Welfare Reform Bill

Baroness Hayter of Kentish Town Excerpts

Thursday 3rd November 2011 Grand Committee

[Baroness Howe of Idlicote]

My Lords, I congratulate the noble Baroness on the detailed and effective way in which she has presented the case for her amendment. I spoke firmly on the equality issue at Second Reading. I am most concerned about the extent to which the majority of second earners are women. Their very delicate position may be fine if they have a fully understanding husband, but we know that some families face situations that are far removed from this. I understand the point about mutual parenting, but if the Government put more emphasis on companies providing enough flexible working for both sexes, this situation would be much easier for families. My main concern is the vulnerability of the woman at home who, as we have heard, does not have a very good argument if she is not going to earn, as a result of her extra hours, enough to make any difference at all to the joint income. I therefore support what has been said.

[Baroness Hayter of Kentish Town]

My Lords, this amendment seeks to tackle the introduction, under UC, of a poor work incentive for second earners who, as the noble Baroness, Lady Howe, has said, are mostly women. As my noble friend Lady Lister said, 300,000 second earners will see increased marginal deduction rates as opposed to only one-third of those who will see reduced MDRs. The policy to make work pay does not appear to extend, therefore, to a third of these affected second earners. According to the impact assessment:

“It is possible that in some families, second earners may choose to reduce or rebalance their hours or to leave work. In these cases, the improved ability of the main earner to support his or her family will increase options available for families to strike their preferred work/life balance”.

As my noble friend Lady Lister has said, it is not clear how this will improve options for families who prefer to have a more equal working relationship, where both partners combine work and child rearing. It also seems to be in conflict with other bits of coalition policy, such as the BIS modern workplace consultation, which sets out options for families to share parental leave more evenly between men and women. Perhaps, in responding, the Minister can let us know what discussions he has had with BIS about whether the incentives within universal credit support the BIS policy.

The reduced incentives for second earners to work come on the heels of the April cuts in childcare and therefore, as has been said, further reduce the incentive for anyone with a child to take a job, not to mention other little things such as cuts to the baby element of the child tax credit, the health in pregnancy grant, the Sure Start maternity grant and the freeze in child benefit.

As my noble friend Lady Lister said, the pay of second earners is crucial in keeping families out of poverty. If I may be forgiven for repeating her figures, which I hope I have right, child poverty is at 19 per cent where there is one full-time earner but it drops to 5 per cent with two earners and down to 2 per cent with two full-time earners. Therefore, second earnings are absolutely key to the Government’s objective of reducing joblessness, child poverty, dependence on universal credit and increasing the tax take. I look forward to the Minister’s answer to whether it was the gross cost after taking account of tax take which led to the projected cost of this.

Childcare has already been mentioned and is clearly particularly important in two sorts of families. One is obviously lone-parent families, and the other is where there is a second earner, with both parents tending to be out of the house at certain times. The disincentive to work increases where there are child costs to be met. As has already been said, childcare will cover only 70 per cent of costs, and that leaves 30 per cent to be found from earnings, which is already a high enough take from the second earner’s pay. Therefore, without an earning disregard of their own, the second earner has a very high deduction rate where there are child costs to be met, effectively making the taking of a job financially unviable. Yet, as I have said, second earnings are crucial in keeping households out of poverty. They will be even more important if, as we read today in the Financial Times, there is any truth in the rumour that when times get tough it is the poor whom this Government will seek to make pay. According to these press reports, the Chancellor is looking at cutting further billions from benefits by scrapping inflation-linked uprates, even—this beggars belief—freezing some payments. We read in the same article:

“The Liberal Democrats will oppose anything that suggests the coalition is unfairly passing the burden of deficit reduction on to struggling families”.

We look forward to hearing whether the Minister can say whether the Financial Times is accurate. Perhaps he can also ask those sitting alongside him—maybe they could pass him a note—whether they would like to place on record their opposition to any attempt to pass on any cutbacks to struggling families. They must know that the rich can pay far easier than the poor. Are they going to use their bargaining power, such as it is, in the coalition to protect the very weakest in society?

