at the safeguarding provisions, it was clear that a person would be able to requalify only in very limited circumstances. In light of that helpful debate, we have decided that further clarification should be provided on the face of the Bill and are therefore moving these amendments.

The government amendments will enable people whose contributory ESA, while in the WRAG, has ceased as a result of time limiting, to requalify for an award of ESA if, after their award ends, they continue to have, or are treated as having, limited capability for work, and—I stress this point—at any time thereafter they develop and continue to have limited capability for work-related activity and would become eligible for the support group. The substance of this new category of entitlement is found in Amendment 43, which provides for claimants to have further entitlement after time limiting has been applied to an award of contributory ESA. I note with pleasure that the noble Lord, Lord McKenzie, and the noble Baronesses, Lady Morgan and Lady Meacher, have added their names in support of Amendment 43.

Without wishing to anticipate or foreshadow the debate on Amendment 42, tabled by the noble Lords, Lord Patel and Lord McKenzie, I trust that the noble Lord, Lord McKenzie, having lent his support to Amendment 43, may feel able not to proceed with Amendment 42. I shall endeavour to explain why shortly.

I turn to the remainder of the government amendments in this group. In previous versions of the Bill, the time-limiting provisions for ESA youth appeared in Clause 52. As a result of the amendments, we have moved to provide for new entitlement to contributory ESA through deterioration, and it has been necessary to amend how the time limiting of ESA youth awards will work to provide for the new deterioration category. This is because we wish the category of further entitlement to ESA after deterioration to cover both claimants who deteriorate after their time-limited contributory ESA awards end and claimants who deteriorate after their time-limited ESA youth awards end. We have therefore moved amendments to provide for Clause 51 to deal with the time limiting of ESA youth awards where a claimant is in the work-related activity group. To be clear, the clauses as revised by the government amendments still have the effect that claimants awarded ESA on grounds of limited capability for work developed during youth will have their awards time limited, if the claimant is not in the support group.

Amendment 42 is similar in a number of respects to Amendment 43, and I think I can probably say was the inspiration in an earlier form for that amendment. However, the point is that Amendment 42 is less favourable than Amendment 43 in one important respect, as it states that a claimant must be assessed as having limited capability for work-related activity within five years of the termination of the first ESA award. The approach taken by the government amendments would not seek to put this time limit on the new form of entitlement to ESA for claimants whose condition deteriorates. We would allow a claimant to return to a contributory ESA award at any time after their time-limited award has ended, as long as they develop limited capability for work-related activity or fall to be treated as having it, and as long as they have continued to have or be treated as having limited capability for work throughout the period after their time-limited award ended.

On this basis, I trust noble Lords will agree that Amendment 43 and the supporting government amendments provide a more generous approach than would be provided by Amendment 42. I beg to move.

[Lord Patel]

My Lords, I speak to Amendment 42, to which the Minister has just referred. Before I start, perhaps I might wish him a happy new year and, in doing so, thank him enormously for his Amendment 43. It may be claimed that it was in response to my amendment in Grand Committee; if so, I am very grateful for it. I thank him and I do not need to go any further.

[Baroness Meacher]

My Lords, I support Amendment 43, tabled by the noble Lord, Lord Freud, and I also wish to congratulate him on levering a little money out of his Government, or the Treasury, to enable that amendment to be tabled. However, I also want to speak to my Amendment 42A, rather late in the day, which seeks to introduce just a little more humanity into this part of the Bill. It simply extends a little the remit of Amendment 43.

At present, a claimant who has a terminal illness and who is expected to live no more than six months would be placed in a support group, which means that they would have no conditions attached to their benefit entitlement. If they have a few good days when they might be able to work, there is no commitment for them to have to do that although anyone in this position who has a job will no doubt wish to work as far as they possibly can. I am talking about those people who do not have a job and who therefore find themselves in the position of having to look for one, when they have a terminal illness that will deteriorate over time until they finally die.

This amendment applies to a group of people who are suffering from a life-threatening disease, the symptoms of which cannot be controlled by any recognised therapeutic procedure, and where there is reasonable cause for these symptoms not to be able to be controlled by any such procedure. At present, the default position is that these claimants will be allocated to the work-related activity group and will be expected to undertake interviews and activities on this rather wild and ridiculous assumption that they should be finding a brand new job, with a brand new employer, for whatever little bits of time they are able to function. At the same time, of course, they have to prepare themselves mentally for the ever worsening symptoms that will lead to their death.

My question to the Minister is whether he regards such expectations of persons on a downward path towards death as humane and reasonable. I hope very much that he will answer that question rather carefully in his response, in the sense that having accepted the government amendment and put that forward, he will find that this amendment is a very minor shift which brings people in a rather similar position into line. Again, I must emphasise that this amendment would not in any way discourage terminally ill people who can work from doing so. Rather, it is an attempt to remove callous pressures from being applied to people who already have probably far too much to cope with.

The Minister knows that I understand very well the need to reduce the numbers of people on ESA and, most particularly, to reduce the months and years that some people remain on it. We are really of one mind on that. Of course, proper conditions need to be applied so that if people are really sufficiently well to work, they make every effort to do so. However, we are talking about people whose lives are severely curtailed. They will not be around to spend years on ESA, let alone to claim pensions. Are we not in danger of throwing the baby out with the bathwater here?

I shall leave your Lordships with just one case to illustrate the point. A CAB client had had major surgery for breast cancer, twice. At the time of her assessment for benefit she was suffering severe pain and undergoing tests that revealed some abnormal bone activity. She told the HCP about her condition and the fact that she was due to have a further scan. This lady was found to have metastatic non-curative cancer of her bones, primarily in her pelvis, hips, back and spine, as well as down her legs and in the rib area. She was told that she had three or four years to live, although I have to say that sounds a little unlikely to me, and my guess is that it will be a pretty miserable three or four years.

On appeal, this claimant had her “fit for work” status—which is mind-boggling in itself—removed, but she was placed in the work-related activity group. She became very tearful and had to see a psychologist. She was unable to return to her previous job due to pain from the operations removing the lymph glands under her arms. She got extremely tired, of course—if you have metastatic cancer you are not going to be in a good way to do anything. The CAB adviser was of the view that this client would not be able to work again due to the increasing pain levels that she was going to suffer.

Anyone who has known anyone with metastatic bone cancer will know that this is not a happy thing to have; it is seriously deleterious. That is the point that I want to make: here you have people whose pain, tiredness and general debility cannot be adequately controlled, and there should be some fairly automatic procedure to deal with them. Perhaps the Minister could consider the position of a potential employer. Who would take on an employee with metastatic bone cancer? I have to say that I would not. How reliable would such an employee be, and for how long—for how many days or weeks at a time? Who knows? The prospects, though, are pretty poor.

This client will have to go through the humiliating and endlessly negative experience of writing applications and going for interviews, knowing in her own mind that employers, if they are half sensible, simply will not take her on. It is that aspect that we need to get hold of. Also, she could be accused of wasting employers’ time: why should they be reading these applications and interviewing her when, poor soul, she really is not in a fit state to work?

Noble Lords have mentioned in previous debates that terminally ill claimants will be saving taxpayers substantial amounts of money because of course they will not be living for decades with dementia, as people like myself might be doing. All we are looking for is dignity in those last months and, if they are lucky—although perhaps this might not be lucky after all—years before they die. As the Prime Minister said in his first party conference speech as Prime Minister,

“people who are sick, who are vulnerable, the elderly—I want you to know that we will … look after you. That's the sign of a civilised society and it's what I believe”.

We are really not talking about a lot of money here. I hope that the Minister will consider this matter.

[Lord Kirkwood of Kirkhope]

My Lords, I would like to make a brief contribution to this debate. Anyone who was part of the collective consideration in Grand Committee would have to acknowledge the very constructive role that the Minister played in this part of the Bill. The Bill is very difficult territory. I think that it was an amendment in the name of noble Lord, Lord McKenzie of Luton, that opened the door to some of the changes that the Government are now proposing, but it was palpable to everyone who was watching the Minister that the defence that the department was taking at the time was not adequate to meet the demands that were being made of it in the cross-examination that he was getting. For myself, I think that it was commendable that he was alive enough to what was being said by adult people around him at the time on an important issue. It is not a huge issue; there may be 4,000 or so claimants who might now benefit from this measure, but those who do will get substantial benefit. It is appropriate, particularly from my side of the coalition on this side of the House, to recognise that this is a significant amendment that was won only because the Minister was willing enough to listen and make a constructive response. That is why we have the amendment in front of us today, and I hope that the House will support it unanimously.

16:00

[Baroness Finlay of Llandaff]

My Lords, I shall make a brief intervention in support of the noble Baroness, Lady Meacher. It is important for the House to remember that whatever is said in the prognosis of someone who has an advancing life-threatening disease, it is completely unreliable; it is no better than a guess. These patients are living with uncertainty. They may die much sooner than their prognosis predicts or they may live longer, but they know that death is staring them in the face.

We are talking about adults of working age. They often have dependants. They often have children for whom they must make provision. If they do not use what energy they have to work on making provision for those children, the problems in the next generation among bereaved children will be much greater. There are questions about who will care for the children, what provision will be made, what the children are being told, how they are being prepared for bereavement and so on, quite apart from legal arrangements. Many people who are single parents say that making provision for those children is particularly difficult at times. Therefore, it does not make sense to take what little energy people who are ill have and put them through a system that stresses them further. It is much better for our society to use the energy that they have to do the thing that they know needs to be done, which is to make provision for those who will be left behind after their death.

I just emphasise that the uncertainty with which they live makes their lives even harder. It is impossible for an employer to know accurately about taking someone on. They may take them half way through an induction period before they become ill. Given the competition for jobs at the moment, any employer seeing this will, if they are in their right mind, say about the job that needs to be done, “Hang on, is this sensible for my place of work?”, however much they want to help someone. I caution the Government against preventing people using the energy that they have to make provision for the future of those who will be left behind after their death.

[Baroness Morgan of Drefelin]

I just want to thank the Minister for bringing forward Amendment 43 and the other government amendments in this group, and for listening to the debates in Committee. I do not want to detain the House in any way—I know we are engaged in several critical debates this afternoon—but the noble Baroness, Lady Meacher, has explained very eloquently the challenges that the Government have in addressing the thorny, knotty and difficult problems of people facing terminal and life-shortening illness. I do not want to say more than that because her points have been made so clearly.

[Lord McKenzie of Luton]

My Lords, I start by also thanking the Minister for Amendment 43 and wishing him a happy new year. I am sure it will become happier when we get into February. That is the case for several of us. Perhaps I can comment first on some of the other amendments to which the noble Lord referred. I understand that Amendments 33 and 34 are consequential. The fact that they include references to provisions that cover 365 days or the clock for counting those days already being under way does not imply our acceptance of them. They are the subject of subsequent amendments that we are about to come to. Similarly, as we have heard, Amendments 37, 39, 40 and 41 are the formulation to confirm the intention that the limit should apply to contributory claims under the youth condition. Again, as will be clear, we do not support the 365-day limit or the future denial of claims under the third condition, and we will address this by amendments in the next group. Therefore, our not challenging these amendments should not be taken as accepting this as the final position; likewise in relation to Amendments 63, 64, 65, 66 and 67.

Amendment 43, tabled by the Minister, obviates the need for Amendment 42. It covers the same point and, as he said, goes further in that there is no time limit. This is to be welcomed. This enables someone to reconnect with contributory ESA after time-limiting should their condition deteriorate and they become eligible for the support group. It would appear that this applies equally to those with an existing youth condition claim and those accessing contributory ESA via the first and second national insurance contributions. Perhaps the Minister would just confirm that. It would appear that there is no time-limiting factor—I think that he confirmed this—so the gap between the time limiting of the contributory allowance and arrival in the support group could be five or 10 years or, in theory, even longer. I touch on this particularly because I am bound to say that this is not something to which the Minister warmed in Committee. On 8 November, at col. 33 of Hansard, he stated in relation to Amendment 71P:

“However, this could mean benefits being reinstated 10 or more years after the claimant last worked, which is not reasonable”. —[Official Report, 8/11/11; col. GC 33.]

Further, he stated that,

“people in the WRAG who have gone through their time-limited period do not then have a right to go into the support group on a contributory basis”.—[Official Report, 8/11/11; col. GC 36.]

I do not wish to be churlish about this but that is why we included the five-year limitation in Amendment 42, which sought to meet the Government at least part way. However, the Government are to be congratulated on Amendment 43, which deals with the disconnect from the national insurance contributions and also addresses the concerns powerfully expressed in Committee about people with deteriorating conditions who are initially placed in the WRAG. My noble friend Lady Morgan of Drefelin spoke about people with Parkinson’s disease, motor neurone disease and some forms of cancer. The Government will fulfil their stated intent that the time limiting of contributory ESA will not affect those in the support group.

However, as ever, I have a couple of questions. Amendment 43 states that the employment and support allowance entitlement,

“is to be regarded as a contributory allowance for the purposes of this Part”.

Why is “regarded as” used rather than “is”? Is it or is it not a contributory allowance? The requirement is that the person remains assessed as having limited capability for work. How is this to work in practice in circumstances where entitlement to the contributory allowance has lapsed and income or capital levels preclude entitlement to income-related ESA? Does it require the individual to be subject to the crediting-only arrangements? Would a claimant commitment still have to be in place? If somebody’s prognosis of limited capability for work has lapsed but there has been no reassessment because nothing is due, how does this affect the position in practice? Where someone’s reassessment has initially led to a fit-for-work designation but this has been overturned on a reconsideration or appeal, will the claimant be treated as being continuously in the WRAG and remain entitled to the benefit conferred by the government amendment? The noble Lord’s letter of 8 January, which I received yesterday, suggests that around 4,000 people will benefit from this measure by 2016-17. This may be only a small proportion of those damaged by the general time limiting. Nevertheless, I stress that it is welcome.

Amendment 42A, spoken to by the noble Baroness, Lady Meacher, and supported by my noble friend Lady Morgan and the noble Baroness, Lady Finlay, raises an extremely important point about individuals with life-threatening diseases where there is evidence that their diseases are uncontrollable or uncontrolled by a recognised therapeutic procedure. It requires them to be treated as being in the support group to obtain the benefit of the easements in the Government’s legislation. I would be interested to know how often such individuals would not be assessed as being in that group anyway. I think that we heard some examples from the noble Baroness, Lady Meacher. I await the noble Lord’s reply but I hope that he can give her a sympathetic response to this important issue.

[Lord Freud]

My Lords, picking up the point of the noble Lord, Lord McKenzie, about the discrepancy between Amendments 42 and 43, sometimes when a powerful argument is made in Committee, it succeeds even more than do the proponents of that argument. In this case we went back, thought about the measure and said, “If we are going to do it, let us do it properly”. That is why the measure is indefinite and not for five years. The noble Lord asked whether Section 1B on further entitlement after time-limiting covered contributory ESA under the first and second contribution conditions and the ESA youth awards. The answer is yes

Let me turn to Amendment 42A. I very much understand noble Lords’ concerns on this, but the amendment would not achieve the stated aims of placing in the support group individuals with conditions that reduce life expectancy to two or three years. Substantial provision is already available to ensure that individuals with life-limiting diseases are provided with appropriate support. The amendment seeks to ensure that individuals with uncontrollable diseases who do not meet the support group criteria of the WCA, set out in regulations, are treated as having limited capability for work-related activity. Under the current system, individuals who meet this provision and are treated only as having limited capability for work will have a condition that does not significantly limit their functional ability such that it would be reasonable to expect them to undertake work-related activity. However, anyone who has an uncontrollable condition may still meet the current support group criteria if, as a result of their condition, there would be a substantial risk to their health if they were held to be capable of work-related activity. A large number of protections are therefore built in.

Perhaps I may provide an example of how that might work—and does work. Consider an individual with extremely severe uncontrolled hypertension, who has little or no symptoms or functional impairment. This individual will not meet the test of limited capability for work-related activity necessary to go into the support group, or even the test of limited capability for work to go into the WRAG. As a result of their condition, work-related activity is likely to pose a substantial risk to their health.

[Baroness Meacher]

I apologise for interrupting the Minister. The point that I was trying to get across was in the example of the woman to whom I referred. It may be that today she could do a little bit of work—although probably not. The difficulty is that the assessors do not take into account the likelihood over a number of weeks that this person simply will not be able to maintain an employment pattern. No employer in their right mind would therefore take them on. The issue that I am trying to raise is that the assessment processes, as I understand them, absolutely do not go anywhere near that level of sophistication. I agree that we are not talking about large numbers of people, but each and every case is a tragedy in its own right. There will be people who, for reasons that we can understand, will be assessed as not qualifying for the support group at this moment, yet for whom employment is completely unrealistic. I hope that the Minister can get the sense of what I am trying to say.

[Lord Freud]

I am sympathetic to this issue—one has to be. Clearly, we are continuing the whole time with improvements to the WCA process. We are getting a lot of improvements. We are beginning to sense that. Although the figures do not show it, the anecdotal feedback is becoming much more encouraging. This is an area in which we can make the assessments with the kind of detail that is necessary as we work through the process. Indeed, that is where it should be done. As the noble Baroness, Lady Finlay, said, in these situations it is extraordinarily difficult to come up with a six-month or a year’s prognosis. We all know that. The position, on the balance of probabilities, is that if the prognosis is six months, people go straight into the support group. That has happened since 2008 and for about 10,000 people.

The data are extraordinarily imprecise. There is great variability among clinicians. It is very hard to pin down anything that we could use with any consistency stretching out to two or three years. Medicine is advancing with great rapidity, so whatever we decide on today may be radically different in two years’ time. A longer prognosis could mean that a condition could be very well controlled for a period and then deteriorate dramatically towards the end. The amendment concerns only conditions that are uncontrolled and uncontrollable. Clearly, that may not be the case for many life-limiting diseases. I think there is consensus around the House that in many circumstances work is beneficial and important for those with life-limiting conditions. Some will want to continue to work, and it is important that we have a system that does not write people off but allows for that.

16:15

The most important point is that it is simply not appropriate to put such provision into primary legislation. We already have powers in the Welfare Reform Act 2007 to treat claimants as having limited capability for work or for work-related activity. Where appropriate, we use those powers to make regulations that allow for people who would otherwise fail to demonstrate limited capability for work or work-related activity to be treated as having either or both. It is important to place those treating provisions in the regulations, so that we have the right flexibility to ensure that the test is operating properly and covers the right people.

Terms such as life-threatening, uncontrolled, uncontrollable, recognised and therapeutic are subject to different interpretations. That is why it is important to be able to refine the wording or adjust it over time to ensure that the test remains accurate and appropriate. If we placed such wording in primary legislation, we would not be able to amend it with the flexibility that we would need. We would need future primary legislation—I think that everyone in the House knows what pressure there is on time for primary legislation—which would hinder its being updated.

We already make provision for a variety of “treating as” provisions in secondary legislation. There is no basis for inserting this provision into primary legislation when the other important provisions are contained in and work effectively through secondary legislation. Bluntly, that would lead to inconsistency in both primary and secondary legislation.

I ought to pick up a couple of points made by the noble Lord, Lord McKenzie. On his question about how appeals work, claimants will be treated as having limited capability for work where an appeal has been made, and will be able to benefit from the new provision if they move to the support group, having won the appeal. How will we continue to assess capability to work after the time-limited award ends? Credits-only claimants will continue to have work capability assessments, as will claimants on income-related ESA. This is clearly a complicated area. I hope that I have dealt with it. I can write to the noble Lord if he needs further detail.

I thank noble Lords for their comments on Amendment 43, for which I am pleased to have had so much support. That was one of the really good things that came out of Committee. A lot of good things came out of Committee, but that provided a real learning opportunity for us and I hope that we have responded in style. I ask noble Lords to support the series of government amendments, as I am sure they will, and I urge them not to press Amendments 42 and 42A.

Amendment 33 agreed.

Amendment 34

Moved by

[Lord Freud]

34: Schedule 3, page 126, line 3, at end insert—
“( ) section 1B(1) (as inserted by section (Further entitlement after time-limiting) of this Act;”

Amendment 34 agreed.

Clause 40 : Interpretation of Part 1

Amendment 34A not moved.

Clause 44 : Claimant commitment for jobseeker's allowance

Amendment 35 not moved.

Clause 46 : Sanctions

Amendment 36 not moved.

Clause 51 : Period of entitlement to contributory allowance

Amendment 36A

Moved by

[Baroness Meacher]

36A: Clause 51, page 36, line 31, after “2007” insert “, and subject to section 52,”

[Baroness Meacher]

Amendment 36A is a paving amendment for Amendment 46, which is consequential upon it. Our aim with these two amendments is to ensure that young people who are very severely disabled and who are assessed as qualifying for the support group continue to be entitled to contributory employment support allowance in the future. Clause 52, if not amended, would remove this entitlement from all such young people. Amendment 46 would accept the Government’s position that those somewhat less disabled young people would be entitled to employment support allowance as a member of the work-related activity group, or WRAG, but for one year only, so this is a very modest amendment. We recognise the financial constraints within which Ministers are working. Having said that, in principle I support Amendment 45, but Amendment 46 is more limited.

Until now, under the Welfare Reform Act 2007 the contributory allowance of ESA is payable to all those who have paid sufficient contributions and to young people who have not had an opportunity to make contributions because they have had limited capability for work for at least 28 weeks prior to being awarded the benefit. In other words, under the 2007 Act and under Amendment 46 a young person with a long-term condition or impairment which is so severe that they qualify for the support group—thus having a condition which prevents them working and paying contributions —can qualify for benefit as of right without having to be subject to a means test. The Government plan to remove this entitlement—at least for new claimants. As I understand it, those who have gained this entitlement as young people will continue within the support group.

The Government’s arguments in their impact assessment are, in my view, extraordinarily weak. First, they argue that abolishing the youth entitlement to contributory benefit puts those young people on the same footing as everyone else claiming contributory ESA. This is surely simply not the case. These young people with congenital conditions or impairments so severe that they are entitled to the support group provision are in a completely different category from people who are able to earn and build up capital, pay contributions and thus have some kind of dignity. They are surely in a category of their own.

The Government have said that they will protect the most vulnerable. As I said in my previous speech, the Prime Minister himself made a very personal commitment to protect these people. Is there anyone more vulnerable than a severely disabled young person who has never had, and will never have, the chance to earn a living? I find it difficult to think of anyone.

The second government argument is that the abolition of the youth entitlement to contributory benefit will simplify the system. My question is: simplify the system for whom? I understand that one of the most common errors made by jobcentre staff is the failure to advise young people of their entitlement to contributory ESA. Balancing a reduced number of errors against the hardship which Clause 52 will cause hardly justifies the reform. For the claimant, a contributory benefit which does not change with a change in income or capital is surely much, much simpler. Simplicity for whom? It may be simplicity for Jobcentre staff but certainly not for the complainant, so the Government’s argument does not stand up.

The Government’s attempt to save money by denying this particularly disadvantaged group of people may indeed backfire. Would it not be wonderful if some of them could find a partner, despite the level of their disabilities? In the long run, such a relationship would undoubtedly save the taxpayer. How much more difficult for someone to find a partner if not only do they have to cope with their own severe disabilities, but they are also a financial burden if they have no entitlement of their own to any income should their partner have any earnings? Such a position is quite different from an able-bodied person who has had an opportunity to build up earnings and capital—and indeed a pension of their own. These people will never have a pension; they will never have any sort of entitlement unless we make that provision for them in this Bill.

This is not an even playing field. The Government will argue that most of these young people will be entitled to some means-tested benefit. Indeed, I understand that only 10 per cent will receive nothing at all under a means-tested system. Then—you could turn that argument on its head—there will therefore be very little savings by denying these people the dignity of an entitlement to some benefit. Why remove that dignity from this peculiarly disadvantaged group?

The noble Lord, Lord Freud, in a letter sent to the Cross-Bench Convenor on 8 January, points to a very different argument with which I have some sympathy; it is quite, quite different. The noble Lord refers to a recent European Court of Justice ruling that restricts the Government’s freedom to apply the residence and presence tests that are part of the conditions of entitlement to ESA. This restriction makes the youth provision potentially available to people living abroad who come over here for a short period and then go home and have an entitlement for life. I understand that the Government are fighting the EU court ruling and I wish them well in that fight.

