House of Lords

Wednesday 13th February 2013 Lords Chamber

Wednesday, 13 February 2013.

15:00

Prayers—read by the Lord Bishop of Worcester.

15:06

Viscount Ridley took the oath, following the by-election under Standing Order 9.

Ministerial Code

Wednesday 13th February 2013 Lords Chamber

Question

15:07

Asked by

[Baroness Miller of Hendon]

To ask Her Majesty’s Government whether the constitutional convention of Cabinet collective responsibility, as confirmed in the Ministerial Code, remains in force.

[Lord Wallace of Saltaire]

My Lords, yes.

[Baroness Miller of Hendon]

I thank the noble Lord for his very helpful and complete reply. However, as noble Lords are doubtless aware, in the votes that took place last month in both Houses, none of the Liberal Democrats who are members of the Government supported the proposals of the independent Electoral Commission to ensure fair voting by making equal, even-sized constituencies. What are the current sanctions available to the Prime Minister against Ministers who vote against government legislation?

[Lord Wallace of Saltaire]

My Lords, perhaps I may read from paragraph 1 of the Ministerial Code:

“The principle of collective responsibility, save where it is explicitly set aside, applies to all Government Ministers”.

Three sentences before that, it states:

“The Ministerial Code should be read alongside the Coalition agreement”.

[Lord Kakkar]

My Lords, in coalition government, does the application of sanctions against Ministers who fail to respect the convention of collective responsibility lie with the Prime Minister or the Deputy Prime Minister?

[Lord Wallace of Saltaire]

My Lords, this is, as the noble Lord said, a convention. I am sure he recalls that it was developed in the 1780s as a way to protect the Cabinet as a whole against the monarch, who wished to call Cabinet Ministers in one by one to ask them what they personally thought; it was not originally concerned with Parliament at all. There is a very useful document with which noble Lords may not be familiar, which accompanied the coalition agreement, entitled the Coalition Agreement for Stability and Reform, which states:

“There is no constitutional difference between a Coalition Government and a single party Government, but working practices need to adapt to reflect the fact that the UK has not had a Coalition in modern times”.

[Lord Hughes of Woodside]

My Lords, is it not the case that, apart from the words as written down in the paper, there is much more to collective responsibility? Does not a moral judgment apply here? Should it not be a matter of honour, or does the story that there is honour among thieves not apply in this case?

[Lord Wallace of Saltaire]

My Lords, if one compares this Government with the previous Government, there has been much less briefing by Ministers against other Ministers than there was between 1997 and 2010. If I may cite my favourite senior official, this coalition Government are rather easier for officials to work with than their predecessors because, “You have to have your discussions out in the open rather than in secret”.

[Lord Mawhinney]

My Lords, given that collective responsibility exists, how can the Minister stand there and answer as he has, with a straight face, as if we are expected to believe what he is telling us? Will he do me the honour of personally asking the Prime Minister what disciplinary action he intends to take against Lib Dem Ministers at both ends of the Corridor, and then do me the courtesy of writing to tell me what reply he got?

[Lord Wallace of Saltaire]

I am happy to write to the noble Lord but I reiterate: this is a coalition Government. Working practices have to adapt to accept that this is a coalition Government. That is what was formed in 2010; that is what I trust will continue until 2015.

[Baroness Butler-Sloss]

My Lords, does the agreement between the coalition include that one party should be whipped to vote against the coalition?

[Lord Wallace of Saltaire]

My Lords, we proceed case by case as we move ahead. There are a number of issues on which it is agreed that neither party will be whipped. As on the question of same-sex marriage, some issues are not whipped; however, the programme Motion in the Commons was whipped. One takes it case by case and on particularly sensitive social issues we do not have a Whip at all.

[Baroness Symons of Vernham Dean]

My Lords, the coalition agreement does indeed make the point about collective responsibility, where the two parties agreed that on certain issues they might not be able to vote together. I have two points. First, does the noble Lord not acknowledge that the coalition agreement has had no endorsement from the British public and that it is very odd for the current Government just to set aside what the Ministerial Code says, of their own volition? More specifically, can he tell the House where in that agreement there was a specific set-aside on the issue of the vote that took place a couple of weeks ago when his own party—and he as a Minister—did not support the Government?

[Lord Foulkes of Cumnock]

The Minister did.

[Baroness Symons of Vernham Dean]

Where was that explicitly set aside?

[Lord Wallace of Saltaire]

As the noble Lord, Lord Foulkes, points out, I was in Berlin at the time so I was not involved in that particular dimension. I recall some time ago being asked by the noble Baroness, when she was on a committee, whether I felt that one could operate as a Government against the mandate of the manifesto. I pointed out that the strongest mandate in the 1997 Labour manifesto was a commitment that the Labour Government never fulfilled, so there is a degree of flexibility in all these issues.

[Lord Tyler]

Does my noble friend accept that on the specific occasion to which the noble Baroness referred, the Prime Minister himself accepted that there could not be collective responsibility where there had not been collective agreement? That was explicit in the coalition agreement and, as with Leveson, which we will refer to later, there are disagreements that are accepted. In a grown-up society, it is surely right to be transparent about that rather than covering up artificial disagreements, as in the previous Administration, where collective responsibility was disguised.

[Lord Wallace of Saltaire]

As the opening paragraph of the coalition’s working agreement also stresses:

“In the working of the Coalition, the principle of balance will underpin both the Coalition Parties’ approaches to all aspects of the conduct of the Government’s business”.

[Baroness Hayter of Kentish Town]

My Lords, of course we hate to intrude on private grief, but will the Minister tell us whether we will have one response on the charter or two?

[Lord Wallace of Saltaire]

My Lords, that question is currently under discussion, although of course the doctrine of collective responsibility prevents my telling the House exactly where those discussions are at present.

[Lord Cormack]

My Lords, did the Liberal Democrat Ministers change their minds as well as their votes, bearing in mind the Deputy Prime Minister’s earlier firm agreement to boundary changes?

[Lord Wallace of Saltaire]

My Lords, coalition government is a matter of constant negotiation and discussion. Unfortunately, we have not managed to deliver much of the political reform agenda that we agreed to in the coalition agreement. All three parties bear some responsibility for failing to deliver that agenda.

Health: Healthcare Assistance

Wednesday 13th February 2013 Lords Chamber

Question

15:15

Asked by

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government whether they will reconsider the decision not to regulate healthcare assistance in the light of the Health and Care Professions Council’s preliminary finding, published in December 2012, that there are significant shortcomings in a voluntary register.

[Lord Hunt of Kings Heath]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and refer noble Lords to my interests in the register.

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

The department notes the Health and Care Professions Council’s findings. Levels of assurance are already in place for healthcare assistants, including supervision by regulated professionals and registration of their employer with the Care Quality Commission. In addition, new training and conduct standards for healthcare assistants will be published shortly. We will review the need for further assurance of healthcare assistants in light of the recommendations of the Francis inquiry.

[Lord Hunt of Kings Heath]

I am grateful for that response. Does the Minister agree that the significance of the council’s report is that in relation to social care assistants it has concluded that a voluntary register is not sufficient? Does he agree that the same argument applies very much to healthcare assistants? With regard to the Francis inquiry recommendations, will he undertake for the Government to seriously consider reversing their policy on this matter?

[Earl Howe]

My Lords, we have made it clear that each and every one of Robert Francis’s recommendations will be considered extremely carefully, including the recommendation in relation to healthcare assistants. However, it is worth noting that while the Health and Care Professions Council has signalled some potential limitations to a statutory regulator holding a voluntary register, and we take account of that, nevertheless that does not mean that these potential limitations would apply to other organisations wanting to set up a voluntary register. Our view is that that avenue should be explored. The HCPC also flagged up some major limitations in attempting to regulate healthcare assistance. Those messages bear thinking about.

[Baroness Gardner of Parkes]

I ask the Minister again—I have asked him this so many times—whether he will ask the Nursing and Midwifery Council to look again at some intermediate training level, which I think is sadly needed since the abolition of the SENs, for which you could qualify without having to have academic university entrance.

[Earl Howe]

My Lords, the policy on nursing is clear: there is general acceptance that nursing should be a graduate profession. The problem with giving responsibility to the NMC for healthcare assistance is that that is not currently within its remit, and I think it would say that it has enough on its plate to deal with, without that added dimension as well.

[Baroness Masham of Ilton]

My Lords, what does the Minister think of the care assistant who posed as a nurse for four years, working in four different surgeries, before she was found out? She did several hundred vaccinations and cancer smears on patients.

[Earl Howe]

That story bears out the importance of employers fulfilling their responsibility to those who are in their care and ensuring that those whom they employ have the competences and skills that are required for the job. I do not want to prejudge that case, but there are systems in place that should ensure that patients are protected. We must deplore cases of this kind but they should not happen—safeguards are already in place.

[Lord Turnberg]

My Lords, many members of the public find it difficult to understand why healthcare support workers who deal with patients every day are not regulated and registered and do not have to be fully trained in order to take up a job. I, too, am puzzled. Will the Minister tell us whether it is purely a matter of finance?

[Earl Howe]

No, my Lords, it is not purely a matter of finance. Our view is that what really matters in this context is the competence and training of the individual involved. We are not oblivious to the concerns in this area. That is why we have already announced a number of further measures to support healthcare assistants. For example, we have just created an innovation fund of £13 million for the training and education of unregulated health professionals. The Care Quality Commission will undertake a review of inductions for care staff to make sure that nobody can provide unsupervised help without an appropriate level of training, and we have the work currently being done by Skills for Health and Skills for Care. Their report has now been received and embodies suggestions for a code of conduct and induction standards for health and social care workers.

[Baroness Emerton]

The Minister mentioned supervision. The voluntary register does not necessarily cover the total safety of patients unless they are supervised. There is an issue about the minimum levels of registered nurses who can supervise support workers. When will the Government look at minimum standards for the registered nurses to enable sufficient supervision? The evidence base is that effective care and cost-effective care are reliant on the number of registered nurses who can supervise support workers.

[Earl Howe]

The noble Baroness as ever raises an important issue. She will know that the code of conduct for nurses specifically covers supervision where necessary. My department has instigated a number of measures to support local decision-making to get skill mix profiles right. They include the QIPP programme, which is a key driver for getting the skill mix right through producing tools and programmes in that area. The NHS Institute for Innovation and Improvement supplies case studies and other resources to help NHS provider organisations deliver their QIPP strategies, and NHS employers also deliver guidance and support to help employers better plan their workforce.

[Baroness Maddock]

My Lords, given that the Care Quality Commission has highlighted the problems of people having too many different carers and of them not arriving at the right time—I can vouch for that; my mother is nearly 94 and has care twice a day—does he agree that managers of rosters need better training to enable them to make much better provision for carers and those they care for?

[Earl Howe]

I agree with my noble friend. It is an extremely important issue. Part of this relates to employers, part of it relates to those who are charged with supervising healthcare assistants, but part relates to induction training. The Prime Minister announced on 4 January that the CQC will undertake a review of induction training for care staff to ensure that nobody can provide unsupervised help without an appropriate level of training.

Airports: Heathrow

Wednesday 13th February 2013 Lords Chamber

Question

15:23

Asked by

[Lord Spicer]

To ask Her Majesty’s Government what has been the average daily spare capacity at Heathrow Airport over the last six months.

[Earl Attlee]

My Lords, the day-to-day monitoring and management of Heathrow’s capacity is a commercial matter for the airport operator. However, I can confirm that the declared daily runway scheduling limit at Heathrow, published by Airport Coordination Limited for the winter season 2012-13, is for up to 656 arrivals and 678 departures, a total of 1,334 movements per day. There is an annual planning limit of 480,000 air transport movements at the airport.

[Lord Spicer]

My Lords, most people think that Heathrow is now pretty well full up. What would a third runway do for capacity at Heathrow and what would it do for the economic growth of our country?

[Earl Attlee]

My Lords, I certainly agree that Heathrow is to all intents and purposes full up. The answer to the noble Lord’s question about the third runway is a matter for the Airports Commission. Coalition policy is currently that there will be no third runway at Heathrow or any of the other London airports.

[Lord Soley]

The Minister’s comments were rather good and quite encouraging. However, whatever Sir Howard Davies is likely to recommend, it is unlikely to be an alternative hub airport somewhere else in the near future—at least in the next 15 or 20 years. Therefore, would it not be wise to allow Heathrow fully to prepare for the likely decision to go ahead with a third runway, even if only in the short term, because otherwise we will be shutting ourselves out of the global economy? Will the Minister take that back to his department? People are increasingly turning to Frankfurt and Amsterdam, particularly international investors. We really do have to take it more seriously.

[Earl Attlee]

My Lords, I know that the noble Lord has strong feelings on this matter, but I am afraid that he should take no encouragement from what I have just said at all. We will have to wait until the Airports Commission reports. However, Heathrow is well connected at the moment, and compares very well with our European partners.

[Baroness Valentine]

As chief executive of London First, I hear daily of businesses’ frustration that capacity constraints are not being tackled more urgently. In the mean time, recent trials at Heathrow using both runways to land and take off appear to have reduced the number of stacking planes and to have improved punctuality. If the Government are satisfied with these trials, when do they intend to make the practice permanent?

[Earl Attlee]

My Lords, the noble Baroness raises an important point about the operational freedoms trials which arose from the south-east airports taskforce, chaired by my right honourable friend Theresa Villiers. We are in the second phase of the trials. They are not yet complete, so we do not yet have the complete answer. We will just have to see the results, but we are making good progress on the trials.

On stacking, the Civil Aviation Authority is undertaking a study on the future airspace strategy. One of the objectives is to reduce stacking of aircraft, because of the noise, emission and cost.

[Lord Bradshaw]

Most people have been worried by the awful trouble caused when there is bad winter weather at Heathrow. As the allocation of flights is, as the Minister put it in his Answer, a commercial matter, will he consider asking the CAA whether there should be a regulatory decision which would actually make airlines cancel flights in order that they can stop the horrors that happened at Heathrow two or three weeks ago?

[Earl Attlee]

My noble friend raises an important point. In the event of bad weather, a committee, HADACAB, determines whether it is desirable to reduce the number of flights so that Heathrow, or any other airport, is not running at maximum capacity and time is provided for the runway to be cleared.

[Lord Clinton-Davis]

Is not the truth of the situation that the Government have made up their mind, despite evidence to the contrary, that Heathrow has to be ruled out? Is there any alternative? What do the Government propose? Is not time of the essence?

[Earl Attlee]

The noble Lord will know that this is an extremely difficult issue. For every suggestion that the noble Lord could make about what we should do about this problem, I could tell your Lordships what the difficulty is. We have set an extremely difficult exam question for the Airports Commission, and we will just have to wait and see what it advises.

[Lord Forsyth of Drumlean]

My Lords, I declare an interest: it took two and a quarter hours to get from Glasgow to Heathrow on Monday, most of that time being spent on the tarmac at either airport. How long are we going to continue with the disgrace that is Heathrow? Is it not obvious for a Government with no money that if there is a proposal to create a privately funded third runway—up and running and providing jobs—and we want growth, then we should get on with it?

[Earl Attlee]

My Lords, I understand noble Lords’ passion about the problem with Heathrow, but we must also recognise that there are over 200,000 people around Heathrow adversely affected by the noise of airport operations.

[Lord Rotherwick]

My Lords, although people are saying that Heathrow is full up, nearly saturated or working at 98% capacity, is it not true that that in reality is in good weather? During bad weather when the time between landings is extended significantly, considerable delay is caused. It really is time that we should respond to this because it is totally detrimental to the UK that other nations should see that we are incapable of operating an efficient transport system.

[Earl Attlee]

My Lords, I believe that we are responding and that we have handled the bad weather better by proactively cancelling flights in advance in order to reduce the activity at the airport so that the runways can be cleared. It is interesting that at Gatwick, which does not run at 100% capacity, it is much easier to keep the runways clear. Gatwick has the time to do it without having to cancel aircraft.

Monetary Policy Committee: Inflation

Wednesday 13th February 2013 Lords Chamber

Question

15:30

Asked by

[Lord Barnett]

To ask Her Majesty’s Government what is their response to the proposal by Mark Carney that the Monetary Policy Committee’s inflation target should be flexible.

[The Commercial Secretary to the Treasury (Lord Deighton)]

My Lords, the Chancellor set the remit for the Monetary Policy Committee at Budget 2012 to target inflation of 2% as measured by the 12-month increase in the consumer prices index. Inflation targeting has served the UK economy very well.

[Lord Barnett]

The Minister did not quite answer my Question, my Lords. He will know that Mark Carney, the new governor, has said that,

“flexible inflation targeting offered the best chance of boosting growth while maintaining price stability”.

Does the Chancellor agree with his new governor, who he has said is the best in the world?

[Lord Deighton]

My Lords, if I did not quite answer the Question directly it was because the Question implies that we currently do not have flexible inflation targeting, but I believe that that is precisely what we have already. The remit given to the MPC actually lays out the conditions which provide for adjustments, given what may happen with shocks and disturbances, so that we can take a longer time to reach the inflation target. To my mind, that is a definition of flexibility.

[Lord Peston]

Dare I say to the Minister that he is mistaken? The word flexibility does not appear anywhere in the Bank of England Act. He is entirely right that the Monetary Policy Committee behaves as if it does have a flexible inflation target—the trouble is that it does not, and therefore it is acting illegally. For a great many years my noble friend Lord Barnett and I have been trying to get the Bank of England Act modified so that what the MPC is doing—which, as the Minister says, is quite right—turns out also to be legal.

[Lord Deighton]

I do not really want to get into a semantic argument about the definition of flexibility, and I do not know whether it appears in the original Act. However, to my simple understanding, the remit and the MPC’s behaviour clearly demonstrate significant flexibility, which is what you would expect in a policy tool to cope with our difficult and challenging economic circumstances.

[Lord Lawson of Blaby]

I support my noble friend the Minister in everything that he said and I greatly look forward to the court case which the noble Lord, Lord Peston, is about to bring against the Bank of England. I am sure that that will give us great entertainment value. Is my noble friend aware that to jettison the inflation target at this time or at any other time would mean a loss of financial market credibility and a loss of political credibility for no gain whatever?

[Lord Deighton]

I thank my noble friend for his expert endorsement. He is absolutely right: our inflation target has served this economy extremely well. The Chancellor and the incoming governor as well as the existing governor have been clear that it would take a very high hurdle to climb over to find a better structure than the one that we currently have.

[Lord Howarth of Newport]

My Lords, particularly after the bad experiences of previous decades, this—like any—Government should always bear in mind that if we again lost control of inflation, the consequences would be impoverishing, divisive and altogether malign.

[Lord Deighton]

My Lords, I could not agree more with the noble Lord’s observation. There is nothing more insidious than inflation, which is why sticking to our inflation-targeting mandate, which the independent Monetary Policy Committee pursues with great skill and judgment, is absolutely the right thing to do.

[Lord Davidson of Glen Clova]

My Lords, given the objective that the MPC is set by Her Majesty’s Treasury, how does the Treasury propose to modify the inflation rate target, since it appears that it needs to accommodate Mr Carney’s new desire for flexibility? Or—harking back to something that has already been said—is it that the flexibility already exists because it accommodates the Bank of England’s failure for more than two years to meet its statutory inflation target?

[Lord Deighton]

My Lords, it is extremely clear from the MPC’s own minutes how it treats that trade-off. With the House’s indulgence, I will read the most appropriate lines:

“The Committee discussed the appropriate policy response to the combination of the weakness in the economy and the prospect of a further prolonged period of above-target inflation. It agreed that, as long as domestic cost and price pressures remained consistent with inflation returning to the target in the medium term, it was appropriate to look through the temporary, albeit protracted, period of above-target inflation”.

That is the perfect mandate for flexible inflation targeting.

[Lord Flight]

My Lords, how credible does the Minister think it is that the Bank of England could unwind £380 billion of QE and sell £380 billion of gilts, in the event of velocity of circulation recovering and the economy picking up, so as to stabilise the money supply?

[Lord Deighton]

My noble friend raises an important question: the technical unwind of the quantitative easing strategy, which is not something which would appear imminent. However when it does take place it will be done in full consultation with the Debt Management Office to ensure that we minimise any volatility to the gilt markets.

[Lord Stern of Brentford]

The Minister sees virtue in flexibility in monetary policy. Will he comment on the virtue of flexibility in fiscal policy?

[Lord Deighton]

The noble Lord is absolutely right to point out that there is an array of policy tools at our disposal. The unfortunate reality with respect to fiscal policy is that, given the enormous debts and deficit which we have had to contend with and have sought to consolidate, our room for manoeuvre is significantly diminished.

Press Regulation

Wednesday 13th February 2013 Lords Chamber

Statement

15:38

[Lord Gardiner of Kimble]

My Lords, with the leave of the House, I will now repeat the answer to an Urgent Question made earlier in another place by my right honourable friend the Secretary of State for Culture, Media and Sport.

“Mr Speaker, I must make clear that following the publication of Lord Justice Leveson’s report, cross-party talks have been exploring different ways of implementing the tough self-regulatory system for the press that he recommended. As colleagues will know, there are already several press Bills in the public domain which have been published by various organisations. The draft royal charter published by my party yesterday is outside the normal arrangements for collective agreement and does not reflect an agreed position between the Conservative and Liberal Democrat parties.

I made clear to this House on 3 December that we would,

“send a loud message to the press of this country, and that message is that the status quo is not an option”.—[Official Report, Commons, 3/12/12; col. 594.]

Both the Prime Minister and I wholeheartedly support a tough new system of independent self-regulation as outlined by Lord Justice Leveson. We knew that any new model must restore public confidence and ensure that the abuses of the past could not happen again, but we continue to have grave reservations about statutory underpinning and, as such, we have concerns about implementing a press Bill. The royal charter that I have published would put in place Leveson’s recommendations without the need for statutory underpinning. It would see the toughest press regulation this country has ever seen without compromising press freedom.

The royal charter implements the principles of Leveson in a practical fashion and is the Conservative Party’s alternative to Lord Justice Leveson’s suggested use of Ofcom as a verifying body. All parties now agree with us that handing further powers to an already powerful body would not be appropriate. There is a distinction between the regulatory body being set up by the press and the verifying or overseeing body for which we suggest a royal charter is used. Let us be clear: the charter does not create a regulator, rather it establishes the body that will oversee it. The regulatory system that the royal charter body will oversee will be tough and the regulator will have the power to: investigate serious or systemic breaches of the press code; impose up to £1 million fines; and require corrections and other remedies, including prominent apologies. The royal charter body will provide tough oversight and ensure that the new regulatory body is efficient and effective.

We have also published draft clauses for exemplary damages that would provide very real incentives for the industry to join the regulator and ensure that there are serious consequences for those that do not. This is tough regulation, a tough package, that delivers the principles of Leveson. Lord Justice Leveson’s report was almost 2,000 pages long. I do not think that anyone is really suggesting that it would be possible to pick it up and implement in full. There were areas raised within the report which all political parties have expressed very real concerns about; Ofcom is but one example. All political parties expressed serious reservations around data protection proposals and their potential impact on investigative journalism. There were also concerns about whether it would be appropriate for the Information Commissioner to investigate and then decide on public interest.

The royal charter reflects a principled way forward proposed from the Conservative side of the coalition. We are clear that this is a workable solution, but it is only a draft. We will continue to debate it as part of the cross-party talks and we will seek to secure agreement. We are all committed to the Leveson principles, and this is not about implementing or not implementing Lord Justice Leveson’s recommendations; this is about taking the Leveson report and making sure it can be practically implemented. The challenge before all of us is to find an agreement. The victims deserve nothing less”.

15:42

[Lord Stevenson of Balmacara]

My Lords, I thank the Minister for repeating the Statement made as a UQ in the other place. Given that what we are addressing are, indeed, the Conservative Party’s belated Leveson implementation proposals, can he confirm that he is on this occasion speaking on behalf of his party and not on behalf of the Government?

It is almost three months since the Leveson report was published. Most people, particularly the victims, are getting fed up with the delay and obfuscation being perpetrated by those who profess that they agree with the Leveson principles but who seem to be ready to do anything but implement his ingenious and effective recommendations. Yesterday’s YouGov poll commissioned by the Media Standards Trust found that 74% of people believe that the Government should implement Lord Justice Leveson’s recommendations, 82% believe that if the status quo continues there will be a return to unethical and illegal practices and only 35% would have confidence in a press regulator set up voluntarily by newspapers and backed by a royal charter.

Given these figures, does the Minister agree with me that what Leveson proposes is fair and reasonable, as it protects free speech as well as protecting people from abuse and harassment by the press, and that there is no justification for watering it down? What we want is Leveson, not Leveson-lite. Does he also accept that the most straightforward way of implementing Leveson is by statute rather than the rather archaic and cumbersome proposals we have before us today, which are neither fish nor fowl—a royal charter plus parliamentary safeguards and a separate statute? Does he agree that Leveson has given Parliament the opportunity once and for all to clean up the practices and behaviours of the press that have made a misery of the lives of the Dowlers, the McCanns, Abigail Witchalls’ family and so many others, and that history will judge us harshly if we fail in our duty and do not implement Leveson now?

15:45

[Lord Gardiner of Kimble]

My Lords, perhaps I may start by addressing the issue of the victims because the task of all political parties is to ensure that we have a long-standing arrangement whereby what has happened before never happens again. That is the number one priority in all our endeavours.

There is no intention or suggestion of the status quo remaining. I have to say to the noble Lord that what is on the table, the draft royal charter, is not a government document; it is an offering to the cross-party talks that are continuing tomorrow, and I very much hope that politicians of all sides and of good will can have a good discussion on this. However, there is absolutely no suggestion that this proposal is about a dilution of Lord Justice Leveson’s recommendations. This is about bringing forward, yes, a royal charter and not statutory legislation in the way that the noble Lord has put, but it is not a cumbersome mechanism. Indeed, if we are talking about speed, which is very much one of the issues that a lot of noble Lords and many people are concerned about, the route of the royal charter will, in fact, lead to a more speedy conclusion to what we all want in this regard.

15:46

[Lord Fowler]

My Lords, perhaps my noble friend’s words about the victims would have more force had not the victims rejected the particular course being proposed. The original objection of government Ministers—or perhaps I should say, some government Ministers—to the Leveson proposals was that it required legislation. Now the impression is given that under the royal charter no legislation is required. However, is it not the case that legislation, and quite controversial legislation at that, is required both on costs and on damages to make the royal charter work? As that is the case, would we not have been better to have agreed to Lord Justice Leveson’s proposals and added the very modest statutory underpinning that he proposed?

[Lord Gardiner of Kimble]

My Lords, I understand and know that my noble friend has a long-standing view about legislation. The point about the royal charter is that it is, in fact, the most speedy way in which we could address this matter and come to a conclusion, and I understand and very much hope that the cross-party talks tomorrow are going to discuss the detail of the royal charter. This is a draft, and copies of the papers are in the Printed Paper Office. I am starting to look through them because there is much merit in this avenue to deal with the concerns that have been expressed. I very much commend the detail of the royal charter, which is very different from many of the royal charters that noble Lords are aware of. On a range of issues, from the BBC to professional bodies, it is a different sort of proposal.

[Baroness Boothroyd]

My Lords, the BBC is governed by royal charter. It did not seem to me to assist the BBC or, particularly, Lord McAlpine some months ago when there were great difficulties with the BBC. Can the Minister convince me in a few short words as to how a royal charter will improve the workings of the newspaper industry and protect individuals who the newspapers potentially are going to highlight?

[Lord Gardiner of Kimble]

My Lords, I have looked into the number of organisations that have a royal charter. They range from the Scout Association to the RSPB, and from professional bodies to universities and colleges. I emphasise to the noble Baroness that the proposals in this particular royal charter are very clear and distinct. The way in which the appointments panel, the recognition criteria and the recognition body are constituted will, on reading, reassure the noble Baroness that this is a serious proposal. It is in draft, and I do not think that drafts are always the final or perfect version, but they are certainly the beginning, I hope, of the opportunity for some serious discussions across the parties.

[Lord Lipsey]

My Lords, the Minister said that there was no suggestion of a dilution of the proposals. Does that mean that he has not yet had time to read the analysis published by Hacked Off, which calculates that of the 30 recommendations that constitute Leveson’s recognition criteria, just five are adequately represented in the royal charter, with 23 breached or caveated and two unclear?

[Lord Gardiner of Kimble]

My Lords, I understand particularly the points made by Hacked Off. Clearly, we need to ensure that as many concerns as possible are allayed. As I say, the royal charter document is a draft. I am sure that there will be commentary on it by the political parties and I am sure that the point made by the noble Lord will be part of those discussions. In those cross-party talks it is important to have a formal structure from which we can take forward the very legitimate points that Hacked Off and other organisations have made.

[Baroness Bonham-Carter of Yarnbury]

My Lords, although welcoming the publication of the Conservative’s proposals for a royal charter, we on these Benches have always been clear that our preferred option is the implementation of Leveson. In view of what my noble friend has said, will he encourage the Secretary of State to work through cross-party talks, which he says are happening tomorrow, to produce a royal charter that achieves Leveson’s recommendations in full, which this, quite frankly, does not? Specifically, will she bring forward provisions that prevent it being amended or abolished by future Governments?

[Lord Gardiner of Kimble]

My Lords, I very much hope that tomorrow’s discussions—obviously, I will not be party to them—will take forward an understanding of the parties’ positions. The royal charter provides an opportunity to have those discussions. I understand that there is considerable good will on all sides. My noble friend has made a point about the future of a royal charter and the importance of no one tampering with it. The detail of the royal charter includes how the appointments process is constituted; how the recognition body cannot change itself without a triple lock, which includes a unanimous decision by the recognition body; the written agreement of all the leaders of the three main political parties; and a two-thirds vote in both Houses of Parliament. With all those matters drawn into this draft, I believe that this royal charter has a very strong chance of considerable success.

Of course, no Government can bind a successor Government. That is one of the principles of the fine way in which we conduct our business. No Parliament can bind its successors.

Prisons (Property) Bill

Wednesday 13th February 2013 Lords Chamber

Third Reading

15:53

Bill passed.

Environmental Permitting (England and Wales) (Amendment) Regulations 2013

Wednesday 13th February 2013 Lords Chamber

Motion to Approve

15:53

Moved by

[Lord De Mauley]

That the draft regulations laid before the House on 8 January be approved.

Relevant document: 16th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 7 February.

Motion agreed.

Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) Regulations 2012

Wednesday 13th February 2013 Lords Chamber

Motion to Approve

15:53

Moved by

[Earl Howe]

That the draft regulations laid before the House on 10 December 2012 be approved.

Relevant document: 15th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 7 February.

Motion agreed.

Local Authorities (Conduct of Referendums) (Council Tax Increases) (England) (Amendment) Regulations 2013

Wednesday 13th February 2013 Lords Chamber

Non-Domestic Rating (Rates Retention) Regulations 2013

Local Government Finance Act 2012 (Consequential Amendments) Order 2013

Motions to Approve

15:54

Moved by

[Lord Ahmad of Wimbledon]

That the draft regulations and order laid before the House on 8 and 10 January be approved.

Relevant documents: 15th, 16th and 17th Reports from the Joint Committee on Statutory Instruments, 24th Report from the Secondary Legislation Scrutiny Committee, considered in Grand Committee on 7 February.

Motions agreed.

Business

Wednesday 13th February 2013 Lords Chamber

15:55

[Lord Foulkes of Cumnock]

My Lords, before we move to the main business of the day, perhaps I may point out that there seems to have been a mistake in the timing of the Urgent Question debate. My understanding was that there would be 10 minutes after the contributions from the Front Benches on both sides. On this occasion that was not the case, and a number of Back-Benchers who wanted to get in were not able to do so. Will the Leader of the House confirm that after the Question repeated by the Front Bench and the reply from our Front Bench, we should then have 10 minutes for Back-Bench questions?

[Lord Newby]

My Lords, I am afraid that the noble Lord is mistaken. The rule is that the Minister repeats the Question and the clock then starts. The 10 minutes will include all questions, including those from the opposition Front Bench.

[Lord Martin of Springburn]

My Lords, that is rather unfair on Back-Benchers. Perhaps the rule could be examined. It would be fairer if the minutes that the Front Bench took up could be disregarded as far as concerns the 10 minutes, so there could be a full 10 minutes for Back-Benchers.

[Lord Newby]

My Lords, this is a new procedure, agreed by the Procedure Committee. One way of dealing with the noble Lord’s point is for the Opposition to keep their initial comments and questions brief.

[Baroness Royall of Blaisdon]

My Lords, perhaps I might intervene following the statement from the Government’s Deputy Chief Whip. Clearly this is a new procedure. It is probably here for a trial period over a short time. Very valid comments have been made on the Floor of the House today. When this matter goes back to the Procedure Committee and then to the House, it is clear that we must take these comments into consideration.

Universal Credit Regulations 2013

Wednesday 13th February 2013 Lords Chamber

Motion to Approve

15:57

Moved by

[Lord Freud]

That the draft regulations laid before the House on 10 December 2012 be approved.

Relevant documents: 17th Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument), 24th Report from the Secondary Legislation Scrutiny Committee.

