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Lord Low of Dalston
“Safeguarding of vulnerable claimants: guidance
(1) The Secretary of State shall issue statutory guidance for the safeguarding of vulnerable claimants in relation to any sanction, reduction of benefit, or disallowance of benefit (“the guidance”).
(2) The guidance shall incorporate all relevant provisions and operational protocols contained in the following Departmental operating guidance—
(a) procedural guidance within the Labour Market Conditions Guide;(b) universal credit guidance for agents;(c) Employment and Support Allowance (ESA) guidance for Jobcentres;(d) ESA operational guidance for benefit delivery centres;(e) ESA Incapacity Reference Guide;(f) Core Visits Guide;(g) Work Programme guidance;(h) guidance for health professionals.(3) The guidance shall specify—
(a) indicators of vulnerability and procedures for identification of vulnerable claimants;(b) situations which may demonstrate good cause for inability to participate in a work-focused interview, undertake work-related activity, or attend mandatory Work Programmes or back-to-work schemes;(c) where claimants must be referred for a Core Visit conducted by a Department for Work and Pensions (DWP) Visiting Officer;(d) how to support claimants with additional or complex needs;(e) liaison arrangements with mental health services where claimants are mental health service users; (f) collaborative approaches through which DWP can work with independent advice and support bodies in assisting such claimants;(g) who is responsible for ensuring that the guidance is complied with.(4) “Vulnerability” and “vulnerable claimants” shall be taken to refer to individuals who are identified as having complex needs or requiring additional support to enable them to access DWP benefits and use DWP services.
(5) Complex needs may refer to difficult personal circumstances, life events, or health, disability or incapacity conditions that affect the ability of individuals to access DWP benefits and services.
(6) In issuing the guidance the Secretary of State shall ensure consistency of definitions, terminology and language in the guidance.
(7) The Secretary of State shall ensure that consistent principles, good practice and fairness in safeguarding procedures is applied across all types of benefit claims, including Jobseeker’s Allowance claims, and by all agents involved in the assessment and administration of benefits.
(8) The Secretary of State shall report to Parliament annually on the application of the guidance.”
Lord Low of Dalston (CB)
My Lords, I shall speak also to Amendment 62. At Second Reading I spoke about two issues that had been highlighted for me by my work as chair of an independent commission which had been considering the future of advice and legal support on social welfare law in England and Wales: how to protect the most vulnerable from the worst effects of sanctions, and how claimants might get the advice and support they need to adjust to the changes brought about by welfare reform legislation. Amendment 58 deals with the first of these and Amendment 62 with the second.
Operational guidance has been developed over a number of years to build some minimum safeguards into the application of conditionality-based decision-making—for example, in dealing with claimants with serious mental health problems or cognitive impairments. It has been evolved in a piecemeal fashion around certain minimum requirements covering, in broad terms: the identification of claimants with mental health conditions or a background of mental illness and liaison with social and mental health services, with such cases referred to a higher managerial decision-maker before a benefit withdrawal decision is made; the requirement for the DWP to consider any good cause as to why a claimant may not have met a particular condition; and a requirement for the DWP to attempt to contact the claimant, conduct a face-to-face discussion about the conditionality and, if necessary, arrange a home visit if they do not accept that good cause.
Welfare reform legislation and new policy on sanctions since the 2012 Act in particular has complicated matters, although the same guidance on minimum requirements carries over to a significant extent. The guidance is, however, piecemeal and scattered over several different operational guidance manuals, each with subtle differences in language and terminology, leading to application and practice that is far less consistent than it should be. Overall, this has meant that the guidance is weaker in its application to new JSA claims—in fact, there is no JSA-specific guidance—universal credit claimants and clients of Work Programme providers.
Welfare rights workers can also point to numerous cases where the DWP has failed to apply safeguards correctly, especially following ESA work capability assessments. The consequences for vulnerable claimants can be devastating. In its inquiry on benefits sanctions beyond the Oakley review, the Work and Pensions Select Committee concluded that:
“Given the complexity of the existing legislation, there is a strong case for a review of the underpinning legislative framework for conditionality and sanctions, to ensure that the basis for sanctioning is clearly defined, and safeguards to protect vulnerable groups clearly set out”.
The Select Committee further recommended strengthening and clarifying guidance around the protocols and purposes of home visits or core visits. It also recommended better guidance on vulnerability specifically directed to Jobcentre Plus staff in identifying vulnerable JSA claimants, including those with mental problems and learning difficulties who may face difficulties in understanding and/or complying with benefit conditionality.
I have a number of cases that illustrate the need for a stronger legal framework to protect vulnerable claimants in situations where they potentially face sanctions. Given the time, I will mention only one, but it graphically makes the point. Mr D had his ESA stopped after failing to attend a work capability assessment. The DWP was aware of his history of mental ill health and that he was receiving support from his local NHS mental health service. However, it did not carry out safeguarding procedures and did not attempt to contact his local NHS mental health service to find out more about the risks to Mr D’s health if his income were to be stopped. After benefit was stopped, Mr D’s mental health deteriorated and he became suicidal. His psychiatrist assessed that the benefits stopping was a stressor that put Mr D at severe risk of suicide. Mr D was assisted in contacting the advice service by his psychiatric nurse. After the advice service challenged the DWP on its handling of the case, benefit was reinstated and Mr D was placed in the support group of ESA.
Amendment 58 would address the state of the guidance and the recommendations of the Select Committee by inserting a new clause in the Bill which would provide a clear statutory underpinning and codification for all safeguarding procedures and guidance; put all the guidance in one place, which should make it more accessible, user-friendly and easier for professionals to use; require consistency and robustness of application, especially consistency between new and legacy benefits systems; and require the Secretary of State to report annually to Parliament on the operation of the safeguarding procedures. As the language used in the amendment is drawn from existing guidance—for example, as regards the approach to vulnerability—it does not attempt to impose a higher threshold of safeguarding requirements in relation to conditionality but rather to ensure that existing standards are made more effective, consistent and transparent. The amendment is therefore consistent with the scope of the Bill, and the 2012 Act and its predecessor legislation.
Amendment 62 addresses the question of how claimants might get the advice and support they need to adjust to changes brought about by welfare reform legislation. The universal credit support service framework is a DWP-led collaborative project with the Local Government Association to deliver local support for more vulnerable claimants and to assist those who might be unable to use the digital claims process or who may need help budgeting, given the transition to monthly payments. The DWP drives a lot of the demand for advice as a result of delays and failures within the system, so it is only right that it should have an obligation to support and fund welfare rights advice. It therefore needs to be engaged in directly supporting the advice sector to help vulnerable claimants transition to new benefit regimes and/or adjust to new entitlement rules, as well as helping to challenge the system when it gets decisions wrong.
Amendment 62 would insert a new clause in the Bill providing that the Secretary of State shall publish guidance for local authorities about their role in developing schemes to support claimants, especially claimants with additional needs or indicators of vulnerability, and report annually to Parliament on the operation of the universal credit local support service framework. It provides that guidance shall specify, among other things, the role of local authorities in developing partnerships to deliver support and a priority role for independent local advice agencies. Finally, it provides that the Secretary of State shall ensure that the universal credit local support service framework is appropriately resourced so that it can be rolled out to all local authority areas. It is difficult to establish how far the DWP intends to roll out its local universal credit support services beyond the initial UC pilot areas and how the funding for this works. Therefore, it would be helpful if the Minister told us what the department’s plans are in this regard and what the relationship is between the universal credit local support service funding and other grants to local authorities, such as the troubled families programme, and the information and advice strategies required by the Care Act. I beg to move.
The Earl of Listowel (CB)
I rise to support both these amendments and have attached my name to Amendment 62. I have an interest in this as vice-chair for the last 10 years of the parliamentary group for children in care and care leavers, and as a carer of a mentally ill adult. I know how fragile many of the individuals seeking welfare support are. The Minister himself may have been shocked to discover the issues around mental health as he has done his important work in building capacity in jobcentres. I strongly support my noble friend’s amendments.
Baroness Sherlock (Lab)
My Lords, I intend to speak very briefly as we have had a good debate on sanctions and the noble Lord, Lord Low, introduced his amendment with characteristic care and detail.
I just want to say a couple of things to the Minister. I know that the department is not attracted to statutory guidance on universal credit in particular. One of the reasons is that it likes to make personalised decisions. Before the noble Baroness tells us how the system is meant to work, I want to flag something up. I worked in government and know that you always get complaints from non-profit organisations about how things are working. At some point, the noise being made reaches a certain level, and you know that maybe things are not working quite the way they are meant to work. It is my judgment that we are approaching that level. The level of concern expressed by charities about the way the sanctions environment is working, particularly for vulnerable groups, and about the severity of some individual mistakes that have been made, suggests there may be something systemic going wrong. I am not suggesting that means it is going wrong on a large scale across the caseload, but that something is going wrong often enough, and on occasions badly enough, to merit attention.
When the Minister responds, even if she is not attracted to the way the amendment might resolve this issue, could she address the underlying problems and tell us how the Government might like to deal with them?
Baroness Evans of Bowes Park (Con)
My Lords, Amendment 58, tabled by the noble Lord, Lord Low, seeks to make part of statute all guidance relating to the safeguarding of vulnerable claimants in relation to any sanction. It also seeks to define vulnerability and to commit the Secretary of State to report annually to Parliament on the application of the guidance. In his speech on this Bill on 17 November, the noble Lord, Lord Low, said that the Work and Pensions Select Committee had called for safeguarding measures to be included in legislation. However, it did not recommend that specific action and did not suggest that the guidance should be put on a statutory basis. Therefore we do not believe that the amendment will achieve what the noble Lord intends.
As a principle, the guidance that the department produces to support the implementation of key policies is comprehensive. It is also regularly reviewed and refreshed to ensure that it meets policy intent, reflects new evidence about its effect and implementation and allows us to introduce easements within the scope of the current legislation. Much of the guidance relating to the safeguarding of vulnerable claimants in relation to any sanction, reduction of benefit or disallowance of benefit is based on individual assessment of need. Defining the scope of vulnerability too closely or predetermining who these groups are in statute could create unintended consequences. One example is the plight of Syrian refugees: fixed guidance might not have been able to respond to the specific and varied needs of those fleeing the conflict. Embedding a definition which may appear fit for purpose today within statutory guidance would remove important flexibility to ensure that we can respond to change quickly tomorrow and thereafter.
It is also worth noting that the existing vulnerability guidance already provides detailed material to assist work coaches in identifying and supporting the complex needs of vulnerable claimants. It is linked to an online vulnerability hub which has been specifically created to support staff in dealing with all forms of vulnerability and to ensure that guidance is in one place, which is what the noble Lord is suggesting. For instance, the hub contains information such as the mental health toolkit and the hidden impairment toolkit, both of which have been developed in conjunction with health experts and DWP work psychologists to ensure its effectiveness.
The content of all eight sets of guidance is reviewed frequently and the department works with both internal and external stakeholders to ensure that it effectively recognises and supports vulnerable claimants. We are also currently changing elements of the guidance in response to a recommendation made by the Work and Pensions Select Committee to supplement the existing work coach guidance to illustrate how conditionality can be tailored to take account of individual claimants’ circumstances where they have complex needs or need additional support.
Amendment 62, in the names of the noble Lord, Lord Low, and the noble Earl, Lord Listowel, refers to the universal credit local support services framework, now called universal support delivered locally. Again, I am sure that the noble Lord has tabled this amendment to ensure that vulnerable claimants are identified and supported as we move to universal credit. However, again, we do not believe that the amendment is best placed to achieve this aim.
The universal support framework was developed in acknowledgement that some people will need additional help in making and maintaining a claim for universal credit, which for the majority of people will be an online service with payments made monthly direct to the household. The framework aims to align with a flexible approach to services for vulnerable complainants and those with complex needs and recognises that individual local needs may be best met through integrated localised support service offers. It aims to help DWP and local partners plan the level of appropriate services and delivery methods to support the delivery of universal credit and to support claimants in moving towards greater individual self-sufficiency and independence.
Universal support trials started across Great Britain in September 2014. Five of the trials ended on 31 August this year and the remaining six ended on 30 November. The trials tested digital inclusion, financial inclusion, different arrangements for triaging household needs and the sharing of data, skills and estates to create the right integrated local foundation to support more households into work. The final evaluation of these trials will published in late spring 2016, although a short summary of key learning will be published before then. The trials will also allow us to better understand the business case for universal credit delivered locally, claimants’ needs, funding requirements and the delivery approaches that tested best. This information will be used to inform a refreshed framework alongside the full universal credit digital service from May 2016 and a refreshed specification of requirements.
The intention is that the universal support framework sets out the principles and specifications but is not prescriptive about delivery, although learning from the trials and local expertise will be brought to bear to enable continuous improvement. We want to ensure that local areas support their local communities as best they can and it will be up to them to decide how they want to bring resources together and to effectively provide the support needed. For instances, trials in Greater Manchester, Kent and Flintshire have all produced different ways of working which have been effective for those local communities.
On the basis of this explanation, I hope that the noble Lord will withdraw his amendment.
Lord Low of Dalston
My Lords, I thank the Minister for her full and careful reply and my noble friend Lord Listowel and the noble Baroness, Lady Sherlock, for their speeches in support of the amendments.
I missed out the end of my speech. I would have said that I hoped the Minister might agree that these are two useful amendments, almost of a good housekeeping nature. The Minister has given a substantial reply to the points that I made. In particular, she has told us that the guidance is available and referred to the hub. It is perhaps in more of a one place than I allowed for when moving the amendments. However, all in the garden cannot be said to be lovely when cases of the kind I mentioned in my remarks come to notice. I had a good many more up my sleeve than there was time to tell noble Lords about.
Although the guidance may be found in one place, there still may be a need for some rationalisation. The noble Baroness has told us that it is constantly kept under review and has been updated and I like to think that the process of continuous rationalisation is taking place. However, I wish to read the noble Baroness’s remarks—there was a lot in them to digest all at once and I should like to take time to consider them carefully—go back to my advisers on the low commission, take further advice and, if we feel there are further points we could make to assist the department or that there are still matters to discuss with a view to improving the guidance, I hope the noble Baroness and her colleagues at the department would be prepared to meet us to discuss these matters.
Having said that, I propose for now to withdraw Amendment 58.
Baroness Manzoor
“Universal Credit (Work Allowance)
The Universal Credit (Work Allowance) Amendment Regulations 2015 are repealed.”
Baroness Manzoor (LD)
My Lords, I am delighted that in his comprehensive spending review the Chancellor bowed to pressure and agreed with my fatal Motion to scrap the proposed cuts to tax credits for working families. He was lucky to receive a £27 billion windfall to enable him to do this, but it was the right thing for him to do. However, this is little consolation to families who start claiming universal credit after April 2016. Despite George Osborne’s decision in his Autumn Statement to scrap cuts to tax credits, the new universal credit system will mean a less generous benefit entitlement for working families.
The Institute for Fiscal Studies has estimated that 2.6 million working families can expect to be, on average, £1,600 a year worse off under universal credit than they would have been under the existing system. The institute says that the transitional protection means that potentially very different amounts of benefit could be paid to people in similar circumstances depending on when their universal credit claim started.
