Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Monday 21st November 2011 Grand Committee

[Baroness Lister of Burtersett]

Perhaps I may intervene. I can tell the Committee off the cuff that all of them with children will be receiving child benefit, which has a 99 per cent take-up rate. They will be receiving exactly the same amount in child benefit as people out of work, and one of the amendments in the next group will address this matter.

[Lord Skelmersdale]

My Lords, as I understand it, everyone with children gets child benefit, so you can cut that out quite regularly because you know that it is going to come under subsection (4)(c)—that is inevitable. As I said at the beginning, we will find out from my noble friend what exceptions the Government are currently planning in order to change what the noble Baroness, Lady Hollis, calls apples and pears into apples and apples or perhaps pears and pears.

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[Lord McKenzie of Luton]

That would certainly be satisfactory but even if that 10 per cent estimate is roughly right, it means that 90 per cent of the people who will be affected by this cap are under no obligation, under the Government's policies, to have full work conditionality. How does that square with the big thrust of this being about work incentives? I should also like to follow up on another point which the Minister did not touch upon: the profile of those, again within that 50,000, who would be tenants and paying rent of one sort or another. Is it the case that a significant proportion of that 50,000 are tenants of social landlords, RSLs or councils?

[Baroness Lister of Burtersett]

While the noble Lord is conferring, can he perhaps explain to the Committee what behavioural effects the Government are trying to achieve in the case of those who are not required to seek work?

[Lord Freud]

On the figures, one reason why I am slightly betwixt and between is that we are looking at that impact assessment, which is now somewhat dated, with a view to updating it and providing fresher figures when we can. That work is in progress and we are getting some more detail. All that I can do is to offer to provide some of that extra detail as soon as we get it. I am not completely sure yet of its timetable but there is ongoing work there, which is why I am slightly hazy about exactly what some of these figures will end up being, for which I apologise.

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These amendments continue to explore that protection of children to which we all aspire and which we have been discussing for the past hour or so. I hope that we in this Committee can do something to achieve this. I beg to move.

[Baroness Lister of Burtersett]

My Lords, I rise to speak in support of Amendment 99AD and to oppose the questions that Clauses 93 and 94 stand part of the Bill. I want to make clear that I also support other amendments, both the more ambitious and the more limited ones. I see Amendment 99AD as something of a bottom line, particularly its exclusion of child benefit from the cap. However, first I shall say a few words about why Clause 93 should not stand part of the Bill.

Unlike some other noble Lords who have spoken, I do not support the principle of the benefit cap. Despite ministerial invocations of fairness, it is unfair. It deliberately reduces the amount of money that some families will receive to well below the amount that Parliament has determined is the minimum that is required to meet their needs—a minimum that is itself well below minimum income standards, as we discussed earlier in our proceedings. We have heard that the average loss will be £93. Nearly half the families affected will lose between £50 and £150, and 15 per cent will lose more than £150. Black and minority ethnic families will be disproportionately affected. It simply is not good enough for Ministers to say, as they have, that the state can no longer afford to pay this minimum. We are a rich society despite current economic difficulties. What the state can afford to pay is a matter of political choice.

In applying such a cap, the Government are arguably reducing income to below what constitute decency levels in a modern, industrialised society—below the level required to ensure human dignity. Therefore, it does not surprise me that legal advice received by the Equality and Human Rights Commission stated that,

“there must be a real concern … that the cap on benefits, which will disproportionately impact on larger families”,

will result in a violation of the Human Rights Act. Some of the likely consequences have already been spelt out by other noble Lords. My noble friend Lord McKenzie has already cited the Centre for Social Justice, which warned that the impact was “likely to be devastating” for some families, so how can this be justified?

The justification put forward by Ministers is another example of how the Bill is designed to try to influence behaviour and send out signals—so many signals that we should nickname this the “semaphore Bill”. Once again, the spectre of welfare dependency raises its head and people are to be incentivised to find work, although I thought that the main point of universal credit was to do just this, insofar as incentives are inadequate at present.

We have already heard how the incentives argument is not that convincing. As my noble friend Lord McKenzie has already observed, some groups affected by the cap are not expected to seek work—the right reverend Prelate the Bishop of Ripon and Leeds made this point—such as carers and lone parents of children aged under five. I was disappointed that the Minister could not explain to the Committee what behavioural effects the Government were trying to achieve in the case of those who are not expected to seek work. I hope that, having had more time to think about this, he might be able to do so when he speaks.

Could the Minister also address the issue that I raised at the last sitting, which the right reverend Prelate has also raised, about impact of the six-month qualifying period for PIP? How many are likely to be affected, and would it be possible to backdate the money that they lose as a result of the cap, when they then become eligible? It should also be noted that, to the extent that fewer people qualify for PIP than for DLA, so will fewer disabled people be exempt from the cap.

As has already been noted, the cap will also apply to some who are in paid work. Again, I was disappointed that the Minister could not explain at this stage how it is planned to determine at what point those in paid work will be free of the cap under universal credit. It is a very important question. As was pointed out in CPAG’s Welfare Rights Bulletin, the danger is that a threshold is created that people in low-paid work could frequently cross, resulting in wild fluctuations in their entitlement and complex better-off calculations. A small drop in earnings over which the claimant might have no control could leave to a massive drop in income if the cap is triggered.

Ferret Information Systems comments that the cap will create just the kind of cliff edge that universal credit was intended to remove. It gives an example of how a difference of 1p an hour for someone working 24 hours at the minimum wage level could generate a net income increase or loss of £98.23. This is surely nonsensical. The greater security of income promised with universal credit would be undermined if people on very low earnings are living in constant fear of the cap being triggered.

I am also unclear as to how work incentives are promoted if, as predicted, one effect of the cap is that families have to move house to find cheaper accommodation, which we have already talked about and could be difficult, given that a majority of those affected—although perhaps not quite as big a majority as originally thought—will be in social housing. Is there not a danger that in search of affordable accommodation they will end up moving to an area where job opportunities are even poorer?

At Second Reading and in response to previous amendments, the Minister argued that:

“The introduction of a benefit cap will mean that households on out-of-work benefits will have to make the same decisions as families in work with regard to the lives they lead and the areas they can live in”.—[Official Report, 13/9/11; col. 739.]

It is still unclear to me, having listened to everything that the Minister said earlier and the debate so far, what decisions people are supposed to take if they cannot find work or affordable housing. The answer is that they simply have to live below the level set by Parliament. In response to a Written Answer about the implications for homelessness, the Minister said that if they became at risk of homelessness then our old friend, the loaves and fishes of the discretionary housing payment, would come to the rescue.

For lone parents in particular, the loss of social networks that can help with childcare could serve to make it harder for them to enter into paid work if they have to move area. The loss of such networks surely goes against the aspirations of the big society. Moreover, as the noble Baroness, Lady Tyler of Enfield, and my noble friend Lord McKenzie have already said, the cap will create a significant new couple penalty. So it is difficult to square the cap with key elements of the Government’s own philosophy.

The Minister of State told the Public Bill Committee in the other place that the clause is not primarily a “cost-saving measure”. Instead, he claimed that,

“fundamentally it is about creating a more credible welfare system … We do not believe that it is reasonable or fair that households getting out-of-work benefits should receive a greater income from benefits than the average weekly net wage for working households. That is the core principle that we are seeking to put in place here”.—[Official Report, Commons, Welfare Reform Bill Committee, 17/5/11; col. 985.]

We have heard that again from the Minister this evening. Is it not the case that the Government themselves are undermining the credibility of the so-called welfare system by sending out a signal that people on average wages are receiving significantly less money than some people on benefits, when the proposition is based on the false assumption that people on average—or, more accurately, median—wages are not themselves receiving welfare in various forms? That this is the case is demonstrated by parliamentary Answers, which show that, if the benefits and tax credits received by working families on median earnings were taken into account, hardly any of them would be worse off than out-of-work families. The Government could do much more for the credibility of the system if it sent out more accurate signals.

This brings me to Amendment 99AD, which is about protecting children, who are the main victims of the cap, as other noble Lords have underlined. They are victims who cannot respond to the Bill’s signals. I am grateful to Barnardo’s for circulating a briefing in support of the amendment. It is designed in particular to stop the cap penalising larger families—thereby failing the Prime Minister’s family test—and to create the level playing field that the Minister of State claimed for the cap in the other place. We have already heard—and I apologise for repeating it, but it seems like the message needs repeating because it has not been heard loud and clear by some members of the Committee—that one important reason why the playing field is far from level is that child credit and child tax credit received by families of median earnings are not included in the income level at which the cap is set, but are included in the out-of-work income to be taken into account. I could not believe it at first when I discovered that child benefit is being treated in this way, because it is so patently unjust. As I said earlier, take-up of child benefit is virtually 100 per cent, so there is not an issue as to whether families with median earnings are or are not getting it. They are getting exactly the same amount as families out of work: it just depends on the size of the family.

According to a Written Answer, the median level of child benefit received by families with median earnings is estimated to be £33.70 a week. If the child benefit of out-of-work families were ignored when applying the cap—and this is also the purpose of the amendment moved by the right reverend prelate the Bishop of Ripon and Leeds—it would reduce the numbers affected by 40 to 50 per cent. This would reduce the savings from £270 million to £140 million in 2014-15. Therefore, nearly half the savings from the cap are being made on the basis of a blatant piece of unfairness which drives a coach and horses through the Government’s claim to be creating a level playing field between those in and out of work. Given that the Minister of State has said that it is not primarily a cost-saving measure, I hope that the Minister will not use the cost as an argument for rejecting the amendment.

The amendment would also exclude childcare costs. If I understood the Minister correctly, he has told the Committee that those costs will not be treated as income for someone out of work. That is correct, so we have that again clearly on the record. I very much welcome that, because previously it had been suggested that they would be. That is an important step; it would have been nonsensical had it been, so perhaps we have achieved something here today.

I oppose the cap in principle, and would support more ambitious amendments than the one in my name and the names of the noble Lords, Lord Kirkwood of Kirkhope and Lord Adebowale. As I said, I particularly see the exclusion of child benefit from the income taken into account in applying the cap as a bottom line below which the Government’s claim to fairness is so patently unfounded that they should be embarrassed even to try to justify its inclusion. In the Public Bill Committee in the other place, the Minister of State had no real answer to this and kept evading the question of child benefit received by working families. I would therefore be grateful in the Minister could explain to your Lordships how in fact the Government justify the inclusion of child benefit in the cap when it is not included in the comparator incomes of working families. Better still—given that, according to the Minister of State, the cap is not primarily a cost-saving measure but purports to be about fairness, and given the strength of the opposition which we have already heard—I hope the Government will think again.

Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Wednesday 16th November 2011 Grand Committee

[Baroness Grey-Thompson]

My Lords, I support the noble Baroness, Lady Campbell of Surbiton, and this amendment is also in my name. It is vital to ensure that the new framework is right, and this amendment gives me some comfort in what is a very difficult time for a huge number of disabled people. The noble Baroness, Lady Howe of Idlicote, mentioned time. That time is required.

If someone has a health condition that is likely to improve, or a newly acquired impairment to which they are likely to adapt, no one would argue that the costs might not change over time and that there should not be a reassessment. For example, the costs of someone who is a lower leg amputee will be very different in the first 18 months or two years after the amputation from what they may be 20 years later when they have adapted to it. However, when someone has a health condition or impairment that is unlikely to change and the costs are likely to remain the same, it does not make sense to keep sending them for more face-to-face assessments. For people in this situation it should be enough to confirm with the claimant’s healthcare professionals that their condition is unchanged. I feel very strongly about this because the following claimant told the MS Society how she feels about the prospect of face-to-face assessments. Many like her find this process very strange given that so much is known about the condition, including that it will only get worse and not better. When such claimants have to talk to a stranger about some very intimate details of their life it can have a devastating effect on them. The claimant said:

“I am already dreading the day when I have to sit in front of someone and explain myself to them … When I am already seeing a neurologist and a whole team of people who help me to try and live as best I can with MS … This is just not fair in my eyes. … Shame on the people who have come up with these changes which once again affect real people who have no choice but to try and live with this illness”.

[Baroness Lister of Burtersett]

My Lords, I wish to speak briefly in support of the hobby horse of the noble Baroness, Lady Campbell of Surbiton, which we should take seriously. I was struck by what she said about how a trial period in which disabled people’s organisations were involved could do a lot to restore confidence in the system. I am sure that I am not the only noble Lord who has been struck by the e-mails, letters and faxes that I have received, which demonstrate that that confidence is at rock bottom. There has been a catastrophic loss of confidence. The noble Baroness is offering the Government perhaps not an olive branch, because that suggests that a war is going on, but an opportunity—I suggest that the Government would do well to grasp it—to listen to what is being said, accept this amendment with its trial period and involve disabled people’s organisations. That could go a long way to restore confidence in this system.

[Baroness O'Loan]

My Lords, I apologise to the Committee that I was unable to be here at the beginning of the proceedings. The amendment tabled by the noble Baroness, Lady Campbell, to Clause 78 has to be considered in the light of the UN Convention on the Rights of Persons with Disabilities. I draw particularly to the Committee’s attention the fact that paragraph o of the preamble to that convention provides that,

“persons with disabilities should have the opportunity to be actively involved in decision-making processes about policies and programmes, including those directly concerning them”.

The proposal for a trial period and the involvement of disabled people’s organisations in the assessment process will undoubtedly enhance that process, but it will also put the United Kingdom in a position in which we are in compliance with our obligations under the convention. I am sure the Minister will be aware that it will be most important to have a review in terms of having confidence in the Government’s new system, and to ensure that injustice is not done and that people do not lose the right to benefit simply because of a flawed assessment process, particularly one that is not conducted by those with the necessary expertise, as was referred to by a number of noble Lords.

I refer the Committee to Articles 19 and 20 of the UN Convention on the Rights of Persons with Disabilities, which are particularly relevant in terms of the opportunities that disabled people need in the context of this amendment. It is also cost-effective; more importantly, it is respectful of the rights and dignity of people with disability. As the noble Baroness, Lady Grey-Thompson, was saying, when they are unlikely to experience any change in the health impairments from which they suffer and which result in significant costs, they should not be required to be assessed more than once every five years. It is a human rights issue. The assessment process itself, as we have been told, will take a toll on such people and it would be disproportionate, unnecessary and unproductive to require more regular assessment.

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[Baroness Grey-Thompson]

My Lords, I support the noble Baroness, Lady Thomas of Winchester, in Amendment 86A, and I believe she has covered the amendment very clearly. I also find the qualifying period worrying. As the noble Baroness, Lady Morgan of Drefelin, has said, the first months are often the period when extra costs are at their greatest, and just as people are trying to adjust their outgoings, they are also adjusting to the impairment or illness.

I do not believe that it is the case that they will be able to receive support elsewhere. Social care support may be available, but that is means-tested and has its own application and assessment process, which we have debated quite a lot this afternoon. Support from the NHS can be very limited and not immediate and I do not think we should assume that appropriate help is that easy to find.

In Committee in another place, the Minister for Disabled People stated that this proposal was not being driven by the need to make significant savings, so why are we making this change? It has been argued that, for example, in the case of someone who has had a stroke, it may not be clear at three months what their long-term needs may be, and that may also be true at six months. However, their costs are likely to be very high during these initial stages. While no one, me included, wants to see repeated assessments, we have heard a lot about giving help to those who most need it. In the initial months following diagnosis we should look at the qualifying period as detailed in the amendment because those are the people who will need immediate help.

[Baroness Lister of Burtersett]

My Lords, I support the amendments which seek to revert to the existing qualifying period of three months. The noble Baroness, Lady Thomas of Winchester, said that six months is a long time to wait for extra resources, and we have heard from a number of noble Lords about the significant additional costs which can be incurred during this period.

However, there is a further twist in the tale—the benefit cap—which we will be discussing next week. PIP exempts people from the benefit cap but, of course, if you cannot qualify for PIP for six months then you would not only have to wait for additional resources but could find that your own resources are being significantly depleted during this period. This is very worrying. Can the Minister say whether any estimate has been made of the number of people who may be caught in this way? I suspect that it is not a large number, but one person is one person too many. It could be potentially very frightening for people to find that they might have to face this horrible benefit cap.

I hope that the Minister will accept the amendment. If not, and the six-month period goes ahead, a perhaps minimalist way of addressing the question—although it does not really address it—is that someone who qualifies after six months should have the money backdated to cover what they lost through the benefit cap.

[Baroness Campbell of Surbiton]

My Lords, I support the amendment. I hate the term “alignment”. I worried about it enormously when it was used by the Government in connection with the proposal that mobility allowance should be removed from people in residential care homes because they wanted to align it with hospitals. We are now back to “alignment” again.

One of the major problems that nurses and doctors in specialist units face in trying to discharge their patients with brain injury or the onset of MS, which causes vast deterioration, is getting their support sorted out so that they can leave the hospital. DLA with a time limit of three months is cited as being difficult to get into now, so raising it to six months is wrong. We forget that people do not on day one think of their long-term disability—whether that be a spinal injury, a brain injury or something that is sudden and quick—and say, “Ah, I must put in my DLA request now so that I will get it in six months’ time”. That just does not happen.

This is another delay for people who find themselves in an appalling situation, in a crisis, and having to face even further barriers to the support that can give them some independence, enable them to get back into the community and return to their families as soon as possible. The three-month eligibility period should remain. The six-month period will cause more problems. Hospitals will despair about discharging people and it could mean that disabled people will have to leave work earlier than they would have because they are not getting the support that they require quickly to keep them mobile and to enable them to stay in work. It is a lose-lose situation.

