Welfare Reform Bill
Baroness Hayter of Kentish Town Excerpts(13 years ago)
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Baroness Gibson of Market Rasen
My Lords, perhaps I may explain why I am briefly entering the Bill at this stage. I did not speak at Second Reading and was not planning to speak in the debates but I have chosen to speak today because I received a letter from an old school friend. He went to school with me when I attended Caistor Grammar School in Lincolnshire many years ago. This friend knows a lot about disability because he is himself disabled. In mid-life, he went into hospital to have what was expected to be a very straightforward operation but unfortunately came out having lost his sight. When Derek wrote to me, I took his letter very seriously and I wish to speak briefly on his behalf today.
My friend is very worried indeed about Clause 51, particularly about the one-year time-limit on contributory ESA, which we have heard a lot about this afternoon, and the replacement of the working-age disability living allowance. With regard to the limit on contributory ESA, he points out that it takes no account of the often very complex issues that disabled people need to address in preparing for and finding work. I understand that the Government have estimated that 94 per cent of those on ESA and in the work-related activity group would take over a year to find work. That would mean that by 2015-16 700,000 people would be affected and 280,000 could have lost their entire benefit payment. The new criteria focus on a much narrower range of support than DLA and appear to fail to recognise the barriers that prevent blind and partially sighted people being able to participate fully in society.
The Disability Benefits Consortium, which is a national coalition of more than 50 disability and welfare charities and other organisations committed to working towards a fair benefits system, also wishes to see Clause 51 removed from the Bill to ensure that disabled people continue to receive the critical financial support that they so deserve. The Disability Benefits Consortium included in its briefing a moving statement from a woman who has Parkinson’s disease. She says:
“I’ve worked all my life and paid for decades into the system on the understanding that there’ll be support if I need it. To be told that all of this support could have an arbitrary time limit is both unfair and stressful”.
I agree. Clause 51 is very flawed and this would be a better Bill if it were removed.
Baroness Hayter of Kentish Town
My Lords, I am not replying on behalf of the Front Bench at this stage. My noble friend Lord McKenzie will no doubt do that after the Minister has spoken to his amendment. I am particularly pleased to rise after my noble friend Lady Gibson and want to comment on what the Lord, Lord German, said, although he is unfortunately not in his place at the moment. No doubt he can read my comments at a future moment.
Like my noble friend Lady Hollis, I very much support the amendment to which the noble Lord, Lord German, spoke. However, I should think he finds it rather easier to speak to it here today, in the Committee, than at the Lib Dem conference. I do not think it would answer the party’s desire to get rid of arbitrary time limits. It will, to some extent, help the very poorest but it does not address the fundamental issue that has been raised.
As my noble friend Lord McKenzie said in opening the debate, this will affect some 700,000 people. I should like to talk about just a few of these, particularly older women with breast cancer who have paid into the insurance system for their whole working lives. I quote in particular Dawn Sheldon, who wrote to me. She said:
“I am terminally ill with breast cancer which has spread to the lung. I am in receipt of benefits, without which, I would have no income whatsoever. Under the proposed reforms, I would have to find employment. My concerns are that although reasonably qualified, I’d be applying for jobs against other applicants with a clean bill of health and a long life expectancy who would be more attractive than my own CV”.
As has already been mentioned, in addition to being ill with the cancer itself, breast cancer sufferers take very strong medication, sometimes for up to five years, with very unpleasant side-effects. Dawn says that without benefits she probably would not be able to pay her mortgage and fears that she would become homeless.
Other breast cancer sufferers have also written to me. Similarly, having been on strong medication for 18 months, one woman feels that she would be a cripple if she carried on using it. Therefore, she asks what benefits she should have, and she might come off the medication. That is some indication of how dreadful some of the side-effects are for some people. Another woman writes that she has a lot of pain in her joints at night. She has an eight year-old, so she is taking whatever she can to be here for him. The consultant said that it is a balance—quality of live versus length of life. She says that when she takes her painkillers her boss can tell that she is not able to work as well as she does normally. However, she wants to be there to see her son grow up.
These women have asked me to plead with the Government not to reduce their benefits. They are pleased that their tumours have been removed but they are not fit and well; they are struggling to keep going. While they have not yet been diagnosed as being terminally ill, it would be wrong to think that they are able to return to work. They have a choice to make about whether to take drugs to live longer and see their children grow up but, with that medication, perhaps be even less fit for work. The question that they pose is: if you were a prospective employer, would you want to employ someone with a history of cancer or someone who had to take medication to the point that they could be ineffective in their work—at least, at certain times? These women feel that the new medical assessment is a “ploy”—their word—so that they can simply be told what the Government want to hear: that they are fit for work, disregarding the reports of qualified medical staff.
Lord Freud
I will be supplying annual figures later on. I wanted a single figure.
Lord Freud
It is a single figure. We believe that our one-year time limit is not arbitrary; rather, it strikes the right balance between restricting access to contributory benefits and allowing those with longer-term illnesses to adjust to their health condition and surrounding circumstances. In recognition of that, it is double the length of time allowed for contributory JSA and is one of a number of difficult decisions that the Government have had to make in view of the current fiscal climate.
Given that I was asked about the single figure, perhaps I may take the opportunity to read out the per annum figures. Next year, the change would cost £270 million; in the following year, 2013-14, it would be £420 million; the figure would be the same the following year; in 2015-16, we think that the cost would be £360 million; and it would be £140 million in 2016-17.
Welfare Reform Bill
Baroness Hayter of Kentish Town Excerpts(13 years ago)
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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.
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.
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.
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.
Welfare Reform Bill
Baroness Hayter of Kentish Town Excerpts(13 years ago)
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Baroness Hollis of Heigham
Like other noble Lords, I very much welcome this. The problem in the past has always been the length of time to get a learning loop into systems. By the time there has been a pilot and the evidence has been assessed and reported back, three years have passed—by which time, alas, usually incumbents have moved on and questions have changed. I am delighted that we will get pilots. Will the Minister give an undertaking that the results of the pilots will be published and made available to Members of both Houses as soon as is practicable? Sometimes they will not be supportive of positions that the Government wish to develop. However, at the core of research must be the integrity of publication.
Baroness Hayter of Kentish Town
My Lords, the Committee will know that my noble friend Lord McKenzie and I have added our names to this amendment, but we are delighted that it has been overtaken by the Minister’s own amendments. I am getting a bit of a record for doing this. Last night I commended the Government on their move on the Housing Ombudsman, and I am doing the same today. However, I have a couple of questions. Whether this is to be piloting or testing throws up exactly what I wanted to ask: what is the purpose of each of these pilots? Are they to test whether the principle of a particular part of the Bill is right—in other words, that the aim of each part of the Bill is being met—or are they simply to determine how best to implement each proposal?
We always welcome piloting and testing of whatever it may be, but the exact purpose of a pilot needs to be absolutely clear at the start, particularly for those who have to design and implement it, as well as for all the participants and evaluators. What is the pilot meant to achieve, and therefore how should it be monitored and evaluated? That is because whether it is simply to find the best way of making something happen or to see if the idea behind it is right is quite an important distinction.
We hope that the Government will be confident enough not to assume automatically that what they think will work, will work—whether to incentivise people or to simplify systems—and that they will use these pilots in order to test the assumptions underpinning particular proposals in the Bill. That means being confident enough to design the pilots accordingly to see whether the particular objectives behind the proposals in what will by then be the Act are being met. That is asking quite a lot of a Government. We are saying, “Are you confident enough and in a sense big enough to be able to call it a day if the end results of any particular pilot call for a big re-engineering?”. I believe that pilots of this sort will be worth their weight in gold to the Government in financial and administrative terms and to claimants, landlords, employers, carers and providers, all of whom are going to be affected by different parts of the legislation. The pilots can play a role in creating the sort of welfare system that is able to meet the demands made of it. We would ask the Government to be as adventurous as they can with these pilots by putting the difficult questions. Also, following up on what my noble friend Lady Hollis said, the results should be transparent.
Who is going to oversee the design and delivery of the pilots? Who will decide, under subsection (5)(b) of the proposed new clause, that pilots may be replaced or extended, and on what grounds? To whom will the evaluators report? That is more or less the same question as that posed by my noble friend Lady Hollis. How will Parliament be able to ensure that the lessons from such pilots are learnt?
Lord Freud
I thank noble Lords for their support. At this stage we are taking legislative powers in order to be able to do this. How it is done is something that we will actively develop. I will tell noble Lords what I think we should be doing without necessarily locking down that that is to be the process, because we have not developed it.
Universal credit is the most amazing social science laboratory that I suspect we have ever seen, and I wonder how many other people will see it. Under universal credit you can change different aspects of people’s support.
As such, it needs a unit built in which is constantly looking at how to improve it and optimise it or to adapt it to different circumstances. I anticipate, in answer to the question from the noble Baroness, Lady Hayter, that we would have a series of real questions. Many of the questions raised by noble Lords in the Committee—should we have a second earner disregard; should we have a lower taper; what happens when you move disregards up or down?—are real, basic questions. They are all being put in the form of amendments, but here, we can have a series of tests of different aspects, or tests in combination, to find out what really optimises the system. Clearly, it is impossible to get it absolutely right first time. No one would claim to do that, but this is an architecture which would allow us to optimise it.
Baroness Meacher
My Lords, I support some of the concerns that have already been raised by other noble Lords. I am not clear about the logic of ending the provision for adding disregards if a claimant falls within two categories, both of which qualify for a disregard. As I have always understood disregards, the idea is that they compensate for the costs that a claimant faces, whether those costs arise from being a lone parent, being disabled or whatever. I am sure that the Minister has a rationale for the measure but it is difficult to think what it could be. Is he going to provide a disregard for the disability side, the lone parent side or some other side? Why provide it for this bit rather than that bit? Why not provide the disregard for both sets of additional costs? It would be interesting to hear his rationale for this measure.