Universal credit transitional protection is the system the Government are implementing whereby an additional amount is paid to universal credit claimants to make up the shortfall. However, it can act as a barrier to taking on higher-paid work, according to the Social Market Foundation. This is because for many family types, universal credit will be less generous than the tax credit system it replaces. The foundation states that the difference will be quite substantial for some families. An example is that a two-earner family with two children could be £2,700 better off receiving tax credits as compared with universal credit if both parents are working full time and earning £7.20 per hour. As a consequence, many families will be understandably reluctant to move from tax credits on to universal credit.
That is because the transitional protection will cease to apply if the family undergoes any change in its circumstances, such as a partner moving in or out of the household, a person moving off universal credit due to a lot of earned income in just one particular month or one or both adults leaving work, or indeed even moving home. The Social Market Foundation illustrates the problem by citing an example, stating:
“Suppose a family was receiving transitional protection as a result of being moved from tax credits to UC. One partner is offered a better-paid job, but one that would require the family moving home. The family faces a dilemma. Do they move to take up the job offer, increasing their income but losing their transitional protection payments? Or do they refuse the job offer in order to continue the receipt of their transitional protection?”—
That protection may be important for the family, particularly when moving between low-paid jobs.
“This example … illustrates precisely the kind of situation that universal credit was designed to avoid: a barrier to taking up better-paid work. The problem will be exacerbated in April 2016 when the cuts to UC create considerable differences in the generosity of tax credits as compared with universal credit”.
Another problem is that, if income levels in a household fall, the universal credit entitlement does not rise to offset that fall until the transitional protection has been exhausted. Families losing work will face the double whammy of experiencing not only worklessness, but also of being transferred on to a much less generous welfare system under universal credit.
The Universal Credit (Work Allowance) Amendment Regulations 2015 will have exactly the same impact as the cuts to tax credits for working families which may need to have work allowance as part of their universal credit from April 2016. Under universal credit, cuts will be made to work allowance and large reductions will be made to how much families can earn before benefits start to be withdrawn—called work allowance under universal credit. This will mean that tax credits start to be withdrawn once family earnings are above £3,850 rather than the current £6,420 under tax credits. The IFS states that this will weaken the incentive for families to have someone in work.
As a result of the changes, universal credit, which when originally introduced by the coalition Government was intended to see 2.7 million working claimants better off, will now mean that 2.6 million working people will be worse off by an average, as I have said, of £1,600 a year. The whole point of universal credit is to make sure that it always pays more to be in work than on benefits. The Universal Credit (Work Allowance) Amendment Regulations 2015 further undermine that vital principle. They are an attack on hard-working, low-income families.
I know that the Minister supports the framework of university credit, and I applaud him for doing so because I support the framework as well. However, this undermines some of the fundamental principles that we are working towards. I would be grateful if the Minister could give an assurance that, in light of the Chancellor’s assurance to the public and to working families that work will always pay, the Government will consider repealing these regulations, or at the very least end the anomalies presented by them—particularly given that they were introduced, again, by secondary legislation.
Can the Minister also say what effect the Chancellor’s announcement in the Autumn Statement on the minimum income floor, which is in line with the national minimum wage, will have on self-employed people, particularly as this means that universal credit claimants who have been self-employed for more than 12 months are assumed to have earnings of at least 35 hours a week at the national living wage? I understand that there are exceptions, such as for those with caring responsibilities, but claimants will receive no additional support if their income drops below this level. I beg to move.
Baroness Lister of Burtersett (Lab)
My Lords, I rise to speak in support of Amendment 59, to which I was happy to add my name. The work allowance was one of the jewels in the crown of universal credit, heralding a shiny new era of improved work incentives and making work pay. How quickly it has turned into the Cinderella of the social security system: first frozen, then cut in real terms, frozen again, and abolished altogether for non-disabled, childless households. When I questioned the Minister on this in an Oral Question on 27 October, he justified what has happened by referring to the experience of single people, arguing that they do not in fact need the work allowance for the incentives. I have since read the Resolution Foundation analysis and I accept that there may be a case for abolishing the work allowance for this group, but the foundation recommended that that should be in the context of the need for improvements elsewhere—in particular, an increase in the work allowance for lone parents, who are very responsive to such incentives, and a shift in the balance of the allowance between the first and second earners in a couple, with a new work allowance for second earners in families, just as some of us argued for during the passage of the Welfare Reform Act 2012. The foundation went on to say that that is a,
“crucial step in making UC pro-women, a test it currently fails”.
The Social Security Advisory Committee picked this up in its report, Universal Credit: Priorities for Action, and agreed that second earners need further attention, and it recommended further consideration of the Resolution Foundation report to the Government. I would be grateful if the Minister told us what consideration has been given to that report.
The Resolution Foundation also emphasises the importance of uprating policy and argues that cuts in income tax should be passed on in full to families on universal credit via an equivalent adjustment to work allowance; otherwise, people on universal credit will not get the same benefit from an increase in tax allowances. Other analyses by the Child Poverty Action Group—I declare my interest as honorary president—and the TUC show that it is much more cost-effective to raise work allowance than to increase personal tax allowances in terms of getting parents into work and addressing child poverty.
In his reply to my Oral Question, I felt that the Minister tried to brush the cuts in work allowance aside as somehow inconsequential. The noble Baroness, Lady Manzoor, has spelt out just how consequential they are for new claimants of universal credit. In his oral evidence to the recent Work and Pensions Committee’s inquiry into tax credits, Torsten Bell of the Resolution Foundation said:
“That work allowance change is so large that our view is that it to a degree fundamentally changes how universal credit is going to feel for people on low hours”.
He gave an example and said:
“Before the Budget a single parent on the minimum wage could have worked 22 hours under universal credit before she had any of her universal credit entitlement taken away. After both the reduction in the work allowance, which falls to £5,000 for her next year, and the increase in the national minimum wage”—
I would say, the so-called national minimum wage—
“if she is on that, she will now only be able to work 10 hours before she starts to see quite a significant, 76%, tapering of her entitlement. It is exactly that kind of incentive that the welcome purpose of universal credit was aiming to get around”.
I think that he means disincentive. Picking up on the point made by the noble Baroness, Torsten Bell continued:
“When we are talking about these work incentives, more of the debate should be focused on what we have done to the original purpose of universal credit in these drastic cuts to the work allowances, in particular for single parents”.
I know that the Minister cared passionately about that original purpose of universal credit and I cannot believe that he is happy about what is happening to work allowances. I would welcome a more considered response than it was possible to give in Oral Questions, now that he has more time to give such a response.
The Earl of Listowel
I will speak to Amendment 62D in this group and apologise to your Lordships for giving so little notice of it. The issue was only drawn to my attention on Friday. I felt that it was important and timely so I asked for a manuscript amendment. I am very pleased to see that the noble Baroness, Lady Armstrong of Hill Top, has attached her name. Unfortunately, she cannot be here. I have not had the opportunity to thank the Minister for saying that there would be a life chances strategy and I am sorry that I was so pessimistic. I was very pleased to read the comments made last week by Christine Lagarde, the head of the IMF, about the success of the economy in terms of employment and improving productivity. The Minister may feel that this is recognition of his good work and that of his colleagues in these areas.
This amendment was brought to my attention by the Family Rights Group and is supported by many other children’s charities. Its purpose is to ensure that lone parents under the age of 25 who are also care leavers continue in the same system under the new arrangements, so that they will be £780 a year better off. I very much welcome the extremely good work the Government have done and are doing for young people leaving care. The strategy has been a great success. Many people recognise that it is very difficult to get different departments to work together. Through the strategy, the DWP identified care leavers and can give them the additional support they need. Other departments also are aware of that. Staying Put has been a very important step forward. It recognises that young people leaving care should have the right to remain with their foster carer until the age of 21 where both parties agree. Some 50% of children in the general population stay with their parents until the age of 22, so these children should also be able to remain.
However, there is much further to go with these young people. Ofsted has recently started assessing care-leaving services. Its most recent report found that, of the local authorities it examined, 63% of the care-leaving services were inadequate or needed improvement. There is a very long way to go.
The Centre for Social Justice has done some important research on births. There is a much higher likelihood of teenagers leaving care becoming pregnant. One in 10 young people leaving care between the ages of 16 and 21 have their child removed. Often, they have been in care and then lose their own child. It is important that these lone-parent care leavers get all the support they can. This additional cash would be very important for them. They do not have the family network that many of our children have to support them. I hope the Minister is prepared to accept this amendment, and I look forward to his response.
Baroness Sherlock
My Lords, I will say a brief word on Amendment 62D and move on to the main amendment in the name of the noble Baroness, Lady Manzoor. The noble Earl, Lord Listowel, has clearly made the point about the particular vulnerability of young care leavers and the way the changes to the provision of support for under-25s and universal credit will affect them. In 2013, half of 22 year-olds in the UK still lived with their parents. This Bill makes it more likely that even more young people will need to live at home. The issue, of course, for care leavers is that they do not have a home to live in. One of the problems is that they are simply not in a position to depend on the kind of support and home environment that other young people can turn to as an alternative. Perhaps the Minister will comment on that in responding to this amendment.
Likewise, an important point was made by the noble Earl about the position of care leavers who are much more likely to become teenage mothers and, in turn, lose their children. Certainly, when they are supported appropriately by charities and given appropriate financial support, there is much more chance of their being able to keep the children with them and then try to break the cycle. Without that, there must be some risks. I will be very interested to hear the Minister’s comments.
I really want to talk about universal credit and the implications of the amendment in the name of the noble Baroness, Lady Manzoor. We on these Benches have long supported the principle of universal credit. I know the Minister has done a lot of work to make sure that the new system will make work pay and will work for working families. But I am getting increasingly concerned, as are many people, about the Treasury’s continuous slashing away at the money involved, which makes it harder and harder for universal credit to do the job. I do not expect him to comment on that, but he has my sympathies.
The speed at which this is being rolled out is also making a difference. As we know, from October 2013 there should have been no more claims for the old legacy working-age benefits. In fact, everyone would have been transferred over by April 2017. By last March, we should have had 4.5 million households on universal credit. The last time I saw the figure, it was about 141,000. There have been various slippages in timing and now it will not be fully rolled out until, I think, 2021. That matters because it goes right to the heart of the transitional protection arrangements for people moving across, as mentioned by the noble Baroness, Lady Manzoor. Along the way, the Treasury has made six—this is the seventh—cuts to universal credit: £6 billion has been slashed from the budget before it has even been fully rolled out. There are some potentially serious traps down the line.
I unreservedly welcome the fact that, after pressure from all quarters and being asked to think again by this House—I pay tribute to my noble friend Lady Hollis and congratulate her on her successful delaying Motion, which caused Mr Osborne to have the opportunity to think again—the Chancellor decided not to proceed with the tax credit cuts. Three million working families would have lost an average of £1,300 a year.
However, as has been mentioned, he did not reverse the comparable cuts in universal credit. I want to understand the implications of that, so I hope the Minister can help us. The Autumn Statement suggested that the Government are still planning to take £10 billion from working families through cuts to universal credit during this Parliament, as a result of removing work incentives and work allowances. That means that 2.6 million families will still be £1,600 worse off by 2020, on average. Therefore, I am trying to understand why the Secretary of State, Iain Duncan Smith, when touring TV and radio stations last week, was able to say that universal credit is a big success. He said on “The Andrew Marr Show” that nobody will lose a penny from the UC cuts. How can that be true?
In the wake of the Autumn Statement, the OBR put more figures out to help people understand. I have been poring over them with a wet towel around my head to try to make sense of them. I suspect that I have not, but the Minister will put me right. There are three issues: whether people on UC will be better off than those on tax credits, whether people transferring from tax credits to universal credit will lose out, and whether anyone will lose out in cash terms come next April.
The Minister of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, the amendment proposed by the noble Baroness, Lady Manzoor, would repeal the Universal Credit (Work Allowance) Amendment Regulations 2015, which were laid before Parliament on 10 September 2015 and come into force next April. The amendment tabled by the noble Earl, Lord Listowel, and the noble Baroness, Lady Armstrong, would increase the standard UC allowance payable for lone parents who are also care leavers. Both amendments refer to issues recently considered by this House. The work allowance regulations were lying before the House as recently as last month and we have already discussed care leavers in debates on the Bill, most recently last Wednesday.
The Bill does not make any changes to the standard allowances in universal credit, which are set out in the Universal Credit Regulations 2013, debated in this House in February of that year.
The Government set out in the summer Budget measures to transform Britain from a low-wage, high-tax, high-welfare society to a higher-wage, low-tax and low-welfare society. This package of measures included changes to UC and tax credit allowances but also the introduction of the national living wage and further increases to the personal tax allowance. Noble Lords will be aware that the Chancellor has subsequently announced changes to the tax credit element of this plan in response to concerns raised mainly by noble Lords about the timetable for implementation. However, the overall strategy remains unchanged. The welfare system needs to be brought under control to make it fair to the taxpayer and support economic growth.
This is perhaps a reasonable time to pick up the point made by the noble Baroness, Lady Lister, about all the improvements that there might be to universal credit. I acknowledge that there may well be improvements. One of the opportunities that we have, uniquely in universal credit, is to start doing randomised control trials to discover how we might improve it. Some of those suggestions may well work when we have discovered the dynamic effect of making those changes. We do not know at this moment, but we and future Governments will have the opportunity to test some of those propositions.
Doubtless noble Lords will have seen analyses published by various organisations assessing the impact of these changes on claimants and are clearly concerned about the possible impact on families. As I start trying to explain the impacts, it is important to explain why those analyses tell only part of the story. First, they fail to reflect that the summer Budget measures are a package. The comparator, which excludes work allowance changes but includes all other summer Budget measures, reflects the Government’s policies to deliver low taxes but not those to deliver low welfare. If we are to deliver our commitment to stable public finances, we cannot deliver one without the other.
Secondly, they fail to take account of all elements of government policy that will have an impact on families between now and 2020, including spending on vital public services such as the NHS and schools, on which so many families rely. If you take the sort of analysis that has been carried out by the IFS and the Resolution Foundation but instead compare the net incomes of those on tax credits in 2015 with what they would get under UC in 2020, taking into account the national living wage, increases in the personal allowance, better provision for childcare and economic growth, the cash position would look broadly similar in 2020.
Thirdly, and perhaps most importantly, the analyses fail to take account of the dynamic impact of universal credit, or indeed of any changes in behaviour as a result of the measures in the Bill. We are introducing universal credit precisely to give people more choice and opportunity to get into and progress in the labour market. The early impact is already documented, but static analyses cannot help showing claimants as passive recipients of welfare, unresponsive to the new possibilities that this Government are opening up with these reforms. This is particularly important when we consider universal credit claimants directly affected by this change when it comes into effect next April. The overall numbers are of course small, given the controlled rollout. They are also made up primarily of childless singles.
Let us be clear about the group we are talking about. They are a group with no barriers to full-time work. Indeed, many of them already move off universal credit altogether by finding full-time employment. Those with residual universal credit awards in work are normally working part-time and would therefore have got absolutely nothing under the tax credits system. The changes in April will reduce that generosity but will still leave this group better off than under the previous system.
