Welfare Reform Bill

Baroness Thomas of Winchester Excerpts

Wednesday 11th January 2012 Lords Chamber

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

My Lords, I shall leap straight in on the issue raised by the noble Baroness, Lady Lister, on the assessment phase. What I was really alluding to was the upcoming sickness absence review, which is an important review of how we treat sickness absence. One of the things it has looked at is the interrelationship between sickness absence periods and the ESA regime. Basically the review sees no real reason for the assessment phase. As we look at this we must ask: are we structuring ESA and sickness absence so that it is a vulnerable or difficult process? I am sympathetic to my noble friend when he says that there might be a way through this. I want noble Lords to be aware that huge weaknesses have been found. We are pushing people through a process that puts them in limbo for a long period of 92 days or more. The sickness absence review states that that is deeply unsatisfactory, and I suspect that a lot of noble Lords in this Chamber who understand the system also believe that. In that area, I am not sure that this is genuinely the direction in which I want to go because I am not sure that it is something we want to maintain.

Moving on from that, let me set out some of the technicalities of the assessment phase. It usually ends after 13 weeks unless by that point there has not yet been a WCA determination. If a WCA has not been carried out by the 14th week, the assessment phase ends when a determination about limited capability for work has been made. So if the claimant’s assessment phase lasts longer than 13 weeks and they are found to have limited capability for work or work-related activity, the payment of additional components is then backdated. That is the existing system, which I am not that happy with. The effect would be to exclude it in terms of counting to the 365 days, or at least the 730 days depending on where we are, but in practice it does not always happen within 13 weeks and we have a lot of disparity of treatment. Even if we were to stay with the regime, it would be a pretty messy system.

I know that noble Lords hate me when I go through figures, but let me give some—I shall do my best because these figures have been running around. Purely on this basis, there is a cost of an extra £430 million cumulative to 2016-17 over the five-year period. I shall try to make a quick off-the-cuff assessment of how much extra it is when we look at it on top of the two years, and it is not actually a hugely different sum. It is £200 million on the SR period and £400 million on the total period of five years. I know that noble Lords feel that hundreds of millions are easily obtainable, but it is not an insignificant amount of money.

Moving on to Amendment 40B, the effect of this amendment would be that for existing ESA claimants, the one-year time limit would be calculated from the date the clause is commenced, and none of the time already spent on ESA would count towards the 365-day total entitlement. I want to have a word about retrospection. The noble Lord, Lord McKenzie, used the word slightly freely and in fact slightly aggressively. I was upset but not ashamed. I can understand that noble Lords are unhappy that we are taking account of days before the clause is brought into account, but this is about the question of whether noble Lords feel that this is the right approach; it is not about retrospection. Retrospection involves interfering with a claimant’s past entitlement and we are not doing that with this measure.

It is worth explaining what retrospection of time limiting would involve if we were to do it, which we will not. It would involve interfering with past entitlement to ESA. An example would be: at the date we commence the time-limiting provisions, if a claimant who had been receiving contributory ESA in the WRAG for 18 months, it would be retrospective if we demanded repayment of the extra six months of benefit he had already received because that would interfere with the claimant’s past entitlement. We absolutely are not doing anything which is retrospective in that sense. We are redefining the terms on which claimants are entitled to ESA in the future.

[Baroness Thomas of Winchester]

My Lords, perhaps I may make a small point. Were claimants who were receiving ESA last April told by the benefits office or whoever pays their benefit that it might be subject to this one-year cut-off? I ask this because the Government had already announced it in their comprehensive spending review. Were claimants warned then? I know that they were sent a letter in September saying that their claim was likely to end this April if it had started in the previous April. However, were they warned in April 2011?

[Lord Freud]

My Lords, it was a reasonably well publicised announcement by the Chancellor. There was no formal process of warning afterwards. That process began, as my noble friend points out, in September. How much warning people had is an issue, but the essential fact is that we are redefining the terms for entitlement to ESA. That happens quite a lot. Examples of future changes to entitlement include, among others, changing the descriptors to the work capability assessment.

I understand noble Lords having concerns about the fairness of the measure. Again, fairness is a matter of achieving a balance in our policy, so that as many claimants as possible who are in the WRAG are entitled to ESA for the same period.

The noble Lord, Lord McKenzie, asked for figures. We expect that, by April 2012, around 100,000 people will have been receiving contributory ESA and been members of the WRAG for more than 12 months. If the amendment were accepted, we would have another substantial decrease in our savings forecast and a real problem.

Amendment 41A would enable claimants to start a fresh 365-day period if they moved from the support group back to the WRAG—I am not sure whether we are now talking about 365 days or 730 days, so let us leave that on one side for a minute. In practice, for those claimants moving between the two groups regularly—it is funny how, when things are encouraged financially, regularity seems to increase—the amendment would be likely to mean that they would be able to remain on contributory ESA indefinitely.

We have always made it clear that, when addressing claimants in the WRAG, our aim is for as many people as possible to receive contributory ESA for the same period. This will be a period of 365 days on our original formulation and at least 730 days on the basis of the amendment that passed. Restarting that period each time a claimant moved from the support group to the WRAG would lead to inconsistent periods on benefit for claimants.

I accept the amendment that has just gone through, but, on the basis of the period—whether one year or at least 730 days—we do not think that we need to make any of these additional changes, particularly given their high cost in the current fiscal climate. I urge noble Lords not to press these three amendments. We do not consider them consequential upon each other.