Employment and Support Allowance (Sanctions) (Amendment) Regulations 2012

Tuesday 29th January 2013 Grand Committee

Motion to Take Note

Moved by

[Lord McKenzie of Luton]

That the Grand Committee takes note of the Employment and Support Allowance (Sanctions) (Amendment) Regulations 2012 (SI 2012/2756).

[Lord McKenzie of Luton]

These regulations are subject to the negative procedure, so the Motion to Take Note is an opportunity for us to bring some focus to these provisions. This follows on from the report of the Secondary Legislation Scrutiny Committee’s 15th report, which draws the regulations to the special attention of the House on the grounds that they give rise to issues of public policy. Indeed they do.

ESA was introduced in 2008 as the replacement for incapacity benefit. It was designed to focus on what individuals could do rather than what they could not, placing emphasis on their functional capabilities. This was all part of the broad consensus concerning the importance of work and of helping people move nearer to the labour market. The introduction of ESA has not been without its challenges, although the basic concept has been validated, but with periodic reviews bringing improvements to the process. However, concerns remain about the process and the role of Atos, so perhaps we can use this opportunity to get an update on some of these matters.

Can the Minister give us an update for last year on how many appeals are entered against decisions, either to access the support group or to the work-related activity group rather than JSA? What is the current rate of success? I probe these points because the quantum of appeals on a success rate is clearly indicative of how effectively the system is making the judgments that it should. It is these judgments, made by DWP decision-makers, which drive the conditionality in the regime and the sanctions which flow from it.

The regulations under consideration introduced from 3 December 2012 a new sanctions and hardship regime. As the Explanatory Memorandum makes clear, the rationale of the change is to align as far as possible the sanctions regime with the equivalent category under universal credit. For those claiming ESA, and in the work-related activity group, conditionality involves attendance at a work-focused interview and undertaking work-related activity. No conditionality of course applies to someone in the support group, but obviously greater conditionality applies to somebody placed on JSA rather than in the WRAG.

These new sanctions have an open-ended period which can be brought to an end when the claimant meets a claimant condition followed by a period of one, two or four weeks, depending upon the number of prior sanctions. The effective date of the sanctions to operate is to be brought forward in comparison with current arrangements. In addition, the amount of the sanction is to be increased; rather than 50% or 100% of the work-related activity component, which is currently some £28, the sanction will be 100% of the prescribed ESA amount, currently £71. This will leave the individual with only £28 plus any premiums to which they might be entitled.

We accept that the regime should involve conditionality and that this implies some form of sanction, but this level of sanction is frankly draconian and unacceptable. Our concerns are about not only the huge reduction of income that it entails but the risks of the system for vulnerable people. There is provision for hardship payments; we can ask about any differences between the regime which is being introduced by these regulations and the existing position in terms of eligibility for payment and the amount of any payment.

The Explanatory Note to the regulations says that in determining whether hardship payments are appropriate, a decision-maker will take the following matters into account: whether a member of the family satisfies the requirements for a disability premium or an element of child tax credit in respect of a disabled child or young person; the household’s likely resources without hardship payments, including whether the claimant can seek assistance from others, such as family and friends; the difference between the claimant’s likely resources and the amount of a hardship payment which can be made; the difference between the claimant’s likely resources and the amount of a hardship payment which could be made; the risk that the claimant’s household will not have access to essential items such as food, clothing or heating, or will have access to such essential items at considerably reduced levels without a hardship payment; and the length of time that these factors will continue.

To what extent does that description differ from the detail of the current regime? I am particularly interested in the suggestion that people have to go outside the household, not only to family but to friends, and that resources that friends may have are taken into account in whether or not the hardship payment is made. We need to know particularly about the protections built into this whole regime. As we have discussed on many occasions, individuals in the WRAG, even if properly judged to be capable of work-related activity, could suffer from a wide range of conditions. There are concerns in particular about those with a mental health condition, with fluctuating conditions, and indeed with hidden conditions. It was the prior intent that nobody with a mental health condition would be sanctioned without a face-to-face visit. Is this still the case?