Given that the Government want to make swingeing cuts to the welfare bill, I completely understand that two-earner households are not a priority from that perspective. However, going back to the Government’s commitment to having incentives to work, this is another example of a part of this legislation running completely counter to that aim. I know that the Minister will correct me if I am wrong, but as I understand it the second earner will have almost no incentive to work, particularly if they have children, as they will not have the earnings disregard but they will have to pay the 30 per cent or so costs of childcare. This will almost certainly be the case if they have children. Therefore, it would be helpful if the Minister agreed with me that this is a bit of a problem in terms of incentives to work or explained the rationale behind the measure.
Regarding people with mental health problems, I envisage—I think that the Minister agrees with this—that this group will lose overwhelmingly from the shift to the new system and the reassessments for ESA. Rafts of these people will come off ESA and on to JSA with the result that, even with a disability, they will not receive any disability support because they will be on JSA. Yet people with mental health problems can have additional costs in order to go to work that others might not have. For example, somebody with severe anxiety might have to have someone accompany them on their journey to and from work, although they may be able to sit there and do the job when they get there. However, if they get no financial support at all for their disability—I understand that that is what the system sets out—how will these people have an incentive to work? They will have to pay for this support out of their tiny pockets.
The other point about people with mental health problems is that many of them can manage only a limited number of hours of work and need to build up their hours slowly. I do not know how this will work. The structure of the universal benefit is very good in this regard and should make life easier for people—at least in theory, if the two computer systems of the DWP and HMRC manage to bond together as they are supposed to do. However, the loss of disability support will cause problems in terms of incentives to work.
Sue Royston of Citizens Advice also provided me with the facts that were read out by the noble Baroness, Lady Lister. I will certainly not repeat them but I would find it helpful if the Minister could confirm for me how the two tapers of the universal credit on the one hand and the council tax benefit on the other will work together. Perhaps he has already done that when I was not here, as I have not always been here due to other commitments. I still hope that he will ultimately find a way to bring council tax benefit within universal credit, as it is such an important issue.
I am sorry to be a bore and raise this again, but it would make such a difference for so many people. If not, it seems to me that claimants working a few hours and building their employment up slowly will be dogged by a terrible complexity and lack of clarity not that dissimilar to what they have suffered in the past. That would be a great pity.
Baroness Hayter of Kentish Town
My Lords, the explanation that I am most looking forward to from the Minister, having taught us the difference between soon and very soon and that spring comes between winter and summer, is where on earth is the end of October if not yesterday, on Halloween night. We await that answer.
Under universal credit, the support currently obtained by a tax credit will be obtained via disregards, hence their importance. The disregards will allow some groups to earn higher amounts before benefit starts to be withdrawn, thus household income will be held to similar levels as now via tax credits. However, as has been mentioned, at present there seems to be no mention of disability in such disregards. Amendment 52B would provide an additional disregard for one aspect—carers who are currently not set to receive any disregard. We support that amendment and I shall speak to Amendment 52DB, which stands in my name and that of my noble friend Lord McKenzie. It would include a disregard for a second earner, but we will cover that issue in Amendment 52C. It is also intended to ensure that there are earnings disregards for claimants who are disabled, lone parents or the second earner—often a woman. Further to the comments just made, as each disregard recognises the impact of the particular circumstance on the earning potential of the individual, and as such impacts are cumulative, it is proposed in the amendment that the disregards should also be cumulative, as each circumstance—whether being disabled or being a lone parent—makes earning that much harder to achieve and, perhaps, more costly, with extra travel times or other expenses.
At least initially, it is foreseen that under universal credit we will have a 65 per cent taper for earned income, so a disregard improves the incentives to move into work by not applying the taper for the amount earned for the first disregard. That means that the value of the disregard for the claimant is 65 per cent of the actual amount written on paper, if you like. Someone with a £40 disregard who earns £40 can keep all their universal credit and will thus be better off by £40. Without the disregard, they would keep only 35 per cent of the £40 and so be only £14 better off. The figure of £40 that we use as the disregard is actually worth £26 in hard cash, which is the only way that I can think about these things.
There is a little complication, of course. There will be a maximum disregard for each group. Those not receiving support for housing costs will receive the maximum disregard and those getting support for their housing costs will see the maximum level of their disregard reduced by one and a half times the amount of their housing support. I trust that noble Lords are all with me. Good. Most claimants in rented accommodation will receive the minimum disregard. We know that universal credit aims to,
“allow people in work to see clearly how much support they can get”.
I just hope that they are better at doing that than I am.
The 14 October briefing note referred to by my noble friend Lady Lister on disregards set out the new higher disregard levels to try to deal with the localisation of council tax benefit. It aims to ensure that income support for council tax is effectively disregarded. Whereas single people previously would not receive any disregard, they will now get the amount mentioned, £13.50, as a disregard. Similarly, the disregards for lone parents and couples have been increased. However, as has been mentioned, Citizens Advice points out two problems. The first, elaborated by my noble friend Baroness Lister, is that those earning more than the amount will still be subject to two earnings tapers until no longer eligible for help with council tax. What plans does the Minister have to deal with this two-taper issue caused by the localisation of council tax benefit? Secondly, although the level of disregard has been increased to reflect council tax changes for single parents and couples, no such addition has been given to disabled people. Perhaps the Minister could also explain in his answer why they have been overlooked.
Lord Freud
Absolutely. We are discussing a framework piece of legislation that will allow us to bring in the regulations. I am sure that next year many of us will discuss the detail of this for many months. It is an introductory, not a locked-in proposition. I have tried to explain, and hope that I have explained, that this system is an architecture and it can roll and improve. We may find in many areas that a change will pay for itself in its own terms, both in what the benefit system costs and the benefit to the economy. We will be able to test those propositions. A lot of what I talk about when we lay out the structures is simply what is affordable within a very difficult financial environment where we have had to put a proposition that we can float and that works. I have made the point before that that is within a context where we are injecting £4 billion into the pockets of the poorest people. Every time someone says, “Do that” or “Do the next thing”, they are adding to that figure. We can either take something else away or provide that. That is where we have come out. Later on, when the financial situation is more suitable or we establish that changing something pays for itself in its own terms, we can make changes and improvements. I labour the point only because we can spend a lot of time arguing whether this is better than a disregard or addition. The answer is that none of us knows but I hope that in the medium term we will.
In the example, we estimate that if couples who are both in work were entitled to an additional disregard of £700 a year, the cost would be £240 million. If the disregard was £1,000 a year, the cost would be £350 million. This is real money. We took the decision that it would be better spent, for instance, on childcare, where we had to find an extra £300 million. In current out-of-work benefits, there are no additional disregards for second earners. Similarly, working tax credit makes no additional provision for second earners. It is true that members of a couple may qualify for the disability elements of working tax credit if both are working and disabled. Equally, when a disabled person is not in work, no disability element can be paid. Indeed, working tax credit may not be payable at all.
I turn to the proposal that lone parents, disabled people and second earners should receive the sum of two earnings disregards if their circumstances entitle them to each, rather than the higher of the two as we propose. Many people on low incomes will have substantially more support under universal credit because of the earnings disregards that we propose. The standard weekly disregard in current out-of-work benefits for these groups is only £20, after which benefit is withdrawn pound for pound. Some people on employment and support allowance may benefit from the permitted work rule with a disregard of up to £95 per week. However, this provision is available only for one year, after which the disregard returns to £20 for most claimants. Crucially, earnings disregards are not added together in current out-of-work benefits.
In working tax credits, various elements can be added together. However, that does not differ from the way elements in universal credit build up to a total award. The earnings disregards in universal credit are more generous than those in the current system for lone parents and disabled people, helping in particular those working a small number of hours. For instance, a disabled person working 12 hours a week at the national minimum wage will be more than £50 a week better off, and a lone parent will be more than £60 a week better off in work because of the disregards in universal credit. This will provide a stronger incentive to work than exists in the current system.
For most people claiming universal credit, the main financial incentive to work will be provided by the taper. Our proposals for a structure of disregards are intended to provide an additional incentive for those who need it most. If additional funding were available, we would need to consider the taper as well as the disregards. Adding together two or more disregards simply because the claimant falls into a number of categories would be inconsistent with the approach that we have adopted. If the earnings disregards worked in this way, we would not have the funding to set each at the level that we have. Universal credit must be delivered within the financial envelope we have available. I hope that this explanation will persuade the noble Baroness to withdraw her amendment.
Baroness Hayter of Kentish Town
My Lords, I will raise a couple of points—and not simply to defend my aunt. I said that she worked at the Conservative club. She was the barmaid and cleaner. The noble Lord is very lucky that she is no longer with us.
Lord Wigley
I have been mulling over this point. Is the noble Baroness sure that she is not inadvertently misleading the Committee? Surely there is no such thing as a Conservative club in Ystradgynlais.
Baroness Hayter of Kentish Town
Perhaps I may ask a couple more questions. I think that the Minister said that the figure I used of 50,000 was wrong because the only people who would lose out are those working between two and five hours at the national minimum wage. However, it is exactly those sorts of people who are carers and who will be doing quite small numbers of hours: the six-to-eight shift, if you like. Even though it is a small number of people, it would be interesting to know whether there was an impact assessment of the effect on carers and whether it showed how they would be affected.
I have two other points. One is about the figure of £4 billion, which gets used a lot. The disregards will not necessarily cost the Government money; if they are encouraging people into work, those people will quite quickly start paying tax and NI—not immediately but fairly quickly—and they will quickly pay for themselves. I realise that that will not happen at the moment as there is rather a lot of unemployment because of the Government’s policies, but we will not go there. Normally, though, the incentive is to get people into work, so that will soon begin to pay itself off.
Baroness Thomas of Winchester
May I interrupt the noble Baroness at this point? I would like to ask my noble friend about the new test that is going to be devised for those disabled people in work. I do not think that he answered that. I apologise for interrupting the noble Baroness, but before she withdraws the amendment I would like to know whether he has any news or wants to write to me afterwards.
