Welfare Reform Bill

Baroness Wilkins Excerpts

Thursday 6th October 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, Amendment 2 seeks to attach a clear but succinct purpose to the universal credit; that is,

“to support work for those who can and provide security for those who cannot”.

Much of the focus of our discussion about the universal credit is on the former, helping people into work and closer to the labour market, but there is an obligation also to help those individuals and families for whom work is, for one reason or another, not currently reasonably practicable. We subscribe to the view of the importance of work in helping people out of poverty, in the development of their self-esteem and, as per Waddell and Burton, as being generally good for their health. This has the potential to translate at the macro level to the prospect of lower benefit costs, higher taxes and national insurance and, other things being equal, higher growth. That approach characterised the reforms, which I will call welfare reforms notwithstanding our discussion last Tuesday, of the previous Government and this Bill is a significant development of that trend. Of course, the Minister has been present in both of them.

Contrary to popular belief, it might be contended that receiving financial support from the state when unemployed and unable to work is harder now than at any time for 60 years—that is certainly the view of the Child Poverty Action Group—because the eligibility criteria for benefits have been heightened, benefits are more conditional on actively seeking work and there are tougher sanctions for non-compliance. Some of this happened on our watch as a Government and universal credit provisions go further and, in some respects, too far. We will discuss this when dealing with later clauses, but we support the concept of good and clear work incentives. We also support the requirement for those who can work to meet their obligations. There are some who need to rely on benefits and who do not lack the motivation to work, who see the benefits of work even with existing incentives. As we go through the Bill, we will seek to test that the new universal credit works for them also. These include those with caring responsibilities and health conditions, but also those who simply cannot get a job, be they from Bombardier, BAE systems, or, indeed, anywhere else.

It is worth reminding ourselves of what has gone before. If we look at the recent history of welfare reform, the Welfare Reform Act 2007 introduced the employment and support allowance and the personal capability test; the report of the noble Lord, Lord Freud, focused on the large-scale marketisation of employment services; in 2008 we saw the employment and support allowance introduced; we saw lone parents move off income support and onto jobseeker’s allowance and flexible New Deal pilots introduced to replace the New Deal 18-24 and New Deal 25+. The Welfare Reform Act 2009 established a structure for the future abolition of income support, the progression to work conditions for lone parents and partners of unemployed people, and the extension of work-related activity for employment and support allowance recipients. So hitherto an increasingly active regime has been developed. As I say, we support the concept of good and clear work incentives. We also support requirements for people to meet their obligations.

Of course, the “work first” approach is not the only model of support that countries have adopted. The “human capital development” approach would be claimed by some to be a more effective approach. The Minister often talks about universal credit as engendering a cultural change in attitudes towards work, and that is fine, but he will be aware that in some countries benefit conditionality is also being used to leverage non-employment related outcomes, such as health outcomes and child welfare outcomes. This happens in the US and Australia in particular. I understand that the Secretary of State has recently been on a trip down under. We see speculation in the press that Ministers are turning their minds to benefit sanctions, as the noble Lord, Lord Kirkwood, said on Tuesday, to address a range of other problems. Can we have some clarity on this today, and will the Minister confirm that there are no plans or intent to follow the Australian path and use conditionality for anything other than employment-related outcomes?

It would be extremely helpful when Ministers, including the Prime Minister, are discussing changes to conditionality that they do so in a measured way to avoid creating the impression that everyone on benefits is seeking to avoid work. In his speech to the Conservative Party conference, the Prime Minister said:

“For years you’ve been conned by governments. To keep the unemployment figures down, they’ve parked as many people as possible on the sick. Two and a half million, to be exact. Not officially unemployed, but claiming welfare, no questions asked”.

Nobody who has any knowledge of the benefits system could reasonably accept that as a fair representation of the situation in recent years. When we left Committee on Tuesday last week, there was a headline in the Evening Standard saying that people would have to travel for up to 90 minutes to take up work. Can the Minister say how conditionality is to be amended in this way? If everyone is to be better off in work, will this be before or after travel costs?

Of course, the universal credit is being developed in a period of rising unemployment. I do not propose to open the wider challenge to the Government on their growth strategy this afternoon, although we may drift into that, but we should use this opportunity to seek to understand how the “work first” approach of universal credit is being complemented by the work programme—the “black box approach”, which I believe is entirely appropriate.