I recognise that there are some more complex cases in the current caseloads, with higher entitlements and greater barriers to increasing earnings. To respond to the first question asked by the noble Baroness, Lady Sherlock, I can say that the Secretary of State has announced that we will use adviser support and the flexible support fund to ensure that each of those families is supported through the change.
Baroness Hollis of Heigham (Lab)
Would the noble Lord expand on that answer? How many lone-parent families? How much will they be supported by in terms of their finance—is he saying that it would be as though the cuts had not affected them—and for how long?
Lord Freud
It would be a small number of families; I do not have the precise number.
Baroness Hollis of Heigham
Can he give us a feel: are we talking about 100 or 1,000?
Lord Freud
It is a small number. It is probably towards the lower end of that, but I do not have the precise number. We will use the flexible support fund—the measures the Secretary of State was talking about—to help them to make the transition, so that they manage the change.
Baroness Hollis of Heigham
Does that mean that they will not be worse off in cash terms during their transition by virtue of the support system?
Lord Freud
It is not the same as transitional protection, as I was indicating. It is our means of helping people adjust to the change we are seeing in universal credit for those groups.
Lord Freud
We will help them make the transition. It will vary for each of those families: it might be some more work or it might be upskilling to earn more. The numbers are very particular and specific but they are clearly a focus of our obligation to those groups to help them to manage their position. We will put the resource in to help them to do that. That is what we are talking about. Helping those on lower income towards financial independence requires a tax and welfare system that encourages and rewards work, and one which provides people with the right support to progress in the labour market and provide their families with long-lasting security.
The next question asked by the noble Baroness, Lady Sherlock, was about how the transitional protection works. The people who get transitional protection are only those whom we have managed migration for, which, as the noble Baroness pointed out, will start in 2018. It is not designed to provide indefinite financial protection. Over time, transitional protection will be eroded as claimant circumstances change. It will be appropriate to end it when circumstances underlying the award are no longer recognisable as those on which the legacy calculation was made. We have not yet regulated for transitional protection, but we have described its principles. We will bring forward those regulations in due course.
Baroness Manzoor
Will the Minister say what those changes will be? The changes in circumstances are really important. The Minister has not highlighted those issues.
Lord Freud
We put them out at the time of the Bill. They were reasonably large changes. There is a list of them: re-partnering would trigger one, as would a new member of the household. Other changes might be a sustained drop in earnings—an equivalent almost to moving out of work—or one or both members stopping work. As I said, those are all indicated. We will set out those changes in due course.
Baroness Hollis of Heigham
Can the noble Lord envisage a situation in which a couple—a family—received this, he moved out and she became poorer, but the result was a change in circumstances, so her reduced income was made worse because she no longer had transitional protection?
Lord Freud
The trouble is that one can make up particular stories and play around, but overall the position is that, as we get through to the time when the managed migrations happen and the national living wage and various other things come in, the norm will be pretty stable, as I said before.
I will move on to the next question on those people who move earlier—that is, not in the managed migration—and reconfirm that they are effectively making a new claim for universal credit. Therefore, they will not be transitionally protected. I think I have gone through those very specific questions.
Baroness Manzoor
In terms of the flexible element of the budget, can the Minister say, as the noble Baroness, Lady Sherlock, requested, how large that budget will be? It is not the transitional protection money but the other fund that may be available.
Lord Freud
I do not have the precise figures here so it is quite hard for me to know how much of that flexible support fund will need to be diverted, but it is a mixture of support and funding. It is a question of how that is combined. We do not anticipate a large amount because the numbers are not very large. We have not isolated the precise numbers. It is too difficult—we just have not done that—but our anticipation is that it is not a substantial amount.
Let me pick up the point from the noble Baroness, Lady Lister, on incentives to work. There are only two ways of reducing the cost of universal credit: looking at either the taper or the work allowances. The taper is what maintains the incentives to work and to work more. Keeping it at a steady rate so that people can understand exactly where they are, so that if they change their work hours they can understand exactly what happens in a way that they cannot with the present system, was something that we saw as a priority, particularly at a time when the economy is strong and there is work available. There may be a different dynamic at different stages of the cycle, but that is the position we are in now.
On the question from the noble Baroness, Lady Manzoor, the minimum income floor will continue to be calculated by reference to the national minimum wage, which includes the national living wage.
I turn now to Amendment 62D, tabled by the noble Earl, Lord Listowel. In the current system there is considerable complexity around the rates for young people, with some differences between benefits. The structure of age-related rates in universal credit is much simpler than the benefits it replaces, with just four rates of the standard allowance: two for singles, two for couples. That compares with 15 in employment and support allowance, for example.
The age-related rates are now established in universal credit and the Bill does not make changes in this area. Doing so would start to replicate some of the complexity that we are looking to remove and noble Lords have heard me grumble about “carbuncleising” enough to know what I mean. However, the Government do recognise the challenges which these young people face. We should be supporting vulnerable young people and parents to stabilise their lives and find work and we have a number of measures within the context of universal credit. We will ensure that care leavers claiming universal credit who need help managing their money and paying bills on time will have access to personal budgeting support. Care leavers are exempt from serving waiting days in universal credit to ensure a smooth financial transition, and single care leavers aged 18 to 21 are exempted from the shared accommodation rate for LHA housing costs. I ask the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham
I am still trying to make sense of the responses which the noble Lord very helpfully gave to my noble friend Lady Sherlock. I know that the Minister does not like hypothetical questions, but if we want a dynamic—to use his word—situation, we have to look at it in those terms. A lone parent with two children is currently on tax credits. Let us say that, in 2018, she re-partners. Her partner moves in and the tax credit transitional protection ends because his income floats it off. Within a year, he leaves her: does she then have to make a new claim to universal credit? Putting aside any question of the level of the national minimum wage, would that be at a lower rate, in cash terms, than she would have received on tax credits? In other words, what sort of linking would there be? If he moved out in less than six months, would she be able to resume her previous tax credit claim or will the cuts kick in at any point when there is a change in circumstance—even if it effectively only lasts for a fortnight—that takes her on to UC?
Lord Freud
We have not yet put out the detail of the transitional regulations and that is where one would expect to see them. We will be producing some precision in how the regulations will work.
The Earl of Listowel
My Lords, I am grateful for the Minister’s response and for the work which the Government do to support care leavers. I omitted to say why Amendment 62D was timely: today, research from the University of Lancaster highlighted a huge leap in the number of newborns being taken into care. In 2008 it was about 800, in 2013 it was over 2,000; a very considerable number. Some of that is down to better early intervention; taking children very quickly out of damaged families. However, Nicky Morgan, the Secretary of State, is concerned about this and it suggests, again, that we need to be even better at supporting these vulnerable families. I hear what the noble Lord has said and I will look carefully at it.
Baroness Lister of Burtersett
Will the Minister say when, roughly, he expects to be publishing the transitional regulations? Will he, in his normal helpful way, commit to publishing a draft of the likely contents first, so noble Lords can discuss them, rather than just be presented with the actual regulations?
Lord Freud
I will take that request in the helpful way that it was offered. I will write to the noble Baroness to see if I can give her any comfort.
Baroness Manzoor
I thank all noble Lords who have taken part in discussing this group of amendments, particularly the noble Baronesses, Lady Lister, Lady Sherlock and Lady Hollis, and the noble Earl, Lord Listowel. I also thank the Minister for his considered response and for allowing me to intervene when he was speaking. A number of issues have been raised. The noble Baroness, Lady Hollis, stated very clearly what happens to an individual when there is a change of circumstances. It is important that there is some guidance before Report. I have not been reassured by the answers which have been given. I have every sympathy for the Minister in terms of what he is trying to deliver, but I passionately believe that cuts are affecting people who want to work and will want to go into work under what is being proposed. I will consider what has been said, but I am likely to bring it back on Report. As the noble Baroness, Lady Lister, said, I would be grateful to receive any other information that would help us make our minds up. On that basis, I beg leave to withdraw.
Baroness Manzoor
“Housing benefit: age of entitlement
In section 130 of the Social Security Contributions and Benefits Act 1992 after subsection (1)(a) insert—“(aa) he is aged 16 or over”.”
Baroness Manzoor
My Lords, I am pleased that the noble Lord, Lord McKenzie, has added his name to Amendment 60. Support for housing costs for 18 to 21 year-olds is not contained in the Bill but it was announced in the Budget. From April 2017, 18 to 21 year-olds making a new claim for universal credit will not be automatically entitled to support for their housing costs. As the Bill creates no new powers for this, these measures are likely to appear in regulations, using powers already contained in the Welfare Reform Act 2012. Crisis states that it has serious concerns that removing young people’s access to support for their housing costs will lead to an increase in youth homelessness. Crisis, the Joseph Rowntree Foundation and the Homelessness Monitor state that youth homelessness is already on the rise, with 8% of 16 to 24 year-olds reporting being recently homeless.
According to the Crisis analysis of CHAIN data, in four years the number of young people sleeping rough in London has more than doubled. There are many reasons why young people may find themselves homeless, including parental relationship breakdowns; abuse and violence from family members; and leaving care. For many young people, housing benefit is all that stands between them and homelessness and is an important safety net.
My proposed new clause attempts to address this hole in support for young people. The amendment says “aged 16” in order to avoid excluding 16 year-olds already entitled to housing benefit from eligibility in the future. But the amendment is ultimately about stopping the Government’s attack on 18 to 21 year-old claimants. Some 15% of current 18 to 21 year-old claimants are in work. They need this housing benefit to subsidise their rents; one only has to look at the level of rent in cities such as London.
Housing benefit is also vital for those living in areas of low employment to enable them to move to somewhere where they will have more chance of getting a job. Does the Minister really believe that it is better for our economy, and our young people, for them to remain in the family home, away from possible employment opportunities, than to temporarily pay for their housing benefit? I recollect the “get on your bike” sentiments expressed by Norman Tebbit—now the noble Lord, Lord Tebbit. These appear to be holding little water now. I beg to move.
Lord Low of Dalston
My Lords, I rise to speak to Amendment 62C. In the summer Budget, the Chancellor announced that under universal credit there will be no automatic entitlement to support for housing costs for 18 to 21 year-olds. This is to make sure that young people are unable to leave home and start claiming housing support unless they have a job. It is intended to mirror the choices made by young people who choose to live at home until they can afford to support themselves. The Government have been clear that vulnerable groups will be exempt, but have not yet confirmed how this will work in practice. Amendment 62C is intended to fill this gap by setting out the vulnerable groups which should be exempt. I am grateful to the organisation Crisis for briefing me on this amendment. It is also supported by Nacro, the Salvation Army, Caritas Social Action Network, Centrepoint, Shelter, Action for Children, St Mungo’s, Homeless Link, the YMCA, the Prison Reform Trust and the Albert Kennedy Trust, so we can be sure that there is a good deal of consensus as to the groups which should be exempt.
The Government have committed to protect care leavers, those with dependent children and those receiving the equivalent of ESA or income support. Young people living in homeless hostels or domestic violence refuges are also expected to be exempt given that they will continue to be funded through housing benefit and not universal credit, at least in the short term. If the groups listed in the amendment are not exempt, there is concern that we could see a further rise in youth homelessness. This could also damage the prospects of the young people affected finding employment. In four years, the number of young people sleeping rough in London has more than doubled, and 8% of 16 to 24 year-olds report recently being homeless. For young adults who are trying to rebuild their lives following a period of homelessness, failure to provide the safety net contained in this amendment—if the protections for the most vulnerable are not sufficient—may make it much harder to keep their lives on track.
For many young people housing benefit is all that stands between them and homelessness. This includes those who have experienced violence or abuse from family members. Some younger adults may be unable to live with their parents because of relationship breakdown but find this difficult to prove—for example, if they have been thrown out because they are gay or if a parent has remarried. To make sure that all young people at risk of homelessness are protected, the list of those who will be exempted from the proposals must take into account all the reasons young people may need support with their housing costs.
The projected savings from this measure are small in relation to the overall savings from the Welfare Reform and Work Bill. The Treasury has estimated that this measure will save the public purse £25 million in the first year, rising to £40 million a year in 2020-21. However, if the Government’s exemptions are not sufficient to protect young people at risk of homelessness, greater costs will be incurred. Homelessness is estimated to cost the Exchequer £1 billion a year. Investing in homelessness prevention on the other hand can make significant savings. Recent research commissioned by Crisis found that tackling homelessness early could save the Government between £3,000 and £18,000 for every person helped. The report uses illustrative vignettes, each based on qualitative data from 165 interviews to give an overview of the costs of homelessness. Each vignette explores two scenarios: one where homelessness is prevented or resolved and the other where homelessness persists for a year. One of these vignettes concerns a 19 year-old who is expected to leave the parental home and exhausts sofa-surfing arrangements with friends. In the first scenario she is helped into immediate temporary accommodation in supported housing for four weeks. She then receives a low-intensity floating support service during a short-term return to the parental home, which enables her to make a planned move into suitable shared private rented accommodation. Parental relationships become positive while she is able to live independently and she secures paid work within a year.
In the second scenario the local authority finds her ineligible for the homelessness duty. She receives a list of private rented accommodation but no other assistance. She relies initially on sofa-surfing but negative experiences from these arrangements lead to a deterioration in her mental health. She makes increasing use of homelessness services and uses drugs as a result of stress and depression. She has a non-elective long stay in hospital as a result of the deterioration in her health. She is admitted into a residential detoxification service for six weeks but lack of settled suitable housing presents major challenges. The research calculated that preventing her homelessness in the first scenario cost £1,554. By comparison, this cost rose to £11,733 when her homelessness was not properly resolved, as described in scenario 2. If this young person were unable to meet the eligibility threshold for claiming the housing costs element of universal credit, the first scenario would not be open to her.
I shall go through the groups of young people who would be protected by the amendment. Crucially, the system must be flexible enough to cover more difficult or complex cases. First, I shall address those who are owed a rehousing duty under the Housing Act 1996 and the comparable Scottish and Welsh legislation. By definition, people who are already homeless have nowhere else to live and should be exempted from these proposals or they will be at serious risk of street homelessness. Young people who approach their local authority and meet the statutory definition of unintentionally homeless in Scotland, and of being in priority need in England and Wales, should automatically qualify for support. Local authorities have a statutory duty to house those who meet this threshold, which they will be unable to meet if the young people owed the duty cannot claim the housing costs element of universal credit.
Secondly, I shall address those who are homeless or at risk of homelessness being supported by local authority housing options teams. In England, the threshold for priority need is high, however, and most single people will not meet it. Nevertheless, they are owed a general duty of advice and information about homelessness and the prevention of homelessness. Across England, Scotland and Wales, many homeless people are supported by local authority housing options teams to prevent or alleviate homelessness. In England, statutory homelessness guidance advises housing options teams to use family mediation services to prevent homelessness when family or friends are no longer able or willing to accommodate. It is therefore vital that those who fall short of the statutory homelessness threshold, as well as those young people at risk of becoming homeless, are protected.