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

My Lords, I shall speak also to the Universal Credit (Transitional Provisions) Regulations 2013. This is the first of our debates this afternoon on a series of welfare reform regulations that together will bring forward fundamental changes to the welfare state.

First I will say how grateful I am to the many Members of this House who have taken a close interest in these reforms. Many noble Lords have attended various briefing sessions intended to explain and debate key policy details, keeping up the dialogue that started during the passage of the Welfare Reform Act 2012. This House has been, and will continue to be, invaluable in shaping our reforms, whether on PIP or universal credit.

While some areas of the regulations are necessarily quite technical and detailed, at the core of our reforms we are creating a new relationship between the individual and the state. These regulations will introduce the universal credit that lies at the heart of our welfare reform programme—a single, income-related benefit for working-age adults.

Universal credit is intended to be radically simpler than the complex web of tax credits and benefits that it replaces. We have made a deliberate choice in this. It would be all too easy to replicate the current system in all its complexity. Some noble Lords have criticised us for relying too heavily on a rational model of human behaviour. We know that incentives work only if people can understand them and can see that with each and every hour of extra earnings they will be better off. Therefore, these regulations deliver a single taper of 65% instead of multiple and sometimes overlapping tapers, and an end to people cycling between different benefits and tax credits when their circumstances change.

Given the undoubted importance of these reforms, when draft regulations were ready in June last year, my right honourable friend the Secretary of State invited the Social Security Advisory Committee to undertake a special exercise to scrutinise them. The committee undertook a public consultation exercise as part of its review and produced a very helpful report. In our response, published on 10 December, we accepted most of the committee’s 36 recommendations and welcomed the acknowledgement that the Government’s proposals for simplifying the benefit system have the broad support of a significant number of consultation respondents.

16:00

At the same time, the department undertook extensive stakeholder engagement in workshops and smaller meetings with individual bodies. As a result of this valued input, the policies expressed in these regulations take account of the views of many interested parties. I will give a couple of practical examples of where we have listened. We discovered that claimants found the phrase “earnings disregard” incomprehensible, so I can announce that this phrase has been abolished. I suspect that the only people who understood it are in this Chamber today. Noble Lords will be pleased to note that the regulations now provide for “work allowances”. With regard to self-employment, the Government have decided that where a claimant has been self-employed for fewer than 12 months, a start-up period will be granted. This means that claimants will not be required to satisfy work search or availability requirements, and the minimum income floor will not be applied, giving them time to concentrate on developing their business. The Government have also decided to allow further start-up periods for self-employed claimants —one new start-up period every five years. I can further announce today that when we migrate people over to universal credit who are already running their own business, we will provide a similar six-month grace period before they need to make any adjustments under universal credit. In addition, the regulations now provide that 100% of contributions to an occupational or personal pension scheme will be disregarded when calculating earnings.

The Universal Credit (Transitional Provisions) Regulations will enable the universal credit pathfinder to be launched from 29 April 2013. That is six months earlier than we previously said universal credit would start, so we are not just on time but, in this case, ahead of time. However, it is important to stress that the pathfinder is a deliberately limited first step. Its purpose is to enable us to test basic processes and systems, and to make sure that the core around which universal credit is built is working effectively before being rolled out nationally. That is a sensible approach to such a large-scale programme of change. It is an approach that we have planned for and have always intended to take. Many noble Lords have urged that we do not rush into implementing reforms on this scale, and organisations such as the Child Poverty Action Group have made a similar point. I am pleased that we all agree on that.

During the pathfinder, a restricted group of people will be able to apply for universal credit, limited to the more straightforward cases. The Universal Credit (Transitional Provisions) Regulations specify those cases in detail. Broadly speaking, we will accept claims from jobseekers, including people with very low earnings, who are single and fit for work and who have no children, are not homeowners and do not have any awards of existing benefits or tax credits. The pathfinder will operate in four local authority areas in Greater Manchester and Cheshire: Oldham, Tameside, Warrington and Wigan. Noble Lords will have noticed that the regulations do not include those locations. That is because the order commencing the relevant provisions of the Act will do so.

We anticipate that we will accept around 9,000 claims for universal credit during the pathfinder. That will be our first step towards our phased approach to the national rollout. From October, we will see the scope of universal credit extending beyond the pathfinder in three ways. First, a wider group of people will be eligible to apply. We will also extend incrementally the geographical scope of universal credit, and we will extend and enhance the capabilities of the online service. We will make adjustments and refine our plans as we learn lessons from each stage of the rollout from the pathfinder onwards. That means that we will make further sets of transitional regulations as we move through the delivery phases. Later this year, therefore, regulations providing for the national launch will be laid in good time before it starts in October.

I turn now to the Universal Credit Regulations 2013. These set out provisions for universal credit including entitlement, elements of the award, calculation of income and capital, and claimant responsibilities. For claimants in paid employment, the automated link to the real-time information on earnings from the HMRC PAYE computer system is a key innovation. DWP and HMRC officials have worked closely together on the requirements and delivery of RTI and its support for universal credit. The RTI pilot is going well. HMRC is on track to expand the pilot and expects to have around 6 million individuals’ records reported in real time by March 2013.

The department published an updated impact assessment on universal credit in December 2012. An estimated 3.1 million households will be better off by an average of £168 a month under universal credit. This includes an expected improvement in the take-up of benefits where people do not currently claim all their entitlements. Potentially, the equivalent of up to 300,000 additional people will be in work from the improved financial incentives. The extra investment with childcare costs to people working fewer than 16 hours per week is now expected to help 100,000 additional families at a cost of £200 million. We are investing £2 billion upfront on the development and delivery—for example, on new IT—of universal credit in this spending review. Over the longer term, this will help to deliver annual administrative savings estimated at £200 million per year.

There is rightly a lot of interest in guidance to decision-makers. I am grateful to the Secondary Legislation Scrutiny Committee for its report on the Universal Credit Regulations which drew this to the attention of the House. On 31 January, I placed sections of the draft guidance in the Library of the House. These cover key aspects including childcare, the claimant commitment, good reason, hardship payments, and exempt and temporary accommodation. My officials have worked with stakeholders to produce the guidance and, having consulted the Social Security Advisory Committee, have taken into account its feedback. We were also pleased that the Commons Work and Pensions Select Committee supports the principles of universal credit, and we welcome the work it has done in its recent report.

The main route to accessing universal credit will be through digital channels. Supporting channels such as telephony will continue and face-to-face support will still be available to claimants locally. The department has worked closely with HMRC and local authorities to develop these arrangements, and on 11 February we published details of the local support services framework. Universal credit will generally be just one monthly payment per household, making it easier for people to understand their entitlement and to take responsibility for managing their own finances, but in order to support people in vulnerable situations we have developed a payments exception service. This service includes budgeting support and the facility to pay some people on a fortnightly basis, with a view to moving over time to monthly payments. I know there is a good deal of interest in this House about how the arrangements will work for claimants with the most challenging circumstances. Let me reassure noble Lords that the guidance sets out the factors we will consider, such as where someone has a history of rent arrears, a drug, alcohol or gambling addiction, or mental health issues. It places securing the rent payment to the landlord, where necessary, as the first priority. Crucially, it also explains that we will offer help to people to become financially independent wherever possible.

In the Government’s view, the regulations are compatible with the European Convention on Human Rights. However, the House may wish to take note of paragraph 6 of the Explanatory Memorandum with regard to the judgment in the case of Burnip and others, which sets out the position pending the Secretary of State’s appeal to the Supreme Court.

I commend the Universal Credit Regulations 2013 and the Universal Credit (Transitional Provisions) Regulations 2013 to the House and ask noble Lords for their approval.

Amendment to the Motion

Moved by

[Baroness Sherlock]

At end to insert “but that this House regrets that the regulations will not achieve their aim of making work pay for all and in fact will provide lower work incentives for 2.1 million households; will have the effect of penalising savers; will result in a cut in childcare support for working families; will result in cuts to the income of some of the poorest and most vulnerable in the country and will have a disproportionate impact on women and lone parent families; do not meet the needs of disabled people; do not provide adequate treatment of small businesses and the self-employed; and risk pushing many families into arrears and homelessness”.

[Baroness Sherlock]

My Lords, in rising to move an amendment to the Motion, I thank the Minister for his co-operation and for the work that he and his officials have done to help us to understand the very complex regulations we have had to work through in preparation for today.

I believe that this is probably one of the most important set of regulations your Lordships will debate this Session. The main Universal Credit Regulations operationalise the workings of the new system of means- tested benefits for most working-age people. This is huge. They constitute the framework which supports the huge tent that is universal credit, into which millions of people will be moved over time. The Universal Credit (Transitional Provisions) Regulations provide the detail of how people will move into the tent. In working through this considerable amount of material, I have been impressed by and grateful for the detailed work done by many stakeholder organisations, including the Children’s Society, Citizens Advice and many others. We on these Benches also broadly support the principle of a single structure for working-age support, but we have always said that the design and implementation are all. These regulations are too important to the many citizens who depend on the money that the state provides to them for us not to go over them in detail.

Now that we have most of the regulations and some, but not all, of the guidance, what was a pile of canvas on the floor is starting to take shape as a tent. It raises some very significant concerns, the first of which is money. In the Second Reading of the Welfare Benefits Up-rating Bill on Monday, we heard of the huge losses already being faced by many low and middle-income families, with more to come. We are about to find that significant numbers of people are going to be worse off as a result of universal credit. The impact assessment states that,

“3.1 million households will have higher household entitlement under Universal Credit”,

than now; but that 2.8 million will have a lower entitlement and that 300,000 households will lose more than £300 a month. These are significant sums. There is of course transitional protection at the point of moving across if someone is actively moved on to the new system. However, if someone claims universal credit because they have lost their job or had a baby, they will not get any protection. As the Welfare Reform Bill went through both Houses of Parliament, we were repeatedly assured that the new system would make sure that work always paid and that more work would pay more. I have been struggling to reconcile those assurances with the views of many experts outside the House who have made representations to most of your Lordships.

Regulation 22 sets out the way in which income from work will be treated for the purposes of withdrawing universal credit. To understand what that will mean in practice, we have to go through the impact assessment, which contains details of what are called “participation tax rates”—which reflect how much a claimant would gain from moving into work—and “marginal deduction rates”, which reflect how much better off they would be from increasing their earnings once they were in work. When I read this, I was astonished to find that more people will see their marginal deduction rates rise than fall; so some people will get to keep more of every pound that they earn than now, but more people will get to keep less of every pound that they earn than now. Some 1.8 million first earners will have higher marginal deduction rates under universal credit and 1.3 million will have lower ones. Similarly, most second earners will face higher marginal deduction rates than now, and couples with children are generally likely to see an increase rather than a decrease in those marginal deduction rates. How can this be in a system that is designed, surely, to make work pay? I think the culprits are found in different places.

First, there is childcare. Currently, the childcare element of working tax credit covers up to 70% of childcare costs for children in working families. However, many low-income working families can currently get up to 96% of their childcare costs covered through the tax and benefits system. The extra 26% comes through an allowance within housing benefit and council tax benefit. Around 100,000 families—about 20%—who get help with childcare through the system get this extra money. But under universal credit, that will not be around. The Children’s Society estimates that this will leave some of the lowest-income working families paying more than seven times as much out of their own pockets.

Barnardo’s did some detailed figures and discovered a whole series of circumstances in which parents could be worse off by doing more work—precisely what the system is not meant to do. For example, a lone parent with two young children ends up in effect paying to work once she starts having to use paid childcare rather than free childcare. Does the Minister accept that there is a problem in making work pay for parents who pay for childcare?

16:15

The second area is mortgage interest. The regulations provide for claimants to receive help with mortgage interest in certain circumstances. But paragraph 4 of Schedule 5 states that once that claimant does any paid work at all, all help with mortgage interest stops immediately; at present they can get help if they do up to 16 hours’ work a week. Aside from being rather ungenerous, this creates a huge cliff edge for someone wanting to move into work and goes against the grain of making sure that under universal credit work—even a few hours—will always pay. The new work allowances are little or no help if you want to do only a few hours’ work.

This is not just an issue for rich people who own houses. I spent some years running a charity working with single parents, which has now merged with Gingerbread. Over the years I met many women who had to give up their jobs when their partner left because all the childcare arrangements had been predicated around having two people to look after the children. They were usually desperate to stay in the marital home for a time to try to give the children some stability when they had just lost one parent, but when that single parent began to try to get a foot back into work she would instantly lose all the help with her mortgage, which could put her home at risk. Surely that does not make any sense. Can the Minister tell us whether the Government will think again on that? In particular, can he reassure the House that in those circumstances somebody would be deemed as having what is called “good cause” in the regulations not to take a job if the result was that, for the sake of a few hours’ work, they could lose their home?

The third area is the self-employed. I believe that my noble friend Lady Donaghy will once again take up the cudgel on behalf of the self-employed people of Britain, for which I am sure they are enormously grateful. We have been very impressed by her in this. I will not linger, given that she will do that. I am very grateful that the Minister has made some concessions but it is still the case that the way universal credit treats the self-employed is really very problematic. It could create serious disincentives to starting a business. Given the lack of growth in the economy, we should not be doing anything to discourage anyone from starting a business or trying to develop it.

The Social Security Advisory Committee recommended that the Government review their approach to self-employment, including introducing more flexibility. In particular, it noted:

“The inability to roll forward losses from an earlier assessment period is likely to disadvantage unfairly those self employed individuals and small businesses whose income flows are irregular and/or seasonal. The Committee recommends that this is looked at again”.

Can the Minister tell the House if this is one of the things on which the Government have moved and, if so, how that will work in future?

The next area is disability. There have been some very harsh consequences of the way the Government have chosen to distribute the money available for disability through universal credit. The details and likely effects were catalogued in great detail in Holes in the Safety Net: The Impact of Universal Credit on Disabled People and Their Families, the report of the inquiry chaired by the noble Baroness, Lady Grey-Thompson. Now that the regulations have given us the final details of the levels of entitlement, it is clear that a great many disabled people stand to lose often significant sums. I am sure that other noble Lords will comment on this, but does the Minister accept the figure in the report by the noble Baroness, Lady Grey-Thompson, that 230,000 severely disabled people who do not have another adult to assist them could lose up to £58 a week as a result of the abolition of the severe disability premium and the failure of universal credit to provide a counterpart to this?

Then there is housing. Regulation 26 and Schedule 4 contain details of the new size criteria for social housing—the much criticised bedroom tax, which will penalise some 660,000 households, two-thirds of which have a disability. Despite the Government claiming that this was about freeing up larger housing, we all know that smaller properties do not exist, a point underscored by the original impact assessment, which made clear that the Government were assuming that most people would stay put and just take the hit in their benefit. People could lose an average of £14 a week. I know that this is something to which my noble friend Lady Hollis intends to return.

When reading the regulations, I was disappointed to find that the Government had not responded to any of the specific hardships that were highlighted during the passage of the Bill. Has the Minister addressed the problem of foster carers, who need a spare bedroom to be able to undertake emergency fostering, or of families with disabled children?

On work incentives, it is impossible to know whether anybody will be better off until we know what will happen to passported benefits in universal credit. The Secretary of State for Work and Pensions indicated at the start of proceedings on the Welfare Reform Bill in another place that he would announce proposals on eligibility for free school meals before that committee finished its work. We are still waiting. Can the Minister tell the House what is happening with passported benefits and can he assure us that the new regime will protect the incomes and work incentives of claimants?

Then there is conditionality. The regulations seem on the face of it to contain a serious tightening of the conditionality rules applying to single parents. I shall give just a few examples. At present, a single parent with a dependent child aged 13 or over can limit the hours that he or she is available for work according to their caring responsibilities. Under the regulations, they can do so only if they can show that they have reasonable prospects of finding work. How will that work? If I were a single parent in that circumstance and the only jobs in my area were night shifts in a petrol station, would I be required to take that job? Or would the fact that I could not leave my 13 year-old at home alone be definitely good cause for my being allowed to turn that job down? What would happen to a single parent whose child was excluded from school or who was made the subject of a parenting order? At the moment, the regulations provide that a lone parent is allowed to limit her work-search requirements in those circumstances in the interests of the child but, again, there is no such counterpart in the regulations. What if she could not afford or find suitable childcare? Again, the current regulations could give her protection; the new ones do not. A single parent who refused to take a job for any of those reasons could be sanctioned for three or six months, or even three years, of her benefit.

The Minister will say that this is all in guidance, but guidance is not legally binding. It is entirely down to the discretion of the individual Jobcentre Plus worker. We have seen some very bad cases in the past where, even with the existing regulations, Jobcentre Plus advisers have made decisions that are against the spirit of the regulations. Will, even at this last moment, the Minister reconsider this? If not, will he confirm for the record that no single parent will be sanctioned for the reasons that I have cited? Will he agree to guarantee that all the flexibilities currently in regulations for single parents seeking work will at least be spelt out in the claimant commitment, so that both the adviser and the lone parent can see together what she is or is not required to do?

Finally on conditionality, Regulation 32(2)(b) states that claimants who become sick and receive statutory sick pay can be treated as meeting the work condition for receiving universal credit, but self-employed people cannot claim SSP. Can the Minister confirm what happens to them?

I turn briefly to the transitional provision regulations. The Minister will be aware that there has been much concern about the timetable, but I am delighted to hear today that all is going to time. There have been concerns also about logistics. When the regulations were debated in another place, my right honourable friend Mr Stephen Timms asked the Minister how the IT was going. In particular, he asked whether the universal credit IT had been taken off the “at risk” list maintained in the Treasury. He did not get an answer, but I know that the Minister here is the man who will know, so I look forward to hearing all about that.

Will everyone in the pathfinders make their applications for universal credit online? If someone in the pathfinder is employed but her employer is not in the real-time information system, how does she get her monthly income information to the DWP to support a universal credit application?

We have heard from the Minister and read in the regulations who will be able to get universal credit in the transitional stage when the tent first opens its flaps for business. There are to be four pathfinder areas, but you really have to be very special to get through that flap in the first place. The Minister mentioned a few criteria but, in fact, you have to be between 18 and 60.5, single, British, and not pregnant or just have given birth. You must declare that you are fit for work and not be entitled to any existing benefit or tax credit. You must not have children or young people living with you; not be liable to pay maintenance under the CSA; not be a carer; have no self-employed earnings; not be in education or training; not be awaiting a decision on entitlement to a relevant benefit; not be deemed not to have mental capacity; and be deemed fit for work. Your capital must exceed £6,000; your earned income in the next month must not exceed £270 for those aged under 25 or £330 for those aged over 25; you must not be homeless and you must be living at your normal address. You should not be in supported or temporary housing and you should have a national insurance number and a bank account. I think I know him, his name is Mr Smith; perhaps I could introduce him to the Government. I am glad to hear that there are 8,999 other Mr Smiths, but how much does the Minister believe will be learnt from this?

It is true that universal credit is opening ahead of time, but not for many people. When will the Government be able to test that those systems work well with claimants who are inconsiderate enough not to meet all those criteria? That could be important. For example, how many people will be in the system by, say, next April? How fast will this progress?

Finally, I have a specific question. Regulation 13 covers what happens if a claimant makes a mistake filling in the form, is invited into the pathfinder and then discovers, not unreasonably, that they did not meet one of the conditions and therefore should not be included at all. They can then go off to claim another means-tested benefit or tax credit, but the new system is very ungenerous on backdating. I understand that DWP will deem the claim as having been made on the date that the universal credit claim was made, provided that it is not more than a month later. Will the claim definitely be processed in a month? Although that sounds a small point, if for some reason it takes longer than a month to process the claim, can the Minister guarantee that someone would have their claim backdated to the date that the universal credit claim was made?

There is so much more that I want to ask, but I know that other noble Lords want to speak and we have much to get through. There are some major questions to be answered about the way that the regulations operationalise universal credit. Is the IT up and running? Will work pay for all? Will doing more hours always pay? Will claimants be sanctioned for not being able to find decent childcare? Can disabled people afford to work? There is so much more. I very much look forward to questions from other noble Lords and to the Minister’s answers. I beg to move.

[Lord German]

My Lords, I congratulate the noble Baroness, Lady Sherlock, on asking a broad range of questions. I was going to ask some of them myself and so I will not repeat them. A lot of other questions need to be raised. I am grateful also to the Secondary Legislation Scrutiny Committee, which advised us:

“We … hope that DWP will ensure that sufficient time is allowed for members to absorb fully the content”,

of the regulations,

“prior to the debate”.

My absorption rate may be generally high, but having received about an hour ago a further five and a half pages of information, I am doing my very best. We have had so much material to look at and so it is very important that we discover very swiftly the intentions of the regulations.

The support that we as Liberal Democrats give to the introduction of universal credit is constant, but the architecture now being put in place raises a large number of questions about much of the detail. I appreciate that much of it has been in guidance rather than in the regulations themselves. We do not have all the guidance at present and some of it is stamped “Not official” but is guidance for guidance that may well become official in days to come.

I start with the back end of the regulations, which is monitoring and evaluation. Noble Lords who sat through the process of the Welfare Reform Bill becoming an Act will know that that is an issue with which we vexed ourselves greatly at the time. I am pleased to have received the programme produced by the Government, which tells us that we will be engaged in what is called the theory of change model. How far does that proposal vary from the traditional route for evaluation methodologies used by the Department for Work and Pensions—in fact, used by the Government as a whole—particularly in respect of behavioural change? If there is one thing that we must learn from the regulations, it is that they need to be continually reviewed and changed. I am pleased that the guidance on some of the sets of regulations that we are debating today says that they will be continually updated. However, we need to know what the process is for that and particularly to have some sense of a timeline and of how Parliament can be engaged with the outcomes, and not just in the set-piece debates and milestones that have been the fairly traditional route for this Parliament to deal with these matters.

16:30

I may be starting at the rear end but there are a number of very important questions, some of which were raised by the noble Baroness, Lady Sherlock. I start with the question of the claimant commitment. I must ask my noble friend what the effect is on universal credit of the new regulations that were laid last night and the court ruling which preceded them. It seems that on the regulations which the court ruled to be not in accordance with the primary legislation, that was not about the content but rather in respect of the primary legislation to which they related. I should be grateful if my noble friend could reassure us that these regulations in no way impact on that court decision or on the new regulations which were laid last night by the Government and are now in effect.

More importantly, in respect of the claimant commitment and the worked examples, which I found very useful indeed, is there not clearly a difference between commitment and a contract? They do not appear as a contract but do appear to be very much a commitment by the claimant, without any recognition of what level of support Jobcentre Plus, and the Government as a whole, will provide for that claimant. I wonder whether there might be an element of expression of the sorts of services that a claimant could rightly expect to receive to assist a claimant through the process laid out in the claimant commitment.

I turn to the sanctions regime, on which we have now had some detail. The guidance we have received refers to “good reason” as opposed to good cause. The guidance on good reason says that it is not defined in law but that good cause has been considered in case law. I wonder whether there is a deliberate reason for choosing those different words because that might then avoid the case law, which has already been gone through, in order to provide what might cause a reasonable person to act as they did. The guidance itself seems to draw heavily on the good cause experience as provided through the courts. I wonder whether there are significant differences within the guidance provided on how good reason might be shown and how good cause can be shown under the current legislative procedures.

The issue of monthly awards has concerned many Members of your Lordships’ House as has the issue of direct payments to landlords. On the monthly awards, there is clearly a need for extensive money advice. I looked at the guidance we were given on the local support services framework. It states in outline only that it starts to draw up a programme for a relationship between central and local government on welfare issues. I wonder how far that debate has gone and what the Government’s intentions are in order to be able to deal with, and react swiftly to, difficulties which individuals may have. We could think of many examples where it might be necessary either to shift payment between one claimant and another in a household or to move to a more frequent system on a time-limited basis. I wonder whether there is pressure in the guidance on the decision-makers to be able to implement that fairly rapidly.

We have also been given a set of criteria that are the factors to consider for alternative payment arrangements. There are tier one, which is headed with a red bar, and tier two, which is headed with a green bar, but no weightings are given to those factors. For transparency purposes, I wonder whether my noble friend would like to outline some of the weightings that are to be given to those factors so that people would know when it might be appropriate for them to be able to find exceptions to the monthly awards and direct payments regime.

My noble friend made strong play, and I think he was supported very widely, of finding new financial products to be able to help people to manage their money on a monthly basis. We have frequently talked about jam jars and jam-jar accounts, and about the difference between prepayments and direct debits. The evidence at paragraph 57 in the response from the Government to the SSAC was that 1.3 million potential new universal credit claimants do not use a transactional bank account. I should like to hear some more today on what is going to happen to these new products. Are we going to see them in time for the pathfinders, and certainly for the rollout in October, to be able to take advantage of them?

On direct payments to landlords, an issue that I know many social housing associations are concerned about, the pilot studies so far show that 92% of the due rent has been collected on time—but of course that means that 8% has not been collected on time. When the pilots end in June, which is not far short of the October introduction and full rollout, will my noble friend be publishing the final arrangements as close to the June date as possible so that there will be some speed of engagement with individuals’ difficulties? Will he be indicating how third parties, such as landlords and so on, will be able to make an intervention as swiftly as possible to ensure that rent is paid and collected?

In his introduction, my noble friend mentioned compatibility with the European Convention on Human Rights. This relates, of course, to the additional bedroom for a disabled child and overnight carer, and to paragraphs 10, 25 and 36 of Schedule 4 to the Universal Credit Regulations before us. Guidance will be relied on to supplement these regulations, but the guidance states that local authorities under the current regime, which is the one where the legal case stands, may wish to consider suspending the part of the housing benefit relating to the additional room. Does my noble friend accept that that puts people in a very difficult position as some local authorities may decide, as it is purely advisory and it is a consideration that they can make, that they should pay for an additional bedroom for a disabled child? That is what is being challenged by the Government but it is the current legislative position that they find themselves in. Some local authorities may provide the cash and others may not, but they are obliged to consider it. Therefore, it might be in the award but not paid or it might be in the award and paid.

I notice from the Explanatory Memorandum that new guidance is to be issued, with the Government saying that all this will not be decided for some time. With regard to the timescales that my noble friend often provides to your Lordships’ House, when late autumn often becomes Christmas and early spring often becomes summer, the words “decided for some time” mean that it may be some years before the courts reach their final conclusion on this matter. I wonder whether we need to have that certainty now in regulations, or certainly in the guidance, to support those issues.

I shall conclude with the issues about digital. The Government are persuaded, of course, that “digital by default” is where we should be for applications and submissions regarding universal credit. I understand that only 14% of main benefit claimants currently put in a new claim online—that is in the local government briefing—but 45% said that they would need help or support to apply online in future. That is a very substantial number of people. The arrangements for supporting people are crucially going to be conducted through agencies, including local government. I notice that the Government have been working with the Local Government Association, the Scottish local government association and the Welsh Local Government Association to find a route forward on these matters. The document that the Government have provided us with, Universal Credit—Local Support Services Framework, states:

“This framework is the start of a conversation”.

Can my noble friend say when the conversation is likely to end and when local government is likely to know how much money it will get in order to be able to provide those services? It seems to me that those supportive services need to be in place in advance of a rollout so that people know where to turn. For example, on online applications, where libraries will be the obvious place for undertaking such work, I wonder whether the conversation needs to come to a rapid conclusion. Will my noble friend indicate when that might be? There are also data transfer and data protection issues because people will need to be able to share information between one group and another.

That may all sound very negative, but the thrust of these regulations is in the right direction. However, when we are having such an enormous change to the structure of our welfare system, it is crucial that the necessary architecture is in place. I hope that my noble friend will be able at least to provide us with some indication of how Parliament can engage in the journey that is likely to take place over the next two years to ensure that we get the best out of the universal credit. That is the ambition we all want to achieve.

16:45

[Baroness Hollis of Heigham]

My Lords, like my noble friend, I thank the Minister and the Box for the papers and seminars that we have found so helpful. I congratulate my noble friend on her powerful scrutiny of some very extensive regulations that effectively took 17 days in Committee to debate.

The noble Lord, Lord Freud, admitted that the regulations assume economic rationality. As a result, they are heavy on sanctions—in my view, appallingly heavy sanctions in Regulation 102 lasting for up to three years—believing that they can sanction people into the behaviour they want. However, as abundant research shows—I am sure that the Minister is familiar with it—and as the Trussell food bank network confirms, most people do not know why they have been sanctioned. It is as though it has happened to them. They live chaotic and confusing lives, to the intense irritation of the benefits staff. The CAB says that the claimant does not understand the responsibilities and the adviser does not understand the claimant. The personalised claimant commitment will, we hope, introduce an essential flexibility and headspace into the regulations, but I fear that the very clarity produces a yes/no, either/or approach to regulations and guidance that is not reflected in real life. Some of these issues have been raised by the noble Lord, Lord German.

The second issue is that we face major delivery problems, an issue perhaps associated with transitional arrangements. I want UC to work. I fear that on delivery we will be heading for a train crash. At one and the same time, the Minister is rightly introducing a new benefit architecture that will, however, confuse most people with its new rules, new conditionality, new sanctions, new tapers and new backdating rules and that has most benefits in, but some, from DLA to council tax benefit, out. That is the first thing that is happening.

Then, on top of that, come the cuts. Some benefits, such as HB, will be cut because of the bedroom tax. Claimants will think that it is DWP error and will go frantic trying to correct it. Thirdly, in the past they will have received their benefits weekly or fortnightly, but now it will be monthly in arrears. As nearly half of those in the bottom two quintiles are in work paid weekly, many will not cope and debt will grow.

Fourthly, for the first time, they will find their housing benefit paid to them and not to their landlord. Inevitably, on a monthly basis, it will be raided before the month is out to meet other bills. The DWP’s demonstration projects show that 40% of tenants will find it difficult, and a quarter will need substantial, long-term support. The chief executive of Wakefield, one of the pilot areas, is reported to have said that people are now ceasing to pay their rent at all. That is from a pilot area where tenants have had considerable support. It is worth reminding ourselves that this demonstration project showed that 40% of tenants were in debt, already excluding rent arrears. Over 90% had no savings as a buffer. Over a third had sought help from the CAB.

Fifthly, these arrangements come as a single electronic payment, paid probably to him, leaving her and the children potentially vulnerable, when claimants have been used the past to separate flows of benefit, particularly to the one with children, and to a cash economy for food. And all the claims are online, although 30% of the poorest have no access to IT at all. Citizens Advice, which would have helped them, has lost nearly half its grant thanks to coalition Government cuts. Claiming benefits online would certainly terrify me. However, in exceptional cases, there will be face-to-face support. Will the Minister tell us what percentage of people he expects to take up that proposal? As these tenants do not have and cannot afford a word processor at home, their benefit claims cannot be interactive. They go to a community centre and fill in their forms online with the help of someone present, and then they go home. And then what? How do they get any interactive dialogue going should there be any query over, or error in, their submission? How will DWP manage this?

I greatly welcome the local support service, but the obvious hard questions are how many centres there will be, how many claimants there will be and how much new money there will be. Or is it another slice off the HB under-occupancy test for someone else? It cannot be left to district managers to decide, as is proposed. As it is, my housing association will be employing and paying new staff out of tenants’ rents to provide the self-same welfare advice that, hitherto, trained CAB volunteers offered for free.

The delivery of any one of these seven major changes to benefits would need careful implementation. To bring in all seven at the same time seems like folly. I think that we are setting up UC to fail, and causing much misery in the process—and that is before the IT plays up and falls over.

UC is for the benefit of claimants. I fear that most of the delivery changes which I have listed will destabilise it and are for the benefit of the department, making UC harder for claimants to embrace and understand. I have been through ambitious change programmes, but nothing as ambitious as this. I beg the Minister to sequence these seven changes properly—to introduce them incrementally on an agreed timeline so as to take people with him. Yes, claimants will come across in manageable cohorts; that is entirely right. However, once in UC, they face all these seven delivery changes simultaneously. Those changes need to be phased in, as well as the claimants themselves.

I beg the Minister to consider, even at this late stage, a transitional year for claimants to be able to opt for fortnightly payments, split payments within couples and direct housing benefit payment to their landlord, while the claimants get their heads around UC and learn to work IT—itself a big enough challenge over the course of a year. At the very least, we should ensure that those who are treated as exceptional or vulnerable for the purposes of housing benefit payment are passported to the exceptional payment grounds within UC and vice versa. What estimate has the Minister made of the percentage of people who will be protected in this way under the heading of “exceptional or vulnerable”?

Finally, the regulations that worry me most are sanctions, hardship and housing. First, as regards sanctions and Regulation 102, if you are economically rational, as the Minister surely is, you also surely reward people who become compliant. You reward them for good behaviour. With three-year sanctions, what is the point of the claimant changing his behaviour if nothing happens as a result and he continues to be sanctioned? What message does the Minister think he is sending? The concession on holding down a job for six months is empty in this situation. Will the Minister at least follow the SSAC recommendation that when a claimant has complied, the sanction should be suspended? That is the message to get across. It then can be reimposed if the claimant breaches his conditionality subsequently. Otherwise, I expect this to be judicially reviewed. Will the Minister also ensure that when one person in a couple—for these purposes, I will assume that it is a male—is sanctioned, the payment is automatically switched to the main carer to protect the children?