We need to be very clear that young people with very severe disabilities or impairments, which qualify them for the support group, are among the greatest priorities for this Government. As I said, the Prime Minister made his commitment to that group. Taking account of the EU ruling, but also the absolute priority for this particular group of claimants, I ask the Minister to take away this issue and consider tabling an amendment at Third Reading that would provide residential conditions, or perhaps parental contribution conditions for entitlement to this youth contributory benefit—the passporting in of youth to this benefit. There must be some way of providing for conditions for this benefit for young people that would preclude people abusing the benefit as the EU ruling has made possible.

If the Minister can agree to take this matter away and positively discuss with us and others a way forward to protect this group of people, while precluding the abuse, I would withdraw the amendment. But I would want the understanding that I will bring back the amendment at Third Reading if we cannot arrive at some satisfactory arrangement. We should not be ignoring the real entitlement of these young people—the most disadvantaged people in our society. They should have an entitlement to benefit, so that they do not have to rely on means-tested benefits for the rest of their lives. That is what we are talking about here. Either they have an entitlement to benefit or they are subject to means testing in perpetuity. It is an important matter and I hope that the Minister will be willing to take it away.

16:29

[The Earl of Listowel]

My Lords, I put my name to Amendments 36A and 46, to which my noble friend has just spoken so eloquently. I strongly support them. Young people with a severe congenital disability, or a severe disability developed early in life, merit contributory employment support allowance; it should not be removed from them. Noble Lords who are acquainted with families who have disabled children will know of the appalling difficulties they face when their child makes the difficult transition to adult services. It is particularly important that such disabled young people have financial support because the transition to adult services is often very poor.

Vital to a safe transition is a social worker, who can be a powerful advocate for a child and their family. However, what does one hear again and again from such families? Their social worker continually changes, the parents have to keep rebriefing the social worker on their child's needs, and there is no continuous and strong advocate for the child.

We should consider another group. As vice-chair of the parliamentary group for children in care, I know of the high rates of disability among children taken into public care. There must be absolutely no erosion of financial support for these children as they leave care. Amendment 46 would ensure that this erosion would not happen.

I am most grateful to the Minister for his helpful letter to the Convenor. I recognise that retaining contributory ESA for this small group of very vulnerable young people would be somewhat inelegant. I also recognise the concerns that my noble friend raised about the European judgment. However, I hope that the Minister may be able to help in this area, given the particular needs of this vulnerable group. I also hope that my noble friend will press this matter as far and as hard as she can.

[Lord Patel]

My Lords, I speak to my Amendment 45, which takes a much more radical view and proposes leaving out Clause 52. I guess the happiness will end now. However, I take note of the comments made by the noble Baroness, Lady Meacher, about the anxiety over abuses in the system, and I will listen carefully to the response from the Minister, because it is an important issue. I agree with the noble Baroness that it will not be worthwhile pressing any of the amendments if the Minister’s response is that there is a need to reconsider matters in the light of our comments.

I will outline the reason for my suggestion that we leave out Clause 52 by exploring historically why youth ESA was set up. Under the provisions, a person under the age of 20 who is not in full-time education or who has had a limited capability for work for 196 consecutive days can gain entitlement to contributory ESA despite not having reached the contributions threshold. This measure has existed in some form in the benefits system for nearly 40 years to enable young people to access contributory benefits if they are unable to work because of illness or disability.

The youth rules were introduced for incapacity benefit in April 2001 as a result of provisions in the Welfare Reform and Pensions Act 1999. They were intended to refocus benefits on people disabled early in life who had never had the opportunity to work and gain entitlement to incapacity benefit through the payment of contributions. The rules were carried over into ESA as part of the Welfare Reform Act 2007, again to ensure that young people who had not had the opportunity to build up a sufficient contribution record would not be excluded from the non-means-tested allowance.

With the Welfare Reform Bill the Government now intend to abolish the youth condition, as well as time-limiting its receipt to 12 months for existing claimants. The justification for this change, as set out in the impact assessment, is that it,

“will simplify the benefits system and ensure a consistency of treatment for those claiming ESA”.

This assessment completely fails to recognise that young people with long-term health conditions or disabilities are already in a place of disadvantage in comparison with older adults, hence the introduction of the youth condition in the first place, and that this change will entrench this disadvantage. This will mean that young people, including those unable to work because of cancer, will be extremely unlikely to be able to access the contributory element of ESA and will have recourse only to the means-tested income-related element to be subsumed into universal credit. Young people who are ineligible for the income-related component, which will include those with a partner who works more than 24 hours a week and full-time students, could therefore lose up to just under £100 a week. This will have a devastating impact on those who are unable to work and are struggling with the significant additional costs of a cancer diagnosis—and, believe me, there is a significant cost for all kinds of reasons once cancer is diagnosed.

The eligibility of young people for benefits is extremely dependent on their circumstances and particularly on their education status. I have serious concerns about how students, for example, are treated under the system. Full-time students are able to claim income-related ESA only if they are already in receipt of DLA. This is another example of how the eligibility rules at present disadvantage young people. I am also concerned about the knock-on effect of many young cancer patients who are students becoming ineligible for DLA as a result of the introduction of PIP—and we will discuss that later. I believe it is critical that the Government ensure that the eligibility of students with long-term health conditions and/or disabilities for ESA is not dependent on their receipt of DLA.

Let me give an example. David was diagnosed with stage 4 Hodgkin's lymphoma when he was 22. Before he was diagnosed, he received a full wage working for the NHS that stopped when he was undergoing treatment. As he had been working for his employer for only six months, he was entitled to three weeks’ paid sick leave. He was subsequently unable to claim any benefits, including ESA, because he was forced to move back home with his parents. David told me: “It can be really difficult for young people to build up time with one employer so that they are entitled to sick pay at full pay”. Similarly, it is extremely difficult for young people to build up national insurance contributions, so I am thankful that at present the youth rules enable young people, including those with cancer, to access contributory ESA, which can be a lifeline when they are already impacted by a loss of earnings.

DWP statistics show that 17 per cent of the current caseload of ESA claimants aged 16 to 24 are currently accessing contributions-based ESA, or both income and contributions-based ESA, and could therefore be negatively affected by this change. The DWP impact assessment estimates savings of only about £11 million per annum while noting that 70 per cent of those affected will lose £25 a week as a result of qualifying for income-related ESA only, which equals about £1,300 a year. A further 10 per cent will lose almost £100 a week by virtue of not qualifying for income-related ESA. Over a year, this amounts to almost £5,000. Only 20 per cent, or just under 3,000 claimants, will get exactly the same amount of income-related ESA that they would have got under the youth provisions. Based on the Government’s own estimates, this loss of income may affect as many as 10,000 people by 2015-16.

This means that only 20 per cent of claimants will be financially unaffected by these changes. I believe that it is wrong that these savings should be levied from such a small group of vulnerable young people. Indeed, the department’s own impact assessment notes that:

“The abolition of the ESA ‘Youth’ provisions is more likely to have an impact on disabled people because ESA is directly targeted at people with health conditions that limit their ability to work. There is a risk that the affected group will be more likely to need more support because of their condition than all ESA customers”.

I therefore believe it is wrong that the Government should seek to remove a vital form of financial support for young people with serious long-term health conditions. For a proposal that by the Government’s own admission will impact around 10,000 young people, the cumulative savings will be only £11 million.

In Committee, the Minister stated that he believes that his,

“proposals have built-in support for this group of claimants”.—[Official Report, 8/11/11; col. GC 58.]

I can assure the Minister that this is not the case and that his proposals will have a significant financial impact on young people with serious health conditions who may have no other option for financial support. For example, young people with cancer are not always able to access DLA, particularly if they have a treatment period of less than nine months. ESA may be their only option while they are undergoing treatment.

The Minister has also argued that no other group has this kind of concession in contributory benefits. However, that is exactly the point: the rules exist precisely because it is unlikely that young people will have been able to build up the requisite national insurance contributions, but they should still be able to access a benefit designed to provide financial support to those unable to work because of illness or disability. I do not see how this proposal can be part of a “principled approach to reform”, which is the basis for the whole of welfare reform.

The measure will remove a vital source of financial support for young people with serious health conditions and disabilities. I hope that the Minister will give some indication that he recognises this and that he is willing to look at it again or at least give it further thought. I take the point made by the noble Baroness, Lady Meacher, about the abuse of the system, which certainly needs to be addressed. When the time comes for me to decide whether to press my amendment, I will be mindful of that.

[Baroness Lister of Burtersett]

My Lords, I support Amendments 45 and 46, to which my name is attached. The purpose of the amendments has already been explained and the case has been made convincingly. I simply want to add to that. Young people who are disabled from birth or early in life have been entitled to claim ESA or its predecessors from the age of 16 since 1975, as the noble Lord, Lord Patel, pointed out. That has been accepted by all the main parties as a fair and proper way to treat young disabled people. Indeed, my noble friend Lord McKenzie did not thank me for reminding the Grand Committee that in a previous Parliament he was urged to be more generous to this group of young people by the then Opposition spokesperson, the noble Lord, Lord Skelmersdale. I was therefore rather surprised when the Minister argued in Grand Committee that no other age group can qualify for contributory ESA without having paid, or been treated as having paid, national insurance contributions. That is because all other age groups will have had the opportunity to earn such contributions, as the noble Baroness, Lady Meacher, and the noble Lord, Lord Patel, have already pointed out.

We are talking about a very small group. According to the Government’s figures, about 15,000 young people are likely to be affected each year. Some of these will qualify for income-related ESA, although sometimes at a lower rate, when there will be an estimated average loss of £25 a week, which is a significant sum for those on a low income. They may become automatically eligible for passported benefits such as free prescriptions, depending on the outcome of the review currently being undertaken by the Social Security Advisory Committee, but that does not justify removing their underlying entitlement to a weekly income. One in 10—or 1,500 a year—will lose all entitlement to benefit, perhaps because they have a partner in full-time work or because of the capital rules.

16:45

What kind of young people are we talking about? In Grand Committee I gave examples provided to me by CPAG that illustrated the kind of young people likely to be affected, which I know noble Lords found very moving. They were of young disabled people in foster care or living with a kinship carer; young disabled people who had built up savings to be used to help them maintain their independence; and young disabled people who might be fearful of forming a relationship for fear of losing their independent income. I will not repeat the case studies but will provide a couple more that CPAG has kindly given me:

“Martin has been disabled since childhood. For years his parents have been putting money into a savings account for him, including saving money from his disability living allowance. Now a young man, Martin cannot work but can nevertheless look forward to living an independent life. Claiming contributory ESA in youth will help him to do this. Because of the capital his parents have painstakingly saved for him, he is excluded from income-related ESA. Instead of having the means to pay for the independent living equipment and support he needs, if he cannot access ESA in youth he will have to run down his savings on day to day living costs, leaving him with no financial cushion for extra needs or against the day that his parents are no longer able to provide any support.

Ryan is 17 and has significant mental health problems. He currently lives with his grandmother. He is looked after by the local authority which pays his grandmother a small allowance for his upkeep. She cannot get child benefit or tax credits for him and is finding it difficult to manage. Ryan can get ESA in youth to provide him with his own independent income and some security for himself and his grandmother”.

Noble Lords may well ask what could possibly justify depriving this very small group of vulnerable young people of the independent means that offer them some security without the vagaries of means-testing. Is it a matter of principle? No principle has yet been enunciated by the Government and I think we can all agree that the something for something principle can be suspended in these circumstances. Is it cost? It would appear not. The department has indicated that this is not about cost. That said, the Minister’s final card in Grand Committee was the statement that the amendment tabled there, a slightly less restrictive version of Amendment 46, would reduce the expected cumulative benefit savings by around £10 million by 2015-16. That is cumulative, not annual, savings and, as was pointed out in Grand Committee, £10 million was easily within the margin of error. That was a very weak card to play.

What it seems to come down to is administrative simplicity. I am not sure that any policy that increases reliance on means-tested benefits, which the impact assessment acknowledges will be the case, adds to the sum of simplicity in the benefits system. I do not believe that your Lordships would want to deprive a small group of very vulnerable young people of a degree of financial security simply to make the overall system look tidier administratively.

I hope I am not doing the Minister a disservice when I say I did not feel that his heart was in the uncharacteristically feeble defence he put up for this clause in Committee. If there are any remaining technical problems with the amendment, including those raised about the European Court of Justice ruling and its possible implications—which I admit I was not aware of until today, although the noble Baroness, Lady Meacher, has made some suggestions about how they could be dealt with in an alternative amendment—these could be put right at Third Reading.

Given that the costs will be lost in the margin of error, I hope that the Minister will show the same openness of spirit with this amendment as he showed with the earlier government amendment, and accept either this amendment or one along similar lines—or, as the noble Baroness, Lady Meacher, has suggested, that he will bring forward an alternative amendment at Third Reading. If he cannot make such a commitment, I hope that your Lordships’ House will stand up for this very small group of vulnerable young people.

[Baroness Finlay of Llandaff]

My Lords, I have also added my name to Amendment 45, which was so ably spoken to by the noble Lord, Lord Patel, and the noble Baroness, Lady Lister of Burtersett. There are many complex issues in this group, all of which been addressed pretty comprehensively, but I would like to add a piece of new research which emerged in December. It shows that half of young cancer patients have to borrow money as a result of their illness. More than one in five have borrowed over £1,000, while almost one in 10 have borrowed over £2,000. The eligibility of young people is heavily dependent on their circumstances, such as their educational status and so on, and they are in a unique situation.

I should like briefly to address the situation of students. They are unable to access contributory ESA, and can access income-related ESA only if they are already in receipt of disability living allowance. Many young cancer patients, particularly those with initial treatment periods of less than nine months, may not be able to access DLA. Furthermore, there are students who are fit and well one day but, for whatever reason, discover that they are not on the following day. Some are diagnosed with devastating diseases such as osteosarcoma or cancers like Hodgkin’s lymphoma. There are also those involved in traffic accidents or who suffer catastrophic sports injuries, head injuries and so forth. The numbers are small, but suddenly these young people become very dependent and require long periods of rehabilitation. If you are a full-time student whose life suddenly collapses around your ears and treatment starts immediately, the costs mount up quickly. The problem with the way that the Bill is worded at the moment is that it closes the door on young people being able to access options for financial support. The complications of this have already been discussed, and I hope that between now and Third Reading the Minister will be able to consolidate the sentiments and ensure that we do not inadvertently remove a very important safety net for young people.

[Baroness Howe of Idlicote]

My Lords, those of us who sat through the entire Committee stage and have listened to and contributed to these arguments are now hearing it all again. We are hearing the horrific details about the suffering of children and their families and carers, and indeed of grandparents who are often involved in the care needs of these children and young students. All this must help to persuade the Minister, who we know has tried his very best in a number of respects, and has succeeded in a number of areas in which we had considerable concerns. In this case, however, with the numbers so small and the need to look elsewhere to make savings if that is necessary, why should we continue to penalise this group? Surely we can get around the European inhibition confronting us, and we have even had suggestions about that. Some brilliant speeches have been made today and I hope that they have had the desired effect.

[Lord McKenzie of Luton]

My Lords, I speak in support of Amendments 45 and 46. As the noble Baroness, Lady Howe, has just said, we have heard very powerful presentations by my noble friend Lady Lister, the noble Lord, Lord Patel, the noble Earl, Lord Listowel, the noble Baroness, Lady Finlay, as well as from the noble Baroness herself. I do not plan to repeat all the key issues associated with why I support these amendments. We have gone over them in Committee and we have heard them again today.

Society imposes significant challenges on young disabled people, especially so far as employment is concerned. These challenges will be particularly acute in the next few years as unemployment soars, particularly youth unemployment, which is now more than 1 million. Given the determination to place a time limit—we have yet to settle whether it should be one or two years—on contributory ESA for those in the WRAG, the abolition of the youth condition seems particularly spiteful.

The amendment of the noble Earl, Lord Listowel, would preserve the third condition, but only in circumstances where the claimant was and remained in the support group, thus focusing the support on those with the highest needs. The amendment would not appear to add any further benefits to existing claimants who qualify for ESA as a result of the third condition, because that is now covered by the government amendment. However, it would preserve the third condition for new claimants who fell within the support group. As such, I suggest that it is absolutely consistent with the Government’s Amendment 43, which was so widely praised earlier. I would hope that it was readily acceptable.

Just to be clear: the effect of government Amendment 43 is to provide among other things for those with an existing claim which relies on the third condition, the youth condition, to remain entitled after time- limiting if they have moved into the support group. Amendment 46 would allow the third contribution condition still to be applicable for new claimants but only where they would go directly into the support group. So there is a parallel in enabling young people with the most severe needs, existing and new claimants, to make use of the third condition. It is unlikely to have any significant cost, but doubtless the Minister will advise on that.

The letter sent by the Minister to the Cross Benches, and perhaps more widely, states that a “recent” European Court of Justice ruling limited the circumstances. How recent is “recent”? I do not believe that we debated or touched on this issue in Committee—if I am wrong, the Minister again will correct me. The letter goes on to say that the judgment further weakens the ESA youth provision, making it potentially much more widely available than intended. Of course, none of us would support benefit shopping if that is what is behind the concerns felt and we would work with the Government to try to make sure that it did not recur and was stopped, but until we have a much clearer idea of what is involved here, it would seem wrong to throw out now, on the basis of this potential issue, the prospects before us in the Bill to deal with the third condition and people entering the support group. If we do that now on the basis of the judgment, we close it off because we are coming to the end of the primary legislation.

At the very least, I hope that the Minister will be able to give a clear assurance to the House today that there will be an opportunity to come back to this issue at Third Reading and for us to have more detail, and that he will facilitate that. I would urge him also, because it would be consistent with that, not to press his Amendment 45A, because it would cut off the opportunity for people to make use of the youth condition for employment and support allowance. If noble Lords who have tabled these amendments are going to withhold pressing them on the basis that this issue requires further input, I hope that the Minister will undertake to do the same when he responds.

17:00

[Lord Freud]

My Lords, I start with government Amendment 45A, on which the noble Lord, Lord McKenzie, ended his remarks. We have already discussed government amendments to provide for further entitlement to ESA after a contributory award has been time limited. As I mentioned in the previous debate, it has been necessary to amend how the time limiting of ESA youth awards will operate as a result of providing for that new category of entitlement. We have introduced the amendments so that the deterioration category will be open to both claimants with a time-limited contributory ESA award and claimants with a time-limited ESA income-related award. In practice that means that the substance of the ESA youth time-limiting measure has been placed in Clause 51 instead of Clause 52. The government amendment preserves the intended policy for preventing new claims to ESA youth from being made in the future. The amendment to Clause 52 seeks to remove the substance of ESA youth time limiting, which will now feature in Clause 51, but to retain the measure that prevents new ESA youth claims being made.

Our proposed changes to the condition relating to entitlement to ESA on grounds of limited capability during youth are part of, basically, a set of principles around the form, where we are trying to focus our support for the poorest people. We are seeking to avoid duplication and to redefine the contract between the state and individuals as we move towards introducing the universal credit, which is clearly a far more efficient way of directing our resources to the poorest people.

As we go through some of the specific areas, I should remind the House that the universal credit, when it is introduced, is designed to focus each year an extra £4 billion into the pockets of the poorest people. On the other side, we do not think it is right in principle that, for example, a claimant who under the existing youth provision has qualified for contributory ESA as of right and then comes into a large amount of money—for instance, an inheritance from a parent—should then be in a position to continue to receive the scarce resources of the state in terms of contributory ESA without having paid any contributions. The figures available show that there is support for these youngsters in income-related ESA and that, indeed, 90 per cent of existing recipients will go from contributory to income related.

[Baroness Meacher]

My understanding is that many of these people may receive some income-related benefit but not at the same level of the contributory benefit that they would receive under the amendment. My second point is that the Minister has frequently referred to the £4 billion addition in the Welfare Reform Bill: is that a monetary addition rather than a real-terms addition because surely in real terms there will be a considerable drop in the overall welfare reform cost under the Bill?

[Lord Freud]

To be absolutely honest, unwinding the effects of the first full year, which will be in 2017, is quite hard to do in simplistic terms when compared to an SR. The simple answer is that the £4 billion is a real £4 billion, not an eroded £4 billion. The impact assessment makes it clear that it is made up of roughly half and half efficiency; it is a much more efficient system. We have taken the efficiencies that we have gained and put them back into the pockets of people, plus an extra amount of £2 billion. That is where the money is coming from. The bulk of it is going into the lowest two quintiles in a rather efficient way; I forget whether it is 80 per cent or 90 per cent, but the bulk of that money is directed very efficiently.

I turn to Amendment 45 in the names of the noble Lord, Lord Patel, and the noble Baronesses, Lady Lister and Lady Finlay. Clearly, the design of that amendment removes Clause 52 altogether. As I have just mentioned in my remarks on Amendment 45A, we have a principled approach to reform, in which we are trying to modernise and simplify the current welfare system and remove duplicate provision when our resources are limited.

As we move towards universal credit, on which I have just spent a bit of time, there are other areas of rebalancing the relationship between the state and individuals. I remind noble Lords again that the small number of youngsters who do not qualify for income-related ESA are in this position only because they have alternative resources available to them. All those in the ESA support group will continue to receive unlimited support. We will also, of course, provide support to ESA youth claimants whose awards end, and they later become vulnerable through their conditions deteriorating so they develop limited capability for work-related activity.

[Baroness Lister of Burtersett]

Does the Minister accept that there may be resources available to that group but that they are not resources over which they would have control, as they do not provide those young people with any form of independence, as does the contributory ESA?

[Lord Freud]

My Lords, where they have other resources, as they move into young adulthood, clearly they have to be resources of their households at that stage and their own capital and household income. The reality is that very many of this small group of youngsters are inheriting very substantial sums of money; that is why they are in the position that they are in. That is a decision in principle over whether we should support people who have very adequate resources of their own. We will continue to support those who have deteriorating conditions even when they have a high income. They just go back into the support group.

Let me just go into the rather complicated position with European law and the specific judgment here, which I am looking at. I do not know whether the noble Lord, Lord McKenzie, will regard it as recent enough—this is the Lucy Stewart case on 21 July last year. It is within half a year, so I think that is recent. We have a code for soon and sooner or whatever; recent is within half a year. That judgment made it clear that we cannot use the past/present test to deny access to a benefit if a claimant demonstrates a genuine link to the UK in other ways, which may include consideration of the relationship of a claimant and the social security system of the competent member state or claimants’ family circumstances. The past/present test requires that a claimant must be present in Great Britain for 26 weeks out of the last 52 preceding a claim for employment and support allowance. We still lost the case, even though we had lots of powers on residence. Clearly, the view of this Government is that it should be a matter for the Government of this country to decide how people qualify for benefits. The effect of this judgment is that young people can qualify for a benefit even when they have not lived in this country for many years.

I cannot be absolutely hard and fast on the European benefit-shopping issue; I can tell your Lordships only that this is causing us enormous concern at a number of levels and we are currently challenging Commission lawyers on it. The issue, at the simplest level, is that if you can call something social support it is much less likely to be abused and taken abroad than if it is a contributory right. That is where the battleground is and your Lordships can clearly see what we are doing here. When we are asked for a concession and whether we can get round the European law, what we are looking at is a system that basically provides the support for the vast bulk of the youngsters whom we want to support without opening our doors wide to current and future dangers of this kind of benefit exportability. That is the approach that we have adopted to try to get round this problem.

[Baroness Hollis of Heigham]

It is a dilemma. I think that the entire House sympathises with the noble Lord. Many of us have been faced with this dilemma in the past. You are eligible for benefits in the UK if you are ordinarily resident. Much of the protection has been about whether you are allowed to go away for extended periods of holiday and still continue to claim. That is secure, but the problem of contributory benefits is that which flows out of the free movement of labour and, as a result of that free movement, generates you a right to a contributory benefit whichever state you may subsequently live in.