Baroness Hayter of Kentish Town
My second point is that the question that was not asked is why there is no additional amount of disregard for disabled people to take account of the council tax issues. I presume that the noble Baroness, Lady Howe, will speak, but if those extra points could be referred to it would be helpful.
Baroness Howe of Idlicote
My Lords, this has been an interesting and extremely wide-ranging—
Welfare Reform Bill
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“(e) the claimant having guaranteed and predictable access to high quality flexible and affordable childcare acceptable to the parents and children”
Baroness Hayter of Kentish Town
My Lords, again my education continues apace. I know that the Minister is a good man, that spring comes after winter and before summer, and now I know that he got on his bicycle.
In moving this amendment tabled in my name and that of my noble friend Lord McKenzie of Luton, I shall speak to the other amendments in the group. I welcome the comments made by the Minister in response to the first grouping that the reasonable position is the default, not full-time being the default position. Our amendments seek to protect those with substantial responsibilities for children from falling foul of the conditionality regime due to their caring responsibilities. In particular, we seek to maintain the protections put in place by the Labour Government for such people. Some noble Lords, although not me, will recall the substantial discussions that took place in the House at an earlier time.
Amendment 51CED would ensure that the limitations to the availability for work rules include in them reference to the availability of childcare which, as we have all accepted, is key to being able to work. Amendment 51FZZA similarly would write the existing safeguards into the relevant considerations when requirements are placed on a claimant. It is worth setting out the formal position, which was referred to by the Minister earlier. These established safeguards illustrate rather well the sort of issues that a lone parent or main carer faces when seeking to combine part-time paid work with caring for a child.
The first safeguard is that a lone parent of a child aged under 13 need look for work only during school hours, and the Minister has just confirmed that that will remain the position. Secondly, lone parents who can be treated as available for work under JSA during school holidays or when a child has been excluded from school and is not receiving education do not necessarily have to take up a job. Thirdly, lone parents may restrict their availability for work if they are the subject of a parenting order or have entered into a parenting contract. Fourthly, those with substantial caring responsibilities for a child aged under 16 have to be available to take up a job only at 28 days’ notice rather than immediately if such responsibilities make immediate availability unreasonable.
Baroness Sherlock
My Lords, I am aware that irony plays rather poorly in Hansard. Just to clarify for the record, I am not actually recommending this scheme to the Government. I simply want to raise the fact that one has to be careful not to build perverse incentives into the system and overformalise relationships that might otherwise find a way of working out on their own.
Baroness Hayter of Kentish Town
My Lords, I thank the Minister for his response, and the speakers who contributed to the debate. I especially thank the noble Lord, Lord Newton of Braintree, who is not in his place at the moment. Perhaps other noble Lords could pass on to him that he would never incur my wrath—the Minister’s, yes, but never mine.
The one thing that we have to take account of when we use words like “trust” and “availability” is that the debate is taking place within a much broader overall government policy. We have already mentioned in Committee that unemployment is at a 17-year high. There are already cuts to childcare. It is estimated that 32,000 people have already given up work because of the reduction in childcare allowance—at a cost of £50 million to the Exchequer, I gather, so the Treasury will not be very happy about that. Of course, it demonstrates yet again that if affordable childcare is not available, people do not go to work—fairly obvious, but there you are.
Unfortunately the noble Baroness, Lady Grey-Thompson, is not in her place. I was a little worried after what the noble Earl said about being an untrained play-scheme worker that maybe we were all untrained carers today for her daughter. At least with her mother here, I assume the child was in safe hands. As a grandparent, I very much appreciate the comments made about the contribution of grandparents. I am in the other position: with very new grandchildren, all the grandparents line up and vie to look after them. I am assured that this soon gets a bit too much and problems set in. Short-term care is much more easily set up than long-term grandparenting, unless the sort of help that my noble friend Lady Hollis mentioned is available.
I will make a couple of comments. First, I thank the Minister very much not only for saying that he will look very carefully at the suggestions made by my noble friend Lady Hollis but for the commitments he gave about including current protections. However, he did not answer one of my comments about whether they will apply to couples. He mentioned lone parents but not couples.
Lord Freud
Let me clarify that for the record. The protection includes couples as well.
Baroness Hayter of Kentish Town
This is getting better. I have one more question and I wonder if I can risk it. The Minister was also helpful on the question of school hours. He did not mention the point about being available for work during school holidays and whether those protections will remain. But given that he is in such a generous mood, my estimation is that he will reassure me on this.
Lord Freud
It is my delight to be able to reassure the noble Baroness that those protections will remain.
Baroness Hayter of Kentish Town
I am twitchy about one more thing, because I know that the Minister will say no. Although we are happy about the responsibility being put on local authorities with regard to childcare, I cannot let the moment go without saying that their funding has been cut. I know that that is not within his department, but some of these things cost money.
The Earl of Listowel
Before the noble Baroness withdraws the amendment, I should have reminded your Lordships that the Childcare Act 2006 applies only to England and Wales, so local authorities in Scotland and Northern Ireland are not under these obligations. I hope that that is helpful to the Committee.
Baroness Hayter of Kentish Town
I should have known that, but I did not, so I thank the noble Earl. Nevertheless, we have had some helpful reassurances in the Minister’s response to the debate and I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town
You are not allowed to demonstrate things in the House, but I now have to tear up my speech. I have never been so pleased to do so, I have to say. We should thank the Minister both for what he said and for coming in so early to make those comments. I really am going to tear it up and only add two things. One is to reconfirm what has been said. What he is looking at is undoubtedly in the best interests of the children and of the state, because it is a good investment for the future. As the Minister recognised, we are often talking about older children—I think that children over 12 make up a higher proportion of those in kinship care than those in the wider population, so perhaps we are talking about a different group here.
The only other thing I will add is that he talked about discussing this with others. My noble friend Lady Drake spoke about talking to BIS—an elegant name—about the rights-at-work issue. However, the DWP policy on kinship care is a bit out of kilter with that of the Department for Education, with the latter promoting family-and-friends care as a first option for children needing alternative care. It would therefore be useful—I am sure that the Minister has it already in mind—to talk to the DfE about these proposals. Given the involvement of local authority social work staff, who are often the brokers in setting up an arrangement that can lead to a child being taken into care, tying them in as well would be useful. Therefore, it means including the DCLG as well as the other departments to get a joined-up approach to this.
I think that the Minister used the word “clarity”. Whether kinship carers know the situation before they take the momentous decision to take in a child will be key. That probably means statutory provision rather than just guidance, to give that security to someone taking on what is often a lifetime commitment. As all noble Lords who are parents know, children do not even grow up at 18. Even 30 year-olds have not grown up. It is a lifetime commitment. We very much welcome the comments that have been made.
Baroness Drake
First, I will respond to the comments made by the Minister. I fully recognise that he has shown a real interest in this community of family-and-friend carers; and that his interest was shown before any prompting by this amendment. It seeks to ensure that his resolve stays firm and to push him firmly into including something in the Bill to address this community. I welcome his positive response this evening.
Guidance does not do it; it will not be acceptable. It may be imposed, but that is not where I, or those who are interested in this issue, want to be. Nor do we want case-by-case consideration. It does not give the clarity of treatment, the confidence, or the protection that this community should have when they take on children. I agree with my noble friend Lady Lister that if something firm could come from the Government on this before the Bill leaves the House, it would be warmly welcomed. I wish to push the Minister, between now and the appropriate stage of the Bill, to reflect on something firm that could be placed on the record.
In response to my noble friend Lady Sherlock’s point, I must be honest and say that in drafting the amendment I was conscious of balancing the needs of a community with people’s concerns about more informal arrangements for the care of the child. This amendment specifically addresses a community of carers where there is a legal order.
My noble friend is right that, particularly if parents are, for instance, taken to prison, there could be an immediate effect of children needing to be looked after, even if subsequently there is a legal process to follow. Perhaps the Minister could reflect on the weakness of my amendment, which I will address at a later stage.
Welfare Reform Bill
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“School meals
(1) The amount in respect of other particular needs or circumstances, under section 12, shall include an amount in respect of school meals for any dependents of the claimant.
(2) The maximum award of the amount under this section shall be 100% of the cost that the claimant would expect to incur in respect of school meals, up to a prescribed maximum value per child.
(3) Regulations shall specify the circumstances under which a claimant shall be entitled to an amount under this section.
(4) Under no circumstances shall any amount payable under this section be included in the “relevant amount” specified in section 93(5) of this Act.”
Baroness Hayter of Kentish Town
My Lords, I shall speak also to Amendment 51C. These amendments seek to ensure that free school meals and health costs, which are the core of passported benefits, are included as part of the universal credit. They also seek to ensure that any amounts included for universal credit are not included as part of the benefit cap.
In May, the Minister deftly devolved the tricky matter of how to deal with passporting to the Social Security Advisory Committee. In a Written Statement earlier this month, he updated the House on the committee’s consultation and its information gathering. It reported that the SSAC had had more than 60 responses from individuals and a wide range of organisations, including disabled people, offenders, schools, children, housing bodies, medical bodies, the NACAB, local councils, debt advice bodies and, of course, the devolved Administrations. That was alongside a trawl of relevant research and some qualitative research, which included focus groups with welfare rights advisers, and a few in-depth interviews and discussions with individuals who either have or are claiming passported benefits. The research identified more than 25 different passported benefits provided by government departments or local authorities, some of which were mentioned by my noble friend Lady Drake on the previous group.
Perhaps more significantly, although hardly surprisingly, the committee found that passported benefits are viewed as fulfilling important needs. Respondents’ views on the withdrawal of passported benefits were mixed, with some supporting a tapered withdrawal and others more of a timed withdrawal when a claimant moves into work. At the moment, we would argue—I think that this would go across the Committee—that passported benefits should be designed to incentivise people both to move into work and to stay in work. The committee has now been asked to develop guiding principles for such a design of passported benefits in relation to universal credit. I think that it has been given until the end of January to do that. My understanding is that we will see that report and the DWP’s response only in the spring of next year, which makes it difficult for this Committee and the House later to judge whether the Bill will ensure that work always pays.