Thirdly, I address those who are homeless or at risk of homelessness and are being supported by voluntary or statutory agencies into more settled accommodation. While many homeless young people are housed in supported accommodation which will continue to be funded through housing benefit, homeless hostels are not right for everyone who has experienced homelessness. Others may struggle to find a bed space since numbers of beds are declining. Those being supported by homelessness organisations to find and sustain alternative forms of accommodation should therefore be protected. This includes private rented sector access schemes and supported lodgings. Withdrawing support from young people using such schemes would undermine the Government’s own efforts, including significant investment to tackle single homelessness.
Fourthly, I address those who have formerly been homeless as young adults aged 16 or over. People who first become homeless when young are particularly vulnerable to repeat homelessness. To mitigate the risk of people becoming homeless again following a period of stability, it is important that young homeless people who qualify for the housing cost element of universal credit can continue to do so following a change in circumstances up to the age of 21. Young people ready to move on from a homeless hostel or domestic violence refuge must be able to access financial support to maintain a private tenancy, or moving on will be impossible. The chance to move on in this way will in turn enable other young homeless people and those experiencing domestic violence to access hostel and refuge places.
Fifthly, the amendment refers to,
“a person without family or for whom the home environment is not suitable to live in”.
The Government have been clear that those who cannot live at home will be protected. We welcome this commitment, since relationship breakdown is a leading cause of homeless young people no longer being accommodated by parents. A broad exemption to protect young people at risk of homelessness due to family breakdown will prevent young people having to become homeless before they can access support. This protection must apply to those without living parents or parents in the UK, and to those for whom it would be damaging to remain in or return to the family home. For example, up to 24% of homeless youth identify as lesbian, gay, bisexual or transsexual, and in 69% the primary cause identified is rejection or abuse after coming out to parents or caregivers.
Some young adults need to leave home because the family home is unsuitable or puts them at risk of harm. This may be because of overcrowding, for instance, if the family has downsized due to the social sector size criteria. Overcrowding is a form of hidden homelessness with implications for family cohesion and well-being. In some cases of severe overcrowding, councils may offer to rehouse adult children independently, rather than move the entire family. If young people in overcrowded homes can no longer access housing support, this will not be possible. For some young people, the neighbourhood may be unsuitable: for instance, due to risk of involvement with gangs or other anti-social and unlawful activity. A 2011 cross-government report, Ending Gang and Youth Violence, committed to roll out schemes to rehouse former gang members wanting to exit the gang lifestyle and cited joint police and council projects which seek accommodation for people at high risk from gang violence. This work will be significantly undermined if young people in such circumstances cannot access support for their housing costs.
Sixthly and finally, regarding “those leaving custody”, young people leaving custody are at particular risk of homelessness due to their higher levels of need, vulnerabilities and chaotic lives. Thirteen per cent of young homeless people are offenders and 22% have an offending history. Accommodation is critical for effective resettlement. A return to the family or neighbourhood may expose them or their families to risk of harm and the negative social networks which they are trying to leave behind. An exemption for young people at the point of release will provide stability and support to help them adjust at this critical time, when the risk of reoffending is greatest.
Baroness Hollins (CB)
I support Amendment 62C, as spoken to by my noble friend. I do not usually speak on homelessness but I have a keen interest in the mental health and well-being of young people. I am also a huge admirer of Crisis and other charities offering support to people experiencing homelessness. I was extremely concerned to hear that the number of young people sleeping rough in London has more than doubled in four years, and that 8% of 16 to 24 year-olds report having recently been homeless, for reasons such as those outlined by my noble friend—being victims of or at risk of violence or abuse, or a breakdown in family relationships. According to Crisis, tackling homelessness early can save the Government between £3,000 and £18,000 per person. Can the Minister describe exactly which homeless young people will be entitled to the housing costs element of universal credit?
Lord Best (CB)
My Lords, I support Amendment 62C, in the names of my noble friends Lord Low of Dalston and Lady Hollins. This is one of a number of amendments to the Bill addressing issues of special concern to charities seeking to help homeless—very often, young homeless—people.
I see the tension here between the objectives of the Department for Work and Pensions, which is so very concerned to see the huge housing benefit bill reduced, and the objectives of the Department for Communities and Local Government, which of course wants to see rising homelessness reduced. It is not going to be possible for the objectives of both departments to be met and a balance between these conflicting aims has to be achieved. It is utterly pointless for the DWP to win in cutting the benefit bill for housing costs if the homelessness position deteriorates further. The supposed savings will then look very paltry, not least when set against the costs to other government departments in physical and mental health, social care, criminal justice and more. This anxiety that cost-cutting measures will undermine homelessness charities is reflected in the list of 12 charities seeking to persuade your Lordships to accept this amendment, as set out by the noble Lord, Lord Low, with Crisis as the co-ordinator of their efforts. They are a roll-call of nationally important charities trying very hard to tackle the horrors of homelessness.
Amendment 62C addresses a key concern of the charities, which has been very well spelled out by my two colleagues: that the vulnerable 18 to 21 year-olds who come within the priority categories set out in the amendment will no longer be able to get enough financial help with their rent to obtain the accommodation and support which they need and which the charities and local authorities can organise or provide for them if the rental funds are forthcoming. If the charities have to turn away young people because they are denied access to sufficient support with their rent, then street homelessness—as the noble Baroness, Lady Hollins, has said, it has doubled in London since 2011—will get worse. That means more young people sleeping rough and facing the cold, the abuse, the violence and the illness that goes with that.
Later amendments in my name also address the same issue of the problems which will emerge if benefit payments for housing—in this case, the entitlement to the housing element in universal credit—are reduced for vulnerable young people. The other reductions, for us to discuss in detail later, which potentially affect housing costs for young homeless people are, first, the proposed 1% per annum cut to social housing rents, which could put some social housing charities out of business and, secondly, the new idea that rents in social housing should be capped at the local housing allowance levels set for private landlords, although the charities’ rents may include special support services that no private landlord would ever supply.
I am making the overarching point in respect of all these cuts that the DWP’s earnest desire to reduce the costs of housing benefit—in future, of universal credit—really must avoid crushing efforts to help those who are or will be homeless. To save time in our later deliberations, I simply flag up the common policy point which relates to all these amendments, since the Minister may want to respond in the round. I hope that he can provide reassurance that the DWP’s different ways of reducing benefits for housing will stop short of squeezing those people in the most acute difficulty and those bodies desperately trying to help them.
I think all of us, and every Government I have worked with over the last 45 years, have been clear that we must give special attention to trying to ensure that young people at risk of homelessness are supported. If we fail, and yet another young person ends up living on the streets, it is incredibly hard for that person to keep away from crime, alcohol, drugs, depression and ill-health and to get back on their feet, as we all know and as was so well illustrated by the example quoted by the noble Lord, Lord Low.
I feel sure the Minister gets this and has no desire for the Government’s welfare cuts to pull the rug out from under the charities that are trying so hard to address the evils of homelessness. This amendment would remove one of the new threats to these bodies continuing their vital work by ensuring a range of vulnerable young people are not going to be denied housing support just because they are aged 18 to 21 and will be in at least no worse a position to pay their rent than those who are older. Indeed, 18 to 21 year-olds may have a greater need for help simply because they are young. I commend the amendment to the Minister and hope he will be able to tell us that Government recognise the case being made and have no intention of harming the vital work of the charities that can offer a life-saving lifeline to very vulnerable young people.
The Earl of Listowel
My Lords, I rise very briefly to support the amendment of my noble friends. On a visit to a Centrepoint hostel in Soho several years ago, I spoke with a very young girl—16 or 17 perhaps—and asked her why she was there. She said that her mother had a new boyfriend who did not want her around. The OECD said in its report on family formation that this country will overtake the United States in the 2030s in terms of the numbers of young people growing up without a father in the home. We have to think about the changes in families and about the Children’s Commissioner’s report on the sexual exploitation of children. Most sexual exploitation takes place within the family, from people within the family who the children know. Some 90% of lone parents are going to be women, and if different men are regularly coming into the household, this issue of girls in such households having worries about sexual exploitation or being sexually exploited also has to be considered. I commend the amendment to the Minister.
Lord McKenzie of Luton (Lab)
My Lords, as your Lordships have heard, we have added out name to Amendment 60 in the name of the noble Baroness, Lady Manzoor, and I cannot think why we did not do likewise for Amendment 62C, which we support and which also has the support of the noble Baroness, Lady Hollins, the noble Lord, Lord Best, and the noble Earl, Lord Listowel.
The proposition to remove access to the housing element of universal credit for 18 to 21 year-olds from April 2017 has been some time in the making. Its progression—or, more likely, regression—can be tracked from a series of references by the Prime Minister at his party conference. Its original focus was to remove housing benefit for people aged 16 to 24, but this has now been narrowed, as we have heard, to 18 to 21 year-olds for universal credit. There are of course already lower levels of housing benefit allowances for single people under 25 and couples under 18, as well as restrictions under the shared accommodation rate. Can the Minister confirm that the Prime Minister’s desire to have an extended denial of housing benefit or universal credit for 16 to 25 year-olds is now off the agenda? The rationale for the policy has a familiar refrain:
“This will ensure young people in the benefits system face the same choices as young people who work and who may not be able to afford to leave home”.
That is a simplistic view of the choices facing many young people and in any event ignores the fact that housing benefit can be claimed by those in work.
This policy is being introduced at the same time as the new youth obligation for 18 to 21 year-olds on universal credit—the so-called boot camp. As the noble Lord, Lord Low, points out, we are promised that there will be exemptions, and the amendment is probing what might be available. The policy starts from April 2017 for 18 to 21 year-olds who are out of work. Can the Minister confirm specifically that there will be protection for vulnerable claimants, as spelt out by the noble Lord, Lord Low, and that they will definitely include those with recent experience of work, young people living in homeless hostels or domestic violence refugees, care leavers, those with dependent children, those receiving ESA, or its equivalent, or income support and those who cannot live at home?
Like the noble Lord, Lord Low, we are grateful for the briefing provided by Crisis and its insights into the consequences of these proposals should they not be ameliorated—in particular, the consequences for those who are homeless or who have experienced or are at risk of homelessness. Its briefing reminds us that if the protections and exemptions are not sufficient, any savings from this measure will be wiped out by costs elsewhere, mostly from increased homelessness.
The policy has generated a range of criticism, as we have heard. The Chartered Institute of Housing says that it could mean young people being less willing to take risks in moving for work because of the removal of a safety net. Centrepoint says that claiming housing benefit is for many a short-term solution to a situation they find themselves in, providing them with a safety net from which they can get their lives back on track. Shelter opposes the measure because it asserts that,
“every young adult deserves somewhere safe and decent to live”—
and who could disagree with that?
House of Commons briefing paper number No. 06473 of 26 August 2015 refers to the Uncertain Futures paper published by YMCA England. This points out that, of the estimated 3.2 million 18 to 21 year-olds, just over 19,000 young people are currently claiming jobseeker’s allowance and housing benefit, and that 71% of the 18 to 21 year olds who access JSA do so for less than six months. It also points out that 7,200 young care leavers between 19 and 21 years-old in England are currently out of work and would potentially be able to claim JSA and housing benefit and that nearly 1,400 18 to 21 year-olds are currently living in YMCA supported accommodation and claim JSA and housing benefit. It points out, on lifestyle choice and the assertion that people just want to live on the dole, that most young people are entitled to £57.90 a week in JSA—frankly, what we would blow on a meal at the weekend.
YMCA England concludes:
“By removing automatic entitlement to Housing Benefit for 18 to 21 year olds the Government could be in danger of inadvertently taking away support from the young people who need it most and in doing so, exposing many more vulnerable young people to the risk of becoming homeless and therefore damaging their prospects of finding work in the future. Action is needed to address youth unemployment, but without protections thousands of vulnerable young people will face uncertain futures, not knowing if they will have anywhere they can call home and leaving them less able to find work”.
Lord Freud
My Lords, the Government’s policy proposal is to remove automatic entitlement to the housing cost elements of universal credit for certain young people aged 18 to 21. I confirm to the noble Lord, Lord McKenzie, that that is the Government’s policy. It will apply only to relevant 18 to 21 year-old claimants who make new claims in the areas where UC digital has rolled out. This will ensure young people in the benefits system face the same choices as young people who work and who may not be able to afford to leave the family home.
I start with the amendments tabled by the noble Baroness, Lady Manzoor. It is not fair that taxpayers should have to pay for young people who are not working to be able to live independently when young people in work or education may not be able to afford to do so. Having said that, the Government recognise that vulnerable people need to be protected. Work is currently being undertaken with a wide range of stakeholder groups to understand who these vulnerable young people may be. I can reassure the noble Baroness that the policy will not stop people looking for work in other areas of the country in the same way that young people not reliant on benefits can look for opportunities away from where they live.
We need to complete the consultation work in order to ensure that a robust policy is put in place. I acknowledge the remarks of a wide range of noble Lords, including the noble Lord, Lord Low, the noble Baroness, Lady Hollins, and the noble Lords, Lord Best and Lord McKenzie, but we are doing this work. It is too soon to make decisions on the specific exemptions that will be applied, but we will bring forward detailed proposals once the work is completed—although, to anticipate the question, that will not be in time for Report. Indeed, to jog back to the previous amendment, I do not anticipate that the work on the work allowances that we discussed in UC would be done in time for Report. As I mentioned previously, the change will apply only to new universal credit claims from April 2017.
Baroness Manzoor
I thank all noble Lords who took part in discussing the two amendments. I am very grateful to the Minister for stating that there are likely to be exemptions in certain aspects of this area. Of course, my amendment referred to current entitlement—the 16 year-olds who currently are entitled to housing benefit—and I wanted to safeguard that same provision for the future, for the reasons so well articulated by noble Lords. I personally would have preferred to see what the exemption said.
On that basis, I am particularly keen to explore this area much further, because I am very concerned about those of 16-plus and the fact that they are excluded from the 18 to 21 year-old group, for their vulnerability in terms of work and where they are going out to work. I am thinking of someone living in a small village. That comes to mind when I think of two young people who may well be searching for work; they are very likely to go into low-paid work. That means that if they are going into the city, which is quite a number of miles away from them, they cannot come backwards and forwards from home. In fact, it would be very expensive for them to do so, so they would be looking for accommodation in the cities. They would be unable to do so as matters stand, under this Bill.
I feel very strongly that there needs to be a clause such as the one that I have indicated. Indeed, I take on board the other amendment—and like other noble Lords I am not sure why I did not have my name to it. I understand where the noble Lord, Lord Low, and others are coming from.
I give notice that I shall come back to this amendment on Report. On that basis, I beg leave to withdraw the amendment.
Baroness Donaghy
“Self-employment and minimum income floor
In Schedule 1 to the Welfare Reform Act 2012 (universal credit: supplementary regulation-making powers), in paragraph 4, at end of sub-paragraph (4) insert “, and may prescribe modifications of such provisions in respect of particular persons or classes of persons”.”
Baroness Donaghy (Lab)
In moving Amendment 61, I shall speak also to Amendment 66 in my name. The detailed amendment comes before the general one, but it is about the self-employed—and the Minister will not be surprised by that because I raised this in the Welfare Reform Bill discussions. I am coming back to haunt him.