We understand the Minister’s dilemma very well, but I would have thought that there is a route out, which is of course to recategorise this as a special non-contributory benefit. That has a long pedigree in social security and European Union co-ordination of benefits and would therefore take it out of the label “contributory”. It would take it out of the labour market eligibility, because these young people have never been in the labour market. We are trying to apply a label to them that is not appropriate. By relabelling this, perhaps along the lines suggested by the noble Baroness, Lady Meacher, we should in my view be secure.

[Lord Freud]

My Lords, I do not think that we ought to spend a huge amount of time on this—it is really difficult and moving very fast. The principle is that it is the automatic entitlement that makes us vulnerable. If it is for income supplement and social support, it protects us. Your Lordships can see that the change that we have made here is to cover the vast bulk of the youngsters with support, but it is not automatic. That is precisely the safety that we are going into with this European legislation. I do not think that the precise workaround from the noble Baroness, Lady Hollis, works or that we should sit round this Chamber and work something out. All I can tell your Lordships, for your consideration, is that this is the way that we have found to get round it while, as I say, covering 90 per cent of those youngsters.

I ought to hurry along, but let me move to giving your Lordships the figures on Amendment 45. The reduction in the cumulative benefits savings by 2016-17, over five years, would be around £70 million, which we would need to find elsewhere. A little bit here and a little bit there—it is a very hard thing finding bits of money.

[Baroness Lister of Burtersett]

I am sorry to interrupt again but in Grand Committee the cumulative saving during that period was £10 million. Now, suddenly, it is £70 million. Where has the other £60 million been accumulated?

17:15

[Lord Freud]

The figure that is closest to the one in Grand Committee is the one relating to Amendment 46, which I will come to, which is closer to £17 million. This one is £70 million.

Amendment 36A, moved by the noble Earl, Lord Listowel, and the noble Baroness, Lady Meacher, and Amendment 46 would allow new claims to ESA to be made by those claimants who at the end of the assessment phase would be placed in the support group. We understand the purpose of Amendment 36A to be to provide support for Amendment 46. I have already listed the rationale for rejecting Amendment 45, which would remove Clause 52, and that rationale applies to Amendments 36A and 46 as well. In addition, Amendment 46 would have accepted considerable unwanted—

[Lord May of Oxford]

At the risk of exposing my lack of full comprehension of this, I have been listening to the debate and I resonate with the concern that the Minister has expressed about the abuse of this system, but at the same time I have not heard clearly that his resolution of one problem has not created a different and arguably more severe problem that has been emphasised by people who really understand this.

[Lord Freud]

My Lords, we have had a pretty good Socratic debate on the welfare Bill for some time. I hope that I can get over to noble Lords that the move from an automatic payment system, which is what we have for these youngsters, to one based on their income needs will pay them effectively the same amount depending on the position of their disability, will cover 90 per cent of the same people and will leave out the last 10 per cent who have their own means of one kind or another. That is the solution that works best in terms of the European legislation.

[Lord McKenzie of Luton]

Before the Minister sits down, is the ruling in question a concern only in relation to the youth condition that we are discussing today, or does it have a wider implication? If the latter, how are the Government proposing to address that?

[Lord Freud]

My Lords, I am being dragged a long way away from my brief. This is a widespread concern that runs to benefit tourism. We are currently challenging the Commission in the Court on one of its findings and trying to build a constituency with other European countries that are also enormously concerned at the implications of this. As I say, though, the principles are that these automatic payments leave us far more vulnerable than income support in this area.

I know that noble Lords are listening very hard to this, because it is an important concern that we all have. I hope that I have been as clear as I possibly could have been on this issue. It is a moving target and changing all the time. It is not settled at all, so I cannot lay it out absolutely—I can talk only about the risks involved.

[Lord McKenzie of Luton]

I think that we all understand that, but the Minister is praying this EU ruling in aid of his desire to stop the youth condition continuing in future. He has already said that that ruling has much wider implications, and that there will be a wider need to look at how it can be fully addressed. In those circumstances, is it not unfair of him simply to target this particular benefit and say, “This can be dealt with by stopping it”, rather than addressing a wider solution in due course?

[Lord Freud]

My Lords, not really. This is a prime area in which we have automaticity without any payment system. This is one of the areas where we are very vulnerable so it makes enormous sense to look at it now and as it comes up. Therefore, I would not agree with that point. Shall I rattle along?

Amendment 46 would create considerable and unwanted uncertainty for claimants and operational difficulties for the department. A claimant would need to claim ESA and go through the assessment phase without any entitlement to ESA at all until the question of limited capability for work-related activity was determined at their WCA. This is because, under Amendment 46, only claimants who were found to have limited capability for work-related activity at the end of the assessment phase would be entitled to ESA on the grounds of youth. As I have already said, the amendment would save rather less—£17 million until 2016-17. The discrepancy is in the SAR, which is covered by a very similar amendment, to pick up the point of the noble Baroness, Lady Lister.

I confirm that the Government see Amendment 46 as linked to Amendment 36A, but none of the amendments in this group is consequential on any other. We would expect the House to make a decision on each individually. In due course I will move the amendment in my name, Amendment 45A, and I urge noble Lords not to press theirs.

[Baroness Meacher]

I thank the Minister very much for his reply to the various amendments, and many Members of the House for their contributions. What we have here is an attempt to protect the dignity of a very vulnerable group of severely disabled people at a cost of £10 million, which is absolutely paltry. I refer to Amendment 46.

I feel that we are being somewhat sidetracked by the intervention on the European Union. Contributory benefits of all sorts are vulnerable to this situation. I think that the whole House has made it very clear that we are behind the Government’s fight to make sure that benefits tourism is stopped. We do not want to see it happen.

[Lord Freud]

My Lords, can I make it absolutely clear that contributory benefits per se are not vulnerable because they are paid? The vulnerability is in assumed contributory benefits, where they have not been paid.

[Baroness Meacher]

If I may say so, that brings me back to the point that I made earlier. We need to find a way of making it clear that this is a non-contributory benefit for people who, sadly, will never be able to contribute towards a contributory benefit. This is a social benefit for very disadvantaged and disabled people—a very small group of such young people, who will never have a chance, almost certainly in the rest of their lives, of any sense of independence or dignity, unless we give it to them today at a cost of £10 million to the entire tax-paying population of this country. On that basis, I do need to test the opinion of the House. However, I respect the Minister’s position and hope we can have further discussions about how we can prevent benefits tourism, which is completely unacceptable.

17:24

Division 1

Ayes: 260

---

Labour: 174
Crossbench: 65
Bishops: 4
Ulster Unionist Party: 3
Liberal Democrat: 3
Democratic Unionist Party: 1
Independent: 1
Plaid Cymru: 1

Noes: 216

---

Conservative: 141
Liberal Democrat: 60
Crossbench: 10
Independent: 1

17:39

Amendment 37

Moved by

[Lord Freud]

37: Clause 51, page 36, line 33, at end insert “by virtue of the first and second conditions set out in Part 1 of Schedule 1”

Amendment 37 agreed.

Amendment 38

Moved by

[Lord Patel]

38: Clause 51, page 36, line 34, leave out “365 days” and insert “a prescribed number of days which must be at least 730”

[Lord Patel]

My Lords, I shall speak also to Amendments 38A and 39A. These amendments oppose the introduction of a 12-month limit on the amount of time in which those in the work-related activity group, or WRAG, are able to claim contributory employment and support allowance, or ESA.

All the cancer charities, such as Macmillan, the Disability Benefits Consortium and the wider disability sector also oppose the principle of time-limiting ESA. I believe that people with a disability or illness who have paid into the system should be able to receive support for as long as they meet the eligibility criteria for ESA and are unable to work due to their condition.

As I said, Clause 51 amends the Welfare Reform Act 2007 to introduce a 12-month limit on the amount of time that a person in the WRAG is entitled to contributory ESA. The cancer charities, such as Macmillan, along with the rest of the disability sector, strongly oppose the principle of time-limiting. There is already more than enough incentive for people with disabilities and long-term illnesses such as cancer to get back into work. What they need is enough time and the right support. What they do not need is to be penalised for not recovering quickly enough.

The Government are clearly opposed to removing time limiting altogether. Therefore, I understand the need to find a compromise that meets the Government’s priority of finding savings but, crucially, gives disabled and sick people a more realistic timeframe in which to return to work. Evidence supports extending the one-year time limit.

The impact on disabled people of time-limiting ESA will be considerable. The Government’s own figures show that 94 per cent of people in the WRAG will need ESA for longer than 12 months. Those affected, including 7,000 people with cancer, will lose up to £94 a week of vital support, despite having paid national insurance contributions throughout their working lives. The proposal in the Bill is based on the Government’s objective of making savings. However, the Government have provided no evidence to demonstrate that a 12-month time limit is reflective of the amount of time needed by people in the WRAG before returning to work.

The coalition agreement promised to protect the vulnerable from spending cuts. In his party conference speech the Prime Minister, David Cameron, said:

“People who are sick, who are vulnerable, the elderly—I want you to know we will always look after you. That’s the sign of a civilised society and it’s what I believe”.

It cannot be right to take crucial financial support away from people who have paid into the system but are unable to work due to illness.

The Government’s own figures estimate that 94 per cent of people in the WRAG will not be ready to return to work after one year—I repeat: 94 per cent—but the Government have stated that the change will help to encourage people to come off benefits. They have also stated that the proposal is aimed at making savings and is not based on an estimate of what is a reasonable length of time within which to expect people with a disability or illness to be able to return to work. It cannot be right for the Government to propose such a significant policy change without providing evidence that the measure is appropriate or reasonable.

In Committee, the Government were asked to publish evidence to demonstrate that a 12-month time limit reflected the needs of people in the WRAG. I have seen no such evidence. The Government were also asked which organisation of experts they had consulted before making the decision to introduce a time limit for contributory ESA. They have not consulted any of the organisations which have subsequently raised concerns about the impact of this policy. The time limit will be imposed on people who are in the WRAG. Those in the WRAG are people who, following the work capability assessment, have been found not to be fit to work because of their disability or illness. While those in the WRAG are expected to carry out some work-related activities to help them to return to work, they are still considered to be not fit for work. If, following the WCA they had been found to be fit to work, they would be eligible for ESA and placed on jobseeker’s allowance. People in the WRAG could still be severely disabled or debilitated, as is the case with people recovering from aggressive cancer treatment.

17:45

Let me give an example. Martin was diagnosed with primary progressive MS in 2007. He continued to work until November 2009, albeit with difficulty. He cannot walk or stand up. He has incontinence problems and suffers badly from fatigue and muscular weakness in his legs and back. Martin recently received a letter from the DWP outlining how the Government are seeking to change the rules on ESA and to impose a time limit on benefit. He said:

“The real sting in the tail is that the ‘clock’ starts ticking from the date you first ever started receiving the benefit. In my case that is since June 2009—so, some 27 months ago, so in their eyes I am 15 months over the limit! Therefore, my payments would stop immediately once the policy comes into force next year”.

Currently no one is placed in the WRAG indefinitely. Only those who meet the strict eligibility criteria for ESA and are unable to work will be able to continue to receive ESA. People in the WRAG can be called for an assessment at any time and will lose benefit if they are found to be fit for work. The current system works on the basis that people should not receive support for longer than they require it. The Government’s proposals, therefore, will affect only those vulnerable people who are too unwell to work. The vast majority of disabled people want to work if they can and do not need an incentive. Unlike incapacity benefit, the WRAG or ESA are clearly focused on supporting people into work, and receipt of the benefit is conditional on claimants taking agreed steps and activity to move towards work. This can include training, education or condition management. Claimants who are taking the agreed steps to return to work should not be penalised simply because they need longer than one year. Many disabled people will simply not be fit enough to return to work after just one year. For example, people with cancer will often experience side-effects of their condition and treatment, such as severe fatigue or depression, for many months, and in some cases years, even after the treatment has finished.

People with cancer face a range of barriers that impact on their ability to return to work. This House understands that more clearly than anywhere else because many in the House, or their relatives, have experienced what it is like to be on treatment, such as chemotherapy, radiation or post-surgery. People can experience debilitating physical and psychological effects from cancer and its treatment, including severe pain, fatigue, nausea, fever and diarrhoea. The majority get poor advice about the impact of the cancer diagnosis on their working life and on how to manage their condition. They are not routinely offered a range of the back-to-work services that they need, such as counselling, retraining and work-based advocacy. They are less successful in securing workplace adjustments to which they are legally entitled and which help them to return to work. That is probably linked to the fact that just 43 per cent of employers know that people with cancer have legal protection against discrimination.

Stephen Townsend started claiming ESA in March 2011. His partner earns roughly £160 a week. Under the Bill, he will lose his ESA in April 2012. He states:

“I can’t believe the Government is planning to take away all my ESA after just 12 months because my wife works more than 24 hours a week. I had renal cancer and have had a kidney removed. I’m still in a lot of pain. I need to stick to walk and get awful pins and needles down my legs. Without my ESA we would find it really difficult to get by. We have used up virtually all our savings already. I have worked all my life and paid into the system but this doesn’t seem to mean anything”.

A lot of these patients will not just have paid into the system; they will have paid into their pensions, which they will not live to collect.

Under means-testing thresholds, thousands of people will lose their ESA if their partner earns as little as £150 a week. Of the people who will lose out, 51 per cent will be in the lowest-third income centile. The average drop in income will be £52 per week for those who lose out. For those in the lowest-income centile, the figure will be £35 per week. It is a significant amount of money for people who are struggling to make ends meet.

This policy will penalise people who worked before their disability or illness, paid into the system, often for many years, and are doing all they can to return to work. They are not part of the something-for-nothing culture of which the Government have been so critical. The people who will be affected have paid their national insurance contributions. Therefore, it was disappointing when, in a response to the press, an official spokesperson for the Department for Work and Pensions drew a distinction between disabled people and taxpayers.

The Government claim that alternative means of support, such as housing benefit and tax credits, will be available for people who lose their ESA. However, these benefits depend on personal circumstances and many cancer patients will be ineligible. For instance, a couple without children who own their own home will not be eligible for housing benefit and will qualify for tax credit only if the working partner works for more than 30 hours a week, which may not be possible because of their caring commitments.

In 2008, Julian was diagnosed with cancer of the jejunum, which is part of the small intestine. He stated:

“Many people may not be aware that when you have cancer, you tend to feel the cold a lot more—even in the summer months! Especially if you are recovering from an operation or having chemotherapy. Additionally, your body is more susceptible to the cold whilst it is fighting disease.

Due to my illness I am no longer working and am at home during the day, which means that I have the heating on. This has meant that my heating and electricity bills have practically doubled”.

The Government have not made a satisfactory assessment of the likely impact of time-limiting health and social care budgets. For instance, and unbelievably, the impact assessment from the Department for Work and Pensions states that there will be no impact on health and well-being. Unfortunately, it does not provide any detail on how this conclusion was reached. In response to recent Parliamentary Questions, Ministers admitted that no robust assessment had been made of the impact that time-limiting ESA would have on the number of people in poverty, on health and social care budgets, on the demand for benefits advice services such as Citizens Advice and on people with long-term degenerative conditions.

Many of today’s newspapers cover a report that states that for many cancer patients, financial worries are second only to worries about their condition and treatment, and are even more important than the possibility of dying. I have serious concerns about the impact that time limiting will have on the psychological well-being of sick and disabled people who might already be experiencing depression and anxiety. This will also put pressure on mental health services funded by local authorities. In Committee and in answer to PQs, it became clear that the Government had failed to adequately consider the profound impact that the proposal will have on sick and disabled people. Given the clear inadequacy of the Government’s impact assessment, how can they be confident that the change will not have a significant impact on the health and well-being of those who will lose support, and will not simply displace costs to other areas of already stretched local authority health and social care budgets?

Calls for a rethink on the time limit have been widespread. There has been severe criticism of the policy from experts and commentators in the media_. Today’s newspapers are full of it. Liberal Democrats voted to change their party’s policy to oppose an arbitrary time limit on ESA. In Committee, the Government’s case was unconvincing and did not stand up to scrutiny, at least by the Committee Members who attended. Despite assurances from Ministers throughout debates on the Welfare Reform Bill that the Government will improve the WCA for cancer patients in the light of Professor Harrington’s recommendation, the Government are now consulting on proposals that will reduce the protection offered to thousands of cancer patients undergoing treatment. Today’s report by Citizens Advice about the accuracy or reliability of the WCA points out that for 96 per cent of people who are assessed it is inadequate, inappropriate or inaccurate. Instead of extending automatic entitlement to ESA for cancer patients undergoing chemotherapy to other patients receiving equally debilitating treatment, the Government’s proposals would remove automatic entitlement altogether and force all cancer patients, even those on intravenous chemotherapy, no matter how sick they are, to undergo an assessment to prove their eligibility, an assessment that today’s report has found to be totally unreliable and faulty.

This is why leading cancer charities, Macmillan Cancer Support and many others, and oncologists have been unable to support these proposals. Even without this retrograde step for cancer patients, it is widely recognised that the WCA needs significant improvement. Why this change before improving the WCA? Why subject sick and vulnerable patients to a faulty testing mechanism? Instead of taking away support from sick and disabled people who are still unable to work, the Government should be working with disability organisations to design back-to-work programmes that offer personalised support appropriate to customers’ needs.

There are additional concerns about the amendments that ensure that time limits for contributory ESA for those in the WRAG are not applied retrospectively. As it stands, because of the retrospective nature of the proposals in the Bill, anyone placed in the WRAG in April 2011 or before will immediately lose their contribution-based ESA when the proposed legislation comes into effect in April 2012. Those who will not qualify for income-based ESA because of savings or a partner in work will lose £94 a week. I do not believe that the time accrued in the WRAG prior to the proposal coming into effect should contribute to any time-limit period.

The Government had an amendment to protect those with deteriorating conditions, and I welcomed it, but although it addresses the concern of people with deteriorating conditions, it does not go far enough. It is extremely important that a person in the WRAG who has been subject to the ESA time limit of 365 days is able to requalify for the contributory benefit at any time that they are subsequently assessed as eligible for the support group. The Government’s amendment does not address the central concerns about the inadequacy of the 12-month time limit. I beg the Minister to consider this again.

I know the argument will be that in cost terms this is very significant, but I wonder whether there might be other ways of trying to find a compromise, even if it is to see whether a review can be carried out and its results assessed to see whether the 12-month time limit is satisfactory. As I said before, I am sympathetic to cutting the deficit, but I am highly sympathetic to sick and vulnerable people not being subjected to something that will make their lives even more miserable. I beg to move.

18:00

[Lord Low of Dalston]

My Lords, I understand that short speeches are the order of the day so that we may make progress. I shall therefore try to make a short one. I put my name to this amendment because I feel very strongly that the proposal to time limit contributory ESA to one year is one of the most retrograde features of the Bill. At Second Reading, I identified as many as five things wrong with the Government’s position. I will not repeat all those here but I will refer to a sixth, which I did not quite crystallise at Second Reading. The matter was gone into in great detail in Committee, although I was unable to be present. However, I have carefully read the debate twice, most recently through the long watches of last night as I travelled back from Bangkok on an overnight flight with an active two year-old for company.

In any case, the argument emerges most starkly if one sticks to its bald outlines, which have to do with the basic unfairness of the proposal. This was incisively encapsulated by the Disability Benefits Consortium in the words of a woman with Parkinson’s disease. She said,

“There’s no guarantee that I’ll find a job in 12 months. It could take me much longer”.

At this point, one might interpolate, “especially in current economic conditions”.

She continued,

“I’ve worked all my life and paid for decades into the system on the understanding that there will be support if I need it. To be told that all this support could have an arbitrary time limit is both unfair and stressful”.

There are two aspects to this unfairness besides the one which I have just interpolated. First, the condition of sick and disabled people in the WRAG is such that their likelihood of being able to get into work within a year is remote in the extreme, especially in present conditions. As my noble friend Lord Patel has told us, the Government’s figures show that 94 per cent of people in the WRAG need support for longer than a year and a DWP research report entitled Routes onto Employment and Support Allowance, which was published last September, revealed that, despite its name, after 18 months, only 9 per cent of claimants who had previously been out of work on incapacity benefit had found work and still only 25 per cent of those who had entered ESA from work had found new employment. In these circumstances, as the lady quoted by the Disability Benefits Consortium said, to limit ESA to just one year is both arbitrary and unfair. It is in no way evidence-based and is simply cost-driven. The DWP estimates that by 2015-16, 700,000 people will lose their entitlement, of which 280,000 will lose it entirely, which will mean a loss of £94.25 a week.

The second unfairness resides in the breach of the contributory principle that the noble Baroness, Lady Lister, was so concerned about in Committee; that is, the breach of faith of citizens who have paid their national insurance contributions perhaps for 30 or 40 years in the belief that the support would be there if needed. A correspondent who wrote to me said:

“I believe it is totally wrong that people who have worked and paid tax plus national insurance for many years—36 in my case—should have their entitlement to state support time limited in this manner. It seems that the state is breaking its side of the contract at a time when people are most vulnerable”.

The Minister dismissed this in Committee. He said that national insurance contributions were to cover a wide range of contingencies, including the state pension and the NHS. He argued that a year was a reasonable amount of support to give someone when they got into difficulty. In a letter dated 10 January 2012 addressed to Cross-Bench Peers, to which my noble friend Lord Patel has referred, the Minister said that it strikes a reasonable balance between the needs of sick and disabled people claiming benefit and those who have to contribute towards the cost. But you might as well say that it was enough to give someone a pension for, say, three years to help them with the adjustment to retirement, after which they are on their own. Perhaps that will come to be the Government’s position: who knows? Anything is possible. Who would have thought that we would be reducing ESA support for which people have been contributing all their working lives to just one year?

Finally, I come to my sixth point, which I failed to develop at Second Reading. Ministers are constantly pointing to the unprecedented amount of support that they are putting in place to help people back or in to work. Only last night a statement was read out on the radio from a DWP spokesperson, which said:

“We are absolutely committed to supporting more disabled people into work. That is why this Government has protected the budget for specialist disability employment services. Aside from our disability employment advisers, we also have specialist teams at Jobcentre Plus who actively work with businesses to encourage them to interview disabled people with the right skills. Work Choice is expected to support more disabled people into employment each year than any of its predecessor government programmes”.

As regards specialist teams, Ministers have little idea of the reality. No Minister could go on the programme and this statement was read out in response to a blind woman—an able person with a lifetime of successful, professional employment, who had been made redundant last May. She told a woeful tale of the poor advice and lack of support that she had received. She received none of the interviews or training that had been promised. She is very eager to find a new job but few, if any, openings have been drawn to her attention. Despite repeated requests, no information has been provided in an accessible form. Her adviser seemed to have had little training. I know the woman concerned and on one occasion she told me that she felt she could do the adviser’s job better than the adviser.

The Work Programme is not working. In these circumstances it is not only unfair but downright cruel to time-limit contributory ESA to one year. At present it is unlimited. To reduce the level of support to just one year at a stroke is draconian in the extreme. I would drop Clause 51 entirely but I am a realist and recognise that, to have any prospect of success, compromise will be necessary. The amendment proposed by my noble friend Lord Patel is surely the least one could make to ameliorate the draconian nature of the Government’s proposal. I very much hope, too, that in the light of their conference’s decision to oppose the time-limiting of contributory ESA last September, Liberal Democrat colleagues will search their consciences and also give my noble friend’s amendment their support.

[Baroness Hollins]

My Lords, local health charities and services are also very concerned about the impact of time-limiting ESA. They are well aware of how difficult it is for people with severe and enduring mental illness to obtain and to sustain employment, especially at a time of deficit. My postbag is full of angry letters. One correspondent wrote to say that her brother took his own life largely due to difficulties in his working environment. She wrote:

“I personally have only ever managed a very chequered career due to living with complex mental health conditions and welcome any effort on the part of our Government to encourage a mental-health friendly workplace and specialist schemes to support people with mental health conditions into work, but”—

and here is the rub—

“on a voluntary basis because I am deeply concerned that any system built on a backdrop of conditionality, sanctions and time limits will prove to be totally counterproductive, leading to fear, anger and disengagement”.

I could speak at great length about some of the many issues that have been raised with me and I support this amendment.

[Baroness Thomas of Winchester]

My Lords, the time-limiting of ESA is one of the most emotive issues in the Bill, as we have heard. As the noble Lord, Lord Low, said, people affected by severe illness in their working lives who have paid national insurance for many years expect to be protected by the state.

