Welfare Reform Bill

Lord Freud Excerpts

Thursday 6th October 2011 Grand Committee

[Baroness Hollis of Heigham]

So do I.

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

My Lords, Amendment 2 would define the purposes of universal credit as,

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

In Tuesday’s debate on Amendment 1, several noble Lords stressed the importance of language and risk. I am not sure that a definition that divides the caseload between people who can and cannot work is particularly helpful in that respect. However, it clearly is the purpose of universal credit to support people in or out of work, provide security and remove risk.

With regard to supporting people into work, I hope that it is already clear that work is at the centre of the new benefit. In designing universal credit our clear aim is to make work pay. In Tuesday’s debate I referred to the significant improvements that we expect, overall, in terms of participation tax rates, marginal deduction rates and levels of worklessness. Key to this is the single taper, which will ensure that claimants see the benefit of every extra hour worked. We will debate the level of the taper in a later session. For now, I hope your Lordships will agree that the principle of replacing the current tangle of overlapping tapers is the right one and a major step forward.

Other key elements of the work focus of universal credit are the work-related requirements set out in the Bill, the work programme and support for childcare. I said on Tuesday that I hope soon—very soon, in fact—to be able to give more details about the childcare element of universal credit. This is clearly an essential part of supporting parents in work.

[Baroness Hollis of Heigham]

My Lords, if “soon” is around a week, is “very soon” around a day? An hour?

[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.

[Lord McKenzie of Luton]

I thank the Minister for that detailed reply. Of course I will be withdrawing the amendment. I thank all noble Lords who have spoken in favour of it and even the noble Lord, Lord Newton, for occasionally being a loyalist. It would be helpful if he did not do it too often on my amendments. We will return in some detail to a lot of the issues that the amendment touches on over the weeks, if not months, ahead. I also accept that the precise wording of the amendment could be subject to challenge. If someone wants to offer an alternative, I am happy with that. It is an attempt to put something in which is trying to be indicative of what the universal credit is about, with the focus not only on work but also on support for those who are not opposed to moving closer to the labour market and, as the noble Lord, Lord Wigley, pointed out, for those who are very keen to get back into the labour market, but for whom there are no jobs.

A common feature of many noble Lords who contributed to the debate is about the WCA and concerns over how it is being used in the universal credit for access to the disability additions. I also raise the point about how I understand that it is being used in relation to the work programme. If there are concerns about how Atos is making assessments on whether somebody is fit for work, in the work-related activity group or the support group and is struggling to do that on a basis that people find acceptable, then the added precision that apparently it is being asked to provide about whether that person is going to be fit for work in three months or six months, which drives how some of them will enter the work programme, seems to me another dimension to what it is being asked to do and therefore somewhat worrying.

When we had a briefing from officials, I asked whether any of the appeals that had taken place were around that prognosis rather than the designation that was temporarily being visited on somebody. I am not quite sure what the answer to that is. If the work programme is a key part of helping people into work, which we agree is the intention of universal credit, how Atos or the work capability assessment features in that is of some importance. The noble Baroness, Lady Campbell, raised the concern that the current assessment processes have not been co-produced. We share some of the thinking about how the WCA has been developed. It was introduced under our legislation. A lot of effort went into focusing on it, just like the effort that is going into the assessment of DLA and PIP. But when it came to the practice of it, it turned out to be quite different. I accept that it is an evolving situation, but one can understand the fear that has been expressed today and how it represents the views of disabled people more generally about how this is featuring and working in the universal credit.

The Minister did not respond to the questions around the work programme. Would he like to do that now and give us an update on how it is progressing? That is particularly important at this juncture. The previous programmes we have talked about—my noble friend Lady Hollis mentioned some of their origins—by and large were developed in an economically vibrant situation where unemployment was reducing. We are not in that environment now.

[Lord Freud]

I can tell noble Lords that, regrettably, at this stage it is very early days. The noble Lord will be aware that it was launched on 10 June. I do not have any meaningful data to supply him. I am not sure when I will have some, but when I do, I will let the Committee know.

[Lord McKenzie of Luton]

Might I ask the Minister to use his best endeavours to see that we get that data soon?

[Lord Freud]

My Lords, I think the answer to that is no.

[Lord McKenzie of Luton]

Perhaps I can press on one or two other matters. I was interested in the noble Lord’s response about conditionality being associated with work-related activity. I accept the assurance that in respect of this Bill, that is what the focus is, but am I right in getting the hint that there may be some wider plans following this Bill where that conditionality might be applied more generally, not just in a work-related context? Perhaps the Minister would like to say something more about that.

[Lord Freud]

I have no information on any plans in that area at present. This Bill is about conditionality for employment purposes, and I have no information on any other such plans.