Secondly, I should like to make a few comments on hardship and Regulation 116. The guidance is really helpful and very worrying. I believe that there are three problems. At the moment, you are automatically entitled to hardship payments if you are vulnerable—for example, if you have children—but you will not be entitled in future. All expenditure is to be scrutinised to see if the family is truly and deeply in hardship. Should they return the TV? What about smokers, Christmas presents, or train fares to attend granny’s funeral? None of those is covered in the four basic criteria of health, housing, hygiene, food and so on that the Minister has put into regulations and guidance.

Iain Duncan Smith, I think, believes that poverty is primarily a moral failing. Like the Victorians, he is insisting that the poor must always live in the light and display their income and behaviour for scrutiny by their betters; that is, young, local office staff with often little experience of difficult lives. The intrusiveness of it all appals me. What is worse is that the hardship handouts will be, as far as I know for the first time ever, clawed back. A hardship handout now is a loan and not a reduced benefit entitlement secured for the vulnerable. Paying it back will in future cut the UC a claimant gets and will further increase debt, which is one of the major problems that all claimants will face.

Most disgraceful of all is that under Regulation 116 (1)(b), households get hardship payments for the vulnerable only if they have met compliance conditions. So why are we still sanctioning them? Why do they need to claim hardship payments at all? We have never made hardship payments conditional in this way, nor should we. Hardship payments meet needs—above all, those of children. They are a safety net. Instead, in these regulations, they are being treated as another lever to make sanctions and compliance bite. It is ugly and indecent. Are we going to refuse hardship payments to a lone parent where she and the decision-maker disagree about her availability for work given the age and vulnerability of her children? That is the sort of example that my noble friend Lady Sherlock described so effectively. The lone parent is sanctioned and is not compliant. She is refused hardship money. I hope and expect that this will also be judicially reviewed.

Finally, on housing benefit and Schedule 4, we now find that the bedroom tax may affect one-third of working-age tenants. They will be fined—because they cannot move—£14 a week for accepting the home which was offered to them in good faith a decade previously, which is where they have brought up their family. As a result, unable to pay that £14—they have no savings—they will go into debt, arrears, be evicted, bed and breakfasted, children traumatised. Then they will be rehoused, either in the private sector at higher housing benefit costs or back again in the same size accommodation that they left, since that is all that we have. This is simply because the DWP and the coalition have so decided. The issue of overcrowding, which the noble Lord sometimes quotes, is, as my noble friend said, utterly irrelevant because they are in different places.

So why are the Government appealing the Court of Appeal judgment in the Burnip case, which allowed disabled children to have their own bedroom? A decent coalition Government would not fight on. If they lose, as I fervently hope—we will not know until December—what estimate have they made of the numbers who will then be protected? What are the implications for middle-aged couples, whose ill-health requires separate bedrooms, or do we need to judicially review that as well? Will the Minister tell us what level of disability aids and adaptions have to be fitted into a property and at what approximate cost before the Government accept that it makes no sense for the household to move and to refit another, but smaller, property in its place? Housing bodies need to know to make sensible forecasts. Foster carers have been mentioned and I am sure that the Minister will respond.

Turning to another issue, following bereavement the Minister is allowing only three months’ grace if someone is required to move house. I think that I am resilient, but I could not have coped with finding a house, packing up and moving within three months of my bereavement. I was wiped out. The distress of a forced, speedy move from the home built together is like being bereaved twice over. SSAC called for 12 months’ grace, not three months. Will the Minister, in all decency and compassion, please agree?

I have one final housing point. At the moment, households where an unemployed person under 25 years old lives at home getting £56 a week JSA do not incur non-dependant adult deductions. In future, they will lose £68 a month, the same as those on higher benefits or in work. That seems grossly unfair. If he is economically rational, as no doubt he is, he will increase the HB bill by finding separate accommodation of his own and leaving home.

We have more regulations to come in October and, I am sure, amending regulations of regulations. We are already starting to see them. We also have negative regulations, some of which I am sure we shall pray against. However, we cannot amend these regulations. Will the Minister at least attend to some of the concerns being expressed all around this House in regulations that we have yet to examine?

[Baroness Thomas of Winchester]

I have one small point to raise under these regulations, which I expect the House will welcome. Before I do that, whatever we think of the detail of these regulations I pay tribute to the Minister and his staff in the DWP, who have worked absolutely non-stop to get out these regulations and all the guidance. We might complain about having so many piles of paper, but somebody has had to prepare them. It has been a tremendous effort, so I thank him very much.

Noble Lords will be pleased to hear that the one matter I address in these regulations is a success story. It is possibly the end of a long road leading to the better treatment of all those service users and carers who are involved in helping to improve health and social care services. This is about having their expenses disregarded for benefits.

There is one matter to ask my noble friend about: the word “consult”. When service users and carers report their involvement to Jobcentre Plus, they are likely to do so by using the terms that are used by the health and social care organisation that has asked for their help rather than the term “consult”, which is used by the DWP in these regulations. We were told that the lawyers insisted on this word. In order to avoid misunderstandings in Jobcentre Plus offices, it would be helpful to explain that service user and carer consultation may be described as “involvement” or “participation” and “co-production” by the Department of Health. Other health and social care organisations also use the expressions “experts by experience” and “acting together”. Will my noble friend ensure that the guidance for Jobcentre Plus staff will include an explanation about the terminology likely to be used? This will prevent a great deal of misunderstanding and I am sure will reap dividends.

17:00

[The Countess of Mar]

My Lords, I propose to confine myself to Part 5 of these regulations on the capability for work or work-related activity. The Minister will recall many occasions when he has assured me that people with ME/CFS are judged on what they can and cannot do in their condition. Memo DMG 1/13, entitled, ESA: LCW and LCWRA Changes, has been brought to my notice very recently. Part 16 of these changes, which I will read out completely so that we understand them, states:

“DMG 42114 advises that a claimant’s LCW must be due to a specific bodily disease, mental illness or disablement. This means that a claimant could satisfy the mental, cognitive and intellectual function descriptors if they had a physical health condition, without having a mental health condition. The law is amended to make it clear that physical descriptors can only be satisfied by a person with a physical health condition, and mental descriptors can only be satisfied by a person with a mental health condition”.

The document then indicates the difference between limited capability for work and limited capability for work-related activity. Both the sections are the same, so I will just read out one:

“when assessing the extent of the claimant’s LCWRA, it is a condition that the claimant’s inability to perform¹

1. physical descriptors² arises”—

I assume the figures refer to the notes—

“1. 1.1 from a specific bodily (i.e. physical) disease or disablement or

2. 1.2 as a direct result of treatment by a registered medical practitioner for such a condition and

2. mental descriptors³ arises

1. 2.1 from a specific mental illness or disablement or

2. 2.2 as a direct result of treatment by a registered medical practitioner”.

In view of the fact that these regulations are running parallel with the ESA regulations—Part 4 and Part 5 —will the Minister please explain why this change has occurred? These people obviously have to have a mental or a physical condition, on a medical certificate presumably, before they can be judged to have one or other of the conditions that I have mentioned. We have a particular difficulty with ME/CFS, as the Minister knows, because many of these people will not have seen a doctor for years and cannot get a medical certificate. I would be grateful if the Minister could clear that up for me.

Also on these paragraphs, Citizen Advice states in its briefing that Regulations 39 and 40 in Part 5 of the Universal Credit Regulations 2013, to which I have referred, set out,

“who is entitled to the Limited Capability for Work element and the Limited Capability for Work Related Activity elements. Regulations 89 to 91 set out who apart from those with LCW or LCWRA will have full work related requirements. Under Universal Credit, claimants with a disability and/or a health condition can be required to undertake ‘all work-related requirements’ before the outcome of their claim for the equivalent of income-related Employment Allowance … has been decided, and whilst they are appealing that decision. ESA regulations (2013) Regulation 26 maintain current protection for those applying for contribution-based ESA … This means that claimants with an equivalent disability and/or health condition applying for ESA … (or the equivalent in UC) will face different work-related conditions through the assessment phase and any appeal, to those applying for ESA”.

Will the Minister kindly clear that one up as well, please?

[Lord Eden of Winton]

My Lords, perhaps I may make a brief comment, but first I must apologise to noble Lords. It is quite clear from all those who have spoken that there is a great deal of expertise and deep knowledge of the subject and, as will become immediately clear, I cannot live up to those standards. However, there is one matter on which I wish to make a brief point. Before doing so, I congratulate my noble friend the Minister on the clarity with which he introduced this subject and on the immense work that has clearly been done on it.

I have one worry, which is that these are enormous and complex changes that will impact on and affect many people who by definition are extremely vulnerable. While I very much support the aim and objective of what the Minister is proposing, and I hope that the pathfinder work is a success, I worry about the implementation of such complex proposals in practice. I share quite a lot of the sentiments expressed by the noble Baronesses, Lady Sherlock and Lady Hollis, and others.

It is therefore most important—perhaps this can be enshrined in guidelines—that those who will be advising the potential beneficiaries of the change are fully and adequately trained and fully understand what they will be talking about. More importantly, when it comes to actually carrying out the whole process of changeover, those who are at the decision-making end should exercise supreme patience and understanding. For me, patience is all important.

As the noble Baroness, Lady Hollis, said, many people will not have online access. I know, being of advanced years myself, how difficult it is to understand everything that is going on. I am reasonably but not fully conversant with all the complexities of new technology and new systems of communicating. I can often sense the impatience at the other end of the line in people younger than me, for whom it is second nature to handle these things. It is not so for everyone and it is most important that those who are in a commanding position assist potential beneficiaries to understand the process of changeover, and do so with extreme patience.

[Baroness Lister of Burtersett]

My Lords, the noble Lord, Lord Eden, said that he is not an expert but sometimes it is the non-expert who puts his finger on the key points, as the noble Lord did. I apologise to noble Lords in advance for the length of my speech but there are a lot of areas to cover, although I shall be leaving out a lot of important issues, including monthly assessment. I shall return to that, in case the Minister thinks he is getting off lightly.

I shall start with three general points. First, I add my thanks to the noble Lord for the work done by him and his team in providing us with so much information. It is only right to draw your Lordships’ attention to the 17th report of the Joint Committee on Statutory Instruments, which has reported these regulations for four instances of defective drafting. Although the DWP acknowledges each of those defects, as I understand it, it did nothing to put them right before these regulations came before both Houses of Parliament. I am told that that is unprecedented.

My second general point was made by CPAG—I declare an interest as its honorary president—in its evidence to the Work and Pensions Committee and concerns simplification. That goes back to the point made by the noble Lord. This is a raison d’être of universal credit, as the Minister made clear in his introductory remarks. CPAG, having acknowledged that of course simplification is a worthy goal which we all support, warns that it is very difficult to achieve in a heavily means-tested and conditionality-based system such as universal credit. Noble Lords who have been grappling with these draft regulations will no doubt nod wryly in recognition of that fact. CPAG points out that many complexities will remain and new complications will be introduced with the advent of universal credit.

The draft regulations reveal that many of the rules that currently cause great confusion will simply be imported into universal credit, despite what the Minister said earlier. The group warns that without good advice, many claimants will struggle to comprehend either their entitlement or the new obligation that universal credit places on them. As a result, the Government’s expectation that universal credit will be taken up more widely than the existing benefits could be misplaced, which also means that its estimates for the number of gainers could be inflated. The group argues that it is essential that the Government provide support for the advice sector as an integral part of the design, piloting and rollout of universal credit. That point is emphasised also by the Work and Pensions Committee, which calls for sufficient additional resources to be available to the advice sector to support a successful transition to the new system.

During the last major reform of social security in the 1980s—noble Lords who have been around a while will remember that time—welfare rights advice services were flourishing in local authorities and in the voluntary sector. Today they are a shadow of their former selves as the cuts take their toll. Could the Minister tell the House what resources will be made available to the advice sector?

My third general point concerns the very heavy reliance on guidance to put into effect the Welfare Reform Act 2012. Gingerbread, for example, argues that transferring details from regulations to guidance removes important safeguards, erodes accountability and transparency in decision-making and increases uncertainty for claimants. It has a particular concern about the over-reliance on guidance to put into effect the flexibilities available to job-seeking lone parents. My noble friend Lady Sherlock has touched on this already and I shall try not to repeat what she said in her able opening statement.

I raised this issue during Report stage of the Bill, late at night on 23 January 2012. The debate was very rushed for procedural reasons, but I thought that I had achieved something when the Minister assured your Lordships’ House that,

“advisers will take childcare responsibilities into account when setting work-related requirements, and we intend to set out some specific safeguards on this issue in regulations”.—[Official Report, 23/1/12; col. 915.]

He then referred to the right of claimants with a child under 13 to limit their work search to jobs that would fit around their children’s school hours. He rightly emphasised that the best way to prevent the inappropriate application of sanctions was to ensure that the requirements were reasonable in the first instance. It is therefore incredibly disappointing that the regulations do not adequately reflect this wise principle.

17:15

Regulation 88(2)(b) stipulates that where the claimant is a responsible carer for a child under the age of 13, she can restrict her work availability to her child’s normal school hours, including normal travelling time. A Parliamentary Answer in the other place confirmed that, as now, this group of lone parents will not have to show reasonable prospects of finding work. However, the new regulation does not say this, whereas the present regulations do.

Nor do the regulations provide the same protection against sanctions that the current regulations do—for instance, where there is no affordable or appropriate childcare available, or such childcare is not available in school holidays. I am sure that I do not have to tell noble Lords of the problems still faced by those trying to find affordable and appropriate childcare, in particular in rural areas or for disabled children. The guidance makes reference to such factors, but not in the same clear-cut way that the current regulations do.

These are just some of the 11 examples of instances where current flexibilities set out in regulations have not been fully transposed to the new regulations. Only one has been. Will the Minister explain why these crucial safeguards have been removed from the regulations, despite his assurances to me in your Lordships’ House?

I did not find the justifications provided in the answers to questions circulated recently—for which I was grateful—at all convincing. They stated that the avoidance of detail was deliberate in order to support better decision-making by allowing advisers to consider the merits of each case rather than applying a tick-box approach. Of course, no one ever wants a tick-box approach. Gingerbread’s response is that the current flexibilities in the regulations are not cumbersome to administer, and that multiple evaluations by the DWP have never suggested that they are anything but appropriate. The persistent problem has been a lack of adviser awareness, as well as inadequate training and performance. Again, that refers to points made by the noble Lord, Lord Eden.

This will not be addressed by making rights discretionary, thereby increasing uncertainty and weakening decision-making standards further. There are enough examples already of those safeguards being disregarded, even when they are in regulations. I fear that there will be many more examples when the safeguards no longer constitute clear rights. Although Gingerbread is pleased that the draft guidance has been strengthened in response to feedback, in order to provide greater clarity with regard to restricting work availability for lone parents with children aged between five and 12, it considers that the situation for those with older children, as set out in paragraphs WR064 and WR066 in particular, remain opaque and confusing. Will the Minister give a commitment further to review the guidance in consultation with stakeholders such as Gingerbread?

As well as the relegation of certain safeguards into guidance, there are a couple of examples of new regulations being more restrictive than the current ones. My noble friend Lady Sherlock referred to one of them, which concerned lone parents of children aged 13 or over who have no reasonable prospect of finding work. The second example is that lone parents will be allowed only 48 hours to attend a job interview, taking into account alternative childcare arrangements, whereas at present they are allowed up to one week, which does not seem unreasonable. Will the Minister explain why this provision has been made more restrictive?

Unfortunately, we are unable to amend regulations, so we must look to the Minister to ensure that the guidance provides adequate safeguards to protect lone parents with caring responsibilities; that these safeguards are written into the claimant commitment for lone parents; that advisers are properly trained to administer the flexibilities; that their ability to do so is included in the performance management framework; and that there will be adequate monitoring of the impact of the loss of regulatory flexibilities on the ability of lone parents to adhere successfully to the conditionality regime, and to find and remain in paid work. I would welcome the Minister’s assurances on these matters, in the hope that they will be more meaningful than those with which he provided me on 23 January last year. It is all the more important that we get these matters right, because with universal credit we face a further ratcheting up in the conditionality regime and associated sanctions.

In relation to this, I want to raise three points, building on the powerful arguments that my noble friend Lady Hollis has already made. The first concerns a claimant commitment and couples, and it is a slight variation on her argument. There is a tension between the personalised individual conditionality, which requires both members of a couple to sign and adhere to a claimant commitment, and the refusal to allow both members of a couple to receive some benefit in their own right. We will no doubt return to the latter point when we debate the claims and payments regulations, when we would no doubt pray against them. In the mean time, I wish to raise my concerns that, according to the Explanatory Memorandum,

“if either eligible adult in a couple refuses to accept their claimant commitment, the claim for the other eligible adult will also end”.

In the spirit of individual conditionality, should not the partner who accepts the commitment be entitled to benefit for themselves? This is one of the few issues to which the Secondary Legislation Scrutiny Committee draws attention, advising that, because of the volume of legislation, its usual degree of analysis was not possible.

Secondly, the Social Security Advisory Committee pointed out that in-work conditionality,

“is clearly different to the kinds of conditions that will be placed on claimants who are out of work”.

It therefore suggested that it should be dealt with in a separate regulation in order to clarify the difference. The DWP rejected the suggestion, leaving the issue to guidance. Barnardo’s,

“remains concerned that this could result in cases of unreasonable demands being placed on parents to apply for new and different employment even if the new employment does not suit them for other reasons”.

I, too, remain concerned, and I would welcome assurances that the Minister will review this matter in the light of the piloting that is very sensibly proposed for in-work conditionality. The Minister started by referring to a new relationship between the individual and the state. I fear that this is not going to be a very happy relationship for many individuals in work, who are not used to being brought under conditionality regimes. This has become clear from the research that the department has already done with users. So the Minister stands warned.

My other main concern relates to the treatment of hardship payments. The CPAG points out in its evidence to the Work and Pensions Committee that,

“such payments will be both more restricted and recoverable”,

under universal credit. It goes on to say:

“Reclaiming hardship payments will mean that sanctioned claimants will continue to receive a reduced rate of UC for significant periods after the sanction expires”.

This is itself likely to cause hardship, which does not make sense when the point of the payment is to prevent hardship, even with the concession that recovery will be suspended if the claimant is in work and earning above the conditionality threshold. Could the Minister please explain why the rules are changing on this? As my noble friend Lady Hollis has said, one of the main concerns about hardship payments, raised with SSAC, was the introduction of conditionality into them. SSAC cites Barnardo's in particular:

“Hardship payments ought to operate as a safety net to prevent families from entering destitution and ensure that children are provided with a minimum standard of living even when their parents refuse to engage with the system—imposing conditions on families could seriously risk the welfare of children”.

SSAC suggested that,

“the government may wish to reflect further”,

on this. Unfortunately, they do not appear to have done so and make no reference to these concerns in their response to SSAC’s report. I had a wry smile when my noble friend Lady Hollis kept saying how a judicial review would be used. I am not sure whether she is aware that the Government propose at present to limit the use of judicial review. I wonder whether that is a coincidence.

However, what I find most outrageous is the requirement that in order to qualify for a hardship payment, claimants must make,

“every effort to cease to incur any expenditure which does not relate to … their immediate and most basic needs”.

Those are defined as accommodation, heating, food and hygiene. That may sound innocuous to some noble Lords, but when I first saw a reference to it in an early briefing, it conjured up images of officials checking what claimants have spent their money on in ways that are resonant of the 1930s means test. When some of us expressed our dismay at such a prospect in the briefing session, the Minister seemed to be surprised, but I had understood that he would look at it again. However, it is still here. The provision shows no understanding of the social nature of needs.

When the Minister of State in the other place was questioned about this in relation to the Social Security (Loss of Benefit) (Amendment) Regulations 2013, he appeared to confirm that claimants would not be allowed to buy Christmas or birthday presents, or presumably incur expenditure in celebrating other religious festivals, and he seemed to find this perfectly acceptable. I do not. I would remind the Minister of what Seebohm Rowntree wrote back in 1937 in The Human Needs of Labour. Rowntree is of course associated with an absolute understanding of poverty, yet he showed a greater understanding of human needs than do the present Government, who profess to accept that poverty is relative. He asked why poor people spend their inadequate incomes on social recreational activities instead of food. The explanation is that “working people”—I think it is reasonable to include people who are not in paid work—

“are just as human as those with more money—they cannot live on a fodder basis … they crave for relaxation and recreation just as the rest of us do”.

But they can only do so by going short of something that is essential to physical fitness, and so they go short. There will be no social or recreational activities that cost money for today’s poor who fall foul of these regulations. I would be interested to know whether the noble Lord agrees or disagrees with Seebohm Rowntree. Could he also explain exactly how this pernicious rule will work in practice? Having read the guidance I am not clear as to what proof will be required. Will claimants have to provide receipts for everything they have bought in the previous week? Will they be visited by officials to check on what is in their cupboards and the fridge? While food is allowed, will there be restrictions on what is permitted? We know that children often make it difficult to stick to the cheapest options by refusing to eat certain foods; will that be taken into account? Are children to be allowed no little treats?

Recently I hosted a wonderful evening in the River Room on behalf of the CPAG during which Simon Callow gave a moving and illuminating talk on Charles Dickens’ anger over child poverty. Dickens would have recognised and condemned the mean spirit at work here all too well.

[Baroness Stowell of Beeston]

My Lords, this is a very important debate and I know that many noble Lords have contributions that they wish to make. However, it is worth reminding the House that although this is a Motion, the guidance in the Companion still stands in terms of the length of speeches. Some noble Lords have been brief and I am grateful to them. However, the Companion states that speeches are expected to be kept within 15 minutes as a maximum. We have exceeded that on a couple of occasions this afternoon.

17:30

[Lord Kirkwood of Kirkhope]

I am grateful to my noble friend for that advice which I will try to take into account. As always it is a pleasure to follow the noble Baroness, Lady Lister. Her speeches repay careful study and I am sure that colleagues will do that. I yield to no one in the pleasure I get from reading social security regulations. Nothing makes my weekend more than a wet towel around my head and a glass of malt whisky in my hand, but I will make my first plea to the Minister a simple one: can we have August off this year? The consultative process has consulted me all out, so I am just going to make some general remarks about what I think we need to watch out for carefully in these regulations.

I am absolutely supportive of the general political direction of these reforms, but they are very ambitious, so we have to be careful about how we implement them. The noble Baroness, Lady Hollis, was also correct to say that whether we like it or not, the financial austerity we are experiencing may prejudice the outcome of what I think is an essential and necessary architectural change. We have to be careful that we do not spoil the public’s understanding of what is trying to be achieved here in the short term. I know the Minister is alive to that but we need to continue to be alive to it.

These regulations put us in a position of having fewer unknown unknowns, but there are still quite a lot of known unknowns. The question that I really want to ask more than anything else this evening is a process one, about how we can be sure that we use the expertise in this House and, indeed, some of its self-confessed non-expertise. The latter is just as effective, as the noble Baroness, Lady Lister, said, and the speech of the noble Lord, Lord Eden, was very refreshing and welcome in that regard. We in this House need to be sure that we have an ongoing and positive relationship that allows us to encourage the Government to continue to be flexible in the roll-out of this programme. It will take 10 years to get to a steady state in universal credit and for it to be really bedded in so that people are comfortable about it. We must hasten slowly to get the introduction of this policy correct.

I am very pleased that the Social Security Advisory Committee is so engaged. I remember getting quite a long look down a ministerial nose when I suggested that this might happen. However, to be fair to the Minister, he does listen and changed his mind. The SSAC report gives me more comfort than I would otherwise have had, so I thank him for that, as I do for some of the other flexibilities he has introduced. He has to persuade his ministerial colleagues, some of them in other departments, that some flexibility needs to be retained. Unless we do that, we will prejudice the implementation of this very important new area of public policy.

It is quite difficult to get the balance right with the next thing I want to say to the Minister. I believe what he says to me and understand that the Government’s position is that the digital implementation—the agile computing process that has been deployed in this case, which is new, innovative and gives us better functionality, in theory—is all on track and that everything is under control. I have to say to him that that is not the signal that I am getting from sources close to the development of the project who are not Ministers. It is so important to make sure that we get the computer-based system—not just the digital application process but the underlying framework of ICT provision—to work. I believe it can be done but am very nervous about the timetable—a point that I think was made by the Delegated Legislation Committee—because I bear the scars of the Child Support Agency and many other horrors. There have been one or two successes but the experience has not been great. I hear the assurances that I am getting officially, but would just like to make sure that if things start to become unstitched, or the timing slips, that adult ways will be found to deal with that. If things start to go wrong, we need to know about it. There is nothing worse than Ministers covering up. I am not suggesting for a moment that that is being done, but if things go wrong, my plea is that the Minister comes and looks me in the eye and says, “Look, there’s a glitch here, we’re going to lose six months”, or whatever it is. I would much rather have that than find suddenly that the whole project is in jeopardy because of the computers going wrong. I hope that he will take that message to heart.

I will just make a point in passing about pathfinders. There is a spatial dimension to the pathfinders as we roll this out. Coming from, and having formerly represented, a rural area, I know that the differences between the communities that this programme will serve are very important. In the evaluation of the pathfinders, I hope that my noble friend will pay very careful attention to the different types of communities that we are seeking to serve.

I want to make a very quick point in passing. The noble Baronesses, Lady Lister and Lady Sherlock, both made a point about guidance suddenly becoming a substitute for regulation. I say this in a considered way, but I was horrified by what Mr Mark Hoban said on Monday when the First Delegated Legislation Committee was discussing these regulations. He said:

“We think that it is more appropriate to rely on the discretion and judgment of our advisers to make the right decision for families. We will monitor that situation quite carefully and there will be training in place”.—[Official Report, Commons, First Delegated Legislation Committee, 11/2/13; col. 23.]

That is dismissing the qualitative difference between the essential protection that regulations provide and slipping into guidance. If this is to be part of the new system, I think he will come up against serious objection in this place if not in the House of Commons—to be fair, Mr Stephen Timms made the point powerfully. That is something that I will certainly share with other colleagues in watching like a hawk.

My final point is about the importance of the exceptions service and the evaluation framework. We have just seen some encouraging signs that the exceptions service will be deployed properly. It will need money but if it is done in the way that I understand it will be done, I would be satisfied with that. However, there is always a risk that it falls down in the deployment because it does not have the capacity to meet the demand. Frankly, it is very hard to assess the level of the demand that it will be expected to meet, certainly in the early months and years of this rollout.

I am very encouraged by the members of the expert group that is looking at the evaluation framework. I have been looking at the evaluation framework very carefully. This brings me back to where I came in: the way in which we monitor and evaluate this implementation will be absolutely crucial. My plea is for honesty and a continuing relationship with this House because I am long enough in the tooth to know that things get much better consideration here than anywhere else. If we do that, we have a much better chance of getting this system in place in time and in a way that benefits the kind of people we are trying to serve.

[The Lord Bishop of Worcester]

My Lords, I welcome the introduction of universal credit. I think it is a very important step forward. Like other noble Lords, I am grateful to the Minister for all the work that he and his colleagues have put into the regulations before us today.

However, I am concerned about the inadvertent hardship that might be caused to some of the most vulnerable in our society. The report of the inquiry led by the noble Baroness, Lady Grey-Thompson, Holes in the Safety Net: The Impact of Universal Credit on Disabled People and Their Families, has already been referred to by the noble Baroness, Lady Sherlock. It clearly sets out the concerns of disability charities and the millions of people they represent. I want briefly to highlight one of the issues about which I feel concern: the impact on families with disabled children.

As I understand it, the regulations laid before us today propose to reduce the level of financial support to most disabled children from £57 a week under the current system to just £28 a week, or £124 a month—a reduction of nearly £30 a week. According to the Government’s own estimates, 100,000 disabled children will be affected. Only the most severely disabled children who are on high-rate care components of the disability living allowance or registered blind will be unaffected.

Many parents of disabled children already struggle to find the money to cover the extra costs of having a disabled child, such as specialist adaptations to their home, access to disability-friendly services and higher travel and childcare expenses. Already, 28% of households with a disabled child are living in poverty, and this rises to around 50% if the additional costs associated with being disabled are taken into account.

For those affected by this further reduction in their income, the impact could be very serious. Two-thirds of them say that they will have to cut back on spending on food and more than half say that they will get into debt, yet on Monday we heard in the debate on the Welfare Benefits Up-rating Bill that the lower disability addition of universal credit, as well as being cut in half, will be now uprated by just 1% a year in 2014 and 2015, well below the expected rate of inflation. That is why one of my colleagues on these Benches will support an amendment to remove the child disability elements of universal credit from the 1% cap.

I highlight to your Lordships the serious concerns raised in the report on these and other areas produced by the inquiry headed by the noble Baroness, Lady Grey-Thompson. I urge the Minister to review and monitor the impact of universal credit on disabled people, and in particular on families with disabled children so that this policy can better meet its aims of supporting those in greatest need constructively.

[Lord Touhig]

My Lords, we have had a very good debate and I do not want to spoil it, so I shall not detain the House for more than a few minutes. As the Minister knows, I am supportive of the whole idea of universal credit, but have concerns about the IT system that will be essential to make it work. To be fair to the Minister, I have had some very helpful conversations with him about universal credit and I have tabled a number of Questions which he has answered, although I am not entirely happy with some of the Answers.

The implementation of universal credit has been described by Margaret Hodge, the chair of the Public Accounts Committee in the other place, as a train crash waiting to happen, a point made by my noble friend Lady Hollis a little earlier. Having served on the Public Accounts Committee when I was in the other place, I can testify that no major government IT project in 20 years has been successful. Every one has gone massively over budget and or been years behind in its date of implementation.

I share the concerns of those who are worried about the implementation of the IT system to support universal credit. As I understand it, it will require two separate IT projects to piggyback on a third. That is a real challenge if ever there was one. I am also given to understand that, to make universal credit work, at least 80% of claims have to be made online. When I discovered this, I also discovered that the only benefit that was then claimable online was jobseeker’s allowance, which only 17% of claimants were claiming online.

As my noble friend Lady Hollis pointed out, 30% of the poorest families in this country do not have a computer and I presume that these are the people who need benefit support. What happens if 80% of claimants do not access the system and claim online? What happens to those who are unable to access the system on the computer? To make the system work effectively, it will require every employer to inform HMRC every month of how much they have paid every single employee and how much that employee has paid in tax. If any of those employers’ staff are on benefits and the employer fails to file the information by the due date that universal credit requires, there will be real problems for that person’s benefit because it is paid in real time.

I tabled a number of Questions about this. I asked the Minister,

“what assistance will be available to people receiving universal credit if their payments are wrong as a result of their employer failing to notify Her Majesty’s Revenue and Customs of their pay and tax details”.

In response, the Minister said:

“If earnings are not reported … for any reason, claimants will be requested to declare their earnings to DWP through the universal credit interface”.—[Official Report, 19/11/12; col. WA330.]

I then asked how the universal credit interface would operate. The Minister replied:

“The universal credit … will allow claimants to provide … details via a self-reporting tool”.—[Official Report, 26/11/12; col. WA24.]

That tool is the telephone. It does seem a bit Heath Robinson if that is how it is going to operate.

There are then widespread concerns about the cost of the IT project for universal credit. We are told that the Chancellor of the Exchequer has put it on the Treasury’s “at risk” list. That “at risk” status is given to projects that will go over budget or be late in delivery. I have asked a number of questions on this. Perhaps I may ask the Minister three brief questions about the cost of the IT project. First, of the £105 million total cost of universal credit in 2012, how much supported information technology development? I cannot seem to get answers to that point. Secondly, can the Minister give us exact figures for expenditure on developing universal credit’s information technology for the years 2012-13, 2013-14 and 2014-15? Finally, how does the current total cost estimate for universal credit’s information technology project compare with the Government’s original estimate? All these questions are relevant to making universal credit work. All across the House, people want it to work, but if the IT project is wrong, it simply will not and people will lose out as a consequence.

17:45

[The Earl of Listowel]

My Lords, I shall share some concerns with your Lordships about the regulations but, first, I underline my support for the principle behind the introduction of universal credit. I recall, when I first entered this House, the work of Louise Casey, who was then the rough sleepers’ tsar, appointed by the then Prime Minister. A key part of her successful programme in reducing the number of rough sleepers on the streets was to find purposeful activity for those who had been homeless. It seems to me such a curse that many people are not finding useful things to do with their time and are allowed to fester, sometimes for generations, without being actively involved and engaged in productive work on a daily basis. I welcome the fact that the legislation will make that more possible for more people.

My concern is about vulnerable families. I recall for your Lordships what my chemistry teacher used to say to me. He talked about dynamic equilibriums. I suggest that vulnerable families are subject to a dynamic equilibrium. If they are given the right support, they can thrive and do well. We saw that recently again with the work of Louise Casey, who has been tasked by the right honourable gentleman Iain Duncan Smith, I think—or at least by the Government—with looking at the 120,000 most troubled families and making a difference in their lives. Through her work supporting those 120,000 families, she has managed to decrease significantly the level of domestic violence in their homes and to increase significantly the number of their children attending school on a regular basis. It is possible to act on the positive side of that equilibrium and make a difference to families.