Perhaps the Minister would take this opportunity to update us on the programme, particularly as we understand that providers are being sworn to secrecy about how it is all going. In the interests of transparency, perhaps the Minister could tell us directly how many individuals have been referred to the work programme to date, clarifying which of the eight categories they fall into. Can he also tell us a little about how the WCA and the role of Atos Healthcare are feeding into all of this? We are aware of the improvements to the WCA and Professor Harrington’s ongoing work. However, is it right that individuals are being referred to the work programme if the prognosis is that they will be fit for work in three months? Are we comfortable that the precision of “fit to work” within three months, six months or any other time period is within the competency of those making the assessment?

If this benefit is to work, it must work for all—this is very important. It must be free from stigma, and it must work in a fair yet firm way. I beg to move.

[Baroness Wilkins]

My Lords, I support the amendment, especially to say that it should benefit everybody. The simplification of benefits and plans to taper income to ensure disabled people who can work retain more of their income has been welcomed. However, there is very deep concern in the disability community that while some disabled people will gain under the universal credit, many will be made considerably worse off. In its current form, the Bill will dramatically increase disability poverty and leave many thousands of families lacking essential support.

At the moment, a disabled person receiving middle-rate disability living allowance who is found fit for work is eligible for the severe disability premium of £55 a week, whether they are working or not and if they live alone and do not have a carer. They may also be eligible in some circumstances for the disability premium of £29 per week as a single person and £41 per week for a couple, as well as the disability element of working tax credit, which is about £50 per week if they work for at least 16 hours per week. It is not unusual for someone to be eligible for middle-rate care, but to be found fit for work. For instance, it would apply to me because I can self-propel my manual wheelchair for 50 metres. Similarly, someone who is severely visually impaired from birth is quite likely to receive middle-rate care, but be found fit for work.

However, under the universal credit, the gateway for extra support for disability will not be through DLA—or in future PIP—it will be through the work capability assessment conducted by Atos for the employment and support allowance. Under the universal credit system, unless a disabled person is put in the work-related activity group or the support group, they will get no more extra help than someone who is not disabled. These people are still disabled. They still face all the extra costs of disability not met by DLA; for instance, the need for extra help with housework, extra heating, extra laundry, help with the garden if they are lucky enough to have one. We also know that disabled people are more likely to have lower earning power and to be unable to work full-time. Let us face it, in the current economic climate, few employers are going to choose to employ disabled people over the non-disabled, and yet those people are going to lose any extra help because the universal credit will be based on the extremely flawed Atos assessment.

Noble Lords will no doubt have been inundated with e-mails and letters about this as I have, demonstrating that Atos is routinely failing to identify disabled people’s needs. I am sure the Minister will remember from his visit last week to Hammersmith and Fulham Action on Disability a young woman with mental health difficulties. She had spent six years struggling to find help. She finally managed to get therapy about six months ago, and has been progressing well when she innocently attended her Atos assessment, not realising what she was up against. Atos found her fit for work. All her benefits were stopped as of last Friday and her mental state has been set back by months. She is now in debt for the first time and she is distraught.

I know the Minister is very concerned about disabled people’s fears. As he said on Second Reading:

“The most disturbing thing that I heard today was the concerns of many noble Lords about the anxiety of disabled people”. [Official Report, 13/09/11; col. 737.]

The noble Baronesses, Lady Murphy and Lady Gale, talked about how people were terrified or petrified, and that worries me more than anything I have heard. However, those fears are very justified unless this Bill is amended. I know we will come back to this many times during the course of the Committee, but will the Minister say what steps he is taking to ensure that disabled people’s fears are met? Is he considering the proposals by the Disability Benefits Consortium, for instance, to retain the severe disability premium? Does he recognise that the universal credit risks oversimplifying needs by providing for only one disregard which ignores some disabled people’s multiple levels of disadvantage? I hope he will reconsider.

--- Later in debate ---

[Lord Freud]

“Soon”, you can measure in weeks; “very soon”, you can measure in days. Well, let us say that noble Lords in this Committee can.

To pick up the point made by the noble Lord, Lord McKenzie, on the application of conditionality; in the Bill conditionality is linked only to employment outcomes, but any responsible Government will always want to look at options for achieving other outcomes for individuals, taxpayers and society as a whole. Indeed, I remind the noble Lord that the previous Government tried sanctions as a way to improve compliance with community sentences.