As I said in Grand Committee, by bringing in this change in policy, the Government are acting like a private insurance company that changes the rules when a person makes a claim. However, as we know, the comforting words “national insurance” are really a myth, as many are about to find out when those in the WRAG who have been receiving ESA for a year by this April will have their money stopped immediately. Of course, some will go straight on to income-based ESA, but according to the impact assessment, about 40 per cent will find their income dropping by a staggering £90 a week if they have modest savings or a partner earning only about £148 a week.

The key question is whether it is fair to cut the benefits of those too ill to work, in this time of austerity, when the highest spending department in Whitehall has to take its share of deep cuts in expenditure. As we know, the change to universal credit, which we discussed at the beginning of the Bill, is going to be very expensive initially before savings will be made. Presumably the Treasury demanded this measure as a quid pro quo for finding the money to pay for universal credit.

What troubles many people, and certainly troubled the Lib Dem conference last year, is the arbitrary nature of the one-year cut-off. As we have heard, the DWP’s own figures show that 94 per cent of longer-term claimants were on ESA for more than a year. The many briefings that we have all received tell us that most people with severe but not necessarily rapidly deteriorating conditions struggle to be well enough after a year. I welcome the Government’s amendment, which would mean that those with deteriorating conditions will have a reassessment with a view to them migrating from the WRAG to the support group after a year.

What about the others? Will everyone be entitled to ask for a reassessment at the end of the year or only those with deteriorating conditions? For example, what about people who have had quite severe strokes? Their condition may not be deteriorating but they may be a very long way from the jobs market although that will be their eventual destination. If reassessments are to be allowed, at what point will people be asked to be reassessed? If it is too near the one-year cut-off point, I can envisage such a backlog that it may be many months before the reassessment is carried out.

Is the answer Amendment 38 tabled by the noble Lord, Lord Patel, to allow two years in the WRAG instead of one—another arbitrary time limit? I understand that this would be prohibitively expensive. The figure of £1 billion over the next few years has been mentioned. If this amendment is successful, the House of Commons will almost certainly claim financial privilege, which will mean that this House cannot even debate it again. A vote for Amendment 38 might lead to ping-pong, if it were to be won, but only to ping, not to pong. It would therefore be a merely Pyrrhic victory as the amendment would not go any further.

The work capability assessment is at the heart of this debate, and Professor Harrington’s reviews of it are most welcome and instructive. He advises patience, saying that the changes he has asked for and which the Government have accepted are taking time to bed down. I quite understand that, which is why I am so opposed to what I still wish to call the retrospective nature of this part of the Bill, even if strictly speaking it is not retrospective as it is not actually clawing money back from people. However, stopping someone’s claim the minute the ink is dry on the statute book, having warned them in a round robin letter, is pretty sharp practice. The Government maintain that people have been given enough notice of the April 2012 cut-off date because they could have read about the proposal in the small print of the comprehensive spending review in October 2010. How incredible is that?

18:15

If the Government were to wait, even if only for six months rather than a year, it might give Professor Harrington’s recommendations for improving the WCA a chance of being implemented consistently around the country; if six months would be too expensive, what about three months? I am sorry that the Government are including the 13-week assessment phase in the year because that is paid at the lower JSA rate rather than the WRAG rate. If they ignored this phase, it would at least give people 15 months instead of 12 months, and again those three months could be useful in concentrating minds on improving the work capability assessment. As the noble Lord, Lord Patel, said, we have all received the CAB report, which is pretty damning about the work capability assessment right now.

One of Professor Harrington’s recommendations is that DWP decision-makers should look independently at the Atos Healthcare assessments, in particular the person’s medical reports, and then make their own minds up; in other words, they should not just rubber-stamp the Atos recommendation. I wonder whether that now happens routinely across the country and whether and how it is being monitored. The Government should pull out all the stops as a matter of urgency to make sure that the Harrington review proposals are being implemented in full throughout the country as the payback for bringing in this policy so soon. Does my noble friend the Minister know whether this is happening?

I believe that the number of appeals about the WCA is beginning to drop, but I fear that there will be many more appeals when this policy is brought in from people wanting to migrate from the WRAG to the support group. Even the impact assessment reckons that 50 per cent of those affected by time-limiting will appeal, of which 20 per cent might be successful.

Many of us are uneasy about the whole policy because of the unintended consequences that we expect to flow. Low-paid partners may be tempted to give up work so that means-tested ESA can be claimed, while the category with the highest claimants—those with mental health conditions—could give up in complete despair. Those with modest savings will wonder why they are being penalised if they are saving for care in their old age. However, I reiterate that voting for Amendment 38 might make us all feel better but it could be seen as a rather cynical move because we know that it will not stick and it might be reported as a great victory. I would rather vote for a more modest amendment such as Amendment 40A, which leaves out the assessment phase, which has more of a chance of success. However, I shall listen to my noble friend’s winding-up speech with great care.

[Baroness Lister of Burtersett]

My Lords, I want to make a very brief point in support of the amendments. The Government say that time-limiting ESA is not based on an estimate of a typical recovery time—it is not evidence-based—but on the principle that these are people who have other means of financial support, which of course is exactly the same principle that the Minister raised earlier to justify removing the ESA youth condition.

This other support is of course income-related ESA, and the Government point out that 60 per cent of people affected will be able to claim it. That means that 40 per cent of those affected—roughly one-third of men and nearly half of women—will not be able to. We are talking here about an erosion of their financial autonomy. Many noble Lords have received many letters from people saying that they are shocked and anxious at the implications of this.

An article in today’s Guardian summed up very well what this erosion of financial autonomy means. This quotation is from a man who is going to be affected by this:

“The satisfaction of being able to contribute to the family budget with a benefit that has been earned and paid for will be removed. The last shred of dignity will be stripped from people who have already lost a great deal in life and who may already feel a burden on those who care for them”.

Disabled people should never feel that they are a burden on those who care for them, and it is terrible that they are being made to feel that way by this clause.

[Baroness Hollis of Heigham]

I shall be very brief and respond, if I may, to the noble Baroness, Lady Thomas of Winchester, who over the years has been a doughty champion for disabled people. However, I have never before heard her make a speech based on the sole proposition that because the House of Commons might reject an amendment, it should not be moved in this House. That is not a sound base for policy, as the noble Baroness will accept. That does not mean to say that at Third Reading there may not be compromise or fallback amendments and so on, but this House has never walked away from its proper duty to scrutinise because it feels that the other place may not accept what we are doing. I hope that the noble Baroness will not run up that sort of argument again.

[Baroness Thomas of Winchester]

My Lords, I shall respond to that. What I said was that noble Lords may think that we will go into ping-pong: that the House of Commons will say one thing and we can come back to the debate and have a dialogue. That does not happen with financial privilege. There are many new Peers in the House who will not realise that financial privilege is imposed by the Commons, which it may be—it may not, but it probably will be because this is going to cost around £1 billion over the next few years. People outside will be given a false sense that we have done something and scored a great victory by defeating the Government and so everything will be all right. No, it will not be. That is what worries me. This is not like ordinary ping-pong; it is quite different.

[Baroness Hollis of Heigham]

My Lords, almost everything passed in this House has financial implications. The House of Commons is entitled to and regularly will dismiss every amendment passed in this House under financial privilege. There is nothing new in that. We do indeed then go into ping-pong because this House will offer an alternative amendment for the House of Commons to consider. Should we reach that situation, some of the fallback amendments mentioned by the noble Baroness could then be considered.

[Lord Blencathra]

My Lords, it is with some trepidation that I intervene briefly in this debate in view of the learned comments that one has heard from both sides. I seldom contribute to debates of this nature because it is outside my areas of expertise, but I am prompted to do so as the result of a speech made yesterday. I heard the leader of the Opposition say that,

“in these times, with less money, spending more on one thing means finding the money from somewhere else”.

He went on to say that:

“When someone wins, someone else loses”.

I have looked briefly at the amendments before your Lordships’ House today and I had not intended to say anything on them because I knew that they had considerable spending implications, but I am tempted to speak out because of what the leader of the Opposition said yesterday.

The noble Lord, Lord Patel, has made a powerful and compelling speech, and it would be easy for me and no doubt for other noble Lords to vote for his amendment and feel morally good. But the sting lay at the tail end of his remarks when he said, I think, “Of course, this could have some enormous cost implications”, and then he came up with not what I would say is a formula but a suggestion, which I must admit I did not quite understand, about how one could try to save on some of those considerable costs. However, I am informed that his amendment as it stands has serious cost implications. I believe that it would cost up to £200 million next year, maybe £400 million the year after and again the year after that. I hope that my noble friend the Minister has the correct figures, but I believe that it will be around £1 billion of expenditure over the next three years. The House needs to know exactly what those figures are.

Perhaps I may turn to the Opposition and say this. If the Opposition are tempted to support this amendment —I hope that I am not being too political here—I hope, in view of what the leader of the Opposition said yesterday, that they will spell out where the money is to come from. At this stage I am not concerned about whether the Commons will reject the amendment or whether there will be ping-pong, although that is a valid debate to have in due course, but it is incumbent on the Opposition or on those who are arguing for this amendment to say where the £1 billion, if indeed it is £1 billion, is to come from. Is to come from higher taxation or from a cut in public spending somewhere else? Is it to come from increased government borrowing? Someone somewhere will have to pay for this.

[Lord Boswell of Aynho]

I am most grateful to my noble friend for allowing me to intervene. Having listened to the debate this afternoon, does he not acknowledge that whereas the previous amendment, which was supported by noble Lords, was in comparative terms a relatively small matter of cost, this is of a different level and magnitude of costs—at least 10 times as great? Whatever might have been said about the previous amendment being comparatively trivial, this could not be possibly be so described.

[Lord Blencathra]

My noble friend is correct. The last amendment would cost around £70 million, and no doubt the Government will say that that is going to hurt and that the money will have to come from somewhere. But if the costs of this amendment are £700 million, £800 million or £1 billion, as I have read somewhere, we need to know that before we go into the Lobbies in support of the powerful speech made by the noble Lord, Lord Patel, in which he spelt out some of the difficulties that a large number of people will face if this cut is made.

I conclude with these remarks. It is easy to feel morally good because we have done something to help those who will be affected, but we have to bear in mind the others who will lose £1 billion of expenditure, or wherever that £1 billion will come from.

[Lord Wigley]

My Lords, we went into this matter in considerable detail in Committee and the Minister withstood the pressure at that point on the basis of it being so expensive. Perhaps I may repeat the point made from several different directions in Committee. If it is indeed £200 million plus £400 million plus £400 million, that is money that is coming off vulnerable disabled people. There are other priorities which I believe are not as pressing as the needs of these people.

It has been said that some will lose £90-odd a week. That is a considerable amount of money for those who are dependent on help such as this. If they are indeed fit to work and can hold down a job, they would earn considerably more than that, so there is an incentive to go to work, but the disability itself might well prevent them being able to take up opportunities, and indeed the psychological effect of the uncertainty of waiting out the 12-month period might add to the lesser likelihood of their being able to work. In a civilised society it is not the disabled people at the end of the queue who should be bailing out successive Governments for the economic mess that we are in. If we need to share it out, as the noble Lord said a moment ago, there is such a thing as taxation, which shares out the burden more equally. Why put the burden on the shoulders of the most vulnerable in our society?

[Lord May of Oxford]

My Lords, I suspect that others might share my feeling that in some of the last exchanges the discussion has taken on a curious additional aspect. The exchange about whether whatever we do will ultimately be nullified by the Parliament Act speaks to me not as an argument for doing one thing or another but in support of the distinctive character of this Chamber. Particularly from the Cross Benches, the Chamber brings to debates that in the lower House would be basically political in nature a degree of expertise and knowledge of the impact on the ground of the things that we do. That is often missing, particularly in the upper chambers of parliaments in other countries with which I am familiar. I shall mention the acquaintance with uncomfortable facts, and again we have here an echo of what we heard a moment ago.

I have every sympathy for the Minister, who has quite properly to tackle questions of fiscal responsibility. At the same time, powerful points are being made about individuals and how this is going to play out in the system by people who really know it. That is something distinctive which we add to the debate, and I hope that it is taken into account when things go back to the Commons.

[Lord McKenzie of Luton]

My Lords, we support each of the amendments tabled in the name of the noble Lord, Lord Patel. As we have heard, the first would amend the Bill’s 365-day limit on the contributory employment and support allowance and proposes to replace that with an order-making power for setting a limit, but with the proviso that it should be not less than two years. The proposal that any limit should be set by order opens up the opportunity, sadly missed in the Government’s formulation, for any time limit to be evidence based. The 365-day limit currently in the Bill is supported by scant evidence, apart from some references to “international practice”, which did not bear scrutiny in Committee.

18:30

What the Government are proposing is fundamentally unfair. The unfairness is compounded by issues to which we will come later; for example, the inclusion of the assessment phase in the time and the counting-in of contributory benefits already received when the legislation enters into force.

As the noble Lord, Lord Patel, said, to be entitled to employment and support allowance, an individual must be assessed as having limited capability for work and/or limited capability for work-related activity; that is, they are not fit for work. Contributory ESA is a non-means-tested benefit and is earned by having a national insurance contribution record, some of which requires payment and some of which is credited in. It demonstrates a recent attachment to the labour market, but the long-standing principle underlying it is that people pay contributions on the basis that, if they fall out of work through ill health or disability, they have a degree of financial protection. Some may pay in throughout their working lives and may never have to draw on it; some may pay in for just a few years and need recourse to the benefit for an extensive period. That is what social insurance is all about.

But we should be clear: being in receipt of a contributory benefit does not amount to having a life on benefits. The benefit is payable only for so long as somebody is unfit for work. We have accepted with some reluctance that a time limit could be imposed on contributory ESA, but it would have reasonably to reflect a time period sufficient to enable people to overcome their illness or disability and to access employment. A minimum of two years is to an extent still arbitrary, but there is no doubt that it is a more realistic timeframe within which to expect a return to work. However, an evidence-based process rather than an arbitrary figure should be locked into primary legislation.

Why will the Government not at least agree to remove the 365-day limit from the primary legislation? They have prayed in aid international comparisons for the one-year restriction, but even cursory probing in Committee, particularly by my noble friend Lady Hollis, demonstrated this to be a trifle flimsy. Our Library was unable to access any meaningful international analysis. Comparisons are made with the JSA regime and the fact that contributory JSA lasts only for six months, but JSA is a regime applicable to those deemed fit for work—that is, work ready. Let us be clear: to be eligible for ESA, a person must be assessed as having limited capability for work. That is defined in the Welfare Reform Act 2007 as being where a person’s,

“capability for work is limited by his physical or mental condition, and … the limitation is such that it is not reasonable to require him to work”.

Of course, it is expected that people who are able should take every opportunity to move closer to the labour market, but any suggestion that the one-year time limit will act as a spur to force people towards work by making them poorer seems particularly pernicious. We and the Government know full well that many people in the WRAG will not be able to access work within a year.

The Government propose to do this irrespective of the particular health circumstances of an individual and in the knowledge that the prognosis for many people is that they will not be fit for work within 12 months. Indeed, they know full well that the data indicate the contrary. As we have heard, some 94 per cent of contributory ESA claimants have a claim which will last longer than one year. An analysis of the Pathways programme showed that, for 2008-09, only some 13 per cent of those who started the programme found work within one year. Perhaps the Minister would let us know the expected job conversion rates in the Work Programme for those entering from the WRAG.

The Government seem almost to be seeking to undermine the WCA and WRAG designations by bringing further policy levers to bear to push people back to work. There is the implication that it is somehow easy to be assessed as eligible for the WRAG. Pretty much all the evidence, as we know and have debated often, points in the other direction. Despite some improvements on Harrington, the volume of successful appeals against exclusion from the WRAG remains high.

The Government offer in mitigation the availability of income-related employment and support allowance without time limits, which will certainly help some, but the thresholds, as we have heard, are low—household income of £7,500 or capital of £16,000—and will preclude many from benefiting. We have heard about the numbers affected—100,000 people losing their benefit overnight and, overall, some 700,000 people. Income losses will amount on average to £36 per week.

We are told that time limiting ESA will save some £1.3 billion a year by 2016 and that our amendments are unaffordable, but we should challenge this. If we are to be denied the opportunity to amend anything which the Government have cut, what purpose do we serve here? Of course the Government have to tackle the deficit and of course this is not easy, but it is for the Government to justify why this particular burden should be borne in this particular way. On their own impact assessment, of those who lose out from these proposals, more than half fall within the bottom three income deciles. Those in the lowest income decile lose on average £35 a week. What definition of fairness allows this to happen?

Amendment 38A, which I hope is more palatable to the noble Baroness, Lady Thomas, because of its cost implications, is more narrowly focused. It would remove time limiting in its entirety from those undergoing treatment for cancer or those who are in the WRAG as a consequence of being diagnosed with cancer. We heard in Committee and again today powerful testament about the range of barriers faced by people with cancer and its impact on their ability to return to work. They are not the only ones in this position, but we should take this opportunity today to secure greater justice where we can, even if this cannot be delivered for all. Supporting these amendments would not deny the Government a contribution to the government deficit; supporting these amendments would not give people a life on benefits; but it would give them a better chance to overcome the barriers which prevent them doing what they overwhelmingly want to do; that is, access the labour market with all the benefits that this can bring.

[Lord Strasburger]

My Lords, I fully support the Government’s efforts to address the huge deficit which they inherited. However, my noble friend the Minister needs to explain why I should support this attempt to penalise some of the most vulnerable and disadvantaged people in our society for the greed of the financial services industry and the incompetence of the regulators. Do these sick and disabled people have the broadest shoulders, which we keep hearing about, to carry the burden of the cuts?

[Lord Freud]

My Lords, before we consider this group of amendments, it is important to remember the context within which they are proposed. I remind noble Lords that our proposal to time-limit ESA applies only to contributory ESA claimants in the work-related activity group, or WRAG. Those in the support group and those claiming income-related ESA are unaffected by the proposals.

We will always provide a safety net for those who have limited income, and people will still be able to claim income-related ESA subject to meeting the conditions of entitlement, including an assessment of means. In addition, other benefits such as housing benefit and council tax benefit will be available. However, it is only right that those claimants in the work-related activity group who are above the income threshold for income-related ESA should have their contributory benefit time-limited in a similar way to contributory JSA.

Amendment 38, tabled by the noble Lords, Lord Patel, Lord McKenzie and Lord Low, and the noble Baroness, Lady Hollins, requires the time limit for claimants receiving contributory ESA in the WRAG to be a minimum of 730 days and to be prescribed in regulations. Amendment 39A, tabled by the noble Lords, Lord Patel and Lord McKenzie, is designed to have the same effect for claimants whose ESA youth awards are time-limited.

We understand noble Lords’ concern about the proposal to introduce a time limit of 365 days for these claimants and the reasoning behind their request for the limit to be a minimum of 730 days. However, as I said in Grand Committee, the 365-day time limit is not an arbitrary one. It is similar to the limits applied in several countries overseas and around the world, including France, Ireland and Spain, and strikes a reasonable balance between the needs of sick and disabled people claiming benefit and those who have to contribute towards the cost. We strongly believe that a time limit of one year is the correct approach for a number of reasons. It strikes the right balance between restricting access to contributory benefits and allowing those with longer-term illnesses to adjust to their health condition and surrounding circumstances, and it is double the length of time allowed for contributory JSA in recognition of that fact.

There is also a very strong financial argument. As requested, I shall give my noble friend the figures on the costs. The total costs in this SR period are £1.1 billion —next year it is £270 million, then £420 million, and then another £420 million—and then £360 million, and then £140 million in 2016-17. Over the full five years it will be £1.6 billion, including £1.1 billion in this SR. It is a very large sum.

The noble Lord, Lord McKenzie, said that Governments have to justify reductions, and clearly reductions are difficult. However, when he proposes reducing our cuts by £1.6 billion over five years, he should consider that he also supported the move late last year on the social sector size criteria, which will cost £700 million in the SR period and £1.5 billion over five years. He is already up, over five years, to above £3 billion in reductions in cuts. The opposition Benches have also voted for or supported universal credit changes in excess of £600 million a year on an annualised basis once the system is introduced. These are huge figures which we will have to find elsewhere. Before one starts making such reductions, one has to ask: where are the alternatives? Where will we find these sums? That is why it has been such a difficult process for the Government to find ways of reducing the deficit while causing the minimum difficulties possible. Clearly, one makes the cuts where there is the most expenditure, but the expenditure has been provided to those who are the most deserving. That is the natural structure of it. That is why it is so difficult to do this.

The effect of Amendment 38A would be that no time limit is applied to contributory ESA for those claimants receiving treatment for cancer or where they are receiving benefit because of a diagnosis of cancer. Another effect of the amendment would be to extend the 12-month time limit for claimants in the WRAG if they are either having cancer treatment or their limited capability for work is caused by the effects of their cancer. I understand noble Lords’ concerns in tabling the amendment and can confirm that at present around two-thirds of those with a primary diagnosis of cancer who complete their WCA are placed in a support group. This means that they would not be affected by time-limiting.

We want to make sure that the system is as accurate as possible and that is why we asked Professor Harrington to carry out his review.

18:45

[Baroness Morgan of Drefelin]

The Minister referred to the position of two-thirds of cancer patients. Is that before or after the changes coming from the Harrington review with regard to intravenous chemotherapy versus oral chemotherapy and the automatic move of patients into the support group?

[Lord Freud]

The figure that I quoted is the existing one. I shall come straight on to the cancer issue because it is clearly of great importance. On the basis of the Harrington recommendations, the figure is expected to go up by about 10 per cent on the existing figure on our modelling basis.

There is a great deal of misinformation about the position and I shall try to pull out some of the main issues on cancer. First, the Guardian printed a letter from Professor Harrington in which he said:

“I believe the government’s proposals would significantly improve on the current system and would be of considerable benefit to those who face the real personal challenge of a cancer diagnosis and subsequent treatment”.

He went on to say:

“The government’s proposals have been developed as a result of evidence submitted to me by Macmillan and discussions with cancer specialists. The proposals would considerably increase the number of people who receive unconditional support in the benefits system. They would also reduce, not increase, the number of face-to-face assessments that individuals suffering from cancer would undergo. The proposals are underpinned by a presumption that people undergoing cancer treatment will be entitled to the benefit if they have the necessary supporting evidence. They widen the scope of the people this applies to, while also allowing people who want to work to do so. This will mean better provision all round. Delays in these proposals may ultimately affect individuals and their quality of life”.

We have now published the Macmillan evidence, which I hope is available and of great interest to noble Lords. What is interesting about the evidence is how many professional oncologists support this approach. I have a few quotes here which I would like to share with the House. The first states:

“Not all patients will experience toxicity related to treatment … Not all patients should be exempt”.

The next states that,

“some people on long-term maintenance treatments may have little or no upset and be quite able to work”,

and so on. That evidence is available to noble Lords.

As to where we are on the important issue of cancer, we are now carrying out a consultation with the industry. That will be ready in March, when we will pick up the responses and apply them. The noble Lord, Lord Patel, may take some comfort from the fact that there is now a major process going on as we consider this issue, and he would be right to take such comfort.

On the point raised by my noble friend Lady Thomas on the WCA, we are absolutely committed to making it as effective as possible. It is beginning to move quite quickly now in the right direction. We have taken forward all of Harrington’s recommendations from year one, which means that decision-makers are better supported and have received new training, and all the ATOS reports now have a justification. Professor Harrington has praised the improvements that he has seen so far.

The other point raised by the noble Lord, Lord Patel, was—

[Baroness Finlay of Llandaff]

Before the Minister moves on, I wonder if I could ask for some clarification. When he talked about the evidence from oncology, he implied that patients would have to be not working for two years. I do not see anything in any of the proposed amendments that stops people going back to work as soon as they want to go back to work. Indeed, one hopes that many people will get back to work, perhaps on a part-time basis or whatever, within months of having their treatment, but the purpose of the amendments is not to force those who are so debilitated post-treatment or during treatment, particularly with fatigue that can go on for weeks or months before it improves, and not to make them subject to a guillotine coming down at the end of the year. Can the Minister clarify that there is nothing in the amendments that stops people going back to work as quickly as they want to?