On the other hand, one can see that if one puts those families under too much stress, they can fail. I was reminded recently of that experience when I visited Feltham young offender institution and spoke to prison officers. I had not visited for 10 years, but the same theme came through: so many of the young men with whom they were dealing had never known their fathers—had never had fathers—and the officers found that they had to adopt that role for those young men.

It is critical to support those vulnerable families in the best way that we can. I thank the noble Lord, Lord Eden, for his speech. In this extremely difficult time, when local authority funding is being cut by 28%—and there will be further cuts to services—which is impacting very heavily on services for vulnerable families and their children, a complex change such as this has to be carefully considered to minimise any adverse impact on those families.

So I welcome the principle, but I have concerns about various issues. They have all been raised this afternoon, so I need not go into detail. I was grateful for what the Minister said about the monthly payment of housing benefit to families. There is the payment exemption scheme, which he described, and he is paying particular attention to drug and alcohol misusing families and those with gambling problems. I welcome that, but I share the continuing concern of the noble Baroness, Lady Hollis, that that may well not go far enough. I found what she said very persuasive: there is a danger of underestimating the chaos in many of those families and their inability to manage their finances in the way that we and the Minister would like.

With regard to childcare, important questions have been raised about significant increases in the cost of childcare to families. The changes to housing benefit and the limit on the number of bedrooms that families can have is clearly putting a lot of stress on some of our most vulnerable families and may cause some of them to have to uproot and move to new areas and communities in which they know no one. They may easily feel isolated and, again, are at risk of collapse. I am particularly concerned about the ability of foster carers to keep a room open for a fostered child. In the past, the Minister has gone quite a long way in reassuring me on that point but I would be grateful if he could go further in reiterating that today.

Finally, the right reverend Prelate the Bishop of Worcester and others alluded to the concern raised by the Children’s Society, and by my noble friend Lady Grey-Thompson in her report, about how this all impacts on children with a disability. He was concerned that these are often the poorest families, struggling to make ends meet. Given that 100,000 of these children will be up to £28 worse off under the new arrangements, that is a very real cause for concern. I hope that the Minister can say something about how he will monitor the situation for these children carefully and that he will go as far as he can in offering me reassurance on this point.

To conclude, in my experience vulnerable families exist in a dynamic equilibrium. Given the right support, many of them can do a lot better and their children may perhaps break through the generational failure that that family may have experienced. Without the right support, however, particularly in such difficult times, one will often find that their children will fail and possibly end up at Feltham young offender institution, costing the public purse well over £40,000 or £50,000 a year to maintain them there. It is crucial that we get this right and I look forward to the Minister’s response.

[Lord Freud]

My Lords, I give really sincere thanks to everyone who has spoken because I do not often hear a debate where people have worked quite so hard to understand the issues. I might not agree with everything that people have said but the quality of debate has been pretty extraordinary, given the complexity of the issues we are dealing with. I hope that your Lordships all know now that I listen very hard—and I steal or plagiarise as much as I can—so a lot of what your Lordships have said has fallen on fertile ground.

Let me deal with the amendment proposed by the noble Lady, Baroness Sherlock. There are some serious misconceptions in it about what universal credit will do. First, on work incentives, the fact is that universal credit will change them out of all recognition—and manifestly for the better because it will reduce participation tax rates and take away some of the scandalously high rates under the current system, which may be 91% or even 100% in some cases. There are some losers but they are losing, on average, a rather modest 4 percentage points. In many cases, the increased marginal deduction rate is because people are being brought into entitlement for UC, so they are actually better off. They may have a higher marginal deduction rate but have become better off because they have been brought into universal credit.

I do not agree that universal credit penalises savers. In practice, it corrects an overgenerosity in the current tax credit system. It must be right to focus our resources on those households with the fewest resources. Under universal credit, claimants will be able to save up to £6,000 without any impact on their entitlement, in contrast to the typical working-age household, which has £300 in savings.

We are not cutting childcare support; we are investing an additional £200 million in it when we remove the 16-hour rule, which we think will help an additional 100,000 families. The combination of childcare support, higher work allowances and a single taper rate will provide a clear financial incentive that rewards work.

We estimate that around 3.1 million households will have a higher entitlement as a result of universal credit. It is true that, on a static analysis, some households will receive less benefit; however, in practice, we expect that people will adjust their working patterns where they can and will be able to gain—as they can under universal credit. I cannot agree that universal credit is bad for women and lone parents. We know from the experience of tax credits that, in practice, lone parents are among the groups most likely to respond to the financial incentives in the system. In any case, even on a static analysis, in the 3.1 million households that gain there are 2.6 million women. Lone parents will on average gain around £5 per month.

Throughout the passage of the welfare Bill and in recent months, we have debated at length the support for disabled people. We recognise the concern about the impact of the severe disability premium but our aim here is to target additional support on those who have the most severe disabilities or health conditions and who are unable to work, or to work full-time. On average, disabled households will gain by £8 a month. Responsibility for assessing and meeting significant care needs sits with local government. This week, we have set out proposals to put the longer-term funding of such care on a better footing. However, I put on record again my personal commitment to ensuring that we carefully monitor and evaluate the impacts of UC on disabled people.

Universal credit provides appropriate support to self-employed people but only in so far as self-employment is the best route for them to become self-sufficient. As I said in my opening remarks, we have carried out extensive engagement with groups representing businesses and the self-employed, and have responded to their concerns.

In relation to housing, universal credit provides fairness and responsiveness to the housing choices that working families faced already. The best protection against homelessness is a job. Universal credit will provide work incentives and support people in moving into work. Discretionary housing payments are available to help those at risk of being homeless.

The amendment implies that the objective of universal credit is as a savings measure. Nothing could be further from the truth. We are spending more and have huge ambitions to change people’s lives. In any case, we will be monitoring outcomes very carefully. We published a high-level evaluation framework in December 2012, which sets out our proposed evaluation approach and our key aims and objectives. I am happy to reassure the noble Baroness, Lady Lister, that the evaluation of universal credit comprises part of a continuous programme of analysis. It provides real-time evidence and information, as well as a measure of overall impact and success further down the line, although it will take time to assess how different groups experience universal credit and to build up a clear evidence base.

Implementing a system that is dynamic and responsive is at the heart of these reforms. That is why the welfare Act contains a provision to enable the piloting of changes to the system that aim to achieve simplification or change claimant behaviour to improve their labour market outcomes. I am happy to reassure my noble friend Lord Kirkwood that I will personally value continuing the dialogue with this House. I know that this House knows how much it has put into the creation of universal credit.

There were a huge number of points and I will do my best in the limited time to touch on them. The noble Lord, Lord Touhig, requested a lot of detailed figures on IT. I think I will write to him with details, as I have dealt with quite a few of those points in recent PQs, but I will make sure that the noble Lord has an up-to-date list of exactly what we are spending in each year. As I said, I will not go into detail, but we are on time and on budget, we are pushing ahead and we are starting with a pathfinder, to make it work, in April.

17:59

The noble Baroness, Lady Sherlock, queried how self-reporting would work. Employers will be expected to provide earnings data at the same time as making the payments of earnings to their employees. If that does not occur, we will have arrangements in place to ensure that payments of the universal credit are not delayed. We can use either self-reporting or estimated earnings.

On the severe disability premium, it is estimated at just over 230,000 households are in receipt of that, as the noble Baroness suggested. We will not make any savings from the restructuring of disability support in the universal credit. As I said, we will be monitoring carefully the impact of this measure on disabled people.

On the related point raised by the right reverend Prelate the Bishop of Worcester about disabled children, we will be looking closely at the routes by which disabled children qualify for additions in the universal credit—there are two levels now—and when we debated this during the progress of the Act, the real concern that I took from it was that we might not be passporting children into the right groups. I have committed to looking at those passporting arrangements closely in time for when the bulk of people may be affected.

The hearing for the Burnip case, raised by my noble friend Lord German, is scheduled for 9 and 10 December. In practice there will be virtually no cases before we know what the answer is under the universal credit. Whatever happens, that is winter, unless someone moves the seasons on me.

My noble friend and the noble Baroness, Lady Hollis, raised the question of monthly payments. Clearly they will be a challenge for some, and we do not underestimate the difficulties of managing on a tight budget. That is why we have the exceptions process, which will allow the Secretary of State to adjust the payment frequency on a case-by-case basis.

On the point about weightings, they are not being weighted; rather, they are classed as level one or level two, with level one being an indicator of a high likelihood that the claimant will require an alternative payment while level two suggests a lower likelihood.

On the question from my noble friend on progress to produce new financial products, we have been working closely with financial providers across the private, social and third sectors, and we will consult them and other stakeholders about next steps, which I hope to be announcing in due course.

On the point raised by the noble Baroness, Lady Lister, about the claimant commitment and the refusal to sign—if one refuses to sign, that implicates the whole household—that underpins the policy principle that the universal credit is a household benefit, and it is a basic condition of entitlement that all working-age members of the household must agree to reasonable requirements to take up a job.

On the lengthy set of points about conditionality for lone parents, raised by the noble Baroness, Lady Lister, we are carrying forward 10 of the 12 current protections and have done so, where appropriate, through legislation. The primary legislation protects claimants’ children under one and then the regulations protect those under five. Regulation 88(2)(b) protects parents of children under 13 to limit their hours to fit with the work. I see the noble Baroness shaking her head sadly; I suspect that we will go on with this debate.

I need to assure the noble Baroness, Lady Sherlock, that we do not expect lone parents to leave children to work a night shift, nor will lone parents be sanctioned if they cannot find appropriate childcare. We will ask parents do everything that they can to look for suitable work that fits with their caring role and to demonstrate that they have taken all reasonable steps to secure suitable childcare.

On the self-employment monthly reporting issue, raised by the noble Baroness, Lady Sherlock, I take her point about the carrying forward of losses. We are looking at the feasibility of introducing a carry-over function for self-employed income, and this will come a little later but in time for when it is required.

My noble friend Lord Eden made the overarching point about the need for, and the importance of, the adviser and the adviser’s training. We have a huge investment in that training, and one of the things that we are testing in the pathfinder areas is getting the support systems for our staff right.

I assure my noble friend Lady Thomas on looking at ensuring that the word “consult” is appropriately interpreted. I also assure the noble Countess, Lady Mar, that the tests of limited capability for work have not changed substantially in the universal credit. The intention is to ensure that consistency is applied in these tests across the universal credit and the employment support allowance.

The noble Baroness, Lady Lister, was concerned about some of the technical points made by the JCSI. Out of three of them, we intend to amend the regulations at the next suitable opportunity. We actually feel that the explanatory element is valuable so there is still a slight disagreement between us on that, but the others we will sort out.

On the points about the kind of support for the advice centre sector, we are looking closely at the role, particularly in the light of the local support service network. The Cabinet Office and the Big Lottery Fund have created a £65 million advice services transition fund to support this period, and our aim is to work with the advice sector partners to share information with them and encourage them to help us with the successful introduction of universal credit.

The funding arrangements for the local support services are in place. They will be agreed locally with the local authorities that will be running the local partnerships. That is in phase one; in the pathfinder in phase two we are looking at how that is being done in practice. The DWP will be providing the funding for the appropriate local partnership network provision. Beyond that, we need to take the lessons of the local authority pilots that we are currently conducting and which will be completed in September.

The noble Baroness, Lady Hollis, was concerned about direct payments. I hope I can give her some reassurance that we are going to take a very prudent approach on this. I am not going to set any targets, but we expect a significant proportion to be able to handle this, and where they cannot, we will have mechanisms, which we are currently developing, to make sure that housing associations do not have an arrears problem. Interestingly, we are discovering in the pilots that it is not that people are not paying at all, but that they just do not pay quite enough. That is the issue.

We have moved the 52-week protection. There have been protections for different elements of benefits all over the place. For some, there has been no time protection, for some, there is 12 months, such as on housing. In practice, we have moved them all to the same three months. Do not forget that in the case that the noble Baroness was citing, there would be no change if a partner died. There would still be the same bedroom provision whether it was a single person or a couple.

On non-dependants, there is no deduction for any non-dependant aged under 21 whether they are on benefit or not, but we expect over-21s to make a contribution. The standard allowance in universal credit for someone under the age of 25 is £246 a month, of which they would be expected to contribute £68 a month for rent. Of course, a flat-rate deduction is very encouraging in terms of moving into employment.

The noble Baroness, Lady Sherlock, asked about mortgages and the zero-earnings rule. In practice, only about 5% of claimants who receive SMI work part time because people with mortgages know that they need to get into full-time work. Claimants will not have a good reason for refusing works on the grounds that they will lose their mortgage support.

We are working to produce a passporting strategy, and I hope to make an announcement pretty soon.

I cannot handle all the questions. I have got through a good two-thirds of them, I think. I will write where I have not answered. This is a huge topic, and that is why this is an overlong debate. I will be the first to admit that we might not have got every single detailed provision quite right. We have been given the task of reducing literally hundreds of pages of regulations into a set of just over 100 pages, so it would not be surprising if there were not room for improvement in some areas. I am always prepared to look at how we can improve it. The essential thing is that we have got a basic architecture that will be viable for the long term.

Finally, I should repeat the point that the Universal Credit (Transitional Provisions) Regulations 2013 are the first in a series of transitional regulations in keeping with the phased rollout of universal credit. That approach will enable us to adjust the exact timing and sequencing of the rollout as we learn from each phase.

[The Earl of Listowel]

Before the Minister sits down, if it is in order in this procedure of the House, may I ask him a question? I was grateful for his reassuring reply to the noble Lord, Lord Eden, about the great efforts he is making in looking at the administrators and the support and training they need. If he will write to me with some idea of the minimum standards for the supervision of administrators that he might be considering, I will appreciate it.

[Lord Freud]

I will be pleased to write.

[Baroness Sherlock]

My Lords, I thank the Minister for trying to answer our questions. Of course he could not answer them all in the time because there were so many. I have never been through a two-and-a-quarter-hour debate over one set of regulations with so many powerful speeches from every set of Benches in this House. I understand it is complicated, but we are running out of time. This is not simply a rough sketch of the architecture; these regulations describe what will happen to real claimants when the system starts operating in April. I understand that the Government are doing something that will revolutionise payments to all working-age claimants. We support that principle, but we cannot experiment on the lives of ordinary men and women in this country and on their children. The Minister has been unable to answer, despite his best efforts, concerns from all around the House about the impact on disabled people, childcare, free school meals, vulnerable people, of forcing people to claim online and so much more. We have to let these regulations go through because that is the nature of our House, but we do not have to allow them to go through without making a very clear signal to the Government that they need to get these things right. To that end, I wish to test the opinion of the House. I urge all noble Lords to come with me.

18:16

Division 1

Ayes: 169

---

Labour: 136
Crossbench: 23
Independent: 3
Plaid Cymru: 1
Bishops: 1

Noes: 239

---

Conservative: 156
Liberal Democrat: 63
Crossbench: 12
Independent: 2
Democratic Unionist Party: 1
UK Independence Party: 1
Ulster Unionist Party: 1

Motion agreed.

Jobseeker’s Allowance Regulations 2013

Wednesday 13th February 2013 Lords Chamber

Motion to Approve

18:31

Moved by

[Lord Freud]

That the draft regulations laid before the House on 10 December 2012 be approved.

Relevant documents: 15th Report from the Joint Committee on Statutory Instruments, 24th Report from the Secondary Legislation Scrutiny Committee.

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

My Lords, I can confirm that, in my view, the statutory instrument is compatible with the European Convention on Human Rights. These regulations are designed to work alongside the introduction of universal credit by removing all the existing income-related provisions from jobseeker’s allowance. They also work alongside the Welfare Reform Act 2012, which removed the existing income-related provisions from other Acts.

Under JSA, there are currently two elements—namely, a contribution-based element and an income-based element. The first element is for people who have paid sufficient national insurance contributions. The second element is for people who have low or no incomes. From this April, the income-related elements of JSA will gradually be phased out for any cases where universal credit has been rolled out. The new regulations will remove the income-related elements and make provision for an award of JSA based solely on national insurance contributions.

In addition, to further align with universal credit, the regulations will introduce revised conditionality and sanctions regimes into JSA. We have of course already largely aligned the JSA sanctions regime with the universal credit sanctions model. Noble Lords will recall that last October, we introduced a number of changes to JSA, including sanctions of up to three years for those who persistently fail to comply with the most important job-search requirements. The changes we made last year have helped staff and claimants to prepare for the introduction of UC and for the revised JSA regime. These regulations now complete the alignment with universal credit.

However, beyond these changes people will find that the effect of the existing JSA benefit regime is unaltered. Noble Lords may find it helpful if I provide more detail on how these changes will be applied. As noble Lords will know, JSA is a benefit payable to people who are out of work and seeking employment. The work-related requirements in these regulations will apply where the claimant claims only jobseeker’s allowance. Where a claimant receives both jobseeker’s allowance under these regulations and universal credit, the work-related requirements provided under the universal credit regulations will apply. That will ensure that even where a claimant is in receipt of the two benefits, they will have only one clear set of requirements placed on them at any time. As these regulations align JSA to UC, there will be little difference between the respective conditionality regimes if they move between the two benefits.

People claiming JSA under these regulations will, as with UC claimants, generally be expected to be available for full-time work immediately, depending on their commitments and capabilities, and to treat their day-to-day work search as if it were a full-time job. This means that they will be expected normally to demonstrate that they are spending 35 hours per week finding a job. However, requirements can be tailored to meet a wide range of circumstances. For example, their requirements can be reduced if the claimant is a carer or disabled, or has recently been a victim of domestic violence.

Under these regulations there will be three levels of sanctions in the JSA regime—high, medium and low level. These sanctions will broadly work in the same way as equivalent sanctions within the universal credit regime. The universal credit sanctions regime, which is mirrored in these JSA provisions, is designed to provide greater clarity for claimants and to ensure that there are proportionate consequences for failing to meet requirements, especially repeat failures. For example, to act as a deterrent, the sanction periods escalate where a claimant repeatedly fails without good reason to comply with a reasonable requirement. This more robust but proportionate model is designed to be more effective in encouraging claimants to engage with the requirements which help them to move into or to prepare for work.

It is important to remember that our focus will not be on imposing sanctions but on ensuring that claimants meet the requirements that will support them into or towards work. The requirements expected of claimants should be reasonable and will help claimants to understand and meet the requirements so that they can move into work as soon as they are able to do so. Using the claimant commitment, we will clearly communicate both requirements and the sanction consequences of not meeting them. Only if they fail to meet a suitable requirement without good reason will a sanction be imposed.

These regulations were subject to statutory formal consideration by the Social Security Advisory Committee. The committee decided that formal referral was not necessary but raised a number of points, all of which were considered, and changes were made where appropriate. As the sanctions and conditionality rules for JSA were being brought broadly into line with universal credit, these regulations were included as part of the Social Security Advisory Committee’s wider universal credit consultation exercise.

Therefore, the views expressed during the consultation period regarding the proposals for the universal credit conditionality and sanctions regime also applied to the reform of JSA. Those views were considered and changes were made. For example, we decided to remove a reference to long-term impairments in Regulation 9 of the JSA regulations. This change takes into account a range of physical and mental impairments that a claimant may have when considering any limitations that may be placed on a JSA claimant’s work-related requirements.

I should also like to thank the Secondary Legislation Scrutiny Committee for its earlier consideration and analysis of these regulations. As noble Lords will be aware, the committee drew attention to the importance of guidance for our staff in operating a fair and effective conditionality and sanctions policy. Therefore, we have placed in the House Library copies in draft of key chapters of the guidance covering approaches, including that for good reason for sanctions. Today we have published a draft of the claimant commitment.

In conclusion, I can assure noble Lords that, beyond the changes I have outlined, the rules for the new-style JSA will be very similar to the existing rules for the contributory element of JSA. In particular, there have been no changes to the national insurance contribution conditions which need to be satisfied to qualify for entitlement and the fundamental structure of JSA remains untouched. I seek noble Lords’ approval of the regulations and commend them to the House.

[Baroness Donaghy]

The Minister will remember that I raised a number of issues in the debate on 17 January concerning the self-employed and the quasi self-employed. These were mainly around the requirement for monthly reporting, the burden of different systems being applied for tax and benefit purposes, and the need to recognise that not all self-employed people were in a position to choose their employment status. If I had had time, I also would have raised the problems caused by the different criteria used by HMRC and the DWP for claiming reasonable expenses, as well as the need to recognise seasonal variations for those working in agriculture and preparation periods for freelance writers.

I made the point that under generally accepted accounting principles, a true and fair statement of how a business is doing involves accounting for business receipts and expenditure over a period to which they relate. The huge advantage of working tax credits was that this principle was also adopted, enabling claimants to draw up one set of accounts that keeps administration costs down and matches the support given by the benefits system to the actual state of the business. The universal credit regulations have departed completely from these generally accepted principles by requiring a month by month reporting system and not allowing any carryover of a previous month’s loss. This artificially short period does not present a true and fair picture and does not allow for events beyond the claimant’s control.

No provisions have been made in the regulations for seasonal gains and losses or periods of economic difficulty, and there is no recognition that a business may experience low or no profits. Added to this, there is no facility for carrying forward a loss made in one month to subsequent months. This is a fundamental flaw in the design of the regulations for the self-employed. The Government see the need for this facility, but have not made any changes, because the IT system has not been designed to allow carry-forward. In reply to the point about carryover in January, the noble Lord, Lord Freud, assured the House that,

“I am aiming to introduce something for that to work efficiently; that will be in time for when the people who need it will be using it”.—[Official Report, 17/01/13; col. 832.]

The noble Lord made a similar remark earlier this evening. I believe that the Minister is looking for a solution, but it is not yet there and I have a number of real concerns.

My first concern is the Minister’s statement that, “It will be in time for when the people who need it will be using it”. I am not so sure that the Government have the luxury of the six months’ grace or the year’s lag. What happens if the wife or husband of the self-employed person puts in a claim for universal credit first? Surely the information on the self-employed person’s earnings will be required straight away. Secondly, the regulations could have a damaging impact on particular industries. I use the example of farmers and the farm industry, although other examples could be writers and actors. A farm could have a negative cash flow for eight or nine months a year, as cited in the Social Security Advisory Committee’s recent report, and its entire income could be concentrated in a three or four-month period when the farm’s produce is sold. Even a quarterly reconciliation would not work in these cases, let alone monthly assessment.

There are also a range of factors beyond the farmer’s control, such as the weather and inability to move stock, which would affect the profitability of a farm. In answer to a Parliamentary Question on 28 February last year, we find that in excess of 90% of farmers in England and Wales are self-employed; and between 31% and 43% of all farmers earned less than the national minimum wage over the past five years. Imagine the scene at the assessment interview, where there is a framed motto on the wall which reads:

“Universal Credit should support people to be self-employed but only insofar as self-employment is the best route for them to become financially self-sufficient”.

This is a point that the Minister has already raised. I realise that it is a long motto to have on the wall, but it is important to quote the Government’s response to the Social Security Advisory Committee in full.

So the farm worker, possibly self-employed or technically self-employed, is sitting there and told by the assessor that his way of life is not “the best route for them to become self-sufficient” and that he should go back and look for work. Remember that 60% of farmers’ income already comes from taxpayer subsidies. That is the self-employed in the farming industry down the pan for starters. Obviously we should not accept that a third of all farmers should seek alternative work without considering a number of factors, many of which I have mentioned. How qualified will the assessors be in making these judgments, and how detailed will the guidelines need to be to ensure consistent standards of application? The Government have apparently turned their back on a pilot scheme, which is regrettable.

A third concern is the construction industry, where bogus or quasi self-employment is anything from 40% to 90%. It suits the contractor because it gives flexibility to hire and fire and it sometimes suits the individual for tax reasons. Other workers accept self-employed status as the only way to get a job. Contractors must submit monthly returns detailing all their subcontractors’ pay during the tax month and certifying that none of them is an employee. The view of the Business, Innovation and Skills Committee in 2008 was that,

“the questions asked of a contractor to establish whether any of their sub-contractors are self-employed, are remarkably similar to the criteria used for identifying direct employment”.

As I said in my report on the underlying causes of fatal accidents in construction, the current system,

“relies too much on HMRC monitoring and enforcement resources which are likely to come under pressure in any economic down-turn”.

18:45

The Government have accepted the recommendation by the Social Security Advisory Committee about the importance of correctly identifying those who are technically self-employed and would be more appropriately treated as an individual seeking employed work, and those who are self-employed and developing their business. The initial gateway interview will determine this. Referring back to the BIS committee definition of self-employment, how will this work for construction workers? The gateway interview will decide that they are not in gainful employment and send them off to seek work. They will turn up at the building site and if they get a job they will be regarded as self-employed—with or without their knowledge. As the Low Incomes Tax Reform Group said,

“employers treat them as self-employed, even though the relationship between the worker and the engager is in reality, strictly and probably legally, one of employment. The workers have no real choice in the matter—either they work for that employer on those terms, or they look elsewhere for work and face whatever sanctions are imposed for failure to take up the work that is offered”.

I am seriously concerned that many workers—particularly building workers—will find themselves in a no man’s land where these regulations are concerned. The uncertainty of their employment status is endemic in the construction industry and it has been tolerated by successive Governments. As the Social Security Advisory Committee saw for itself when it visited a jobcentre, the practice,

“of ‘jobs’ being advertised on ‘self employed’ terms … appears to be most common in casual or temporary employment and often involves the more vulnerable and lower paid”.

The committee recommended that,

“the Government should provide further clarity on the responsibilities of the Government, employers and their intermediaries, and individual jobseekers in determining the employment status of posts, in particular for the purpose of reporting income”.

This is an important recommendation, because it recognises that potential claimants should not be expected to take on the whole burden of the idiosyncrasies of their industry. For over four decades, successive Governments have failed to tackle the wild west employment world in the construction industry. Not only does it have an impact on claimants, it means that we have lost billions in tax revenue over the years. It could all end up with an out-of-work construction worker sitting in an office with an assessor, possibly a very junior grade civil servant, being cross-examined about whether he is,

“in a situation of seeking work rather than developing a business”.

I am not saying that an attempt should not be made to distinguish between the two. In fact, I am pleased that more attention is being given to the subject of the self-employed and more information is now being sought. However, if successive Governments could not disentangle the real employment status of workers in the construction industry, how will jobcentre staff achieve it and who will be the potential losers? The self-employed and those who are employees, but designated self-employed because of the nature of their industries or their lack of bargaining power, deserve answers and practical solutions when they get into difficulties.

Finally, the Prince’s Trust survey of its successful businesses cited two entrepreneurs who said that working tax credit, which is going to be replaced by the UC rate, has been a life saver and was “a real lifeline”. I hope that the eventual verdict on these regulations by the self-employed will not be that they were left to sink or swim.

[Baroness Lister of Burtersett]

My Lords, I want to make a very brief point. However, it is a positive point, after having been rather critical of the Universal Credit Regulations.

During our discussions on the Bill, I raised on a number of occasions my concern that there had been a suggestion that the payment of contributory benefits might be wrapped up with universal credit. That would mean that it would all go into one bank account even though contributory JSA is an individual entitlement. Therefore, I am delighted that that will not happen. I simply seek an assurance from the Minister that no step will be taken to make that happen without first debating it in both Houses of Parliament. It is an important issue and it could mean the loss of individual entitlement, particularly for many women who have now come within the contributory benefit system.

[Lord Kirkwood of Kirkhope]

It is still a pleasure to follow the noble Baroness because she made a point that I was going to make. I want to make two remarks on which I would like the Minister to reflect. The first is about the contributory system—the national insurance system. In the middle of last year, I remember listening with great attention to a lecture given by a valued friend, Malcolm Wicks, who sadly died recently. He was a great defender of the national contributory system. He gave a lecture on how he melded the concept of citizenship with the national insurance principle. He said that this involved a lifetime longitudinal commitment both ways between the state and the individual, with people paying in and people taking out, and that people understood that. He was an exponent of that all his life and I certainly miss his good counsel and wisdom. I share his view. We cannot allow these regulations to pass without remarking that this is another notch down in the diminishing of the national insurance principle. I regret that. I understand why the Government are doing it because otherwise the misalignment would be confusing. If you are introducing universal credit, I understand the rationale and it makes perfect sense. However, universal credit does not have the advantage that the national insurance contributory principle had of giving a longer-term relationship between the state and the individual. I want to put that on the record in passing.

Secondly, conditionality for people who are paying national insurance contributions suggests to me that people should perhaps pay less because they now have to submit themselves to sanctions. I have a strong view on sanctions and earlier today the noble Baroness, Lady Hollis, reflected some of that. I take the Paul Gregg view that sanctions are positive only if you can get the full commitment of the individual who might be potentially taking on a jobseeker’s commitment that will lead to sanctions, and if they feel that they are in charge of the process. That is not the case with the system of conditionality as it is currently cast, although with a bit of flexibility it might be amended in that direction to put people in a position where they feel they are more in control of what is going on. They are then much more likely to understand the rationale of a sanction being applied to them. That is work in progress. I hope it will be part of the careful evaluation that the Minister explained to us earlier this afternoon the Government will undertake.

My points really comprise two moans about national insurance that I am getting off my chest. I do not expect the Government to do anything about it. However, these regulations change things in a way that is significant for the future of the national insurance system. Indeed, perhaps in the long term, once universal credit gets into a steady state, the Government of the day—whoever they may be—may want to ask themselves whether it is sensible to continue to have a residual diminishing national insurance contributory principle set of benefits running alongside universal credit. I am agnostic about that but I certainly think that it needs to be recognised in this important debate.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for introducing these regulations. I am fully supportive of the probing that my noble friend Lady Donaghy has done, particularly around the construction sector, on which she is very knowledgeable. I agree with the noble Lord, Lord Kirkwood, that, given the increasing demise of the contributory principle, it is important to consider how we re-establish that in this context, if we can. Of course, there has been an accelerated demise in various benefits. We shall talk about contributory ESA in a moment, but that is now payable for just one year and JSA is generally payable for just six months.

The Minister explained that these regulations refer just to contributory JSA and not to earnings-related JSA. I believe that he referred to my next point in introducing the regulations but, to be clear, I understand that as regards the entitlement under these arrangements, the national insurance contribution rules remain exactly the same as they are at the moment. In respect of national insurance credits, under current circumstances these can be obtained when the claimant satisfies the qualifying conditions for JSA, when he or she is not in work and earning. Will the Minister remind us what the credit and entitlement will be under universal credit when JSA is no longer with us? The Explanatory Memorandum recites that the rules for contributory entitlement are, except for the conditionality and sanctions regimes on which the Minister touched, “largely” unchanged. Will he particularise a little any other significant changes outside those two areas? As regards the alignment of the conditionality and sanctions regimes, we obviously see the merit of this and these regulations give us an opportunity to explore further how that actually works across the three benefits, including ESA.

Like others, I am grateful to Gingerbread, which briefed us on this matter, particularly as regards its focus on lone parent flexibilities, which was touched on extensively in our earlier debate. I will not go over that again except to say that I think the Minister said in response to the debate that 10 out of the 12 lone parent flexibilities are being carried forward, albeit in guidance rather than in regulations. I apologise if he covered this point earlier, but will he remind us which two are not being carried forward? We are aware that he has been pressed on flexibilities and that these should be set out clearly in the claimant commitment so that both the adviser and the single parent claimant can share the same understanding of what the regulations and guidance say about balancing work conditionality with caring responsibilities. It is understood that the noble Lord’s colleague in another place was sympathetic to this. Perhaps the Minister can say whether he agrees. It seems an ideal way of ensuring that all concerned are clear on the matter and it would help to focus the minds of advisers who may not always be up to date with the range of flexibilities available.

19:00

[Lord Freud]

My Lords, I again thank noble Lords for a somewhat briefer debate although the quality remained high. Clearly, I do not have to remind the House what these regulations do. They remove the income-related element and make provision for an award of JSA based solely on national insurance contributions.

I will touch on some of the questions that were raised. I start with the issues raised by the noble Baroness, Lady Donaghy. She brought some matters to the discussion which are entirely irrelevant to this set of regulations, thereby rather skilfully avoiding the shorter answers that I suspect would have been given in the previous debate, given the pressure of time. I therefore take my hat off to her. She made one or two very valuable suggestions, which I have stolen from her, as she knows. I shall go on doing that. There are some interesting issues on timing. For example, do we have the luxury of time with the self-employed? I am very conscious that we may get the odd one or two people coming in, who I suspect are probably not on the pathfinder, because one of the things that the noble Baroness, Lady Sherlock, teased me on as regards our exclusions was that they made this provision difficult for a self-employed couple to obtain. We therefore have a little time plus the six-months’ grace. Given that we are starting with people probably even in the next phase who are coming in and will find a self-employed job, we would give them the year. All I am saying is that I am absolutely conscious of the noble Baroness’s main point relating to the one-month period and the need for a carryover. I have been looking at that closely, and what she said gave me a good hint about how long that carryover should last, which in her view should be a year. Noble Lords will be pleased to know that that is the kind of period that I am currently exploring.

