Jobseekers (Back to Work Schemes) Bill

Lord Foulkes of Cumnock Excerpts

Thursday 21st March 2013 Lords Chamber

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

My Lords, this Bill will ensure that, following the recent Court of Appeal judgment in the case of Wilson and Reilly versus the Secretary of State for Work and Pensions, the Government will not have to repay previous benefit sanctions to claimants who have failed to participate in mandatory back to work programmes. It will also enable the Government to impose benefit sanctions where a sanction decision has been put on hold because of the Wilson and Reilly case.

I shall briefly set out the details of the Court of Appeal’s judgment, but let us first be clear on what this case was not about. The court did not cast any doubt on the policy intention behind any of the schemes. In the words of Sir Stanley Burnton, one of the judges, the case was,

“not about the social, economic, political or other merits of the Employment, Skills and Enterprise Scheme”,

and the court noted that the use of mandation was appropriate in such schemes.

The policy intention of our schemes has been clear to all from the outset. I have said that the Court of Appeal judgment was not about the social or other merits of the employment, skills and enterprise scheme, but the judges were not silent on the broad principle underlying mandatory employment schemes. Lord Justice Pill said:

“A policy of imposing requirements on persons receiving a substantial weekly sum, potentially payable for life, is readily understandable. Equally, the means sought to achieve that end are understandable; claimants should be required to participate in arrangements which may improve their prospects of obtaining remunerative employment”.

Again, I say that the case was not about the policy intent of the schemes, which has been clear from their inception.

So what was the judgment about? The judgment centred on the Jobseeker’s Allowance (Employment, Skills and Enterprise Scheme) Regulations 2011, which for brevity’s sake I will from now on refer to as the ESE regulations. These regulations provide for most of the mandatory back to work schemes, including the Work Programme.

First, the court rejected the claimants’ argument that the ESE regulations were contrary to the European Convention on Human Rights—specifically, Article 4.2 on forced labour. Secondly, it rejected the claimants’ argument that the ESE regulations could not be enforced in the absence of a formal published policy.

However, the court found against DWP on two grounds. It found that the ESE regulations did not describe the programmes that they underpinned in enough detail. It also upheld the High Court’s ruling that letters sent to claimants when they were mandated to an ESE scheme were insufficiently detailed to comply with Regulation 4 of the ESE regulations. We have since laid new regulations and issued revised letters so that we can continue to mandate claimants to our schemes and ensure their continued proper functioning in accordance with the principle of imposing requirements on jobseekers in return for paying them benefit.

Your Lordships will not be shocked to learn that the department fundamentally disagrees with the court’s verdict in respect of the two latter grounds, which is why it has applied for permission to appeal to the Supreme Court the Court of Appeal’s judgment in respect of those two grounds. The arguments that we will make before the Supreme Court, if we are granted permission—

[Lord Foulkes of Cumnock]

If the department was so upset and disagreed with the decision, why did it take it so long to bring legislation before Parliament?

[Lord Freud]

I will come on to explain that in a little.

The arguments that we will make before the Supreme Court, if we are granted permission, will not be affected by this Bill. However, we need the Bill to provide certainty that the Government are not in a position where we will have to repay previous benefit sanctions, and can impose sanctions where decisions have been stayed, in respect of claimants who have failed to take part in employment programmes without good reason. We have made it clear that we will take steps to ensure that claimants cannot expect a sanction refund as a result of this judgment, and there is a compelling public interest for taking those steps.

The Bill does not overturn previous appeals that have succeeded on the basis of good cause and it does not prevent claimants from appealing a sanction on the basis of good reason. Instead, it ensures that claimants who have failed to participate with no good reason do not obtain an undeserved windfall payment. We estimate that such a windfall could cost the public purse up to £130 million. That is money that would be better spent on people who take their responsibilities seriously, and it is in the public interest that we ensure this.

There is also an important public interest, as the Court of Appeal recognised, in getting people back to work by ensuring that jobseeker’s allowance is paid only to those who are actively seeking employment and who engage with attempts made by the state to achieve that end, and that those who do not do so face the appropriate consequences. The Bill will protect this public interest by ensuring that those who have not engaged with attempts made by the state to return them to work face the appropriate consequences, rather than receiving an undeserved windfall.

The Government respect the general principle that Parliament should not legislate to reverse the effects of the judgments of the court for past cases unless the situation is exceptional. However, it is entirely proper to enact such legislation if there is a compelling reason to do so. There is a compelling reason here on three grounds: first, the cost involved; secondly, the claimants affected do not deserve a windfall payment; and, thirdly, this is an unusual case in social security legislation where a court or tribunal decision has a retrospective effect.