With approximately 4.8 million self-employed people, this is an important area for growth in our economy, which makes it even more surprising that this Bill makes no reference to the particular and varied needs of the self-employed at such time that they might need some support from the social security system. I am grateful to the Low Incomes Tax Reform Group for its briefing.
Amendment 66 would add a new reporting obligation on the Government about self-employment and the impact of the minimum income floor in particular. The self-employed are a very diverse group which includes freelancers, farmers, seasonal traders and workers in construction and IT. Their needs will be different if their businesses are start-ups or are ongoing business. We need an annual government assessment. Some will take up to five years before their business is viable, and some will experience extremes of volatility in their income depending on their profession. We do not know enough about how this diversity fits into the social security system. The self-employed might be flexible, but their experience of the system is anything but.
I am arguing for a different system for the self-employed and for groups within the self-employed, particularly bearing in mind the Chancellor’s announcement that the minimum income floor will be the equivalent of the national living wage from next April, when it was originally the statutory national minimum wage. That is comparatively good news for the employed, but is bad news for the self-employed. To require the self-employed claimant to achieve an earnings pattern similar to that of the employed claimant is fundamentally to misunderstand the nature of profit and to ignore the fact that a business has to meet its costs and expenses before it can declare a profit. They include rent, heating, lighting, office equipment, vans, tools et cetera.
Reporting to Parliament would help to reveal what work is organised and regular under the new, much more stringent test to qualify for working tax credit. It would help to reveal how monthly reporting to DWP for universal credit purposes adds to the difficulty in the lives of the self-employed. This also has to be seen in the context of the Chancellor’s recent announcement that small businesses will have to report quarterly from 2020 instead of annually, just as our largest companies are dropping quarterly reports to their shareholders. Apparently, it is going to be made easy because the Government are,
“going to build one of the most digitally advanced tax administrations in the world”.—[Official Report, Commons, 25/11/15; col. 1361.]
Does that statement not fill you with terror?
The assumption is that more frequent reporting will improve accuracy, but that is far from the case. It does not take account of annual reconciliation, disputes about holidays or sickness, seasonal working or long periods of not working for freelancers, particularly writers and actors. We have the best actors in the world, but it is important that they do not all come from Eton. Equity recently conducted a survey of its members and found that 20% had claimed some form of benefit in the previous 12 months and more than half of them had claimed tax credits. When asked about their earnings, 25% of Equity members said that they earned between £5,000 and £10,000 from their self-employed work in the previous 12 months, and just over 23% earned between £10,000 and £20,000. Equity has said that when you factor in net profit figures, it is clear that many will hit the problem of the minimum income floor. I hope I will be forgiven for repeating what I said at Second Reading, which is that is that a minimum income floor is set for the self-employed who are deemed to be earning the national minimum wage—recently changed to the national living wage—whether or not they earn it.
You could argue that at least this is equal misery for all under the new system, but it is worse for those self-employed people with fluctuating earnings. If earnings in any month from April 2016 onwards are high enough to disentitle the claimant from universal credit, the surplus earnings regulations will apply to bring the surplus earnings in that month into account as earnings for universal credit purposes in each of the next five months. To summarise, actors will be worse off because of the application of the minimum income floor. That is why I ask in Amendment 61 for more flexibility to be applied to certain work groups because of their fluctuating earnings. It may seem an obscure amendment because it refers to the Welfare Reform Act 2012. However, the purpose is the same as it was when we discussed the self-employed during the debates on that Act. There is no evidence that a flexible approach has been adopted since the Act, and I do not believe it is impossible to prescribe the modifications that I have asked for.
To be self-employed, activity needs to be undertaken on a commercial basis, with a view to making a profit, and, as I said earlier, it must be organised and regular. With effect from April 2016, a self-employed claimant must register as self-employed with HMRC for self-assessment and provide their unique taxpayer reference with their working tax credit claim. It remains uncertain how HMRC will determine whether an activity is undertaken on a commercial basis; whether there will be different interpretations of whether someone is employed or self-employed for tax and tax credit purposes; and how claimants and prospective claimants will be helped to ensure that they claim on the correct basis to avoid unwittingly incurring an overpayment. HMRC is still developing its guidance, apparently.
The Minister’s letter to Peers of 25 November 2015 says that the same tests for determining the commerciality of a trade will be applied to tax credits as to income tax. However, the Minister goes on to say that if HMRC decides that the test is not met for tax credit purposes, the income from the activity will still be subject to income tax. It would be interesting to know on what basis that income would be taxed; if it were taxed as profits of a trade, it would be an indication that the tests of commerciality are not the same.
The minimum income floor will be particularly problematic—a word that I cannot say—for seasonal trades and trades that take more than 12 months to move into profit; newly established businesses taking on their first employee; businesses experiencing a downturn, a bad debt or the bankruptcy of a key customer; businesses depending on the weather; and businesses that incur large expenses in certain months. I have already mentioned entertainers and those in other unpredictable trades, but there are also bed and breakfast owners in the winter season; arable farmers who earn all their profit at or around harvest time; and livestock farmers, who face the cost of rearing and getting their livestock to market.
The fundamental objection to the monthly minimum income floor is that it opens up a gap in the treatment of employed as opposed to self-employed claimants. For example, a livestock farmer who has had his universal credit restricted by the minimum income floor in the seven months of the year when he makes little or no profit, and who receives no universal credit at all in the five months in which his business becomes profitable, will be entitled to considerably less universal credit over the course of the year than an employed claimant who may earn the same over the whole year but whose earnings are spread evenly over 12 months. It is wholly wrong that the amount of welfare support that a worker receives should depend so much on cash flow rather than earnings. The position is made worse by carrying forward surplus income and expenditure with a view to total annual profits being assessed over the course of the year, as the minimum income floor will continue to be applied on a monthly basis.
Many self-employed claimants will be disadvantaged by the minimum income floor even when their annual profits exceed it. Given that the intention of universal credit is to assist claimants at the point when they most need help, it seems perverse to restrict entitlement when cash flow is at its lowest and to exclude from entitlement when profit from that expenditure is finally received.
For claimants whose income and expenditure arise unevenly, would the Minister consider accepting Amendment 61 so that they may opt for appropriate and tailored conditionality instead of the minimum income floor? This would limit the risk to the DWP while addressing an otherwise unfair anomaly. Assuming that a statistical framework is already in place for self-employed and the minimum income floor, why should it not be made publicly available and sector-specific so that we can see who is most disadvantaged?
Baroness Campbell of Surbiton (CB)
My Lords, before I speak to Amendment 67 I apologise to the Minister for not being here at Second Reading. Unfortunately, it clashed with the hearing of the Select Committee on the Equality Act on disability provisions and I was very torn as where to go, so I ask him to forgive me for not being there at that time.
I am delighted that Amendment 67 has the support of the noble Baroness, Lady Doocey, and my noble friends Lord Low of Dalston and Lady Hollins. Amendment 67 would require the Secretary of State to report each year on the Government’s progress in meeting their commitments to halving the disability employment gap. My amendment is designed to ensure that this commitment has the prominence it needs if it is to come to fruition.
I was delighted and honoured to receive many invitations last month to speak on the 20th anniversary of the Disability Discrimination Act 1995. One of the key objectives that drove our campaign at the time was to end discrimination faced by disabled people in the workplace. The Disability Discrimination Act made it unlawful to discriminate against disabled employees, which was a good start, but we all know that legislation alone cannot provide all the solutions—and it did not.
One need only glance at the statistics to see that disabled people are still facing significant challenges which prevent them pursuing interesting careers. At present, the employment rate for disabled people is 47.6%; for non-disabled people, it is 80.5%—a gap of over 30%, and it has been stuck at that level for more than a decade. The Government identified this gap as one of their election priorities and committed to halving it by the end of the term. That was a very bold commitment but one that I praised enormously.
The Minister for Disabled People in another place has put his weight behind the Disability Confident campaign to raise employers’ awareness of disabled people’s potential, in the hope that they will get the same opportunities as their non-disabled peers. It is a laudable aim but not quite as new as it purports to be. The Business Disability Forum has been promoting a similar campaign in great detail for years upon years. Nor is this a solution to the gap. It helps, of course, but it will not achieve the objective on its own. As many organisations working in the field have found, awareness-raising is important but it goes only so far—and not that far, I am afraid.
The disability employment gap illustrates the systemic and deep-seated inequality that disabled people in the workplace face. It is constantly there, whether the economy is booming or in recession. That is why the Government need to step up their oversight and target action where it is needed. It is not enough simply to count the employment numbers. It is the employment gap that needs to be measured in more detail. The Minister for Disabled People in the other place said that measuring progress towards full employment will include some—I repeat: some—reporting of the gap. That is of course welcome but, if change is to be driven across government, we need to have a proper reporting mechanism enshrined in law to incentivise all departments to scrutinise what goes on beyond the headline figure. Reporting against specific groups of disabled people will give the Government a greater understanding of how to tackle the complex reef of barriers to work. These are deeply ingrained at every stage of the path to employment, including further and higher education and apprenticeships, which I shall come to later.
Support for disabled people in other areas is crucial to their ability to work. It also needs factoring in when addressing the employment gap, as I shall briefly illustrate. In a recent research study carried out by the charity Scope, 79% of disabled users of social care said that support services are vital to help them to work, seek work, volunteer and study. The research further showed that fewer than half of disabled people now receive the support they need to live independently and access jobs.
Inadequate support for independent living is another massive barrier to the employment of disabled people. Without assistance to get out of bed, wash, dress, have breakfast and leave the house, it is nigh-on impossible to find and retain a job. The lack of work income has an impact on the independence of disabled people, and in the end creates a vicious circle. Therefore, reporting on the gap would help the Government to get a more accurate picture of what is behind these figures. It would enable them to plan a well-co-ordinated cross-departmental response to the long-term chronic unemployment cycle in which disabled people are caught.
In the recent spending review it was announced that more than £115 million would be invested in the joint health and work unit. A requirement to report annually to departments on progress towards halving the disability employment gap, in the detail set out in my amendment, would support the unit and provide a cross-departmental employment focus.
I look forward to the Minister’s response to my amendment. I hope he will appreciate that it is an enabling amendment that is intended to be helpful and to ensure that the Government continue to support disabled people in playing an active role in our country’s growing economy. It is time to move on from awareness raising.
Baroness Doocey (LD)
My Lords, I rise to support Amendment 67 in the name of the noble Baroness, Lady Campbell of Surbiton, and in particular to support the right of disabled people to access employment. As the noble Baroness has just said, it is quite shameful that almost half the working age population of disabled people is without a job.
The Bill includes little detail on how the Government plan to halve the disability employment gap. Perhaps the Minister could kindly tell the House what practical and measurable steps they are taking to achieve the target and how they plan to involve disabled people themselves in formulating the plans.
Disabled people clearly know from personal experience the barriers they face to finding and staying in work; despite the best intentions of successive Governments, disabled people face major discrimination when trying to get work. Employer attitudes are a particular problem, not because employers do not care but because they often see disabled people as “risky hires”.
One of my friends, who has an excellent degree, exceptional IT skills and is very personable, has spent 10 years trying to get work without success. The fact that he is blind has been a major problem, largely because employers have absolutely no idea what specialist equipment is available that would allow him to play a full part in the workplace. He tells stories of explaining to employers that he can type because there is a special programme. It is not that employers do not care; they do not know. It is therefore essential to find ways to educate employers about the specialist employment support that is available to disabled people. Although I am sure that the large employers understand what systems are available, I have spoken to about 50 SMEs and the vast majority have little or no idea of how disabled people operate and the huge contribution they could make to their business.
In the latest spending review the Government announced plans for a new work and health programme to provide specialist support for claimants with health conditions or disabilities and those who have been unemployed for more than two years. Can the Minister confirm that the programme will be similar to the Work Choice model and say whether it will respond directly to the specific barriers to work that disabled people experience?
Access to Work is a vital scheme that enables many disabled people to stay and progress in work. The Government also announced in the spending review a real-terms increase in spending on Access to Work. This is extremely welcome, but it can only make a difference if employers and disabled people know that it exists. This is not the case all the time. The investment also comes with a great opportunity to improve Access to Work itself. Will the Minister, for example, consider an approach which delivers Access to Work through a single personal budget for employment support that is available both before and during employment? Disabled people tell me that this could make a huge difference, because it would guarantee prospective employers that any adjustments a disabled person needed would follow the person and would already be in place. It would take away the concern that they would not be able to provide what was needed.
If reporting requirements are included in the Bill, it will provide a departmental and cross-government focus on these laudable goals and ensure that achieving them is embedded in the organisational culture. It will also ensure that successive Governments remain committed to delivering the changes in policy, practice and, more particularly, public attitudes that mean that disabled people can find the employment they want and so desperately need.
Baroness Pitkeathley (Lab)
My Lords, Amendment 64 concerns those people who are kept out of the workforce as a result of their caring role. Every year, 2.1 million people take on an unpaid caring role and nearly 2.1 million people find their caring role comes to an end. While not of all of those whose caring role finishes have given up work to care or may be of working age, a considerable number of them are in that situation. Indeed, Carers UK research shows that 2.3 million people have given up work at some point to care, unpaid, for loved ones.
People give up work to become a carer for all kinds of reasons. It may be simply through personal choice or because there are some unreliable services out there that provide substitute care. Others feel forced to leave through a lack of carer-friendly employment practices such as flexible working and paid care leave.
The Government do not currently collect information about the number of working-age carers who remain out of work after their caring role ends. However, evidence from Carers UK’s Caring and Family Finances inquiry indicated that former carers who are of working age remain significantly less likely to be in work than non-carers of working age.
Leaving work to care puts pressure on the day-to-day finances of carers and their families, but it can also have far-reaching consequences for their long-term financial independence as they struggle to return to work after a caring role. Former carers out of work report high reductions in their income as a result of the legacy of caring, with over 80% saying that their income was more than £10,000 a year less than it would have been if they had not been carers.
The end of caring responsibilities can cause complete disruption to family finances, but the wider economic impact is also vast. Research from Age UK and Carers UK indicates that £5.3 billion has been wiped from the economy in lost earnings because of people who have dropped out of the workforce due to caring. Providing the right amount of support to enable carers to return to work is essential, not only for their health, well-being and finances but for the wider economy.
Our ageing population and the fact that more people are living with long-term conditions means that the demand for care will rise. Measures therefore need to be in place for those who choose to give up work to be able to return. A requirement to report on the support available to former carers and the number of former carers in employment would ensure that this often-hidden group would be given the tailored support they need. Does the Minister acknowledge that more needs to be done to help former carers back into employment and will he undertake a review of the support currently available to former carers? Does he agree that helping former carers back to work benefits both the carer’s own personal health and finances and the economy as a whole?
Baroness Hollins
My Lords, I will speak to Amendment 67, in support of my noble friend Lady Campbell. Given the Government’s ambitious commitment to halve the disability employment gap, it seems logical and common sense to require the Secretary of State to report on progress, but such a report would need to be broken down by disability or impairment. For example, the Spinal Injuries Association draws attention to a number of issues that prevent people with new spinal cord injuries returning to work. I shall mention just two of those. The first is the need to have the right care and support package in place that is flexible enough to enable a person to work. The second is the need for accessible transport to and from work.