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[Lord Freud]

Let me go on a little further and try to pull this issue back. Noble Lords have said that, in practice, DLA is being used in a slightly different way to the long-term intention, and that that is tied to three months as opposed to six months. I have said that it is not a matter of money but of coherence. I have heard many strong views expressed in Committee about noble Lords’ discomfort with the move to six months and so I will take this matter back—that might be a slight overstatement—and look very closely at what we are hearing, not only from here but from elsewhere. This is not one-way traffic; some people are more concerned that if you go to an earlier assessment it implies that you will have more reassessments, which some groups dislike rather more. So it is not all one-way traffic for people who are affected.

[Baroness Lister of Burtersett]

I apologise for interrupting the noble Lord. I am sure that the Committee is extremely pleased to hear him say that he will take this away. I hear what he says about it not being one-way traffic but, given that the Minister is writing to the Committee already on this issue, it might be helpful if he could list the organisations which are supporting the move to six months and those organisations who are against it, so that the Committee can weigh the balance of opinion for itself.

[Lord Freud]

I have slight jitters about that level of transparency, apparently.

Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Monday 14th November 2011 Grand Committee

[Lord Low of Dalston]

My Lords, I give my support to this amendment—the first in a long series that we are due to consider on this part of the Bill which deals with the personal independence payment. Like the noble Baronesses who have already spoken, I declare my interest as a recipient of disability living allowance since its inception in 1992. I hope that that can be taken as read throughout the rest of the amendments as we speak to them.

The noble Baroness, Lady Campbell, has made a very full case. What has emerged is the iconic significance of DLA to disabled people. It was an enlightened measure introduced by a previous Conservative Government, when, as the noble Baroness, Lady Campbell, told us, the noble Lord, Lord Newton, was Secretary of State—and, if I am not mistaken, Sir Nicholas Scott was Minister for Disabled People. It corrected many anomalies, as the quotation of Sir Bert Massie by the noble Baroness, Lady Campbell, reminded us.

Blind people were particularly grateful for the introduction of DLA. They had campaigned for many years for recognition of the extra costs attributable to blindness, but they were never officially acknowledged until the introduction of DLA. There were still anomalies; blind people were only eligible to apply for the mobility component at the lower rate—an anomaly that was only removed with the passage of the Welfare Reform Act 2009. That reform was supported by the Conservative Party at the time. I very much hope that blind people will not find that that hard-fought gain is snatched from their grasp—just as it has been won—with the implementation of personal independence payments. That would surely leave a legacy of bitterness that the Government would find hard to overcome.

This brings us back to the iconic significance of DLA. For many people it is not only the means but the symbol of their independence. As we have heard, much apprehension has been caused among disabled people by the changes the Government are making to the benefit system. People are fearful that their independence will be undermined with the change from DLA to PIP, or personal independence payment.

As Ministers probably recognise, the Government have a gap in confidence to overcome as regards the reforms where disabled people are concerned. They may well feel, on reflection, that retaining the name, which has such significance for disabled people, would be a small price to pay for the changes that they wish to make to the benefit. As the noble Baroness has said, names are important, and many disabled people obviously feel that we would lose this one at our peril. I hope, after due consideration, the Minister will take the same view.

[Baroness Lister of Burtersett]

My Lords, I would like to speak very briefly indeed in support of the noble Baroness, Lady Campbell. I apologise that I cannot be here for all of our deliberations today.

The noble Baroness made a very strong case. I was struck by one thing she said when she talked about the signal sent out by this label. The Ministers are constantly telling us about wanting to send out signals with this Bill. It is one signal after another. The noble Baroness has said very clearly that disabled people are telling us that this is sending out the wrong signal. Disabled people are the experts here and we should be listening to them.

I want to add one further point. An additional reason why personal independence payment could be very confusing and give the wrong signal is that, unfortunately, the term “independence” in government speak has come to be equivalent to being in paid work. There is a real danger that disabled people will think it is only for those of them who are able to be in paid work or who are in paid work. I do not believe that that is what “independence” means, but it has become a kind of conventional wisdom. There is an opportunity here for the Government to send out the correct signal to ensure that this benefit is taken up by those for whom it is designed. I hope that we can take note of and support what the noble Baroness has said. I am sure that the artwork has not yet been done. The amendment will therefore be completely cost-free and the Government could take the credit simply by accepting it.

Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Thursday 10th November 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, I am grateful to Gingerbread for a briefing on this issue. It has asked us to raise this matter, which I believe has considerable merit.

Clause 57 proposes to extend further the numbers of single parents required to seek work. From early 2012, single parents not in paid work and whose youngest child is aged five or over will no longer be entitled to claim income support. Instead, single parents will be required to claim jobseeker’s allowance or another benefit. On JSA, single parents receive the same amount of money each week as they do on income support, but face a substantial increase in conditionality and risk a payment sanction if they fail to demonstrate that they are actively seeking and available for work.

This latest proposal is estimated to affect 100,000 single parents currently receiving income support who have a youngest child aged five or over. It is understood that the Government anticipate this will save something like £50 million in 2012-13 by removing entitlement to income support from this group of single parents. However, I wonder if there is any revision to that sum, given the state of the labour market and the difficulties that are confronted by people seeking work.

We have an opportunity to introduce a delay to the proposed change and instead align it with the planned introduction of universal credit from 2013. This can be achieved by simply removing this clause from the Bill, which is what this amendment seeks to do, and would mean that single parents with a youngest child aged five would continue to receive income support until universal credit is implemented. At this point, single parents, along with responsible carers and couple families, will be subject to work search and work availability requirements, as outlined in Clause 22; that is, “all work-related requirements”.

Noble Lords will be aware that Clause 57 is an extension of the lone parent obligation policy which we brought forward when in government. The LPO restricts entitlement to income support for single parents according to the age of their youngest child. The reforms have sought to move more and more single parents from income support to JSA. Implementation began in November 2008 and first affected parents whose youngest child was aged 12 and over in October 2009; parents with children aged 10 and 11 were also transferred to JSA. In October 2010, single parents with children aged seven, eight and nine switched into JSA. In previous years, single parents have been given clear advance notice of six months in order to prepare for the switch from income support to JSA. However, we have not yet passed this piece of legislation and this will be implemented in April 2012, which is certainly in the near term.

Some 57 per cent of single parents are in paid employment and many more want work as a means of increased income and financial independence. Those are key motivators, along with personal independence, the opportunity for social interaction and to set a good example for their children. Indeed, 42 per cent of single parents say that having almost any job is better than being unemployed and on benefits. Critically, single parents require jobs that allow them to be there for their children when necessary. With only one parent to do the school run, care for children when they are ill and support them with their schoolwork, jobs with flexible working patterns are absolutely vital, as is access to affordable, high-quality childcare. We have discussed that on a number of previous occasions. Flexibility does not just mean part time but can include job share, compressed hours in term time and annualised hours. However, employment opportunities that provide the degree of flexibility that single parents need are few and far between, particularly in difficult economic times.

The particular reasons for delay are as follows. On 7 October this year the Government announced an extension of childcare support to those working under 16 hours to be implemented as part of universal credit from October 2013. Currently, through working tax credits, as we are aware, single parents working 16 hours or more a week can access support of 70 per cent of their childcare costs up to £175 per week for one child and up to £300 per week for two or more children. This provides vital support to working parents on low to middle incomes and makes all the difference as to whether they can make work pay. However, it has always been a challenge for those with caring responsibilities or those who have been out of work for some time to make the leap from no work to 16 or more hours a week. So the further investment to provide childcare support at the same level for those working under 16 hours a week from 2013 onwards is welcome. This support will be of particular benefit to single parents of five and six year-olds who move on to JSA from income support after a period of time looking after their child. That is why it makes no sense to push 100,000 single parents into this position 18 months before the new childcare support is available.

In addition to the logic of delaying the switch from income support to JSA to enable single parents to access the new childcare support that will be available under universal credit, I suggest that there is a broader rationale in aligning this change with the overall implementation of universal credit. The transition from the current benefits and tax credits system to unified universal credit will require a huge administrative change in order to transition all existing claimants on to the new system. When resources are stretched, it would therefore be both needlessly disruptive to single parents and an unnecessary cost to the state to put the same group of claimants through two substantial administrative processes within a relatively short period of time—ending entitlement to income support in early 2012 and then a migration on to universal credit for existing claimants from April 2014.

It is also important to note that the Bill we are considering introduces changes that will affect the job search requirements of lead carers in couples families which will be implemented from 2013 as part of universal credit. From this point on, nominated lead carers in joint couple claims will be required to seek work when the youngest child reaches the age of five and be subject to increased conditionality accordingly. There is therefore no clear rationale for why single parents should be subject to identical changes in advance of nominated lead carers in a joint claim.

According to the Office for National Statistics, in the three months from June to August 2011, unemployment rose to 2.57 million, an increase of 114,000. The fall in the number of people employed was 178,000 and has been particularly driven by the loss of part-time jobs, down by 175,000. Single parents rely heavily on part-time work as this allows them to juggle their caring responsibilities with work. The total number of people claiming JSA is 1.6 million, of which 124,000 are single parents. The total number of single parents claiming JSA increased by 48,000 over the 12 months from August 2010. Unemployment is at a 17-year high and job creation in the private sector has so far failed to plug the rising tide of redundancies and job losses in the public sector. Overall, the picture is bleak, with markedly fewer family-friendly jobs available and increasing numbers of single parents trapped on jobseeker’s allowance, so moving an additional 100,000 single parents from income support to JSA when their youngest child reaches five is a blunt instrument in the current economic climate.

Increased conditionality and tougher sanctions only serve to add unwarranted pressure on single parents when suitable employment opportunities remain sparse, childcare costs continue to rise faster than earnings and single parents are not able to take advantage of new childcare support that will be introduced from 2013. Single parents will struggle to find work that is sustainable and that fits around their caring responsibilities when faced with increased conditionality, limited access to support for childcare costs, limited opportunities to access training and further education, low growth and a stagnant job market. I oppose the clause standing part.

[Baroness Lister of Burtersett]

I had not planned to speak but I support the opposition to the clause standing part. It seems eminently sensible that we should postpone this provision. I am prompted to speak by a rash of e-mails that I received today from people who clearly feel strongly about it, although I shall read from only one of the e-mails. However, I am ambivalent about the issue of lone parents and paid work. On the one hand I was a member of the Commission on Social Justice which, to a lot of criticism, recommended that lone parents with children aged 12 and over, I think, should become part of the workforce. One of the reasons for that, as my noble friend said, is the importance of paid work to women as a source of independent income and so forth. On the other hand, it also worries me that much new policy underestimates the importance and value of care work and the time and energy it takes. So, as I say, I am ambivalent. However, I think that lowering the age to five is perhaps going too far. It is putting a lot of strain on lone parents in terms of the competing responsibilities that we are placing on them. That is very much reflected in the rash of e-mails that I received today. I shall read out from one. I do not necessarily agree with everything in it but it reflects what people are feeling. This e-mail is in fact not from someone directly affected but from a grandmother who would have been affected had this rule applied earlier. She says:

“I have been informed that you are discussing legislation which will force mothers who are [on] welfare to look for a ‘job’ when the youngest is five years of age. I am a grandmother now but raised three children on welfare following marriage breakdown. It was not a lot of money but I had control of it”—

an issue that I have been raising in other contexts—

“and was able to survive and care for all my children. I did try going out to work but it was almost impossible to cope first of all with having time with them. Keeping tabs on where they were every day of the week was a nightmare. When I lived on welfare they knew they could come home after school bring their friends with them home if they wanted. Much safer for everyone. The proposal that children have to be out of their home from leaving for school in the morning until I get home later in the evening”—

I myself would not put it this strongly—

“is nothing less than child abuse—adults are exhausted after doing such hours”.

I think that we should be conscious of that point on exhaustion. We are asking an awful lot of lone parents. She continues:

“How are children supposed to develop with any feelings of confidence and security if they are constantly shunted around from pillar to post, treated as if they are an encumbrance, rather than being valued by the society”.

I shall not read any more. However, there is a feeling that we are devaluing the work of caring for young children whether it is done by mothers or fathers. This opposition to the clause standing part would allow us to pause and think again about whether this is the right way to go, particularly in the current labour conditions, and whether it would not be better to wait until universal credit is introduced and the childcare changes referred to by my noble friend are made. I hope that the Minister might be willing to pause and reflect on this matter.

--- Later in debate ---

[Lord Freud]

My Lords, I cannot bring to mind a particular piece of research on that question, but I suspect that the noble Baroness, Lady Lister, probably went into this in great detail when she was working on her piece of research for the CSJ. If I can find something which pinpoints that particular question, I will certainly give the noble Baroness the reference. But the general point I sought to make is that a range of research in this area shows the great benefits for families of working, and if I can give a particular answer to her question, I will.

[Baroness Lister of Burtersett]

I suspect that that was research done for the department by Millar and Ridge. It absolutely did show positives, but it also revealed some of the strains placed on mothers and on children. If I remember rightly—I have to admit that my memory for research is waning—in some cases mothers moved out of work again because of those strains. The research showed both sides of the issue.

[Lord Freud]

Let us not debate research none of us can remember. I will have a look at this and if I can provide anything more solid, I will do so. On the point about school holidays, under the regulations, if a lone parent had to leave a job because no appropriate childcare was available in the holidays, that would be taken into account for good reason. Technically it is good cause, but it would become good reason.

--- Later in debate ---

[Lord Freud]

Yes, the noble Baroness is way ahead of us, as usual, as we structure how we do the universal credit. We are currently looking at that very closely in terms of how we do it. We have not settled this, but my view is to look at it in fairly cash-in-the-month terms, as she is implying. That is where I would come from as we started to devise it. However, I cannot give a commitment or go further than say how we would do that. I am not keen to elaborate averaging-out processes because I think that gets overcomplicated.

[Baroness Lister of Burtersett]

I am very grateful to hear that. In order to dot the “i”s and cross the “t”s, could the noble Lord confirm that a dinner lady, or someone in that position, would not be subjected to in-work conditionality rules? The fact that there is a contract means that they are still in work. I may have misunderstood.

[Lord Freud]

Let me just try to pin down the point on transitions and whether people should be in work. There is little evidence relating to the effects of maternal employment on children's cognitive and behavioural outcomes in the UK, but what there is suggests that there are few negative effects of maternal employment once the child is aged over 18 months. If I can find some more research, I shall get it to noble Lord post-haste.

--- Later in debate ---

Moved by

[Baroness Lister of Burtersett]

86ZZZB: Clause 69, page 53, line 20, at end insert “providing these amounts are ring-fenced for the purpose set out in the Act”

[Baroness Lister of Burtersett]

My Lords, noble Lords of a certain age and with long memories—particularly the noble Lord, Lord Newton of Braintree, who unfortunately cannot be in his place this afternoon, but who has very kindly said that I can tell the Committee that he is in sympathy with what I am about to say—will appreciate the irony of me rising to defend the Social Fund.

Back in the mid-1980s, when I was at the Child Poverty Action Group, I was trying to convince your Lordships’ House to reject the introduction of the discretionary Social Fund in place of single payments made as a right to help people with one-off needs they were unable to meet out of their weekly benefit. Although I am defending the Social Fund today, I am not claiming that it does not need reform. Clearly there is a consensus that there are problems. However, nothing the Government have said has convinced me and many of those closer to the ground than I am that Clause 69 is the solution to those problems.

The clause abolishes discretionary community care grants and crisis loans. In their place, local authorities in England will have the power, but not the duty, to provide assistance using money transferred from the DWP without ring-fencing. The devolved Administrations in Scotland and Wales will decide their own arrangements. I will focus my remarks on England, but I hope that other noble Lords will be able to provide a perspective for the other nations. The noble Lord, Lord Wigley, has apologised as unfortunately he has had to return to Wales this afternoon.

The Social Fund provides vital cash assistance. It is, in effect, the ultimate safety net. CCGs are intended to help vulnerable adults establish themselves or remain in the community. As well as their emphasis on helping people live independently in the community, they are also available to people on benefit who face exceptional pressure, such as family breakdown and long-term illness. Interest-free crisis loans are normally payable when an applicant can show that they are the only way to avoid serious damage or risk to health and safety, although the qualifying conditions have been tightened up recently. According to research by Crisis, 94 per cent of housing advisers working in private rented sector access schemes which help vulnerable people into private accommodation say that crisis loans and CCGs are vital or important to their work.

Local authorities are not being asked to administer a locally provided social fund. The discretionary Social Fund is being abolished. There will be no requirement on local authorities to provide cash assistance or, indeed, any assistance. All the signs are that most local authorities will provide any help in kind, rather than in cash. This has raised fears of stigmatisation, lack of choice and the undermining of financial independence. Moreover, the Parliamentary Under-Secretary of State, Maria Miller, told the Public Bill Committee in the other place that the new service may not necessarily be an application-based service.

If I were writing the Minister’s brief, I would cite the recent Communities and Local Government Committee report, Localisation issues in welfare reform, which supports the proposal to devolve responsibility for the discretionary Social Fund, so I will get in first and point out that the report also acknowledges that there is legitimate debate about whether localisation will in itself be an adequate remedy for the long-standing problems of the Social Fund. It expresses some reservations to which I will return in relation to the amendments before us.

Having read the oral evidence and some of the written evidence to the CLG Committee, it does not seem to me that the main conclusions of the report reflect the balance of that evidence, and I have to say that I place more store on the views of, for example, Citizens Advice and the Social Fund Commissioner than those of the committee itself. The commissioner warns that:

“With over 150 local authorities in England, there is a high risk that a scheme providing unbounded discretion in each of those areas could result in geographical inequities that do not correlate with local needs … in the absence of any guidelines or criteria that set parameters for local discretion, it will be difficult to achieve some broad consistency of purpose and approach”.