I am talking to Defra, which is working with the NFU, on how all this works for farmers generally, and so I am very conscious of that issue. As regards the point on the construction industry, which is one of the more interesting industries, what I heard from the noble Baroness was, “Don’t get a Catch-22 situation here about people because of the way we define things”. That is a good point and one of the benefits of guidance is that we can quite flexibly get that in. I commit here to making sure that in that guidance we do not have a Catch-22 situation for this industry which I know has some odd things. If you are working, it should not matter how the position is actually defined if people are making the effort. I will look at that matter seriously.

We have dealt with the irrelevant stuff and I will now move on to the points made by my noble friend Lord Kirkwood. It is interesting, when you look at the figures, that of the approximately 1.5 million on income-related JSA or UC, only 200,000 receive the contracted amount that we are talking about, based on their contributions. Of those, only 70,000 receive it on its own, without a UC or income-related top-up. We have therefore moved a long way into means-testing, as my noble friend observed.

My noble friend’s point about feeling in control was smack right. You do not get a response of the kind that you want if people do not feel part of it. If they do not understand and have not been part of the process that has generated it, the sanction will not work as well and create the right behavioural response. That is what the claimant commitment is doing. Interestingly, the early trials of the claimant commitment are finding that it is working much better than our existing contract.

The noble Baroness, Lady Lister, asked me for another guarantee. I will give the noble Baroness a guarantee that any changes to the ESA and JSA as part of UC would require regulations. There will therefore be a chance to debate that. As to the point about having a contributor on a different platform, the reality is that any Government looking ahead would want to have as few platforms as possible. One will probably end up with the same platform but approval of the process of who gets paid and how would have to go through this House.

In response to the question of the noble Lord, Lord McKenzie, the two areas that were not carried forward were those where the time allowance to attend an interview was moved from seven days to 48 hours. Claimants with children over the age of 13 are expected to show that they have reasonable prospects of getting a job, but they can still have tailored requirements in line with their caring responsibilities. Those are the two specific changes. Regarding the point about national insurance credits, everyone on universal credit will have national insurance credits that count towards the state pension. The difference is that there are class 3 credits for UC, whereas JSA claimants currently get class 1 credits.

[Lord McKenzie of Luton]

Will the Minister drop me a line on the point he made about class 1 and class 3 contributions? I should like to reflect on it because I am not sure that I understood the import of it.

[Lord Freud]

Yes, I would be pleased to provide a letter laying that out for the noble Lord to consider in depth.

We started last year to align the JSA regime and universal credit with the sanctions model. These changes pull them even closer together. We will thereby have a clearer system of requirements and sanctions that are robust and appropriate, underpinned by safeguards for claimants. I seek approval of the regulations and commend them to the House.

Motion agreed.

Employment and Support Allowance Regulations 2013

Wednesday 13th February 2013 Lords Chamber

Motion to Approve

19:07

Moved by

[Lord Freud]

That the draft regulations laid before the House on 10 December 2012 be approved.

Relevant documents: 15th Report from the Joint Committee on Statutory Instruments, 24th Report from the Secondary Legislation Scrutiny Committee.

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

My Lords, I can confirm that in my view the statutory instrument is compatible with the European Convention on Human Rights.

As with the JSA regulations we have just considered, these provisions are designed to work alongside the introduction of universal credit by removing all the existing income-related provisions from ESA. From April 2013, the income-related elements of ESA will gradually be phased out for any cases where universal credit has been rolled out. These regulations will introduce new conditionality and sanctions regimes into ESA benefits to align them with universal credit. The ESA sanctions regime is, following reforms made last year, already significantly aligned with the UC sanctions model. However, beyond these changes, people will find that the effect of the existing employment and support allowance regime is unaltered.

Noble Lords may find it helpful if I provide more detail on how these changes will be applied. ESA is a benefit with which all noble Lords will be familiar and is payable to people on the basis that they have a disability or health condition that affects their ability to work. As with the changes that we are making to JSA, these regulations provide new claimant responsibilities and sanctions for claimants who fail to comply with the conditionality regime.

The requirements placed on ESA claimants are also based on the universal credit model. For example, where appropriate, ESA claimants can be required to prepare for work and attend work-focused interviews. These requirements are broadly equivalent to those placed on claimants in the universal credit work preparation and work-focused interview-only conditionality groups. Therefore, ESA claimants will not be required to look, or be available, for work. I should also stress that ESA claimants can be subject only to the lowest levels of sanctions. These sanctions have an open-ended element that stops building when the claimant complies, so the quicker the claimant engages the shorter the sanction will be.

The two levels of sanctions broadly work in the same way as the equivalent sanctions for universal credit claimants in the work-preparation and work-focused interview requirement groups. The high and medium-level sanctions in JSA and universal credit, which are for longer, fixed periods, do not apply to ESA claimants. Our aim is not to impose sanctions. We want claimants to comply with the reasonable requirements that will prepare them for work. Therefore our focus is on ensuring that the requirements expected of claimants are reasonable and clearly communicated to them. Only if claimants fail to meet a suitable requirement without a good reason will a sanction be imposed.

As with the JSA provisions, these regulations were subject to statutory formal consideration by the Social Security Advisory Committee. The committee decided that formal referral was not necessary, but raised a number of points, which were all considered, and changes were made where appropriate. For example, the committee questioned Regulation 46 of the ESA regulations, which originally provided that the purposes of a work-focused interview included the five things in the list. The committee questioned whether this meant that the interview had other purposes that were not included in the list. We decided that the list should be exhaustive, and therefore amended the wording of the regulation to remove the word “include”.

As the sanctions and conditionality rules for both benefits were being brought broadly into line with universal credit, both sets of regulations were included as part of the Social Security Advisory Committee’s wider UC consultation exercise. We firmly agree with the committee that the key to an effective sanctions regime is clear communication with claimants, delivered by well trained advisers. In line with assurances sought during the passage of the Act, stakeholders were keen to ensure that the sanctions regime incorporates sufficient safeguards for vulnerable claimants.

Noble Lords will know that I share concerns that the sanctions regime incorporates robust safeguards. I would like to assure noble Lords that a number of protections will be in place, for example visiting or calling claimants with a mental health condition or learning disability before a sanction is considered.

In closing, I reiterate to noble Lords that beyond the changes I have outlined, the rules for the new style ESA will be very similar to the existing rules for the contributory element of ESA. I would also like to thank the Secondary Legislation Scrutiny Committee for its earlier consideration and analysis of these regulations. I seek noble Lords’ approval of the regulations here today, and I commend them to the House.

[Baroness Turner of Camden]

My Lords, very briefly, I wish to raise with the Minister the issue of appeals and appeals mechanisms. Where I live, I am often approached by people for advice, particularly by those on DLA. Of course, DLA will be transformed into the personal independence payment under the new system. At present, when people come to me to complain that they do not have the amount of DLA they thought they ought to have, I always advise them to appeal. I tell them what they ought to do, and I advise them to consult the local authorities and to proceed accordingly. The notable thing about appeals against DLA assessments is that 40% of them are successful. That raises a number of questions in my mind about the people who carry out the assessments.

What will happen under the new system? Will a private firm do the assessments, as happens with DLA, and how will the Government ensure that the private firm doing the assessment is capable of doing the job effectively? I have doubts about the way in which the present system operates when so many people are dissatisfied and so many people are successful at appeal. That is very unsatisfactory. From the point of view of those concerned, it makes them feel that the system works not for them but for the Government on behalf of people who want to diminish the amount of money that is spent in support of people who are on benefits.

As regards legal aid, after April that will not be available for anyone who is concerned to contest an appeal. There may be people who are very aggrieved because they are not getting the benefit assessment that they ought to have, even under the new system, but what course will they have to follow, and how can they follow it? Are the Government satisfied that the people doing the assessments are capable of doing them?

19:14

[Lord McKenzie of Luton]

My Lords, I thank the noble Lord for introducing these regulations, which run parallel with those relating to JSA, which we have just considered. Before going further with my script, I would like to say that I do not think the Minister dealt with the point I raised earlier about flexibilities being included in the claimant commitment document. Perhaps he might pick up that issue when he responds to this debate.

As we have heard, these regulations relate to contributory ESA, which means that they are generally limited to 12 months, except for people in the support group. Can the Minister confirm that these regulations correctly reflect that position and that days in the support group do not count towards the 365-day maximum, or the days in the assessment period, followed by a period in the support group? Can he further confirm that they reflect the entitlement for someone in the support group to reconnect the contributory entitlement as provided for by Section 52 of the Welfare Reform Act 2012? It would also be helpful if the Minister could put into context the provisions in the regulations relating to youth, given the provisions of Section 53 of the 2012 Act, which preclude further claims under the youth condition.

As for JSA, the Explanatory Memorandum states that any allowance will be paid either alone or together with universal credit, a point probed by my noble friend Lady Donaghy in the earlier debate. How will this work, and who is to decide whether it is paid separately or with universal credit? Currently, universal credit is payable fortnightly in arrears, and the allowance is to be treated as unearned income for the purposes of universal credit. Presumably it is not impacted by the actual payment date. Can the Minister tell us whether ESA is to be sanctioned and whether it is the gross or net amount that is to be taken into account as unearned income? What about hardship payments and repayable hardship payments? How will they work?

The Explanatory Notes make it clear that, with the exception of the conditionality and sanctions regime, the rules will be very similar to the existing rules. I think the Minister repeated that. For the purposes of the record, can he be a little more precise about the lack of similarity?

As regards claimant obligations, the Explanatory Notes at paragraph 7.63 record that the UC model requires more of the claimant than ESA does. In particular, the paragraph suggests that claimants may be required to look for and be available for work that they are capable of doing, which is a more onerous test. Perhaps I can go back to that paragraph. I do not think it accords with what the Minister said in introducing these regulations. It states:

“The requirements placed on Employment and Support Allowance claimants are also based on the Universal Credit model, though there are again some significant differences. For example, claimants can be required to prepare for work and attend work-focused interviews, but are not required to look for work or be available for work whereas in Universal Credit, within limits, claimants may be required to look for or be available for work that they are capable of. The requirements to prepare for work and attend interviews are broadly equivalent to those requirements placed on claimants in the Universal Credit work preparation and work-focused interview only groups”.

I read that to suggest that if the universal credit rules are to apply, claimants may be required to look for, and be available for, work that they are capable of. If that is not the case, it is fine, but if that is correct, one has to ask how these more onerous requirements are to be derived, or are they to be derived from the same WCA process? Will revised guidance be given to Atos and decision-makers?

Similarly, in relation to sanctions, where there is an entitlement to both benefits—contributory ESA and universal credit—the latter will apply. Given that the universal credit requirement on the claimant may be higher than the ESA requirement, what will ensure that there will not be movement up the sanctions scale?

[Lord Freud]

The Employment and Support Allowance Regulations remove the means-tested provisions, because in future universal credit will replace the incremented employment and support allowance. With the exception of the conditionality and sanctions regime, the rules for the new employment and support allowance will be very similar to the existing rules for the contributory element of ESA under the 2008 regulations.

I will pick up some of the questions. The first was from the noble Baroness, Lady Turner, who asked about appeals. As she said, about 37% of appeals overturn the original decision. However, in the context of the total number of decisions made, the tribunal overturned around 15% of around 741,000 fit-for-work decisions. Therefore, the original decision on benefits stood in 85% of cases. Clearly, we will have a further chance to debate this issue later this evening.

All the remaining questions were asked by the noble Lord, Lord McKenzie. He asked about flexibilities for lone parents. Claimants will meet their personal adviser and discuss their circumstances, which will include the hours that the claimant is able to work, taking into account their caring responsibilities. Clearly, the claimant commitment is a living document that will change with people’s circumstances.

There will be separate payments of JSA, ESA and UC. The contributory benefits will not be paid with the same frequency as universal credit, although the monthly amount will be equivalised, and the monthly amount of the contributory benefit will be taken into account as offsetting unearned income. In other words, it will knock out the equivalent amount of UC.

I confirm that days in the support group—the WRAG—will not count towards the 365-day limit. The way in which sanctions will operate if a claimant receives both universal credit and a contributory element is that the relevant sanction will apply to their universal credit award and not to their JSA or ESA award unless they close their UC claim.

The hardship provisions have been removed from both the JSA and the support allowance because it will now be for contribution-based claimants, who will have other income and savings to live on. The noble Lord is correct that there will be no new claims for youth conditions.

I make it absolutely clear that the requirements are for work preparation such as attending a training course, preparing a CV or taking part in the Work Programme. They do not relate specifically to searching for work. Perhaps I may say that there is a bit of clumsy drafting in that paragraph, which states that UC has other elements that are not in the ESA. I know exactly the issue that the noble Lord seized on because I was puzzled by it myself when I read it. However, I can reassure him on that point.

As with the JSA, we are now moving the ESA and UC regimes closer together after the start last year. I commend the regulations to the House.

Motion agreed.

Social Security (Personal Independence Payment) Regulations 2013

Wednesday 13th February 2013 Lords Chamber

Motion to Approve

19:25

Moved by

[Lord Freud]

That the draft regulations laid before the House on 13 December 2012 be approved.

Relevant documents: 15th Report from the Joint Committee on Statutory Instruments, 23rd Report from the Secondary Legislation Scrutiny Committee.

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

My Lords, this instrument was laid in draft before the House on 13 December 2012, and I confirm to the House that I consider it to be compatible with the European Convention on Human Rights.

This Government are clear that they are committed to continuing to support disabled people to play a full role in society. The reform of DLA and the introduction of the personal independence payment are central to this. We recognise that DLA plays an important role, but it is simply not working in its current form. In the past 10 years, the number of people claiming DLA rose by more than a third, from around 2.4 million to 3.2 million. That level of growth is not sustainable.

We could have reduced expenditure by simply cutting money across the board. Instead we chose the principled but more difficult option of modernising the benefit and focusing support where it is needed most—on those who face the greatest barriers to independent life. I accept that this reform will mean that we spend less money on PIP than we would have spent on DLA, and that fewer people will receive the benefit—300,000 fewer by October 2015 and 600,000 fewer in steady state. We have not hidden from this. However, this has to be put in context. The UK remains a world leader in protecting the rights of disabled people. We currently spend almost £50 billion a year on support and services for disabled people. We will still be spending more on DLA and PIP in 2015-16 than we did in 2009-10 or 2010-11.

Importantly, this reform has also allowed us to ensure that the money we are spending is used effectively and fairly, and will go to the people who need it most. More people will receive the highest rates of the benefit than at present, both in terms of the proportion and the actual number of people receiving the benefit. The proportion of individuals who receive the top rates of both DLA components is 16%. Under PIP this will rise to 23% and will be worth £134.40 a week, based on April’s rates. More individuals will receive the enhanced rate of the daily living component in PIP than receive the highest-rate care component in DLA.

The Government’s reforms present an opportunity to start afresh and make the benefit fit for the 21st century while keeping the best elements of DLA that disabled people value. Throughout the development of PIP we undertook extensive stakeholder engagement to ensure that disabled people and their organisations were able to feed in their views and concerns. We listened, and in many cases acted on what we were told. Our commitment to consultation was recognised by the Secondary Legislation Scrutiny Committee. We are continuing this engagement as we move into the delivery phase of PIP.

A key area where we listened to and acted on people’s views was the timetable for reassessment of the DLA caseload. We announced in December that this would take place more gradually, allowing more time to make sure that we get the implementation of PIP right. The peak period of reassessments will now not start until October 2015. This will also allow time for the first independent review of PIP to be carried out and any required changes to be implemented before reassessment of the bulk of the DLA caseload starts, from October 2015.

19:30

We have also made a wide range of changes to the assessment criteria, following two extensive consultations. For example, we heard the concerns that we had not taken great enough account of the ability to read in our second draft of the assessment criteria. To rectify this we have introduced a new activity so that we can separately assess the ability to read and understand written information and the ability to communicate verbally. In addition, we have broadened our approach to aids and appliances, recognising that disabled people can be reliant on non-specialist aids to complete everyday activities, which can create costs and barriers.

I know that there is some continuing concern around the assessment, particularly in relation to the physical mobility activity—that is, moving around. We have already discussed the issue in this House. However, I would like to take this opportunity to reassure noble Lords once again that we have not tightened the rules regarding physical mobility. I must stress that, under the second draft of the assessment, being unable to walk 50 metres did not automatically entitle claimants to the enhanced rate. The policy intent behind this activity has always been that being unable to walk more than 50 metres should lead to entitlement to some rate of the mobility component. Within this, we intend that the enhanced rate should go to those individuals who face the greatest barriers to mobility and the standard rate to the remainder.

In the second draft, we differentiated by looking at the type of aid and appliance that an individual used; but we did not do it well. We used terms such as “up to” certain distances, which meant that it was not clear which descriptor applied. As such, people received variable outcomes. The strong response from our consultations and meetings with disability organisations was that the criteria were very unclear. Many organisations told us they believed that only people who needed to use wheelchairs could receive the enhanced rate. We heard this from the Disability Benefits Consortium, the MS Society, Parkinson’s UK and Leonard Cheshire Disability, among others. In the final version of the criteria we differentiate by distance, which we feel is much clearer. This means that, in the final draft, individuals who cannot walk 20 metres can be certain that they will receive the enhanced rate, regardless of whether they need an aid or appliance.

I must also stress that this has to be looked at in the context of whether individuals can complete activities safely, to an acceptable standard, repeatedly and in a reasonable time. So, if individuals can walk more than 20 metres but cannot do so in a safe and reliable way, they should receive 12 points and the enhanced rate. Our analysis shows that, when you compare the second and final drafts of the assessment criteria, the projected number of people who will score 12 points under the moving around activity will remain broadly the same, despite a reduction in the overall mobility caseload.

At this point I would like to reconfirm that the Government will lay an amending regulation to make clear that consideration must be given to whether individuals can complete the assessment activities,

“safely, to an acceptable standard, repeatedly and in a reasonable time period”.

I have already shared a draft of the amending regulation, and we commit to putting a final regulation before Parliament shortly.

I am aware that both the House and disability organisations are as interested in how the assessment providers will carry out the assessment as they are in the policy itself. As always, the legislation will be underpinned by guidance, and we made the relevant guidance for assessment providers available on the DWP website on 23 January so that noble Lords could consider it before today’s debate. It will remain under review and will continue to be refined. We have also shared relevant extracts of the working draft of the decision-makers’ guidance.

I would also like to address some of the concerns that have been raised about the impact that these changes will have on carers. Informal carers provide an invaluable service to some of the most vulnerable people in our communities. The Government absolutely recognise and value their contribution, and enabling carers to fulfil their potential remains central to the Government’s carers strategy. That is why we believe that welfare reform must support carers’ independence. Under universal credit there will be a carer element to support carers on a low income who provide care for a severely disabled person. Additionally, such carers will have improved opportunities to maintain links with the world of work by being able to keep more of their income from working than under the current system.

As part of our approach, the Government also announced that carer’s allowance will continue to exist as a separate benefit outside universal credit, providing carers with the support of a dedicated benefit; and we will continue to uplift it with inflation. We also made it clear more than a year ago that both rates of the daily living component of PIP will provide access to carer's allowance. This was welcomed by Carers UK, and we will enshrine it in primary legislation—indeed, we have shared the draft provision that does so with Carers UK. The latest available information shows that there were more than 1 million people with an established entitlement to carer’s allowance. Of these, some 269,000 have a carer’s allowance claim in payment, linked to an award of DLA in respect of someone of working age.

By October 2015, when we will have completed 560,000 DLA reassessments, the overall change in the carer’s allowance workload where benefit is in payment, will be a reduction of just 5,000 awards. It is important to put this in context. Expenditure on carer’s allowance continues to rise. On average, it has increased by 5% in real terms over the past four years and will continue to increase every year up to 2015. We currently spend £1.9 billion on carer’s allowance, and this is expected to rise to more than £2 billion by 2015. Our approach means that those caring for disabled people with the greatest needs will continue to get the support they need.

I hope that this short opening reassures noble Lords that this is a sensible reform. It has been developed in close collaboration with disabled people and their representatives. We have listened to concerns and acted on them. Therefore, I present to the House today a set of regulations that will ensure that we can provide disabled people with a new, more sustainable benefit, which will reflect modern society and allow us to continue helping disabled people to live full and active independent lives.

Amendment to the Motion

Moved by

[Lord McKenzie of Luton]

At end to insert “but that this House is concerned about the impact of the replacement of Disability Living Allowance with Personal Independence Payment; is concerned about the lack of a full impact assessment on carers; regrets the lack of a cumulative impact assessment of all the changes hitting disabled people; regrets the fact that vital safeguards have not been introduced to ensure that additional pressure is not put on carers, that people do not lose their freedom to work and that they are not driven to already stretched NHS or social care services; believes that while Disability Living Allowance needed reform it should have been started with the needs of disabled people and not with a budget cut; notes that some 600,000 fewer people will be in receipt of Personal Independence Payment by May 2018 compared to those who would have been entitled under Disability Living Allowance; and further notes that some 25,000 disabled people could be forced to give up their jobs because they can no longer afford the extra costs of getting to work”.

[Lord McKenzie of Luton]

My Lords, the regulations that the Minister has introduced come at the end of a protracted process whereby the Government, in their early tenure, signalled their intention to abolish disability living allowance and substitute it with the new personal independence payment. The proposal has not been without controversy ever since. The abolition of a benefit that aimed to support disabled people by making a contribution to the extra costs of disability has failed to gain full support among disabled people and their organisations. Nevertheless, we acknowledge the positive changes that have been made at various stages along the way.

The fundamental problem was the starting point of this process—not how best to design a new benefit that meets the needs of disabled people but a crude attempt to reduce the benefit bill. The change was then promoted in the context of suggesting that DLA was an easy touch for so-called cheats and scroungers, when the reality was that the fraud rate was only around 0.5%.

The first time we heard that there were going to be changes to DLA was in the 2010 Budget when the Red Book said that there would be a reduction in caseload and expenditure of 20%. That figure, I think we now realise, was plucked out of the air; no analysis, but a nice round figure that sounded definite. We now know that DWP’s latest projection indicates that the reduction in caseload and expenditure as a result of these changes will be 27% to 28% by the time the PIP assessments are completed in 2018. There will be more of this later, but we should acknowledge the hard work by officials during this process and the extensive consultations and engagement which have ensued. The Government have been pushed back on a range of important issues, whether through the Bill or the various rounds of consultation: the required period condition is now three months rather than a six-month qualifying period; the mobility component for care home residents has been retained; and they have introduced two-year linking rules, as well as substantive changes to the assessment activities. Furthermore, the agreement to switch into regulations the phrase,

“safely, to an acceptable standard, repeatedly, and in a reasonable period of time”,

is certainly a reassurance for some, as is the extended reassessment process. These are all to be welcomed. Whether the Government should be congratulated on their sensitivity in responding to these points or berated for the insensitivity of their starting position is perhaps a moot point. I shall put it down to the good sense and power of persuasion of officials.

At the last minute, after consideration in the other place, we have what part of our Motion calls for: an assessment of the impact on carers of the replacement of DLA. This is hardly the time to subject it to proper parliamentary scrutiny, but it seems clear from the DWP’s own analysis and the Minister’s introduction that the projected eligible PIP number for 60 to 64 year-olds in May 2018 at 1.6 million will be 600,000 below the number who would have been eligible for DLA. Of the reassessed DLA caseload, some 450,000 out of the 1.75 million will receive no award at all. In total, almost 1 million will receive a reduced award or none whatever. Is it the contention of the Government that these individuals who are to miss out on PIP have no significant additional costs associated with their disability? One of the quoted reasons for the change from DLA to PIP has been the Government’s wish to increase support for those with the greatest needs; we have heard it again this evening. How, therefore, does that oft-repeated assertion chime with the statement that the new PIP benefits rates will be exactly the same as those for DLA? The Government claim that a higher percentage of claimants will receive the highest rates of PIP than would be the case under DLA, but because the caseload under PIP is much lower, this amounts to approximately the same number of individuals. That is not helping the most severely disabled more; it is helping them at the same rate while taking away financial support from many other disabled people who also have additional costs to meet as a result of their disability.

This has not proved to be a good time for many disabled people. The shutting of the Remploy factories; the failure of the Work Programme to support disabled people; the impact of the looming bedroom tax; the failure fully to protect disabled people from the uprating caps; the loss of the severe disability premium in universal credit; and concerns over the protection from the benefit cap all mean that we need to be especially cautious about the change from DLA to PIP. We have not seen any comprehensive cumulative impact assessment of all of these measures on disabled people. Are we to expect one?

We know that for some, the receipt of DLA has proved a means to get to work. This raises the concern that anyone in these circumstances missing out on PIP may have to give up their job. What reassurances can be given that this will not happen? The Minister may pray in aid the Access to Work Programme, as did his colleague at the other end. Perhaps we can be given an update on the budget. Official statistics released in January this year show declining numbers of individuals being helped under this scheme. In 2009-10 it was 37,000, a year later it was 35,000, and in 2011-12 it was 30,000. What is happening with this programme?

19:45

We are hoping to be reassured that there is no adverse knock-on effect to carers, but denial of the highest or middle rate care component of DLA could take the carer out of entitlement to carer’s allowance. We know that DLA helps people to manage some of their own care needs so that their carer can undertake some work. The Minister will doubtless be aware of the reaction of Carers UK to the latest figures released last Friday. These show that there will be a net fall in carer’s allowance caseload as a result of the PIP reforms and some 25,000 individuals will lose their eligibility for the allowance. Carers UK states that:

“Carers sacrifice so much to care for loved ones and make a huge contribution to family life in our society. They contribute an estimated £119 billion to the UK economy with the care they provide, often at a cost to their health, careers and family finances. In return the Government is now cutting financial support for carers by £31 million, meaning that thousands of families now face the devastating double blow of disability and carers’ benefits. This comes on top of cuts to social care services, cuts to Housing Benefit support for carers who need a separate room to sleep in, forthcoming reductions in support with Council Tax and thousands of carers who will have their benefits capped—a perfect storm of cuts to families already struggling to care for loved ones”.

We know also that there are concerns that cutting support for those on the lower rate of DLA will particularly affect people with mental health and learning disabilities, with grave concerns that people with mental health problems will comprise a large proportion of those losing out. Parkinson’s UK says that this reform is causing untold anxiety to people with Parkinson’s.

The final criteria will cause hardship for an estimated 1 million disabled people and their families, even those who are in the greatest need. Such cuts will have an inevitable knock-on effect on the budgets of health, social and other support services for disabled people. How does the Minister respond to these concerns?

Where DLA is withdrawn from a person, their automatic exclusion from the benefit cap will fall. How many more households is it estimated will fall into the cap because of this? Further, the Disability Benefits Consortium suggests that under the Universal Credit Regulations, there is a tightening of the rules that permit an additional bedroom for an overnight carer. This is currently allowed on the basis of need, whether or not someone is in receipt of DLA/PIP. Can the Minister say whether this has been tightened and what analysis has been made of the consequences, if it has? The DBC also points out that there are likely to be many disabled people who have limited capability for work or work-related activity who will not be entitled to PIP. If so, there are circumstances where the universal credit rules will operate to create a perverse incentive for this group. I will not detain the House with the numerical example that has been offered, but no doubt the Minister has had a chance to peruse it. Does he agree with the analysis, or if he has not a chance to see it, will he ensure that he takes the opportunity to do so?

On the mobility criteria, many have welcomed the Minister’s commitment to include the term,

“safely, to an acceptable standard, repeatedly, and in a reasonable period of time”,

in the regulations, and obviously we support it. However, many disabled people and their organisations remain alarmed at the hurdle that disabled people will now face before being awarded the enhanced mobility rate. The arguments they make are that the 20 metre criterion simply does not provide a practical level of mobility. It is a very short distance, approximately equivalent to the length of two buses. There is very little a disabled person can achieve outside of their home without a wheelchair if they cannot walk for more than 20 metres. Since most wheelchair users can walk a qualifying distance of only 20 metres, it is likely to lead to wheelchair users using adapted cars or very expensive converted wheelchair-accessible vehicles. This could include those whose conversions have been part funded by a grant from the Government’s Specialised Vehicles Fund which is only available to those who are eligible for the Motability Scheme.

The distance of 50 metres has been embedded for many years in guidance on access to the built environment for people with mobility difficulties. For example, the Government’s own publication, Inclusive Mobility, referenced in Approved Document M of the building regulations, recommends that seating,

“should be provided on pedestrian routes at intervals of no more than 50 metres”,

and that parking spaces for blue badge holders should preferably be provided within 50 metres of the facilities they serve. The distance of 50 metres is used by some councils for considering residents’ applications for advisory disabled parking bays close to their homes. Salford Council, for example, uses an application form which includes the following question:

“Is the applicant ever required to park further than 50 metres from home due to the lack of on-street parking spaces?”.

The change was the subject of a confused consultation, as the Minister himself I think recognised. If the proposed change had been spelled out in the consultation document, the DWP might have expected a somewhat different response, not least because of the points above. It is accepted that confusion may be attributed in part to the consultation around “up to 50 metres” initially, which the Minister confirmed, but there seems to be a difficulty in articulating quite why the DWP’s analysis shows that the proposed working of the new criteria would lead to broadly the same outcome that would result from applying the existing criteria. If this is true, I suggest there is a duty on the Government to spell this out in some detail. But if this is the case, what is the difficulty anyway in reverting to the 50-metre formulation?

Parkinson’s UK says in its briefing:

“In answer to a Starred Question, the Minister, Lord Freud, appeared to imply the change was the result of concerns expressed by charities including Parkinson’s UK. For the record, Parkinson’s UK’s concerns related not to the distance but to an implication that only wheelchair users could meet the criteria. It is unacceptable to use these concerns as a justification for reduction in distance. The government must reinstate the 50 metres rule for the highest rate of mobility PIP. The change to 20 metres is unacceptable. Making it tougher to get this rate of PIP would mean people with Parkinson’s, most of whom are on the high-rate mobility DLA, losing their transport lifeline of a Motability vehicle”.

For many disabled people who were and have extensive mobility issues, access to a Motability vehicle is a lifeline. What assessment has the Minister made of the effect that the 20-metre threshold will have on those disabled people in employment? Can the Minister tell us whether he sees Access to Work taking up some of the suggested previous support given through Motability? What assessment has been made of the financial implications of this? If somebody had a car under the DLA regulations because they were virtually unable to walk, they are hardly likely to be able to hop on and off the nearest bus or train, such that any support might actually be more expensive than Motability arrangements.

We have had the benefit of perusing the guidance for providers who are carrying out assessments for PIP. It is an extensive and seemingly comprehensive document, but one which invites a fundamental question. However well constructed the criteria and the processes, what matters is how the system will work in practice and, clearly, the roles of the provider and the health professional are key. It is understood that these are to be Atos and Capita. Atos is well known to the DWP and, it is fair to say, has not always come up to the mark. We welcome the early review of PIP but can the Minister say what safeguards are being built into the arrangements to judge performance and how the Government will ensure that efforts on PIP will not undermine efforts on ESA? How many health professionals are likely to be available by 2015 for this role and what would their previous roles actually have been? As we understand it, there is not an extensive pool of individuals with the required skills. In evaluating the contractual arrangements with these providers, can the Minister tell us about expected productivity levels for health professionals? What is the estimated average time—if it exists—for the HP to carry out their tasks, ranging from considering the client questionnaire to reporting to the case manager?

Whatever we do with this Motion tonight, the House will approve these regulations, and whatever our misgivings, we have to wish them well because they will impact on the lives of many. However, we will be rigorous in following the progress of DLA/PIP to ensure that they deliver what is promised as well as in pursuing the cause of those who are excluded. I beg to move.

[Baroness Thomas of Winchester]

My Lords, this has been a long journey, with many bumps and scrapes along the way. We are grateful to my noble friend and his team for listening to many representations on the whole issue of replacing DLA with the new territory of PIP—I declare an interest in that I receive DLA— and I am very pleased that the timetable for PIP’s implementation is being slowed down to ensure that it is got right. We all know that the DWP is determined to reduce the number of people eligible for PIP, but I am not going to talk about the numbers, because I am not sure anyone can really forecast with any accuracy how many people will be found to be eligible and how many ineligible. However, I would ask my noble friend whether the DWP has taken fully into account all those disabled people, like me, who receive DLA and who are now well over pension age and still going. The last thing anyone wants is for disabled people whose way of life depends on being eligible for the higher rate of mobility allowance, which opens the gate for a Motability vehicle, suddenly to have that gate slammed shut by a rigid new PIP ruling.

I shall just say a word about what my Motability car means to me. It not only transports me about but takes all my aids too, which I could not carry around in any other way. A look inside my boot would tell the story. My real fear is that those who do the utmost to help themselves may find that their determination counts against them in being eligible for the enhanced mobility rate. I echo what the noble Lord, Lord McKenzie, said about Access to Work. That is fine, and I know more money has been put into it, but it only helps people to a certain extent in getting to and from work, and it does not help all those people who live in rural or semi-rural places who need to get to hospital appointments, see friends and go to the shops—all those things that Access to Work simply cannot do.