The employment rate for people with learning disabilities, mental illness and autism remains stubbornly low, which highlights the very real structural and attitudinal barriers that exist for them. Worryingly, the Health & Social Care Information Centre reports that the percentage of people with learning disabilities in paid work has dropped from 7.1% to 6% in the past few years. To be frank, the current government employment schemes have failed people with learning disabilities. The National Development Team for Inclusion has done some thorough research into the cost-effectiveness of employment support for people with mental health problems and learning disabilities. It shows that much of the current public spending in this area is being wasted, as it goes on non-evidence-based models that are more expensive and have poorer outcomes than the approaches that do work. If scaled up, effective interventions could be expected to support up to three times as many people in retaining paid work. This would save considerable sums in traditional care services.
A major obstacle for people with learning disabilities to getting into work is the lack of aspiration, for themselves if they have grown up not having any expectation of working, and of their families, their supporters and the professionals who advise them. The two approaches found by the NDTi to be effective were individual placement support and supported employment. I declare an interest here as I have published a book for employers which tells the story of Gary Butler and his work at St George’s, University of London, where he is employed to teach medical students how to communicate with people with learning disabilities. It is interesting because it is a job which only those with learning disabilities can do. The normal image of work that is suitable for such people is traditionally along the lines of collecting trolleys at Sainsbury’s and so on, but there are jobs which are particularly suited to people’s own needs and interests. St George’s has been employing two people with learning disabilities as trainers for 23 years. It is something that I initiated after having seen a similar kind of scheme in Boston.
With the right support, people with learning disabilities and those with mental illness make valued employees who are more likely to stay in work with lower sickness rates than non-disabled people, and there is research evidence for this. I hope that the Minister will recognise the value of a detailed report so as to understand any remaining barriers to halving the disability employment gap and, as my noble friend said, to get behind the figures.
Baroness Drake (Lab)
My Lords, I rise to speak to Amendment 64A. On 25 November, the Chancellor stated that he was determined that the economic recovery would be,
“for all, felt in all parts of our nation”.—[Official Report, Commons, 25/11/15; col. 1358.]
Increasing employment is a key indicator of the benefits of economic recovery, but there is much debate about whether the increase has been at the cost of job quality, weak pay growth and productivity performance, and rising and deepening job insecurity for a significant number of workers. Understanding the reality and extent of these concerns is important to understanding progress to full employment. Level of employment is a necessary but not sufficient indicator of whether the recovery is benefiting all parts of the nation and providing opportunity for all, which the Chancellor aspires to.
The plethora of amendments to the Clause 1 obligation to report on progress to full employment reveals that many noble Lords share that concern, if for slightly different reasons. Amendment 64A requires the report to address additionally what is happening within the labour market, in particular but not exclusively in terms of changing employment practices and types of employment, as well as on self-employment, non-guaranteed hours of work, quantitative and qualitative underemployment—that is, people working fewer hours than they want, or at a lower level of skill than they are capable of—and younger workers.
The UK Commission for Employment and Skills reports that, since 2008, the UK labour market has been more efficient than some other economies in keeping people at work, but that there have been significant changes in the nature of that employment and that those at the margin are impacted especially harshly. Labour productivity is struggling to recover. This results from factors such as the decline in youth employment, rising underemployment, a falling number of jobs in middle-skill occupations and a shift to a lower-wage, lower-skill economy. There are concentrations of unemployment and evidence of quantitative and qualitative underemployment. The commission found that nearly half of establishments reported that they had employees with skills more advanced than their job required, which accounts for 16% of the workforce and 4.3 million workers—indeed, more than are considered to have a skills gap.
If the commission is correct, when it comes to considering how full employment is interpreted, the available supply of labour will be much bigger than those officially classified as unemployed. Economic growth has increased employment but not always of the type and with the hours that people seek. If the Government want to achieve opportunity for all and lower welfare, the higher minimum wage cannot be a direct replacement for welfare. Arithmetic tells us that the £4 billion rise in pay it will produce will not compensate many whose benefits will fall as a result of the £12 billion cuts. The minimum wage targets the hourly pay of low earners and we hope that it will deliver increased productivity. Welfare supports low-income families. A goal to benefit all families needs the progress report to cover types of employment and practices.
The rise in self-employment—83% of net gains in employment between 2007 and 2014, rising to 4.5 million and 15% of workers—was accompanied by a 22% fall in self-employed average median income. The Resolution Foundation found that more than half of full-time, self-employed people are low paid, compared to around one in five employees. My noble friend Lady Donaghy gave an excellent articulation of the problem and any repetition from me would merely detract from that clarity. To restate, increasing the minimum wage is a solution largely confined to those directly employed. The minimum wage does not apply to low earning, self-employed people. Whether self-employment falls with recovery is uncertain, but policies focused on increasing high-wage employment need to deliver for the self-employed too.
The labour market has witnessed the rise of other precarious forms of employment, such as a sustained increase in the use of fixed-period contracts, casual employment, short-term arrangements and non-guaranteed hours. Recent ONS updates on the use of non-guaranteed hours contracts—zero hours for short—reveal around 1.5 million such contracts where work was carried out in the survey period, which is an increase of 6%. But in addition to the 1.5 million, there were 1.9 million contracts where no work was carried out, which is up from 1.3 million. This is not a small business phenomenon, as nearly half of businesses with employment of 250 or more make use of non-guaranteed hours contracts, compared with 10% of businesses with less than 20.
The key observation is that the increased use of non-guaranteed hours contracts over a period of stronger employment recovery suggests that they are becoming a permanent feature. The Resolution Foundation comments that,
“it is clear that this form of working is not fading away as our employment recovery gains ground … some people value the flexibility offered by ZHCs, for many they bring deep insecurity … for those affected—particularly in low-paying sectors … the danger is that job insecurity is becoming deeper”.
The Clause 1 report needs to inform us whether such contracts are becoming a standard form of employment in low-paid sectors, such as hospitality, care and retail, and how the Government will respond.
Baroness Manzoor
My Lords, I shall speak to my Amendment 65. I recognise that my proposed new clause may be imperfectly drafted, as the word “disabled” should perhaps have been defined. As this is a probing amendment, I hope the Committee will make allowances.
My amendment is pretty self-explanatory, in that it requires the Secretary of State to,
“lay a report before Parliament annually on the progress which has been made towards halving the disability employment gap”.
It also requires that,
“the report must set out how the Secretary of State has interpreted ‘disability employment gap’ for these purposes”.
I would like the report to include,
“an assessment of the sectors in which disabled people have primarily secured jobs … an assessment of the type and level of jobs primarily secured by disabled people, and … an assessment of the progression of disabled people within the job market”.
My amendment will help to improve the transparency of employment outcomes for disabled people and allow monitoring of the Government’s target.
I am, however, rather concerned because we have asked the Minister for reviews of sanctions, conditionality criteria and so on. From my perspective, we have not had an answer that might have given us some hope. However, I hope the Minister will give this measure careful consideration because, across the Committee, I see there is some support for it.
Baroness Lister of Burtersett
My Lords, I shall speak briefly in support of Amendment 64 in the name of my noble friend Lady Pitkeathley, an indefatigable champion of the rights of carers. I also express my support for other amendments, particularly those concerning the disability employment gap, on which we heard very eloquent arguments from the noble Baroness, Lady Campbell of Surbiton.
It is very welcome that the constraints on labour market participation created by the care of children are much better recognised now than they were in the past, but we still have a long way to go with regard to carers, who are an increasingly important part of the labour force. I hope that the carer strategy the Government are working on will address the need for policies that make it easier to combine paid work and care, such as the statutory paid care leave for just a few days a year which many other countries provide. I have argued for this very important policy in relation to a number of Bills going through your Lordships’ House. We are becoming a laggard compared with other countries. We can learn a lot from them.
As care is such an important part of the economy, the amendment underlines the case for reporting on the position of carers and former carers in the labour market as part of any duty to report on employment trends. I suggest that it might go a bit further, so that any such report includes information on those who combine paid work and care and those who have had to give up paid work to care, as well as former carers.
Baroness Grey-Thompson (CB)
My Lords, I speak in support of Amendment 67 in the name of my noble friend Lady Campbell of Surbiton. I wholeheartedly support the Government’s laudable aim to halve the employment gap. Leonard Cheshire has called it the most ambitious and exciting commitment to disabled people in the last decade. However—I am sure that the Minister was expecting a “however” from me—without reporting it becomes just awareness. Awareness will not do it. There has been awareness-raising for as long as I can remember. There is a moment of “wake up”, when people realise they should be slightly more open to disabled people, but then they forget what they are meant to do. Charities such as Scope, Mind and Mencap, to name a few, have had amazing public campaigns to raise awareness. There is a host of such organisations. Disability Confident is a bit of a step forward, but the shift in attitude is minute. We know that because the employment gap still exists.
It is important to look at the reality of how this changes for specific impairment groups. We are not one homogeneous group. We are not “the disabled”; we are disabled people. Different solutions will be required for different people: two wheelchair users do not require the same solutions, let alone the difference between me as a wheelchair user and somebody with a learning disability. We can all be treated and discriminated against in very different ways. With changes to things such as disabled students’ awards and Access to Work, which is too complicated and inflexible—it takes too long to apply to get support—and the other changes that have come in, a number of people have written to me to say that their access to work has been cut with extremely short notice. They have gone from full-time support to suddenly having 12 hours a week. They are then pushed out of work. Instead of helping them it is making their lives far more complicated.
Disabled people are tired of awareness; we are tired of waiting. Disabled people just need a bit of help. The biggest change will come if we move away from awareness. If the Government are really serious about closing the employment gap, the tone must come from this Chamber and the other place with them accepting the amendment.
The Lord Bishop of St Albans
My Lords, I rise briefly to support Amendment 65 in the name of the noble Baroness, Lady Manzoor, and Amendment 67 in the name of the noble Baroness, Lady Campbell of Surbiton, which would legislate for a disability employment gap reporting obligation.
If we are to take the Government at their word—that the measures in the Bill reducing benefits for the disabled are about incentivising work, rather than simply cutting the cost of the benefit budget—I freely applaud the intention, if not necessarily the execution. The disability employment gap is, of course, a sad indictment of a society that has for perhaps too long been willing to ignore the aspirations of the disabled to engage fully in society through work. As the Government’s own impact assessment found, 61% of those in the work-related activity group want the opportunity to earn a living. It is quite right that the Government have committed to this laudable aim of halving the disability employment gap. We all applaud that.
There are, of course, measures within the present Bill that the Government claim will contribute towards reducing the employment gap by incentivising paid employment; the WRAG cut is the obvious example. However, as was evidenced in this Chamber last week, there are quite a few people with a great deal of experience in this area who have grave concerns about the effectiveness of the measures. This kind of carrot-and-stick approach cannot be a substitute for the proper strategic, joined-up thinking across the departments that will be required if we are to help disabled people overcome the considerable challenges they face in entering or re-entering the workplace.
I acknowledge that the Government are making good progress on this issue on some fronts. For example, I welcome the announcement in the spending review of the new work and health programme. However, a proper reporting obligation will bring much needed clarity and transparency to the issue of disability employment, as well as allowing the Government to think more strategically about how best to allocate resources in an effort to close the gap. This obligation is made even more essential, given the seriousness of the implications of measures like the ESA WRAG cut for those who currently rely on such benefits. If the WRAG cut does not facilitate increased numbers of disabled people moving into work—or, even worse, makes it harder for them to find employment, as a number of charitable bodies have suggested—we need to know about it. These amendments would cost the Government almost nothing, but would give them a sound platform going forward as they seek to fulfil this excellent pledge to close the disability employment gap. I therefore hope that they will support some form of these amendments as we go forward.
Lord Suri (Con)
My Lords, it is a pleasure to be able to support Amendment 67, which is crucial. At present, the disability employment gap means that disabled people are over 20% less likely than their counterparts to be in full-time employment. Employment has many benefits other than the obvious one of economic advantage. The recognition of your employment acts as an important societal signal, improving your reputation among your peers. Furthermore, in what the Prime Minister has termed the “global race”, the cost to the country of having unutilised human capital is immense. Quite simply, high levels of unemployment for the disabled are not something we can afford.
The new clause which Amendment 67 would introduce would nudge the Secretary of State into dealing properly with this issue, and laying out a clear strategy to close the disability employment gap. The current Secretary of State has made significant strides towards helping the disabled into work. It would also allow Members of Parliament and Peers to scrutinise the work done in this field separate from any other scrutiny of employment statistics which goes on. Some might argue that this is not required or that it is impracticable to have a separate report for disabled people but, as the amendment says, these people are,
“marginalised from the labour force and require a specific focus”.
Lord McKenzie of Luton
My Lords, before I get to Amendment 62, I will comment on the range of amendments which other noble Lords have spoken to. Each of these has the aspiration of getting appropriate reporting requirements from the Government, particularly to address the challenge of closing the disability employment gap. We heard from the right reverend Prelate the Bishop of St Albans about the importance of reporting, particularly in the context of something such as the ESA WRAG. If that is going to challenge closing the employment gap then reporting is needed to make sure it is better addressed. He said that we have ignored for too long the aspiration of disabled people to work.
Lord Freud
My Lords, I start by addressing the amendments relating to self-employment, Amendments 61 and 66, tabled by the noble Baroness, Lady Donaghy. Amendment 61 relates to self-employment and the minimum income floor, and how it works within universal credit. Universal credit is there to support those on low incomes and ensure that work always pays. It supports self-employment where it is a realistic route to financial self-sufficiency, alongside other support available to help businesses.
However, the welfare system is not there to prop up unproductive or loss-making businesses. The minimum income floor is there to incentivise individuals to increase their earnings from their self-employment. Those subject to the minimum income floor are exempt from having to search for or carry out any other work, allowing them to concentrate on making a success of their business and maximising their returns up to and beyond the level of the minimum income floor. I should just point out that the changes to the national living wage mean that the pay of the competitor to the self-employed will go up, so in relative terms they have an opportunity also to increase their pay. The other thing that the minimum income floor does is address a loop-hole in the tax credits system whereby individuals can report little or zero income but still receive full financial support, which is neither a desirable or sustainable situation to maintain.
Amendment 61 seeks to allow for flexibility in the application of the MIF. This power already exists and provides a number of significant easements on when the MIF is first applied and the level it is set at. The most significant example of this is our exemption from the MIF, for up to 12 months, of claimants who are within one year of starting out in self-employment and are taking active steps to increase their earnings. Monthly reporting allows universal credit to be adjusted on a monthly basis, which ensures that claimants whose income from self-employment falls do not have to wait several months for an increase in their universal credit. Following a report from SSAC, we have put in big disregards on the surplus earnings on a monthly basis. This approach eradicates the overpayment and underpayment issue generated by the current system, which is done on assumed average earnings.
The noble Baroness was quite right that we need to make this work for particular groups. She picked out Equity, with which we do have regular meetings, to make sure that we understand not so much its concerns as the reality of the working lives of people within Equity and adjust to them. We are testing how to provide support for the self-employed and to help them increase their earnings, employing some specialised work coaches in a trial. We will test all this out as we roll out. The noble Baroness is, of course, well ahead of the game. The number who are self-employed among universal credit claimants is currently low. We need to monitor how all this works, including the implementation of the minimum income floor, as we roll out universal credit with more self-employed in it.