The Bill will provide that any decision to reduce jobseeker’s allowance under the ESE regulations cannot be challenged on the grounds that those regulations were invalid or the notices given under them inadequate. It makes similar provision in relation to the mandatory work activity regulations in respect of notices given under those regulations.

I have said that we fundamentally disagree with the court’s verdict with respect to the lawfulness of the ESE regulations and the notices given under them. We believe that those regulations were correctly drafted. They were drafted to be flexible enough to encompass a wide range of programmes designed to support jobseekers into work. There was no clear and identified need to go further than the ESE regulations in order to lawfully mandate claimants to our schemes.

The Merits of Statutory Instruments Committee, as it was then called, published a report that covered the ESE regulations on 5 May 2011. The Merits Committee had a number of concerns, including the quality of the Explanatory Memorandum. To go off on a tangent, I want to acknowledge that there was a period when we were not servicing the Merits Committee adequately, and I have taken steps since then to improve that position. The Merits Committee had concerns, but the possibility that the ESE regulations were unlawful was not one of them. The committee drew attention to the fact that the regulations,

“interpret the Act very broadly so that future changes to the Scheme could be made administratively without any reference to Parliament”.

However, it did not go on to suggest that they went beyond the primary powers.

The Joint Committee on Statutory Instruments also considered the ESE regulations at its meeting on 15 June 2011. I am sorry to report that no fewer than three instances of defective drafting were identified, which the department acknowledged. However, the committee did not raise even the possibility that the ESE regulations were unlawful. The Social Security Advisory Committee, whose independent and informed advice we value greatly and with which we have a very constructive relationship, also considered the ESE regulations. Among other issues, it made a point about the breadth of the powers, but it did not suggest that they went beyond the primary powers. Similarly, those primary powers in the Welfare Reform Act 2009 received full scrutiny. The Delegated Powers and Regulatory Reform Committee regarded the delegations in the relevant part of the Act and the associated scrutiny procedure as unexceptionable.

We consider that the primary powers do not require that the regulations set out the fine details of the scheme. We believe that it is undesirable to do so, as a wide variety of possible arrangements could be made, depending on the nature of the labour market conditions in particular parts of the country. We also need to be able to respond to changing conditions and challenges quickly and effectively.

We believe that the flexibility that the ESE regulations provided was rational and desirable, and it must be remembered that the High Court ruled that the regulations were lawful. We therefore cannot agree with the Court of Appeal’s judgment. We also believe that the letters issued to claimants provided sufficient information on the consequences of not participating in our schemes. In addition to the information provided in the letter, claimants would have also discussed the precise details of the scheme with their jobcentre adviser, including what was expected of them and the consequences of not upholding their side of the bargain.

Nevertheless, following the High Court judgment, we revised all referral notices to comply with the judgment and sent letters clarifying the position to the then claimants impacted by the decision. That allowed us to continue to operate the schemes as intended—an intention that has been clear to all from the scheme’s inception, based on principles which the effects of the Court of Appeal judgment undermines and which the Bill is intended to protect.

It is right that we are able to operate our schemes as intended, giving jobseekers the opportunity to improve their chances of moving into work, with appropriate consequences for those who fail to take up that opportunity. It is right that government resources are targeted on those claimants who are actively seeking employment and taking all reasonable steps to improve their chances of securing employment and that resources are not wasted on those who have not met their responsibilities.

To pick up the question asked by the noble Lord, as soon as the judgment was handed down, the department explored all the options and avenues available to it to ensure the protection of the public interest. Once the decision to pursue emergency legislation was taken, that required legal advice, the appropriate consent prior to introduction and preparing the Bill products. We also engaged the Opposition, who rightly gave the matter thorough consideration. I am sure that all noble Lords will appreciate the time that that has taken.

[Lord Foulkes of Cumnock]

As I understand it, this lay in the department without any suggestion of legislation for more than a month. If the department had been really concerned about it, the legislation could have been dealt with through the normal procedure. Instead, both the other place and your Lordships’ House are faced with emergency legislation, which is entirely unsatisfactory for examining such an important Bill in detail. All the subsequent stages will be dealt with on Monday. That is not adequate scrutiny. Does the noble Lord not feel some guilt or embarrassment at having to deal with it in this way?

[Lord Freud]

My Lords, obviously, it is never desirable to have emergency legislation where one can avoid it. It would be desirable to run this through a more normal process, but we are caught by time constraints. The point that the noble Lord made about delay is accounted for by the various steps that we have had to take in that period.

In conclusion, the Bill guarantees some fundamental principles, which are about helping us to move people into employment and protecting the public purse. I commend the Bill to the House and I beg to move.