We can only take my noble friend’s word for it that far too many people became eligible for DLA, as a whole, because of the vagueness of the application form and the stretching effect of case law. I take my noble friend’s word for it that descriptor E in activity 12—the “moving around” section of the PIP form—was changed at the last minute to make it clearer, rather than to disadvantage whole rafts of people. I am glad that my noble friend has clarified that further this evening. We all know that suddenly introducing 20 metres as the cut-off point for those walking, aided or unaided, to receive enough points for the enhanced mobility payment terrified huge numbers of disabled people, especially as the crucial qualifying words were only to be in guidance. I am particularly pleased that my noble friend and his colleagues listened to our pleas to embed the relevant words in regulations.

That has now been done, but I know, as the noble Lord said just now, that there is still acute worry among disabled people that “20 metres” is still there in descriptor E. Perhaps I can say how I understand the situation, in order to try to dispel some of the fog which is still around this vital descriptor, which unlocks the door to a Motability vehicle. The words that are now to be in the amending regulations—

“safely … to an acceptable standard … repeatedly … and in a reasonable time period”—

will apply to all the descriptors. That is why the Minister in another place, and my noble friend tonight, have said that people who could walk up to 50 metres might now be on either standard or higher-mobility DLA and that this will also be the case with PIP—that those who can walk up to 50 metres might qualify for either the enhanced or the standard rate. In another place, the Minister said:

“In seeking to clarify that, we have said that those who can only manage 20 metres will automatically get the enhanced rate. However, using the test of ‘safely, reliably, repeatedly and in a timely manner’, those people who can only manage up to 50 metres could also get an enhanced mobility rate”.—[Official Report, Commons, Eleventh Delegated Legislation Committee, 5/2/13; cols. 17-18.]

So it is not the case that the only people who will get the enhanced rate of PIP are those who cannot walk more than 20 metres. I hope my noble friend will confirm this. Of course, the words the Minister used in another place have now been superseded in the new draft regulations, which I warmly welcome.

20:00

However, before leaving those words, I would be grateful if my noble friend could confirm the meaning of “repeatedly”. The Government’s response to the consultation says:

“We have also broadened the definition of ‘repeatedly’ so this is no longer limited to looking at repeatability on the same day but potentially allows longer considerations—i.e. if an individual walking on one day would prevent them doing so on the next. This reflects concerns raised in the consultation. While we accept that these terms are potentially more subjective than the previous draft, we think they are fairer, more flexible and more accurate”.

This would be of great help, for example, to those with a prosthetic leg who can walk one day but have to use a wheelchair for the next few days. This is a common occurrence and something that a lot of amputees are worried about.

In fact, quite a number of the examples given in the huge amount of material we have been given about PIP display much more flexibility than someone looking at the descriptors on their own would judge. Will the assessors be thoroughly versed in these examples that we have been given by the DWP? Just yesterday I found the PIP assessment guide on the DWP website, which we have talked about. It was very instructive. The absolute key to this whole matter is how the assessment is done and what part JCP decision-makers play in ultimately making these decisions. A lot of successful appeals will mean that the assessors and decision-makers have not carried out the assessment properly and have not taken medical evidence into account. Here I put in a plea for those people who suffer from severe conditions such as colitis or Crohn’s disease, whose needs are often overlooked.

The internal and external reviews of PIP that have been announced are very welcome, but Atos and Capita must ensure from the outset that their assessors are of the highest quality. Perhaps my noble friend will tell us how the DWP will ensure that PIP assessors are going to be monitored, and reassure us about the dreaded word “targets”. We are often told that targets do not exist but we need to be reassured that the companies themselves do not set informal targets that are below the radar.

Finally, will my noble friend undertake to lay further amending regulations if any of the reviews show that the weighting of the regulations before us today is seriously flawed? With that, I wish PIP well and will keep my fingers crossed for its success.

[Lord Touhig]

I refer noble Lords to my entry in the register of interests. As the Minister will recall, in Committee and at Third Reading of the Welfare Reform Bill, a number of colleagues, notably the noble Baroness, Lady Browning, and the noble Countess, Lady Mar—who is no longer in her place—and I all raised issues about face-to-face assessments.

I urged the Government to take a “tiered approach” to the PIP assessment. This would mean that instead of people with conditions such as autism having to undergo a stressful and often inaccurate face-to-face consultation, assessors would first consider existing medical and other evidence about their needs. On the basis of this, a decision would be made as to whether a face-to-face consultation would be necessary. We are all keen to learn the lessons of the work capability assessment for employment and support allowance, which, as the Public Accounts Committee in the other place confirmed recently, continues to be problematic at best. A tiered approach to PIP would help make it fairer and more accurate for people with autism and other complex conditions.

The guidance that has been published by the Department for Work and Pensions for the assessment providers Atos and Capita reflects this tiered approach, which is certainly most welcome. However, the guidance also makes it clear that the end-to-end assessment process should be completed within 30 days. I understand that contracts between the DWP and the providers make it clear that there is a financial incentive to work towards this timescale; indeed, if fewer than 85% are completed within 30 days the providers are at risk of losing their contract.

I share the view of the National Autistic Society, which has serious concerns about whether evidence can and will be collected within this very tight timeframe and whether as a result people with complex conditions such as autism will undergo a stressful face-to-face consultation, and a decision will be made about their needs by an assessor who may not be in possession of all the relevant evidence. A one-hour face-to-face assessment will not enable the assessor to gain a full picture of the impact of autism on the claimant. It is an inherent part of the condition that people with autism will present differently according to the environment in which they find themselves.

Does the Minister think that 30 days is a realistic timeframe in which to get a response to a request for further evidence from busy health and social care professionals? Is he prepared to consider extending that, in particular with regard to people with autism and other very complex conditions?

[Baroness Browning]

My Lords, I refer to my interests in the register and also declare an interest in that I have close relatives who are in receipt of DLA. I want to use this opportunity to put on the record again my ongoing concerns, which are very much reflected in the amendment that the noble Lord has spoken to. I continue to have these concerns about the Government’s change from DLA to PIP for three principal reasons.

First, although I recognise, as others have, that my noble friend has worked very hard and made concessions that have very much improved these regulations, in successive debates about PIP he has repeatedly reassured us that “the most vulnerable” will still be in receipt of the benefit. To me, saying “the most vulnerable” is like saying “the most pregnant”—people are vulnerable or pregnant but the degree starts to give me cause for concern.

The second area that gives me concern, which has already been mentioned, is this figure that has been attached to how many people will lose their DLA. It seems to be an arbitrary figure and nobody seems able to identify quite how that figure came about or how it will be implemented.

Thirdly, in recent years the Government have had to take account of the demographic changes relating to the cost of the care of the elderly—something on which we have had an announcement in the past week. But equally, in looking at these changes, they have ignored another demographic change: the number of people with a disability who now live independently, who 20 or 30 years ago would not have done so.

When I had the privilege of representing Tiverton in Devon, in the 1980s we had three mental institutions in that constituency. The policy to take people out of mental institutions and integrate them into the community was not without its problems, but when you saw those people eventually living in the community it was only too evident that they had become institutionalised because they had basically been locked up for decades, and that the vast majority of them should never have been there in the first place. We do not do that any more. We do not lock people away. Equally, a changing trend that I am very pleased to see is that particular groups of disabled adults no longer live into their middle or old age with even more elderly parents. There are many who still do that, but the trend has been to move them into independent living.

If one sees the cost of what is required to move vulnerable people, even if they are only a little vulnerable, one realises that it is not a cheap option if those people are to be safe and to have the quality of life which we would all aspire to. The Government should have done their homework and looked at this change in society whereby we now integrate people into independent living in a way that a previous generation would never have countenanced. That is not just about putting a roof over their head; it is also about providing support and sometimes even having to contrive some sort of social life, which is again supported, so that they really feel that they are integrated into society.

My noble friend said at the Dispatch Box just now that the costs of DLA have gone up greatly in the past decade. I suspect that a lot of those costs are associated with the very welcome news that people are now integrated into independent living, sometimes supported but sometimes fully independent, where previously they would either have been locked up or sitting on the sofa at home with elderly parents. There would have come a point with those adults when their parents were no longer able to look after them and when, usually in an emergency, they suddenly became dependent on the state at much higher cost than those small amounts of money needed to support them in independent living. Unfortunately, despite what any Government say, Governments work in silos, so I appreciate that what my noble friend has to look at is the budget of the DWP, when a lot of people who are now moved into independent living are dependent not just on disability benefits but on health and local authority services. It is that package that helps them attain independent living.

I am seriously concerned that many of the 600,000 people, or however many it turns out to be—as my noble friend will know, I have a particular interest in this group—who are on the autistic spectrum, as my noble friend Lord Touhig described, or who have learning disabilities and mental health problems, do not always present initially as people with deep-seated problems and needs. Rather like icebergs, they very often present with a third on the surface and two-thirds under it. When they run into difficulties with independent living or taking their place in society it is not only devastating for them personally but very expensive on the public purse. It is therefore a false economy if that particular group, many of whom may be intelligent and do not present as the most needy or the most vulnerable, lose their DLA after achieving independent living. I say that on behalf of many autistic people whom I have known and on behalf of autistic young people whom I can think of who have committed suicide because they simply could not cope with day-to-day living. It may have taken a long time to get them to independent living and if you pull the rug from under them, the whole structure collapses around them like a pack of cards. It is not the case with learning-disabled or autistic people that, once they have achieved a level of independence you can walk away and say, “Okay, they’ll be all right now for the rest of their life”. They simply do not function in that way.

The Government should look at this changing trend in independent living. It is rarely mentioned by the Government but it is just as significant as some of the challenges that we face with the ever increasing dependency of old age. Much as all of us who take an interest in these matters appreciate what my noble friend has done—he has a very good understanding of autism and is doing a lot to try to help more autistic people into work—none the less, the words set out in this provision give cause for concern and it is a concern that I share.

20:14

[Baroness Grey-Thompson]

My Lords, it gives me great pleasure to follow the noble Baroness, Lady Browning, who makes some excellent points on independent living. When I was born in 1969 with spina bifida my parents were told that if I had been born even two or three years earlier, I would have been taken away, not fed and left to die. I know that we are now a long way from that treatment of disabled people, but many fear that we are returning to days of ghettoisation.

I declare an interest in that I am in receipt of DLA. I do not have a Motability car, but I know that it is a lifeline for many. It was interesting to hear the noble Baroness, Lady Thomas, talk about how important her car is to her. She made some excellent points and gave some excellent examples of fluctuating conditions which we must take into account. A debate on accessible —or rather inaccessible—public transport is for another time, but perhaps I may offer to take the Minister or the noble Baroness, Lady Stowell, when they have a little more time, on some bus and train journeys to show the scale of what we have to change in the United Kingdom. It is really not very good out there for disabled people.

I thank the Minister for being open to continued dialogue, for having several meetings with me and not least for his phone call this week, when he offered me some reassurances around the evaluation process. Like many, I am delighted that the words “reliably”, “repeatedly”, “safely” and “timely” will be in amended regulations. Moreover, their gradual implementation will give all of us in your Lordships’ Chamber an opportunity to play a part in the review. Some disabled people have been offered just a small beacon of hope by this.

I have to admit that I spent a great deal of time—in fact, right up to the deadline last night and beyond—considering whether this amendment should have been tabled as a fatal amendment, because fatalistic is how I and many other disabled people feel. I know that the noble Baroness, Lady Campbell, would have liked to be here tonight to support this debate, but the lateness of the hour makes it impossible.

I am disappointed with these regulations because of how they are going to affect real disabled people—not the media portrayal of this homogenous group of unknowns who are living the high life on benefits but disabled people who are struggling to survive and live independent lives. The Government have listened up to a point, but not as much as I would have liked. While the Minister has said, and will keep on saying, that his Government are merely providing clarity with these regulations, he will know—not least from my Question of 24 January 2013—that I was extremely disappointed by the consultation around the change from 50 metres to 20 metres. I accept that the time is now past, but we should have had the opportunity at the very least to debate it on the Floor of your Lordships’ Chamber. Parkinson’s UK has called the 20/50 metre change a “back of an envelope” calculation.

When the regulations are combined with the outcome of the Welfare Benefits Up-rating Bill, disabled people, and many others, will be in a significantly worse position than they are now. This is not protecting the most vulnerable. Enough is enough. Once these regulations pass, we have to leave them to bed in and give disabled people a chance to deal with them. I sincerely hope that what we have here—the clarity—is not a stepping stone to something that is harsher and that the 20 metres is not going to be the upper limit for claiming the higher rate of support at some point in the undefined near future. I would like some further reassurance on this from the Minister.

The noble Lord, Lord Kirkwood of Kirkhope, talked in a wider context about the evaluation process. The right reverend Prelate the Bishop of Worcester, who is unfortunately not in his place, also made his feelings clear on this subject. Several other noble Lords, too, have raised this issue. I look forward to feeding into the review. It is vital that we have a detailed review that we can take forward and that we learn from some of the things that I still do not believe are right.

When I have talked about these changes—disabled people losing their access to transport, having to stop work and being stuck at home, it has been suggested by some that I am scaremongering. Well, I believe that it is imperative that not just the people affected by these changes but the wider public understand the implications of what we all do here today.

I am reporting back what significant numbers of disabled people are telling me about their real fears, and that fear is around disabled people’s ability to live independent lives. The most stark figure that I have seen is from the We Are Spartacus report, which suggests that around 200 Motability cars per constituency could be removed from disabled people once these changes kick in. That could be just the tip of the iceberg, as not everyone uses their DLA—or PIP in future—to pay for a Motability car.

Disabled people are going to be hit by the cuts in so many ways, not just under PIP. I do not envy the onslaught on the inboxes and postbags of Members in another place when that starts.

Perhaps the time when what these changes mean will really hit home is when our first Paralympian has their car taken away. They are not workshy scroungers; they represent our country. It is not a day that I look forward to, but I wonder what the reaction then will be—what will happen when they are no longer able to get to training or competition.

All the way through the welfare reform legislation, we heard about protecting the most vulnerable. I and many others both inside and outside your Lordships’ Chamber will be watching whether that is the case with a great deal of interest and care.

[Baroness Lister of Burtersett]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Grey-Thompson. She and other Members have spoken very powerfully about PIP, and I share their concern.

I want to speak very briefly about the implications for carers, to whom the Minister referred. He prayed in aid Carers UK’s approval at an earlier stage of the process. I think he would probably accept that if it had known then what it knows now, it would have been less approving. It issued a press release saying that it finds shocking the figures in the impact assessment, which appeared only days ago—we have been trying to get it for a long time. I think that it withdrew its approval at that point.

The Minister talked about only 5,000 fewer carers being eligible. It is not “only” for each of those 5,000 people. Each of them will be worse off. That 5,000 is nearly 7%, which is a minority but still a significant number. It is based on a static analysis. The Minister is always telling us that we should do dynamic analysis. Well, Carers UK has done what I would consider to be a more dynamic analysis of the figures in the impact assessment, and it suggests that by 2015 10,000 fewer carers will be eligible for carer’s allowance. Will the Minister comment on those figures? Will he also tell your Lordships’ House whether the Government will offer any transitional protection to carers losing carer’s allowance as a result of the introduction of PIP? Also in the spirit of the dynamic analysis, by 2015 I think that we are only about one-third of the way through the introduction of PIP. Do the Government anticipate further proportionate losses to those eligible for carer’s allowance as the process continues after that?

[Lord Alton of Liverpool]

My Lords, I think we all recognise that taking regulations of this nature in the course of a debate on eight sets of regulations is perhaps not the best way to do business. Given the speeches that we have already heard, especially about the effect on mobility and the allowances that people with disabilities cling to in order to ensure their freedom of movement, these regulations are so crucial that I am surprised that they have not been uncoupled from the others so that we could consider not just the regulations as they stand but the amendment that the Minister referred to earlier, which he intends to lay in due course anyway. It might have been better if they had been uncoupled from the other regulations before us today so that we could have had a separate debate on that question.

All of us will have been moved by my noble friend Lady Grey-Thompson’s powerful speech. Having had the chance to speak to her briefly yesterday, and to my noble friend Lady Campbell of Surbiton, none of us should underestimate the strength of feeling. My noble friend’s remarks about contemplating tabling a fatal amendment to the regulations underlines that, despite the changes that have been made, welcome though they are—as the noble Baroness, Lady Thomas of Winchester, said, the Minister has listened and made some changes—there are deep concerns in many organisations throughout the country. Some of those concerns have been mentioned already, but I shall refer to others.

During a debate on 17 January initiated by the noble Baroness, Lady Hollis of Heigham, I signalled my concern about the impact that the changes to the personal independence payment would have on the mobility of sick and disabled people. During that debate, and again on 24 January when I asked an Oral Question, I drew attention to those two things. The first was the omission of the words,

“reliably, safely, repeatedly and in a timely manner”,

from the text of the regulations setting out the qualifying criteria for the payment and the impact of altering the criteria for the enhanced mobility rate from 50 metres to 20 metres.

During the debate on 17 January, I asked the Minister to,

“confirm the Government's own prediction, made earlier this month, that 27% fewer working-age people will be eligible for the Motability scheme once PIP is fully rolled out? Disability organisations say that the new proposal means that 42% fewer disabled people of working age will be eligible—an average of 200 people in every constituency”,—[Official Report, 17/1/13; col. 817.]

a figure my noble friend referred to a moment ago. I received no answer in the Minister’s reply that day.

When I returned to the question on 24 January, I pressed him once more and asked whether he accepted that,

“with one-third of disabled people living in poverty and an estimated 42% fewer being eligible for mobility support-many fearing that they will become prisoners in their own homes-his admission that under the new regime some disabled people will have their specially adapted vehicles taken away from them or offered to them to buy has caused widespread disbelief and considerable distress?”.—[Official Report, 24/1/13; col. 1180.]

Let us be clear: some existing claimants will face losing as much as £150 a month if they fail to meet the newly tightened criteria. That amounts to an annual loss of £1,800. As the Disability Benefits Consortium, representing over 50 disability rights groups, says, that loss will have calamitous effects, as Motability vehicles, which include adapted cars, powered wheelchairs and scooters, are withdrawn. In its words, Motability vehicles are,

“their means of independence and participation, the lifeline that enables them to get to work, to GP appointments, to the shops, to take their kids to school”.

During the briefing session which the Minister kindly arranged two weeks ago, I returned to the same line of questioning, simply trying to obtain from the Government their estimate of how many people will be affected by the regulations that we are being asked to approve today. Not to know the figures but simply to have guesstimates thrown around like confetti is not a sensible way to proceed when the House is being asked to agree something as important as the regulations.

In a Written Question on 4 February, I asked,

“how many people they estimate will be affected by changes to mobility support for people with disabilities; and how many vehicles are likely to be repatriated or offered for sale”.

The Minister’s reply was, to put it charitably, opaque. He said:

“We are continuing to work closely with Motability to understand what impact personal independence payment might have on its customer numbers and to ensure the smooth introduction of PIP as it relates to users of the Motability scheme”.—[Official Report, 4/2/13; col. WA26.]

That is information that Parliament needs to have before we can in all conscience approve the regulations. The Minister needs to tell us how many vehicles will then be sequestrated or repatriated. What are the best guesstimates that have been made by his officials? He must have had discussions with Motability. What figures has it given him? How many will be offered for sale to their users and at what average price? What assessment has been made of the ability of the current users of those vehicles the funds to buy them and then to fully maintain them?

Like the noble Lord, Lord McKenzie, and others, I would also like the Minister to say something about companies that have been given responsibility for implementing PIP. Perhaps he can confirm that Atos Healthcare, also mentioned by the noble Lord, Lord Touhig, has been given responsibility for two of the three contracts for PIP. Only last week the Public Accounts Committee reported on the work capability assessment. The committee is damning of the whole process, and particularly stresses that ultimately the Department for Work and Pensions is responsible. One of its main findings was that:

“The Department lacks sufficient rigour in managing the contract with Atos Healthcare. It has adopted a light-touch approach to managing this contract and placed too much reliance upon information provided by the contractor. The Department seems reluctant to challenge Atos Healthcare. It has failed to withhold payment for poor performance and rarely checked that it is being correctly charged for work”.

If after three years of trying with the work capability assessment it has been unable to get that right, goodness knows how much further misery and cost will be incurred with PIP.

20:30

The report also says:

“The Department cannot explain how the contractor's profits reflect the limited risk that it bears. Moreover, in a new contract for the Personal Independence Payment, Atos Healthcare is sub-contracting to the National Health Service for part of its work, suggesting it is transferring risk back to the public sector. The Department should explain how the profitability of the contract reflects the actual transfer of risk for both the Work Capability Assessment and the Personal Independence Payment medical assessment contracts”.

Perhaps today the Government would care to give an answer to the Public Accounts Committee. They should certainly not expect us to proceed with these regulations until those questions, and others to which I want to turn, are answered.

During the exchanges on 24 January, the Minister admitted that the consultation process had been inadequate. That was very straightforward and honest of him, and I thank him for the subsequent decision on removing the four trigger words. Their retention in the regulations at least gives people the opportunity to go to appeals and tribunals. However, he will know that despite his assurance that the change from 50 metres to 20 metres will have little or no impact on the number of people qualifying, disabled people have not unreasonably asked: “Why change it, then?”. The Minister promised to consult more widely before asking us to debate these regulations today. I wonder whether, following that further consultation, he can tell us which disabled people’s organisations support that change.

On my reading of the regulations, the reduction from 50 metres to 20 metres will still have an adverse effect. For instance, if a person can walk 20 metres “reliably”, et cetera, but starts to struggle at 30 metres, they will not qualify for the enhanced mobility component of PIP under the moving around activity, as they would be deemed able to walk more than 20 metres “reliably”, et cetera. The Government have admitted that:

“We do accept that we have not previously consulted on a 20 metres measure—and we did not receive suggestions that we include one. However, we have consulted extensively on the assessment proposals and received very strong feedback that the ‘Moving around’ activity was unclear. Our changes were made as a direct result of these concerns”.

Having asked disability rights groups, they remain vexed that: first, there was no consultation on 20 metres; secondly, consultation on PIP assessment criteria did not clearly indicate the intention to use a distance of less than 50 metres, which was only implied in the case studies and insufficiently clearly to demonstrate proper consultation on a lower distance; thirdly, 20 metres is a massive reduction from the 50-metre distance established through DLA case law as proxy for being virtually unable to walk; fourthly, none of those responding to the consultation suggested 20 metres and only one mentioned a limit of lower than 50 metres, which has been referred to; fifthly, there is no research or evidence basis for 20 metres; and, sixthly, the 50-metre distance is embedded in guidance that was referred to earlier by the noble Lord, Lord McKenzie, in the Department for Transport’s inclusive mobility guidelines.

I have also seen a barrister’s opinion, which says that,

“it is arguable that the secretary of state has acted unlawfully by adopting eligibility criteria which are fundamentally different from the proposed criteria set out in the consultation process”.

Only today, I received an anxious e-mail about the possibility that the 20-metre distance will be seen by assessors as relating only to indoor mobility. I hope that the Minister will at least be able to lay that one to rest this evening.

Let me also refer to some case studies that were used by the department in its consultation and to the response that they received from Jane Young of We Are Spartacus. At a meeting with an official in April 2012, Ms Young challenged him on the apparent discrepancy between the descriptors and the case studies and was told that the case studies were provided “to make people think”. She responded that they merely served to frighten people and she now adds,

“it’s now clear our fears were entirely justified. They never actually meant 50 metres … and used the phrase ‘up to’ to ensure they could implement their intention to use a shorter distance in practice”.

I find it surprising that the Government can say with great confidence that their analysis is that the number of individuals who receive a score of 12 points or more from activity 12 to be broadly the same, regardless of this change, while saying simultaneously that they are unable to say how many people will be affected by the changes overall.

In conclusion, the financial consequences are very clear and the social consequences will not be far behind. People with significant mobility difficulties will become socially isolated. That in turn will lead to poorer health and well-being, a point made by the noble Baroness, Lady Browning, in her excellent speech. There will therefore be greater demands on the National Health Service and other public services. Mobility is often the only antidote to toxic loneliness, which in many ways is the scourge of the 21st century.

I end by quoting the Joint Committee on Human Rights, which published a report following its inquiry into disabled people’s right to independent living. In paragraph 110, it expressed concern,

“that the UNCRPD, and Article 19 in particular, does not appear to have played a central role in the development of policy. Inadequate attention has been paid to the impact of relevant policy on the implementation of the UNCRPD, in contravention of Article 4(1) and 4(3)”.

It went on to make other conclusions in paragraphs 146 and 161, which I will not quote this evening.

Before passing these regulations, the Government should share with the House what legal advice they have been given on the susceptibility of this aspect of the regulations to judicial review. They should detail the staff and resources that will be involved in dealing with the many appeals that will be generated. They should also commission a cumulative impact assessment that would include the impact of welfare reform changes on other services, carers and Motability scheme users. Above all, they should not expect us to vote these regulations through without giving us clear answers about the numbers of people who will be affected and the manner in which Motability vehicles will be sequestrated and repatriated from the owners who are deemed no longer to qualify. I know that I am not alone in believing that these wholly underreported and ill-conceived proposals will come to define the Government’s approach to welfare reform, in a way that will undermine those changes that have commanded much more broad-based support.

[Baroness Howe of Idlicote]

My Lords, it is a great pleasure to follow the powerful speech of my noble friend Lord Alton. I share many of the concerns that have been raised in the amendment proposed by the noble Lord, Lord McKenzie.

I want to say a few words about the impact of PIP on deaf people. I gather that deaf people who are unable to understand verbal information without communication support will not be entitled to PIP. Support will be restricted to those who are unable to understand “basic” information. “Complex” information appears to be broadly defined as anything longer than a sentence. As this definition could apply to everyday conversation, I am aware that some people find the term “complex” in this context to be somewhat disingenuous. I hope that the Minister will set out exactly what this is likely to mean in practice.

Fears have been expressed to me that many deaf people who need communication support will find themselves without money to pay for it under these changes. If accurate, that does not seem to be consistent with promoting personal independence. We have heard much about how the Government wish to target resources, rightly, at those who face the greatest barriers. I feel sure that it is not the Minister’s view that deaf people are not among those facing the greatest barriers or that deaf people do not need or deserve support to be independent. This is another area where I hope he will reassure me, and others who apparently feel this, on this point.

I am particularly concerned about the impact of these changes on young deaf people who have just turned 16. Many of these young people will barely have begun their transition to adulthood. How will the department ensure that such young people are managed sensitively when they apply for PIP? How will they be supported if they are not eligible for this new benefit?

I ask the Minister to outline what plans there are, if any, to reform the disability living allowance for children. I understand that this may well be reviewed in future. We know that some 600,000 disabled adults over 16 will see their DLA cut. There is considerable anxiety that a similar proportion of disabled children will also see cuts once the new review gets under way. The consequences of that would be severe.

I, too, have greatly admired the Minister’s dedication to his increasingly difficult and complex brief, not least in working out the details of these regulations. I much admire him for that and know him to be a fair-minded individual as well, with a great deal of knowledge in this area. I hope that I can look forward to a sympathetic, just and kind response.

[Lord German]

My Lords, I would like to raise the issue of sufferers of Crohn’s disease and colitis, who may not have been able to put their case as strongly as they might have in this whole arena of the development of PIP. There are around 240,000 people in the UK who are sufferers of Crohn’s disease or ulcerative colitis—collectively known, of course, as inflammatory bowel disease. They are lifelong conditions that most commonly present first in the teens or early 20s, and the intestines become swollen, ulcerated and inflamed.

The concern that these sufferers have is around Activity 5 in the descriptor list, which is about managing toilet needs or incontinence. The “continence” descriptor is limited. It fails to take into account the impact of the frequency and urgency experienced 24 hours a day by people living with conditions such as inflammatory bowel disease, as well as difficulties in reaching a toilet, both at home and outside the home, cleaning up after using the toilet or an episode of incontinence. The descriptor is phrased around the need for prompting or assistance to manage continence. Although this reflects the barriers imposed by people who have learning disabilities and musculoskeletal difficulties, it does not account for the severe difficulties faced by some people with inflammatory bowel disease in relation to controlling their bowels, who are otherwise physically well.

People with inflammatory bowel disease may experience additional costs associated with buying food and drink, which are currently ignored by the descriptor. These may include the need to buy expensive, nutrient-rich foods to address deficiencies, the need to modify their diet to avoid other foods or additives or the need for frequent and urgent access to a toilet, while the fatigue associated with IBD may require a taxi to and from the shops or the use of online shopping facilities. Consideration is not currently given to the additional cost of utilities for people who may be forced, because of this disability, to live more frequently within their home, and laundry or high utility costs are often incurred by people with IBD who have to wash or replace their clothes more frequently due to soiling or extreme fluctuations in weight. Can my noble friend the Minister explain how IBD sufferers are currently handled within DLA and whether the descriptor as it now stands can be looked at again to reflect the needs of sufferers of this not-well-understood disease?

20:45

[Lord Hardie]

In rising to speak in support of the amendment moved by the noble Lord, Lord McKenzie of Luton, I have to declare an interest as honorary president of Capability Scotland. Capability Scotland is a charity which provides services, education and accommodation for people with disabilities, both mental and physical, of varying degrees of complexity and severity. It provides services at more than 25 locations in Scotland for 1,000 people who are afflicted in one way or another. It is in that capacity that I became aware of these regulations and of the concerns of people who use the services of Capability Scotland. Those concerns have already been alluded to by the noble Lords, Lord McKenzie of Luton and Lord Alton of Liverpool, the noble Baroness, Lady Grey-Thompson, and other noble Lords in eloquent speeches highlighting the difficulties surrounding these regulations. I cannot improve upon the points they made. I simply look forward to the Minister’s response to the detailed questions posed by noble Lords who were seeking the justification for the reduction of the distance from 50 metres to 20 metres.

A Question on the personal independence payment was asked in the House on 24 January. In reply to an intervention by the noble Baroness, Lady Grey-Thompson, about the 20-metre point, the Minister referred, at col. 1181 of the Official Report, to the various groups mentioned by the noble Lord, Lord McKenzie. I was surprised to see them mentioned because the implication I took from it, wrongly, was that they had suggested that the distance of 20 metres was appropriate.

The other thing I noted from the Minister’s reply was that there is no effective change in the number of people receiving higher rate mobility allowance because of this change. I challenge that statement. I am sure that the Minister did not intentionally mislead the House in making it, but I shall cite an example from Capability Scotland’s experience. A 41-year-old lady who suffers from cerebral palsy is in employment in the National Health Service and currently receives higher rate DLA at £54.05 per week. She uses that to cover the cost of her Motability vehicle, which is essential for her to get from home to work. She can walk with a frame a distance slightly in excess of 20 metres, but she cannot walk 50 metres, and that is why she gets her current benefit. If this regulation passes with the 20-metre limit, she will receive the basic mobility award, not the enhanced mobility award. The effect of that is that she will get £21 a week, losing £33.05 a week, or £132.20 a month. She will not have enough money to replace her car or to take taxis to work, and she will be unable to remain in employment. How is that compatible with the Government’s policy of encouraging people back to work and encouraging people with disabilities into work? This lady has done that, and yet because of this regulation, she will lose that independence.

I do not share the optimism of the noble Baroness, Lady Thomas of Winchester, about the flexibility of the regulations. Regulation 6 sets out the structure and one then has to look at the schedule for the assessment. When one does so, one has the various activities: “Planning and following journeys”, and then “Moving around”. There is then the detail of what is required of “Moving around”. If you:

“Can stand and then move more than 200 metres, either aided or unaided”,

you get no points. If you:

“Can stand and then move more than 50 metres but no more than 200 metres, either aided or unaided”,

you get four points, and so on. These points are maximums. It would not be possible for an assessor to give any more than the points in the table. Therefore, in the case that I have cited, the lady in question will qualify for 10 points. She needs 12, but unless she can get points from “Planning and following journeys”, she will never get 12 points. She is perfectly capable of planning and managing her journeys. I am confident that she is not the only person in this category. Lots of people will lose out because of this change. They deserve an answer to the question: why has this change been introduced? Why has it been reduced to 20 metres? Who suggested it? What is the scientific basis for it? What consultation was there? Did any disability organisation go along with 20 metres? I think not, but I look forward to the Minister’s response.

Another concern I have is that the regulations do not make provision for people who need occasional supervision to prevent them being a danger to themselves. I again cite as an example someone who gets support from the organisation of which I am proud to be honorary president. A 36 year-old man has had schizophrenia for nine years. He receives a low-rate care component of DLA because he has been assessed as requiring occasional supervision to prevent him being a danger to himself. He uses his payment of £20.55 a week for his sister-in-law’s bus fares to and from his home on a daily basis. Seven days a week, she travels by bus there and back to check on him. To give him some structure in his life, she checks that he is up in the morning, and that everything is all right. She knows instinctively if he is not well, and then alerts the mental health team. Take that allowance away, and she will not be able to visit as regularly as she does and the tell-tale signs of his increasing illness will be missed. He may then be a danger to himself and to others.

I am very concerned about these regulations. I hope that the Minister will give me some reassurance about the two matters that I have raised.