Furthermore, I am slightly unclear as to how the new “app” foreshadowed by the Minister last week will be able to deal with things such as free school meals and other passported benefits if these are to be subject to any sort of taper or awarded only to certain UC recipients. Perhaps the Minister will spend a moment exploring this in his response, especially now that my noble friend Lord Knight who understands these things is in his place and will understand, I hope, the response better than I will on things like that.
The Social Security Advisory Committee unsurprisingly found that passported benefits provide a vital support to many. Free school meals can have a significant impact on the well-being of children. In its response, the CPAG stressed that access to school meals has a range of positive well-being, health and educational outcomes for children, from improved classroom behaviour to increased key stage 2 performance. It also pointed out that school meals tend to be far healthier than packed lunches: only 1 per cent of packed lunches meet the nutritional standards set for school lunches. We know that for a number of children, this is the only hot meal that they get in a day.
Similarly, the support available under the health costs criteria provides vital help to people on a low income. People who meet various criteria can get support with dental charges, optical costs, wigs and travel costs. In England, some get free prescriptions. Unlike Scotland and other areas where prescriptions are free, they are paid for in England. Passported benefits thus provide a means of safeguarding the health of children and adults, and can be worth substantial amounts in cash terms. The CPAG in its evidence gave an example of a lone parent aged 37 with two school-age children and a two year-old, and her passported benefits were probably worth about £37 a week from the mixture of free school meals, prescription, dental costs, bus fares and eye-care, along with some discounts on travel, phone bill and leisure activities. So, knowing which of these benefits she will still be able to be entitled to as she moves into work will be absolutely vital in judging whether or not she will be better off in work, and whether work really does pay.
We know that the current system is not perfect. Some 20 per cent of children in poverty are not entitled to free school meals. But for those who are, the current loss of free school meals when the parents move into work is really quite a significant cliff edge; but at least at the moment that loss of support is offset by the extra payments in working tax credits, because the current system provides an income boost when parents move into work of 16 hours or more. But by contrast, the welfare White Paper suggestion that passported benefits would be withdrawn once the family reached a certain income level seems to have two problems. The first is in replicating the cliff edge. If entitlements were suddenly lost at an income threshold, that could have a disastrous effect on work incentives as well as family budgets, and a family with two children earning an extra pound a week could be in a state where they lose £18 per week in free school meals.
Secondly, if it was to be an income threshold, that appears to take no account of family size. So a mother of three would stand to lose much more as she reached the cliff edge than—for example—a mother with one child. The first mother’s work incentives would obviously be much worse.
Now we know that, again, the canny Minister has asked the Social Security Advisory Committee to consider these issues, which are clearly pretty challenging. So we may not have the answers today. Nevertheless, we would ask for two assurances and clarifications. First, will the commitment made by the Secretary of State in the White Paper that universal credit,
“will ensure that work always pays and is seen to pay”,
apply after the loss of passported benefits has been taken into account? Because it is unclear at the moment whether passported benefits have been included in the current impact assessment of work incentives under universal credit. As Citizens Advice says, the Government really do need to ensure that decisions about who is entitled to free school meals and help with health costs does not undermine universal credit principles—which we are all signed up to—of making work pay.
Secondly, can the Minister confirm that any calculation of total benefits for the purpose of the benefit cap, will not include amounts paid in lieu of passported benefits—or the value of those benefits—if they continue to be provided in kind?
Perhaps I may add two points of clarification. First, will the IT system be able to deal with passported benefits? Secondly, could the Minister help me with the definition of “spring” as he has rather helpfully done over “soon” and “very soon”? It does seem that unless we are clear before the Third Reading whether work really will pay—taking passported benefits into account—then it will be very difficult to measure whether this whole Bill will achieve the laudable aims that the Government have for it. I beg to move.
Lord Freud
Yes. I thank the noble Lord for that question. I have specifically asked the SSAC to cover the point of working with devolved Administrations when it comes up with its recommendations so that will be incorporated in its original review, let alone in our subsequent review.
Baroness Hayter of Kentish Town
My Lords, having learnt last week that the Minister is not a bad man, this week we learn that spring comes after winter and before summer. I have discovered that my education is absolutely complete. We welcome very much the assurance that at the point when he gets the report, he will be looking at this firm of the view that passported benefits should not undermine the incentives to work in the rest of the Bill. It may be no surprise but it is nice to have that—and the acknowledgement of the importance of making sure that any such passported benefits are spent on what they are needed for. Of course, the comment that these will not count towards the benefit cap is particularly welcome. With that, I beg leave to withdraw this amendment.
Baroness Grey-Thompson
My Lords, I have a few words to add to those of the noble Baroness, Lady Thomas, about people in manual wheelchairs. I have been contacted by a number of disabled people recently who are very keen to get into work, but they have told me some heartbreaking stories of the hidden discrimination that they have faced. One young lady had very good skills and qualifications and she applied for more than 40 jobs but was turned away from each of them for some quite interesting reasons. It all boiled down to the fact that it would be too difficult to employ her. I think it was a case of providing a little extra support. We want to get that group of people into work and they want to be in work. It is important for them to be in work so that the rest of society can see their range of impairments and disabilities. That will encourage people to be much more open-minded. I am really concerned that we are not doing everything we can to ensure that that group of people get a fair crack of the whip.
Baroness Hayter of Kentish Town
My Lords, we support this group of amendments, which seeks to ensure that a person’s long-term health condition or impairment is taken into account, both when drawing up a claimant commitment and when considering compliance and, therefore, possible sanctions. Amendment 51CE requires that evidence from a claimant's own health professionals is part of any health assessment required in drawing up the work preparation requirements, along the lines set out by the noble Baroness, Lady Hollins, and emphasised by the noble Baroness, Lady Meacher.
The amendments affect both those claiming ESA and those who fail the assessment process and are asked to claim JSA instead. They apply to people with long-term physical or mental health conditions and impairments. I particularly bring to the attention of the Committee the fact that many of these long-term conditions also fluctuate, as has been mentioned, particularly things like multiple sclerosis. As the Committee will know, MS is twice as prevalent in women as it is in men, so it will excuse us taking a moment on it. Some long-term conditions, such as relapse-remitting MS, also happen to have what can appear to be very non-specific symptoms, such as fatigue, generalised pain and cognitive difficulties. It is vital that the assessors understand those, along the lines mentioned by the noble Baroness, Lady Meacher, and that the advisers take full account of the claimant’s own physician.
The DWP note states:
“Claimants with a health condition, or who are undergoing regular treatment to manage their health condition (but do not have limited capability for work) will be required to provide evidence of any limitations on what work (hours, nature of work, and location) they are capable of doing. This will be taken into account when setting … requirements”.
However, as has already been touched on, if a claimant raises reasonable objections to their work availability and work-search requirements, although those will be considered by the adviser, where there is no agreement, the claimant can only get them reviewed by another officer. That was mentioned earlier by my noble friend Lord McKenzie. That falls short of a proper right of appeal.
As we know, the process for assessing whether someone has limited capability for work is not perfect. It is not easy. Will the Minister update us on the implementation of the year 2 recommendations from the Harrington review following last month’s closing date for evidence? This continued process and the very real concerns that it is causing disabled people mean that it is important that long-term health conditions are considered when the claimant is asked to sign up to that claimant commitment or when good cause is being considered as to whether a sanction should be imposed for failure to comply.
Even if the review process is perfect, there will still be some people with long-term health conditions who are able to undertake work search but who need their conditions to be taken into account. They may, for example, be able to work very competently and fully but for only part of the day or a few days a week from time to time. In other words, they can work well but not necessarily on a sustainable basis. The resulting absences or the requirement for additional time to travel to work or extra support at work need to be taken fully into account when assessing both their search for jobs or subsequent work record. The descriptors relating to fluctuating conditions will be crucial in assisting the assessors.
Because the claimant commitment is new, we do not know the extent to which DWP advisers will take long-term or fluctuating conditions into account. There is a precedent for health conditions to be taken into account when good cause for turning down a job is considered. Those are already set out and include,
“any condition … that suggests that a particular job or carrying out a jobseeker’s direction, would be likely to cause you excessive physical or mental stress or significant harm to your health”.
The draft regulations do not list how this issue will be dealt with under universal credit. Will the Minister outline what is intended in this regard?
I want to finish by bringing to the attention of the Committee the concerns of Scope, which is very worried about the proposals as they stand. It fears that,
“there will not be adequate safeguards to ensure that sanctions are not applied to disabled people who are unable to meet the conditions due to factors relating to their impairment or condition”.
Scope is,
“not convinced that applying long-term sanctions … will incentivise those to comply after the sanction has been introduced”.
Moreover, Scope is,
“deeply concerned that the use of stricter sanctions will impact upon disabled people receiving JSA”.
After all, sanctions are most likely to affect those who did not fully understand that penalties could be imposed. This frequently involves claimants who already face multiple barriers to work, including various disabilities.
Scope also believes that there is little to suggest that sanctioning such claimants in this way will actually do much to change behaviour when a claimant, perhaps with a learning disability, has not understood why they were sanctioned in the first place. Scope is concerned that conditionality requirements and sanctions, as has been mentioned by other noble Lords this afternoon, will not be applied to disabled people until there has been proper consideration of need. A thorough assessment of need and barriers to finding work must be carried out before any decision is taken to apply a sanction. I look forward to hearing from the Minister how he responds to the concerns raised by the noble Baronesses, Lady Hollins and Lady Meacher, and other noble Lords who have spoken.
The Earl of Listowel
My Lords, I apologise. I should have put a couple of questions to the Minister. How will care leavers be treated in this system, and what additional support and flexibility might they expect to be shown? Perhaps he might prefer to write to me on those two points.