Amendment to the Motion

--- Later in debate ---

[Lord German]

My Lords, I want to address the Bill itself, but before I do that I want to make a few comments on the amendment before us today. When I first read the amendment’s text last evening, when it was produced, I had a bit of a flashback to earlier student days when you had composite Motions and amendments and the call for separate votes to be able to unpick the various parts. While I acknowledge that there are issues fundamental to this Bill that need to be raised, they are appropriately the issues that would and should be raised in Committee on Monday. I expect that we will deal with those issues, so the amendment as a composite presents a very difficult picture for people to decide upon. However, there is one crucial factor running throughout the amendment: the issues raised by the Constitution Committee of this House on retrospection and fast-tracking. Before I ask my noble friend to comment on that, I refer to two paragraphs in the Constitution Committee’s report—the last in respect of retrospection, and paragraph 12, which says:

“it is incumbent upon the Government to explain to Parliament why they have chosen to proceed by means of fast-track legislation and to reject the alternative options”.

I listened very carefully to my noble friend at the outset, and I hope that he comes back to that matter in his summing-up, when he may be able to give this House an explanation.

Subject to the Government providing those explanations, I support the Bill for exactly the same reasons as the Front-Bench Labour spokespeople in the other place, who said that they,

“do not want to risk an additional £130 million cut to benefit spending over the period ahead … Nor do we want to be in a position in which people who were sanctioned months ago—in many cases, well over a year ago—have to be refunded”.—[Official Report, Commons, 19/3/13; col. 825.]

I agree with the Labour Party Front Bench on those issues and why the Bill is before us today.

I want to say something about the nature of secondary legislation and its scrutiny. It is Parliament that passes and scrutinises regulations, and it will probably be Parliament that has to decide how it does those things in the light of any subsequent changes brought about by the courts. Of course we are not at the end of this process yet, as I have said already. There are important lessons to learn from these problems to see how we can move on in a better way.

The court determined on narrow issues and on insufficient detail and content of the schemes and regulations, and that the notices given to claimants did not specify the range of sanctions that could be used, but it upheld the policy intentions of the Government’s work schemes and backed the right to require people to take part in programmes that would help to set them into work. Up to 1 September last year, 200,000 people found work through the Government’s Work Programme. Appropriate work experience is a good thing, and it helps to build the confidence of jobseekers. Increasing employment levels in our country since May 2010 have meant that since that time nearly 250,000 fewer people now claim out-of-work benefits, in a period of huge economic difficulty. However, I wish to discuss the operation of these schemes. We know that there are no targets and no league tables for Jobcentre Plus on sanctions. Therefore, the key question I want to probe is how we can better undertake these tasks, which is fundamental to ensuring that we get the best out of existing programmes.

We know from the evidence provided by the DWP that the overwhelming majority of those who have been on the Work Programme are satisfied with it, but, of course, there is always room for improvement. Three-quarters of those who attended the programme said that they believed they were more attractive to potential employers and that their personal confidence had increased as a result. That is a powerful outcome for a group of people who are some distance from the labour market. Clearly, the majority think that they have got closer to it. However, the programmes could offer better outcomes in many cases. The first of these areas concerns engagement with the third sector. When the main contractors were appointed to run the Work Programme, there was much discussion about subcontracting to the third sector. I would be grateful if, when he sums up, my noble friend could tell us to what extent that engagement has occurred given the unusual skills of people in the third sector in dealing with individuals who find themselves in difficulty.

The second area that we ought to probe is the change of culture within Jobcentre Plus. There is a balance to be struck between codifying everything passed on to the JCP and giving advisers the discretion to interpret issues in the light of claimants’ circumstances. There is a question to be asked about the level of top-down instruction, which in the past has been very much the way of working. I looked up the instruction manual to ascertain what constitutes good reason or good cause for people not undertaking to do things they have been asked to do. You can read through 16 pages of guidance, plus another chapter. However, if you ask people in general what they would do in such circumstances, they reveal an all-embracing understanding of the issues. It is a very complex area and a vigorous interpretation of the guidance has led to the problems being experienced in some offices, particularly in relation to targets for sanctions, which have been mentioned today.

Ministers have had to come down hard on clear misinterpretation, but have signalled that they are pursuing the empowerment of decision-makers as a critical cultural change. There must be a role in all this for flexibility, discretion and sensitivity. The legal case behind today’s Bill has thrown up other cases. As regards the cultural shift that Ministers have outlined, a basic structure needs to be provided vis-à-vis the way Work Programme claimants are handled. That structure should have three components. First, there should be a meeting with the provider or JCP contractor. Often there is no face to face meeting between the provider and the claimant. However, it is necessary to have an intelligent conversation about their future needs. Those needs should be clearly communicated and agreed. The outcome also needs to be agreed between both parties, rather like the new contracts proposed for universal credit.