In other words, localisation could aggravate rather than address one of the Social Fund’s current problems. The commissioner concluded that:

“There must continue to be a safety net for poor and vulnerable people because their needs will not disappear”.

As I will argue in a moment, without a ring-fenced budget, there can be no assurance that there will continue to be any sort of safety net.

Alan Barton, the social policy officer for Citizens Advice, in his oral evidence disputed the DWP’s characterisation of CCGs as delivering a social care package. He explained that:

“To a large extent, we are talking about items with which people furnish their properties”.

Many of those needing such items will not be in touch with local authorities. An analysis of 500 applications to the discretionary Social Fund by the Social Fund Commissioner found that:

“A significant number of vulnerable people trying to create or re-establish or remain in a secure home, who have ‘slipped through the net’ and receive no support”,

from other support services. With regard to crisis loans, Mr Barton acknowledged that,

“schemes for second-hand furniture, white goods, food banks and credit unions … are helpful to low-income people”,

but added that,

“we see considerable numbers who are in desperate need of cash to buy food and top up their electricity or gas cards when they do not have any light or heating in the house. It seems that there will be no provision for them under the new arrangements. They will have to go to charities that are already under huge pressure; credit unions, which are very patchy and charge quite high interest rates; high-cost lenders—a survey that we did with our advisers showed that 67% of them had seen people go to high-cost lenders when they had not got money from the social fund—or I suppose they might just go hungry or cold”.

That is the view of Citizens Advice.

Growing numbers are already turning to food banks. As Shelter argues, food banks should be seen as a last resort and,

“not become an established part of the welfare state. Shelter’s services staff observe that where clients have resorted to food banks many feel embarrassed and demeaned”.

Family Action, which together with a wide range of charities is supporting these amendments, warns that charities such as it will not be able to cope. It fears that in the worst case scenario, there will be greater resort to loan sharks—a fear that I have already expressed with regard to the move to monthly payments.

One of the main arguments put forward to justify this change is that local authorities are better placed to provide this kind of help. In his oral evidence to the Public Bill Committee, the Secretary of State painted a picture of a,

“person sitting or standing in front of a local authority”.

That is contrasted with the remote decision-making under the present scheme. However, there is no guarantee that a transfer to local authorities will necessarily mean localised face-to-face decision making. Some authorities might choose to contract out any service, and there is nothing to stop them processing claims remotely or by phone. I am advised by Family Action that Westminster council recently announced that its emergency response team, covering social services activity involving children’s and adult social services, emergency repairs, homelessness and emergency lifeline calls will be moving to Dingwall in Scotland. As Family Action observed, it is unclear how staff based 850 miles away could be expected to deliver a more local service. This clause is about the abolition of the discretionary Social Fund, not its better targeting, as has been claimed. I believe that the case for localisation has not been made convincingly, and on this basis, I oppose that the clause stand part of the Bill.

--- Later in debate ---

[Lord Freud]

We are not expecting it.

[Baroness Lister of Burtersett]

My Lords, perhaps I, too, may ask a question on the crisis loan budget. As I understand it, at present, if there were a disaster, people could get help from crisis loans. If there were a disaster, for example a flood—and more and more flooding is taking place—would local authorities get additional money to help out, or would they have to use the money that has already been transferred from the DWP, which may already have been spent on other things for that ring-fencing? Will there be provision to help people in the case of disasters?

[Lord Freud]

In the case of disasters, other measures would be introduced. This will not be a core methodology to deal with particular localised disasters.

[Baroness Lister of Burtersett]

At present, people can turn to discretionary crisis loans in such cases. I would feel more reassured if the Minister could tell us what that provision would be.

[Lord Freud]

I will have to fall back on offering to write on that particular matter. I do not know exactly how we finance local disasters. In practice, the Social Fund has not been much used in that area. However, I will have to write on how funding for local disasters works.

--- Later in debate ---

[Lord McKenzie of Luton]

The noble Lord is absolutely right. That was deployed in relation to the flooding in Cumbria.

[Baroness Lister of Burtersett]

I raise this to ask not so much about housing but about people's white goods and furniture that may have been destroyed for whatever reason. My understanding is that, at present, they can turn to discretionary crisis loans in such cases.

[Lord Freud]

As I say, that is not a major use of the fund. Clearly, the local authority with its housing obligations is very well placed to manage that on a holistic basis. In the case of that example, there would be a better and more efficient use of funding than we have today.

The amendments in this group seek to place constraints on the changes to the discretionary Social Fund that would undermine the much-needed reforms and prevent the needs of vulnerable people being addressed in an effective way. In line with our commitment to localism, and to allow local authorities to make the best decisions for their respective areas based on their more detailed knowledge of local concerns and requirements, we do not propose to ring-fence the funding given to local authorities in England and in the devolved Administrations of Scotland and Wales. Local authorities have entered very positively into discussions with us and have come forward with interesting and innovative ideas on how support can be delivered. For example, one large rural authority is considering using some funding to pay the delivery fees charged by an existing provider to deliver free goods to the vulnerable people they need to reach.

The noble Baroness, Lady Hollis, asked whether the funding would go to the upper or lower tier. The funding will be allocated to upper-tier local authorities in order to provide the greatest possible flexibility to local areas. From our discussions with local authorities, we know that a range of delivery models is being considered. Some of these models will result in funding being devolved to lower-tier services such as housing. Decisions about the ultimate funding route for each area will be determined by a range of local factors, including the location and the nature of existing services and how these align with areas of deprivation and need, and the level of funding that will be devolved. In less deprived areas it may not be necessary or practical to operate a number of services.

--- Later in debate ---

[Lord Freud]

My Lords, I am just pausing while I think about the reflection process. Can I ask my noble friend to leave the reflective process as open as possible? I do not want to be over-circumscribed in how we reflect.

It is also worth noting that even under the current system, community care grants do not support those in the process of fleeing domestic violence. Under the current scheme, victims of domestic violence must have already fled the family home to qualify for support from the discretionary Social Fund to set up home.

I turn now to Amendment 86ZZZE which requires the Secretary of State to,

“conduct a review into the impact ”

of these reforms, and to commence,

“one year from the coming into force of this Act”,

and that there should be subsequent annual reviews which should be published. Eligibility for an award under the current scheme depends on an extensive range of factors so that identifying those who would previously have been eligible is not a simple matter. This would therefore place an almost impossible task on the Secretary of State. Comparing the recipients of support from the existing scheme with those under a wide range of new local support seems to miss the point that the driver for these reforms is better targeting. We would expect certain under-represented groups such as pensioners to be better served by a more local approach. Local authorities will want to consider ways of monitoring and reporting on their activities to provide transparency to those they serve.

[Baroness Lister of Burtersett]

My Lords, if the Government are successful in their desire to open up the scheme more to pensioners, it will mean that less money will be available for non-pensioners. What are the Government’s thoughts on that?

[Lord Freud]

Well, my Lords, local authorities will have to provide support for vulnerable people in their areas. They have a difficult balancing act to perform, particularly in the difficult economic circumstances we are in. Exactly how they spend the money is, in the context of the ring-fencing question, something for them.

[Baroness Lister of Burtersett]

I am sorry if I am being a little dense here. When the Minister says that local authorities will have to provide support, if there is no statutory duty to do so, what validity will this have? What power would central government have to make sure that local government provide support if they place no statutory duty to do so in the legislation?

[Lord Freud]

Local authorities have a number of duties under which they are bound, and those are the duties to which I am referring. Let me continue.

--- Later in debate ---

[Lord Freud]

I understand that it is fixed for two years, which takes us to the end of this spending review.

I turn now to a number of questions raised by my noble friend Lord German, who asked about the devolution aspects. The Scottish Government have consulted on the approach that they might take to deliver the new local provision. They considered local as well as Scotland-wide approaches and they now have to decide whether the local approach, in line with the English approach, or the centralised approach is best. If the Scottish Government decide to go down the centralised route, that would be an interesting test case of whether devolving down to the local level, to populations of between 12,000 in the City of London and 1.4 million in Kent, or centralised to cover 5.2 million people across Scotland, is the best way to administer this sort of discretionary support. Clearly, we have taken the view that the closer to the populations served, the better.

If the Scottish Government choose to divert funding from other sources to top up the funding they receive from the UK Government, that is their choice, but they will have to tell the Scottish people from where the money has been diverted. My noble friend asked about legislative consent motions, but those are not necessarily for Social Fund reform. On the accounting officer question, for the national payments on account provisions that will clearly be the DWP Permanent Secretary. I shall come back to him on the devolved moneys.

I hope that I have adequately explained why these amendments are necessary. I shall reflect on the points that have been made so powerfully. Meanwhile, I would urge the noble Baroness to withdraw her amendment.

[Baroness Lister of Burtersett]

I thank the Minister for his full response. Unless I missed it, I do not think he dealt with one amendment, but I shall come to that. I thank noble Lords for their very helpful contributions to the debate. The noble Lord, Lord Kirkwood, gave a cautionary tale of what happened in the 1980s. I cannot speak for the noble Lord, but the Minister’s response that local authorities will set up an internal review mechanism if they think it is appropriate is not the kind of positive response that, for instance, the noble Lord, Lord Newton, in his former incarnation made when similar points were being made about going from single payments to the Social Fund. Perhaps on his behalf I could say that I am disappointed with that response.

A number of noble Lords made the point about the money that would be available in the future. One thing that we have not talked about is that, at present, the crisis loans bit of it has money recycling, but money will not be recycling because there will not be any loans. Presumably, that will also mean, not just that it is not going up with inflation, but that there is no money coming back into the system. Again, that will make less money available for local authorities.

The noble Lord, Lord Kirkwood, made a very powerful point when he read out the principles that the Social Fund Commissioner set out and then compared and contrasted them, in good student essay style, with what the Government produced. My noble friend Lord McKenzie made another good point when he asked where the vision was for what the Government want to achieve. I am no clearer about that vision. We have talked about the importance of local decisions. The noble Lord reiterated the point about decision-making at local level but did not address the point that it is possible that these decisions will not be made at local level. If Westminster can send its emergency decision-making up to Scotland, what guarantee do we have that decision-making on “daughter of Social Fund” will be taken locally? If that is the vision and purpose, perhaps the Government need to make it clear and set down that those decisions must be made locally—otherwise we might not have localism at all. We need more reassurance on that.

The noble Lord, Lord German, made some important points about accountability. The Minister responded but did not explain what the reporting-back mechanism will be. Accounting officers may be accountable to the Permanent Secretary at the DWP, but how will they be accountable if there are no reporting-back mechanisms and no requirement to report on how the money is being used? Again, a bottom line must be written into this.

I welcome the fact that the noble Lord said that he will reflect on some of these issues, particularly ring-fencing. He said that he would like the reflection process to be as open as possible—so no ring-fencing around that reflection process. He made a very important statement, which will be on the record. He said that the Government would have to make sure that money will go to vulnerable people and will not be diverted elsewhere. I am pleased by that because we are clearly in agreement. However, I am not clear how we can achieve it without ring-fencing. If on reflection he could come back and satisfy the Committee that this can be achieved without ring-fencing, I am sure that we would all be very happy and impressed. However, I find it very difficult to see how it can be achieved without some form of ring-fencing. I remain to be surprised and impressed.

On domestic violence, the noble Lord made the point that someone must already have left home in order to get help from the Social Fund. I understand that, but does he not accept that some women will be afraid to leave their home if they are not sure that there will be help for them when they take their children into the great unknown? At present at least they know that there is a very good chance that they will get help from the Social Fund. There is a real danger here.

[Lord Freud]

I will make this absolutely clear. Where one gets help from in those circumstances is the responsibility of local authorities under their homelessness obligations. The Social Fund plays a part way down the track. It was not the solution to that problem, so nothing is changing in that area. I would like noble Lords to understand that that is not an issue that arises from this change.

[Baroness Lister of Burtersett]

I thank the noble Lord for that, but that is certainly not how Women’s Aid sees it. It talks about it being a lifeline, and this lifeline is being taken away. Obviously the housing itself is the most important thing, but for a house to be a home it needs furnishings and the worry is that those furnishings will not be there for people. Perhaps in his reflections he can come back with better reassurance about that than at present.

I do not think the noble Lord has said anything about local connections. If he did, I apologise. The point was made that there should be no form of local connection test. Did the Minister say anything about that? I quoted from the other place, where the Secretary of State answered this by saying there will be a moral duty on local authorities to meet needs, but there are a lot of people who are going to be leaving institutional care. I refer not just to people fleeing domestic violence; they could be ex-prisoners or members of the Armed Forces. There are all sorts of reasons why someone might not have what is recognised as a bona fide local connection. The worry is that they could be left high and dry and we could be back into a kind of Poor Law situation where people are pushed around as they try to find somebody who will help them. Perhaps the Minister could say something about that.

[Lord Freud]

I think I am going to be reduced to the letter.

[Baroness Lister of Burtersett]

In that case, I look forward to this letter. I particularly look forward to the list of statutory duties and whether it will put flesh on that moral duty to provide a safety net that the Secretary of State talked about. I am not aware that local authorities have that statutory duty, but I look forward to seeing it when the Minister’s little list appears.

I acknowledge the fact that the Minister has accepted the spirit of the amendment on ring-fencing with his very strong statement about what must not happen. I look forward to the outcome of this reflective process and I hope that it will go some way—all the way, actually—to meeting the Committee’s concerns. We have had a very strong statement from the noble Lord, Lord Kirkwood, about his bottom line on this, which I am sure is ringing in the Minister’s ears, much more than anything I have said would ring in his ears. On that basis, I beg leave to withdraw the amendment.

Amendment 86ZZZB withdrawn.

Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Tuesday 8th November 2011 Grand Committee

[Lord Patel]

My Lords, I thank noble Lords who have supported my amendments. There are three amendments in my name: one to ensure that any period of time-limiting contributory ESA restarts following any period a person spends in a support group, one to ensure that the assessment phase is not included in any time limit of contributory ESA, and one to ensure that time-limiting contributory ESA for those in the WRAG is not applied retrospectively.

Many groups, including Macmillan, Disability Alliance and others, oppose the introduction of a 12-month limit to the amount of time someone is able to claim contributory-based employment and support allowance for those in the work-related activity group. Macmillan, the Disability Benefits Consortium and others in the wider disability sector oppose the principle of time limiting ESA. People with a disability or illness who have paid into the system should be able to receive support for as long as they meet the eligibility criteria for ESA and are unable to work due to their condition.

Clause 51 amends the Welfare Reform Act 2007 to introduce a 12-month limit to the amount of time a person is entitled to contributory ESA for those in the WRAG. In my view, Clause 51 should be removed from the Bill. Removing this clause would ensure that disabled people would continue to receive critical financial support for as long as their disability or long-term condition limits their ability to work.

The Government’s own figures show that 94 per cent of people in the WRAG will need ESA for longer than 12 months. Those affected, including 7,000 cancer patients, will lose up to £94 a week in vital support. The Government’s proposal is based on their objective to make savings. However, they have provided no evidence to demonstrate that a 12-month time limit is reflective of the amount of time people in the WRAG need in order to be able to return to work.

The coalition agreement promised, I believe, to protect the vulnerable from spending cuts. In his first party conference speech, the Prime Minister last autumn said:

“People who are sick, who are vulnerable, the elderly—I want you to know we will always look after you. That's the sign of a civilised society, and it's what I believe”.

It cannot be right for the Government to propose such a significant policy change without providing evidence that the measure is appropriate and reasonable. Can the Government publish evidence to demonstrate that a 12-month time limit reflects the likely needs of people in the WRAG? What organisations or experts were consulted before the decision was taken to introduce a time limit for contributory ESA?

The time limit will be imposed on people who are in the WRAG. Those in the WRAG are people who, following a work capability assessment, have been found to be not fit for work due to their disability or illness. While those in the WRAG are expected to carry out some work-related activities in order to help them return to work, they are still considered to be not fit for work. If following the WCA they had been found to be fit for work they would be ineligible for ESA and placed on jobseeker’s allowance.

People in the WRAG could still be severely disabled or disabled, as is the case with people recovering from aggressive cancer treatment and other debilitating conditions. I have one example. Martin was diagnosed with primary progressive MS in February 2007. He continued to work until November 2009, albeit with difficulty. He cannot walk or stand up, has incontinence problems and suffers badly with fatigue and muscular weakness in his legs and back. Martin recently received a letter from the DWP outlining how the Government are seeking to change the rules of ESA and impose a time limit on the benefit. He said:

“The real sting in the tail is that the ‘clock’ starts ticking from the date you first ever started receiving the benefit. In my case that is since June 2009, so some 27 months, so in their eyes I am 15 months over the limit! Therefore, my payments would stop immediately once the policy comes into force next year”.

Poor old Martin. What is he going to do?

Currently, no one is placed in the WRAG indefinitely. Only those who meet the strict eligibility criteria for ESA and are unable to work will be able to continue to receive ESA. People in the WRAG can be called for an assessment at any time and will lose the benefit if they are found fit to work. The government proposals will affect only those vulnerable people who are too unwell to work. The vast majority, patients with cancers and others, want to work if they are able to and do not need an incentive. Unlike incapacity benefit, the WRAG or ESA is clearly focused on supporting people into work and receipt of the benefit is conditional on claimants taking agreed steps on activity to move towards work. That can include training, education or condition management. Claimants who take the agreed steps to return to work should not be penalised simply because they need longer than one year.