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Baroness Sherlock
My Lords, there is very little left to say, particularly after the astonishingly impressive opening speech of my noble friend Lady Hollis. If I were a Minister facing that speech across the Table I would have run the white flag up and gone to the pub, but the Minister is clearly made of sterner stuff than me, which is probably just as well.
I have two questions, the first specific and the second general. First, what discussions has the Minister had with colleagues in other departments about the position of children in relation to the implementation of these provisions? Like many other noble Lords, I have had a number of cases raised with me on the position of disabled children, to which we may return, and children with health problems, as discussed by my noble friend Lady Lister. Also, Barnardo’s, for example, raised with me the position of families in which a child or children are in temporary care. For example, they may live temporarily under a residence order with their grandparent, and while the family is trying to get the children back it may look as though they are underoccupying when they are not. There is a whole series of exceptions. I am interested in the specifics, but more generally has the Minister talked to colleagues in other departments about the impact on child welfare, safeguarding and well-being or child poverty when this policy is implemented?
The second question is one the answer to which I would be very interested to hear. We have talked a lot about modelling and transition, but the noble Baroness, Lady Hollis, talked about what seemed to me to be an astonishingly simple amendment. She said that somebody should not be required to do something that they are incapable of doing. What is the Minister’s philosophical reply to that?
Baroness Hayter of Kentish Town
My Lords, I start by saying that it was good to hear a defence of the noble Lord, Lord German, who arrived in the House at the same time as I did. However, I thought that being asked questions and dealing with them was a wonderful preparation for being Minister, and I hope that the government Whip has taken note of that.
It is difficult to add to the words of the noble Baroness, Lady Hollis, who, as the Guardian said last week—and only the Guardian could use these words—gave a “frankly beautiful speech”, and an astonishing one today, as it was described by my noble friend Lady Sherlock. I hope only to add a few remarks in support of what she said. First, I remind us, as did my noble friend Lady Turner, of the special nature of a home. We know the importance of feeling secure in one’s home and that one of the biggest causes of stress is a house move. It affects all of us, whether we are owner-occupiers or renters, old or young, rich or poor. As the noble Lord, Lord German, said, it is one of the worst things that we have to do.
Lord German
My Lords, I was talking just before the break about the number of foster carers who will be affected by the proposal. We do not have the figures because the Government do not collect the right data, but the 2010 survey commissioned by the Fostering Network found that 6 per cent of all families lived in private or social housing. We know that the split between private and social is 32 per cent to 68 per cent. As there are roughly 45,000 foster families in the UK, if we take that figure, there would be approximately 2,700 fostering families in private and social housing and 1,836 in social housing, but those are extrapolation figures. I would be grateful if the Minister could assist us in that matter.
What is critical in this suite of amendments about children is that the Government do not jeopardise our caring for children with disabilities, and particularly our fostering system, by introducing measures that would penalise those groups of children. I hope that the Minister will be able to tell me that that is an unintended consequence, if people believe that we will impact on such groups of children. I hope that the Minister can assure us that those particularly vulnerable groups of children will not be affected by the Bill.
Baroness Hayter of Kentish Town
My Lords, I, too, shall speak briefly to Amendment 40 and Amendment 41, which stands in my name and that of my noble friend Lord McKenzie. As has been said, Amendment 40 seeks to ensure that the restrictions on the size criteria for social housing cannot leave a foster carer unable to meet their rent. As has been suggested, as currently drafted, the social sector size criteria and related benefit cuts would hit foster carers who claim benefit. As has been said by the noble Lord, Lord Best, that is because foster children are not counted as part of the household. Therefore, any bedroom that they sleep in is defined as being empty and underoccupied. The Fostering Network has warned that the failure to exempt foster carers from the penalty could lead to a number of them leaving fostering altogether.
As was suggested by my noble friend Lady Hollis in her earlier question, it is indeed a necessity that to be accepted for fostering, carers are required to have spare rooms in their homes for such children. Indeed, if you look at any advertisements for foster parents, they say that a spare room to foster is necessary. In addition, it cannot just be any old room; it is expected that most foster children will have a room to themselves from the age of three upwards, as specified by the minimum standards issued by the Department for Education and Skills. That age is well below the underoccupation rules for birth children who live with their parents.
We all know that social housing can provide a stable, high-quality environment in which to care for children who, for whatever reason, cannot live with their birth families. I am sure that none of us would want to exclude the occupants of social housing from acting as foster carers. I cannot believe that the Government intend that foster carers should face the underoccupation penalty. It is fairly obvious what impact that that would have.
Foster carers can claim housing benefit for the housing needs of their families, but the ones that they look after are not taken into account, which would mean that, just as with any other family, the rooms would count as being underoccupied, despite the fact that children sleep in them, and the foster carers’ benefit could be reduced by 23 per cent for the use of two rooms or 13 per cent for the use of one room used by a foster child. Many foster carers look after two or more children, especially those carers who deal with emergency needs, when a whole family can arrive together, and the availability of not just one but two spare rooms is crucial.
Most foster carers do not receive financial compensation for housing costs at present. They receive allowances towards the care, which include household running costs but not housing per se. Last year, the Government changed the law to exclude foster children from housing benefit claims. The Minister will recall that he wrote that this is because fostering allowances are intended to cover all the costs of looking after a foster child, including housing them. However, that statement is inconsistent with official information about the purpose of fostering allowance. The minimum fostering allowances set by the Governments in Northern Ireland, Wales and England do not include housing costs. In any case, the levels for recommended minimum allowances are far too low to provide realistic compensation for housing costs.
In case it is thought that discretionary housing payments may be available, it is true that foster carers are entitled to apply, but even if this concession was awarded it would be only to a small minority. As other noble Lords have said, there is already a significant shortage of foster carers. If there was a penalty for keeping a room in order to foster, some experienced carers might have to quit altogether. This could have a significant impact, especially in major towns and cities and other areas where rents are particularly high. Accommodation is in short supply, yet the demand for such carers is great. As the noble Lord, Lord German, said, there are about 2,700 fostering families claiming housing benefit. One thing being asked for through the amendments is that the cost of permitting it would be more than offset by the cost involved in losing foster carers, with children therefore having to be kept in care.
It is very hard to overemphasise the value of the work done by foster carers. I should like to take a moment to talk about two families I know, who between them have had more than 120 children through their doors. They have mostly been children who either have difficulties or disabilities themselves, or whose birth families are, for whatever reason, unable to provide a home for them. They do not always arrive in a nice planned way. They can come in the middle of the night, after the death or illness of their only parent, as the result of an assault or, as in one case that one of these families dealt with, when one of the child’s parents had been murdered by the other. The need for a home in the middle of the night and a room for those children cannot be stressed too much. These families are ready to take someone in, often very distressed small children. It is something of which we all need to be aware.
The Local Government Association is particularly concerned that if the proposal should remain unamended, and therefore reduces the likelihood of fostering, as carers are forced to give it up to avoid the penalty, it will be local authorities who pick up the cost, at a time when we are already short of foster families. It is fairly obvious that particularly vulnerable children make up a large proportion of those who are placed in emergency or short-term care. Therefore, we hope that the amendment will get a very warm response.
Amendment 41, in my name and that of my noble friend Lord McKenzie, is there to assist the Minister. It would make an exemption for foster parents to prevent their being subject to any accusations of abuse. I do not believe that there is such abuse, but certain papers like to run scaremongering stories about benefit claimants living in mansions, while there are blogs that talk about people living in enormous eight-bedroom houses in Chelsea, paid for by housing benefit. I have yet to find one. Amendment 41 seeks to protect foster carers from any such accusation. It includes defining,
“the type of property reasonably required for a household which is providing or routinely provides foster care placements”.
So it is to try and help the noble Lord in a very simple way.
The guidelines for good fostering are that there must be a spare room, and that no child over the age of three should be asked to share a bedroom. That is what we would call a suitably sized property, so I very much hope that the Minister can respond positively on the issue of foster care.
Baroness Campbell of Surbiton
My Lords, I support the noble Lord, Lord Best, especially on his amendment regarding the CLG criteria of one-plus-one bedroom. One thing that struck me is that we have not referred in this debate to people with fluctuating impairment who require overnight care but not on a regular basis. People with mental health problems, when they go into crisis, may need somebody to sleep in the bedroom next door for a month or two, and that is not necessarily counted as an overnight carer in considering criteria for an extra bedroom.
We should celebrate that 15,000 disabled people need overnight care in this country—that figure is given to us by the DWP. Has the Minister had discussions with the Department of Health about the implications of the changes to the housing and benefits extra bedroom situation for people with fluctuating impairments? Increasing numbers of disabled people are living at home in the community now, and that is to be celebrated, but many disabled people require the help of another human being in order for them to do that. Otherwise it is back to residential care and the old days of warehousing. This is another good reason to support the one-plus-one bedroom and if we cannot do that, then I certainly support all the exemptions that are called for in all the amendments.
Welfare Reform Bill
Baroness Hayter of Kentish Town Excerpts(13 years, 1 month ago)
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Lord Freud
My Lords, I start by congratulating the noble Baroness, Lady Lister, on her first amendment, and I hope that she does not have too many like it. I was very impressed when she said that she was a conservative, which was obviously supported because my noble friend Lord Kirkwood called her his noble friend. Clearly we have some cross-dressing going on.
In the policy briefing note published on 12 September, we confirmed that the universal credit will be paid monthly. However, we do not intend to specify the payment frequency in primary legislation. As with all existing benefits, this will be dealt with in regulations made under the existing powers in the Social Security Administration Act 1992. That approach gave us the flexibility, for example, to increase payment periods from weekly to two-weekly for most out-of-work benefits. The amended provision would require the Government to pay universal credit more frequently than monthly. Amendment 27, for instance, goes on to provide that in some cases payments would be made twice monthly.