Can the Minister say something about the process attached to these sanctions and the extent to which it differs from that attaching to JSA? Are the good cause rules identical to the current ones? My understanding is that the following still apply as constituting good cause: if there is any misunderstanding on a person’s part because of learning, literacy or language difficulties, or misleading information given by the benefit authority; attending a doctor’s or dentist’s appointment; difficulties with transport where no reasonable alternative was available; the practice of a religion that prevented attendance at a set time; attending a job interview; the need to work in a business if you are trying to become self-employed; if you or a person for whom you were caring had an accident, illness or relapse; attending the funeral of a close friend; a disability that makes attendance impracticable; and any other relevant data. Are those the rules that still apply? I want confirmation of the extent to which they differ, if at all, from those applying currently. The Explanatory Note makes reference to a comprehensive suite of products being developed for operational staff. This is welcome, provided that the DWP has the staffing resources to cope. For the latest year available, how many individuals in receipt of ESA were subject to a sanction, how many appealed, and what was the outcome of those appeals?

We will be watchful regarding these regulations. We note the monitoring review proposals. Finally, how soon will the revaluation of the JCP offer be forthcoming? I beg to move.

[Baroness Stowell of Beeston]

My Lords, I am grateful to the noble Lord, Lord McKenzie, for his Motion to Take Note, and for giving us the opportunity to discuss these new regulations. Standing back a bit, I think it is worth saying from the start that there is a widespread consensus that the welfare system in this country is in need of a great deal of change. Clearly some of that change is in the structural area, where we are bringing in universal credit, while some changes address the cost of welfare and the fact that the bill for welfare is unaffordable.

Under the heading of structural change, and building on what the previous Government did and on what the noble Lord, Lord McKenzie, referred to, we are putting the emphasis on helping people to get back into work, and on making sure that those who are able to work and those who have been diagnosed as being unable to work but who may be able to return to work at some point in the future have the support that they need in order to return to the workforce. That is what people want. When they are on benefits and find themselves in the very difficult situation of being out of work, particularly at the end of a long illness, they want to know that there is an opportunity for them, as there is for all of us. We proposed the tighter sanctions regime because we place so much importance on the requirements to help people back into work.

As the noble Lord, Lord McKenzie, said, these regulations came into force on 3 December last year. They provide for a more effective and proportionate ESA sanctions system, but they also preserve the important safeguards and clarity that are required to ensure a fair and balanced system. The regulations make no change to the assessment of who is eligible for ESA or to the requirements placed on ESA claimants. They form part of the wider package of reforms that move the employment and support allowance and jobseeker’s allowance sanctions systems substantially closer to that intended for universal credit, helping staff and claimants to prepare for the new benefit.

ESA is designed to place greater emphasis on what the claimant can do, and on the importance and benefits of moving towards work. I will be clear that we never ask ESA claimants to apply for jobs—only to prepare for work if they are able to do so, and to meet their Jobcentre Plus or other trained advisers to discuss this. Most claimants value this support and meet the requirements placed upon them. It is only fair to those who meet the requirements that the sanctions system places due importance on these obligations and provides incentives for all claimants to meet them.

I will now set out how ESA works. Claimants in the work-related activity group have been assessed as having a limited capability for work and are required to attend work-focused interviews to meet a personal adviser and discuss the support available to help them to take steps towards employment. Claimants placed in this group can also be required to undertake work-related activity where this is appropriate in their personal circumstances, such as attending a training course or updating a CV. Whether these work-related activity requirements are imposed by a Jobcentre Plus adviser or a work programme adviser, they must be reasonable in the claimant’s circumstances and cannot include requirements for the claimant to look for work or undergo any form of medical treatment.

If claimants do not meet suitable work-related activity requirements and work-focused interview requirements without good reason, a sanction can and should be applied. This is not new. Sanctions have been a feature of ESA since the benefit was launched in 2008. The regulations we are discussing today did not change what the claimant is expected to do or who might be sanctioned. But until these regulations came into force, the financial consequences of the sanction did not give sufficient weight to the importance of the requirements they enforced. As the Social Security Advisory Committee found, claimants do not always realise that they have been sanctioned. If claimants are unaware that they are losing benefit as a result of a sanction, there is little incentive for recompliance.