Secondly, it is important to try to fit the placement to the person. It is important to establish the work habit, obviously, but an appropriate placement is needed that suits the requirements of both parties. Thirdly, the Government should not get in the way of serious job opportunities. They need to give people space to find their own placements. Just yesterday, I heard a case of someone with a qualification in photography who was offered a job in a do-it-yourself shop but found a more appropriate placement in a photography shop, which was accepted as an appropriate placement. I welcome the independent review process. We now need to see new detailed terms of reference. I always make the plea to my noble friend the Minister that any evaluation, rather than being considered a milestone, should be rolling so that you can learn lessons as information comes before you. I hope that we will hear more about that later. I look forward to hearing the Minister meet the concerns of the Constitution Committee, but otherwise I am happy to support the Bill.

[Lord Foulkes of Cumnock]

Could the noble Lord help me? I remember when the Liberal Democrats were on this side of the House all the handwringing about retrospection and fast-tracking of legislation. I am not clear from what the noble Lord said whether he is in favour of the Constitution Committee’s report or supports the Government on both retrospection and fast-tracking. Could he make that clear to the House?

[Lord German]

Yes, I will. It is perfectly obvious that the noble Lord’s party did the same thing when it was in power. There was retrospection in legislation. I can think of the videogames legislation, which has some very great similarities to this Bill. My plea to the Government is to answer the questions posed to them by the Constitution Committee in this debate so that we can have that explanation. I quoted the two paragraphs of the report. I am sure the noble Lord has that in front of him, so he can look at paragraphs 12 and 15. Those are the two questions I want answered.

--- Later in debate ---

[Lord Freud]

As noble Lords know, we are seeking leave to appeal to the Supreme Court to test that specific matter. I will shortly come on to the point raised by the noble Lord, Lord Pannick, about why we have fast-tracked this Bill. However, we have explored all the avenues and have not taken a decision to fast-track lightly. We have looked at other measures to prevent this course of action but none provides a sufficient guarantee. People have been concerned about the four-week period. We have also spent a significant period discussing, through the usual channels, agreement to expedite this legislation.

Let me make clear why the retrospective legislation is necessary. The Government respect the general principle that Parliament should not legislate to reverse the effects of court judgments on past cases unless the situation is exceptional. However, it is entirely proper to enact such legislation if there is a compelling reason to do so. Perhaps I may spell out the three reasons which make this an exceptional case. First, there is significant money involved—£130 million—in very difficult, austere times. Secondly, the money would go to a group of people who neither expect nor deserve to obtain a windfall payment. These claimants knew exactly what was required of them. They failed to participate without good cause and were rightly sanctioned. Thirdly, this case is most unusual in terms of social security legislation.

[Lord Foulkes of Cumnock]

The noble Lord is repeating word for word what he said in his introductory speech. Why does he not reply and answer the important questions that have been raised? For example, why did he not ask for his appeal to the Supreme Court to be fast-tracked? Can he not answer the debate instead of repeating what he said at the beginning?

[Lord Freud]

I am doing my best to explain the reason why this is exceptional. I did not explain it in detail at the outset, so I am really grateful for the opportunity, reinforced by the noble Lord, to explain the exception.

The third reason why this is exceptional is to do with the nature of social security legislation. In almost all cases regarding social security decisions, the decisions of a court or tribunal are only prospective in nature. That is because the most common way in which to challenge a social security decision, including the underlying regulations, is to bring an appeal to the First-tier Tribunal. If that happens, the normal route is followed and the decision of the tribunal will not have a retrospective effect because of Section 27 of the Social Security Act 1998. It is only because there is an anomaly in the text of Section 27 that it does not apply to judicial review cases. That is something that I suspect that this Government will come back to, to clear up. It is clear from Section 27 that Parliament recognised that wholesale retrospective disruption of the social security system was not desirable. That is even more true in a case like this, when the beneficiaries of that disruption are not deserving of the windfall that they would otherwise receive. That is why this is exceptional.

I turn to the reason why we need to fast-track the Bill. I want to respond to the rather witty way in which the noble Lord, Lord Pannick, put his view that there was no urgency by explaining to him and other noble Lords that we have applied for permission to appeal to the Supreme Court. If we are not given that permission to go ahead—and that could come out any day—we immediately become liable to pay back the sanction money of £130 million. That is why there is particular urgency and that is why we are fast-tracking this legislation. We need to provide certainty to taxpayers that we will not spend this money in this way, unnecessarily. The department will endeavour to process the stockpile cases in a robust, transparent and efficient manner. While there is clearly a trade-off between robustness and speed, we will aim to do that as practically as possible.