These amendments are about reducing poverty and increasing the take-up of work, and it would be useful to know on which side the Lib Dem/Tory coalition sits on this. Later today, we shall reach Amendment 75A to Clause 51 standing in the names of the noble Lords, Lord German, Lord Stoneham and Lord Kirkwood, and the noble Baroness, Lady Thomas, which effectively asks for an earnings disregard from the second earner where the first earner is now too ill to work. We very much welcome that amendment, but it would useful to know whether the same principle could be more widely adopted, as this amendment seeks to do.

The Minister may well be forgiven for wanting to reduce the number of working women on this side of the Committee but perhaps he would make it clear that that is not the intention with universal credit by ensuring that second earners really will be better off in work.

[Lord Freud]

My Lords, I have enjoyed what we are calling the bevy of ladies on the other side. Their intellectual prowess has left me stunned on my heels. Let me go into this amendment, which proposes that we create a disregard for the second earner in a joint claim. This proposal was raised in Amendment 52DB, which we have already debated, so I am going to be reasonably brief.

First, this is not a matter of principle. We acknowledge that it would be desirable to incentivise both members of a couple to work. However, we have limited funding and we have chosen to focus that on creating a strong incentive for at least one member of each couple to work, in order to limit the number of workless households. This is clearly a difficult choice. We have discussed these choices, in response to the noble Baroness, Lady Lister, with other departments on a regular basis, and we are very aware of links to other programmes.

Clearly, this is something that, if we had some money, we could revisit at a future point, but let me give noble Lords the figures. If couples who were both in work were entitled to an additional disregard of £700 a year, for example, the cost would be £240 million.

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[Lord Beecham]

My Lords, may I ask what I hope is a final question? The Minister rightly referred to the fact that there would be no income tax income to the Treasury to offset the cost. However, has the Minister considered the likelihood of much of the income of a second earner being spent in a way which would incur VAT? Is that not a material consideration in terms of what would be offset against the cost?

[Baroness Hayter of Kentish Town]

Before the Minister stands up, as I think he might like to get everything together, there were two questions posed that he did not respond to. One was whether he had had discussions with BIS. I had also given him the opportunity to refute the story in the Financial Times. I hope he might use this moment to do that.

[Lord Freud]

My Lords, let me try to pick up some of those points. Picking up the point of the noble Baroness, Lady Hollis, I hope that she is hearing that I am sympathetic to this point. I hope that noble Lords have heard that this is about money. We do not have this money. We have a very sharp choice to make, about whether to reduce workless households or to look after second earners with a disregard. We have taken this decision, and we have also taken a decision, when we do find some more money, to do something about childcare, which is another issue that I know greatly concerns noble Lords.

There are two clear issues when we look to improve this system, as we see dynamic effects coming through which are provable. We had a debate the other day on why we need to test things. Two of the obvious things to test will be second earner disregards and taper. Those are the first two things that everyone in this Room, I think, would like to know about as we get the system under way. Therefore, to the extent to which I am being asked “Will we look at it?”, yes, we will be looking at this. I am not going to make any assurances, because we should find the answers, but that is exactly the kind of question we want to have answered.

I shall take up the points of the noble Baroness, Lady Sherlock, on MDRs. You can freight all kinds of things on to MDRs if you want to, with different costs, and I am sure that you can create a position where the overall costs come up to high MDRs. The simple point that I would like to make is that with the universal credit itself, the MDRs come down.

On whether we will force people to take a job which leaves the household poorer, we made the point when we discussed this that we take these things into account when we set up the obligations of claimants.

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[Baroness Grey-Thompson]

My Lords, I, too, support this amendment and I, too, wish to speak about the assessment process. A number of people have contacted me just on this amendment alone—around 45 at the last count, and the figure is increasing daily. They want to express their concerns in this area and they are using very strong words. People are telling me every single day that they are terrified by the process they are being asked to go through. I accept that it is a difficult process. We demand that through the system we should grade impairment, which is a necessary part of the process, and we try to put people in boxes. However, disability and impairment affect people in such different ways. The process expects yes and no answers and that is almost impossible when we are considering a static condition, let alone fluctuating ones. Many people writing to me say that there is little room to give medical evidence or provide supplementary data and that every step of the process feels very confrontational. It is essential that the test is appropriate for disabled people.

I am also concerned about the number of people who tell me that the facilities used for the assessments are simply not accessible. One example is the Croydon assessment centre; it has a lift for wheelchair users but wheelchair users are not allowed to use the lift due to health and safety reasons. To enter the centre, you have to navigate 46 steps. If you cannot do that, the nearest centre is a 14-mile round trip away, which is very challenging for a number of people.