An ESA award for single claimants who have been found to be capable of work-related activity is made up of two elements: the work-related activity component of £28.15 and the personal amount of £71. Until December 2012, when these regulations came into force, claimants who failed to attend a work-focused interview or to undertake work-related activity without good reason received an open-ended sanction that was lifted when they re-engaged. The effect of the sanction was to reduce the work-related activity component of their award—£28.15—by 50%, which meant that their award of £99.15 a week would decrease by £14.17. After four weeks of non-engagement, the sanction increased to a 100% reduction of the work-related activity component, so claimants lost the full amount of the £28 which was on top of the original £71.

15:45

After four weeks of failure without good reason, claimants who did not meet requirements were still left with their personal amount of £71 in payment. Further, claimants who repeatedly missed requirements but complied within a few days would face only limited consequences. If they complied within seven days—for example, being six days late for an appointment—no sanction would be applied at all.

Our staff, who work closely with claimants to agree suitable requirements, need the tools to help them to emphasise the importance of what we ask claimants to do. We do not want claimants to miss the requirement and receive a short, small sanction; we want them to meet the requirement in the first place.

The new sanctions system will therefore apply the sanction to the personal amount, the £71. This will better reflect the importance of the requirements that we place on claimants. Further, to ensure that there is an impact also on claimants who are repeatedly late without good reason in meeting requirements, we will apply fixed, escalating sanctions of seven, 14 and 28 days once the requirement has been met. This is fair to the vast majority of claimants who always meet their reasonable requirements on time. They need to have confidence that there are consequences for those who, unlike themselves, do not act responsibly.

We have written to ESA claimants to inform them of this change and have been working with the Social Security Advisory Committee on how we communicate with claimants generally. In universal credit, we will continue our work to improve the clarity of how we communicate requirements.

Let me turn to issues around safeguards, which is where the questions asked by the noble Lord, Lord McKenzie, mostly fell. It is important to stress that we will preserve existing safeguards: claimants will be sanctioned only if they do not have a good reason, or a good cause, for failing to meet the requirement. The noble Lord asked whether the definition of “good cause” would remain the same. I can confirm to him that there is no difference in the process or the good cause rules. Only decision-makers can decide to impose a sanction. Before they do so, they must consider any “good cause” reasons put forward by the claimant. The claimant also has five days to respond to a failure-to-comply notice.

Where a claimant feels that the requirements placed on them are unreasonable, they can request that the adviser or provider reconsider them. It is worth making the point that, at the point when the requirements are first decided by the adviser, they are agreed with the claimant. In order for the requirements properly to be defined as reasonable, it is right that they are discussed with the claimant and that the claimant accepts that they are reasonable from the start. A DWP decision-maker must then consider the case and notify the claimant of their decision in writing.

The noble Lord, Lord McKenzie, asked about people in receipt of ESA who might have a mental health condition and face sanction. Jobcentre Plus will also seek to telephone or visit ESA claimants with a mental health condition, learning disability or condition affecting communication or cognition. Claimants will also continue to be able to request further information about the decision to sanction, request reconsideration and appeal the decision.

For the first time, we have introduced a hardship scheme into ESA. If a claimant is in hardship after the receipt of a sanction, they will receive 60% of their personal amount for the period of the sanction. This hardship amount, combined with the work-related activity component which they will retain during a sanction, will mean that these claimants will be in a similar financial position to a claimant who received a sanction under the previous regime.

As to some of the specific questions that the noble Lord raised in this area, he asked to what extent the descriptions of family income and hardship incomes differ from the current regime. The criteria mirror those of the existing JSA hardship regime. As I have already said, there was no ESA hardship scheme previously.

The noble Lord, Lord McKenzie, also asked about the number of appeals against work capability assessment decisions. The noble Lord’s first question was how many appeals we had received from claimants as to which category of ESA they were put in, under WRAG or the support groups. He also asked about appeals against the sanctions. The answer to the first question is that 42% of appeals heard by the tribunal in the first quarter of 2012-13 were successful.

I will give my colleagues a moment. I will cover another point that the noble Lord raised, because I am not sure that that properly clarifies his question.