[Lord Freud]

Once again, I thank noble Lords very much for their thoughtful and moving contributions to this debate. Clearly, as PIP is being introduced as a new benefit, it is right that it is subject to a very high level of scrutiny. I shall try to address as many questions as I can. The noble Lord, Lord McKenzie, asked about case loads and the steady state, which we estimate will be around 2018. Our current estimate is that the percentage getting the top rate of both elements will rise from 16% in DLA to 23% in PIP. As I have said, the actual number goes up as well, although not by a lot, from 354,000 to 357,000. But the number of people who will get the top rate of the daily living component will go up to 674,000 compared to the 539,000 who currently receive DLA.

My noble friend Lady Thomas wanted me to clarify the meaning of “repeatedly”. Currently, it means as often as the activity being assessed is reasonably required to be completed, which makes the point that it will not be on a daily basis necessarily but will depend on the type of activity that we are talking about. The noble Baroness, Lady Grey-Thompson, referred to what might happen to the 20-metre mobility criterion in the future. Clearly, I am absolutely conscious of the strength of feeling around that criterion and I assure the House that we will keep it under very close review both within and outside the independent review process. In the mean time, we have no plans to make any further changes to this criterion.

My noble friend Lady Browning was concerned, as am I, about groups with autistic spectrum disorder. We have worked to ensure that the PIP assessment will take full and fair account of the complex needs that people with autism face. The noble Lord, Lord Touhig, was concerned about the 30-day time period. We believe that that is sufficient time for providers to conclude the process, including gathering evidence where it is needed. Clearly, this is another area that deserves close monitoring.

My noble friend Lady Thomas was interested in how the Government would monitor Atos and Capita. We have set strict recruitment and training criteria for both providers. We will approve only practitioners who reach high standards. We will have random, independently assured quality checks, which we will undertake on a regular basis. Those assessors will be well versed in our case studies and guidance as part of their training.

As regards the carers’ case load and the steady state figure, the noble Baroness, Lady Lister, was concerned that we were using an interim figure for 2015, going to the steady state in 2018. The figure is a reduction of 9,000 claims out of the total number of claims in payment to carers, which is running at around 600,000. I make that 1.5%. The noble Baroness used a rather larger percentage that I did not recognise. Her figures may be on a different basis but we can talk about that privately.

The noble Lord, Lord McKenzie, was concerned about whether there was the right number of people to conduct these assessments. To one extent, by pushing out the timetable, we have taken away some of the potential overlap with the WCA reassessment bulge, but we are not using any of the same health professionals to carry out the PIP assessments, because PIP is being delivered through sub-contractors.

21:00

I will write to the noble Lord and provide some of the numbers on the different lots. I do not have them to hand, but it is hundreds in the different lots and we expect that the face-to-face consultations will take about an hour. As the noble Lord knows, DLA recipients are exempted from the benefits cap and this will also apply to PIP. We do not have an analysis on who might be affected by not getting any benefit at all. The noble Lord asked why, given the concerns, we do not just revert to the 50 metres. We are stuck with the fact that the previous criteria did not work well. They were unclear and would have led to inconsistent outcomes. Twenty metres is not an absolute distance because of the words “repeatedly, safely, and in a timely manner”. Some individuals capable of distances over 20 metres will therefore qualify for the enhanced rate.

The noble Lord, Lord McKenzie, and the noble and learned Lord, Lord Hardie, raised the issue of people not able to go to work any more. This is a point that has certainly resonated with me. We looked at the analysis of this and have not actually seen a negative impact on employment as a result of introducing PIP. We are actively exploring what extra support we can give to disabled people to ensure that they can still get to work. We are looking at whether we can use access to work as that particular vehicle. We want to ensure that mobility support remains in place during any transition between the Motability scheme and access to work. Our aim would be to ensure that individuals retain the use of their Motability vehicle until their access to work application had been processed. Active work is under way. I am grateful, as always, to the noble Baroness, Lady Hollis, who was quickly on to this point.

The noble Baroness, Lady Lister, asked about carer’s allowance protection. There will be protection for one month if a DLA recipient does not qualify for PIP. The noble Lord, Lord McKenzie, asked whether people losing PIP will have additional costs as a result of their disability. A primary objective of PIP is to focus our support on those who need it most. It is hard to make direct comparisons. My noble friend Lady Thomas asked about the role of JCP decision-makers. They take the final decision and they use all the available evidence, including the report from Atos or Capita. We will undertake to lay further amending regulations if findings from the independent review indicate that we need them.

The noble Lord, Lord Alton, talked about the PAC’s issues with regard to Atos Healthcare. We take a robust approach to managing the contract with Atos and believe that the application of service credits has been handled appropriately. Where Atos has been responsible for underperformance, recovery plans have been put in place and redress has been sought in the form of these service contracts. We have a challenging target in this regard in that 95% must reach the top standards but we are looking at whether we should tighten this standard further. We are puzzled by the PAC’s point about whether profits reflect the risk that is borne. An analysis was not provided of how the profit levels related to the risk levels so we are baffled as to how anyone would have reached the conclusion that the PAC did.

My noble friend Lord German referred to people with Crohn’s disease and managing toilet needs. It is important to note that the managing toilet needs activity is not the only activity under which claimants with Crohn’s or colitis could receive points. If an individual who suffers from those illnesses suffers, for instance, fatigue to the extent that he or she requires assistance to get in or out of the bath or shower, he or she would be awarded appropriate points under the washing and bathing activity.

The noble Lord, Lord Alton, spoke of the level of consultation on 20 metres. As I said, we did not specifically consult on the change to include 20 metres. However, we have consulted extremely extensively on PIP and I hope that we have been absolutely clear about it today. Indeed, the Secondary Legislation Scrutiny Committee praised the DWP for its extensive consultation on PIP criteria. It is one of the most heavily consulted on provisions that I can recall, although others may have a better memory.

The noble Baroness, Lady Howe, asked about deafness. The assessment includes an activity on the ability to communicate verbally. That is a significant improvement on the DLA, which fails to take into account the barriers faced by the deaf and hearing impaired people. Individuals needing communications support to be able to understand basic verbal information will receive eight points, which in itself brings entitlement to the standard rate of the component. We currently have no plans for reform for the under-16s.

I turn to the final two points made by the noble Lord, Lord Alton. On legal advice, I clearly cannot refer to anything that lawyers tell me. However, we are aware of obligations under the UN convention and we believe that we comply with them. I assure him that, as regards the mobility criteria, we are looking specifically at outdoor movement—he was concerned that we were looking only at indoor movement—including how someone deals with uneven surfaces and steps, as that movement is clearly more difficult than indoor movement.

We have developed these reforms in a principled and considered fashion by seeking the views of disabled people and their organisations at every step. We have carried out four major consultations and have listened and acted on each of them. We also know that these regulations are not the end of the journey; they are the start. We will be monitoring and evaluating their operation to ensure that they are working as we intend, and to identify whether there are improvements that we need to make. Key to this are the independent reviews that noble Lords rightly insisted we build into our plans. Given all that, I urge noble Lords to support these important regulations.

[Lord Alton of Liverpool]

Before the Minister sits down, would he be kind enough to answer the question that my noble friend Lady Grey-Thompson and I put to him about the numbers of people who will be affected by these regulations? Before asking the House to agree them, it is surely not unreasonable for us again to put the question to him, not for the first time, of whether he disputes the figure of more than 40%—perhaps as many as 200 people in every parliamentary constituency in this country—standing to have their vehicles repatriated or sequestrated. Does the noble Lord agree with those figures? If he disputes them, what figure would he give the House?

[Lord Freud]

My Lords, we know how many people will get the higher mobility component, a figure that will clearly be fewer under PIP than under DLA. I have provided those figures but, just for the record, the figure of roughly 1 million people on the DLA component in a steady state will reduce to roughly 600,000. That is the decline. What we do not have, and therefore find it difficult to comment on, is a read-across from how many people are on the full mobility allowance to those who have a Motability contract, because that is a private matter. Motability runs its operation separately from us; it is a charitable operation. It is therefore impossible for us or anyone to calculate a read-across of the percentage of people on Motability contracts who will be affected.

[Baroness Hollis of Heigham]

My Lords, perhaps I may pursue the Minister on that point about statistics. When we were discussing this elsewhere, he agreed that actually 200,000 people who currently get the lower rate because of problems of supervision, psychological issues associated with outside movement and so on would now get the enhanced rate. Therefore, the number of those who are losing the allowance on the grounds of physical disability only is not 400,000 but 600,000.

[Lord Freud]

Yes, my Lords, there is some churn. By the time we reach 2018, we will be out beyond the major review process that we will have. The figures are therefore quite tentative for that stage. I am providing them to your Lordships but they are indicative. Clearly, there will be some churn, but the point is that we are trying to direct PIP at the people who really need it.

In closing, it is simply not possible for me to confirm, deny or reach any figures in answer to the noble Lord’s question on how many cars will go.

21:15

[Lord McKenzie of Luton]

My Lords, I thank all noble Lords who have contributed to this debate, and I thank the Minister for his responses. In relation to the question of the noble Lord, Lord Alton, I accept that the Minister cannot be very specific, but the answer must be that at least a significant number of people will miss out on their Motability arrangements as a result of these regulations.

Perhaps I may first address the process of holding this important debate at this hour, with little prospect of a vote. We probably bear some responsibility for not pressing hard enough through the usual channels to make sure that this debate was held on a separate day or was ordered in a different way. I should just say that further regulations will at least give us another chance for a debate around the issue. We would not want to defeat them because we would want them, but the House would be able to express its opinion, which I hope would be some comfort to all those people out there who are directly affected by the regulations.

We have heard some very powerful themes. On the importance of recognising the right of disabled people to live independently, we heard from the noble Baronesses, Lady Browning and Lady Grey-Thompson, the noble Lord, Lord Alton, and others. The noble Lords, Lord Touhig and Lord Alton, mentioned the risks around delivery. We understand that Atos will use subcontractors. I am not sure whether we should feel more comfortable; we will have to see. My noble friend raised an issue about a 30-day period and that was deemed to be enough. I am still struggling to see how long, on average, it is expected that a health professional will have to review every case. Some of the experience of the WCA and Atos is that the time spent is far too short and that is why we have problems.

We heard very directly from the noble and learned Lord, Lord Hardie, what it will mean to someone to lose their DLA and what it will mean in terms of their employment. I do not think we had an answer from the Minister to the question about the range of people likely to be affected by that. My noble friend Lady Lister asked about the number of carers. I think she posed a question about the assessment at 2018, when the reassessment process will be complete, and at 2015. The Minister is nodding that he did, in which case I apologise to him. We have had some specific questions about colons and colitis. We have also heard about the impact of all this on deaf people.

At the end of the day, there is no doubt that major concerns are articulated in relation to the 20-metre and 50-metre proposals. I remain confused. The noble Baroness, Lady Thomas, was comforted and thought that the 20-metre proposal was an extra; and that if you could not walk 20 metres you were assured of the enhanced rate and that did not preclude you from getting the enhanced rate if you could not walk 50 metres. I am struggling to see the difference. If the number of people affected by the 20-metre/50-metre proposals are going to be broadly the same under the existing arrangements, why is that? What is the purpose of the 20-metre rule? I am not just talking about the process by which that has come about, but why is it there and what difference does it make?

If the noble Lord is saying that the current 50-metre rule is creating an inconsistency because some people who are not able to manage 50 metres are getting the higher rate when perhaps they should not, we need to understand that a bit better. That seems to be the implication from what the noble Lord is saying. Unless there is clarity on that issue, a climate of fear will persist among many disabled people about the consequence of these regulations for them, their ability to work, and their ability to live independently.

Given the hour, I have no option but to withdraw the amendment. We need to return to this matter and have a fuller, more complete debate. The House needs a chance to express opinions on these regulations and what they mean for disabled people.

Amendment to the Motion withdrawn.

Motion agreed.

Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations 2013

Wednesday 13th February 2013 Lords Chamber

Motion to Approve

21:18

Moved by

[Lord Freud]

That the draft regulations laid before the House on 10 December 2012 be approved.

Relevant documents: 15th Report from the Joint Committee on Statutory Instruments, 24th Report from the Secondary Legislation Scrutiny Committee.

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

My Lords, these regulations were laid before the House on 13 December. I confirm to the House that these provisions are compatible with the European Convention on Human Rights.

The decisions and appeals regulations deal with provisions that set out the framework for decision-making in universal credit, personal independence payment and contributory employment support allowance and jobseeker’s allowance. The existing decisions and appeals regulations are tried and tested and are considered still fit for purpose, even in the “new world” of welfare reform. For UC and PIP to work as we intend, both technically and in terms of protecting claimants’ rights and welfare, the benefits require a strong underpinning both at the initial decision-making stage and where decisions are disputed. The regulations we are considering provide just that.

I will focus on those issues that I believe will be of most interest to noble Lords because they are both new and of significance. The first relates to mandatory reconsideration, provided for in Section 102 of the Welfare Reform Act 2012. Currently, a claimant can ask for a decision to be reconsidered by a decision-maker, and this process may result in a revised decision. In practice, however, many people do not do so and instead make an appeal from the outset. This is more costly for the taxpayer, is time-consuming, stressful for claimants and their families, and, for a significant number of appellants—some 40% of all appellants are successful—unnecessary. I say this because this success is on the back of new evidence presented at the tribunal.

We need a process that enables this evidence to be seen or heard by the decision-maker at the earliest opportunity. It is accepted that this will not mean that all decisions will be changed and appeals will be unnecessary, but we should at least have a process that allows this to happen. Mandatory reconsideration does just that. It will mean that applying for a revision will become a necessary step in the process, before claimants decide if they still wish to appeal.

Importantly, another DWP decision-maker will review the original decision, requesting extra information or evidence as required via a telephone discussion. If appropriate, they will then correct the decision. When this happens, there will be no need for an appeal—an outcome that will be better for the individual and better for the department. Claimants will of course be able to appeal to the tribunal if they still disagree with the decision, which will be set out in a letter detailing the outcome of the reconsideration and the reasons for it. We hope that because of the robust nature of the reconsideration and the improved communication that our reforms will result in, some claimants will decide that they do not need to pursue an appeal.

We ran a formal 12-week consultation on the proposals between February and May 2012, and published the Government’s response in September 2012. We received 154 responses, which included a range of suggestions on how we could continue to improve decision-making across all benefits. A number of respondents suggested that there should be a time limit on the reconsideration process. As set out in the Government’s response, we are not making any statutory provision for this. Some cases are more complex and require additional time—particularly, for example, where extra medical evidence needs to be sought. However, we recognise the concern here and are considering the scope for internal targets. It is a balancing act that we must get right. We will monitor developments closely and make adjustments accordingly.

I will mention another change linked to the mandatory reconsideration initiative. It will see all appeals being made directly to HMCTS and not, as now, to this department. The change brings the DWP in line with the appeals process for other departments. It is a positive move as it will allow HMCTS to book hearing dates much more quickly than is possible currently.

I turn now to the payment of benefit pending reconsideration and appeal. Noble Lords should be aware that there is no change to the current policy. Under existing provisions, if someone is refused benefit and requests a revision of that decision, benefit will not be paid pending the consideration of that request. It will be the same for mandatory reconsideration. Again, there is no change in relation to appeals. Under existing provisions, if someone appeals a benefit—save for ESA, which I will come to—no benefit is paid pending the appeal being heard. This must be right. It would be perverse to pay benefit in circumstances where the Secretary of State had established that there was no entitlement to it. As a principle, this will not be changed by the welfare reforms.

I turn now to ESA. At the moment, if someone appeals a refusal of ESA, it can continue to be paid pending the appeal being heard; this is not changing. What is changing is that there can be no appeal until there has been a mandatory reconsideration. So there will be a gap in payment. In that period—and I repeat that applications will be dealt with quickly so that this is kept to a minimum—the claimant could claim jobseeker’s allowance or universal credit. Alternative sources of funds are available. Of course, he or she may choose to wait for the outcome of the application and then, if necessary, appeal and be paid ESA at that point.

Another important policy change in these regulations relates to the payment of universal credit being made on a monthly basis. Reflecting this monthly payment, the effective date rule for change of circumstances will follow a whole-month approach—that is, that a change will be effective from the start of the monthly assessment period in which it occurs. Claimants will be expected to report any changes immediately. This will be made clear in their claimant commitment and in the decision notifications that they receive. Any change that is advantageous to the claimant must be reported within the assessment period in which the change occurred. Where the change is reported late—for instance, if the change occurred at the end of an assessment period or if there were special circumstances that caused the delay—our guidance and regulations on special circumstances will allow the decision-maker discretion to treat the late report as being in time. However, if the change of circumstances is reported late and does not meet the guidelines for accepting a late application, the change will only be applied from the beginning of the assessment period in which it was reported. This policy will ensure that the reporting of changes of circumstances is done in good time, that there is no incentive to delay reporting, and that the monthly universal credit award accurately reflects the claimant’s needs for the month ahead.

One area that I know will interest noble Lords is the issuing to claimants of decision notices, which have been developed taking on board claimant insight and stakeholder feedback. The decision notice will clearly set out a claimant’s monthly award and break down how the award has been calculated. In the long run and in the majority of cases, we intend that claimants should be notified of decisions relating to their universal credit award through the online channel.

I turn now to the guidance being drafted to support these and other regulations. I know that noble Lords have concerns about this and it was raised by the Secondary Legislation Scrutiny Committee. Noble Lords will be pleased to learn that the guidance has been placed in the Library—indeed, I am sure that many will have read the guidance. In relation to these regulations, guidance on revising decisions at any time and on the handling of late notification of a change of circumstances is available.

Finally, it should be noted that these regulations were referred to the Social Security Advisory Committee, which decided not to refer them for formal consultation but did invite comments informally. The comments received related to the time limit for mandatory reconsideration and the whole-month approach, both of which I have already covered. I commend the regulations to the House and ask noble Lords for their approval. I beg to move.

[Lord Bach]

My Lords, I thank the Minister for moving these regulations. This is clearly an important day for the future of our social security system, and the House has heard why so many of us believe this to be a day of shame for our country and its reputation as a civilised and just place to live and work.

I rise, on this particular regulation, certainly as no expert in the provision of the regulations that have gone before but as someone who has an interest, as I hope we all have, in ensuring that everyone has equal rights before the law—in other words, some real access to justice. In the Explanatory Memorandum to the regulations, paragraph 7.1 states:

“The Department for Work and Pensions … is introducing a new set of Decisions and Appeals Regulations to ensure that the decision-making and appeals framework which currently applies to all social security benefits applies to the new benefits introduced by the 2012 Act”.

No doubt the intent behind the regulations—it is a virtuous intent, at least in theory—is that for those wishing to challenge or appeal a decision there is a procedure to go through, as there always has been.

21:30

So far, so good, but something very big is missing that was not missing when the 1999 decisions and appeals regulations were operated in practice. It is like the elephant in the room; we do not discuss it, but it is there. Has the Minister spotted it? Have his officials spotted it? Has the Secretary of State spotted what I am talking about? The enormous difference between the operation of previous appeals regulations and the ones before us is this. For those few with enough money to pay to appeal or challenge decisions, the position has not changed very much, if at all. They will be able to pay for legal advice and that advice will tell them whether they have a case or not. However, after 1 April, for those who do not have the means to pay—the vast majority, I would suggest, including many disabled people—where will they get the legal advice they need? They can get it now, but they will not be able to get it after 1 April. How will they receive advice on whether to start or not to start an appeal process? Who will advise them on the intricacies of the social security system?

I am sure that it has not escaped the Minister, his fellow Ministers in the department or indeed the department itself, that legal aid for welfare benefit advice will be abolished. However difficult the case, however much it may rely on points of law, there will be no legal aid either before or at a First-tier Tribunal, let alone an application to the Secretary of State for reconsideration. I would ask this question of the Minister: does he think that that is fair or that it represents a just system of reconsideration and appeals? I hope that he will not suggest in his reply that somehow welfare benefit law is so easy and unlegal that legal advice is never justified. He knows better than that, as does the House. Nor, I hope, will he use the argument that it will save some precious public money. Everyone agrees that abolishing social welfare law will cost the state, and particularly his department, much more money when early advice is not available. People’s legal problems, whether they are to do with welfare benefits, debts or employment, will get worse until one day, of course, the state will have to pick up the pieces from the broken lives that follow. It will be his department, not the Ministry of Justice, which has to pick up the pieces.

The Minister has a reputation for being considerate and caring, so I shall ask him the following questions which I will be grateful for a response to, however late it is. First, how can there be an acceptable decisions and appeals system when a large number of those affected will not be able to receive legal advice? Secondly, does it not follow that many hopeless appeals will be begun because no sensible advice will have been given; or alternatively, that proper, winning appeals will never be commenced? Thirdly—I hope that the Minister agrees with this—does it not make a farce of our reputation as a country with equal access to justice as a major part of our legal system that no such equal access to justice is available to millions of our fellow citizens who are in receipt of social security in one form or another?

I used to think it was just ignorance that had led Her Majesty’s Government to abolish legal aid in welfare benefit cases. Now I am forced to the view, as I think are many fair-minded people from outside, that it is too much of a coincidence that these legal aid cuts come at exactly the same time as radical welfare reform. These things are connected—it must be a deliberate government policy to bring in radical and damaging welfare reforms at the same time as making it impossible for the vast majority to appeal against the decisions that affect their daily lives. I feel strongly about this, that it is a disgrace and a scandal and that it is something that has not been talked about enough. Not only is there the blow for people of losing benefits—if that is what happens to them—or of having their benefit reassessed so they do not know whether it is right or not; they have the added blow of not being able to go and get simple, quality and cheap legal advice to advise them whether they should ask for a reconsideration or for an appeal, which is not something they are qualified to do themselves. I very much hope that the House agrees with me and I look forward to the Minister’s reply.

[Baroness Lister of Burtersett]

My Lords, I want to focus on monthly assessment and the treatment of changes of circumstances under the whole-month approach adopted for universal credit. First, however, I will take a step backwards to our earlier debates during the passage of the Bill, when some of us raised our grave concerns about the implications of the move to monthly payments. These concerns remain. Indeed, they have been heightened as a consequence of research published subsequently. Given the late hour, I will spare noble Lords the details, but every piece of research reinforces our argument that we are not simply talking about a small, exceptional group of people with budgeting difficulties, which appears to be the premise underlying the guidance on personal budgeting that we have been sent.

This is a systemic issue, born of the difficulty of budgeting on a low income. I still do not believe that it is a problem that can be solved with an elaborate panoply of exceptions to protect so-called vulnerable groups. That has in effect been recognised by the Northern Ireland Assembly ad hoc committee which recently recommended that claimants should have the right to opt for bimonthly payments in order to minimise the potential adverse impact on women and children. We will return to this issue when we debate the claims and payments regulations—I am sure the Minister cannot wait—but given that guidance has been circulated, I would like to ask the Minister two questions now.

First, what are the department’s working assumptions about the number and proportion of recipients who will require personal budgeting support, both generally and specifically with regard to monthly payments? Secondly, what resources will be made available to the external organisations which will be expected to deliver money advice, according to the guidance, and what discussions has the department had with those organisations about their capacity to provide such advice at a time when the advice sector is under considerable strain?

Turning back to monthly assessment and the whole-month approach to treatment of changes of circumstances, I start with a mea culpa. When we debated monthly payments, I argued that we could separate the question from that of monthly assessment. However, I think I was wrong. As the Women’s Budget Group—I declare an interest as a member—observed in its evidence to the Work and Pensions Committee, the implications of monthly assessment were only,

“fully realised on publication of the Explanatory Memorandum for the Social Security Advisory Committee about the draft regulations”.

I pay tribute to the tenacity of Fran Bennett of the Women’s Budget Group in pursuing this issue. I have decided that I am a bear of little brain when it comes to understanding it—I hope that recipients manage better than I do—and therefore I will be drawing heavily on what she has written on the subject.

What now strikes me, reading what has been said about this by the department, is the extent to which monthly payment, motivated by the desire to change behaviour to monthly budgeting, is the driver behind monthly assessment. In other words, the two issues are in fact closely entwined. In the same way that I argued during the Bill’s passage that monthly payments risked undermining universal credit as a consequence of the Government taking what the Social Market Foundation calls a “sink or swim” approach, so I fear now its underpinning by monthly assessment could do the same, not least because it has limited the options for dealing with changes of circumstances and with more frequent payments.

It seems that the key to understanding the whole-month approach to a change of circumstances is that a whole month’s entitlement will depend on a recipient’s situation on one particular day just because it happens to fall at the end of the assessment period. If a baby is born at the end of the month, the extra benefit will be paid for the whole month, which of course is to the recipient’s advantage. But if a teenage child turns 18 and leaves home towards the end of the month, the universal credit recipient will lose a whole month’s credit for that young person even though she had been feeding her throughout the month. This strikes me as somewhat arbitrary, as I suspect it will to recipients as well.

I acknowledge that this is how the main out-of-work legacy benefits—ESA, JSA and IS—operate already but they do so on a weekly rather than monthly basis, which is totally different. Moreover, these legacy benefits typically represented only part of a recipient’s income as they would also be receiving, for example, housing benefit and child tax credit, whereas with universal credit nearly all their benefit eggs are in one basket, with the exception of council tax support and, thankfully, child benefit.

This approach to changes of circumstances also seems to be out of tune with all the talk about universal credit being more responsive to a recipient’s immediate circumstances. In fact, it is going to be less responsive than income support because instead of following changes of circumstances week by week, it does so only month by month. The Explanatory Memorandum states:

“This whole month approach means that Universal Credit payments will reflect the claimant’s circumstances at the point of payment, and so leave them better able to manage from pay day to pay day”.

But it also means that claimants may not reflect the circumstances that pertained at the time the payment relates to. I would be grateful if the Minister could explain to this bear of little brain how exactly it will leave claimants better able to manage from monthly payday to monthly payday.

SSAC has drawn attention to the particular implications for women who have fled violence. In its response to the draft regulations it observes that:

“Given the unpredictable nature of each potential crisis, the Universal Credit rules about changes of circumstances taking effect from the start of the monthly assessment period do not fit well. The draft regulations mean that an existing claimant arriving and leaving a refuge within their monthly assessment period would be entitled only to their regular monthly payment of benefit. The person or organisation providing the accommodation would receive nothing. Respondents were concerned that the network of support currently made available to those fleeing violence would be weakened. The Committee recommends that the Government gives further consideration to the issues that have been raised”.

Of course, since the SSAC report, the Government have announced that supported housing costs would be administered separately from universal credit and would be disregarded in the calculation of the benefit cap. Although we very much welcomed this concession when it was announced, I have subsequently learned that domestic violence organisations are concerned that the definition of supported housing in the regulations will leave many survivors of domestic violence within universal credit and so subject to the rigidities of monthly assessment.

SSAC also recommended that Government engage with stakeholders on the issue of monthly assessment. Can the Minister explain what engagement has taken place, and will he undertake to think again about how supported housing is defined in order to ensure that all refuges are covered? The Government’s recent response to the Work and Pensions Select Committee report on universal credit stated that there would be a process of consultation with stakeholders later this year on the long-term future of supported housing costs, which will affect refuge services. Can the Minister say if this consultation will include how supported housing is defined in order to ensure that all refuges are covered?

As the Women’s Budget Group pointed out in its evidence to the Work and Pensions Select Committee, the whole-month approach to changes in circumstances may reduce administrative complexity for the department and—the Government no doubt hope—the adverse publicity associated with the underpayment and overpayment of tax credits in the past. But in reality underpayments and overpayments in relation to actual circumstances will still exist. They will simply be hidden by the whole-month approach and the impact will be borne by the recipient—for good or ill.

Clearly the department now thinks monthly and thus in its eyes changes of circumstances during a month simply do not exist, but I am not convinced that that is how recipients will think. I think they will be confused and uncertain as to how what they do affects their universal credit entitlement, and will have greater trouble in budgeting. It seems that the Government want to change not only behaviour but how people think about their everyday lives—and that is not so easy.

I would welcome the Minister’s observations on this and seek an assurance that the impact of monthly assessment and the whole-month approach to changes of circumstances will be closely monitored. I received an assurance from his department yesterday that the general evaluation framework covers intra-household issues as well as household-level issues, which is very welcome. I would be grateful if he could confirm that this will include evaluation of the impact of monthly assessment and monthly payment, because I am particularly concerned about the possible impact on mothers as the main day-to-day budgeters who will carry much of the hidden burden of these changes.

21:45

[Lord McKenzie of Luton]

My Lords, I again thank the Minister for introducing the regulations. I wish him well in dealing with those incisive inquiries from my noble friend Lady Lister about the monthly assessment, the monthly payment and supported housing. She gave us a very powerful analysis.

We acknowledge that an updated framework for decisions and appeals that encompasses universal credit, PIP, JSA and ESA is needed. As the Minister will doubtless anticipate, there are two key matters that we will pursue, mirroring those discussed in the other place: mandatory reconsideration and the payment of benefits in the interim. Noble Lords will recall the debates that we had in Committee and on Report on the Welfare Reform Bill on what has ended up as Section 102 of the Act, and a degree of scepticism about why it was necessary to have two powers when a power was already available to decision-makers to revise a decision prior to the determination of appeal. However, we are where are, with two time limits within the system. If a claimant disagrees with a decision, they have one month to ask for a reconsideration. When the result of that is known, they will have one month from the date of the new decision to appeal.

As the Minister has identified, there is no statutory time within which decision-makers are obligated to complete a reconsideration. This is important because it reflects on how long a claimant’s interim benefit position will endure. We therefore register our concerns about the strictness of the time limits imposed on claimants in the current climate.

My noble friend Lord Bach gave a tour de force speech about the current situation, in which legal aid is being denied and advice agencies are being stretched and hit with redundancies and closures. We received last Friday the Universal Credit Local Support Services Framework, with not enough time to peruse it in any detail for today. Perhaps the Minister will tell us whether its envisaged remit will include advice on a decision or a reconsideration. Will the local support services be available to advise and assist on that? Of course, this pressure on advice surgeries is compounded by the raft of changes that we have discussed today and will doubtless continue to discuss, and which are about to enter the system shortly. Can the Minister say something about any discretion that might be available in respect of the time limits imposed by the provision?

It is understood that benefit entitlement pending a reconsideration will be on hold. I think that is what the Minister said: that if someone is seeking a benefit for the first time, they will be left without benefit if and until the claim is settled positively. For those claiming ESA and going through a reconsideration process, this would appear to herald the change. Is it not the case that an ESA claimant will currently be paid at the assessment rate equivalent to the JSA rate pending a reconsideration and appeal? Will the Minister confirm that this will not be the case in the future? The remedy in the short term, as has been suggested, appears to be a claim for JSA in due course where contributory ESA is involved, presumably a claim for universal credit. This appears to be what the Minister still advises. How does that deal with the point that this may require an individual to sign up to a claimant commitment and undertake work for which they are not suited?

Can the Minister please confirm the position for someone in receipt of ESA who, on a reassessment under the WCA, is assessed as being fit for work or subject to all work-related requirements? If someone who is currently on ESA and at risk of being downgraded to universal credit or JSA is subjected to the reconsideration appeal process, what benefit is paid before that appeal is concluded?

These questions touch on the timeliness of the reconsideration process. It is accepted that if a reconsideration and appeal process is successful, any due award will be backdated to the original claim, but that does not help the claimant in the interim. My honourable friend Anne McGuire MP made the point in another place that where high levels of appeals are successful, such as on ESA and DLA, a protracted reconsideration and appeals process will disadvantage claimants, driving them into debt and into the arms of the food banks.

We note that the Government have declined to place time limits on the reconsideration process—the Minister confirmed that tonight—but it seems from their response to the public consultation on mandatory consideration that they will consider making proposals for an interim performance indicator. Perhaps, therefore, I can take the opportunity to repeat some questions posed by my honourable friend Anne McGuire that remain unanswered. What do the Government envisage as the standard length of time for a revision prior to appeal? Will customers be told how long they should expect to wait? What action can be taken if projected timescales are exceeded, and will the department monitor and publish statistics on waiting times for appeal?

My honourable friend also took us back to earlier deliberations in Grand Committee, when the noble Lord, Lord De Mauley, was at the Dispatch Box. In response to an inquiry, he said:

“Alongside implementation of this power, we intend to make further improvements to the reconsideration process, which will include suitable arrangements for monitoring and, where appropriate, improving the speed of the process”.—[Official Report, 23 November 2011; col. GC 456.]

Perhaps we can be told what progress has been made on that.

Finally, I ask a question about the routine publication of appeals data—again going back to our debates on the Welfare Reform Act. At one stage, I think it was envisaged that there would be a cessation of the routine publication of those data. Perhaps the Minister can confirm that that is not the case.

We do not oppose the regulations, but we need to monitor them closely to see that their implementation does not create unfairness.

[Lord Freud]

Again, I thank noble Lords for some very good contributions. This is not the easiest or most digestible set of regulations. They very much replicate the existing decisions and appeals provisions but, just as the welfare reform agenda has provided an opportunity to reduce the complex range of income-related benefits, with the introduction of UC, it has also provided an opportunity to rationalise the rules governing the administration of these new benefits. This consolidated set of regulations does that by ensuring that the rules underpinning decisions and appeal rights are clearer and more accessible, benefiting both claimants and, indeed, the department.