Many disabled people will simply not be fit enough to return to work after just one year. For example, people with cancer will often experience side-effects of their condition and treatment, such as severe fatigue or depression, for many months and in some cases years, even after their treatment is finished. People with cancer face a range of barriers that impact on their ability to return to work. They can experience debilitating physical and psychological effects from cancer and its treatment, including severe pain, fatigue, nausea, fever and diarrhoea. The majority, 53 per cent, are not advised by medical professionals about the impact of their cancer diagnosis on their working lives and how they can manage their condition. They are not routinely offered the range of back-to-work services they need, such as counselling, retraining and workplace advocacy. They are less successful in securing workplace adjustments to which they are legally entitled and which would help them return to work. This is likely to be linked to the fact that just 43 per cent of employers know that people with cancer have legal protection against discrimination.

Means-testing thresholds are such that thousands of people will lose all their ESA if their partner earns as little as £150 a week. The Government’s own estimates predict that 700,000 people will be affected by time-limiting by 2015-16. Of those who actually lose out, 51 per cent are in the lowest third centile for income; the average drop in income would be £52 a week, but for those in the lowest centile—the lowest third—this figure is £35 a week, a significant amount of money for people struggling to make ends meet. What estimate has the department made of the number of people who will fall into poverty as a result of time-limiting contributory ESA?

Furthermore, people who are currently covered by special rules and can reasonably be expected to die within six months are automatically placed by the support group and will not be affected by time-limiting. However, people who have a terminal diagnosis but who are expected to live for longer than six months currently can still be placed in the WRAG and will therefore be subject to time-limiting. This means someone who has a prognosis of two years and is placed in the WRAG could lose their support after one year, even though they may have only one year left to live. Many of these people will not go on to claim a pension and therefore may receive only 12 months of ESA for all their national insurance contributions. People who lose their contributory ESA due to time-limiting will not be able to claim contributory ESA if they have subsequently become terminally ill and are covered by special rules. This is despite the assurances given by the Government that people who are terminally ill will not be affected by time-limiting.

The Government have claimed that there are alternative means of support available for those who lose their ESA, such as housing benefit or tax credits. However, these are dependent on personal circumstances and many cancer patients will be ineligible. For instance, a couple without children who own their home will not be eligible for housing benefit and they will qualify for tax credits only if the working partner works more than 30 hours, which may not be possible due to caring commitments. My question, therefore, is: can the Government publish evidence to demonstrate what alternative means of support is available for people who lose ESA and give the number of people who are eligible for this support?

For cancer patients, financial worries are second only to worries about their condition and treatment. I have serious concerns about the impact that time-limiting will have on the psychological well-being of sick and disabled people who might already be experiencing depression and anxiety. This will also put pressure on mental health services funded by local authorities. What assessment have Ministers made of the impact that time-limiting will have on health and social care budgets and services, and what discussions have they had with the Department of Health?

Calls for a rethink on the time limit have not been limited to people with cancer and certain disabilities. Concerns about the impact of the proposal is widespread. I noticed that at the Liberal Democrat conference in September delegates voted unanimously to make it Lib Dem party policy to oppose an arbitrary time limit on ESA. I wonder what discussions the Minister has had with his Lib Dem colleagues about alternatives to the 12-month time limit following the Liberal Democrat vote at the party conference, about which no doubt Liberal Democrat noble Lords will correct me if I am wrong.

It is to be welcomed that the Government have recognised the need to make changes to the work capability assessment, and I commend them for at least recognising that. However, I look forward to the Government’s proposal to make more widely available the automatic entitlement to support groups which is currently available to groups such as patients receiving intravenous chemotherapy. As I said, I commend them for that. However, the necessary changes will take time to be implemented, and that will not improve the situation for cancer patients who have finished their treatment and need sufficient time to recover before they are well enough to return to work.

It is widely recognised that the WCA needs to be significantly improved before it is fit for purpose. The introduction of a 12-month time limit for ESA will compound the existing problems relating to the WCA. Instead of taking away support from sick and disabled people who are still unable to work, the Government should be working with disability organisations to design back-to-work programmes that offer personalised support appropriate to customers’ needs. I sincerely hope that the Minister will be sympathetic to the cause and that we will have some proposals from the Government that are encouraging to them.

[Baroness Lister of Burtersett]

My Lords, I am pleased to rise in support of the vital amendments tabled by the noble Lord, Lord Patel, and in opposition to the Question that Clause 51 stand part of the Bill. I am afraid that this will be another of my rather long speeches but this is such an important issue that it is essential that we spend time on it.

The noble Lord, Lord Patel, speaks from his considerable experience as a clinician, particularly with regard to cancer patients. The cause of cancer patients has also been well served by Macmillan Cancer Support, which has done so much to bring this issue to public attention and to brief noble Lords. I shall not focus on this particular group because I cannot possibly bring to the matter the same level of expertise as that of the noble Lord. Instead, I shall discuss some of the wider implications for our social security system, including the gender implications of relying on income-related ESA as an alternative to contributory ESA.

In the other place, the Minister of State told the Public Bill Committee:

“It is a long-standing principle of our contributory system and the JSA system that we allow those who have paid in to draw back out money for a period of time, but that there is a limit to the amount that they can draw out again”.

He continued:

“There has been an enormous inconsistency between JSA and ESA and its predecessors, in that somebody who manages to get themselves on to our sickness benefits is there indefinitely, whereas somebody who is on JSA is there only temporarily. That creates a perverse incentive in the system”.—[Official Report, Commons, Welfare Reform Bill Committee, 3/5/11; col. 650.]

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[Baroness Lister of Burtersett]

I was just quoting from a letter I received from a 50 year-old woman with complex mental health problems. She wrote that,

“my life revolves around trying to be as well as possible. I cannot stress enough how frightening it is to feel that you are not able to work, will not be put into the support group”,

she fears,

“and will be left to use up everything you have until eligible for means-tested benefits … My medicine prescription has been increased 4-fold and been supplemented with extra medication since the time limit was announced”.

As someone who has campaigned and argued for a more inclusive social security system for 40 years, I feel that I have to use the luxury of being a Back-Bencher to oppose this clause on principle. My noble friends on the Front Bench know and understand my position. However, if time-limiting goes ahead, it must be done on the fairest possible basis. Therefore, I hope that the Minister will look favourably on the proposed amendments in the name of the noble Lord, Lord Patel, which would aim to achieve that in three main ways.

First, I hope that action will be taken so as not to penalise people with fluctuating conditions who go on to the support group after the contributory ESA has expired. I know that that is a particular concern of Macmillan Cancer Support. Secondly, I could not believe at first that the rule would be applied retrospectively. The case against that has been made extremely eloquently by the noble Baroness, Lady Thomas of Winchester. As a result of this, the letter has gone out to existing recipients. According to one who wrote to me, far from providing the reassurance mentioned by the Minister in his opening remarks at Second Reading, that will, she warns, “strike fear” into the hearts of those affected. Could the Minister state whether there is a precedent for such a letter to go out before Parliament has agreed such a controversial change?

Thirdly, I was also dismayed when I realised that the 13-week assessment phase is included in the one-year time limit, which in effect means that full contributory ESA will last for a year minus 13 weeks. In Committee in the other place, the Minister of State agreed to look again at this issue in response to concerns expressed by a Liberal Democrat MP. What was the outcome of this further look? According to a Written Answer that I received, if the assessment phase were excluded it would reduce the savings by £100 million in 2012-13, rising to £120 million by 2014-15, but falling to only £40 million by 2016-17. Here is the nub: this clause is not about making social security fairer; it is about saving money, as my noble friend Lord McKenzie has already stated.

I have some sympathy with the Minister. He is extolling the virtues of universal credit at every opportunity, yet universal credit is in danger of being contaminated by sharing a Bill with unfair, cost-cutting measures such as this one. I hope, therefore, at the very least, that the Minister will think very hard about how to mitigate this unfairness through the kind of amendments before us.

[Baroness Meacher]

I rise to speak to Amendments 71M, 71N, 71P, 72A and 73. First, I thank the noble Lord, Lord German, for kindly allowing me to speak a little earlier than I had planned because I have to leave the Committee briefly at 5 pm. I apologise to the Minister and the Bill team that I have not been able to attend the briefing sessions. They are a wonderful idea and I had hoped and assumed that I would attend every one, but life has not been quite like that.

I also apologise for not having had quite the time I would have wished to prepare for this debate. Having said that, I have major concerns about the plan to limit entitlement to contributory ESA to one year. I understand from the CAB service that the DWP has estimated that, of those on contributory ESA and in the work-related activity group, 94 per cent will remain on the benefit from more than a year, so it is estimated that by 2015-16 700,000 people will be affected by limiting contributory ESA. Some will lose their entire benefit payment, currently worth £94.25 a week. I know that the Minister will correct me if that is wrong. It sounds astonishing. The rationale for this change is, I suppose, twofold. First, it is to give maximum incentive to people to return to work and, secondly, it is to save taxpayers’ money. I will refer to those two points briefly.

It is particularly difficult to support the employment incentive argument at present, when even able-bodied people and remarkably highly skilled people are finding it very difficult to find work. As we said, we think that about 94 per cent of those with disabilities will remain on this benefit beyond their contributory entitlement. I would welcome the Minister’s views on the fairness of this provision in relation to an individual with—obviously in terms of my own concerns—ongoing and fluctuating symptoms. He is very keen to work and does not need any incentive, but no doubt he will be given lots of incentives through the mechanics of the work-related activity group. But the fact is that he cannot persuade an employer to take him on. I know that the Minister is aware that there are very large numbers of people on ESA who want to work and cannot persuade an employer to take them. In other words, these people are very much the deserving unemployed. They used to be called the deserving poor. I happen to know hundreds of people personally who fall into that category. I would be grateful for the Minister's views on that.

If we consider for a moment the need to protect taxpayers’ money, I happen to believe that taxpayers would recognise that this group—people who are disabled and sick on benefits—should be entitled to their benefit, having contributed, many of them, for decades. Politically, I do not believe that this is something that one can possibly justify. It is very hard to argue that savings to taxpayers’ money should be made with this particular group—sick and disabled people—rather than at the expense of other groups in society with much broader shoulders. There are all sorts of cuts that a Government could make that would seem much fairer than this one.

Amendment 71M, tabled by the noble Lord, Lord McKenzie, would at least be a great deal fairer. In a sense you could say that it is all rather arbitrary— 365 days or some other number of days. Really, it is just not justified to cut contributory benefit at any stage for many of these people, but I suppose that that would be better than the alternative.

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[Lord McKenzie of Luton]

If the Minister has moved on from national insurance, perhaps he might just address this point of circumstances where somebody starts off in the WRAG and at the start of their claim meets the national insurance contributions, because they have been both credited in and paid sufficient in one of those years. That claim is terminated or ceases after 365 days and the person then moves into the support group. Would that be a new claim for the purposes of attachment to the national insurance contributions? If people had to look afresh at that point, they may well have been credited insufficiently, but they would not be able to pay in, because they would not have been in the labour market and would not have had earnings. They would therefore be disconnected from contributory ESA.

[Baroness Lister of Burtersett]

I shall ask the Minister another question, so that he can get his breath back. I very much welcome what he said about credits. This may reflect my ignorance of the mechanics of it, but could he explain how people get credited, if they cease to be part of the system and have no entitlement to anything?

[Lord Freud]

My Lords, clearly, the detailed mechanics of that is something that we will need to work out and set out in regulation. I am not absolutely convinced that we have it locked down—we might, but I simply do not know. But clearly we will make that clear.

I shall come on to the question asked by the noble Lord, Lord McKenzie. The run-ons in practice are rather complicated. I shall come on and deal with that in a little while.

For the most vulnerable, we will provide the support when it is needed for as long as needed. When people can work, they should be expected to; a lifetime on benefits is no longer an option.

Amendments 72 and 76 are technical amendments that seek to restore the original policy intent for Clauses 51 and 52. The current wording of those clauses meant that days in the assessment phase before the determination that the claimant should be placed in the support group must count towards the calculation of the 365-day limit. This would not of course affect a claimant who remains in the support group throughout their ESA award, but it would affect those claimants who moved to the work-related activity group from the support group, at which point they would be entitled only to the balance of the 365 days after deducting the day spent in the assessment phase. This was never our intention and I urge noble Lords to accept this amendment.

I shall now address Amendments 71M, 72A, 73, 74, 75 and 75A. Amendment 71M would increase the time limit for claimants receiving contributory ESA in the work-related activity group from 365 days to a prescribed minimum of 730 days. We disagree that two years is the right approach. The noble Lord, Lord McKenzie suggested that this was a modest change. It would, in fact, cost a total of £1.6 billion by 2016-17.

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[Lord Freud]

My Lords, I shall come to the point about cancer, which is clearly very important. The powerful speech of the noble Lord, Lord Patel, on his amendment had to do with that. I shall deal with it as a whole. I am trying to make one point at a time. The point I am making is that our proposals are not out of kilter with the arrangements in many other countries. We still provide unconditional support to those in the support group and income-related benefits for the poorest.

I shall just pick up the point of the noble Baroness, Lady Lister, on the expectations of contributors to national insurance. National insurance contributions are used to pay for a wide range of contingencies. These include working-age benefits, the state pension and the NHS. The overwhelming proportion of expenditure—some £60 billion a year—goes on the state pension. This is in contrast to around £6 billion on ESA and incapacity benefit and around £1 billion on jobseeker’s allowance. There have been numerous changes to national insurance and the benefits system over the years to take account of changes in society and demographic factors. For example, far more women now pay national insurance than when contributory benefits were first created. As I have said, we believe that the adjustments we are making are fair and reasonable.

[Baroness Lister of Burtersett]

Will the Minister acknowledge the point that has been made by several noble Lords? Some people will not see the pension that they have paid their contributions towards. Therefore, they feel particularly aggrieved that, having paid contributions all their life, the contributory ESA is being snatched away from them just like that.

[Lord Freud]

My Lords, let me come back to that. It is to do with the debate about who should be in the unlimited support category for an unlimited time and who should not be in it. As I just said, we support the poorest on an income basis and those who are the most ill in the support group indefinitely.

Amendment 71N introduces another regulation-making power to the Bill. It would enable the Government, or a future Government, to exempt certain groups from the 365-day limit for those in the WRAG. This point was also raised by the noble Baroness, Lady Meacher. We believe that it is for the WCA to distinguish between those who are in the WRAG and those who should be placed in the support group and therefore be exempted from the time limit. As noble Lords will know, Professor Harrington has been working with Macmillan and other stakeholders to help us make sure that people are placed in the appropriate groups. Therefore, an amendment along the lines proposed by the noble Baroness is not necessary.

Amendment 71P introduces a new provision, which would mean that people whose contributory ESA exhausts after 365 days would be able to requalify for the support group if their condition deteriorates. However, this could mean benefits being reinstated 10 or more years after the claimant last worked, which is not reasonable. Moreover, we already have a series of safeguards in place that would protect people in this position. First, if the claimant leaves ESA before their contributory ESA exhausts, we have the linking rule, which enables the claimant to return to that contributory ESA within 12 weeks of leaving it.

Secondly, we already have within the ESA regulations an easement allowing a claimant to satisfy the first contribution condition for ESA if they have paid contributions in any tax year at a certain rate, and they had received a contributory ESA award in the last complete tax year before the current benefit year when they are claiming again. If it is decided that a person has limited capability for work-related activity, they will, of course, be placed in the support group. In addition, if someone qualifies for income-related ESA—as some 60 per cent of claimants will—eligibility for ESA can be reinstated automatically.

On the point raised by the noble Baroness, Lady Morgan, regarding protection for those who qualify under exceptional circumstances, time-limiting will apply in the same way as in all other cases. Those in the work-related activity group will be time-limited; those in the support group will be unaffected. Consideration of exceptional circumstances applies to those who do not have limited capability for work.

For those for whom work is simply not an option, we would expect them to be in the support group and not affected by time-limiting.

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[Lord Freud]

I will come back to that issue and argue strongly that there is no retrospection. I will make that argument in a coherent way. No, the people who will have been on support will be in a position where there will be no difference between the existing group and the new group. There will not be that difference. As the noble Lord, who has infinitely more experience than I have, said, with cancer there is a differential experience, and some people literally sail through the process—the really lucky ones. Maybe that is slightly over the top, but they get through the process in a reasonable time, pretty fast, while others find it very tough indeed. If we put everyone in the same category by definition a type of illness, we get back to the problems that we have with treating people who need help to work and everything else—we are excluding them from that. Of course, once you set a precedent in that area, it rolls on and on. That is why we are going about this using the WCA as the route to putting people in different categories.

I was also asked about support to work. Support to find work will be widely available for all ESA claimants from the outset of their claim, irrespective of their health condition. Following the work capability assessment for most ESA claimants placed in the work-related activity group, that support will be mandatory either through Jobcentre Plus or through the work programme once their prognosis is down to a particular number of months.

The vast majority of ESA claimants who want the more intensive support offered by the work programme will be able to access it as soon as the outcome of the WCA is known. That includes contributory ESA claimants who can remain on the programme after their benefit has come to an end—to meet the point raised by the noble Baroness, Lady Lister. That ensures that they receive all the support they need to help them to return to work. Clearly, that was a conscious decision in the design of the work programme because it is clearly not supported by any sort of delaying switch. This is a straight investment in helping those individuals back into work.

[Baroness Lister of Burtersett]

I thank the Minister. I am pleased to hear that. So that I am absolutely sure that I have understood, can he confirm that this would also apply to someone who does not qualify for income-related ESA? Is it simply enough that they have received contributory ESA in the past and that that is the ticket to the work programme for the future?

[Lord Freud]

The noble Baroness has got that absolutely right. It is both for people who are currently on income-related ESA and those who have been recipients of contributory ESA.