[Lord Freud]

Clearly, there is nothing in any amendment or proposal to stop people going back to work should they wish to go back to work, but we are talking about the expectations that there are between the citizen and the state. That is a really important psychological relationship between the two, and that is what we are talking about rather than anything else.

I pick up the point made by the noble Lord, Lord Patel, when he quoted Citizens Advice. We were disappointed by what it said, not because it said stuff that we did not like to read but because it was based on the evidence of 37 work capability assessments when there were more than 600,000 completed in the year to May 2011. That report also relied solely on Citizens Advice’s own interpretation of the healthcare professional’s report and did not allow the HCP the opportunity to explain the reasoning.

Our view and policy is that the right way to address cancer diagnosis and treatment is by ensuring that the WCA provides an accurate and effective dividing line between the support group and the work-related activity group. We want the WCA to consider and assess fully the effects on an individual from both their cancer and the treatment they are receiving for that cancer. As I said, sufferers will be entitled to any income-related ESA.

I pick up the point raised by the noble Lord, Lord Wigley, on the burden on those who can least afford it, because some quite simplistic numbers are flying around here. We have said that income-related ESA will be available to those with the lowest incomes. I accept that if an ESA claimant’s partner has earnings of £152.70 a week, no income-related ESA will be available, but that does not mean that the couple will be £94.25 a week worse off when the contributory ESA is withdrawn. I give an example of why that is not the case. A couple with a rent of £100 a week and council tax of £25 a week, one with the earnings of £152-odd and the other with a contributory ESA of £94, will have a total income of £291 before ESA is withdrawn and £277 afterwards. The main reason is that housing benefit and council tax rise substantially. So there is less income but there are not these very dramatic changes when you go through the actual sums—

[Lord Strasburger]

Do the same figures apply to a couple who own their own property?

[Lord Freud]

My Lords, as noble Lords know, we have two systems of housing support. We have housing benefit for those who rent their property and support for mortgage interest for those who need support with their mortgage payments. Currently mortgage payments are running rather lower than benefit, but that is only because mortgage rates are lower and that can change. We are looking at the whole system of support for mortgage interest, but there is a system in place to support people whether they are home owners or payers of rent.

On the basis of what I have said, I hope that the noble Lord will feel able to withdraw his amendment. Before I ask that he do so, I confirm that the Government see Amendment 39A as linked to Amendment 38, but that none in this group is consequential on another, and we would expect the House to make a decision on each individually.

[Lord Patel]

I thank the noble Lord for his response. I could pick up on each of the points that have been made and answer them, but the time does not allow that. I have to say to the noble Lord, Lord Blencathra, that we are talking here about the level of savings from welfare reform. We are not talking about the Government finding extra expenditure; it is the reduction in savings that we are talking about. The total reduction in saving of the whole welfare reform package will be in the region of £18 billion. We are talking here about not taking money away over five years even to the level of £1.3 billion from the most vulnerable in society. As I pointed out, they are those on the lowest third centile of income, to whom, as the noble Lord, Lord Wigley, said, it is £94 a week. If we are going to rob the poor to pay the rich, we are entering into a different form of morality. The noble Lord asked the question whether it is moral. I say that it is moral to look after those that are sick, vulnerable and poor. If that is immoral, what is moral is to pay the rich—and we are on a different planet altogether.

I come to the figures quoted. The figures are based on the assumption that no one goes back to work until they reach 24 hours. If you speak to cancer patients, you find out that their greatest desire is to go back to work, because it is part of therapy. Noble Lords should read the powerful article written by a very bold and courageous lady called Jenni Russell, which says:

“Not skiving, minister, just suffering cancer”.

She describes what it felt like to have treatment for breast cancer. If you speak to patients on chemotherapy—and my noble friend Lady Finlay sees them every day—they feel good after four days of misery following chemotherapy. By the time they feel better it is time for another period of misery. The effect is cumulative to the point that after a few courses they cannot get out of bed and they wonder whether death might not be better than the disease. It is those people that we are talking about. They are not skivers or benefit cheats. They are the last people who cheat. Are we going to make savings there? I was honest in accepting that what I proposed was costly, but I am not going to be dishonest and say that therefore we should let those people suffer. I ask the House to determine who should be supported.

19:00

Division 2

Ayes: 234

---

Labour: 162
Crossbench: 53
Bishops: 3
Liberal Democrat: 2
Ulster Unionist Party: 2
Democratic Unionist Party: 1
Independent: 1
Plaid Cymru: 1

Noes: 186

---

Conservative: 132
Liberal Democrat: 49
Crossbench: 2
Independent: 1

19:13

Amendment 38A

Moved by

[Lord Patel]

38A: Clause 51, page 36, line 36, at end insert “except—
(a) where a person is receiving treatment for cancer when entitlement shall continue for so long as the person has (or is treated as having) limited capacity for work; or(b) the person has (or is treated as having) limited capacity for work as a consequence of a cancer diagnosis.”

[Lord Patel]

My Lords, Amendment 38A is specific to cancer patients. I have already spoken enough about the suffering of cancer patients and why they require extra time to recover. I have already referred to the article in the Sunday Times, in which a lady who experienced this describes very fully how debilitating it is. The amendment is merely to say that those cancer patients who are currently undergoing treatment, whether it be chemotherapy or radiotherapy, or who have recently finished treatment and are recovering from it but need that extra bit of time, should be supported. This is a small number of cancer patients; there are not many because most of them have recovered within a year. I beg to move.

19:14

Division 3

Ayes: 222

---

Labour: 159
Crossbench: 44
Liberal Democrat: 4
Bishops: 2
Ulster Unionist Party: 2
Democratic Unionist Party: 1
Independent: 1
Plaid Cymru: 1

Noes: 166

---

Conservative: 122
Liberal Democrat: 41
Crossbench: 2

19:31

Amendment 39

Moved by

[Lord Freud]

39: Clause 51, page 37, line 4, at end insert—
“(2A) The period for which a person is entitled to a contributory allowance by virtue of the third condition set out in Part 1 of Schedule 1 (youth) shall not exceed 365 days.”

Amendment 39A (to Amendment 39)

Moved by

[Lord Patel]

39A: Clause 51, line 4, leave out “365 days” and insert “a prescribed number of days which must be at least 730”

Amendment 39A agreed.

Amendment 39, as amended, agreed.

Consideration on Report adjourned until not before 8.32 pm.

EU: Healthcare

Wednesday 11th January 2012 Lords Chamber

Question for Short Debate

19:32

Asked By

[Lord Kakkar]

To ask Her Majesty’s Government what assessment they have made of the impact of the European Union on healthcare in the United Kingdom.

[Lord Kakkar]

My Lords, I am very grateful for the opportunity to introduce this Question for Short Debate on the impact of the European Union on the delivery of healthcare in the United Kingdom—a subject on which I have spoken in your Lordships' House on a number of previous occasions. In doing so, I wish to draw noble Lords’ attention to my entry in the register of interests as a practising surgeon, professor of surgery at University College and active biomedical researcher. I would also like to take this opportunity to thank those noble Lords who have kindly added their names to the speakers list and who will make a contribution to this short, time-limited debate.

The impact of European Union directives and regulation on the delivery of healthcare in our country is an important issue. It is not primarily an issue of politics but of the well-being and safety of patients in our healthcare system. If there have been unintended consequences of the adoption of regulation and directives into domestic legislation, it is important for Governments to recognise this and ensure that appropriate measures are taken to overcome them.

We can consider the impact of legislation from Europe on the delivery of healthcare in our country in three broad areas. The first is directives and regulation that have already been incorporated into the laws of our country. The second concerns how directives and regulation that are under consideration should be incorporated into domestic legislation. The third covers areas of broader concern connected with potential consequences, particularly with regard to European Union competition law and the intended purpose of the Health and Social Care Bill.

As regards the first category, it is well recognised that the European working time regulation has had a detrimental impact on the training of our young doctors, particularly those who are training to pursue careers ultimately as independent practitioners at consultant level in the craft specialties, such as my own of general surgery. A restriction to 48 hours’ working per week has resulted in trainees feeling that they have insufficient experience at the end of their training to be certain that they can perform independent consultant practice in the way that it is envisaged in our country rather than models for the delivery of clinical practice in other European countries, to the extent that there is genuine concern that we may be producing generations of consultants less able to deliver the rigorous and demanding practice that we have always expected and have been fortunate enough to receive in our country.

There is also the question of the additional cost of providing locum cover to ensure that rotas are compliant with a 48-hour working week. In an important piece of work published last year, the Royal College of Surgeons identified an additional £200 million a year cost in providing locums to ensure that rotas were 48-hour compliant after the first year of the introduction of the final European working time regulation.

There has also been considerable concern about the problem of language and competence testing. I think most noble Lords would agree that the same standard should apply to every doctor and healthcare practitioner working in our country with regard to their ability to speak the English language and be able to communicate appropriately with patients. There is no doubt that the ability to communicate is a hugely important part of the delivery of healthcare. Equally, it is only right that patients in our healthcare systems are able to expect that all doctors and other healthcare professionals who have the privilege of treating them in our hospitals and other healthcare environments practise to the same level of competence. At the moment it is impossible for the national regulatory bodies in our country to ensure that doctors who are registered elsewhere in the European Union meet the same standards as we expect of our own graduates or graduates from elsewhere in the world.

There are real concerns that the first year after qualification from medical school—formerly known as the house job year, now known as foundation year 1 —which is an essential part of completing the process for full registration with the General Medical Council, has now been opened up to competition from medical graduates across Europe as part of the free mobility of labour in the European Union. However, this first year of clinical practice remains an important element of ensuring that our young medical graduates can complete their training and can ultimately register to practise in our country. The issue is very simple: if they are unable to take that year, they are unable to fully register and will not be able to practise in our country. This is a huge waste because these talented graduates should remain in our country and serve our nation, ensuring that the debt they have is repaid through practice in the National Health Service. In this year’s round of appointment to that first foundation year, some 52 potential graduates have not been given a foundation year 1 post and some 113 practitioners from the European Union have taken places on those foundation year 1 schemes. How do Her Majesty’s Government propose to ensure that this problem does not result in our graduates being unable to complete that essential first year after they have qualified from medical school?

There are also important concerns about the impact of the European clinical trials directive in terms of reducing the competitiveness of the biomedical science and research science output of our country. It is estimated that in the year 2000, 6 per cent of all patients who entered clinical trials around the world came from our country. Soon after that, in 2003, the clinical trials directive was incorporated into our domestic legislation, and the problems associated with its bureaucracy have resulted in a reduction in this country to just 2 per cent in 2006 and 1.4 per cent in 2010 of the number of patients included in clinical trials around the world.

These are all well proven areas where Her Majesty's Government need to develop a strategy to address the problems that have been experienced. However, there are also important matters relating to directives that are currently being considered by the Department of Health for inclusion in domestic legislation. There is a directive on transplantation which, if incorporated, will add bureaucracy to the delivery of transplantation services in our country, resulting in added cost. Those responsible for the delivery of these services believe that our standards that are highly regarded throughout the world are of sufficient quality and that any potential European directive must not be gold-plated and undermine an already successful service.

With regard to energy efficiency, a directive that is currently under regulation has caused considerable concern to the NHS Federation. This directive requires the building stock of all public bodies, including the National Health Service, to be improved on an annual basis, and for 3 per cent of floor space to be addressed each year. This will cost some £70 million a year, and the NHS, given the severe financial constraints it is facing, can hardly afford this.

Then there is the ongoing concern that European competition law may inadvertently be applied and in some way affect the proposals of Her Majesty's Government in the Health and Social Care Bill. Clinical commissioning groups, in wishing to take forward the development of new services to improve the clinical outcomes and care of our patients, could be disrupted in doing that through the application of European competition law.

In October last year, the Prime Minister indicated that all government departments should look at European regulation to determine how it might be adversely impacting on the work of those departments and the life of our country. There is no doubt that in the area of healthcare, the training of our young doctors, the innovation and delivery of biomedical research, and the delivery of healthcare itself have been detrimentally affected. It is absolutely essential that Her Majesty's Government are sensitive to the concerns—repeated on several occasions by those with responsibility for the delivery of healthcare in our country—and act as a matter of priority.

[Baroness Northover]

I remind noble Lords that this is a time-limited debate and that all speakers, except for the Minister, have two minutes. When the clock displays two minutes, noble Lords have had their two minutes. I note that we are without at least one speaker in this debate.

19:44

[Lord Ryder of Wensum]

My Lords, I congratulate the noble Lord, Lord Kakkar, on opening his debate with such clarity and force.

I am chairman of the Institute of Cancer Research, a college of the University of London. We are now regarded as the leading cancer research organisation in the world and are judged on the discovery and development of drugs. The clinical trials directive has harmed us. It lacks harmonisation across and even within countries. What is called a clinical trial in country A may be an observational study in country B. Sometimes drugs within a protocol are deemed investigational medicinal products instead of supportive medication or routine therapy. Red tape abounds, inspections are inconsistent and heavy-handed, and high-quality clinical trials are stifled by the directive. It handicaps innovation, causes delays with new trials, obstructs our competitive edge over the USA and other countries, and renders us a less attractive location for trials. It damages our pharmaceutical industry—Britain’s most successful manufacturing sector. The Americans are counting their good fortune, and soon the Chinese and the Indians will be accumulating theirs.

Trials are cornerstones of the work with our sister organisation, the Royal Marsden Hospital. The blame for the follies inflicted on us radiates at the feet of the EU, and I urge the Government to press harder for revisions to the directive.

19:46

[Baroness Scott of Needham Market]

My Lords, I wish to focus on the mutual recognition of professional qualifications directive, which provides the framework within which healthcare professionals move around within the EU.

I am entirely supportive of the notion of free movement across the Union and I have no doubts about the benefits that the mobility of healthcare professionals can bring to patients and to the medical profession. However, a number of high-profile cases have called the workings of the directive into question, and all UK regulators have expressed strong concerns that the current system forces them to admit individuals who do not meet the standards that would be required of UK or non-EU professionals.

Professional mobility should never be at the expense of patient safety. There is evidence that, as it currently stands, the directive is striking the wrong balance. The requirements as currently set out are not sufficient to ensure that qualifications and skills are adequate and up to date. We need a competence-based approach, rather than a one-off qualification, fixed at a particular point in time and hard to compare across jurisdictions. Knowing that an individual who has not practised for years has had to take steps to come up to date is essential.

Authorities in host member states must be able to access adequate information regarding the professional history of an individual and to seek answers to any queries they may have. Use of the Internal Market Information System is likely to represent a simpler and more cost-effective option than the proposed European professional card. There is currently no alert system to inform member states when a fitness-to-practise case is brought against an individual. If such a system were to be introduced in some member states, it would be hindered by the use of domestic data-protection legislation.

The ability to communicate effectively in the language of the host member state is critical to safe and effective practice and is the most obvious cause of concern to patients. The directive fails to ensure that professionals meet the necessary standards.

19:48

[Baroness Masham of Ilton]

My Lords, I live in a rural area where patients with serious conditions are now treated many miles away. The local population has become reliant on the voluntary air ambulance. This is the most popular charity in the north. It can be a life-or-death situation. The lifeboats that also save lives and do an equally important voluntary job do not have to pay VAT on fuel, but the ambulances do. A Question was therefore tabled asking whether air ambulances could have equal exemption from VAT. The noble Lord, Lord Sassoon, answered:

“EU law provides a specific exemption from VAT for the supply of certain equipment and services used for sea rescue. There is no equivalent provision for air ambulance rescue services”.—[Official Report, 16/6/11; col. WA 202.]

Is it not time that the EU helped all charities that save lives throughout the EU and allowed VAT exemption on fuel?

I ask the Minister, is there a problem of medication being sold to EU countries for a better price than in the UK? Are we running short of some drugs in some areas? I declare an interest: I have used CoAprovel for some time. My surgery in north Yorkshire can no longer obtain it, and I therefore take the prescription to London, where the drug is still available. The UK should maintain adequate supplies of medication so that patients are never left in a situation where they must wait for their treatment. I hope that safeguards will be put in place.

19:50

[Viscount Bridgeman]

My Lords, I join other noble Lords in congratulating the Lord, Lord Kakkar, on his masterly overview of the subject.

In the short time available, I have to record cautiously encouraging news. Your Lordships will recall a debate on 8 September in which attention was drawn to the problems with language testing of health professionals from the EEA. My noble friend Lord Howe gave an encouraging reply at the time and, following a constructive Green Paper issued by the Commission, a draft directive was issued in December which includes three significant proposals.

The first is that a warning system is to be introduced so that regulatory bodies must warn each other if, for example, a doctor or nurse has been struck off or suspended from a register and attempts to register in another member state. The second is that there will be updated minimum training requirements for doctors, dentists, pharmacists, nurses and midwives to reflect the evolution of those professions and of education in those fields. That is particularly important with some of the newer accession states, where there is a very different culture and practice. The third is the right for regulatory bodies to check the language skills of health professionals—something for which UK health organisations have been pressing. On that point, does the department’s reading of Article 38 of the directive, especially its second paragraph, give a blanket power for a competent authority routinely to examine all applicant health professionals for knowledge of the language, which I understand to be a common aim among those authorities?

Those three proposals will have a major impact in remedying the shortcomings affecting health professions which were thrown up by the original directive. I remind your Lordships that the healthcare regulatory organisations in England, and those covering devolved Administrations where they have responsibility, played a major role in discussion on the Green Paper. Finally, I pay tribute to the Minister and his department for working with the Commission to achieve what I am confident will be a favourable and constructive development.

19:52

[Lord Clement-Jones]

My Lords, I was hoping that the noble Lord, Lord Owen, would be taking part in this debate, as I believe that he was going to be talking about competition law, but this is an opportunity to intervene briefly on the issue. I think the noble Lord, Lord Kakkar, for giving us the opportunity.

The main arguments given by the department for there being a low risk of application of EU competition are that, for commissioners, healthcare is provided on a universal basis on the principle of solidarity and, for providers, that they will not be regarded as undertakings unless the particular economic activity in which they are engaged is part of a market.

However, a number of questions arise. What if providers collaborate, as they do in the post-acute care and enablement programme, which is a collaborative model? What if other providers who are excluded from a consortium object to that? It could be alleged that there is anti-competitive behaviour. What if commissioning bodies create a market, as we have done with elective surgery and ISTCs? There are also question marks over the criteria for mergers, in particular when foundation trusts merge. Why cannot we also temper the application of EU law by referring specifically to Article 106 of the TFEU in terms of the task of integration assigned to commissioners, and mitigate the Competition Commission’s exercise of its duties regarding tariffs, Monitor’s duties, and so on, by praying in aid the need to have regard to the interests of patients?

19:54

[Lord Patel]

My Lords, I want to speak about the data protection directive. It regulates the processing of any personal information, and has been transposed in the UK as the Data Protection Act. That legislation covers any activities that involve data processing. They are as diverse as marketing and internet transactions, routine administrative data collection and the use of health records for research and clinical practice.

Health research is therefore only one small aspect of the directive, but that complex legislation has had a major impact on how health data are used in studies. Properly controlled access to individuals’ health records is essential for health research. Health records enable researchers to identify patients to take part in clinical trials and to provide data for observational studies, such as those looking for associations between particular lifestyle choices and ill health. Researchers find the legislative framework for the use of health data complex and confusing. For example, they are uncertain how much protection now offered by exemptions for research on how they handle anonymised data, where the identity of individuals is masked.

The European Commission will put forward a new legislative proposal to replace the data protection directive at the end of January. That is expected to increase the rights of individuals, and it is highly likely that that will have an impact on how we use health data in research, even if that is unintended.

The Government recognise the importance of the use of patient data in research. I welcome the recent commitment to consult on changes to the NHS Constitution to create a system that will enable patients’ records to be used in research unless they opt out. This is therefore an exciting but also anxious time for the use of health data in research. We must make sure that changes to EU data protection legislation do not inadvertently hamper those plans. I am sure that the noble Earl will liaise with the Justice Department to ensure that that is not the case.

19:56

[Lord Walton of Detchant]

My Lords, in the 1970s, when I was chairman of the education committee of the General Medical Council, before I became its president, I was for five years a member of a European advisory committee on medical education, which produced a number of reports on basic and clinical education. It had the effect of improving medical education in many parts of the EU. That remains somewhat uneven. At the same time, we introduced a Professional Linguistic Assessments Board exam for doctors from outside the European Union coming to work in the UK to assess their clinical competence and their ability to understand English. When we tried to do that for European incoming doctors, we were threatened with being taken to the European Court because that was contrary to the Treaty of Rome. At that time, we persuaded the Department of Health that it was essential that it should impose a language test on incoming doctors from the EU as a condition of employment. That has been done very unevenly. What action are the Government taking to improve that situation? Do they propose to try to renegotiate the European working time directive, which has had such an adverse effect on the training of many junior doctors?

Secondly, does the noble Earl think it likely that the Human Tissue Authority will be the competent authority to deal with the transplantation directive in the UK at a time when the Government propose either to abolish or to merge that organisation? Finally, is the European directive on clinical trials being considered by the newly established Research Regulatory Authority?

19:49

[Lord Lexden]

My Lords, there can be no doubt about the importance of the issues which my noble friend Lord Kakkar raised for debate and introduced with his customary eloquence.

As is well known, where the European Union is concerned, the tendency is often for difficult practical issues to be subordinated to well intended political ideals. As the Social Policies and Consumer Protection Sub-Committee, of which I am a member, pointed out in its report on the mobility of healthcare professionals last year, nowhere is it more important for this tendency to be resisted than in matters relating to patient safety.

The sub-committee concluded that the mutual recognition of professional qualifications directive,

“fails to command the confidence of patients and professionals”,

and that the increased desire for mobility, which we all share, was nevertheless resulting in the admittance of individuals who do not meet standards required to be considered to practise in the United Kingdom. We should keep the sub-committee's conclusions firmly in mind and continue to push for the development of a competence-based approach for the recognition of qualifications across the EU.

More positive, to my mind, are EU proposals for enhancing cross-border access to healthcare—proposals that do more justice to the principles of open markets and free movement. The proposals have the potential to reduce waiting times for patients facing unduly long delays. The principle that patient reimbursement should not exceed the value of the cost of the same or equivalent treatments on the NHS should exert pressure to keep the new directive’s costs under control.

As ever, though, we must be vigilant. As the NHS devolves increased local powers to patients and professionals, the importance of thorough and transparent pricing structures becomes greater. It is easy to imagine a situation in which two patients receive differing levels of reimbursement for the same treatment, performed at the same hospital abroad, based on differences in British local costs. It will be hard to justify such differences to the electorate. As we seek improvements in service, we must always be alert to practical difficulties that may arise.

20:00

[Lord Crisp]

My Lords, I should like to raise three unrelated issues and ask three simple questions. The first builds on the issues raised by the noble Lord, Lord Kakkar, in his opening remarks and picked up by the noble Lord, Lord Walton, about the working time directive. I understand that the recent attempts to revise the directive have failed but that discussion is under way with what are called the EU “social partners”, which are essentially the trade unions and employers organisations. I ask a simple question: if those discussions raise it in this fashion, will the Government support the opt-out from the EU working time directive proposed by the surgeons, which would allow them to work up to 65 hours a week?

The second unrelated issue is that one of the unintended consequences of opening our doors to Europe in this way—very positive as that is—is that it has tended to exclude those from other parts of the world who have made such an enormous contribution to the UK, particularly those from Commonwealth countries. Will the Minister confirm that the Government will continue to support the international medical training schemes for people from the Commonwealth and beyond? Indeed, will he promote them further? At the moment they are not being picked up in any great numbers.

My third point picks up on the issue raised by the noble Lord, Lord Lexden, concerning the cross-border healthcare initiative. It seems to me from everything that I have read that it is very uncertain what the numbers will be in practice. Can the Minister let us know what the Government’s own assessment is of the likely impact of introducing that directive later this year or next year?

20:02

[Baroness Greengross]

My Lords, I basically support many of the aims of the working time directive. None of us wants to see junior doctors exploited or working until they are so tired that they are a danger to the patients for whom they care.