Baroness Drake
The Minister is taking us through a series of reasons why he cannot give the granularity in the report that people seek. Given that the Chancellor said that it was his aspiration to have a higher-wage, low-welfare economy that benefits all, unless Parliament has some granularity in the metrics for assessing that progress, it sounds as though the Chancellor is setting his own aspiration and his own marking system. Everyone agrees that there has been a material change in the nature of employment over the last 10 years, which influences what people can earn and how they can participate in the labour force. If one aspires to a low-welfare economy that benefits all, we need to understand these trends and what is happening to people with disabilities, the self-employed, carers, people on zero-hours contracts and so on. The Minister seems to be listing why that cannot be provided.
Lord Freud
As the noble Baroness knows perfectly well, so I do not have to tell her, a lot of these issues are quite contentious and there is a lot of analysis going on, some of which takes many years to complete and to come to fruition. Our problem is that this commitment runs through the rest of this Government to 2020, and putting in some of the management information requirements that these amendments in practice look for is expensive and risks delaying universal credit, because we are on a tight timetable. I know noble Lords have a primary interest in seeing us move with as much speed as we safely can. We would probably not be provided with adequate information anyway, given the length of time it takes to get it into shape, to take us out to the 2020 deadline. I hope that has cleanly summarised why we are not objecting with horror to the prospect. We looked at it very deeply, but we have to use the information that is available and the extra information we are gathering to get this report to work.
Baroness Drake
I am not trying to put an argument for deferring universal credit, and I understand some of the difficulties, but at the very least the Government should be able to commit to giving us an interim report on the progress they are making on these issues, so we can begin to understand the likely developments and how successful the Chancellor’s aspirations are.
Lord Freud
The whole point of our clause is that we will set out our proposals on how we intend to report on employment. Clearly, a lot of the thoughts expressed here and the specific requests and reasoning are pretty valuable to us as we develop how best we can do a good report on what is happening to our progress to full employment.
Our latest figures on NEETs are rather encouraging and show that around 14% of 16 to 24 year-olds are NEETs, which is the lowest figure on record. It is a constantly changing group, and many people leave the labour market for short periods between jobs, so it does not tell us, of itself, where we stand in relation to full employment. Zero hours—which I almost thought I would not talk about, because we always have a little snip at each other about it—is only 2% of the market and we have outlawed exclusivity clauses in those contracts. Over the past year, part-time work has been driven entirely by people choosing to work part-time, which might not have been the case in the depth of the recession. Again, it is a constantly changing group.
On some of the concerns expressed by the noble Baroness, Lady Drake, I sometimes feel I am living in a parallel universe. Employment growth has been dominated by full-time and permanent employment. It has risen in all regions since 2010. Underemployment is on the turn and going the right way. Wages are now growing quite a lot faster than inflation and temporary work in the UK is among the lowest, so the trends are a lot more encouraging than they have been.
Given these arguments, and given that statistics on these issues are already widely available, I do not believe that specifying them in the report is necessary. However, I understand that full employment is not just about a particular percentage of working-age adults in work, and, as I have said, we will give further consideration to how this annual report can best reflect the diversity of labour. I apologise for the length of my response. I urge noble Lords not to press their amendments.
Baroness Donaghy
I thank the Minister for his response, which I will read carefully in Hansard. I thank noble Lords who have taken part in the debate. In view of the time, I shall be brief. The point of this group of amendments to this important part of the Bill was to indicate that some of us do not think there is sufficient focus on these areas when the issue of social security comes into consideration. These are not add-ons. Like the Minister, we sometimes think we live in a parallel universe. It is not a question of propping up failing businesses; it is a question of some seasonal and fluctuating businesses wanting their annual income to be taken into consideration, so there is some fairness when they claim for social security. The Minister says that there is some flexibility already and the powers already exist, but I have to say there is very little evidence for that, apart from the grand announcement that those in the first year of business will be exempt.
Yes, the number of self-employed on universal credit is low, but if you see an articulated lorry thundering down the middle of the road towards you, you probably have an idea that you might get run over if you stay in the same place. All I am trying to say is that the establishment of a minimum income floor will cause trouble with universal credit in future—and it would be well to heed that warning. In view of the time, though, I beg leave to withdraw my amendment.
Baroness Sherlock
“Disability living allowance (mobility component) for young children
In section 73 of the Social Security Contributions and Benefits Act 1992 (the mobility component), for subsection (1) substitute—“(1) Subject to the provisions of this Act, a person shall be entitled to the mobility component of a disability living allowance for any period and throughout which—
(a) he or she, from birth and on account of a condition, must always be accompanied by bulky medical equipment which cannot be carried around with him or her without great difficulty; or(b) he or she, from birth and on account of a condition, must always be kept near a motor vehicle so that, if necessary, treatment for that condition can be given in the vehicle or the child can be taken quickly in the vehicle to a place where such treatment can be given; or(c) he or she is over the age of five and is suffering from physical disablement such that he or she is either unable to walk or virtually unable to do so; or (d) he or she is over the age of five and falls within subsection (2) below; or(e) he or she is over the age of five and falls within subsection (3) below; or(f) he or she is over the age of five and is able to walk but is so severely disabled physically or mentally that, disregarding any ability he or she may have to use routes which are familiar to him or her on his or her own, he or she cannot take advantage of the faculty out of doors without guidance or supervision from another person most of the time.””
Baroness Sherlock
My Lords, I seek clarification on an issue that was raised with me by a charity called Together for Short Lives, which represents parents and children with life-limiting and life-threatening conditions. The amendment is brief but the issue is this: I understand that children under three are not eligible for the higher-rate mobility component of DLA. I believe that the rationale is that children under three are generally not independently mobile, although anyone who has babysat a toddler might disagree. The assumption is that under-threes will have to be carried in arms, lifted into prams and buggies and from them into cars and car seats anyway, whether or not they have a disability.
For most children and their parents that is true, but Together for Short Lives points out that there are small numbers of children who need help and should have access to the mobility component of DLA. That is because there is a small group of children who depend on ventilators for survival, who may have one or more shunts and IV lines for feeding or drug administration, or other technologies that are life-sustaining. The children are in effect constantly attached to life-sustaining equipment that is often bulky or heavy. The child has to be placed in a wheelchair or medical buggy capable of carrying the equipment, monitors and so on, so that the lines and tubes can be securely attached to the child. Parents therefore need specially adapted or broad-based vehicles capable of carrying these small children, linked together with their decidedly not small equipment, securely. The children cannot easily be lifted in and out of cars like most children of their age.
I want to put to the Minister the case for why this small group of children needs the mobility allowance. Some of the children always have to be placed in a medical buggy or wheelchair when not in bed because they need postural support. These are heavy items. In addition to the life-sustaining equipment attached to them, most of these children require a variety of equipment to go with them wherever they are. This could include a spare ventilator and battery, monitors, oxygen supply, a mask, emergency tracheotomy kits and feeding kits. That is on top of the usual paraphernalia that all parents of children under three find that they need to carry with them at all times. The children cannot travel on public transport, because buses will not take oxygen bottles, and there is the inevitable risk of infection.
As well as being susceptible to infection, the children are often prone to medical crises, such as fitting, and their parents need to be able to get them to hospital immediately for life-saving treatment 24/7. If they do not have a car, the children may not be assessed as safe to live at home and will need to remain in hospital or a hospice. As well as being heart-breaking for families and their children, that could, of course, cost rather more than the higher-rate mobility allowance of £57.45 per week.
What would this all cost? As a result of the Welfare Reform Act 2012, disability living allowance has been replaced by PIP for people aged over 16, but DLA is still given to under-16s. This amendment seeks to open up access to the higher-rate mobility component of DLA for under-threes who require life-sustaining equipment as described above. I am told that there are nearly 49,000 children with life-limiting and life-threatening conditions, but only a very small proportion are under-threes who require life-sustaining equipment.
To establish how many might need this component of DLA, Together for Short Lives submitted a freedom of information request to the Department for Transport in 2014 to ask how many parents of children under three had asked for a blue badge because their child was dependent on heavy medical equipment or needed to be near a vehicle in case they need emergency medical treatment. It found that 1,530 children had blue badges. The wording of this amendment is aligned to the criteria for blue badges. If those figures are correct, the cost of giving all 1,530 children access to the higher-rate mobility component of DLA of £57.45 a week would be about £4.5 million. That is a small sum for DWP but would transform the lives of families with a child with a threatening or life-limiting condition.
What I have described feels to me like an anomaly—I cannot believe that the department intended this to happen. I hope that the Minister will give it a very careful response. I am sure that there cannot be anybody listening to this debate here or outside whose hearts would not go out to the children and families in these circumstances. I hope that the Minister agrees that I have made the case that babies and children under three who depend on big and heavy life-sustaining equipment to stay alive and/or have need for immediate access to transport for medical reasons should be regarded as having an additional mobility need and become eligible for the mobility element of DLA. I beg to move.
Lord Freud
I thank the noble Baroness for tabling the amendment and for providing that degree of clarity over its purpose. I must express my own empathy regarding the intention of what this amendment aims to achieve. There can be no doubt about the harrowing position of families with very young, severely disabled children. However, I find myself in the unusual situation of needing to reflect a position set out by the noble Lord, Lord McKenzie, some six years ago when he was the government Minister for Work and Pensions.
On that occasion, what was to become the Welfare Reform Act 2009 was being debated in Grand Committee. Noble Peers may recall that that Act introduced, by way of amendment in the other place, a new provision which now gives access to the higher rate mobility component of DLA to severely visually impaired people. In Committee a further amendment, in much the same terms or at least intended as the amendment we are discussing today, was introduced by the noble Baroness, Lady Thomas, who is not in her place today. On that occasion the noble Lord, Lord McKenzie, was sympathetic to the situation set out by the noble Baroness, Lady Thomas, but ultimately resisted the motion. He said that,
“in this difficult financial climate, we need to consider carefully the potential cost of any such change … This amendment would, of course, result in additional costs”.
He estimated costs at that time to be around £15 million a year and went on to say:
“This would obviously be a significant increase in what is, unfortunately, a difficult economic situation, and is simply not affordable in the current context”.—[Official Report, 25/6/09; col. GC 538.]
I have never been sadder to have to agree with the noble Lord and to resist an amendment.
On the techie side, the amendment confers entitlement to neither the higher or lower rate of the mobility component. That is because the distinction between the two rates has been lost. There would also be some unintended consequences of the amendment—most notably that it would remove entitlement from the 16,500 children and adults who currently receive the higher-rate mobility component as a consequence of a severe visual impairment. However, I think that that is just a matter of drafting and I would not want to dwell on that issue—we could always sort it out.
The primary reason for there being a lower age limit for entitlement is that, while many children can walk by the age of three, not all will do so, regardless of disability, and few will be able to walk for any considerable distance. Age three therefore provides a reasonable boundary line between what may be considered developmental delay and walking difficulties arising from a disability or long-term health condition.
I think we can all agree that the majority of very young children, whether disabled or not, will need a considerable degree of support and help from parents and carers. Most parents will also be reliant on a range of bulky and possibly heavy items, such as prams or buggies, and items of equipment for feeding and changing. Nevertheless, I recognise that some young children with particular conditions may be heavily reliant on additional therapeutic equipment, some of which can be bulky and heavy. However, such technologies are improving all the time and in some instances equipment is becoming lighter, smaller or in other ways more transportable.
Despite the mobility component being unavailable to children solely on the basis of a need for such equipment, there already exists a range of provisions, financial and in kind, which can help support such children and their parents. For example, the care component of DLA places no restriction on how it can be used, and any entitlement to DLA can bring with it access to the disability premiums in the income-related benefits or tax credits. Parents may also be able to receive a blue badge for free parking if their child is reliant on heavy equipment or needs to be near a vehicle for treatment.
That, in turn, leads me to question the provision in the amendment which focuses on children who need to be near a vehicle for treatment or where a vehicle is used to transport them for such treatment. I question this for two reasons. The first is on the basis that the provision could help only those parents who already have use of a motor vehicle or who would gain access to one through the higher-rate mobility component of DLA. As I said earlier, the amendment is not clear in its intent regarding the rate at which children under three should become entitled, meaning that, by effect, it is also not clear whether such children would be given access to the Motability scheme and, in turn, a motor vehicle. Hence, the amendment as currently drafted would exclude families without access to a vehicle.
Secondly, I question this provision on a more practical basis. If a child requires emergency transportation along with bulky medical equipment, it is doubtful whether transportation by the parents would be a reasonable and practical expectation. Our emergency services, which are much better equipped in terms of medical training and suitable vehicles, are in place for exactly this kind of situation.
Finally, I must turn to the financial implications of the amendment, which are estimated to be still in the order of £15 million. Clearly, this amendment goes further than that debated previously and, in the time available, we have been unable to determine how many children could potentially be entitled on the basis of access to a nearby vehicle. However, patently that would add to what is already a significant extra cost burden and would further damage our capacity to stay within the welfare cap.
I am sympathetic to the broad intentions behind the amendment but, particularly now, the Government cannot accept it on the basis of the unfunded cost implications. Therefore, regrettably, I have to agree with the noble Lord, Lord McKenzie, and I urge the noble Baroness to withdraw the amendment.
Baroness Sherlock
My Lords, before I withdraw the amendment, which I will do, can the Minister tell me how many children his costings are based on?
Lord Freud
I thought that I knew the answer to that, but I am a bit uncertain. I hope that inspiration is striking.
Sorry, it is not 1,600; 18,500 children under the age of three are in receipt of DLA and 5,500 children impacted.
Baroness Sherlock
I am grateful to the Minister for that. I am grateful also for his thoughtful reply. When he reads Hansard, and given all that he tells us of his view of the current economic situation and how it compares to when my noble friend Lord McKenzie was in office, he might like to reflect on whether his own assessment may be different from that. However, I can see that the two men are obviously of one mind. I ask the Minister to think very hard. My noble friend Lord McKenzie has put his name to this amendment and is very much supportive of it.
I wonder whether the Minister might also be willing for his department to meet somebody from Together for Short Lives, perhaps with me. I think that they would like to be able to understand the basis of the arguments that he was making, not so much in terms of the money but in terms of other things.
Lord Freud
I would appreciate meeting them with the noble Baroness. I really regret what I have had to say.
Baroness Sherlock
I thank the Minister for that. On that basis, I beg leave to withdraw the amendment.
“( ) information about the uptake of apprenticeships broken down by region, age, ethnicity, disability, sector, qualification and level,( ) a report by the UK Commission on Employment and Skills on the quality of apprenticeships being provided,”
Lord Bassam of Brighton (Lab)
My Lords, before the noble Lord gets to his feet to move his amendment, I have had discussions with the Chief Whip and I am not terribly happy about us proceeding as late as we are. I do not think it is right or proper, particularly since a number of colleagues in your Lordships’ House are severely disabled and they are spending a lot of late hours working on this Bill. I am prepared for us to proceed with this group of amendments, but I hope that this debate can be relatively short, notwithstanding the importance of the issues. I hope colleagues will see sense in that; we should not be working as late as this on this sort of legislation.