I need to make the point about the difference between assessment periods and payment periods, which is important to bear in mind. Currently, existing out-of-work benefits are made on an assessment period of a week, with a fortnightly payment cycle. That is fairly typical. The universal credit benefit represents a new approach focused clearly on work, which encourages out-of-work households to budget on a monthly rather than a fortnightly basis in the belief that it will better prepare people for the reality of working life. The figures have already been used. Currently, 75 per cent of all those in employment and 51 per cent of those earning less than £10,000 a year receive earnings monthly. In addition, monthly direct debits for household bills are often cheaper than more frequent billing options.
Many noble Lords raised the evidence base. As noble Lords know, we are conducting qualitative and quantitative research with claimants on many issues but particularly on the payment frequency issue. As some noble Lords have pointed out, on 7 October we published a report, Perceptions of welfare reform and Universal Credit. This outlines findings from research we conducted with claimants, the public, employers and staff in December 2010 and January 2011. There were critical findings in that piece of research that we are looking at with great attention.
I understand that many people on low incomes will be used to managing the fortnightly payment of benefits, and I am determined to ensure that there will be appropriate budgeting support to meet the needs of claimants. We want families to be able to manage their financial affairs in a manner that best reflects the demands of modern life, whether they are in work or out of work, and we are working with stakeholders and benefit experts to that end. We are setting up a series of demonstrator projects, as they are called, with housing associations and local authorities to look at how to structure the payment of rents to landlords. These demonstrator projects will look at a wide range of budgeting support. We need to make sure that budgeting advice and support is available for those who need it in order to help them manage the change.
We also need to consider those exceptional circumstances where more frequent payments will be required. To pick up the point made by the noble Baroness, Lady Campbell, people with mental health problems are an example of a group that may need an exceptional service. To pick up the point made by the noble Earl, Lord Listowel, where there is proven abuse or risk to other members of the family, one would have to look at the payment arrangements.
If you separate assessment from payment, the monthly assessment is intended to reduce the burden on claimants and reduce the risk of overpayments compared with a system where benefits are reassessed on a weekly basis, so there is a separation between the assessment period and the payment period. To pick up a question from my noble friend Lord Kirkwood on the impact assessment—
Baroness Hayter of Kentish Town
My Lords, the Minister suggested that payments for those with mental health problems, for example, could be looked at. Could he address how that might stigmatise a certain group; that is, when not everyone can choose to be paid fortnightly, just those with mental health problems?
“( ) an amount in respect of prescribed unearned income calculated as in paragraph (a),”
Baroness Hayter of Kentish Town
My Lords, depending on how the Minister responds, Amendment 29 is, I hope, a probing amendment. It deals with the treatment of income in universal credit. As drafted, paragraph (a) of subsection (3) deals with earned income, while paragraph (b) deals with unearned income. Amendment 29 would insert a new category of income; that is, unearned income which is to be treated as earned income. It seeks to replicate existing provisions within tax credit legislation whereby certain types of unearned income are treated in the same way as wages, including sick pay and maternity pay. We welcome the DWP briefing note on universal credit, which states that:
“The powers in the Bill permit us to make regulations to treat unearned income in the same way as earnings. These powers may be used, for example, in the case of Statutory Sick Pay”—
I have emphasised the word “may”—I hope that it is more of a “shall” than a “may”. However, perhaps we could have some clarification on that. Statutory payments such as statutory sick pay and statutory maternity pay are paid through wages and it would therefore be difficult not to treat them as earnings. We welcome that indication, but again, some clarification of the word “may” would be a nice assurance.
However, although there is no policy reason why those who receive maternity allowance or ESA during the first six months of illness should be treated differently, we seek an assurance from the Minister that these benefits will be treated in the same way; that is, as earnings. By way of example, the Minister will know what I am referring to when I speak of two groups of people who get ESA in the first six months of sick leave rather than SSP. These two groups are those who have been working until they become ill, but are likely to receive ESA rather than SSP. One group is the self-employed, who will have to claim ESA as they have no entitlement to SSP, and the second group is that of people who work for a small employer and become so ill or disabled that it is clear they will be unable to return to their current job. People in this group often give in their notice because they feel it is unfair that their employer is unable to replace them while they are claiming SSP. In monetary terms the difference is fairly obvious. For example, in the case of a home owner during the first three months of sickness, under the current scheme they get in addition to their ESA of £65 a week a payment of up to £52 working tax credit provided that they were working for at least 30 hours a week. That gives them a total of £117. They would have to pay their mortgage out of this because they would not have help with the mortgage repayment.
Baroness Hollis of Heigham
I think that “um” would be a very good response from the Minister.
Baroness Hayter of Kentish Town
Some of my comments will not be appreciated but I thank the Minister for his response. Clearly, I have not received the same response as did my noble friend Lady Lister. I will take it back and think about it. She does not know when she is ahead. However, I am afraid that I have to express some regret. A lot of us have done a lot of work in preparing for the Bill although I am sure that we have done much less than the Minister. I blame my noble friend Lady Sherlock in that when I asked her what I should do she advised me to read everything that was said in the Commons. I thank her for that. What I found again and again were promises from Ministers in the other House that by the time the Bill reached Committee stage there the relevant information would be available. Again and again I am afraid I read that our friends in the other place found that that was not the case. They nevertheless were given absolute assurances that the relevant information would be available before the Bill reached Committee stage in this place. To have something published today concerning a debate that is taking place today is simply not good enough. We cannot work that way; “before” ought to mean before. Anything that is relevant to what we are talking about should be with us in time to enable us to read it and think about it.
I welcome the remarks about our being involved in the debates about how this process is going to work. I think that those remarks were probably genuine. However, that means that we have to have the relevant information available, especially as we are trying to discuss the Bill without a wonderful array of staff to help us.
I also regret the remarks about ESA, maternity allowance and earnings. The women who will be getting this who have been in work may simply not qualify for a statutory payment because they have changed employers. However, they could well have been working full time before that. In that sense it is not a benefit but something that they earned and are entitled to. Therefore, to treat it as unearned income—as if a sugar daddy had given it to them—would not be the right approach. It has been earned, albeit in a different way.
Similarly, the Minister did not respond to the question of whether ESA affected the self-employed. They are another group of people who have paid contributions into a system. If they then discover that what they get when they are possibly very seriously ill with cancer is seen not as something that they have earned but something from a very kindly Government, that will not be the right way to ensure that people see the system as enabling them to get something for what they have put in, which is what many of us want. I am sorry about that and I hope that, even if the Minister does not respond orally now, he will think about those groups of people, and in particular about women whose circumstances may have changed and who may have moved to a better job. On the whole it is young women who get pregnant. They may be moving up in a career and may have moved to a different employer and therefore may not qualify.
I have two further brief points. We are obviously delighted about any monitoring and assessment. If there is to be no formal review, I will have to accept that that is the best way of doing it. Nevertheless, it would be very nice if the Minister or his successor will bring those reports to the House, where they can be debated in the same way as we are able to now.
Finally, I accept that the Minister may not want to set a target rate for a taper. He said that perhaps 65 per cent was too high but that a future Government could perhaps do something about it. I look forward to sitting next to my noble friend Lord McKenzie when he is the Minister in a future Government—
Baroness Hayter of Kentish Town
—and can announce a different taper rate. With those comments, I beg leave to withdraw the amendment.
Welfare Reform Bill
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“( ) Prior to the implementation of regulations made under this section, the Secretary of State shall initiate and respond to a public consultation concerning the operation of the claimant commitment.”
Baroness Hayter of Kentish Town
I beg to move Amendment 21, which stands in my name and that of my noble friend Lord McKenzie. It relates to subsection (7) on the top of page 3; an important, albeit small clause, stating that,
“regulations may specify circumstances in which a person is to be treated as having accepted or not accepted a claimant commitment”.
Amendment 21 would add:
“Prior to the implementation of regulations made under this section, the Secretary of State shall initiate and respond to a public consultation concerning the operation of the claimant commitment”.
Central to the Bill, as my noble friend said in an earlier debate, is the twofold aim of supporting work for those who can work alongside providing security for those who cannot. Key to the former is the availability of work, as was stressed by the noble Lord, Lord Wigley, who is not in his place now, but also assisting those who can work back into the workforce after a period of unemployment, illness or injury or the raising of children.
As the Government have reiterated, one aspect of returning to work or entry to the workforce lies firmly in the hands of the potential employee or claimant of universal credit under this clause. This is not new and not simply from when my two noble friends were Ministers, but, as briefings provided by DWP have said, the requirement to seek or accept suitable work has long been part of the benefit system. Indeed, it has been a condition of receipt of unemployment benefit for 100 years, since 1911 when the system required claimants not to have left work without just cause and disqualified them if they refused to accept a suitable offer of employment. So, in slightly new wording, the Bill seeks to capture that responsibility and to enhance it by way of a claimant commitment. What is new is that for the first time, this covers those in work.
Commitment is an interesting choice of word. Any dictionary tells us that a commitment is an obligation, a promise that restricts one’s freedom of action. That is fine. The problem is that such a commitment appears one-sided. It lays obligations on the claimant but, unlike the National Insurance Act which offered a guarantee of unemployment insurance for a fixed period for those who paid contributions, we are told nothing as to what commitment the state will make to the claimant under universal credit. Yet looking or preparing for a job is meaningless if no employer is under an obligation, or indeed helped, to create or provide jobs. There is also no commitment for an employer to be willing to take on someone who perhaps lacks an established work record or satisfactory referees, or someone who may have lost their job—for example, in Sheffield because the Government refused the loan to Sheffield Forgemasters, or in Derby because the Government did not help with a vital contract there, as my noble friend referred to earlier this afternoon. A one-sided commitment will mean little if the Government do not work with employers as actively as they work with claimants. I hope I may be forgiven for quoting something I said at Second Reading. It is a quote from the Work and Pensions Select Committee in the other place, which called on the Government,
“to pay as much attention to getting employers to take on someone who has been out of work as they do to getting the claimant ‘work ready’”.—[Official Report, 13/9/11; col. 364.]
Those were wise words which I repeat today.