I have also received a number of e-mails saying that there is a yo-yo process going on. One ex-serviceman was assessed in 2003 as being 30 per cent disabled and yo-yoed eight times in the next five years or so between being 30 per cent and 70 per cent disabled. These various reassessments and appeals were carried out at significant expense to the public purse and distress to the individual. When he questioned the process, this man was told by the assessor that he was moved back and forth so many times because they did not really understand trauma.

As the noble Baroness, Lady Wilkins, has said, disabled people are constantly being labelled in the media as benefit scroungers. The rise in the amount of hate crime is a real concern. Could the Minister reassure disabled people who are feeling vulnerable and afraid, who see no light at the end of the tunnel and no improvement in the process? They want to work and be part of society but they feel themselves to be victims of what is happening.

[Baroness Hayter of Kentish Town]

My Lords, I support this amendment. As has been stated, the WCA is about deciding whether a claimant has limited capability, either for work or work-related activity. As the noble Baroness, Lady Howe, said, there is no definition in the Bill, nor indeed in regulation, about what is meant by “work”. This is particularly important for those with fluctuating conditions, who are, at different times, both fit for work and incapable of work within the same month. We already know that, apart from any assessment, people with unpredictable fluctuations find it difficult to obtain employment or to keep it. This is partly because of their previous work records, partly if any of these fluctuations occurred during a probation period, and partly if they are honest and open with a potential employer.

It goes without saying that we support the principle of helping all those who are able to work to do so, but I am concerned about the apparent drop-off in the number of new customers helped by the Access to Work scheme, which has gone down to 13,240 compared with 16,520 in the previous year—a fall of nearly a quarter. It would be interesting to know what is thought to be the reason behind that, because it is an important way of helping people into work.

The really important word in this amendment is “sustainable”. Sustainable employment is defined as 15 or 16 hours a week and on a basis probably of 26 weeks. This amendment is particularly important, as the Government are proposing that regulations about defining capability for work or work-related activity are to be subject only to negative resolution procedure and thus with no opportunity for debate.

We have had a note which states that the Government’s intention is that regulations made under subsection (3) will set out the detailed circumstances and descriptors used to determine limited capability for work and limited capability for work-related activity. These regulations will be based on the Employment and Support Allowance Regulations 2008 and the subsequent amendments contained in the Employment and Support Allowance (Limited Capability for Work and Limited Capability for Work-related Activity) (Amendment) Regulations 2011 and any other changes to the ESA provisions before the introduction of UC in 2013.

We understand that the Government are undertaking further work to develop a supplement to the assessment to accurately identify individuals with enduring health conditions that limit their long-term ability to fully provide for themselves through work. However, regulations under Clause 41, which are also subject to the negative resolution procedure, will define the meaning of “work”. Given that this is another area where we remain unclear of the Government’s plan, it will be particularly important to have assurances about how people with fluctuating conditions are to be protected.

[Lord McAvoy]

My Lords, as a former Member of the other House with experience of constituency cases and organisations, I could not sit silent during this debate. I fully support the point outlined by the noble Baronesses, Lady Howe, Lady Wilkins and Lady Grey-Thompson.

Not referring to a GP when there is a fluctuating illness results in Atos taking a hard line. As I have said before, I am not one of life’s social liberals, but the line taken by Atos on too many occasions has been unfair and there has often been a bit of bother in trying to sort it out. This causes fear and apprehension, not only among the less able bodied but also among the able bodied who are not particularly articulate when they face Atos and its people. I hope notice is taken of the circumstances illustrated by my colleagues today because it is wrong that there should be that fear.

I know that the media, as is their wont, take some cases, pile into them and get stuck into government and organisations such as Atos to highlight obvious unfairness, but there is enough experience in the department and among Ministers to counteract that. However, there is something in the amendment. The Minister can take it away, look at it, amend it or alter it, but I sincerely hope that he takes notice of it and does not dismiss it.