Lord Taylor of Holbeach (Con)
I say to the Opposition Chief Whip that the order of consideration was designed at the request of the Opposition, so that those who are severely disabled could participate in the debates in Committee at the beginning of business. I admit that, today, we have had other business to deal with. However, the truth is that we are still not at the point at which we were due to start business on the third day, which was Amendment 72. This House has a tradition that it tries to deliver the business. I understand that I need the support of the Opposition in doing that. I believe that we should complete one more group of amendments, which will take us past the normal hour for taxis but that is not unusual in this House. Given the unusual nature of the discussions that have taken place on this Bill, that is not an unreasonable thing to ask. I hope that the noble Lord—my “usual channels” partner—is prepared to accept my decision. We still have not reached the target we set ourselves when we discussed this matter earlier today.
Lord Young of Norwood Green (Lab)
My Lords, given the time, I shall endeavour to be succinct and to the point. Nevertheless, Amendment 68 is important as it seeks to ensure that we receive a proper report from the Government on the various aspects of apprenticeships defined in it. I shall speak also to the other two amendments in the group.
The Government have set themselves an ambitious target of 3 million apprenticeships during the life of this Parliament. The challenge will be to ensure that they sustain quality as well as quantity. A recent report by Ofsted said that the expansion of apprenticeships has been a disaster, with too many poor-quality programmes that fail to give young people new skills or better chances of a job. The Chief Inspector of Schools, Sir Michael Wilshaw, accuses some employers of wasting public funds on low-quality schemes that undermine the value of apprenticeships. Indeed, a recent Channel 4 episode of “Dispatches” revealed exploitation of apprentices working for the retailer Next.
Poor-quality apprenticeships were particularly prevalent in retail, healthcare, customer service and administration according to the highly critical report from Ofsted. About 140,000 people started apprenticeships in business administration last year and 130,000 began healthcare apprenticeships. Standards were much higher in the motor vehicle, construction and engineering industries, where numbers were much smaller. So far, apprenticeships have not trained enough people for sectors with skills shortages, smaller businesses are not being involved and not enough advanced schemes leading to higher skills and wages are being created. Widespread concern has been expressed by business about the introduction and application of the proposed new training levy.
Amendment 68A, tabled by my noble friend Lady Nye, seeks to ensure accurate reporting of information in the areas of disability, gender and so on. It also contains an important point about the destination data for those completing apprenticeships.
Amendment 69 again draws to our attention the worrying situation for disabled people under the age of 25 seeking apprenticeships. We know that apprenticeships provide an excellent route into work for young people, including disabled people. However, too often apprenticeships are inaccessible to disabled people. The proportion of disabled apprenticeships has declined from 11.5% in 2007-08 to 8.7% in 2014-15. During the passage of the Bill, we would like to see further commitments from the Government to support more disabled people to participate in apprenticeships. This is why I welcome Amendment 69.
I have a few questions for the Minister which I am sure she will enjoy. What steps is she taking to ensure the quality of apprenticeships and to prevent the exploitation of young people, recognising the damage this can cause to the reputation of apprenticeships, and the waste of public funds? What steps are the Government taking to ensure that all schools give career advice on apprenticeships, bearing in mind the need to encourage young women, black and ethnic minority groups and disabled people to recognise the advantages of apprenticeships as a career option? Bearing in mind that only 5% of youngsters aged 16 currently go into an apprenticeship scheme, how will she ensure that young people are made aware of their right to receive proper training and education in a safe working environment?
What steps are the Government taking to expand the participation of small and medium-sized enterprises in apprenticeship schemes, given that only some 25% of them currently take on apprentices? Do the Government plan to expand the use of group training associations and ATAs? What will be the nature of and timetable for the introduction of the new training levy, which I presume will be accompanied by a statutory instrument and an impact assessment? I would be grateful if the Minister confirmed that. Finally, can the Minister comment on the future of UKCES, the United Kingdom skills body? I beg to move.
Baroness Campbell of Surbiton
My Lords, I shall speak to Amendment 69, tabled in my name, and to which I am delighted to see that my noble friends Lord Addington, Lord Low of Dalston and Lady Grey-Thompson have added their names in support. I also support Amendment 68, tabled by the noble Lord, Lord Young, and Amendment 68A, tabled by the noble Baroness, Lady Nye.
My amendment is intended to address the particular barriers faced by disabled people wishing to enter apprenticeships. It places a duty on the Secretary of State to lay before Parliament a report on the number of disabled people aged under 25 who are seeking apprenticeships in order to identify the barriers that prevent successful take-up. The amendment also requires the report to set out examples of good practice by employees and apprenticeship providers that remove such barriers.
I welcome the Government’s commitment to create 3 million apprenticeship opportunities over this Parliament. Apprenticeships provide an excellent opportunity for disabled students wanting to engage in vocational education alongside their non-disabled peers. For many disabled people, it will be the first time they experience mainstream employment and education. Apprenticeships introduce disabled people to the world of work in a supportive learning environment, which is much needed by young people who are facing additional barriers to entering the world of work. In addition, apprenticeships are crucial to the Government’s commitment to halving the disability employment gap—a central plank of their incredibly ambitious aim to cut the welfare budget.
In 2014, Disability Rights UK with the support of Barclays published a guide called Into Apprenticeships. It demonstrated through case studies that apprenticeships provide opportunities for young disabled people to secure training for employment. Such schemes also help employers to become “disability confident”. Noble Lords will recognise that this is also the name of a current campaign being supported by the Minister for Disabled People in another place to encourage employers to remove those disabling barriers. This will boost employment outcomes for disabled people. However, as I said when speaking to my previous amendment, I am sure that the Minister appreciates that awareness and education alone will not shrink the significant employment gap between disabled and non-disabled people. There must also be regular reviews of progress. Existing barriers that prevent disabled people from accessing apprenticeship opportunities must be removed. This is echoed by the Equality and Human Rights Commission in its recent report, Is Britain Fairer?
The requirement for non-specific industry qualifications to access apprenticeships is one of the greatest barriers. In Peter Little’s 2012 report, Creating an Inclusive Apprenticeship Offer, he says: “Apprentices with LDD”—learning difficulties and disabilities—
“are often disadvantaged due to the fact”,
that functional and GCSE,
“qualifications are assessed out of context. Thus an Apprentice working to the vocabulary and numeracy associated with a particular job may find it difficult to relate to a completely different set of language and numbers presented during assessment”.
There is substantive evidence that significant numbers of disabled people, especially people with learning disabilities, are prevented from gaining an apprenticeship certificate because they have not got GCSE maths and English. These requirements could so easily be replaced by the successful completion of work-related requirements such as the relevant industry-accepted vocational qualifications. The National Voice for Lifelong Learning, which has been working with the Government on apprenticeship placements, has said:
“Some learners are more than capable of achieving the competence and knowledge based elements of an apprenticeship but, due to their learning difficulty are unable to achieve English and maths at the required standard. Until there is a relaxing of this rule disabled learners will continue to be disadvantaged in work and training”.
Baroness Grey-Thompson
My Lords, I support Amendment 69, to which my name is added. When I added my name, I received lots of really good examples of how apprenticeships can work for disabled people, especially when there was understanding of the needs of the disabled person and flexibility in some of the cases where it was required. As my noble friend Lady Campbell said, apprenticeships are really important. It is a massive opportunity for disabled people to develop their skills. But the barriers into apprenticeships can be very different from those into work, which is why this amendment is so important. One person who contacted me said that he wanted to offer an apprenticeship to a 19 year-old young man who has autism. The young man wanted a job and he was good with computers. He said that he wanted to get away from under his parents’ feet. He was offered an apprenticeship through a college. However, they then got stuck in the process of the assessments, which derailed everything. The college wanted to do the assessment in the college and not in the workplace, which made the young man feel very uncomfortable. He then went through this whole process of “dithering” and the young man pulled out because he could not get clear support for the opportunity he was going to be offered. It is a massive mistake and a real shame that young people are getting so close to being offered an apprenticeship but then feel that they cannot take it.
Another young man, who has a visual impairment, has lost out on two positions. He started working but lost out because his employers were unable to be flexible with the opportunity offered.
I have been sent many more good examples than bad examples; it is a shame that we are not using them. This amendment would provide an incredibly useful resource to help others and, if it is reported on in the right way, would help the Government achieve their aim of getting more disabled people into apprenticeships.
Baroness Nye (Lab)
Before I speak to Amendment 68A, I apologise for not being able to take part at Second Reading. I also take this opportunity to declare an interest as a trustee of the Young Women’s Trust, to which I am grateful for the briefing it provided.
My amendment calls on the Government to include in the report the number of apprentices disaggregated by protected characteristics. As I support the other amendments in this group in the name of my noble friend and others, I shall concentrate on young women and apprenticeships.
The Government’s target of 3 million apprenticeships by 2020 is to be welcomed because they can be an important route to skills development and work for all young people, but only if they are of high quality and reach those such as the under-25s who are in the most need. It is also welcome that the Government propose to report on progress each year, but it is important that the information contained in that report is useful and not just a pat on the back for numbers going through the system. The report should identify areas where more attention is needed and inform policy development, because evidence shows that apprenticeships are not working as well for young women as they are for young men.
The Young Women’s Trust aims to improve the lifelong opportunities for young women aged 16 to 30 with few or no qualifications, who might be unemployed or in precarious or insecure employment and who are on very low or no pay. Because of a lack of understanding, the Young Women’s Trust undertook a year-long inquiry into the problems of young women who are not in education, employment or training. It produced a report called Scarred for Life?, which was based on consultations with young women and other interested parties, as well as polling conducted by ComRes.
The polling showed that young women work in fewer sectors than men. Two-thirds of female apprentices work in just five sectors, while the same proportion of men work in more than 10. Female apprentices account for fewer than 2% of apprentices in construction, 4% per cent in engineering and still only 12% in IT and telecoms, but 93% of early-years childcare and beauty places are female. The IPPR has said that traditionally masculine areas may receive better-quality training and these sectors also lead to better employment and further education prospects. As young women are less likely to receive training as part of their apprenticeship, they are more likely to be out of work at the end. This is compounded by other research which shows that employment gains from further education are generally not as great for women as they are for men.
The apprenticeship wage also deters women without parental support from applying. Young women say they understand the logic of earning less before being qualified but the pay is just too low to support themselves. Young women also receive less hourly pay on average than men; they could earn £2,000 less over the course of a year. Apprentice equal pay day was marked on 28 October—for the following 64 days, female apprentices would be working for free.
Young women also recognised that when apprenticeships worked well they were a good route into employment. However, they were concerned about how to meet their current needs while training. There is insufficient flexibility to balance apprenticeships and other responsibilities such as caring. They therefore have different priorities in considering apprenticeships.
Data from the Skills Funding Agency and BIS show that 90% of apprentices are aged over 25, with a greater proportion of women in that age group. It is therefore likely that they have been recruited from the existing workforce and that opportunities are not being provided to young people who are just starting out or who are NEET. These challenges prevent thousands of young women making the most of their potential as well as meaning that the wider economy and companies miss out on a vital source of talent.
Destination data are especially important in measuring quality. Apprenticeships are worth while only if they develop skills in all young people and provide a good route into employment. Young women are three times more likely than young men to be out of work after completing an apprenticeship. University education has long been assessed against destination data. Similar measures should be applied to apprenticeships if the esteem in which they are held is to be raised.
If the figures in the Government’s proposed annual report were disaggregated, it would also give added impetus to employers to develop a diversity policy for their apprenticeship schemes; to monitor the protected characteristics of their intake; and to work with careers services, schools and others to attract a diverse workforce, which I believe would command support from all quarters. Without any measurement of the quality of the apprenticeships, the jobs that might or might not follow, or the impact on the reduction of low wages, they offer no real route out of poverty.
I will listen with interest to the Minister’s reply to the questions posed by my noble friend, but, given the lateness of the hour, I will not add to them.
Baroness Manzoor
My Lords, I have added my name to Amendment 68. The only thing that I wanted to add—all other noble Lords have eloquently put forward the reasons why there should be reporting obligations relating to apprenticeships—is that I note that gender is missing from the amendment. It was an oversight, rather than because we did not care passionately about this particular issue. Once again, I am pleading with the Minister: we really need to be able to differentiate between the different groups to see where apprenticeships fall and who is getting what apprenticeship. The noble Baroness, Lady Nye, made a very important argument relating to young women, but the same applies to disability, race and so forth. There are variations that we need to bottom out so that employers can then have appropriate strategies in place to address the anomalies.
Baroness Lister of Burtersett
My Lords, I will speak very briefly in support of my noble friend Lady Nye, who has made such a good case about gender. She made most of the points I want to make, but I have been sent information by City & Guilds, which has done research into careers advice, which shows how gender-biased careers advice is channelling young women into a very gender-biased labour market. So it is being reinforced. It is crucial that the apprenticeship system does not reinforce and aggregate that gender bias which we have heard about from my noble friend. As other noble Lords have said, it is about not just quantity but quality. From a gender perspective, quality is about the sectors within which young women and young men are being channelled.
The Lord Bishop of Durham
My Lords, in the north-east I get to see apprentices in the car industry, the subsea industry, traditional industries such as stonemasonry, farming, and all kinds of sectors in schools. It is brilliant to be able to see them face to face, to meet them and talk to them. There are brilliant apprenticeships and we need to grow them. Therefore, the 3 million target is fantastic, but I have to say that where the Bill refers to,
“information about the progress made in the reporting period towards the apprenticeships target”,
which is simply the figure of 3 million, that does not give the information about the types of apprenticeship that there are. In the light of the previous comments, I add that in two particular manufacturing industries I went to there were fantastic apprenticeships with brilliant young men, but no young women at all. I am told that there have not been any. We need this kind of information to ensure that apprenticeships are of the quality and standard needed. Because of the lateness of the hour, I will stop at that.
Baroness Evans of Bowes Park
My Lords, I will attempt to respond to various points, but again, due to the lateness of the hour, I will try to keep my remarks brief. Where I do not respond to points I will endeavour to get further information to noble Lords relatively quickly.
The Government are committed to reaching 3 million apprenticeship starts in England in 2020. Clause 2 will place a duty on the Secretary of State to report annually on progress towards meeting that target. The amendments that have been tabled would place additional reporting requirements on the Secretary of State to publish a range of information as part of the annual apprenticeship reporting requirement set out in the Bill.
Lord Young of Norwood Green
My Lords, I thank the noble Baroness for dealing with all those questions without hesitation, repetition or deviation. That was a brilliant effort. I would like a bit more detail on some points and welcome her further comments. I am sure that I am not the only person in that situation. Although she gave us lots of assurances, given the importance of these issues I only wish that schools were applying those assurances in practice in relation to both careers advice and access by employers. My experience is that many are not doing that despite the legal obligations. Given that we have seen a statistical decline in the number of apprenticeships for people with disabilities, it would be useful if we could meet the noble Baroness to go through some of these issues. Nevertheless, on the understanding that we will look carefully at the response to the questions in Hansard, I beg leave to withdraw the amendment.