There will clearly be a financial cost to Amendment 71P, but I am afraid that in the short time available I have not been able to produce a robust costing.

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[Lord Freud]

Well, my Lords, what was written in the document that my noble friend Lady Thomas referred to was posited on the notice given in it, which allowed people to prepare for this change. The notice was given in—

[Baroness Lister of Burtersett]

Can the Minister explain what this preparation is supposed to be? How do you prepare for the loss of a benefit if you are unable to take paid work? Is it preparation for your partner to give up work? I am not sure what preparation people are supposed to be making.

[Lord Freud]

My Lords, one of the clear preparations is to understand whether you are now entitled instead to income-related ESA on the WRAG, or to take steps to get into a job, or whatever it is. There are a number of things, but preparation would cover all of them. However, the documents written in October 2010 were saying that this change was coming in April 2012, effectively giving 17 or 18 months’ notice that this change would apply. That is what was intended by the document.

We have taken steps to give people whose awards will end, either when the clause comes into force or shortly after, time to assess their circumstances and adjust to the change. We have written to all existing contributory ESA claimants who could be affected to make them aware of this change. It is important to remember that claimants in the support group and those claiming income-related ESA will not be affected. The noble Baroness, Lady Hayter, raised the issue of the impact on the lowest deciles. The analysis in the impact assessment shows that although many people affected are in the lowest deciles, they will tend to be fully or partially compensated by income-related ESA and those who will not be eligible for income-related benefits are typically in the middle or higher deciles.

The government amendments I have already outlined ensure that days in the assessment phase for a claimant subsequently placed in the support group are excluded from the 365-day total. Amendment 74 would go further than this; it would mean the 365-day limit for all contributory ESA claimants, including those placed in the WRAG, begins only from day 92 of the claim. This would therefore give an extra 13 weeks of contributory ESA to WRAG members, increasing their overall award to 15 months. Another effect of the amendment would be that, if claimants have repeated short-term claims and as a result they are not medically assessed via the WCA, these claims might never individually go beyond the 13-week assessment phase. If so, the 365-day time limit might never apply to their contributory ESA award. This amendment could therefore create a perverse incentive for claimants to terminate the award before the end of the assessment phase; they may also try to delay attending the WCA. We do not believe that such behaviour should be encouraged.

Amendment 75 would allow claimants receiving contributory ESA who move in and out of the support group, to start a fresh 365-day period each time they move from the support group back to the WRAG. For those claimants moving between the two groups regularly, it is likely to mean they would be able to remain on contributory ESA indefinitely. This amendment would lead to inconsistent periods on benefit for claimants. For some, time spent in the WRAG would count towards the 365-day limit while for others it would not. This is unfair. We believe that everyone should be treated the same, irrespective of when they are placed in the WRAG. I understand the noble Lords’ concern about fluctuating conditions, which may have prompted this amendment. We recognise the importance of the role the WCA plays for people with fluctuating medical conditions, as I have discussed.

To pick up one more point on the cancer issue, I want to make it absolutely clear that the present position is that anyone who is diagnosed as terminally ill and who is expected to die within six months will automatically be placed on the support group.

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[Baroness Lister of Burtersett]

I thank the Minister for his answer, for I realise it is slightly off the main amendments, but I am glad that no final decision has been made. I do not know the nature of the customer insight research but on qualitative research with individuals in couples I know, having done that kind of research myself, that you need to talk to individuals separately within couples for them to be able to talk freely to a researcher. For many women, it is important to have control over a certain amount of income. As the noble Lord said, it is not simply an administrative matter. There is a matter of principle here about having paid into the system as an individual and being able to draw out from the system as an individual, rather than having that benefit paid to your partner. I just hope that the Minister will take that point away and think about it seriously before a final decision is made.

[Lord Freud]

My Lords, we have had this discussion before. I come back to the point that one of the most interesting opportunities in the universal credit is the budgeting support. When I talk about budgeting support there is an element there of how you run your household finances, which we are just beginning to explore. There is huge potential in that and I am just beginning to think about what that could imply and what it means, so we will come back to this in the months to come because it has enormous promise in the areas that the noble Baroness is worried about.

Let me go through the AME savings, which were raised by the noble Baroness, Lady Hollis. Running each year from 2012, they are: £420 million; £780 million; £1,090 million; £1,330 million; and £1,380 million. The £500 million—

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[Lord Freud]

You missed out £1,330 million. I have £420 million, £780 million, £1,090 million, £1,330 million and £1,380 million. That is nearly £5 billion.

Accepting Amendment 71M would reduce the total savings by around a third by 2016-17, which is £1.6 billion. Accepting Amendments 72A or 73 would reduce savings by around £420 million, which represents the entire savings forecast projected for 2012-13. Amendment 74 would reduce savings by around £430 million in total by 2016-17.

[Baroness Lister of Burtersett]

I apologise if I missed this because I know that the Minister has had an awful lot of ground to cover on so many different amendments, but did he explain why the assessment period is being included? The way that the policy has been put across is that if you are in the WRAG, you will get contributory ESA for only a year. But actually that is a year minus 13 weeks because you get a lower rate of benefit for that. Apart from cost, and by 2016-17 only a third minus 3 per cent of the savings would be forgone—I realise it is more up front, but it diminishes—what is the principal reason for including the assessment period?

[Lord Freud]

The reason is that we never intended to take it out in the first place. If someone is waiting to go into the support group it is not appropriate to have them assessed as if they are in the WRAG group.

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[Baroness Lister of Burtersett]

But this is someone who is going into the WRAG group, so they are getting only a year's contributory benefit. It will be a year minus the assessment period. What is the point in principle for cutting short what many people are already calling an arbitrary time limit on their entitlement?

[Lord Freud]

It is interesting that noble Lords are looking at the assessment phase as a different benefit, which it is not. It is the same benefit. It is just a phase. You go on the ESA assessment phase and then it discovers what type of support you are on—the support group or the WRAG group. That is what the assessment phase is doing.

[Baroness Lister of Burtersett]

Forgive me if I am wrong and I expose the frailness of my knowledge of social security, but I thought that claimants got a lower rate during the assessment phase. Therefore it may be called the same benefit but, in terms of the money people get, it is less. That period is not being included. That is why I am saying that it is a year minus 13 weeks. Yes, they are getting a benefit but at a lower rate.

[Lord McKenzie of Luton]

I can support my noble friend: as I understand it, people get the basic JSA rate in the assessment period.

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[Lord Freud]

The assessment phase would last beyond 13 weeks. It can sometimes be a long period, but claimants are always paid the full rate from week 14 of their claim.

[Baroness Lister of Burtersett]

Is the noble Lord saying that you can get backdated money for the assessment period?

[Lord Freud]

Yes, that is precisely the position.

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[Baroness Hollis of Heigham]

My noble friend’s point is entirely valid. You are nominally, on paper, entitled to 12 months of the WRAG money, but in practice it is actually 12 months minus 13 weeks—three months—because for that period you are on a benefit that for all purposes might just as well be JSA, because it is at a lower rate and therefore should not realistically count.

[Baroness Lister of Burtersett]

What is the principal reason for that? How does the Minister justify it?

[Lord Freud]

I have to admit that I am not particularly happy about the assessment phase of ESA and how it is working. It is becoming a separate benefit in practice. I would like to look at it. It is difficult to have a set of principles around something that one is somewhat unhappy about.

I shall go on with the costs. Amendment 74 would reduce savings by around £430 million in total by 2016-17. Amendment 75A would increase expenditure on ESA by approximately £500 million per year, plus up to £50 million more on other income-related benefits. I cannot accept that we should make these amendments. They would place a very high financial cost on us in the current fiscal climate. I believe our proposed changes are right in principle and fair to the taxpayer. I urge noble Lords not to press these amendments.

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Moved by

[Baroness Lister of Burtersett]

76ZA: Clause 52, leave out Clause 52 and insert the following new Clause—
“Condition relating to youth
For paragraph 4 of Schedule 1 to the Welfare Reform Act 2007 (condition relating to youth) substitute—“4 The third condition is that—
(a) the claimant has limited capability for work-related activity;(b) he was under 20 when the relevant period of limited capability for work began; and(c) he has had limited capability for work for at least 28 weeks.””

[Baroness Lister of Burtersett]

I rise to speak relatively briefly, the Committee will be relieved to hear, to move the amendment and to support the noble Lord, Lord Patel, in opposing the Question that Clause 52 stand part of the Bill.

Currently, people who are disabled from birth or early in life may claim ESA in youth from age 16. This has, in different guises, been a feature of the social security system since 1975. When it was incorporated into ESA in the Welfare Reform Act 2007, I understand that the then Opposition did not question the inclusion of young people. Indeed, during the Lords Committee stage, the noble Lord, Lord Skelmersdale, from the Front Bench, asked my noble friend Lord McKenzie of Luton why young people should receive a lower rate of ESA during the initial assessment phase. The implication was that the Conservatives not only supported the inclusion of young people, but thought they should be included on more generous terms. Similarly, Liberal Democrat spokespersons in both Houses, one of whom was Danny Alexander—now in the Treasury—were at that time pushing for more generous treatment of young people.

It thus seems rather strange that in the other place, the Minister commented that,

“It seems to be an oddity that a young person with a disability or a health challenge, regardless of their circumstances, should automatically be able to migrate to contributory ESA even if they have never worked”.

As the Minister acknowledged:

“This may not have been debated hotly in the past”.—[Official Report, Commons, Welfare Reform Bill Committee, 3/5/2011; col. 654.]

I would suggest that this is because it has been accepted for nearly 40 years that it is fair and proper to include disabled young people in the contributory system.

The availability of contributory ESA provides those who become severely disabled in youth with a sustainable income to support their transition to independent adulthood in particularly difficult circumstances. It has long been accepted that the normal contribution conditions should not apply in order not to exclude a group whose members have not had the opportunity to build up a contribution record and may well not have that opportunity in the future through no fault of their own. For those who are hung up on the “something for something” principle, I think we can agree that it can be suspended in these circumstances. Instead, the removal of this long-standing right will undermine the goal shared by all of us of supporting disabled people to live independent lives.

In fact, the justification that we have received for ending the long-standing consensus on this matter is nothing to do with principles or even costs, unlike Clause 51. It is primarily, I understand, about administrative simplicity. It is stated that abolition of the youth concession is a simplification and will create consistency in the run-up to the introduction of universal credit. I am not sure that any policy that increases reliance on means-tested benefits, which the impact statement acknowledges will be the case, adds to the sum of simplicity in the benefits system. I do not think that tidy alignment for administrative purposes is a good enough reason to withdraw a long-standing right, not least because alignment of the rules with those for contributory ESA would be another option open to the Government.

A rather more persuasive argument on first sight is that those receiving contributory ESA are not automatically entitled to passported benefits, to which they would be entitled were they receiving income-related ESA. However, this is true of those receiving contributory ESA generally, not just young people. Therefore, it is a problem that should be resolved for all this group as part of the current review of passported benefits. Can the Minister assure us that those who would have qualified for income-related ESA under the present system will continue to receive passported benefits under the new regime? If he cannot give us this assurance now—and I understand about SSAC looking at all this—then this justification is rather weakened.

The availability of contributory ESA is of particular importance to certain groups of disabled young people. I am grateful to the Child Poverty Action Group for providing me with a number of case studies that illustrate the kind of people particularly affected.

First, there are young disabled people who have been temporarily in and out of local authority care or have moved areas, as it provides a secure, independent income. I know that there are a number of noble Lords here who have particular concerns about this group of young people generally. I do not think that the names I shall use are real but they are real examples. Sanjeet, who is in foster care, is at school and planning to go to college. He is aged 18, severely disabled and lives with foster carers. He was advised to claim ESA in youth to give him some of the extra income and independence that he needs. We should note that a severely disabled young person such as Sanjeet may have limited earnings capacity during his life and may not have parents who can provide financial support. If he has to rely on a means-tested benefit, he will never be able to build up savings beyond the £16,000 limit to help him with equipment, housing and so on for independent living.

Another example is Anna, who lives with a kinship carer. She is 16 and has been living with her grandmother since her mother died. Anna has severe problems with depression and post-traumatic stress. She is not working or in education. Her grandmother is struggling to support her out of her pension. Anna was advised to claim ESA in youth to provide her with her own independent income.

Another group is young disabled people who have built up savings to be used for an adapted car, disability equipment, a deposit on a property or future care needs. In the absence of non-means-tested support, using savings for basic daily living costs will have long-term implications for the welfare state when these people’s carers—usually elderly parents—are no longer able to provide care and accommodation.

An example of this group is Jackie, who is 19 and in full-time education. She has Down’s syndrome and gets the DLA highest-rate care component and lower-rate mobility component. When her parents stop claiming benefit for her, she can claim ESA in youth as her own independent income. Jackie’s parents think that their daughter will never work and she will not have an inheritance from them, so having a contributory benefit of her own means that she will have the option of saving from her DLA towards the cost of future disability-related needs. If her parents were able to leave her some money, she would be able to keep it to fall back on if she had contributory ESA in youth but not if she had to rely on income-related ESA with the capital limit.

Another group is young disabled people who may be vulnerable to forming unsuitable relationships or may avoid forming a suitable relationship due to fears about losing an independent income. The case study is Caitlin, who has learning difficulties and is aged 20. She gets DLA and is attending a life skills course at college. To move towards independence, she is advised to claim ESA in youth, topped up by income-related ESA. Caitlin is currently living at home with her parents. Having a contributory benefit of her own means that she could in the future choose to form a relationship without fear of losing her independent income.

Moving on to young disabled people in education, the example is Nadia, who has cystic fibrosis. She is at university and gets ESA in youth. She has tried to work but has been unsuccessful because of the effect on her health. Unlike other students, she cannot support herself through university by working during the year or in the vacations. Her ESA in youth helps to make up for this. Because it is contributory, it is not reduced because of her student loan. Had she needed to claim income-related ESA instead, she would have been entitled to little or nothing during the year because of the means test.

The CPAG is also concerned about young disabled people trying out work. It says that the removal of contributory ESA in youth would bring young disabled people into the universal credit system. The current permitted work rules for ESA provide a useful opportunity for young disabled people to try work without having an effect on their benefits, in some cases for an indefinite period. There are concerns that the transfer to the universal credit system will increase complexity and reduce the incentive to work for people whose main objective is stability and security of income. The impact assessment says that there may be a “positive employment impact” from this change, but it does not explain how and why, so perhaps the Minister could do so.

The impact assessment also says that about 15,000 people a year are likely to be affected. A fifth of these, who have no other income, will receive the same amount of benefit in income-related ESA. It is estimated that a further 70 per cent will qualify for income-related ESA, either at the same rate or at a lower rate, with an estimated average loss of £25 a week. That is not an insubstantial amount, even if it does open up eligibility to passported benefits.

Finally, one in 10, or 1,500 a year, will lose all entitlement to benefit, probably because they have a partner in full-time work. This is a small group. I hesitate to use the word vulnerable because the noble Baroness, Lady Campbell of Surbiton, has reminded us that disabled people are not intrinsically vulnerable but made vulnerable by disabling institutions and circumstances. This clause will increase the vulnerability faced by a small group of young disabled people, particularly those in the kind of difficult circumstances I have mentioned. The savings are miniscule: an estimated £11 million net per year.

Who was consulted on the likely impact of what I am afraid I see as a mean-minded little measure? I find it difficult to believe that the Minister is comfortable justifying it. I hope that he will therefore be able to give us some indication that he is prepared to reconsider and, at the very least, that he will look favourably on this amendment, which would at least retain contributory ESA for young people in the support group. This would be consistent with the exemption of this group from the one-year time limit. I beg to move.

--- Later in debate ---

[Baroness Lister of Burtersett]

My Lords, perhaps it is the lateness of the hour but I did not think that the Minister read his brief with his customary gusto. I hope that that reflected his embarrassment at trying to justify what I called a mean-minded measure. I did not know that the previous Government had considered this, and I am very glad that they decided not to take it further, as my noble friend said, on the basis of decency. We are talking about decency here and this is an indecent clause. The amendment is purely a fall-back amendment. It would be much preferable if the Minister simply said, “We will continue with the status quo”. Therefore, the amendment would not be necessary. It is a minimalist amendment and, if it creates new problems, they could of course be considered. However, if the clause were to be withdrawn, we would not have to worry about the amendment.

I take the point about why the Minister cannot give us an assurance now about passported benefits, but I suggest that that should not therefore be used as a justification for this measure, given that we do not know who will be receiving passported benefits under universal credit. The Minister said that no other age group has this kind of concession. Of course there is no other age group because any other age group would normally be in paid work and be able to get their contributions. The whole point is that this group cannot be in paid work to get their contributions. I have to say that I am disappointed by the Minister’s response and I hope that perhaps he will reflect on what has been said and think again about this. He then came back and said that there would be a cumulative saving of £10 million. I mean, really—£10 million is absolute peanuts in public spending terms.

[Baroness Hollis of Heigham]

It is a margin of error.

[Baroness Lister of Burtersett]

A margin of error—I thank my noble friend. We are told that this is not about saving money. Therefore, it is totally inappropriate to say what the cumulative savings will be if it is not about saving money. With a heavy heart, I beg leave to withdraw the amendment.

Amendment 76ZA withdrawn.

Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Thursday 3rd November 2011 Grand Committee

Moved by

[Baroness Lister of Burtersett]

52C: Schedule 1, page 107, line 26, at end insert—
“( ) In the case of joint claimants, regulations under this paragraph must specify that a particular amount of the earned income of a second earner should be disregarded.”