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[Baroness Lister of Burtersett]

My Lords, I shall speak briefly in support of Amendment 113. I do not know whether this was another amendment cooked up in the noble Lord’s bath—I forgive him for “going forward”—but I like the idea of an office for social protection. The notion of social protection is one that we do not use enough in this country; it is very much a continental, European concept, and a very important one. I am not arguing for a new quango either but the spirit of noble Lord’s amendment is very important. I have lived through more fundamental reforms of social security than I care to remember, and not one of them has addressed the points made in this amendment about the adequacy and the sustainability of the different parts of the system. If nothing else, there should be a requirement on the Government that when they bring forward reforms of social security they should consider these fundamental questions.

We have touched on these points in Committee already. One noble Lord asked questions about the principles underlying social security. I intend to come back to them under an amendment to Clause 51, when I will to talk about a contributory principle. I am slightly reluctant to think about this as being part of the responsibility of the Social Mobility and Child Poverty Commission because social security is not just about poverty. The whole point about social protection is that it broadens it out beyond poverty—a group “over there”. One possibility to think about is whether to broaden the remit of the Social Security Advisory Committee so that periodically it reports on the adequacy and sustainability of the different parts of the system.

[Baroness Hayter of Kentish Town]

My Lords, I declare an interest in regulatory and professional services, having chaired the Legal Services Consumer Panel, sat on the Board for Actuarial Standards, overseen insolvency practices and sat on the Bar Standards Board, the Pension Regulator and the Property Standards Board. So I have a long involvement with non-economic regulators who oversee the professional delivery of services. These kinds of regulators have a large role to play as they are very much about what we called raising standards—although the words used by the noble Lord, Lord Kirkwood, when he talked about “driving up” standards may be even better. This goes beyond public services. That may be what is in front of us now but consumers are demanding this from a whole range of service providers. It has shaken some of the barristers who do not really like the fact that they have to conform to new consumer-set standards. But that is what the users of all services now want and that is what this kind of regulator provides.

I am less afraid of the idea of quangos—although I am sure that that is not a general view—but what these kinds of regulators do is to adopt codes of conduct; set good practice guidelines and minimum service standards; and then ensure that quality assurance by way of setting minimum training or entry qualifications, CPD requirements and the monitoring of services. That monitoring is not just about compliance, important though that is, but also provides a feedback loop so that lessons are learned, either for standards and the way they are defined and set, or for the way staff are trained, or, as was discussed this morning, to allow systems to continue to be developed in the light of the way the service is delivered.

This kind of standard-setting is particularly important in view of the ending of legal aid to assist complainants and users because the only other monitoring will be via this kind of organisation. This kind of regulator—for want of a better word—can identify whether particular groups are underrepresented in any category and whether all groups are being properly serviced and properly served. As the Minister has stated on a number of occasions, some decisions must be taken on a case-by-case basis—in-work conditionality is a particular example. This will involve tremendous discretion in the hands of thousands of decision-makers across the country, so clear guidance, good and consistent training and ongoing monitoring of decisions by some kind of regulator with authority will be crucial to ensure that the service is fit for purpose.

Unfortunately, the Government refused to accept our earlier amendment that the Jobcentre Plus side of the claimant commitment should be laid down. It is therefore even more important that this standard-setting will be open, transparent, raise standards and, most importantly, create confidence in the new system. This proposal has some merit. I am not sure whether or not the formula will achieve it, but we look forward to hearing the Minister’s response.

Baroness Hollis of Heigham: My Lords, perhaps I may make one brief point. In common with others around the table today, I have had long and—I hope—harmonious working relationships with DWP staff, who have been almost universally helpful, constructive and anxious to take policy forward. However, I believe I am right in saying that in the DWP, more than in any other area of government, staff often start work in benefit offices at the age of 16 with fairly low-level qualifications. Like the police force, this is a field where one can go up through the ranks. The Civil Service is very good at in-service training and so on. However, this is nevertheless an area where a great deal of responsibility is delegated, rightly, to staff at EO level, many of whom have come up through the ranks. Certainly when meeting and discussing policy development with them, it was always clear to me within a few minutes where their education had effectively stopped. As a result there was, in some cases, a real issue about driving up standards and trying to professionalise the service. Nothing that I say should be taken as criticism. It is clearly obvious that in benefit offices staff may very well start at 16, 17 or 18 rather than go through higher education, particularly given that higher education has only recently become more widely available to young people. However, junior staff at the DWP, more than in any other field of Government that I am aware of, are taking key decisions affecting the well-being of hundreds of people and need professional support, training and the continual driving up of standards from the department.