The two judgments in SiMAP and Jaeger were most unfortunate and in fact skewed the working time directive in a very bad way. The result has perhaps been damaging to one very large group of patients—frail older people, who form a quarter of the patients in our hospitals. As we know, some tasks previously carried out by doctors were understandably handed over to nursing staff. This can be a good thing, but in many cases what was previously carried out by nurses has been handed on to healthcare assistants. Healthcare assistants are largely untrained, are not regulated and do not always have the competences that are needed. We know, sadly, that much basic care, such as help with feeding, adequate nutrition and hydration, and even basic toileting, has not been carried out well and has had dreadful consequences, which unfortunately we read about in the press all the time.

These very frail patients—a quarter of the patients whom we treat—often suffer from some form of cognitive loss or dementia. They need to be cared for by people whom they understand and feel they can trust, and language is very important in this. We must be certain that these patients feel safe with the people who are caring for them. Therefore, we need language testing by regulators to make sure that the standard of care that our frail patients receive respects their dignity and human rights, and we must work towards that.

20:04

[Lord Ribeiro]

My Lords, I apologise to the noble Lord, Lord Kakkar, for missing the beginning of his speech, and I thank him for bringing this debate to your Lordships’ House.

“The European working time directive is destroying surgical training”. This was a comment from a surgical trainee responding to the General Medical Council’s national training survey of 2010. It echoes warnings made by the Royal College of Surgeons since 2004, when the 58-hour maximum working week was introduced. In 2011, the Association of Surgeons in Training and the British Orthopaedic Trainees Association surveyed 1,887 trainees on the impact of the working time regulation, which introduced the 48-hour limit in 2009. Sixty-six per cent reported a deterioration in surgical training, only 1.6 per cent reported an improvement, and 67 per cent had to attend work when off duty to maintain their operative training and learning.

The GMC repeated that survey again in 2011. While showing an improvement in some specialties, it found no change in surgery, with 80 per cent of trainees working beyond their rostered hours. It found 60 per cent of trainees in obstetrics and gynaecology and surgery taking longer to achieve the required educational competences as a result of the working time regulation. In America, trainees are allowed to work up to a maximum of 80 hours, and in some specialties this can be increased to 88 hours.

I believe that a more flexible approach is needed to allow senior trainees on the verge of consultant practice to work longer hours if needed, as in the United States. A return to an average of 56 hours for craft specialties would allow new trainees, starting at 48 hours, the time to develop their skills as they progressed through their training to a maximum of 65 hours for senior trainees, as allowed by the opt-out clause of the EU and as noted by the noble Lord, Lord Crisp. A one-size-fits-all solution is not appropriate, and the feedback from trainees suggests that it is damaging their training. Will the Minister identify what steps the Government intend to take to ensure greater flexibility, and will the Government consider overturning the SiMAP and Jaeger judgments and revising the new deal and the WTR?

20:07

[Baroness Wheeler]

My Lords, I, too, congratulate the noble Lord on initiating this debate, and I also congratulate other noble Lords who have very comprehensively covered the wide range of important EU healthcare issues currently in the process of discussion, development or implementation in the UK. Considering these issues as a whole in the one debate, rather than tending to debate them separately as various reports or new proposals or directives come up, has been invaluable. It provides us with an overview of the key issues, how they impact on each other and how they can reach into every aspect of the NHS care and treatment of patients, research, and the working lives and training of healthcare professionals.

The cross-border health directive, which we are required to enact by October 2013, the draft directive on the mobility of health professionals, and the implications for our NHS of the EU’s proposals for revising the energy efficiency directive—with the prospect of huge expenditure and further upheaval for our NHS if, as a public body, it is to become a major driver in achieving EU energy efficiency targets—all present major challenges for the NHS, and one does wonder how well equipped it is to meet them in its current state of uncertainty and upheaval.

In view of the short time available, I want to focus on four questions to the Minister. First, on the clinical trials directive, I echo the concern of noble Lords who have pointed to the UK’s steadily diminishing global share of clinical trials. I look forward to hearing from the Minister how the Government are addressing this decline. How will the new NHS architecture impact on this, and when might we expect our share to start rising again?

Secondly, on EU procurement law, the question we need to address when we come to it in the next stage of the Health and Social Care Bill is the proper balance between planning and the social solidarity that is expressed by the NHS. We also need to consider the effect of EU procurement law on commissioning and the progressive effect of the EU procurement regime to the point where commissioning decisions and planning become victims of court cases. What is the Minister’s opinion of where the balance lies? Will he expedite the meeting that he promised with noble Lords, including my noble friend Lady Thornton, to discuss ways forward on this matter?

Thirdly, how is EU work progressing on tackling health inequalities across EU countries? What initiatives are being undertaken or supported by the Government and what are the timescales for report and development? Finally, I note that last year the UK NHS was owed more than £38 million from EU member states for healthcare treatment for their nationals, so it would be helpful if the Minister could update the House on the progress and systems that are in place to ensure that this money is collected.

20:10

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, I begin by thanking the noble Lord, Lord Kakkar, for calling this debate and, indeed, all noble Lords who have spoken and contributed so eloquently and, I may say, succinctly. The Government are determined that the NHS achieves results for patients that are consistently among the best in the world. One way to do that is to compare our experience with those of other European countries. There are many areas where we can learn from each other—for example, where we have worked closely with counterparts in Spain, which has the highest organ donation rate anywhere in the world, to improve donation rates here.

In assessing the impact of the EU on healthcare in the UK, we should start by recognising that the Treaty on the Functioning of the European Union respects the right of member states to organise and manage their own health services. Much of the activity of the European Union on health is therefore designed to complement national policies. However, various areas of European legislation, as noble Lords have pointed out, can have an impact on healthcare in the UK. One such area is social policy. Every year, many millions of UK citizens travel within the EU knowing that, should the need arise, they can access immediately necessary healthcare for free, or at a substantially reduced cost, by using their European health insurance card as a temporary visitor. Many UK state pensioners prefer to live in the warmer climate of countries like Spain or France, and do so knowing that their healthcare costs are covered. Of course, if they were to live here in the UK, they would be entitled to treatment under the NHS.

Noble Lords will be aware—some have mentioned it—of the European Union directive on cross-border patient mobility. Until relatively recently, there was little discussion of the issue of patient mobility at a European level. However, a new generation of Europeans, accustomed to crossing borders with ease and able to purchase goods and services from any part of the European Union, are proving less willing to accept constraints on where they can obtain their healthcare. The new directive brings together several years’ worth of case law established by the European Court of Justice. It makes clear the rules that apply when EU citizens wish to access treatment in another member state. The directive sets out the arrangements under which member states are obliged to accept citizens from other EU states, and explains the rules for refusing such treatment. It also sets out the systems that a state must provide to allow its own citizens to access their rights to cross-border healthcare. I say to my noble friend Lord Lexden that we do not expect an influx of patients rushing to take advantage of NHS services. The NHS does attract some overseas visitors, including many from outside Europe, who pay for their treatment. EU citizens, entitled to treatment under the directive, would be reimbursed by their home system but only up to the cost of providing the treatment in their home state.

There is also a substantial body of European legislation regulating medicines and medical devices. This legislation, harmonising requirements for allowing medicines and devices into the EU, has reduced burdens on pharmaceutical and medical device companies in accessing the whole European market. The UK plays a prominent role in shaping the regulatory frameworks for medicines and devices with the Medicines and Healthcare products Regulatory Agency, which is one of the leading regulators in Europe.

My noble friend Lord Ryder and my noble friend Lady Wheeler—I apologise for calling the noble Baroness, Lady Wheeler, my noble friend, although of course she is—spoke of the clinical trials directive, as did other noble Lords. That directive is designed specifically to harmonise clinical trial practice across Europe. In recent years, there has been a decline in the number of clinical trials conducted in the EU and the UK. That cannot be attributed only to the introduction of the clinical trials directive as international competition for attracting clinical research has increased dramatically in recent years.

However, the Government consider the revision of this directive to be a priority to ensure that the UK remains an attractive place for the conduct of clinical trials. The European Commission is also committed to revising the directive. A scheme was introduced in April this year for the notification of low-risk national trials, replacing the traditional authorisation process, and more risk-proportionate monitoring has been introduced, taking a targeted approach to monitoring that depends on the level of risk a trial represents to patients and data credibility. I should say to my noble friend Lord Ryder that one of the Government’s aims for the revision of the clinical trials directive is to harmonise its implementation across Europe. The Government have been influencing the Commission so that the revision of the directive ensures that the EU becomes an attractive place for the conduct of clinical trials once again.

Another priority for the Government is the revision of the directive on the mutual recognition of professional qualifications. We have made it clear that we want to stop foreign healthcare professionals working in the NHS unless they have passed robust language and competence tests. The proposal published by the European Commission last month contains some welcome amendments, such as a new proactive alert mechanism. This should contribute significantly to tightening the European regulatory framework and improving patient and public safety. While the proposal would not allow language checks by a competent authority before recognition of the qualification of a professional, they do make it clear that controls on language checks would be permissible and could be undertaken before a professional was able to practise. I should say to my noble friend Lord Bridgeman that the Government are currently analysing the proposals in detail to formulate a UK negotiating position. As usual with EU proposals, part of this process will involve consulting the devolved Administrations. I say to my noble friend Lady Scott and the noble Lord, Lord Kakkar, that the Commission’s proposal does contain some welcome amendments, such as that proactive alert mechanism and negotiations on the text are due to begin at the end of January 2012, with the aim of reaching an agreed directive in the autumn of this year.

With regard to the European professional card, which was raised by my noble friend Lady Scott, the Commission has worked with stakeholders to develop proposals for the card. There have been some positive developments in the proposals and it seems that what is now proposed will be underpinned by use of the internal market information system, but we need to seek views from competent authorities about the administrative implications of the proposals before we can finalise our position. The Government have made clear that mobility should not be at the expense of patient safety. The Commission’s proposals recognise the unique position of healthcare professionals and they build additional safeguards into the directive for healthcare professionals in certain areas—for example, in the case of that alert mechanism. Provided that the necessary safeguards are built in for healthcare professionals, we see no reason for a conflict between the joint aims of facilitating patient safety and freedom of movement.

In relation to EEA migrants having access to the vocational year’s training as part of the directive proposals, which was an issue raised by the noble Lord, Lord Kakkar, the proposals were only recently published by the Commission, which was undertaking a detailed analysis to better understand the impact on healthcare professionals and patient safety. A number of aspects of the proposals require further clarification. A key priority for the Government going forward is to ensure that freedom of movement by professionals is balanced by safety considerations.

I move now to the working time directive, which was an issue raised by many noble Lords, including the noble Lords, Lord Kakkar, Lord Walton and Lord Crisp, the noble Baroness, Lady Greengross, and my noble friend Lord Ribeiro. We are committed in the coalition agreement to limit the application of the working time directive in the UK. The agreed government position is that retention of an individual’s right to opt out of the limit on weekly working time must be the UK’s clear overall priority in any renegotiation of the directive. The UK would welcome changes to increase flexibility on on-call time and compensatory rest, but not at the expense of losing the opt-out.

The noble Lord, Lord Crisp, mentioned the opt-out in particular, and my noble friend Lord Ribeiro asked about flexibilities. The directive at the moment affords all doctors the choice to opt out and work more than 48 hours a week. Doctors who opt out can work up to 56 hours—the maximum outlined in the new deal. But breaching that limit would be very costly for the NHS. The opt-out gives working people, including doctors, the choice over their working hours. They are better off because of that choice, we believe. Therefore, it is a Government priority that individuals should continue to enjoy the right to opt out if they wish. The 48 hours is measured over the reference period of six months. Therefore, doctors may in any week work more than 48 hours; there is flexibility. In response to the Temple report, my right honourable friend the Secretary of State asked Medical Education England to advise NHS employers on ways to realign and simplify the new deal. The Department of Health has received its report and is considering the recommendations very carefully, including the case for negotiating a new contract.

I move to organ donation, which was raised by the noble Lords, Lord Walton and Lord Kakkar. The Government are fully committed to supporting action across the EU to increase the number of safe, high-quality organs available for transplant. We are working with the Commission and other member states to help ensure that any legislative framework will not prove to be a disincentive to organ donation and transplantation. I am sure that all noble Lords will agree that having more safe, high-quality organs available for transplant across Europe would benefit all member states alike.

The noble Lord, Lord Kakkar, and my noble friend Lord Clement-Jones, raised the issue of the potential consequences of the application of EU competition law to the NHS under the Health and Social Care Bill. Competition law could already potentially be applied to the provision of NHS services. The relevant treaty provisions have already been incorporated into UK law. The purpose would be to protect patients' interests from abuses. The potential consequences would extend to remedies and sanctions to address abuses in individual cases. However, European case law makes clear that commissioners of NHS services would not be subject to competition in respect of their purchasing activities, so under the Health and Social Care Bill clinical commissioning groups would not be constrained by EU competition law in their decisions on how best to improve services. I have more to say on competition law but unfortunately time is against me.

The noble Baroness, Lady Masham, asked me about the exemption from VAT for air ambulances. I will write to her on that as I do not have the answer in my brief.

The noble Lord, Lord Patel, asked about the data protection directive. The Commission is in the process of reviewing the existing directive and will publish a draft for consultation, which we expect by the end of the month. We will then have an opportunity to comment and give our views. The department is well sighted on this. We are involved in the discussions to ensure that UK researchers are not affected by proposals covering data protection in respect of research.

The noble Lord, Lord Walton, asked about the role that the new Health Research Authority might have in clinical trials. The HRA will not take over the role of the MHRA in assessing and inspecting clinical trials but will be involved in streamlining the processes, as the noble Lord is aware. On 1 December the HRA issued proposals for the further development of its national research ethics service.

Time has moved on. In closing, I will highlight the positive impact that the EU has had on healthcare in the UK. We are able to share experience and expertise with other member states to improve quality and standards and to encourage innovation, and we are determined to ensure that the United Kingdom continues to play a key role in shaping the European health agenda.

20:23

Sitting suspended.

Welfare Reform Bill

Wednesday 11th January 2012 Lords Chamber

Report (3rd Day)(Continued)

20:32

Amendment 40

Moved by

[Lord Freud]

40: Clause 51, page 37, line 5, after “(1)” insert “or (2A)”

Amendment 40 agreed.

Amendment 40A

Moved by

[Lord McKenzie of Luton]

40A: Clause 51, page 37, line 13, at end insert—
“(d) does not include any days in which a claim in respect to ESA is in the assessment phase.”

[Lord McKenzie of Luton]

My Lords, I shall speak also to the other amendment in our name in this group. Perhaps more than any other component of these changes, the inclusion of the assessment period in the tally of days which count to limit contributory allowance serves to underline that this is fundamentally about budget cuts. The assessment phase of an ESA claim normally ends 13 weeks after the beginning of an entitlement. It is the period during which DWP gathers relevant information about a claim to determine whether a person has limited capability to work or limited capability for work-related activity. While the assessment is under way, there is no entitlement to an additional component. Indeed, it is the additional component which is supposed to reflect the additional needs of those who are not job ready. If the assessment determines that a claimant should be treated as having limited capability for work or work-related activity, the relevant additional component will be backdated to the end of the 13-week period, albeit that the assessment period may have been longer. During the 13-week period, the individual is entitled to only the contributory ESA rate equivalent to the income support JSA basic personal allowance rate. This is the same rate as the contributory JSA rate. By including in the 365-day period the 13-week assessment phase with no additional component, the Government are denying the receipt of 13 weeks of the additional component at the end of the period. This is demonstrably unfair.

We will doubtless be reminded of the cost implications which are, I think, £20 million a year after 2012-13 and £115 million for that year, the accumulated effect of those hitting at the start of the system. The effect of what the Government are proposing is that the additional component receivable by those entitled to contributory ESA in the WRAG will be available for only nine months, not 12 months. This is an example of where somebody has looked at every conceivable means of clawing back moneys from sick and disabled people. The benefit to government is said to be £100 million in a year, but looked at another way, this is an additional £100 million in a year taken from the pockets of the disadvantaged.

Amendment 41A addresses the position of those with fluctuating conditions who might move between the WRAG and the support group. Fluctuating conditions have been a strong feature of our debates on this Bill and on previous welfare reform measures. Concerns have been expressed about how work capability assessment operates for those with such conditions, whether there is sufficient training for DWP staff and providers and whether there is appropriate expertise which can be brought to bear to make sure that the system works as it should for people with fluctuating conditions. This brings with it the prospect of individuals potentially moving between the WRAG and the support group when reassessment arises.

Movements into the support group have been protected by the government amendment, and for so long as somebody is in the WRAG or the support group movements into the latter would not be denied contributory ESA, but periods in the WRAG are accumulated for the purposes of the time restriction. The problem this brings is as follows: consider somebody with cancer or another fluctuating condition who has spent, say, 11 months in the WRAG, has moved to the support group for a period and whose condition subsequently improves so they move back into the WRAG on a reassessment. If the clock does not then start again, they are given one month to prepare themselves for the loss of contributory benefit and to seek to re-enter the workplace. This problem would be made worse if there was an extensive period in the support group because of the greater disconnect with prior work-related activity. It is submitted that the amendment is a narrow and entirely reasonable proposition. The Minister may have figures about how many people it might affect, but it is suggested that it is unlikely to be many.

Amendment 41A, which has been tabled by the noble Lord, Lord Patel, precludes the starting of the time-period limitation for contributory ESA until the relevant provisions of the Bill enter into force. It has our support as it stands. As we discussed earlier, the clock has already started. When this legislation enters into force—the earliest date being April this year—some 100,000 people will lose their contributory ESA overnight, and for some that will be as much as £94 a week. Some may have been receiving it for the bare 365 days yet have paid their national insurance contributions for decades. We await further comments from the noble Lord, Lord Patel, but on any reasonable analysis, this is retrospective legislation and should be opposed. If there is to be time limiting of contributory ESA, in the normal course of events one would expect it to operate for claims after the introduction of the legislation. The Government are applying it to existing claims. Worse, they are counting days for which the allowance has already been received. Letters of notification have served only to cause confusion and dismay. Just imagine the consternation that would be caused by having a letter drop on the doormat telling you that in six months’ time it is likely that you will lose as much as £94 a week of your income—overnight.

In their understandable need to address the deficit, which we acknowledge, I believe the Government have lost all perspective and all sense of fairness. They have been thrashing around in all directions to grab back money on the flimsiest of propositions. Frankly, they should be ashamed of themselves.

[Lord Kirkwood of Kirkhope]

My Lords, I want to make a brief contribution to this debate because we have had a busy day and I think we all want to go away and reflect on what some of the earlier important amendments and votes mean for the rest of the Bill.

As I was preparing for tonight’s consideration of the Bill, I thought that Amendment 40A had some real potential to try to keep some channels open to the department. We have had some very powerful speeches and some significant decisions taken by the House. For myself, I want to go away and read all of those carefully. If we were looking for a way of trying to meet some of the obvious concerns that have been expressed in this debate, both internally and externally, this amendment suggests that there might be a possibility of getting something that can stand the test of time and that does not destroy the tight financial framework within which the Minister is seeking to operate. I know that he cannot on a whim say, “Yes, this is something that is possible for me to go away and look at”, but I think this is potentially realistic.

There are a number of reasons for supporting it, not just because it is realistic and meets some of the concerns but because it wins some extra time for everyone. The extra three months would be of significant advantage to the claimants concerned. My noble friend Lady Thomas made an important point earlier when she said that Harrington has a great deal of potential. I do not think that has been properly reflected in any of this evening’s discussions. The Government have set out their stall very robustly about the five-year set of annual reviews. I am well pleased, and I think everyone else is, about the progress that Professor Malcolm Harrington is making. Perhaps he should be invited to consider some of these things, including what might be done around the assessment phase. All I am saying is that I think there is some potential here for getting a compromise that might be winnable in terms of the financial constraints and might keep the channels open through the rest of the proceedings of this Bill—we might be able to come back to it at Third Reading.

In the balance of what else has happened today, this might seem nugatory or irrelevant, but I do not take that view. I think there is a mechanism here that is sensible and that may be doable. It will not be easy and there cannot be any guarantees, but I would really counsel my noble friend the Minister—who I know is actively concerned about all of this and is trying to find a way through that meets his financial framework as well as the concerns that have been expressed so powerfully by colleagues—to give this very careful consideration. The hour is not great but the House might be well advised to think carefully about this after the Minister has responded. I feel quite strongly that Amendment 40A may be worth considering voting on if we cannot get a response from the Minister that meets some of the concerns that have been expressed this evening.

20:45

[Baroness Lister of Burtersett]

My Lords, in Grand Committee the question of the assessment period got a bit lost because there were so many issues that the Minister had to deal with. I asked the Minister why the assessment period was not included but never got an answer.

We talk about the time limit kicking in after a year but it is a year minus 13 weeks because for those first 13 weeks people affected will be paid at JSA rate, which is lower. Quite a number of us were confused, but the upshot was that the Minister said:

“I have to admit that I am not particularly happy about the assessment phase of ESA and how it is working … I would like to look at it. It is difficult to have a set of principles around something that one is somewhat unhappy about”.—[Official Report, 8/11/11; col. GC 46.]

I hope that the Minister has looked at it in the interim and has perhaps realised that there is no principled reason for the clause as it now stands and there is every principled reason for supporting the amendment. I hope that the Minister will see reason and it will not be necessary to test the opinion of the House in the way that the noble Lord, Lord Kirkwood of Kirkhope, was suggesting.

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

My Lords, I shall leap straight in on the issue raised by the noble Baroness, Lady Lister, on the assessment phase. What I was really alluding to was the upcoming sickness absence review, which is an important review of how we treat sickness absence. One of the things it has looked at is the interrelationship between sickness absence periods and the ESA regime. Basically the review sees no real reason for the assessment phase. As we look at this we must ask: are we structuring ESA and sickness absence so that it is a vulnerable or difficult process? I am sympathetic to my noble friend when he says that there might be a way through this. I want noble Lords to be aware that huge weaknesses have been found. We are pushing people through a process that puts them in limbo for a long period of 92 days or more. The sickness absence review states that that is deeply unsatisfactory, and I suspect that a lot of noble Lords in this Chamber who understand the system also believe that. In that area, I am not sure that this is genuinely the direction in which I want to go because I am not sure that it is something we want to maintain.

Moving on from that, let me set out some of the technicalities of the assessment phase. It usually ends after 13 weeks unless by that point there has not yet been a WCA determination. If a WCA has not been carried out by the 14th week, the assessment phase ends when a determination about limited capability for work has been made. So if the claimant’s assessment phase lasts longer than 13 weeks and they are found to have limited capability for work or work-related activity, the payment of additional components is then backdated. That is the existing system, which I am not that happy with. The effect would be to exclude it in terms of counting to the 365 days, or at least the 730 days depending on where we are, but in practice it does not always happen within 13 weeks and we have a lot of disparity of treatment. Even if we were to stay with the regime, it would be a pretty messy system.

I know that noble Lords hate me when I go through figures, but let me give some—I shall do my best because these figures have been running around. Purely on this basis, there is a cost of an extra £430 million cumulative to 2016-17 over the five-year period. I shall try to make a quick off-the-cuff assessment of how much extra it is when we look at it on top of the two years, and it is not actually a hugely different sum. It is £200 million on the SR period and £400 million on the total period of five years. I know that noble Lords feel that hundreds of millions are easily obtainable, but it is not an insignificant amount of money.

Moving on to Amendment 40B, the effect of this amendment would be that for existing ESA claimants, the one-year time limit would be calculated from the date the clause is commenced, and none of the time already spent on ESA would count towards the 365-day total entitlement. I want to have a word about retrospection. The noble Lord, Lord McKenzie, used the word slightly freely and in fact slightly aggressively. I was upset but not ashamed. I can understand that noble Lords are unhappy that we are taking account of days before the clause is brought into account, but this is about the question of whether noble Lords feel that this is the right approach; it is not about retrospection. Retrospection involves interfering with a claimant’s past entitlement and we are not doing that with this measure.