There is also no commitment that a parent will be better off in work, despite the voiced aim of the Government, due to the strong likelihood that support for childcare costs for working parents will be reduced. Modelling by Gingerbread and the Resolution Foundation suggests that under one of the Government’s options, to pay 70 per cent of childcare costs up to £125 per week for one child, a single parent on minimum wage who needs childcare for each extra hour of work would keep only 6p out of each pound earned for each hour over 24 hours per week. That is hardly a just reward, and certainly higher than the 50 per cent tax rate that so upsets Boris Johnson. With the option of paying 70 per cent of childcare costs up to £210 per week for two children, a second earner on £7.20 an hour would keep only 9p of each pound earned and would take home no extra cash at all from working beyond 30 hours per week.
We are still awaiting an announcement, perhaps very soon, on how childcare is going to work under universal credit. But how can a claimant commit to take a particular job if they are not sure that they would be better off after paying for childcare? The draft regulations state that if there is no suitable and affordable childcare that may, at the discretion of the adviser, be good cause for turning down a job offer, but it is not a certainty.
There is no commitment in the Bill that second earners will always be better off in work. Indeed, the DWP’s own impact assessment suggests that nearly 1 million second earners will face increased costs on entering work compared with the situation now. We do not yet know how many hours people will have to work in order to escape conditionality. The DWP briefing note published yesterday said that the department will set an earnings threshold above which claimants will not be subject to conditionality, so that single claimants will have to earn £212.80 before being free of conditionality. Lone parents with children aged 5 to 12 will be expected to work within school hours, but no limit has been set for the number of hours that they need to work. A couple, neither of whom has health issues or caring responsibilities, will both be subject to conditionality until they earn £425.60 per week between them, but we do not know what thresholds will be set for couples who do have caring responsibilities.
We do not know what thresholds will be set for those with health issues. Will those with disabilities be expected to find work for 35 hours a week before they can escape the threat of benefit sanctions? The briefing note suggests that the DWP will set what it calls “personalised thresholds”, but without defining what they are, claimants are being asked to sign up to a commitment when its details have not yet been written. The number of hours are to be set in legislation, but it is unclear when these will be decided.
Lord Freud
My Lords, these amendments would require a formal consultation on the operation of the claimant commitment and a yearly review on its impact. We will have the opportunity to discuss the claimant commitment in detail when we reach Clause 14, so right now I would like to make some specific points. Before I do that, I would like to make a more general response to some of the general points that the noble Baroness, Lady Hayter, made around the mutual obligations she said are not there and the argument that this is a one-sided commitment. Clearly, it is not one-sided. Part of the Government’s side of this is to pay the benefit to the claimant. The other part of it is to help claimants to find work through, in the case of Jobcentre Plus, adviser interviews and, more importantly, through the investment in the work programme which is, as noble Lords know, a very substantial investment in this country to help people back into the workplace. I will not go further on childcare costs, which the noble Baroness thought would be revealed very soon. Let us have some facts, and then have a discussion on them.
There is genuine mutuality, a two-sided commitment, in the claimant commitment. It is intended to be of benefit to claimants. It will provide all claimants with a single, clear statement of their responsibilities. This will ensure that claimants understand those responsibilities from the very start of their claim and help to improve compliance. Indeed, I am spending quite a lot of time to make sure that the commitment is helpful, understandable and specific to an individual. We are spending a lot of time and energy doing that because, up to now, similar measures have been rather vague and more general.
The content of a claimant commitment will include the hours the claimant is expected to work and it is drawn up between the claimant and the adviser in dialogue. The threshold for things such as the time spent on job search per week will be set according to personal capability and circumstances rather than being prescribed in legislation. The regulations set out only the maximum limit beyond which we will never apply conditionality, so some of the newspaper articles—I am not sure whether this was an upmarket favourite read or in a more downmarket one—apply to the maximum expectation. Clause 17 sets out the kinds of activities we might expect claimants to undertake, and we will get to it later.
We will ensure that the process of accepting a commitment is not onerous. For those claimants who have limited responsibilities—for example, where the only requirement placed on the claimant is to report changes of circumstance—the commitment will be an integrated part of the claims process and could be accepted online or via the telephone. For other claimants, primarily those we would require to look for work, their requirements will need to be discussed with an adviser face to face. They will be able to accept their commitment at their first meeting.
However, we recognise that there may be some very exceptional cases where the claimant cannot fulfil the requirement to accept a commitment: for example, where the claimant is suddenly incapacitated through illness or where the office we were expecting a claimant to attend is forced to close as a result of flood or fire. We will be using regulations under subsection (7) of this clause to cover such circumstances and enable us to treat the claimant as having accepted the commitment. Noble Lords may have spotted that we have responded to the Delegated Powers Committee and agreed to make these regulations affirmative for their first use.
My third and final point is that the claimant commitment is not an entirely new invention. It builds on similar products in the existing benefits regime, most notably the jobseekers’ agreement which JSA claimants must agree to as a condition of entitlement. Operationally, we already have good experience of the use and implementation of such products. Obviously we feel that the claimant commitment is an improvement on the jobseekers’ agreement. Most notably it will bring together all the requirements placed on the claimant, while the jobseekers’ agreement covers only some requirements. We intend to introduce and implement the claimant commitment in JSA in advance of universal credit, and we will, of course, be looking to learn from that experience in advance of universal credit. As I said, I will be able to explain more about this process later as we get to those clauses. I urge the noble Baroness to withdraw this amendment.
Baroness Hayter of Kentish Town
I thank the Minister for that reply, and, through him, I thank his officials for the examples they sent through of the individual claimant. I have only two points to make. First, the Minister said that part of the Government’s commitment is to pay the claimant. Many of these benefits are earned and contributed and are something that people have paid for, so it is not quite the act of generosity and philanthropy that he made it sound.
Secondly, on the individual threshold and the negotiation to make sure that the claimant commitment is tailored to particular needs, I echo a point that was made by at least two other noble Lords about the training of staff. Getting that right will be key to this and is important. As we go through, I look forward to further discussions on this. As I said, such a commitment is not new, but we want to make sure that it does what it is intended to do, which is to assist someone in finding their way into work or back into work rather than to be an excuse for sanctions as an end in themselves. I beg leave to withdraw the amendment.
Welfare Reform Bill
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Lord Freud
I am most grateful to my noble friend. I shall continue dealing with the questions. My noble friend Lord Kirkwood was interested in the interrelationship with the Social Security Advisory Committee, which, as he pointed out, has a statutory duty to examine all social security regulations. Any regulations for universal credit that rely on existing legislation—for example, those relating to claims, and awards and payments to joint claimants—will therefore be subject to full SSAC examination. I accept that there are large parts of the Bill that introduce new regulation-making powers. In these areas, the committee may not have its former role, but I assure noble Lords that we will continue to talk to the committee and use the arrangements currently in place allowing us to provide it with information on new powers and the regulations made, within six months of the commencement of those powers.
On the question raised by the noble Lord, Lord McKenzie, on how the system will cope with, for instance, a self-employed and an employed member of a household, any earnings received through the PAYE system will automatically be taken into account even though they may be from one or more PAYE sources. We will clearly need to take assessment of non-PAYE earnings through some other tool, and we are looking at developing a self-reporting tool to provide us with earnings information.
A number of noble Lords raised the issue of language, including my noble friends Lord Kirkwood and Lord Newton and the noble Baronesses, Lady Hollis and Lady Campbell. I have to agree that language is extremely important. There are quite a few issues around it; some involve European legislation on exportability, so sometimes there are some constrictions. I see universal credit as a support for those who need it, whether they are unemployed, disabled, a lone parent or working for a relatively low income. We want universal credit to support as many people into work as possible.
I will come to the language issue around the name “universal credit”. One of the things about the word “credit” is that it carries with it a sense of entitlement, and I know that a lot of noble Lords are concerned about that. There is some language around that, and that is why the term was chosen in the case of tax credits. There is a sense in which it is a credit; there is an entitlement there.
I was asked by the noble Baroness, Lady Meacher, about allowances for training of staff—clearly, one does not have a transformative project such as this without having properly trained staff. The total budget that has been set aside to fund the transition, including administration costs, is £2 billion. Training is a crucial element of that.
Amendment 1, raised by my noble friend Lord Kirkwood, would rename universal credit. His title, “working age entitlement”, is a straw man, as he said. It is fair to ask where “universal credit” comes from. It has its origins in the financial dynamics paper, although the noble Lord will know if he remembers that paper well that there were two different credits. In this case, they were boiled down into a single credit for all people on working-age, means-tested benefit. That is where its universality resides: it captures everyone in that category.
One of the attractions of having one word to capture all working-age benefits is that we have two systems today, an out-of-work benefit system and an in-work tax credit system, and the differentiation between them has made it harder to move from one to the other. That is where the discrimination and the differentiation are; that is where the apartheid—if one wants to use an ugly word—lies. That is the gap that we are trying to remove. There is not a real gap, as noble Lords have pointed out today, between those who are unfortunate enough to be out of work, or those who have a disability or fluctuating condition that means that they cannot reliably go into work, and those in work. There is no hard line between the two, nor do we want there to be. We want people to be able to flow across easily. It is because we have two different systems that we have made it so much harder. That is what we are doing with the universal credit, and that is what lies behind our reason for calling it that. As the noble Lord said, what’s in a name? It may seem rather a wide name—“universal”—but it reflects the fact that a whole range of needs will now be met through a single payment rather than by a piecemeal and confusing jumble of benefits and credits. I therefore urge the noble Lord to withdraw his amendment.
Baroness Hayter of Kentish Town
I have two questions arising from what the Minister has said. The first is on the current impact assessment—we look forward to the new one soon—of the number of children who will be helped. I think that the figure was 350,000. Was that figure reached before other changes to the benefits system were taken into account, given that the IFS has estimated that child poverty will rise in 2013? The second question, briefly, is on IT. I was involved with some of the IT systems for automatic enrolment with NEST. I should like the comfort of knowing that these two will also be well connected.