[Baroness Lister of Burtersett]

My Lords, the purpose of the amendment is write into the Bill a requirement to provide an earnings disregard for second earners, the majority of whom are women. The Minister will no doubt say that this is not necessary because, as the Minister of State confirmed in the other place and the Minister here confirmed at our previous sitting, the Bill’s regulation-making powers enable this or a future Government to introduce a disregard for second earners at a future date, if they so wish. I welcome that flexibility.

Nevertheless, there are important issues of principle here that need to be debated—not all of which were covered in our initial skirmish in the previous sitting. I once again apologise for the length of my remarks but there are important points to be made. However, the Minister can relax because I will not this time quote any e-mails from Conservative supporters.

The treatment of second earners is an important question that has caused concern among anti-poverty organisations such as Save the Children and women’s organisations such as the Women’s Budget Group that thinks that this is one of the most important issues in the Bill that affect women. I am grateful to members of the group, of which I am a member, for helping me to think through some of these issues. The treatment of second earners also threatens to undermine the Government’s claims to be substantially improving work incentives. The Government have sent out rather mixed messages on incentives for second earners and we would welcome a clear statement of the position. I hope that having listened to the arguments the Minister might go a little further than what he said in our previous sitting.

It is true that second earners are now the only group whose earnings will be subject to the taper from the first pound when the disregard for the couple has been exhausted by the first earner. In a means-tested system based on the joint resources of a couple, some disincentive for second earners is inevitable, and I accept that this is a long-standing problem and is one reason why some of us would like there to be less reliance on means-testing. However, the problem is being made worse under universal credit, and the judicious use of disregards could mitigate it.

A second earner’s disregard would enhance the architecture of universal credit by addressing the increased disincentive that most—not all, I acknowledge—second earners within the universal credit system will face. This is primarily because of the higher taper rate for those whose household income disqualifies them from housing benefit and council tax benefit under the present system. On top of that, those with childcare costs who are working more than 16 hours a week or more will, as a result of the reduction in the limit from 80 per cent to 70 per cent, have to pay more towards their childcare costs than previously. The reduction is already in force, although I welcome the fact that those working fewer than 16 hours a week will benefit from the extension of help with childcare costs. Because even small changes can tilt the balance of advantage of working for second earners, the introduction of a separate disregard for them could prove to be a cost-effective innovation.

Policy briefing note 5 analyses participation tax rates—or PTRs, which measure the incentive to enter paid work—and marginal deduction rates, or MDRs, which calculate how much of a small increase in earnings is lost through a combination of benefit withdrawal and taxation, and therefore measure the incentive to increase earnings once in paid work. In both cases, the lower the rate the higher the incentive. The briefing note shows that around 900,000 or three-quarters of potential second earners whose householders qualify for means-tested support under universal credit will face a lower incentive to take employment than under the current system, with an increase in their average PTR from 35 per cent to 65 per cent.

It appears that all the nearly 1.5 million existing second earners will see an increase in their PTR from 30 per cent to 45 per cent on average. The note concedes that this may reduce some existing second earners’ incentive to work. Where this leads to a withdrawal from the labour market will presumably increase the amount paid out under universal credit. With regard to incentives to earn more when in work, approximately 300,000, or three-quarters, will face an increase in their MDR and, therefore, reduced incentives. According to a Written Answer in the other place, five out of six of these have children.

These calculations, and the worked example we have been given, take no account of childcare costs, although we are promised that these will be factored in at some future point—I trust before Report. Will the new calculations take account of the reduction from 80 per cent to 70 per cent on the debit side, as well as the extension to parents doing mini-jobs on the credit side? I suspect not, because this is one of the cuts already implemented, which can conveniently be ignored in impact statements.

Fortunately my colleague Donald Hirsch, of the Centre for Research in Social Policy, has done some calculations for the Resolution Foundation and Gingerbread which take account of the cut already made in support for childcare, as well as the policy announced recently. He has kindly allowed me to use them, even though I do not believe that they are yet in the public domain. One example illustrates well the nature of the disincentives faced by some second earners. He calls it the “hours trap”. He gives the example of a parent with a low-paid partner. She takes a job at the minimum wage of £6.08 an hour for 16 hours a week to supplement the family income. In 2010, of the £97.28 she earned, she retained £46.19 after taking account of deductions and net childcare costs of £11.20. This represented a withdrawal rate of 53 per cent. Under universal credit, the much faster withdrawal of support for second earners, together with the recent cut in childcare support, means that much more of the extra income will be lost—she will retain only £17.25 of the £97.28, i.e. an 82 per cent withdrawal rate.

Admittedly, for those working fewer than 16 hours a week, an 82 per cent withdrawal rate is an improvement on the current situation, because of the extension of help with childcare—but, as Donald Hirsch observes, it is not an improvement that is likely to get many second earners out to work.

There are three main reasons why I believe we should do what we can to maximise work incentives for second earners. The first concerns the Government’s own anti-child-poverty strategy. It is clear from the statistics that two-earner families with children are much less likely to be in poverty than single-earner families. Without a separate disregard, it will be very difficult for second earnings to fulfil their potential as a route out of poverty. The latest analysis of the official statistics by the Institute for Fiscal Studies shows that the child poverty rate after housing costs drops from 18.9 per cent in couples with one full-time worker to only 5.1 per cent in couples where there is also a part-time earner, and 2.1 per cent where there is a second full-time earner. Moreover, if we take a dynamic perspective, as Ministers encourage us to do, it underlines the potentially protective function that second earners can play in two main ways. If the first earner—usually, still, a man—loses his job, a partner’s earnings can help the household cope while he looks for another job. When the mother is in paid work when living with a partner, she is better equipped to remain in the labour market should that relationship break down and should she then form a lone-parent family household—that family is then less likely to be in poverty. She is also better equipped to respond positively to the extension of conditionality to lone parents with young children. A second earner disregard could thus help achieve the Government’s aim of reducing so-called welfare dependency among both two-parent and lone-parent families, because ultimately it offers a potential route out of universal credit as well as out of poverty.

Secondly, there is the question of implications for shared parenting, a Government goal articulated in their consultation on modern workplaces, which I very much welcome, even if its recommendations on parental leave look to be under threat according to recent newspaper reports. The equality impact assessment acknowledges that,

“it is possible that in some families, second earners may choose to reduce or rebalance their hours or leave work”.

However, it reassures us:

“In these cases, the improved ability of the main earner to support his or her family will increase the options available for families to strike their preferred work/life balance”.

This, it suggests, could be a “dynamic result” that improves family life.

It appears that what exponents of nudge like to call the architecture of choice is being tilted towards a more traditional male-breadwinner model, which may not necessarily reflect the preferred work-life balance of both members of a couple and could weaken women’s labour market positions. According to the equality impact assessment, this traditional male-breadwinner model apparently improves family life. Indeed, at a Social Security Advisory Committee stakeholder event, held at around this time last year, I questioned the Secretary of State about this. He answered in terms that suggested he regarded a return to such a model as a good thing, although I accept that this may not be the Minister’s view.

Moreover, I question the impact assessment’s assertion, made in this context, that universal credit policy is gender-neutral. It states:

“Where men and women are in the same circumstances they are treated equally under Universal Credit”.

We should hope so but in a gender-unequal world men and women are often not in the same circumstances in either the family or the labour market, so the effects of denying second earners a disregard are not gender-neutral. Therefore, I am not convinced that the Government are fulfilling their legal duty to promote gender equality here. Perhaps the Minister will tell us what advice the department has taken on this.

Thirdly, the Government nevertheless seem quite sanguine about the position of second earners as they consider any such risk of decreased work incentives to be justified. The Government are concerned only with incentives at the level of the household, rather than the individual. Indeed, they tend to conflate the two. In an Oral Answer in the other place, the Secretary of State stated that,

“universal credit will provide much better incentives for the first earner, giving a greater choice to the household about how it wishes to spread its income”.—[Official Report, Commons, 28/3/11; col. 2.]

This, together with the quotation that I read from the equality impact assessment is an example of what some economists called a unitary household perspective. It ignores the fact that couples are made up of two people and that the autonomy of each is important. Improving incentives for a first earner, even if on behalf of the couple, does not compensate for worsening them for a second. The choice of one partner is being enhanced at the expense of the other. In an earlier sitting, the Minister observed astutely:

“Effective choice exists only when the balance of power is equal between tenants and landlords”.—[Official Report, 20/10/11; col. GC 169.]

The same is true within those households where an imbalance of power exists, often reflecting the economic power of each partner.

A study of BME maternal poverty conducted for Oxfam found that the women interviewed were keen to take paid work as it is the best way to improve their household finances. However, in addition to the usual barriers, such as childcare, some of them faced their husbands’ attitudes. For the women who were in work, their jobs were an important source of self-esteem and independence, and they often had greater access to household resources than those without paid work. Although more traditional attitudes to gender roles might be more common in some BME households, they are not confined to them.

Consider the situation of a couple where the man is in low-paid work and receiving universal credit. He prefers his partner to be at home, looking after the house, the children and him. She would like a part-time job, perhaps to achieve a modicum of financial autonomy, to enjoy the sociality of paid work or to improve the household finances. Her bargaining position is not strong if taking paid work will reduce his universal credit and he can point out that her earnings will not bring much extra money into the household. If she could say that she and the household can keep a chunk of her earnings before they are affected by the taper, it would increase her bargaining power and make her choice to take paid work more effective, following the logic of the Minister’s own argument about choice and power imbalances.

Finally, there appears to be something of a tension between the Government’s apparent lack of concern about the reduced incentives faced by second earners and the treatment of this group in the new conditionality rules, which we have discussed. In particular, the in-work conditionality rules will require a couple to earn twice as much between them as a single person in order to escape sanctions. Yet if the first earner is unable to earn enough to do so alone, a second earner’s wages could be the most viable means of complying.

In short, whether looking at it from the point of view of the universal credit architecture, the Government’s child poverty strategy and its ambitions for shared parenting, or of financial autonomy for women and effective exercise of choice for them with regard to paid work, a second earner disregard represents a cost-effective enhancement to universal credit which, arguably, could eventually pay for itself. In a previous sitting, the Minister gave some costings for a second earner disregard. Are these gross or net costings? In other words, do they take account of the increased tax and national insurance and reduced universal credit payments that could flow from more second earners moving into paid work?

The Minister also said that this is a matter not of principle, but affordability. I hope that I have convinced him and the Committee that there are important principles at stake and that he will therefore go further than before in accepting the case that has been made in principle and assure the Committee that he would look favourably on such a disregard as and when the resources are available, taking into account the point about net and gross costs. I beg to move.

--- Later in debate ---

[Lord Freud]

We are going round in circles. We all know the point that is being made. We all know the reality of the iron triangle. We are wrestling with it. This is what we can afford to do right now. Some people may be caught in such a position and we make the point that some people will have higher MDRs—a lot will not. As we improve the position when we have funding, and have proof of the dynamic benefits that may free up main funding, we will be able to apply them. However, this is the best we can do right now. I would love to do more, but I cannot find any more money.

[Baroness Lister of Burtersett]

My Lords, I thank noble Lords who have supported the amendment with some helpful additions to the argument. I do not know whether any other noble Lords spotted it, but the Minister asked the “noble Lord” to withdraw the amendment. I do not know if he was making a Freudian slip and trying to reduce the bevy of Baronesses opposite him.

I should like to make a couple of more critical points before I come to a more positive one. I can understand the Minister’s frustrations that there are other parts of government that will not allow the department to do its calculations on a dynamic basis, but I was a bit disappointed that the department’s thinking was not dynamic in relation to this matter and it was not prepared to acknowledge that there could actually be positive dynamic effects through a second-earner disregard—whether they be anti-poverty or paid work effects, and all the things that the department is in favour of. I do not know whether these are just the noble Lord’s own arguments or those that are simply in the brief that comes from the various documents we have been given, but it seemed to me that there was still the unitary-household approach and an inability to understand that while couples are couples, they are also individuals within couples. I ask the noble Lord to go away and think about that a bit more and about the importance of individual autonomy within the context of coupledom. I would have been even happier if he had been able to go one step further and commit himself on the second-earner disregard in the longer term.

We have, however, made progress today. What the Minister has said takes us beyond some of the other things which have been said. I now take it as the official departmental view that it will, in the fullness of time, consider improving incentives for second earners, either through a second disregard or through the taper, as and when resources permit. I therefore beg leave to withdraw the amendment.

Amendment 52C withdrawn.

--- Later in debate ---

[Lord Freud]

My Lords, the intention is that the housing credit will broadly follow the current rules that apply in housing benefit. For someone to be entitled to the housing credit element of pension credit they will need to live in Great Britain, have reached the pension credit qualifying age and be liable for housing costs that relate to the accommodation they live in. The extent to which a person is liable for the housing costs, what constitutes the accommodation, how we treat temporary absences from home and how we calculate the amount of the housing credit will also be included in regulations.

A person may be entitled to the housing credit whether or not they receive the guarantee credit or saving credit element of pension credit. This schedule also enables us to specify that rates of support may differ by area. So, for example, different housing allowance rates can apply in different parts of the country.

In introducing the new housing credit we will, however, look for opportunities to streamline the benefit and align rules wherever possible. This includes extending pension credit provisions to the housing credit wherever possible. One such area includes assessed income periods. These are specified periods during which a customer is not required to report any changes in their requirement provision—namely, their occupational pensions and capital.

The schedule provides us with the flexibility to determine in what circumstances retirement provision will not be fixed in relation to the housing credit regulations, which will be subject to the appropriate level of scrutiny. The schedule also contains the consequential amendments to other legislation needed as a result of the abolition of housing benefit and the introduction of the housing credit.

This probing amendment would remove flexibility and would work to the detriment of those who, through no fault of their own, require assistance with their housing costs while at the same time making the system vulnerable to manipulation.

The noble Lord asked a large number of detailed questions on this matter. I can deal with some of them but I will answer most by way of a letter. On direct payments to landlords, it is not our intention that pensioners would be part of that regime, which is for working-age people. We are not planning to change the SMI arrangements for pensioners. Uprating will be done by CPI, as it will be with working age. We need capital limits in the system overall, clearly, and we need to determine what the right rates should be. They should be at a level where we do not see a substantial change in practice. As the noble Lord pointed out, this is now done by a tariff income process and, as we move towards an overall position in the housing credit, we need to get the equivalence.

I think that deals with the bulk of the questions. There are one or two more, which I will answer by letter, but, given the assurances about how we intend to use these powers, I urge the noble Lord to withdraw the amendment.

[Baroness Lister of Burtersett]

My Lords, will the Minister make sure that that letter includes the answer to a question which was asked a few sessions ago but to which the Committee never received an answer? It was not specifically about pensioners but was a more general question about whether mortgage interest will be paid as part of the universal credit or to the lender.

[Lord Freud]

We are looking very closely at the support for mortgage interest. I can let the Committee know that we are planning to consult on how we do that. Rather than include that point in the letter, I will make sure that noble Lords are informed when that consultation paper comes out.

--- Later in debate ---

We could do more to obtain a balance, particularly in relation to CPI versus RPI, over the long term. Someone will need to hold the ring and look at the long-term changes that will come into being as a result of these matters. If we cannot have an office for social protection then perhaps a body under the Social Mobility and Child Poverty Commission could be spun into the remit in a way that would give me the assurance I am trying to find without the bureaucracy of setting up an extra quango. I beg to move.

[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.

--- Later in debate ---

[Lord Freud]

My Lords, I share the noble Lord’s concern that the benefits system must be fair, efficient and affordable, which is indeed why this Bill is before the Committee today—to ensure that benefits are well targeted and fair and the system is simple to understand and simple to administer.

The first of these amendments would introduce a claimant regulatory body for universal credit. We are committed to involving claimants throughout the development of universal credit. This involvement will ensure that issues are known, understood and mitigated as universal credit is being built. As part of this, we are already conducting a programme of research among a broad range of future claimants and are testing the design of the claimant commitment with claimants, front-line staff and stakeholders. This process will continue over the coming months to ensure that claimants have real and sustained input into the creation of the new benefit.

The other amendment in this group would create a wider office for social protection, looking at the benefits system as a whole. There are already a number of other bodies with oversight of the benefits system and any changes made, not least the Social Security Advisory Committee. As well as scrutinising regulations, the committee comments on a range of operational matters, especially in relation to claimants’ interests. While I am grateful for the contributions of the noble Baroness, Lady Lister, and my noble friend Lord Kirkwood, I am not convinced that another body is needed. The coalition Government are committed to reducing the number and cost of quangos, and increasing accountability by transferring the responsibility for key decisions on public policy back to Ministers. Ministers are held to account in Parliament, including by powerful committees such as the Public Accounts Committee and the Work and Pensions Select Committee, not to say the Chamber of the House itself.

I do not intend to reverse this direction of travel, and I would urge the noble Lord to withdraw his amendments.

[Baroness Lister of Burtersett]

My Lords, before the Minister sits down I would like to make clear that I was not arguing for a separate body. I was arguing that Social Security Advisory Committee could perhaps be asked specifically to consider, on a regular basis, the issues contained in the noble Lord’s amendment—possibly in its annual report—namely the adequacy of the different elements of the system, the sustainability and the way the different elements of the system fit together. It would be very helpful to have that kind of annual overview. Perhaps the Minister can take that away and consider it.

[Lord Freud]

My Lords, I know it is not our House, but I point out that the Work and Pensions Select Committee has that remit—a very direct remit to look at the system overall. If you are looking at how individual claimants are treated, we have a process of tribunal and independent review. There are a whole number of different processes.

Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Tuesday 1st November 2011 Grand Committee

Moved by

[Baroness Lister of Burtersett]

51EA: Clause 22, page 10, line 32, at end insert—
“(4) Prescribed circumstances should include a claimant who is—
(a) a responsible carer for a youngest child aged 5 and 6, and(b) is undertaking further education and training up to and including level 3 until—(i) their youngest child reaches the age of 7, or(ii) their further education or training course ends.”

[Baroness Lister of Burtersett]

My Lords, I shall speak also to Amendment 71JA. These amendments have been tabled with the assistance of Gingerbread. The aim is to protect the opportunity for responsible carers to access further education and training up to and including level 3 when their children start school without facing the risk of sanctions. This means that responsible carers would be deemed to be fulfilling work search and availability requirements while studying until their youngest child reached the age of seven or the course ended. These amendments strike me as eminently reasonable, and indeed should be seen as totally consistent with the Government’s own anti-child poverty and social mobility strategy which emphasises the importance of education and training and the contribution they can make to ensuring that paid work represents a genuine path out of poverty.

The level to which a person is educated has a significant influence on how much they can earn and their ability to move up the earnings ladder. As Gingerbread points out, it is well established that holding a level 3 qualification can provide substantial economic value, particularly in relation to marginal wage returns. For example, only 25 per cent of people aged 25 to 29 holding a level 3 qualification are earning less than £7 per hour compared with 55 per cent of those with a level 1 qualification, and 37 per cent of those at level 2. Level 3 qualifications include access courses to HE as well as vocational courses. It makes long-term sense to enable lone parents in particular to improve their educational qualifications so as to maximise their labour market opportunities.

Until recently, lone parents on income support could complete a full-time further education course up to and including level 3 in preparation for entering the labour market or higher education. This meant that lone parents on income support had a two-year window of opportunity to access training with a fee remission when their children started school and before moving on to jobseeker’s allowance when their youngest child turned seven. As of September 2011, lone parents claiming income support are no longer eligible for fee remissions when accessing further education. Lone parents on income support will now have to self-fund as well as pay for any necessary childcare if they want to improve their chances of employment by undertaking training. Instead, fee remissions are available for individuals in receipt of JSA, but claimants will be required to continue actively seeking work while training, and if offered a job, be prepared to drop out of a training course or face a payment sanction. JSA work search and work availability requirements severely limit lone parents’ ability to train and gain skills that could help them find higher paid employment that is sustainable, and to make the most of opportunities to progress once working.

This modest amendment raises larger questions about some inconsistencies in government policy. On the one hand, as I have said, education and training are key elements in their child poverty and social mobility strategies. On the other hand, they are pursuing what in the jargon is called a “work first” rather than a “human capital development” approach to moving people from benefits into paid work. One of the risks of such an approach, identified by, for example, Dr Sharon Wright of the University of Stirling in a recent article, is that it can mean that large numbers of benefit recipients end up cycling or churning between unemployment and temporary low-paid jobs without advancement. Without the opportunity to train, lone parents face just such a future of low paid, insecure employment, cycling between in-work poverty and out-of-work benefits with little prospect of their financial or social circumstances improving. In our last session, we heard how they might then face in-work conditionality if they do not manage to improve their position to get themselves above the threshold which applies to them.

This amendment would go a small way to addressing the issue by ensuring that responsible parents, in particular lone parents, are better placed to advance in the jobs market and thereby lift themselves and their families out of poverty. I beg to move.

[Baroness Meacher]

My Lords, I support Amendment 51EA moved by the noble Baroness, Lady Lister. I was impressed when the Minister mentioned in an earlier debate that providers of support to claimants will be rewarded financially if their clients find a job and remain in it for two years. That claimants should achieve long-term employment is clearly the objective of the Minister and the Government. I have no doubt that it is a fine objective. Certainly it is supported by me and, I am sure, by other noble Lords around the table. However, this clause seems to run absolutely in the opposite direction. It encourages claimants with young children to rush into a low-paid and probably insecure job rather than taking the opportunity to train and prepare themselves for long-term work.

Will the Minister explain the rationale behind the lack of protection for carers responsible for very young children aged five or six while they complete a training course up to level 3? Does he see the apparent inconsistency between the aim of placing people in long-term employment, which we all support, and incentivising them to take low-paid work rather than educate and train themselves in order to better their future? I will be interested to hear what he says about that.

My second point is about the unreliability as an employee of a primary carer of children who are in the first two years of school. Having had four children, I have strong recollections of the childhood illnesses they pick up in the early years: for example, a cold, an infection or German measles. If you have four children, it is not one lot of German measles but four, one after the other. Employment? Forget it. This is a serious point. The strain of working when your young children are starting school and picking up all those bugs has to be experienced to be fully understood. In education and training, one can catch up when life settles down and the kids go back to school. I know because I did it. I did an economics degree when I had three children under seven.

We know that the Minister is under enormous pressure to deliver cuts through Parliament, but perhaps this issue is worth fighting for in terms of the Government's own admirable priorities of encouraging claimants to undertake training in order to improve their long-term employment prospects for the future.

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[Lord Freud]

My Lords, we are getting into philosophy here. I accept the point and have always been uncomfortable with the “work first” philosophy. It worked in the short term, as the noble Baroness has said, but the evidence is that, in relative terms, we have a poor workforce because we have too many people with no skills and too few with intermediate skills by comparison with our main competitors. We have to think about the balance between “work first”—which does get people a job—and the risk that training is sometimes used as an excuse to do nothing. There is a difficult balance here. We have not got it right. We had a welfare-to-work system that got it completely wrong. We are trying to pull it together. I do not think that this is going to be a rapid process but everyone in this room knows that it is very important to get this right. It will take some years to get it right but we are beginning to travel in the right direction.

[Baroness Lister of Burtersett]

My Lords, I thank all the noble Lords who have spoken in support of this amendment and who have helped to push the Minister slightly further than he had intended to go when originally reading from his brief. I am pleased to know the Minister is not a “work first” devotee. I was going to say, “You could have fooled me”, but his response to the noble Baroness, Lady Meacher, has confirmed that is the case and I welcome the spirit in which the Minister has responded. Even I am beginning to pick up the ministerial nuances to understand that was a helpful response.

My noble friend Lady Hollis helpfully reminded the Committee of some of the exemptions that exist and it is helpful to have on record that those exemptions will continue. The noble Lord said that it is always possible to do training in the evening. If you are a lone mother, trying to bring up children, trying to do your job and support them in their education, and to keep them off the streets, is it realistic to think that you are also going to do training as well? It is asking too much of lone mothers when we already ask too much of them. We expect them to be responsible, in paid work, in education, keeping their kids off the street and so forth. I hope the noble Lord will come back at Report with some response to what the noble Baroness, Lady Meacher, suggested in terms of opening up the potential for the future in the flexibility of this clause.

The noble Baroness also raised a question about the context of government expenditure cuts. It is not clear that this is going to cost very much to extend beyond the exemptions that already exist for this group. It would be helpful to know what the cost would be of doing it now rather than at some future date. Perhaps the noble Lord could let the Committee know. I suspect it would not be very much at all. In the spirit of the human capital approach, I am not sure what the stumbling block is to doing it sooner rather than later. I beg leave to withdraw the amendment.

Amendment 51EA withdrawn.

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[Lord Freud]

My Lords, it is important that the coalface does not do the sanctioning. It is important that there are really well trained people doing this. This is a complicated area that needs to be got right. These are some of the most highly skilled people in Jobcentre Plus aiming to do that with all these supports.

In response to the concerns raised by the noble Lord, Lord McKenzie, on Amendment 51FB, I want to make it absolutely clear that there are no benchmarks and no targets for sanctions referrals. Jobcentre Plus gathers a range of management information to support its work, as you would expect us to do. On the issue of numbers, over the last year, the number of sanctions and disentitlements rose by around 270,000 from approximately 490,000 in 2009-10 to around 760,000 in 2010-11. There are a complex range of reasons for this increase, including the introduction of new requirements, a slight increase in the average claim duration and a refreshed approach to monitoring compliance with requirements designed to maximise claimants’ chances of finding work. A particular reason is due to the 2010 rule change that led to a sanction rather than disentitlement for failing to attend an employment interview. The number of sanction referrals to decision-makers is a key piece of management information. It helps local mangers assess how consistently JSA conditionality and sanctions are being administered in their area. Managers may compare rates of referrals across different areas when analysing the data, but there is no benchmark and certainly no right or wrong level of referrals. The collection of management information also allows the department to monitor and evaluate the impact of sanctions. I urge the noble Lord, Lord McKenzie, to withdraw the amendments.

[Baroness Lister of Burtersett]

My Lords, my attention may have strayed, but did the Minister answer the question of the noble Lord, Lord Boswell, about the reports over the weekend that fines deducted from benefits are going up to £25, which seems to be a draconian response in the context of the riots in which we read about it? Is this something that can be done by regulation, or will it be an amendment to this piece of legislation? It is an issue about which some of us are very concerned.

[Lord Freud]

My Lords, the press reports were about the level of deductions to pay fines and whether the current limit was right for people who had committed a crime and been fined. Although this is breaking news, this is not an area I am confident we will consider in this particular Bill because it is about fines. It is not a matter today that we will need to consider.

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[Baroness Sherlock]

This is the last time that I shall intervene; I shall stop. I want to come back to a point raised initially by the right reverend Prelate: one of the problems, as I know the Minister understands, is that in areas of mental health a lot of problems are not diagnosed and are not necessarily known to be such problems. They can present as behavioural problems but in fact these have underlying causes that may, complete rationally, be wholly unknown to decision-makers and the person themselves may not be willing to disclose them. I am not expecting decision-makers to be able to know that in advance; I am more interested in how the system can deal with that if at some point this information surfaces. It may be that I have simply misunderstood the explanation that the Minister has given. I would be grateful if he could clarify it for me.

[Baroness Lister of Burtersett]

Is my noble friend’s point not that it is at the point where someone has said they will engage with the regime that you are more likely to achieve that outcome if you then withdraw the sanction? You have achieved your end but there is still a sanction. I do not think that the Minister has addressed that point.

[Lord Boswell of Aynho]

I am sorry for the Minister being put under, I think, unreasonable sanctions or pressure himself, but I suggest that it might be unwise to get into a situation either where we were softies and were not prepared to take these things seriously or where, in circumstances where someone had been sanctioned, if they were to get into the frame of mind of saying, “There is nothing to be lost; I shall carry on because it’s going to happen to me anyway”. There ought to be at least an opportunity for at least a negotiation on a restart of compliance.

--- Later in debate ---

Amendment 52A not moved.

[Baroness Lister of Burtersett]

I will just stay standing until my noble friend Lady Howe is here to move her amendment.

[Baroness Hollis of Heigham]

Perhaps we can ask the Deputy Chairman of Committees to inform the usual channels that it is not possible for us to get down to vote and back up again given the queues of people voting, as well as make oneself comfortable, in 10 minutes. I wonder whether we could ask, through the usual channels, whether 15 minutes might be more acceptable.

Amendment 52B

--- Later in debate ---

[Baroness Howe of Idlicote]

My Lords, I am delighted to have actually made it. With regard to the previous amendment and the proposal for pilots, it may well be that pilots are relevant here, too.

This amendment would introduce a specific earnings disregard within the universal credit to ensure that carers juggling work and care are not left worse off as a result of the new system of disregards. Approximately 250,000 carers currently in receipt of the carer premium to means-tested benefits such as income support, will be moved to universal credit. Under that, the earnings taper will be more generous than the withdrawal rate of existing benefits. Many claimants who are in work, including many carers able to juggle work and care, will be able to keep more of their benefits as they earn. However, this will depend on which earnings disregard they have access to and their level of earning.

Under existing plans, it appears that certain groups of carers would see the size of their earnings disregard in universal credit reduced, compared to their existing income support disregard. Currently, individuals in receipt of income support are eligible for a £20 a week earnings disregard, that is £1,040 a year, which allows them to earn £20 a week before their benefits start to be withdrawn. The Government have announced the following disregard groups for universal credit claimants, with approximate disregard levels: for a single person without children it is £700, about £13.50 a week; for a couple it is £1,920; for a lone parent £2,260 plus £520 for the first child and £260 for the second and third children; and for single disabled people or a couple where at least one person is disabled it is £2,080.

The Government have said that, taken together with the taper, this would leave couples, singles, lone parents and disabled people significantly better off in low-paying jobs. That is good as far as it goes. However, it does not apply to single carers, who currently have access to £20 income support through receipt of the carer premium, but who would be able to access only a basic single person disregard of about £13.50 a week under universal credit. Although £13.50 would be an improvement for unemployed single people being moved onto universal credit from jobseeker’s allowance, where they currently receive only £5 a week disregard, it would see the earnings disregard for single carers on income support drop from £20 a week, that is £1,040 a year, to £13.50 a week, or £700 a year.

Those carers who would see their disregard reduced would be those unable to access the higher disregards for couples, lone parents and those with children or covered by a disability disregard. Carers losing out would be those living on their own, who do not have children and who are caring for a disabled person who does not fall within their universal credit household. This latter group includes carers looking after a disabled or elderly friend or relative living elsewhere and carers looking after an adult disabled child, a parent or other elderly relative living with them but who is not considered to be within the same household for the purpose of universal credit.

The Government have estimated that around 20 per cent of households that receive means-tested benefits and include a carer would not have access to any of the higher disregards for couples, lone parents or households that include a disabled person. With approximately 250,000 carers on means-tested benefits, this would leave approximately 50,000 carers able to access only the lowest earnings disregard if they were able to juggle work and care.

I end with a case study to put this in perspective. Sheila is on income support and cares for her mother, who is 58, has early-onset dementia and receives disability living allowance. Sheila is single and has reduced her working hours as a librarian to just two hours a week. She currently earns £20 a week and, because of the existing £20 disregard, her benefits are unaffected. Under universal credit she would be eligible only for a single person's earnings disregard of £700 a year—around £13.50 a week. Sheila's earnings above £13.50 would be subject to the universal credit taper, which would mean that she would be £15.75 better off from her £20 earnings. She would be £4.25 a week—£221 a year—worse off than under the current system even though she would be earning the same amount.

I will not go on to outline the full impact because I have given an impression of what it would be. I look forward to hearing how this unfairness can be tackled. I beg to move.

[Baroness Lister of Burtersett]

My Lords, I am pleased to support the amendment moved by the noble Baroness, Lady Howe of Idlicote. I am glad that she was able to get to her place in time. I welcome the fact that a single person's disregard was included in the latest round of announcements about universal credit. I also welcome the more generous disregards being made available for most recipients.

I have banged on for many years about the importance of disregards. For me, this is one of the plus signs of universal credit. However, the interaction with housing costs and the complexities that will be created have qualified my enthusiasm for the new disregard regime. It sullies the supposed simplicity of universal credit. I came across some of my noble friends one evening last week wandering around in a state of utter confusion, trying to understand various calculations that we had been given on disregards. I should add that these noble friends are extremely expert.

Just how complex the calculations are was brought home to me by Sue Royston of Citizens Advice, who kindly e-mailed me to point out the implications for carers. I will read out what she said because if I try to paraphrase it I could get in a hopeless mess and get it all wrong. She wrote:

“The proposed levels of disregards have added a whole new area of complexity ... The new disregards have given single adults a disregard floor of £13.50. I have assumed in the calculations that CTB will pay council tax in full for those on JSA or ESA levels and that any excess earnings will be clawed back at a 65% taper as I would be very surprised if any Local Authorities were more generous than this. For the first £13.50 a single claimant will not be subject to a taper of UC but will be subject to a CTB taper so will gain 35% of their earnings. However, every £10 they earn beyond that will be subject to a taper of 35 per cent from universal credit and will then be subject to a further taper in council tax benefit, leaving them with a gain of £1.22 for every £10 they earn … a single carer who at the moment can simply earn £20 and keep all £20 as well as their benefits in full will now have to earn over £55 even to get a £10 gain if they pay council tax at £18. When someone is no longer subject to the combined taper will depend on the amount of council tax they are responsible for paying”.

She goes on to observe that:

“People will have to go through complex calculations to work out given extra costs of working, what level of hours they can afford to work and how much they will gain at different levels of income”.

I hope that I have not lost noble Lords in that, but if I have, it makes the point that this is extremely complicated. If we cannot understand it, how do we expect recipients and carers who are trying to juggle work and care to do so?

Juggling work and care is no easy matter. I have not had to do it myself, but anyone who has done so or with relatives who have knows that it is difficult and stressful. According to Ipsos MORI research commissioned by Carers UK and the DWP for Carers Rights Day 2009, about one in six carers had given up work or reduced their working hours in order to care. A major barrier is the availability of suitable replacement care. In a separate survey and research by Carers UK and the University of Leeds, over 40 per cent of carers who gave up work did so due to a lack of sufficiently reliable or flexible services. A similar percentage, 41 per cent of those surveyed, said that they would rather be in paid work, but that the services available do not make a job possible. I am not saying that a disregard will magically create these services, but it would certainly help to pay for the things needed to support the combining of paid work and care. We know the arguments around childcare, but we seem to forget them when we talk about other forms of care.

There is evidence about the stress and ill-health suffered by carers who do this juggling act, and of course we are talking about more women than men here. That is because while,

“women represent 58% of all carers, they make up 73% of carers on benefits. They are substantially less likely to be in work. One third of heavy-end male carers are in full-time work, but only 13% of heavy-end female carers are working full time”.

I, too, will end with a case study which I have been given by Carers UK, and I have a couple of questions.