It is worth explaining what retrospection of time limiting would involve if we were to do it, which we will not. It would involve interfering with past entitlement to ESA. An example would be: at the date we commence the time-limiting provisions, if a claimant who had been receiving contributory ESA in the WRAG for 18 months, it would be retrospective if we demanded repayment of the extra six months of benefit he had already received because that would interfere with the claimant’s past entitlement. We absolutely are not doing anything which is retrospective in that sense. We are redefining the terms on which claimants are entitled to ESA in the future.

[Baroness Thomas of Winchester]

My Lords, perhaps I may make a small point. Were claimants who were receiving ESA last April told by the benefits office or whoever pays their benefit that it might be subject to this one-year cut-off? I ask this because the Government had already announced it in their comprehensive spending review. Were claimants warned then? I know that they were sent a letter in September saying that their claim was likely to end this April if it had started in the previous April. However, were they warned in April 2011?

[Lord Freud]

My Lords, it was a reasonably well publicised announcement by the Chancellor. There was no formal process of warning afterwards. That process began, as my noble friend points out, in September. How much warning people had is an issue, but the essential fact is that we are redefining the terms for entitlement to ESA. That happens quite a lot. Examples of future changes to entitlement include, among others, changing the descriptors to the work capability assessment.

I understand noble Lords having concerns about the fairness of the measure. Again, fairness is a matter of achieving a balance in our policy, so that as many claimants as possible who are in the WRAG are entitled to ESA for the same period.

The noble Lord, Lord McKenzie, asked for figures. We expect that, by April 2012, around 100,000 people will have been receiving contributory ESA and been members of the WRAG for more than 12 months. If the amendment were accepted, we would have another substantial decrease in our savings forecast and a real problem.

Amendment 41A would enable claimants to start a fresh 365-day period if they moved from the support group back to the WRAG—I am not sure whether we are now talking about 365 days or 730 days, so let us leave that on one side for a minute. In practice, for those claimants moving between the two groups regularly—it is funny how, when things are encouraged financially, regularity seems to increase—the amendment would be likely to mean that they would be able to remain on contributory ESA indefinitely.

We have always made it clear that, when addressing claimants in the WRAG, our aim is for as many people as possible to receive contributory ESA for the same period. This will be a period of 365 days on our original formulation and at least 730 days on the basis of the amendment that passed. Restarting that period each time a claimant moved from the support group to the WRAG would lead to inconsistent periods on benefit for claimants.

I accept the amendment that has just gone through, but, on the basis of the period—whether one year or at least 730 days—we do not think that we need to make any of these additional changes, particularly given their high cost in the current fiscal climate. I urge noble Lords not to press these three amendments. We do not consider them consequential upon each other.

[Lord McKenzie of Luton]

I thank the Minister for that reply and all noble Lords who have contributed to this short and rather interesting debate.

I suppose that whether something is retrospective depends on what one’s definition is, but if somebody’s entitlement was put in place at a certain time and under a certain set of rules, to have that entitlement restricted by subsequent legislation and to have the clock running from that earlier date would be, in most common parlance, retrospective. We can argue about the semantics all night and not change anything, but the way in which the Government have gone about this is particularly unfortunate.

I acknowledge the contribution and concerns of the noble Lord, Lord Kirkwood, and my noble friend Lady Lister over the assessment phase. My noble friend instanced the concern that the Minister expressed about this in Committee; I think that he has gone a little further today. As I understood it, he said that the assessment phase, when put in the context of a sickness absence policy, perhaps did not make a lot of sense. If that is the case, I presume that these issues will have to be addressed at some stage and some adjustment made to the process.

Rather than put us in a position where we would wish to test this issue by a vote—there is clearly a degree of support behind me on this and a strong degree of support on the Liberal Democrat Benches—can the Minister offer some comfort that there will be a chance to review this before we sign off the Bill? The consensus of those who have participated is that things are not satisfactory as they stand. Quite what would have to change in the light of any sickness absence policy which is developed would depend on where that policy is heading.

Certainly on issues of fairness, by taking account of the assessment period you are docking three months of someone’s employment and support allowance. Most people would see that as being the period when you get the addition because you are in one of the two ESA categories and therefore the Government are restricting it to only nine months.

[Lord Freud]

Let me clarify that—I hoped I had. Clearly you may not know what category of ESA you are in but you receive the money for the full 12-month period once it is decided. So there is not a problem like that. It is not nine months; it is a full 12 months.

On the question of what is to happen to the assessment phase, I will not be in a position by Third Reading, which is not far away, to give an answer. I am sure the noble Lord will have read the sickness absence review. It is an interesting piece of work which severely criticises the assessment phase. If we need to change it, we will give our response later this year. It is a substantial piece of work and it will take time to work through. It seems that it will become an area for regulations and if one is going to tie a lot of weight on this particular formulation it would probably be easier for the noble Lord to add another three months to his 24 months, if that is what he is trying to do. If it is a formulation of protection to add on another three months, it is not one that anyone would want to rely on for that reason.

[Lord McKenzie of Luton]

Tagging on three months is not the purpose of the amendment or of anyone who has spoken to this. There is concern about unfairness. The Minister said that you get the money from day one, but the point is that you get the money only at the basic JSA rate for the first 13 weeks. You do not get the enhanced funding that comes with the employment and support allowance when you are in either the not-fit-for-work group or not-fit-for work-related activity group. Those premiums do not kick in until after week 13. The Minister is frowning. Someone will correct me if that is wrong but I am getting support from the Liberal Democrat Benches.

I realise that we are not going to get definitive answers on any potentially significant policy development and change in the sickness absence report between now and Third Reading. However, rather than cause us to press this to a vote tonight, could not the Minister at least agree that we can have some further engagement between now and Third Reading to understand a little better the parameters of what is happening on sickness absence and how it might affect the assessment phase?

Seeking to press an issue that, given the hour and whose troops are available, we may or may not win would not be particularly constructive. People are trying to end up in the same place on this issue, which is very much the thrust of what the noble Lord, Lord Kirkwood, is saying, so could the Minister at least assure us of further engagement so that we can understand where this may be heading and the parameters within which it will be considered? Otherwise we move to Third Reading stuck with an assessment phase that we do not think is particularly fair and, in the Minister’s own words, not particularly sustainable. That does not seem a very sensible position to be in.

I do not propose to press the amendments tonight on the other two issues, retrospection and not accumulating the time spent in the work-related activity group, but I am seriously minded to press the issue of the assessment period, because we could have further engagement on that that might be of benefit to noble Lords, some of whom may be more supportive of these measures than others. We are genuinely trying to help the Government, and if they do not want to be helped we might have to look at the alternative. Perhaps the Minister can help us.

[Lord Freud]

My Lords, I am in a difficult position here. My view on the assessment phase is not going to have developed much further in the next two weeks. All I can say is that—well, let me just say what I would say in two or three weeks. I do not think that the assessment phase adds any value to the process; it puts people in limbo. It was meant to be a period in which people adjusted and settled down, and then they had their assessment. It does not seem to be working in that way at all, so we have had the very firm advice that we should get rid of the sickness absence review. If you want to be on ESA you apply for ESA, and if you pass the WCA you are on it, but you do not have all this messing around. That is what our firm advice was from an extraordinarily interesting and important piece of work, and that is where we will end up. If we start sticking other things on to a very shaky process that we want to get rid of, it does not seem a very useful thing to do at all.

[Lord McKenzie of Luton]

The Minister has advised us of an extremely helpful point. Would it follow that if the assessment phase disappeared, once the assessment had taken place and someone was assessed as being appropriate for putting into the WRAG or support group, the levels of funding under the ESA would kick in from day one? If they would, and that is the implication of what the Minister says, and the assessment phase went, that would be the difference between what we are facing at the moment and what might be the future. It would mean in effect that there would be no assessment phase and no period when people were paid at a lower rate than the work-related activity group component rate or the support group rate. If that is the case, we will not have quite the beef that we have at the moment with including the assessment phase.

The noble Lord has been helpful. We are just trying to see here and now how that formulation and prospect features in the Bill before us. At the very least, I ask that we agree to have another look at this, given what the Minister has said and that he is not going to be able to say anything much further between now and Third Reading, rather than having to take a decision on something tonight on which we would have only three-quarters of the information that we need. The Minister has been genuinely helpful, and we have to see how that translates into what we are considering.

[Lord Freud]

My Lords, I do not want to reopen this matter at Third Reading on the basis of things that I will have no further information on at all. That does not make much sense. The noble Lord is absolutely right that if we were to get rid of the assessment phase—and clearly that is something on which, as those who know how government works will know, we would have to do some work—it would be a big change. It would tie in with a lot of other changes, with work that we are going to be doing this year. We are utterly committed to this sickness absence review, which has been a very important document for us. My noble friend said that there was some value in using this assessment phase in this way in the future. I am trying to say that I do not think there is, because I would not want to put any weight on it. There might be other things that we can do to get out of a hole—if we are in a hole—but I honestly do not think that this is a promising line. I do not want to have this debate again at Third Reading. I have said everything I can on it, but I hope that I have said enough.

[Baroness Lister of Burtersett]

I apologise, but I wonder whether the Minister could say one more thing now so that we do not have to come back to it at Third Reading. If the assessment phase is done away with, clearly there is no issue. Given that the Minister himself is clearly suggesting that he would like to see that, would it be possible for him then to say whether, in the event that the assessment phase is not abolished, he would accept the spirit of this amendment now?

[Lord Freud]

I am clearly not in a position, and it would take more than a couple of weeks to get into a position, to make that kind of assurance. I know how skilfully your Lordships ask me these questions, and I deeply appreciate it, but I cannot do that. All I can tell the noble Baroness is that we have had a very powerful report on sickness absence, which I am personally very closely associated with and have sponsored. It made this recommendation, and most people in this Chamber who understand these matters would say that that is the way to go—as I would. Noble Lords must take their conclusions from that, but I cannot go much further or make promises on hypotheticals, because that is not how the system works.

[Lord McKenzie of Luton]

I understand the noble Lord’s dilemma; he is creating a bit of a dilemma for us. Can we at least agree that if we do not press the amendment tonight we preserve the right to bring back the issue at Third Reading, while accepting that the Minister might not be able to say anything further? It would at least give those of us who are not as close as the Minister is to the detail of the sickness absence stuff and where that might be heading a chance to reflect on what that might mean for this; and in particular if there were to be a change—as the Minister seems to want—and the assessment phase went, how that would be accomplished within the framework of the legislation.

[Lord Freud]

My Lords, I do not think that I can do that. We need to take a view now on this. All I can say is that Third Reading is probably not the time anyway for some of this stuff to come to a head. It is not the point at which my noble friend is thinking about it coming to a head. This kind of thing will probably come to a head when we have the debate between the Commons and the Lords. That is when some of these issues need to be looked at, so it is not helpful or productive to think of it happening at Third Reading. This kind of thing may become more relevant at a later stage, but not at Third Reading.

[Baroness Hollis of Heigham]

Does the Bill contain power by regulation, or would the Minister welcome an amendment to introduce it so that at some point down the line, possibly after further consultation and so on, he can make the changes which at the moment he is minded to make but is not yet in a position to introduce?

[Lord Freud]

Without having those in my ever helpful Box right behind me to respond to that—I hope that they are writing—my strong impression would be that I would have powers in regulation. No, my strong impression is the opposite. I am on my own.

[Baroness Hollis of Heigham]

Perhaps the Minister could write to us.

[Lord Freud]

I think I will owe noble Lords a letter. Thank you very much.

21:14

[Lord McKenzie of Luton]

That was an extremely pertinent question. If in essence we can deal with this in due course when further analysis has been undertaken though regulation, that is fine; we would be happy to rest our case there. If the Minister is saying that primary legislation would be needed to deal with this —if that is the message coming from the Box—we are unlikely to have that opportunity for some little while.

[Lord Freud]

We are looking at the sickness absence review process, which is what this is about, and that is a substantial change that will need primary legislation. So I think my reply is to presume primary legislation.

[Lord McKenzie of Luton]

The Minister has not made this easy. I have been trying as best I can to avoid having a vote on this today.

[Baroness Hollis of Heigham]

If my noble friend will allow me, would the Minister be content if we were to introduce such a power by regulation at Third Reading, which would commit him to nothing or everything, according to how he wished to play it in future?

[Lord Kirkwood of Kirkhope]

Before whoever it is who is speaking sits down, I should say that I think that the Minister is making life difficult for himself. If he cannot take the advice that he is getting from all sides—and I, too, concur with what has been said—I, too, will look to get an expression of opinion from the House, which I really do not want to do. The suggestion that has been made about regulation-making powers is an easy out. I do not care what the Box thinks, actually; the Minister has the knowledge and the wisdom to take that decision right now, which would be a beneficial outcome for everyone.

[Lord McKenzie of Luton]

That has been helpful, as has been the intervention of my noble friend Lady Hollis, and I think that I can see a way forward. We do not need the Government’s permission to introduce an amendment in due course to take a regulation-making power, so if there is not that opportunity at the moment we will find out between now and subsequent Report days or even Third Reading. I think that that is what we will do; it will be a route through this. On that basis, and with that preliminary notice to the Minister, I beg leave to withdraw the amendment.

Amendment 40A withdrawn.

Amendment 40B not moved.

Amendment 41

Moved by

[Lord Freud]

41: Clause 51, page 37, line 14, after “(1)” insert “or (2A)”

Amendment 41 agreed.

Amendments 41A to 42A not moved.

Amendment 43

Moved by

[Lord Freud]

43: After Clause 51, insert the following new Clause—
“Further entitlement after time-limiting
(1) After section 1A of the Welfare Reform Act 2007 (as inserted by section 51 above) there is inserted—
“1B Further entitlement after time-limiting
(1) Where a person’s entitlement to a contributory allowance has ceased as a result of section 1A(1) or (2A) but—
(a) the person has not at any subsequent time ceased to have (or to be treated as having) limited capability for work,(b) the person satisfies the basic conditions, and(c) the person has (or is treated as having) limited capability for work-related activity,the claimant is entitled to an employment and support allowance by virtue of this section.(2) An employment and support allowance entitlement to which is based on this section is to be regarded as a contributory allowance for the purposes of this Part.”
(2) In section 1 of that Act (employment and support allowance), in the definition of “contributory allowance” in subsection (7), after “subsection (2)(a)” there is inserted “(and see section 1B(2))”.”

Amendment 43 agreed.

Clause 52 : Condition relating to youth

Amendment 44 had been retabled as Amendment 45A.

Amendment 45 not moved.

Amendment 45A

Moved by

[Lord Freud]

45A: Clause 52, leave out Clause 52 and insert the following new Clause—
“Condition relating to youth
In section 1 of the Welfare Reform Act 2007 (employment and support allowance), after subsection (3) there is inserted—
“(3A) After the coming into force of this subsection no claim may be made for an employment and support allowance by virtue of the third condition set out in Part 1 of Schedule 1 (youth).””

[Lord McKenzie of Luton]

This amendment was in the same group as the amendment on which the Government were defeated but runs contrary to the decision that the House made previously. The assumption is that this matter will not be pressed. Otherwise, the Government give us no alternative but to force a vote on it.

[Lord Freud]

Yes, my Lords, we would like to take this to a vote.

21:19

Division 4

Ayes: 132

---

Conservative: 91
Liberal Democrat: 37
Ulster Unionist Party: 1
Crossbench: 1

Noes: 49

---

Labour: 28
Crossbench: 15
Ulster Unionist Party: 2
Bishops: 1
Plaid Cymru: 1

21:30

Amendment 46

Moved by

[Baroness Lister of Burtersett]

46: Clause 52, leave out Clause 52 and insert the following new Clause—
“Condition relating to youth
In paragraph 4 of Schedule 1 to the Welfare Reform Act 2007 (condition relating to youth), after sub-paragraph (1)(d) insert—“(e) after the assessment phase has ended, the claimant has limited capacity for work-related activity.””

[The Deputy Speaker (Viscount Ullswater)]

The Question is that this amendment be agreed to. As many as are of that opinion will say, “Content”.

[Noble Lords]

Content.

[The Deputy Speaker]

To the contrary, “Not Content”.

[Noble Lords]

Not Content.

[Lord McKenzie of Luton]

Forgive me—are we not dealing here with Amendment 46, which the Government have accepted is consequential on Amendment 36A?

[Baroness Hollis of Heigham]

My Lords, I was the person who drafted Amendment 36A. The noble Baroness, Lady Meacher, clearly introduced it as the paving amendment to Amendment 46. So the Government cannot do as they are now suggesting.

[Lord Freud]

My Lords, let me read out what I said in my speech. I said that I confirm that the Government see Amendment 46 as linked to Amendment 36A, but separate Divisions will be required on all amendments in this group.

[Lord McKenzie of Luton]

My Lords, the noble Lord does not make that happen just by asserting it. One amendment is consequential on the other. We have had a very clear and substantial vote on this, and it is quite disgraceful that the Government are seeking to undermine that.

[Baroness Hollis of Heigham]

I am sure that the noble Lord, Lord Freud, does not wish to appear to be subverting the view of the entire House, which was expressed in the full knowledge that the amendment which we voted on was devised—I devised it—as a paving amendment to a substantive one, so that we could debate it in good time. Most of the population of the House has gone home, believing in good faith that the previous vote has established the principle—as it has. However, the noble Lord is trying to renege on that by forcing a vote despite the late-night keeping of the roster. That would be quite improper and quite unprecedented, and I strongly suggest that he think again.

[Lord Freud]

My Lords, I cannot understand this. I was extremely clear, and have been really clear all the way through, about which amendments relate to which, and which have to be taken separately. I read out what I said. I said it quite loudly and all noble Lords heard it. I cannot feel that it is right to accuse me of anything but absolute clarity in the House.

[Lord Bassam of Brighton]

My Lords, this is somewhat unprecedented, and I am trying to be helpful here. The House is in danger of getting into a considerable muddle. I respectfully suggest to your Lordships that we should perhaps adjourn to try to sort this out, or perhaps come back to it when the House is in fuller session. I do not think that anyone on our side wants to accuse the Government of sharp practice, but that is certainly how it feels at the moment. That is not right or good for the reputation of the House. I ask the Minister to reconsider the course upon which he is currently embarked. Perhaps I may continue with a few more words, and perhaps the Minister will be enabled with a response that can help. I do not want the House to lose the respect that it has, and it should not be frustrated in the way in which the Minister is currently suggesting. My noble friend Lady Hollis made a very reasonable point earlier in addressing this issue. It would serve the Government better if they withdrew for a moment and paused to think about where they are going, so that we can better reflect and try to sort this out in the way that is usually in the House’s best tradition.

[Lord Freud]

My Lords, I have thought more deeply and accept that the amendment is consequential.

[Lord Bassam of Brighton]

I thank the noble Lord for that moment’s reflection, which does great service to your Lordships' House. I am very grateful to him.

Amendment 46 agreed.

Clause 56: Claimant responsibilities for employment and support allowance

Amendment 47 not moved.

Clause 68: Housing benefit: determination of appropriate maximum

Amendments 48 and 49 not moved.

Clause 69: Ending of discretionary payments

Amendment 50

Moved by

[Baroness Lister of Burtersett]

50: Clause 69, page 54, line 8, at end insert “providing those amounts are ring-fenced for the purpose set out in that Act”

[Baroness Lister of Burtersett]

My Lords, I hope that this debate will be a bit more straightforward than what we have just been discussing. The amendment aims to protect the ultimate safety net in our social security system by ring-fencing the money devoted to it when responsibility is devolved to local authorities without any statutory duties attached.

Clause 69 abolishes the discretionary Social Fund, described by Barnardo’s as a lifeline for some of the poorest and most marginalised people in our society. Together with Family Action, to which I am indebted for its assistance, it is among many voluntary organisations looking to your Lordships' House to safeguard that lifeline. Indeed, 20 have this week written an open letter to the Minister. This is not the place to make the case against the abolition of the discretionary Social Fund; we rehearsed that in Grand Committee. Instead, it is up to us to ensure that when the discretionary Social Fund is abolished, the money allocated to local authorities and the devolved Administrations is used for the purpose intended.

The Social Fund was introduced in the late 1980s in place of a system of statutory payments to help some of the poorest members of society with one-off needs. At that time, the noble Lord, Lord Kirkwood of Kirkhope, and I were ranged against the noble Lord, Lord Newton of Braintree, who unfortunately cannot be with us this evening for health reasons. Today, we are trying to salvage something from the forthcoming wreckage of what we now acknowledge that the noble Lord, Lord Newton, achieved—one of life's ironies.

Through a system of community care grants and crisis loans, the discretionary Social Fund provides vital cash assistance to some of the most vulnerable members of the community. CCGs help people on out-of-work benefits to remain in or set up their own home, to retain their independence. We are talking, for instance, about young people leaving a children's home or foster care, people with chronic health conditions or disabilities who need aids and adaptations to allow them to live in the community—about one-third of recipients are estimated to be disabled—and women who have fled domestic violence. As one such woman said:

“The community care grant meant such a lot. I had been in a refuge. I had very few possessions as I had to leave them all behind ...The CCG helped me make my flat into a home”.

Crisis loans are interest-free loans payable where there is an immediate threat to health or safety—for instance fares when a child has to be taken to hospital or money to cover the cost of replacements following a flood or fire.

We accept that the discretionary Social Fund needs reform, but this is not reform, it is abolition with no guarantee that local authorities will pick up the pieces using the money allocated to them. The aim of the amendment is to write into the Bill just such a guarantee and thereby achieve the Government's aim of protecting the most vulnerable.

Experience suggests that without some form of statutory ring-fencing, there is no way to ensure that the money allocated to local authorities and devolved Administrations will be spent in the way that the Government and Parliament intend. That is not a criticism of local authorities but simple realism. Local authorities are already hard-pressed to meet all their statutory functions in the face of budget cuts. This pot of money could be very tempting.

In Grand Committee, the noble Lord, Lord Brooke of Sutton Mandeville, held us spellbound with a cautionary tale of what happened when he was a junior Minister of higher education, and money intended for Liverpool Polytechnic was purloined by Liverpool council for housing. It clearly impressed the Minister. More recent experience is that of Supporting People—a fund designed to help vulnerable groups. Since the ring-fence was removed from that, overall spending on Supporting People has been cut by more than 10 percentage points more than the settlement received by local authorities for the purpose. That is an existing budget; the pressure to cut a wholly new budget will surely be greater.

We should listen to what local authorities themselves have to say. Recently published DWP research with authorities addressed this issue. While admittedly some authorities were unenthusiastic about ring-fencing—perhaps seeing tying their hands in that way as being like turkeys voting for Christmas—a number were,

“concerned that without a ringfence ... funding would quickly become amalgamated into existing budgets and as a result its identity, visibility and purpose would be lost. A second concern was that Councillors or Directorate heads would redirect the funding to plug gaps in other budgets”.

It is just such fears that this amendment is designed to allay.

Both the present and previous Social Fund Commissioners have expressed similar anxieties. What will happen to the woman who has fled domestic violence and who needs to turn a house into a home for her family, or the disabled person anxious to remain in her home but without the means to do so, or the ex-prisoner who needs to set up home? The potential consequences have been spelt out by organisations such as Citizens Advice and Family Action: greater reliance on overstretched charities, on food banks and on high-cost lenders, as the Joint Committee on Human Rights also warned in its report on the Bill, or simply going without, with a potential risk to health or safety.

A child rights impact assessment of the Bill, just published by the office of the Children’s Commissioner, suggests that such consequences mean that the clauses in the Bill abolishing the Social Fund could be in breach of the UN Convention on the Rights of the Child on a number of counts. Can the Minister—wherever he is—please tell the House what account has been taken of the convention and what the Government’s response is to this advice? I am sure that your Lordships’ House would not want to agree to a breach of obligations under the convention.

The case for ring-fencing was made from all Benches in Grand Committee. In response, the Minister acknowledged the strength of feeling and indeed accepted the spirit of the amendment when he said:

“It is quite clear that we need to make sure, if we are putting money out for vulnerable people, that it goes to vulnerable people and is not diverted elsewhere”.—[Official Report, 10/11/11; col. GC 140.]

I could not have put it better myself.

On the other hand, he argued against ring-fencing. He contended that ring-fencing would restrict innovative thinking and limit local authorities’ ability to devise schemes that best address the specific needs in their respective areas. However, ring-fencing does not prevent innovative schemes; it simply prevents local authorities using the money for some other purpose entirely.