On the detail of mandatory reconsideration, I reassure the noble Lord, Lord McKenzie, in particular, that we will closely monitor the impact on claimants, the quality of decision-making and appeal rates during the early stages of implementation. It is a key change that will improve claimants’ experience of the appeals process if we get it right. We will also monitor appeal volumes more broadly, particularly with the introduction of the new benefits, UC and PIP. We will review and amend the advice for decision-makers guidance as necessary, and if we find that the regulations are at fault there is an option to amend them.

On the point raised by the noble Lord, Lord McKenzie, regarding the time limit, the key issue is that we will be able to handle some cases with extreme speed while others may take more time, particularly where we need to ask for more evidence. I will commit to keeping noble Lords updated on that matter. On reconsiderations, we envisage that the first point of call will be to our staff, but some people may choose to go to an independent advice centre, although we had not been envisaging this as part of the role of the local support service.

[Baroness Hollis of Heigham]

If the Minister will allow me, could he reconsider that last point? I had wondered whether to intervene following my noble friend’s contribution on legal advice. It would be extremely valuable if the local support services, which are there helping people to move from paper forms to online forms for a brand-new benefit structure, et cetera, were able to give claimants the sort of legal or welfare advice steer that they would have got elsewhere in the past. For example, I remember vividly cases in which parents were trying to claim DLA for children under the age of two, which is of course simply not possible. That sort of advice and guidance could very well be served by the local support services and would pay dividends in cash, as well as in buy-in to the whole UC procedure, if the Minister could ensure it.

[Lord Freud]

My Lords, the best I can do is to have a think about it. The issue is the balance of what we are trying to get the local support service, which is a partnership approach, to do. I want to get the balance of that right, and I will take that away and think about it. Clearly, at some basic level there will be that kind of support; it is the extent to which it becomes a more formalised process. However, as I said, I will have a think about that point.

The point about ESA is that there is a long-standing provision for it to continue during an appeal. That will continue, so there is no change there. The only difference from the current arrangements is in this rather short period of reconsideration, during which ESA will not be payable. Once the appeal starts, ESA will go into payment, as it does currently. I hope that I have just nailed that point and that the noble Lord, Lord McKenzie, is not looking puzzled deliberately but understands it.

[Lord McKenzie of Luton]

I think I understood what the Minister said, but if during the process somebody has applied for or been in receipt of ESA and there is a challenge, it will have to go through a mandatory reconsideration process first and then out on to an appeal. Once you get to the appeal, you will get ESA at the assessment rate—I would guess until it is settled; is that right?—which is equivalent to JSA. Is that not a change from the current position, under which you in effect go straight to an appeal, however long or short that reconsideration period is?

[Lord Freud]

Under the current position, there is a voluntary process whereby people can go for reconsideration and the ESA is not payable until the decision is taken to go formally to an appeal. The difference is that we are moving from a voluntary process that some people do to a mandatory process that all people will have to do, and there is a gap. That is where concern has been expressed, and my response to that concern is that we need to keep it under control and look at how long that timing really is. I take that specific point, but on a more general point my understanding is that there was a bit of concern from the noble Lord that there was actually a change in payment from appeal. As I say, that is not happening.

22:00

The noble Baroness, Lady Lister, asked about late reporting. I am always frightened when she claims to be a bear of very little brain because obviously something terrible is going to come at me. Her example was this: you have a baby in the middle of the month, or towards the end of the month—babies come at any time, as the noble Baroness, Lady Hollis, says—and then get paid the extra amount from the beginning of the next month when you have the requirements, looking ahead. Likewise, if the teenager leaves the household, you will have had money for the whole of that period for the teenager at the beginning of the month, but for the next month when the teenager is not there you will not have it.

I hope that the noble Baroness does not come back with something utterly devastating, but I cannot understand why this is a problem for a household. When the household gets the money that is to be spent over the next month, it reflects the position that the household is in when that money is received. That is the objective of whole-month reporting, and it is designed utterly benignly. I can testify to that because I spent a long time going through the rights and wrongs of the way to do it. It is designed to ensure that, as the month starts, the payment reflects the requirements of that household.

[Baroness Hollis of Heigham]

But the payment is in arrears for the previous month.

[Lord Freud]

Yes, the payment reflects what happened in the previous month, but it gives you what you need for the month that you are going to be spending that money in. I will take this debate outside over a cup of—sorry, over a glass of something; I think vodka is appropriate. I will argue this right the way through, because I think it is the most benign way to ensure that people have the appropriate amount of money for each month.

On the point about the advice sector, we are looking at working closely with the advice sector to look at how the existing infrastructure can be used to support claimants with complex needs, and we are looking at new services that we need to develop to ensure that claimants have access to the right support. I have already talked about the multimillion pound support package from the Cabinet Office and the Big Lottery Fund.

I hope that I can offer some reassurance to the noble Baroness, Lady Lister, on the question of supported exempt accommodation. I pulled this area out from the universal credit because I could see that people often came through these accommodations quite rapidly, and it just was not the appropriate way of doing this. We have left that for the time being but with a view to ensuring that there is a sustainable financial regime for this kind of accommodation.

I have to confess to the noble Baroness that I have heard concerns only recently that some of the kinds of accommodation that we would want to support are not within our definition of support-exempt accommodation. I will look at that when we look at the whole thing, and we will consult on it. It is an important issue that we have right up front.

I do not have numbers on payment exceptions. We do not want to set targets for this, but a useful figure to bear in mind in the private-rented sector is that currently about 25% of private-rental claimants have their landlord paid direct. We are trying to get as many people as possible to pay their own landlords.

[Baroness Lister of Burtersett]

I would not expect a target, but there must a working assumption. I am not thinking necessarily about direct payments but about those who are going to find it difficult to deal with monthly payments, which is one of my main concerns. Perhaps the Minister can write to me, because the Government must have some view about whether this is a very small group, a larger group or whatever.

[Lord Freud]

We are not defining this by saying that they are vulnerable people; we are asking how many touch points of support people have. The four groups that have a large number of touch points are people who are homeless or who have mental health problems, addiction problems or learning difficulties. They are the groups about whom I have particular concern about making sure there is support for them. The noble Baroness will have her own figures on how big those groups are. We are working to get them refined. I will be able to provide more information on this as we work our way through. We are doing an enormous amount of work in this area, as noble Lords can see from the piloting we are doing and from how we have built up this network with the local support services. This is an area of great activity.

The noble Lord, Lord Bach, made an impassioned speech. Clearly, legal aid will still be available for appeals to the upper tier on a point of law. In our view, the first tier does not require legal representation because it is not adversarial. We are hoping that one of the things that mandatory reconsideration will do is mean that many applicants do not need to proceed to appeal. We are actively working on getting the right advice services locally.

These reforms are necessary and will not lose sight of the overarching policy drivers, but clearly we will go on listening and learning. I hope that noble Lords leave this debate thinking that the department’s decision-making and appeals structure is robust, fit for purpose and ready for the introduction of UC and PIP.

Motion agreed.

Social Security (Payments on Account of Benefit) Regulations 2013

Wednesday 13th February 2013 Lords Chamber

Motion to Approve

22:09

Moved by

[Lord Freud]

That the draft regulations laid before the House on 10 December 2012 be approved.

Relevant documents: 15th Report from the Joint Committee on Statutory Instruments, 24th Report from the Secondary Legislation Scrutiny Committee.

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

My Lords, I can confirm that, in my view, the statutory instrument is compatible with the European Convention on Human Rights.

These regulations support the powers introduced by Section 101(1) of the Welfare Reform Act 2012 to make payments on account of benefit. Two new types of payment on account are introduced by these regulations. First, short-term advances of benefit for universal credit and legacy benefit claimants will replace interim payments and social fund crisis loan alignment payments from 1 April 2013 for legacy benefits and 29 April for universal credit. Secondly, budgeting advances will replace Social Fund budgeting loans for eligible universal credit claimants from 29 April 2013. Short-term advances will provide an advance of benefit against a new claim or a change of circumstances which significantly increases the amount of the benefit award. Budgeting advances will help finance intermittent or unforeseen expenses, such as essential household items or expenses related to maternity or obtaining or retaining employment. These are advances of a claimant’s benefit. They are not additional money provided through a budget-capped scheme as is the case with the existing Social Fund.

I turn to some of the reasons for these changes. The existing Social Fund has been part of the benefit system since 1988. The fund was designed to help people meet exceptional costs that were difficult to budget for out of mainstream benefits. However, it has not kept pace with wider welfare reform which has led to complex administration. Parts of the scheme are poorly targeted and open to misuse. In future, claimants will have access to financial support through advances of benefit and local provision.

Social Fund reform, of which the introduction of short-term and budgeting advances are a key part, was partly in response to various comments and criticisms of the current Social Fund, including from the National Audit Office, the Public Accounts Committee, the Commons Work and Pensions Select Committee, the Social Fund commissioner, and customer representative and other stakeholder groups. As noble Lords know, crisis loans and community care grants are being abolished from April 2013 as part of the reform of the Social Fund. I know that there has been some interest in the progress being made by local authorities and the devolved Administrations in putting their new arrangements in place.

We know from the detailed work being carried out at a local level by Jobcentre Plus that English local authorities are at various stages of readiness. At this point in time we are not aware of any that will not be providing some form of local welfare provision from 1 April. The Scottish and Welsh Governments are both delivering their own national models from 1 April.

Returning to advances of benefit, our core aim remains to provide essential support targeted at people on the lowest incomes, whether in low-paid work or out of work, to manage the demands on their budgets that cannot be addressed through their regular benefit payments. Financial capability plays an important role in helping people to enter the world of work and in enabling self-sufficiency in budgeting and financial management. The Government want people to be able to manage their affairs in a manner that best reflects the demands of modern life, whether in or out of work.

Universal credit will provide a range of financial support to help people achieve financial independence and rely less on government to manage their money. Improving financial responsibility will allow households increased access to affordable credit, will reduce reliance on borrowing from government and will encourage households to take advantage of cheaper tariffs for essential costs such as utility bills.

We recognise that some claimants will need support at the start of their claim when they are waiting for their first payment of benefit, or during their claim when they have a one-off expense for which they have been unable to budget. The new system of advances of benefit will be much simpler to understand and to administer. We will ensure that those in financial need have access to support when they need it.

I want to draw a couple of aspects of the regulations to the attention of the House. For short-term advances, claimants have to be in financial need in order to receive an advance. Regulation 7 defines this as a serious risk of damage to the health or safety of the claimant or a member of their family. This is a high bar to pass but rightly so considering that these advances are paid using public funds. However, it is not a new test within the benefits system. This has been the test in Social Fund crisis loans for the past 25 years or so, so it is one that our staff are used to operating.

Claimants cannot receive a second budgeting advance if they have an existing one which has not yet been fully recovered. This means that they can have only one budgeting advance at a time. This is set out in Regulation 14. I know that this is one element of the new arrangements that has caused some concern.

22:15

The new scheme has been designed to provide an improved and simplified system. The existing budgeting loans scheme works by allowing claimants multiple loans up to the maximum debt limit. These loans can be recovered only one at a time in strict date order, oldest first, and can result in the claimant remaining in debt and on reduced benefit for several years. As I have just said, budgeting advances are limited to one at a time, with one repaid before another can be considered. This new approach is intended to encourage improved budgeting and personal financial responsibility and should help claimants make the transition to work by preparing out-of-work households for the realities of budgeting on a monthly income. Budgeting advice and other support will also be available to claimants.

On universal credit, the Government understand that the move to single monthly household payment is a significant change from the way many benefits are currently paid and that some claimants will require support to help them manage that change. The support available will be a mix of general and targeted budgeting advice, alongside universal credit benefit transfer advances, which are not part of these regulations, and financial products that will be made available dependent on the claimant’s circumstances. In exceptional situations, alternative payment arrangements will be made for those households unable to manage receipt of single monthly payments of benefit.

Extensive stakeholder engagement has taken place on the provisions contained in these regulations. We have held workshops with customer representative organisations and devolved Administrations to outline detail within the draft regulations and to provide the opportunity for them to seek clarification and to comment on proposals. We have responded to the comments made, including, for example, increasing the maximum earnings thresholds for eligibility to a budgeting advance following observations from welfare organisations that the proposed thresholds were insufficient to ensure broad parity between the arrangements for the legacy benefit system and for universal credit.

During discussions with the Social Security Advisory Committee, an issue was raised regarding the way in which the earnings of self-employed people were treated when it came to accessing budgeting advances. Therefore, we plan to lay a minor amendment to the regulations in due course to ensure that assumed income from the minimum income floor is not included in the earnings calculation for accessing a budgeting advance. I am grateful for the work of the Secondary Legislation Scrutiny Committee. Although it drew this instrument to the special attention of the House, it did not appear to have any particular concerns. I seek the approval of noble Lords for these regulations and I commend them to the House.

[Baroness Lister of Burtersett]

My Lords, I have a few points to make. The Minister will be glad that I am not going to go over all the previous arguments about the demise of the Social Fund and I will not cover everything that I had planned to cover. However, I want to ask about budget advances. I think that the Minister may have referred to my first point. In the answers to questions raised at the seminar, which I was unable to attend, it was stated that,

“the test of ‘serious risk’ for budgeting advances has been carried forward from the existing system and is deliberately set at a high bar, but it is one staff are familiar with”.

However, I am advised by CPAG that in the existing system the “serious risk” test is applied to crisis loans and not budgeting loans, which budgeting advances replace. So, yes, staff are familiar with it but in another part of the system. By introducing the test for budgeting advances, the bar is being set higher for this part of the system, and yet another part of social security is being made available only in situations of dire need. Surely, the point of budgeting loans is in part to help prevent ever getting to a situation where there may be a serious risk of damage to health or safety. Will the Minister explain why this particular change has been made? To be honest, I think that he slightly conflated crisis and budgeting loans in his introductory explanation. Will he also confirm that, as with regard to crisis loans, health will include mental as well as physical health, and that safety relates to potential as well as actual danger? Does he agree that the lack of adequate cooking, heating or sleeping facilities could constitute a risk to health? I would feel happier about this shift if the Minister could give that assurance.

Regulation 15 prescribes the maximum amounts of budgeting advances as £348 for single people, £464 for couples and £812 for households with children, single or couples and irrespective of the number of children. These amounts are much lower than the current maximum amount under the Social Fund budgeting loans scheme, which is £1,500. I should be grateful if the Minister could explain the justification for this reduction. In particular, is there any evidential basis to suggest that the maximum amounts can be so substantially reduced, compared to that used for the Social Fund scheme of budgeting loans, without it causing problems for some claimants?

Having elicited some management information through Parliamentary Questions, I accept that these amounts are higher than the average budgeting loan award made to each of these family groups in 2011-12 and that fewer than 100 people are recorded as receiving awards higher than those specified. However, that suggests that such a big reduction in the maximum amount is unnecessary from a public spending point of view while a small number of claimants could suffer as a consequence. Is the Minister able to give any information as to the kinds of circumstances in which claimants have received higher awards than those specified and what kinds of sums are involved? Given that these maximum amounts are set out in the regulations, can he explain the procedures for keeping them under review and for uprating them? This question becomes more important now with the significant reduction in the maximum amounts.

I thank the Minister for explaining why a person has to pay back all a previous advance before getting the next one, but I am still worried that, at a time when benefit levels are being cut in real terms and people will have problems with monthly budgeting, these new rules will be unduly restrictive and cause real hardship. Lone parents and disabled people currently receive two-thirds of the gross expenditure on budgeting loans and they will therefore be the groups hardest hit.

[Baroness Sherlock]

My Lords, I thank the Minister for introducing these regulations and explaining how they would work; and my noble friend Lady Lister for her characteristically incisive questions. For this one moment only, I am glad that I am standing here and not sitting in the Minister’s seat. As has been explained, these regulations come in two parts. I will first look briefly at the payments on account. The Minister has explained the circumstances in which these will operate and my noble friend Lady Lister has already tried to tease out the reason why the Government have gone for this strict test of being available only to those in financial need. It is even slightly stricter than that. They will be available only for those in financial need as a result of having applied for a benefit, but not yet received a payment, when it seems likely that they will do; or when an award of benefit has been made, but the date on which it would be paid has not yet been reached.

That last one is likely to be of particular interest to millions of people who will find themselves being moved from weekly or fortnightly to monthly payments. Recent research commissioned by DWP, Work and the Welfare System: a survey of benefits and tax credits recipients, by Tu and Ginnis in 2012, found that 42% of potential universal credit claimants said they would find it harder to budget with monthly payments; 80% of these said that they were likely to run out of money before the end of the month. As I understand it, they will not all be entitled to budgeting advances, only those who find themselves in this stiff test of financial need, as a result of the circumstances I have described.

I would be grateful if the Minister would explain what he understands as being a “serious risk”. Would running out of food or cooking facilities constitute that, as my noble friend Lady Lister mentioned? Food banks already see significant numbers of people turning up because their benefit payments have been delayed. I suggest that this is likely to become much more significant in future with the move to monthly payments. Even if the test is the same as now, will the Minister concede that there may be a different set of needs resulting from a change in the circumstances because all these people are moving into monthly payments? Has he considered that aspect of it?

Regulations 11 to 15 cover budgeting advances. My noble friend Lady Lister has gone through the reduction in the maximum amount available, so I do not need to revisit that but I will be interested to hear the Minister’s answer. I would be interested, though, in the following information, if the Minister can provide it. His department has inquired about what has been happening with regard to the replacement for the Social Fund in different parts of the country. How many of those schemes will offer cash to claimants? What has his department found out about that? That will be important since they will replace a system whereby claimants can access cash at the moment. What research has the department done to establish the alternatives to which claimants are likely to turn? Since many claimants will not be able to access mainstream credit, it must be feared that they will turn at best to expensive legal credit, home credit or retailer financing, or at worst to illegal loan sharks.

I would be grateful if the Minister could explain again why he thinks it is important that claimants should be able to have only one loan at a time, even when it is a very small loan. A family may have borrowed £150 to buy a bed for a child but then a disaster strikes: for example, their washing machine breaks down, there is a flood or the bicycle which the mum is going to use to get to a job interview is stolen. They then need a significantly larger loan. What is the rationale for their not being allowed to take out more than one loan even if the total of the loans is well below the ceiling?

Will the Minister address the interaction between the new low ceiling, the fact that the adviser will be required to establish that the claimant can afford to repay the loan and the fact that the maximum period over which it can be borrowed has been reduced from two years to one year? Therefore, somebody taking out the maximum loan will have to contend with a tighter borrowing period and will have to prove that he or she can afford to repay it. Is there not a danger that that will make it even harder to get the loan in the first place?

These regulations may seem minor and technical but we will see millions of people face changes in their payment patterns because the decisions the Government have taken—in the face of widespread dismay and advice to the contrary—to move to a single payment, including amounts for rent, children as well as work, and to pay it monthly in arrears, are likely to be the cause of significant difficulty for a great many claimants. The least they deserve is a generous, open, accessible system of payments on account to ease the regulations’ passage.

[Lord Freud]

My Lords, again, lots of punchy points have been made. I think that the noble Baroness, Lady Lister, is under a misunderstanding—this rarely happens—as regards the serious risk test. This is applied only to short-term advances. It does not apply to the budgeting advances. I reassure her that not having access to heating would clearly be considered a risk to health. The budgeting advances are exactly the same as for the current budgeting loans in terms of the maximum. The current budgeting loan is lower than the available maximums because that counts for the whole of the Social Fund debt—the £1,500 figure—which includes budgeting loans and crisis loans. Because the Social Fund will no longer exist and we are sending elements of it to the regions and the devolved areas, we are not comparing like with like. The actual maximums as regards the like-for-like components have not changed.

As regards mental health issues, the test is whether the claimant or a member of their family would face a serious risk to health or safety. Clearly, savings are a factor, as are other sources of income, but health, including mental health issues, will be considered.

The context here is to widen the source of funding for families, which is why we are looking to deliver a further £38 million investment into the credit union movement, thereby aiming to make sure that it becomes a viable industry that is able to support families. I am looking forward to making more announcements about that in the not-to-distant future.

22:30

Just again to reassure the noble Baroness, Lady Sherlock, on the move from fortnightly to monthly payments, as people move under that change, they will get the opportunity to have benefit-transfer advances, if they choose to, which will help them through that first month. We are clearly determined to put loan sharks out of business, and we have put a lot of money into the money-lending teams, which have already spent £24 million, and another £5 million or so in the past year, and have helped 19,000 victims of loan sharks.

We are looking to offer budgeting support to anyone who is claiming universal credit or transferring from another benefit, and we will have a variety of ways of providing that, including self-serve from the online budgeting support that is already available.

I have dealt with the point raised by the noble Baroness, Lady Lister, about the single budgeting advance versus multiple loans, but let me do so again. The system is designed to prevent claimants taking out multiple loans and remaining in debt for many years. It is designed to reduce the risk of the claimant getting into long-term debt and will encourage improved budgeting and personal financial responsibility. Where there is a second crisis, we will look at referral to the local authority provision as a way of dealing with that.

[Baroness Hollis of Heigham]

I am now completely baffled by the approach that the department is taking. On the one hand, the money-lending teams, which are obviously doing well, are seeking to exterminate illegal loan sharks and so on, but they exist because there is a demand for cheap credit, otherwise they would not be in business at all. We obviously respect what the Minister is trying to do with credit unions, which are an appropriate alternative—if, of course, you have first saved—but given that he has now agreed that the maximum figure for single people is £348, £464 for couples and £812 for families with children, why not use those figures as the maximum cap that people can borrow against for their payments on account, rather than be confined to one loan? Thereby, if you have taken out £70 or £120, you cannot take any more until you have paid that back. If you are going to have those caps, regard them as the caps against which money can be borrowed on several occasions and you will therefore teach people how to manage credit as well as income. I suggest that that would be much more appropriate, given the Minister’s other objectives, which we entirely share.

[Lord Freud]

This is a fascinating area because, following the growth of the micro-loan industry particularly in Bangladesh, where it started—it has spread all around the world—the lessons on helping people to learn how to budget are very much along the lines of giving someone a loan which they pay back before they get the next loan. There is therefore a real learning process. In our approach, we are picking up this global phenomenon, whereby we will provide credit—in practice, free credit behind which there is a discipline—which has to be repaid before the next loan is available. It is very much the same thinking as that which we see globally.

[Baroness Lister of Burtersett]

If people know they can get only that amount, they will borrow more than they need at that point, knowing that that is it, whereas, as both of my noble friends are suggesting, you could have £100 here and £100 there, as you need it. I suggest that it would be good to look at this again.

[Baroness Hollis of Heigham]

I would artificially inflate my bid, knowing what you are doing to me. That would be a very foolish way to encourage me to learn how to manage credit.

[Lord Freud]

I can see that I am in the presence of experts—in an observatory context—on how people manipulate any system at all. I shall take away your thoughts, as always, about the fact that some gamesmanship may be going on.

It is getting very late so I shall wrap up. When you look at local authority provision, there are clearly opportunities. It is for each local authority to consider its own local circumstances. We are in the process of getting information about the details of those schemes, which will perhaps provide goods or services and some will provide cash. Then we shall be able to report back at the appropriate time when we have some more information.

I hope I have dealt with the questions. Clearly there will be teething problems, as there is with anything new, but we will monitor this very closely as part of our evaluation programme, and that will cover the introduction of universal credit. In addition, the intention is to review specifically universal credit advances and budgeting advances in 2017. Short-term advances for those on legacy benefits will also be monitored and evaluated. I commend the regulations to the House.

Motion agreed.

Social Security (Loss of Benefit) (Amendment) Regulations 2013

Wednesday 13th February 2013 Lords Chamber

Motion to Approve

22:37

Moved by

[Lord Freud]

That the draft regulations laid before the House on 8 January be approved.

Relevant document: 15th Report from the Joint Committee on Statutory Instruments.

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

My Lords, I can confirm that, in my view, this statutory instrument is compatible with the European Convention on Human Rights.

These regulations support the changes introduced by the Welfare Reform Act 2012 which allow for the toughening and strengthening of loss of benefit penalties for those who commit benefit fraud. These regulations also deal with how these penalties will apply in universal credit. The reason why we are bringing forward these regulations is straightforward. From the research that we have carried out, 41% of claimants think that benefit fraud is easy to get away with, while one-third think that the penalties are not that bad. We need to change the perception that it is okay to steal from the state. It is stealing from taxpayers; it is stealing from fellow citizens; and it is stealing from other benefit claimants.

We accept that the vast majority of people are honest in their dealings with the department. But for those who are not, we need to try to change their behaviour so that they think twice before doing it again. The consequences of their actions must therefore include losing their benefit for a period of time. The more serious or repeated fraudsters should face the harshest treatment. Such behaviour should not be tolerated when you consider that £1.2 billion is lost each year as a result of fraud against the benefit system. It is clear that we have a need to address this undesirable behaviour. This measure is therefore just one of the many we announced in the wider fraud and error strategy. Introducing these changes will help reinforce the message to fraudsters that their actions will not be tolerated and that it is never clever to defraud the benefits system. It will act as a forceful deterrent and encourage a positive change in future behaviour. The regulations before us—the details of which I will now explain—support that aim.

We debated earlier the details of the regulations which cover universal credit sanctions and hardship provisions. I will not dwell on those provisions because they are largely replicated in these regulations. I am sure that noble Lords will recognise that there is a similar need to provide for the appropriate reduction in payments of universal credit during a period of fraudulent loss of benefit. The regulations mean that universal credit claimants, subject to a loss of benefit for a fraud offence, will be paid a reduced rate of universal credit for the penalty period rather than having their universal credit completely withdrawn. This follows the current approach that modifies the effect of the loss-of-benefit penalties imposed on those who are receiving means-tested benefits.

We have set out how we will penalise and treat universal credit claimants who have acted fraudulently while ensuring protection for those claimants who are pregnant, not subject to work-related requirements, or who are responsible for a young child. Those offenders subject to the highest rate of reduction will have their payment reduced by an amount equivalent to the universal credit standard allowance. Where they are in a couple, the reduction will be equivalent to an amount of half of the standard allowance applicable for a couple. In all other cases, it will be reduced by an amount equivalent to 40% of the standard allowance, or 20% of a couple’s claim. This will help ensure that payments for housing costs, for example, are protected.

The regulations also provide for hardship payments of universal credit to be made in appropriate cases. They prescribe the amounts of such payments and the requirements for information that must be fulfilled before they are paid. They also provide for the repayment of hardship payments in certain circumstances. This is in line with existing provisions for other benefits, which we discussed earlier. No one will escape facing a penalty, but safeguards are in place to take into account a person’s conditionality group when the penalty is imposed.

We have also made changes to the loss-of-benefit penalty to be applied to income-related employment and support allowance claimants. In future, such payments may be reduced by 100%. However, this tougher approach will not apply to all employment and support allowance claimants. For example, those who are pregnant, seriously ill, or who are not subject to work-related requirements will retain their payments, but at a reduced amount, depending on their circumstances. Hardship payments will also be available in appropriate cases. These provisions will ensure a similar and consistent approach for universal credit and employment and support allowance claimants in relation to the reductions and hardship arrangements of those benefits that are to be applied where there is either a loss-of-benefit penalty or a conditionality sanction.

The 2012 Act also introduced a provision for a new, immediate three-year loss-of-benefit penalty to apply where a person is convicted of a “relevant offence”—in general, an offence of serious, organised or identity benefit fraud. I think that noble Lords will agree that those who deliberately defraud the taxpayer of benefit payments should face the toughest loss-of-benefit penalties. If someone commits a “relevant offence”, this warrants the application of an immediate three-year loss of benefit.

One relevant offence is specified in the 2012 Act: the common-law offence of conspiracy. That captures the seriousness of the type of offence we intend to be subject to this penalty. However, other offences may be committed in connection with benefit fraud that do not involve serious, organised or identity fraud. We want only benefit offences involving serious, organised or identity fraud to be subject to the three-year loss-of-benefit penalty.

The 2012 Act allows for regulations to set out the other offences that may also be considered “relevant” and therefore justify an immediate three-year loss-of-benefit penalty. The way this will work is that the offences listed in the regulations will be considered “relevant” only when they meet other criteria set out in the 2012 Act. This is because the listed offences are used to prosecute a range of offending.

The three-year loss of benefit penalty will apply in relation to the offences listed in the regulations only where there has been an overpayment of £50,000 or more, where the person receives a prison sentence, including suspended sentences, of one year or more, or where the benefit fraud has occurred over a period of at least two years. These offences are often premeditated, such as where they involve the manufacture of false claims through the creation of false identity or identities, or by the engagement of two or more people to commit benefit fraud on a large scale. We make no apology for getting tough here. There are also some minor technical changes to the existing provisions to specify the appropriate start date of the loss of benefit disqualification period to fit periodicity payment arrangements for some benefits and to update references to certain legislation.

In conclusion, we need to penalise wrongdoing, continue to tackle fraud in the benefit system and seriously deter repeated or serious benefit fraud. These regulations were referred to the independent Social Security Advisory Committee on 7 November 2012, which cleared them without any formal referral. Local authorities have also been kept abreast of the changes. These changes create a necessary, stronger penalties regime. I therefore commend the regulations to the House.

22:45

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his introduction to these regulations. As has been stated, they are narrowly focused and address particularly the issues of fraud. We share with the Government a strong intolerance of those who, through fraud, deliberately set out to cheat the benefit system. However, the three-year sanction—loss of benefit for three years—driven by non-compliance with conditionality requirements is a serious matter and demands careful scrutiny.

It is understood that these regulations are focused just on situations regarding fraud. The wider issue of sanctions and hardship provisions will be the subject of continuing debate. When we challenged the higher-level sanctions applicable to universal credit, we were told that they should apply only to a handful of individuals. Perhaps the Minister can give us some indication of the likely numbers of individuals expected to be subject to the three-year loss of benefit penalty provided for in these regulations.

The debate on these regulations in the other place covered a number of issues, which I do not propose to range over again in detail this evening. We are better informed about the offence of uttering. We know that these provisions will apply also, as does the sanctions regime, to those in receipt of universal credit who are in work. As the Explanatory Note makes clear, these regulations deal with a new three-year loss of benefit on a first offence following a benefit fraud conviction. The conviction must relate to a serious case of organised or identity-related fraud. The Minister has set out the criteria for that loss of benefit to apply.

We understand why, for universal credit, the measure of any sanction will be related to the standard component and that amounts, for example, for children and housing will continue to be paid, together with any hardship payment. The concern is that when these situations arise, the whole household, including children, will suffer, not only the individual who has committed the fraud. Amounts allocated for children and housing, for example, could be used in whole or in part for daily living expenses, with the increased risk of rent arrears and homelessness. It seems to us that there is an argument that, where there are joint claimants, there should be a presumption that in these circumstances payment should automatically flow to the main carer.

The Minister has touched on the availability of hardship payments and we have already spent some time on those this evening. I do not now propose to raise any further questions on them.

As we are probably at the end of our proceedings, I ought just to take the opportunity to thank the Minister for his display of stamina at the Dispatch Box today and for his determination to do whatever he can to answer the whole array of questions that have been directed at him, which he has done probably with minimal follow-up required in correspondence, so we thank him for that. There are obviously many issues around universal credit, which will run and run, and I am sure that we will revisit them on many occasions over the upcoming months and possibly years. But I think that we should conclude by thanking him for what he has done today.

[Lord Freud]

My Lords, I am particularly grateful that this has been quite a short debate. I appreciate the words of the noble Lord, Lord McKenzie. I do think that the debates we have on these matters are of an extraordinarily high quality. One of the reasons for that is that my department makes an effort to get information out to noble Lords so that these quite complicated matters can be understood and we do not waste a lot of time on points that are just misunderstood. However, I am deeply impressed by the number of people who have expended so much intellectual energy on gaining an understanding of what is in effect a rebuild of our social affairs. I appreciate that very much. As I say, I have taken a lot of ideas from noble Lords and I hope to be able to go on doing so. I therefore thank all noble Lords who have taken part in these debates.

I have one bit of information and one idea to steal from the noble Lord. We think that with the immediate three-year penalty for serious fraud, we estimate that there will be something in the order of 400 cases a year by 2020. The idea I want to take from the noble Lord is one that I do not think we have at the moment. It concerns the redirection of the payment away from the fraudster. That is actually a smart idea in these cases, and perhaps we shall claim it.

[Baroness Hollis of Heigham]

My Lords, this issue arose on the very first debate of the day. Will the noble Lord apply it where all sanctions occur, thus ensuring that there is an assumption that there will be a switch of payment to the main carer?

[Lord Freud]

The noble Baroness always takes a finger and seizes the rest of the arm. I have said that I will look at the idea.

It is clear that we do not have an effective deterrent at the moment. The view from the survey shows that people do not think that there is much to worry about from being caught out. We hope that the new regime will actually make people stop and think before committing a fraud. That is its intention, and I welcome the cross-party support for that. I therefore commend these regulations to the House.

Motion agreed.

House adjourned at 10.53 pm.