Lord Newton of Braintree
Before the Minister responds to that, may I chip in? The one thing that has not been touched on—I noticed that the noble Baroness, Lady Howe, was a bit agitated about this as well—is childcare costs. There was no comment on this.
Welfare Reform Bill
Baroness Hayter of Kentish Town Excerpts(13 years, 2 months ago)
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Baroness Hayter of Kentish Town
My Lords, I thank the Minister for opening the debate and I look forward, as does the rest of the House, to the maiden speech of the noble Lord, Lord Feldman of Elstree.
Given our support for the objective of the Bill, which is to make work pay and to simplify the system, it is deeply regrettable that it fails to achieve this. It fails partly because, despite the words we have just heard, it is taking place alongside a commitment to cut benefit expenditure and partly because it is work in progress, with far too many unanswered questions. In the previous speech, I think we heard the words “in due course” more than any other.
First, however, as vice-chair of the Webb Memorial Trust, perhaps I may quote three principles from Beatrice Webb’s 1909 minority report on the Poor Law, when she said that poverty has structural causes—it is not the fault of the individual—that the state has responsibility for preventing and alleviating poverty and that dependency should be avoided. I have no trouble with a no-dependency model of welfare, but Beatrice Webb also believed that the state is responsible for tackling the causes of poverty: the lack of jobs. Today, with 2.5 million unemployed there are six people chasing every job and in places such as Merthyr Tydfil, 84 for each vacancy. There is a responsibility on government to grow the jobs market because unemployment costs each of us—it is perhaps £500 per household—because we need jobs to enshrine a culture of work in every community, recognising the injury to childhood of a home without work, and because without jobs parents cannot return to work, no matter how hard they try.
We must help those who cannot work through age or infirmity but also assist those who have been out of work back into employment. The Work and Pensions Select Committee in another place goes further, calling on the Government to pay as much attention to getting employers to take on someone who has been out of work as they do to getting the claimant “work ready”. It is not alone in feeling that the Government are putting the onus on the individual rather than society. The most reverend Primate the Archbishop of Canterbury has written of,
“a quiet resurgence in the seductive language of ‘deserving’ and ‘undeserving’ poor”,
while the Government, I have to say even just now, seem to suggest that there is a “them and us”—taxpayers and the rest. I see it differently: we are all taxpayers, if only through VAT, and we are all potential recipients. Yes, the welfare state should reward work, but it must be there in times of crisis, where there is illness, unemployment or disability. It should be there for the vulnerable and it should be there to support families with young children, sharing the cost of the next generation throughout our life stages. We want to see a welfare system that is fair and straightforward, without the need for specialist help from hard-pressed Citizens Advice, especially with the threat to legal aid for welfare advice. We want a system that does the job, provides what is needed when it is needed and, yes, a system that is affordable. The Bill fails those tests. It is not fair or transparent, it does not help some of those most in need and it will not be affordable if it leads to homelessness, poverty, disincentives to save or family break-up.
I touch upon some of our concerns; first, childcare, especially in London, where it can cost £11,000 a year —perhaps a quarter higher than elsewhere. Childcare is key to whether parents are better off in or out of work, but in extending it to those working under 16 hours within the same fixed budget, there will be losers, with existing recipients getting less. On the savings cap, claimants will start losing universal credit with £6,000 in savings and will lose all of it with £16,000. While most claimants will never have such savings, this new rule will hit in-work families for the first time, as there is no such savings cap for tax credits. The savings cap undermines incentives to save, whether for a mortgage, tuition fees, social care or to top up one’s pension. The IFS has warned that the savings cap will give some families a strong incentive to lower their capital below £16,000.
Then there is the abolition of the discretionary Social Fund’s community care grants and crisis loans, devolving responsibility to local government, but without ring-fenced funding for cash-strapped councils—what the CABs have warned could be a return to the Poor Law. These safety nets—for cookers, beds, cots—help some of our most vulnerable in times of crisis, often as a result of family break-up. Family Action has warned that, for women setting up home after fleeing domestic violence, such financial support is precious to them and their children. Meanwhile, 22,000 people per year leave prison without accommodation. They need early help to prevent them falling into debt, with all the associated temptation to return to crime. As Sir Richard Tilt has said:
“The discretionary social fund has been the ultimate, final safety net for the poorest and most vulnerable”.
What will replace these half a million grants and 3 million loans? Food parcels instead of cash? A postcode lottery of handouts? Loan sharks instead of regulated grants? The Social Fund Commissioner has called for any replacement to be targeted at the most vulnerable, to be concentrated on one-off needs, to be fair and transparent, with national criteria, and to have an independent grievance process. So we ask the Government today: will they delay devolving responsibility until such a framework is in place?
I turn to housing. Londoners’ rent is already 50 per cent higher than the national average and 80 per cent of housing benefit recipients in private rented homes in central London face cuts in housing benefit. I have to tell the Minister that London landlords will not reduce their rents in response to this. There will be a flight from high-rent areas, regardless of the needs of the family or of children or, indeed, of the local economy; because who will do the jobs that they leave behind? Meanwhile, there are few jobs in low-rent areas. Westminster Council estimates that 5,000 households will be affected and,
“that a sizeable proportion … will need to move … Moving out of the borough is likely to be problematic for families with children at critical schooling points”,
which leads to the so-called underoccupation of social housing. Some 600,000 housing benefit claimants are deemed to need a one-bedroom property but only half that number of such properties exist. What if that family were helping to look after an ageing parent or perhaps were getting grandparent help themselves? How is this to be replaced if they are forced to move? Meanwhile, the household cap on benefit ignores variations in housing costs or, indeed, family size. The head of the Roman Catholic Church in England and Wales, the Archbishop of Westminster, identified these cuts as being likely to force thousands of poor families out of their homes. We know the likely effect of the changes to housing benefit, the underoccupation rule and the benefit cap because Eric Pickles’s private secretary helpfully told No. 10 about it, warning it that 40,000 families were likely to be made homeless. I remind the Government that even Dame Shirley Porter managed to move only 500 families when she tried her form of “social cleansing” from Westminster.
The £500 a week benefit cap will reduce the benefits of perhaps 50,000 families. This will hit carers as, unlike war widows, they will not be exempt. However, some carers will be forces’ wives whose injured husbands were fortunate enough to survive, but their carer’s allowance could go if they hit the cap. Will the Minister explain why the cap figure, mostly affecting families with three or four children in the south-east, has as its comparator the national average earnings for all families, including those with no children and those in low-wage areas? Furthermore, the comparator £26,000 income does not include child benefit, whereas the £26,000 cap does. Will the Minister agree to exempt child benefit from the new cap?
I believe that the change from DLA to the personal independence payment was probably aimed at improving the system, but—there are a lot of “buts”—it is taking place against a background of an arbitrary 20 per cent cut for some of our most vulnerable. There is as yet no decision on which rates of the daily living component of carer’s allowance will be due, but the words,
“those with the most intensive caring responsibilities”,
tend to suggest that other carers will be excluded. The qualifying period will be doubled from three to six months, but it is the first months of disability when one has lost a limb or is suffering from the effects of a stroke or serious illness when costs are highest and income falls as the ill or injured often give up work. Without PIP entitlement their carer similarly cannot qualify for carer’s allowance. The Minister suggested that he had heard concerns about the loss of mobility component for local authority-funded residents in care homes—I am not sure that he responded to them—which will make them virtual prisoners in what is, after all, their own home. How will they afford to go to weddings, funerals, shivas, christenings, bar mitzvahs, Eid prayers, the cinema, the pub, bingo or to shop for clothes without that mobility allowance? I recognise that Ministers have agreed to review this but with no terms of reference, no timetable, no involvement of disabled groups and no publication of the outcome. Will the Minister confirm what Maria Miller, the Parliamentary Under-Secretary of State for Disabled People, said:
“I can offer absolute reassurance to disabled people living in care homes … that this Government will not remove their ability to get out and about”.?
Cancer has been mentioned. We hope that the Government, particularly the Prime Minister, have now understood the concerns of Macmillan and have heard its three “asks”: first, that those on oral chemotherapy should get ESA without being reassessed; secondly, that support for cancer or stroke victims should kick in when their needs are greatest rather than having to wait six months; and, thirdly, that those taking more than 12 months to recover should not be penalised if they are not ready to return to work. After all, it is meant to be a contributory payment, often earned as a result of many years of contributions by today’s cancer sufferers. Without movement from the Government on this matter, someone’s health catastrophe will turn into a financial catastrophe.
The Bill is an assault on ambition. Without childcare support, how can parents return to work and proceed up the income ladder? The threatened cut in childcare, added to the reductions already made, will undermine the very purpose of the Bill, just as the savings cap will undermine incentives to save. This Bill is an assault on compassion. It risks watering down child poverty targets; it will force cancer patients into poverty or to seek work too early; and it risks trapping many disabled citizens in their care homes by the removal of mobility payments.
The Bill is still work in progress. It is not yet fit for purpose, yet your Lordships' House is being asked to scrutinise without the answers to some fundamental questions. We await details of the crucial element of making work pay: childcare. On PIP, the Government’s silence on the review of mobility payments has forced the Disability Alliance to launch a judicial review. The passporting of PIP to carer’s allowance will be decided only later this year. The loss of free school meals is perhaps the biggest cliff-edge disincentive to work and a blow to tackling child poverty. Council tax benefit will be localised, so its taper will be unrelated to the universal credit regime and it could vary across boroughs—a real postcode lottery.
The Bill is a leap in the dark for millions who rely on childcare to work, for the disabled and for the Government—for their IT project and their reputation—and because it appears to have no answer to the myriad questions that so worry the sick and the disabled. We support welfare to work, but for too many disabled and vulnerable people the question is: from welfare to where?
This is a bad Bill. We will seek to improve it to ensure that it becomes a better Bill, leading to a fair welfare system, rewarding effort and compassionate to those most in need.