On the related point of the noble Baroness, Lady Hollis, on IB and ESA numbers, I need to point out that the numbers were pretty much the same in 2008 and 1997. I welcome her focus on reducing inactivity. That is exactly the right thing. One can get pretty historical going over who is to blame or who is not to blame. This is the situation we are in and I do not think that any Peer in this Room would disagree with the proposition that we now have a benefits system that traps people in inactivity through its structure, and certainly one that does not apply substantial help to people to get out of that trap. She asked me to acknowledge the continuity between the two Governments, and I am pleased to do that. I can absolutely confirm that the design of the work programme, for instance, is very much based on the fact that the employment zones pilot initiated by the previous Government was clearly the most successful pilot. We picked that up, effectively, in the work programme and made it a national programme.

While the aim is clearly to help as many people into work as we can, universal credit will also provide for those who cannot work. We have ensured that it is specified in the Bill that a number of groups will receive unconditional support without having to meet any labour market requirements. This will include those assessed as having limited capability for work and work-related activity; claimants with regular and substantial caring responsibilities; and lone parents or nominated carers with a child under the age of one.

In terms of benefit payments, the structure of the benefit is similar to existing provision for people who are out of work. We have announced changes where we believe change is needed, and the Committee will be looking closely at specific points, such as disability support, housing benefit and the household benefit cap, when we reach the appropriate clauses.

It is important to be clear from the outset that universal credit is overwhelmingly not about taking money away from people who are out of work. That much is very clear from the impact assessment, which shows that the majority of losers are people in work, many of whom have higher earnings. As I said on Tuesday, I hope that an updated impact assessment will be available soon, but the fact is that most workless people are not losers and the overall impact of the reform is progressive.

I shall here refer to the important matter raised in particular by the noble Baronesses, Lady Campbell and Lady Wilkins, of the work capability assessment. We continue to work with Professor Harrington to ensure that that assessment works effectively. Clearly, he is involving disability groups in that development in a very proactive way. I obviously know the concerns of disability organisations in this area and I will aim to explain that in much more detail when we get to Clause 12, if that would be acceptable to noble Lords. It is also slightly misleading to talk about losers when we have a package of transitional protection to ensure that there are no cash losers as a direct result of the migration to universal credit, where circumstances remain the same. I understand that noble Lords are concerned that any claimants should be worse off under universal credit, but the fact is that we cannot simplify the system while retaining each and every element of all the existing benefits. That would be simply unaffordable.

If I can touch on the introduction of the PIP on carers, which was raised by the noble Baroness, Lady Hollis, and my noble friend Lord Newton—

[Baroness Wilkins]

Does the Minister not accept that some disabled people in work are going to be significant losers as a result of the universal credit? They will be deprived of what they currently get—the £55 a week severe disability premium. That is why the organisations are so concerned. While there may be transitional arrangements, what about the people who come after the transition? The transition is only for now.

[Lord Freud]

As we restructure the benefits, the out-of-work benefits remain essentially the same. We are making some changes to simplify those, which we will come to in some detail, but rather than taking one aspect I would like to deal with the whole of this at the right time and take it through. I take the point and I will go through it in great detail when we come to the adjustments in the structure of disability benefits. I think it will become a bit random if I just deal with that now. I hope the noble Baroness will forgive me. I am not dodging it; I just want to put it in the proper context.

I want to pick up the point about the entitlement for carers related to PIP and how that will work. Today, all I can say is that we are looking at this issue very carefully. Again, I propose to discuss this in great detail when we get to Clause 75. It is a most important issue in this legislation.

We cannot afford not to simplify, as there is clear evidence that complexity within the existing system is acting as a barrier to work. It is also, interestingly, a barrier to take–up—again the impact assessment shows the clear gains for thousands of individuals that we expect from increased take-up. The analysis of the existing impact assessment shows that two-thirds of the reduction in poverty that we are looking at is a result of take-up rather than the structure of the Bill. We are not expecting that effect to change significantly when we have the new impact assessment soon.

In our proposals for a simpler benefit we think we have got the balance right between promoting work and providing security. I understand that noble Lords may disagree with us on specific issues, but I hope they will accept that the overall purpose is not in doubt. On that basis I would urge the noble Lord, Lord McKenzie, and the noble Baroness, Lady Hayter, to withdraw their amendment.