The noble Lord also asked about evaluation and review of the sanctions regime. It will be monitored and evaluated through research and analysis, and the evaluation of the Jobcentre Plus offer, which will include qualitative assessments from staff and claimants of the new sanctions regime, and a survey of claimants about their experience of receiving benefit and associated support from Jobcentre Plus. The findings from the evaluation will be available in two phases. An initial report was published in autumn 2012, which will include a baseline of the sanctions changes proposed for JSA and ESA. A second report will be published in autumn this year, which will include early analysis of the revised sanctions regime. The department will consider undertaking further analysis, should these findings suggest that that is necessary.

Before I conclude, I look over to my colleagues. I think that I am probably going to have to follow this up.

[Lord Wigley]

I will raise another question which has not been covered; it might give the Minister a little more time to get answers to the questions. On the information that has been given to me, it is noted that a full impact assessment has not been published for the instrument because it has no impact on the private sector or civil society organisations. I am surprised that this does not have some impact on civil society organisations. Many such organisations deal with the people who are impacted by these changes. I would be glad of some clarification, to know exactly when impact assessments are made and when they are not.

[Baroness Stowell of Beeston]

I am afraid that I will have to write to the noble Lord on that one. I do not have the answer immediately in front of me.

I can at least respond to one of the questions put to me by the noble Lord, Lord McKenzie. On appeals against WCA outcomes—the decision as to whether to put somebody in the work-related activity group or the support group—42% of appeals heard by the tribunal in the first quarter of this financial year were successful. What I do not have is the number of actual appeals. Regrettably, I will have to follow up in writing to the noble Lord on the other question that he raised about appeals. That notwithstanding, I hope that I have been able to provide enough information to satisfy the Committee today that these new regulations, which introduce this new sanctions regime, as I stressed at the start, very much emphasise the importance of the requirements on people in the work-related activity group as to how they can return to the workforce at the right time. That is what most people in work-related activity definitely want. It is our responsibility to make sure that they are clear on their requirements and that those requirements help them in that regard.

[The Countess of Mar]

My Lords, when the noble Baroness mentioned the evaluation review, she said that the department was looking at people’s satisfaction with the receipt of their benefits. Two major ME/CFS charities have done reviews with their clientele, amounting to well over 1,000 people in each case. Would the department be prepared to accept these reviews as part of its evidence?

[Baroness Stowell of Beeston]

I am sure that if evidence is there that would be relevant to what we are doing, it would be very welcome.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her response and for dealing with quite a lot of detailed questions. There is not a difference between us on the importance of encouraging people into work and the difference that that can make to their lives as well as to the economy of our country. The key issue around these particular regulations is how these things operate for a range of people who might have a mental health condition, autism, learning disabilities or fluctuating conditions—a whole range of circumstances—where the approach needs to be particularly sensitive, particularly knowledgeable and sometimes very specific, if not individual. I do not think I got the flavour of that from the response.

The statistics for the appeal success rate, which I thought was going to be declining, are worrying because they seem to suggest that the process under way for people in the WRAG or support group, or left on JSA, is still not working as well and effectively as it should be. It has a chequered history. I think the approach is right—indeed we legislated for that approach—but how it works, and is working, in practice, particularly with Atos, remains a cause for concern. That point is not unrelated to these regulations—it is germane to the starting point, so I have residual concerns about that. Helping people to understand their obligations under the system to take advantage of facilities, work-focused interviews and work-related activity is fine. However, a sanction of £71 a week to concentrate the mind is, frankly, outrageous. For us, it is totally unacceptable.

Over the past 12 months, there have been sanctions for people on ESA, and one of the few questions that was not answered was the extent to which there have been appeals and the outcome of those appeals. That goes to the heart of the resources that the DWP will need to address this regime. I would be very grateful if the noble Baroness, in the fullness of time, could follow up on that. The noble Lord, Lord Wigley, made a very pertinent point about the impact assessment and the impact on civil society. Perhaps the noble Baroness will share her answer on that with Members of the Committee. Having said that, we have had one go at this and will keep it in our sights because it is of concern.

Motion agreed.