“Cheryl is 45 and lives in Stoke on Trent—she has been her elderly father’s full time carer since her mother died in 2008. Spinal problems, a heart condition and arthritis mean her father needs full time care so he has come to live with Cheryl, her husband and their 5 year old son. Alongside providing childcare and supporting her father with everything including eating and personal care, Cheryl works for an hour on three evenings each week as an NHS cleaner, once her husband is home from work and can support her Dad and son. The only social care support she gets is six hours of respite care each Monday—time she uses to do food shopping and spend some time with her son who she hardly sees in the evenings. She wants to work more”—

clearly she has the same philosophy as the Government in that she believes in paid work—

“but has no one else to look after her Dad, can’t afford replacement childcare and would have to find a different or second job as her current employer is not able to give her more hours. Any work has to fit around her son’s school hours, school holidays, her husband’s working hours and his ability to provide childcare and her father frequent doctors, physio and hospital appointments during the day”.

That gives a flavour of how difficult life can be for carers. As I have said, a more generous disregard is not a magic wand, but it could ease that life and it is a way for the Government to say, “We recognise that the position of carers is different from that of other single adults”. It has been recognised in the past that there is a case for a higher disregard for carers.

Can the Minister explain why carers appear to be the only group whose earnings disregard will be reduced as they move on to universal credit? Not surprisingly, there is a feeling that that is discriminating against carers. Secondly, what assessment has been made of the impact on carers and particularly on their work incentives?

Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Wednesday 26th October 2011 Grand Committee

[Baroness Drake]

My Lords, I support the amendment and come back to its detail; my noble friend indicated that it was a probing amendment. This is an opportunity to raise significant issues about in-work conditionality. Where a welfare system has to balance rights and responsibilities, under universal credit those in work will be embraced by an in-work conditionality of some complexity which neither they nor their employers will previously have experienced. From the emerging details of in-work conditionality it is clear that it will give the Government significant discretion over a sizeable section of the workforce, and powers to follow through with sanctions that will affect people's lives very significantly.

This is a novel discretion for three reasons. It will impact on a much greater volume of people; it will impact on existing in-work relationships; and it will require Jobcentre Plus people or any outside providers to engage with large numbers of companies with which they have previously had no engagement.

Setting and enforcing what is a reasonable condition, particularly in terms of increasing hours or requiring people to seek and change their jobs, must be sensitive to a range of factors: for example, local and regional labour markets, and different sectors and their employment practices. If an employer puts their employees on short-term working rather than making them redundant, is that a good thing or will it attract conditionality requirements? How will it be handled? What will happen when people have atypical or variable hours work contracts? Over what period and in what manner will earnings be averaged to assess compliance with income thresholds on conditionality?

In requiring people to work more hours or seek a higher-paid job, it is important to ensure that childcare and conditionality interact fairly. Parental need for confidence in the care of their children needs to be respected. My noble friend Lady Hollis moved in on some detailed concerns in this area. Any casual observation of female labour market statistics will show two peaks of part-time working by women. They coincide with key caring periods. Part-time working in the UK is part of the systemic solution to childcare, particularly for single parents. One cannot look at conditionality on the one hand without looking at the nature and characteristics of childcare in the nation as a whole. How will the sanctions regime be applied? How will it impact on the children of those who are subject to sanctions? How long will people and families be given to adjust to any new requirements and conditions, particularly if they come on top of a period of compulsory redundancy?

What we see from the details coming forward is the micromanagement of the work patterns of potentially millions of people, and the application of wide discretion that will need a considerable set of guidance notes and competences to apply the conditionality. The staff making these in-work conditionality assessments will have no previous experience of doing this. It is a novel area in its scale and complexity. No doubt in answer to my questions the Minister will say what is intended or that the matter is work in progress. It is pretty clear that an awful lot of work is still in progress. I say that not to appear negative but to say that the Bill has the effect of giving the Government considerable discretionary power over people in work.

Parliament needs to be satisfied on three issues: that the capacity and capability to implement the proposed in-work conditionality is there; that there is confidence that the discretion will be applied consistently, fairly and proportionately; and that there is a high level of confidence that there will be no inequalities of treatment or impact in the outcomes of applying that discretion. Because conditionality is now going to be applied to people who believe that they are already making a contribution, they will have to experience a different perception of the contribution they should make in terms of being in work.

I want to pose two questions for the Minister. First, do the Government intend to pilot in-work conditionality before they introduce it nationally? Secondly, would any introduction consequent on those pilots be both gradual and incremental so that experience, knowledge and skill can be built up by those assessing claimants? Thirdly, what will be the reporting to Parliament about the level of confidence that this complex system of in-work conditionality can be applied fairly and proportionately?

[Baroness Lister of Burtersett]

My Lords, I would like briefly to follow up on that because this takes us into largely uncharted waters, so we have to be sure of what it is that we are doing. I was struck by the research report, Perceptions of Welfare Reform and Universal Credit, which states that:

“Many part-time workers were surprised that the Universal Credit proposition addresses them as they tended to perceive that they were already doing their bit and felt a strong sense of entitlement to tax credits”.

I think that they found the idea that conditionality was going to apply to them quite disturbing. There is a real danger here. The Government talk a lot about not wanting an overly oppressive state, but I fear that many workers will experience this as just that.

I have two questions for the Minister. First, my noble friend Lord McKenzie mentioned the equality impact assessment. I understand why the Government are using earnings rather than hours as the threshold—because they want to get away from the in-work/out-of-work distinction—but in doing that, as my noble friend said, someone who can earn more will find it much easier to meet the threshold. We know from all the evidence that men are more likely to be able to do this than women, non-disabled people are more likely to do it than disabled people, and white people are more likely to do it than minority-ethnic people.

[Baroness Hollis of Heigham]

People without children.

[Baroness Lister of Burtersett]

Yes. Is there not an issue here in terms of the equality implications? How does the department see those implications?

Secondly, I know that the Minister likes evidence-based policy-making and of course will be very aware of the research report UK Employment Retention and Advancement Demonstration, which has found that gains are made by providing support for people to advance in work through this programme. It states that,

“the evaluation found that for specific populations, gains can be achieved, even for some of the most disadvantaged job seekers, and that those gains can be sustained over a five-year period. These results suggest that the core elements of ERA offer something to build on in future post-employment interventions”.

In what way is the department building on this? To me, it seems that it is going down the in-work conditionality route instead of developing the support provided in this programme.

--- Later in debate ---

[Lord Freud]

My Lords, without wishing to go against normal procedure, it might be valuable if I came in straightaway to say where I stand on this, because it might enable us to move the debate on if noble Lords know what I am saying before rather than afterwards.

I recognise the valuable job that families and friends, kinship carers, do and I recognise the difficult circumstances that they face. I had a recent meeting with kinship care organisations to understand their priorities. I am absolutely convinced that this is a key area and am currently looking closely at ensuring that this group is treated appropriately under the universal credit. There is ongoing work, in which I am deeply involved, on how they should be treated for conditionality purposes; and, indeed, there are other areas where we can talk to other departments. What the noble Baroness, Lady Drake, said resonates with me.

Formally, there are safeguards and flexibilities for this group, and, as a minimum, family-and-friends carers are covered by the same safeguards as any other parent under universal credit; with the normal limitations against imposing full-time search and availability requirements on the carers of younger children and so on. Where the work-related requirements apply, the work-related advisers have broad discretion. However, there are circumstances where it is not reasonable to expect a person to meet even a limited work search or availability requirement. Among other things, advisers will have the scope to temporarily lift the requirements for any period when a child’s needs are such that the claimant must be able to provide full-time care. The point where the older child first moves into a household can often be a very difficult period of adjustment. There is a problem, which is not directly in the hands of DWP, with holding on to a job. That is a matter of concern, especially where you have advice, often from social workers, that the job must go. The noble Baroness, Lady Drake, gave one such example. The least that will happen is that we will look at easements on a case-by-case basis, given the difficulty of having blanket rules. However, we recognise that clarity of treatment and a clear legislative exemption could be of value. As I said, I am actively considering this area, and if further legislation is required, we already have scope to make regulations, as necessary.

Given the ongoing thought that we are giving to this area, I will ask the noble Baroness to withdraw her amendment. I have jumped in early so that any other noble Lords who want to discuss this area know where I am coming from, rather than trying to convince me where I should be coming from. I suspect that I will just say, “Yes, yes, yes”, to a lot of what people are going to say, so other things would be useful.

[Baroness Lister of Burtersett]

I very much welcome the positive response of the Minister and the fact that he has clearly been talking with kinship carers and thinking about how to address the issues raised by the amendment tabled by my noble friend Lady Drake.

I just press him on his final point about doing this on a case-by-case basis. One of the recurrent themes of our discussions is the extension of discretion. I understand the value of discretion, but as the noble Lord himself has acknowledged, it does not provide the clarity of treatment that something in legislation would do. I get the sense that there may be something in future in regulations. I cannot speak on behalf of my noble friend but it would be valuable if there could be a firm commitment before the Bill leaves this House, even if it is not in the Bill, that it will be in regulation. I will not say all that I was going to say because the noble Lord clearly does not need convincing of the importance of this issue. It is one that I have become aware of only fairly recently, partly at the all-Peers meeting where a member of a kinship carers’ association spoke to us. I was very struck by their case in the way that the Minister has clearly been.

I also want to mention, if only to get it on the record, that I was at a conference at the Law Society at the weekend on economic and social human rights. A presentation was made there by the Poverty Truth Commission from Scotland. Some of its members are people with experience of poverty, some of whom are kinship carers. I was struck that it said one of the key issues was kinship care. I will not quote as much as I was going to, but the commission states:

“Kinship carers have been supporting each other and struggling for recognition and justice for many years”.

Recognition is very important for people living in poverty. This is something I have become aware of through my work on the Commission on Poverty, Participation and Power, which also involved people with experience of poverty. The kind of amendment that my noble friend proposes would have both symbolic and practical significance. It would provide that recognition that simply saying, “We will look at it on a case-by-case basis”, would not do. Having said that, for once I can hear the ministerial nuances and I know when to say thank you very much.

[Baroness Sherlock]

My Lords, I have two brief points to make. I was delighted to hear the warmth of the Minister’s response. If he is thinking about this area, perhaps I could punt two thoughts at him. First, I can see that he will be concerned that there may be a range of other circumstances that may appear similar on the face of it, where there is a disruption to the circumstance of an older child, perhaps moving house, and therefore there might be some wish to have that taken into account; for example, a family break-up where the children are suddenly moving to a different house and although the children are of school age, the disruption to the household might make the parent feel that they should stay at home; or the formation of a step-family where there is some significant upheaval in the household which might put a parent who might normally want to go out to work in that situation. If the Minister is thinking, perhaps he can think about those issues as well.

The reason he might want to think that this is a different case is that the grandparents or the other kinship carers have a choice: they do not have to take these children on.

The danger must be that they have to do so unless they have absolute assurances. That is the distinction, which is why I think there is a particularly compelling case for a legislative requirement.

Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Monday 24th October 2011 Grand Committee

[Lord Knight of Weymouth]

I want to comment briefly on this. I say “briefly” because I have the next amendment, there is more I want to say and I do not want to take up too much of the Committee’s time today. I got a bit of billing from my noble friend Lady Hayter as someone who might know something about this, which daunts me somewhat as I had intended to make a contribution more in keeping with my noble friend Lord Foulkes than my noble friend Lady Hollis in terms of knowing something about it or being something of an expert. My noble friend Lord Foulkes is, of course, the master of the probing question, rather than the probing answer.

My noble friend Lady Hayter and others have set out the quandary that the Minister and the Social Security Advisory Committee are clearly in as regards issues around whether it will be included within the cap, for example. If it is going to be part of a tapering rather than a cliff edge, I hope that extra money is added so that you are not taking money away from those who currently get free school meals. I particularly want to focus on free school meals because if I know anything about any of these things, it is about free school meals, given the time I served as a Schools Minister.

Very much in keeping with what my noble friend Lady Sherlock said, I think there is great importance in ensuring that free school meals continue to reach the child. It is a finely grained argument, but I encourage the Minister to look at whether it is possible to get the money straight to schools rather than including this in universal credit. It is important to note that free school meals are used as a proxy within the education system for all sorts of things, and I am sure in other areas as well. In particular, the level of the pupil premium in England is set by the numbers on free school meals. That presents an opportunity to the Government, if they choose to follow the side of the argument that I would advocate in terms of giving the money to schools, and, through them, to children, rather than having it within the universal credit. If the pupil premium is set on the basis of knowing how many children are eligible for free school meals within a school, it ought to be possible to passport the money for those meals to the school directly, given that most schools now operate a cashless payment system. It will then be possible to passport that money through to children's fingertips, if they use fingerprint technology, in respect of paying for their school meals, or on to their cards, if they use a card system. Either way, if they do not operate that, it is possible to get the money into schools so that we can be confident that children are getting a nutritious meal every day, which is hugely important.

I represented a parliamentary seat in Dorset for some time where I found that the health inequalities were such that a child born in my constituency had a life expectancy 10 years longer than one born in Manchester. A lot of that was to do with issues like whether or not they were getting a decent start to the day as regards food and nutrition and the quality of the nutrition that they were receiving during the day. I know that school meals are a crucial part of that. That is why, in the end, my contribution on this is to encourage the Minister to think about that aspect in terms of the needs of children to get a decent meal every day, rather than how things work within the universal credit.

[Baroness Lister of Burtersett]

I have a quick point to make in support of the very strong case made by my noble friends Lady Sherlock and Lord Knight, even if he does not want to be thought of as an expert. If the money for free school meals is paid through universal credit, could the Minister explain how families will know what part of the universal credit is supposed to be for school meals? We know from research that money that is clearly labelled for a particular use is more likely to be spent on that use, but if it is swallowed up in the universal credit, that credit may not be paid to the person responsible for ensuring that the child has money for a school meal or a packed lunch. The danger is that the money will not be spent on the school meal, with all the consequences that my noble friend Lady Sherlock has pointed out.

[Baroness Thomas of Winchester]

A long time ago, during the last welfare reform Bill, when the noble Lord, Lord McKenzie, was the Minister, I moved an amendment in favour of free school meals full stop. I think it was the highest kite I have ever flown. I was very much in favour of the benefits that it had. One of them is the startling fact that research has borne out that children concentrate far more in the afternoon if they have a good hot meal inside them, which may be the only meal of the day. This is an extremely important issue.

The other day I discovered that some boroughs are giving children free school meals in primary schools and I think that Suffolk is one of them, so good for it. I shall be interested to hear the Minister's reply.

Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Tuesday 18th October 2011 Grand Committee

[Baroness Lister of Burtersett]

My Lords, my noble friend Lady Hollis has made a devastating case. I simply want to read out an e-mail that I received from someone who stands to be affected. She says:

“We have two children. Both girls are currently living in a two bedroom flat. We have been assessed by Social Services and GP as needing a three bedroom property due to our eldest daughter’s medical and welfare needs. She suffers from frequent, severe UTI infections which can leave her very poorly and in a lot of pain. She also suffers frequently from incontinence. This is having a very serious effect on her emotional well being and indeed is having a knock on effect on the whole family as we have to go in several times a night to see to our daughter to change her bedding, give her pain relief, clean nightwear, etc”.

This family had been told that they could move to a three-bedroom flat but have now been told that they cannot because of the incipient welfare reform legislation. The e-mail goes on to say:

“The new welfare legislation means that we are no longer entitled to a three bedroom even though they have written proof that we need one. This is now putting serious strain on my family and is affecting my eldest’s welfare. I cannot fight the law, I wish I was able to. I just want people to be made aware that families like mine suffer needlessly when these legislations are made. I would love nothing more than to be told my eldest can have her own room as I know her welfare would improve dramatically. But this is not going to happen”.

When I read this I thought that it surely could not be the case. However, presumably a family in this situation will not be allowed the bedroom that they need for their welfare. I feel dreadful reading such an e-mail and I hope that the Minister feels dreadful hearing it.

[Lord Wigley]

My Lords, the case made in the excellent opening speech by the noble Baroness, Lady Hollis, did not concentrate so much on the disability side, which we will come to in another bank of amendments, but was very strong indeed. Yes, the second part of Amendment 48 applies to disability, but her main thrust was on the adequacy of supply of houses.

The noble Baroness referred in particular to the situation in rural Norfolk. I can certainly vouch for the circumstances in the areas that I know in rural Wales, where this is an enormous problem because so much social and council housing in rural areas, particularly in beautiful rural areas, was bought under the right to buy legislation of the 1980s. Many of those properties that used to be social housing are now second homes. If anyone is expected to move in order to match the circumstances of the housing benefit permitted under this legislation, such people just will not find accommodation to meet those needs. It is suggested that they will find it in the private sector, but in rural areas, particularly where tourism is a major industry, the private housing sector is dominated by the rent that can be attained in the summer months from the tourism industry. Therefore, the likelihood of finding a suitable place is remote indeed.

My fear is that so many exceptions to the proposed legislation will arise that it will not be workable. We heard about the circumstances in Glasgow and the problems of disabled people who will be caught in this. With regard to the rural dimension, the one aspect that I would like to see is the building particularly of bungalows in the proximity of villages to provide the housing need, albeit that that would be a longer-term solution, as the noble Baroness, Lady Hollis, mentioned. One knows that the one category of house in overwhelming demand everywhere is the bungalow. A programme that bought land on the borders of villages that was currently outside the development boundaries and towns into those boundaries, and that was therefore possible to acquire at an intermediate price between the market price for building land and the much lower value of agricultural land, should help to provide a stimulus for the building industry and an answer, over a period of time, for some of the imbalances in the housing stock.

I realise that this does not come under the purview of the Minister, but perhaps the Government could, in the seamless web that they create, think about that possibility as a longer-term solution.