The Minister promised to reflect on the arguments put in Committee. I am sure that all noble Lords will be delighted if he has come up with a solution to the dilemma in which he found himself—that of accepting the spirit of ring-fencing but not the legislative means of achieving it. If your Lordships’ House should pass this amendment, it would not cost the Government an additional penny, which should be music to the ears of the government Benches. On the contrary, it would help to ensure that the money voted by Parliament was spent on safeguarding the health and well-being of the vulnerable people for whom it was intended. I beg to move.

[Baroness Turner of Camden]

My Lords, I support the amendment. When I first read the Bill, it had been my intention to put down an amendment to try to remove the clauses dealing with the Social Fund. Clauses 69 to 72 outline the abolition of the discretionary Social Fund, including community care grants and crisis loans. As we have heard from my noble friend Lady Lister, the Government expect these responsibilities to be undertaken by local authorities.

We are dealing here with quite desperate people. The funds provide assistance for people at the very end of their tether. They have no one to turn to and nowhere else to go. The problem is that local authorities are now under considerable pressure themselves. They are having to economise and there is no guarantee that the very poor people for whom the funds provided some form of immediate support will figure very high in the list of requirements so far as local authorities are concerned.

I did not process my amendment earlier but my fears are very well met in the amendment now before the House. As my noble friend indicated, it provides for ring-fencing to ensure that a local authority makes provision for the people already provided for by the Social Fund arrangements. There are many instances, as we are aware, of women facing domestic violence, which is rather horrifying. Much of it takes place within families, sometimes within immigrant families, and the women have absolutely nowhere to go. Some of the violence is unbelievably cruel and sometimes it surfaces in cases that eventually reach the courts. We have an obligation to ensure that people in such desperation have somewhere to turn.

There are other levels of deprivation and concern that have already been referred to, involving children, homeless people and those who have just been released from institutional care. They are people who have nowhere else to go and we have to provide that support for them. I very much hope that the Government will be persuaded to accept this amendment.

21:45

[Lord Blair of Boughton]

My Lords, I am a Cross-Bencher who does not necessarily spend all day in this House but I have been here all day for this amendment because I have seen the effects of the Social Fund and on victims of domestic violence, in particular. The idea that we would allow the Social Fund to become a discretionary matter for local authorities is an abdication of our duties to the poor and the desperate. I very much support the amendment tabled by the noble Baroness, Lady Lister.

[Lord Kirkwood of Kirkhope]

My Lords, I should like to make a contribution to the debate as someone who was happy to co-sponsor the amendment of my longstanding and noble friend Lady Lister.

This has happened partly because the department thought that the Social Fund was beginning to become too difficult to handle. I know that the current explanation is that it is all part of the localism agenda, but I do not believe that. The criticisms that have been well set out by my noble friend Lady Lister are all valid. They are concerns that I share. More than anything else, I am beginning to hear from my spies, who are everywhere, that local authorities are coming to arrangements—if I were them I would do the same—for benefits in kind with white goods providers and food banks, though not quite soup kitchens yet. The point that I am making is that there is no substitute in certain circumstances, when families are in crisis and people are at risk of prejudice to their health, to the availability of access to liquid cash. There is no substitute to get them out of the kind of classic crises, whether domestic violence or other things. They need hot money and they need it right now to get them into a place where they can become safer. No amount of ingenuity, local creativity, co-operation or anything else is a substitute for that. We are not safe in this House to devolve this money—I shall come on to how it will be devolved in a moment—without recognising the value to family households in crises of having access to cash.

There is a very important point for Parliament about the oversight of this money. As colleagues know, we have a sophisticated system. There is a Social Fund commissioner and a variety of excellent public servants have served in that office with distinction. They have overseen the independent review service and have provided extremely useful current advice, information and data that have helped to stay on top of some of the policy issues. All of that is being thrown to the winds. I deeply regret that and said so at some length in Committee. The work that the Social Fund commissioners did in the past will be missed. I can see no way that Parliament will be able to stay as closely in touch with developments in this important policy area under the regime proposed in the clause.

I have no confidence at all that we can be secure in the knowledge of what will happen in Scotland and Wales. The Government may be able to control to some extent the conditions and provisions under which local authorities in England and perhaps Wales—although I am not sure about Wales—will comply with these regulations. However, certainly in Scotland the money will be given to the Scottish Government, or will pass through the Scottish Government, and noble Lords may have noticed that arguments have started to mature north of the border that perhaps will knock relations between the Westminster and Scottish Governments temporarily out of kilter. My serious point is that there will be different legalities relating to the controls and dispositions that will be made by local authorities in England and north of the border. I have no way of knowing how the Government will handle that.

No additional cost is involved in the amendment. That is an important consideration, given our earlier debates. We had some good discussions on this in Committee and I, like the noble Baroness, thought we had got some constructive and seriously positive responses from the Minister. I simply want to know how Clause 69 in all its glory and with its 10 subsections will be translated into practice and implemented.

I assume that there will be further opportunities at the regulation-laying stage—assuming that we do not agree any of the amendments that I think are necessary to improve the Bill in this important area—when the powers and the money are transferred. The money is important because another unique aspect of the Social Fund is that it has loans that are repaid, and the repaid loans refurbish the resources available for further use by other clients at a later stage. I am not sure exactly what amount of money will be transferred. I am certainly not clear—and I do not think that anybody else is—about how it will be disposed of, in relation to who gets what and the disbursement formula that will be used to allocate money. I assume that it will be done on a basis of need, but I have no way of knowing what that is. If I have missed it, I would be very pleased to be pointed towards the work that the Government are doing.

This is a really important part of the Bill and the amendment is the very least that we should ask for. This House should say that whatever sum of money is available at the moment, it would not be safe for us to let it be devolved to local authorities. I am sure that they will do their best and I have nothing against them, but we must impose a condition that any moneys that are disposed of and devolved for that purpose must be devoted to that purpose and to no other.

[Baroness Howe of Idlicote]

My Lords, I remember there being considerable concern in this area upstairs in Committee. Having listened to what the noble Baronesses, Lady Lister and Lady Turner, said, in particular about the plan in the amendment tabled by the noble Baroness, Lady Lister, I think that there is a way of dealing with the situation. Some of the problems of exactly how it will be spread out and all the rest of it might need a little more administrative attention, but I think this is a satisfactory answer about what to do with this sum of money. I would back it like that. Let us end the argument.

[The Lord Bishop of Bath and Wells]

My Lords, it is often said that we read the world from the position we occupy in it. In particular, users of the Social Fund are unlikely to be very visible and able to hold local councils to account. Recent analysis of some 500 discretionary Social Fund applications has revealed that 12 per cent involved someone leaving institutional or residential care, 20 per cent involved someone who had experienced a period of homelessness and 8 per cent involved someone leaving prison. These groups are much less likely than others to be able to demonstrate local connections, and without crucial assistance from community care grants to buy essential items such as cooking equipment and bedding, they may struggle to sustain and maintain a home. That puts those who have been offenders at risk of reoffending or of moving back into temporary or institutional accommodation, which is far more costly and means they lose their newly found independence. The issue of vulnerable groups and local connection is recognised in housing legislation where people with no local connection must be assisted by the local authority to which they originally applied. I believe that similar provision should apply to protect such groups in the absence of a standard national Social Fund, especially as the Welfare Reform Bill also abolishes the independent review service that reviews refused Social Fund applications. I hope that we can take note of this amendment.

[Baroness Hollis of Heigham]

My Lords, I, too, support my noble friend’s amendment. The whole point about the Social Fund is that all the other elements in the social security system are nationally determined and demand-led—AME-led. The Social Fund has always represented an element of flexibility, of discretionary judgment, for those who do not fit tidily into categories and need only income. When, for example, people needed a modest amount of capital for a fridge, an oven or whatever, they could go to the Social Fund. If they needed to set up after a flood or a fire, they could go to the Social Fund in ways that you cannot cover within a national framework, except by a discretionary local grant.

That is fine, but the problem with the Government’s current proposal to send it to local government is threefold. First, there will be no necessary standards across local government so that similar circumstances are met in similar ways by different local authorities. For good and for bad, there will be a postcode lottery, and we know that demand will almost certainly be greatest in some of the inner cities and least, perhaps, in some of the more prosperous suburbs. There will be no consistency of standards.

Secondly, when that happens, and in the absence of identified funds, people who need that money will go not just to payday loan companies, because they do not have the security, or to pawn shops but to the forms of debt that we are all appalled by. One of the very good things about the Social Fund is that repayment, with no more than £5 or £10 per week of your income going out, is effectively interest-free. By pulling the Social Fund away from people who are most in need of some element of credit to get them from here to there, we are sending them into much more costly spirals of debt and very real problems of repayment. The third problem associated with this proposal is the guarantees we need to have that the money will be spent on the people for whom it is ordained.

The Minister can help us in this if he makes it very clear that local authorities will have no wriggle room to spend the money on anything other than the groups of people whom we are identifying. The firmer he can be in making clear to the House the statutory nature of that guidance, the more he will ease some of our concerns. He also needs to make it clear to the House what elements of the Social Fund will remain AME-demand-led and how much of it will be recycled and capped within a cash grant, what the situation will be in a local emergency—a factory explosion, a major flooding disaster or the like—and whether the local authority, as opposed to central government, has the capacity to respond to that in its social fund.

Therefore, can the Minister tell us first, how he can absolutely guarantee—short of ring-fencing, if that is not where he is prepared to go—that that is reported back to Parliament? Secondly, how he will manage the mixture of AME and DEL expenditure that currently goes into the Social Fund to ensure that local need is properly met?

22:00

[Baroness Sherlock]

My Lords, I have two specific questions for the Minister. Following on from my noble friend Lady Hollis, even if the money were to be spent on the same people, how can the Government guarantee that it is spent for the purposes for which the Social Fund was originally created?

Looking at the local authority fieldwork summary report mentioned by my noble friend Lady Lister, the fear is clearly out there in local authorities that the money will be sucked up by social care budgets. For example, even if it was spent on child protection, that would simply be displacing other money and there would not then be money available to enable local authorities to give cash to vulnerable families. How will the Minister ensure that it gets to the right people and for the right purpose?

My second question follows on from what the noble Baroness, Lady Lister, said about the Office of the Children’s Commissioner, which believes that the Government are in breach of Article 9 of the UN Convention on the Rights of the Child. Has the Minister taken advice on this matter and, if so, will he share it with the House?

[Baroness Meacher]

My Lords, I rise to speak to Amendment 50ZC and I will try to speak extremely briefly in view of the hour. This amendment seeks to ensure that the Social Fund remains in place—

[Baroness Garden of Frognal]

With great respect to the noble Baroness, that is in the next group. We are going to stop on this group.

[Baroness Meacher]

I accept that agreement—excellent.

[Baroness Hayter of Kentish Town]

My Lords, I think I have the right group. As we have heard, unless this Bill is amended, it will fundamentally alter discretionary payments. Budgeting loans will be replaced by payments on account as part of the universal credit. Community care grants, which help those on means-tested benefits stay in their own homes, and crisis loans, which basically do what it says on the tin —they are for a crisis and they are a loan—will both be abolished and the money handed over to local authorities.

As has been said, the problem is that there are no guarantees that similar support will be available to vulnerable people who need it; the funding will not be ring-fenced; and there will be no statutory duties attached, not even any guidance of the sort that my noble friend Lady Hollis has requested. Earlier the Government were very clear that they would not issue any guidance—we trust they may have had time to rethink that. Without guidance, which would guarantee access to certain groups or place a statutory duty on councils to provide the sort of service that has existed, or to ring-fence the money, there is a real danger that the kinds of support that have been available will simply dry up.

The lack of ring-fencing caused the biggest concern to those responding to the Government’s consultation: 42 per cent of respondents raised it, a higher proportion than on any other part of the proposals. The various charities, which know a thing or two about vulnerable people, have, I am sure, contacted the Government—they certainly contacted us about this. Crisis is,

“deeply concerned about the impact on homeless people moving into independent, settled accommodation”.

Family Action is similarly,

“seriously concerned about the abolition of the discretionary Social Fund”,

which it fears,

“will remove one of the final safety nets for some of the most vulnerable and needy members of society”.

Barnardo’s also knows a thing or two about working with vulnerable people. It feels that,

“the Social Fund is a lifeline for many”

and is therefore “seriously concerned” about its removal and the money being given to local authorities, should this not be ring-fenced. Scope is similarly,

“deeply concerned that the Government plans to devolve a vital source of support … with no intention of ring-fencing”.

I am sure that some 22 charities have been in contact because they are worried about the loss of this last safety net for the most vulnerable when they suffer from emergency situations in the form of traumatic events such as homelessness and domestic violence, which has already been referred to by the noble Lord, Lord Blair.

The lack of the ring-fence was mentioned here tonight by the noble Lord, Lord Kirkwood, and in Committee, including by the noble Lord, Lord German, who is not in his place. In response to that, the Minister, who also is not in his place, said that he was extremely concerned about what was being said about the lack of a ring-fence and that he would reflect on the issues raised. I trust that his reflection is going to be shared with us shortly. As we have heard, a third of those getting community care grants are disabled, a quarter are lone parents and one in 10 are pensioners. These moneys go to people moving out of residential or institutional care to live independently, including children moving on from care and people coming out of homeless hostels, psychiatric hospitals and women’s refuges. These are exactly the sort of people who are being helped. In the future, of course, we may rather sadly have to add those who are forced to move as a result of the Government’s so-called under-occupancy rules, should the Government insist on overturning your Lordships’ amendment. Similarly, we risk larger families being forced to move elsewhere once the benefit cap, if that is not amended, affects high-rent areas such as London and the south-east. Again, people will be forced to move and set up home anew. Community care grants also help families at risk due to exceptional pressures. We have heard about overcrowding, relationship breakdown and the examples of a house fire or flooding.

Perhaps the Minister could tell the House whether he has read Destination Unknown, a Demos report tracking the lives of disabled families through the cuts. If he has read it, does he recall the central message that, for the disabled, one unexpected event such as an added illness, a mix-up over benefits, the need for new wheels on an electric chair or longer taxi rides to medical appointments can completely blow a person’s budget out of the water? The disabled tend to have no savings, no leeway and nothing else to rely on. It is exactly this sort of money that has been available to them. Charities, which have also often stepped in, are seeing their supply of funding drying up. They are finding themselves overburdened with demands. Jobs are less available, and the traditional hiccups or slight delays in payments that are bound to occur with the introduction of new systems that we will see at a later stage can have a devastating effect on the week-to-week budgets of disabled people. They just manage, but it is these sorts of emergency funds which can make all the difference when something goes wrong.

Crisis loans are slightly different from the other elements and the DWP has claimed that this expenditure rose following the introduction of the telephone-based application scheme. However, there is no actual evidence that it was a cause rather than a correlation which showed on the figures as the rise in claims also coincided with an increase in unemployment. Also, it is important to remember that the crisis loan scheme is a loan.

Another report that the House may be aware of was published by Barnardo’s in December last year on the vicious circle and heavy burden of credit on low- income families. Families can become trapped in a cycle of debt, which can have a very persistent effect. The Social Fund offers a far better alternative to vulnerable families than home credit, payday loans and other forms of high-interest lending, including of course illegal loan sharks. It is estimated that a £100 loan from a loan shark needs repayments of £285 and takes 57 weeks to repay. The same loan from the Social Fund costs £100 and takes 15 weeks to repay. Furthermore, these are the amounts we are talking about. I think that the average award last year was just £83, so we are not talking about hundreds of thousands, but we are talking about money that makes an enormous difference to a certain number of people. These loans can be life-changing. They can be the rent for a new home; they can be the move out of institutional care and help to pay either that rent up front or for the cooker that enables one to live there.

Our concern is that a lack of ring-fencing will mean that these loans are simply not available under a new scheme. Councils, as has been heard, are already worried that the money will drift away elsewhere, and we understand the temptation for that. We have already seen 123 local authorities increase their meals-on-wheels charges, some by up to 400 per cent, while their own grants to local voluntary agencies, which used to be able to help, are drying up. We should not be surprised if local authorities were a little tempted to move this funding elsewhere.

The amendment does not seek to frustrate the Government’s intention to localise, nor does it argue with the contention that need will best be met if identified at a local level. It seeks to provide a safeguard for the many people who need the support that the Social Fund now provides to help them in a crisis. It is because of the strong concerns that we have heard expressed across the House about the vulnerability of these groups of people if this money is not available that we support the amendment.

As Barnardo’s points out, some local authorities do not yet have expertise in working with the poorest. An inner London borough may well understand how to implement the infrastructure to offer a Social Fund replacement, but this is less likely in a shire county with a smaller and more dispersed population of disadvantaged people. Indeed, localised replacement is likely to be provided through adult social services. Many people who need the support of the Social Fund, such as homeless people, will not be clients of social services, so they may struggle to access it anyway. Without ring-fencing and some guidelines about who it should go to, we have grave worries about the gap that will be left. I hope that the Minister’s period of reflection on the amendment will enable him to accept it.

[Lord De Mauley]

My Lords, I absolutely understand what the noble Baroness’s Amendment 50 is trying to achieve. I assure your Lordships that we are equally committed to ensuring that this money is targeted on and reaches the most vulnerable people. We appreciate the importance of this money to vulnerable people, as the noble Baroness, Lady Hayter, has just explained.

As noble Lords have said, ring-fencing was debated in Committee and the Government have thought carefully about the valuable points that were made. We share the desire of noble Lords to ensure that these funds are used in the way intended and are not lost in the general pool of local authority funding.

We have concluded that the most appropriate way to make clear to local authorities the purpose of the funding is by setting it out in a settlement letter from the Secretary of State that will accompany the funding that is sent to each local authority. This letter will set out clearly what the funding is to be used for and describe the outcome that must be achieved. It is important that local authorities are not constrained in how they achieve that outcome, so the letter will not prescribe the method that should be used.

[Baroness Hollis of Heigham]

Obviously this letter has not yet been sent; I presume that it has been drafted. Would the Minister be willing to circulate to Members of this House taking part in the debate the draft of the proposed settlement letter that he expects to send, so that we can be reassured? I am sure that his intentions are entirely beneficent in this regard, but it might assuage some of our concerns were we to see a letter in draft before it was sent out. If we had comments on it, we could then feed them back to him.

[Lord De Mauley]

My Lords, the letter is not yet in draft. If it is possible to do something along the lines that the noble Baroness asks, I will do it, but I hope she appreciates that I will make no commitment on that.

The letter will ensure that the money intended for vulnerable people goes to vulnerable people without curtailing the freedom of local authorities to tailor provision and, for example, pool funding, without imposing a one-size-fits-all approach that does not take account of the different needs faced by different areas. Furthermore, to underline its purpose, the funding will be distributed to local authorities through a specific revenue grant, rather than including it with the rest of their general expenditure in the main revenue support grant.

22:15

I acknowledge that ring-fencing has been put forward as a means of ensuring that the money is spent appropriately. Our concern is that if the funding is ring-fenced in the way the amendment requires, local authorities will be prevented from investing in services or pooling the money with funding for other existing services to provide a comprehensive and effective support system for the most vulnerable in their communities.

We have thought further on the issue of how we can check that the funding for this new provision has indeed helped to support vulnerable people. The department is already planning to conduct a review in 2014-15, obtaining appropriate information from a representative cross-section of local authorities in order to help inform future funding levels. Following the helpful contributions of noble Lords in Committee, I am able to commit that this exercise will be extended to provide more information about the way in which local authorities have used the funding.

The noble Baroness, Lady Lister, raised a human rights question. The policy is developed taking account of the Government’s commitment to human rights. We do not accept that the Social Fund changes breach the convention. Support will still be provided for children, and local authorities will be able to link the new provision with existing responsibilities such as those through the Children Act.

[Baroness Sherlock]

I asked specifically whether the Government had sought or received any legal advice about whether or not this proposal was compliant with the UN Convention on the Rights of the Child. Can the Minister answer that question?

[Lord De Mauley]

Perhaps I may come to that in a moment.

[Baroness Sherlock]

I shall look forward to it.

[Lord De Mauley]

My noble friend Lord Kirkwood asked about the structure of what is being transferred. The current Social Fund AME allocation of £178 million will fund the new local provision. It will be distributed based on spend at the point of transfer nationally between England, Scotland and Wales. In England, the funding will be devolved to upper-tier local authorities. Again this will be based on Social Fund expenditure. The AME funding splits £141 million to replace community care grants and £36 million for emergency provision. The first year of the new system will be 2013-14 and the funding will be the same as the amounts in 2012-13.

My noble friend asked about the Social Fund Commissioner. The Independent Review Service changed 20,886 decisions in 2010-11. The number of crisis loans, budgeting loans and community care grant decisions made was 5,595,000. The IRS makes decisions on cases that can go one way or another depending on the discretion of the decision-maker. All decisions on the discretionary Social Fund are also first subject to an internal review in Jobcentre Plus.

My noble friend asked about the possible substitution for cash and white goods and indicated that he thought it might not meet the needs. There will of course still be national provision of advances of benefit through the new payments-on-account scheme that will replace budgeting loans and crisis loans for alignment.

The noble Baroness, Lady Hollis, asked how the mixture of AME and DEL will be managed. All the money is AME. There will be, of course, additional admin funding on top to cover the cost of the new burdens.

[Baroness Hollis of Heigham]

Is the Minister therefore saying that if local authorities represent that there is increased need based on the criteria in the letter of guidance, the Government will respond with increased expenditure because AME, of course, means that it is demand led?

[Lord De Mauley]

I would not go that far.

[Baroness Hollis of Heigham]

I thought that the noble Lord would not. I do not think that we can say that it is AME, in that case, if it is not. The point about AME within DWP is that it responds to demand. If it is going to be a cash grant, it is not going to be demand; it will effectively be DEL.

[Lord De Mauley]

Historically it has been AME. The funding for the year 2012-13 will be the funding that is transferred in 2013-14. It will not increase by that amount. However, there are the budgeting loans to which I have referred as well.

The noble Baroness, Lady Hayter, raised a question over benefits. Short-term advances will replace crisis loans for alignment as part of a national payments on account scheme. These advances of benefit will cover those in financial need as a result of waiting for an increase in benefit or for a benefit claim to be dealt with.

On the question asked by the noble Baroness, Lady Sherlock, the policy is developed taking account of all relevant rights. We did not take specific legal advice.

I hope that what I have said will enable the noble Baroness to withdraw her amendment.

[Baroness Lister of Burtersett]

I am very grateful to all noble Lords who spoke in support of the amendment, in particular the noble Lord, Lord Blair, who waited patiently all day and has shown his commitment to the importance of this amendment in doing so. The noble Lord, Lord Kirkwood, is ever a supporter on the side of righteousness and rightly said that ring-fencing is the very least that noble Lords should expect.

I am grateful to the Minister for the spirit in which he responded to the amendment. It was very much the spirit in Grand Committee by the end—the recognition that we must ensure that the money is spent. As my noble friend Lady Sherlock said, it is not just on the people for whom it is intended but for the purpose for which it is intended. I am afraid that I am personally not convinced that a settlement letter is sufficient to ensure that. We have made some progress but not nearly enough. The Minister then half-answered the question that I was going to asked on how the Government would check that the settlement letter was followed. I think that he said that there would be a review in 2014-15 of a cross-section of local authorities. Perhaps I may suggest that perhaps he would like to consider Amendment 50ZA before we come back, as it would go further than that and require local authorities to report on how they use the money, because that is the only way in which to be sure that the settlement letter is adhered to.

I am afraid that I am not terribly convinced by the Minister’s response to the question asked by my noble friend Lady Sherlock about the UN convention on children’s rights. If the Government have not taken legal advice—and I believe that the Children’s Commissioner’s report is only just published—I would want to know specifically what the Government’s response is to that report and to what the Children’s Commissioner says. We have not heard that response tonight. However, I am aware that it is very late and it is not the time to test the opinion of the House, even though not one noble Lord has spoken in support of the Government and all noble Lords have spoken in support of the amendment. Nevertheless, I beg leave to withdraw the amendment.

Amendment 50 withdrawn.

Consideration on Report adjourned.

House adjourned at 10.24 pm.