[Lord McKenzie of Luton]

Perhaps the Minister will let us have some information as soon as it is available to him. We are going to return to many of these issues in our further deliberations on this Bill.

The issue of travel costs has been released. Perhaps the Minister might reflect on the assertion that people should now be prepared to routinely travel an hour and a half each way to take up possibly low-paid work and how that fits with someone being better off in work if the costs of that travel are not covered or dealt with in some way.

We also had a bit of an historical debate about what various Governments did. My noble friend Lady Hollis was very clear about what happened on our watch, and as I said, the Minister was involved in some of that. I accept the assertion of the noble Lord, Lord Newton, that under his watch he did not just sit there and let the number of people on incapacity benefit accumulate. On that basis we should be in agreement that the Prime Minister’s statement was wholly misleading. It is a political point, and noble Lords may think it is a cheap political point, but it matters when the most senior politician in the land is happy to use language and examples that are simply not true. The impact of this is to stigmatise people on benefits, and we should be deeply worried about that.

[Lord Freud]

Let me just make it absolutely clear what the Prime Minister was saying in the slightly more technical language that we understand in this Committee. The Prime Minister was making the point that we had created a series of inactive benefits onto which people were put and then left without any route back into the workplace. That was a dereliction of duty by Government. Our understanding has now transformed. We know that work is part of the solution for people with disabilities, not part of the problem. A key thing that we are trying to do in this Bill is to integrate the work process for people, whether they have disabilities—whoever they are. That is what the Prime Minister was saying. We are making an enormous effort to get people back into the workforce, and we are spending a lot of money—up to £14,000—on the people who are hardest to help, many of whom will have a disability. Underneath the political rhetoric, I think all noble Lords would agree with that sentiment.

[Baroness Turner of Camden]

Was the Prime Minister not speaking in support of the continuation of Remploy?

[Lord Freud]

I think we had the discussion about Remploy yesterday, and I will not go on about it again today.

[Lord McKenzie of Luton]

My Lords, I would just remark that if that is what the Prime Minister was intending to say, his usual high command of the English language eluded him on that occasion. My noble friend Baroness Wilkins emphasised the fear that people have about this process and about the WCA. My noble friend Lady Hollis was quite right to refer to carers. In fact, my shorthand amendment was meant to encompass that and I entirely accept the point. I am increasingly concerned about the impact of this on young carers as well. The noble Lord, Lord Wigley, referred to support for work. He is right, it should not only be about supporting people linked to the labour market. It is a question of how we are going to increase growth and create jobs as well, which is a much wider debate.

My noble friend Lord Beecham made reference to the housing benefit changes and the impact that those will have on labour mobility. I think that the noble Lord referred to people not losing out from universal credit. When you look at the impact of universal credit and some other measures in the Bill, particularly the benefit cap and housing changes, I am not sure that that assertion would necessarily hold true. Having had a good start to proceedings today, we will revisit many of these issues.

--- Later in debate ---

[Lord McKenzie of Luton]

I thank my noble friend Lord Foulkes for picking up the baton from the noble Lord, Lord Kirkwood, so that we have the chance to have the explanation of the points that were put by my noble friend and by the noble Lord, Lord Wigley. Doubtless the Minister will be able to tell us what consultation and engagement has taken place, but I think that the request is that it is not simply done at some formal stage, perhaps when policy is being formulated, but that we consider it as an integral part of our consideration of this Bill. If we can get nothing other than that from this amendment it will have been worthwhile preserving it for our brief debate.

[Lord Freud]

My Lords, I will deal with Amendment 3, which is the one noble Lords have concentrated on. Amendment 3 would introduce a requirement to consult the devolved Administrations before the introduction of universal credit. I must point out that social security is a reserved matter in Great Britain but the implementation of universal credit will have an impact on some matters of policy which are devolved, for example, housing, skills provision and childcare. For that reason, we are working closely with the devolved Administrations on the implementation of measures in the Bill and will continue to do so to ensure that the introduction of universal credit goes smoothly.

We have been discussing aspects of the Bill since well before its introduction during the latter part of 2010. The Secretary of State and I have had a number of meetings with Ministers in the devolved Administrations. A formal role has also been established for the Scottish, Welsh and Northern Irish Governments and for the Scottish and Welsh local authority associations on the universal credit senior stakeholder board. We have a concordat between DWP and the Scottish Government that sets out the commitment on communication and consultation; indeed, the Secretary of State met Scottish Ministers most recently a fortnight ago. I therefore hope that noble Lords will be reassured with regard to the concerns they have expressed. We are addressing these issues, we are consulting thoroughly, and on that basis—

[Lord Wigley]

Before the Minister sits down—although he perhaps cannot give a reply now—would he consider at some stage during the passage of this Bill the possibility of introducing a new clause or subsection? This could perhaps come towards the end, where questions such as extent arise, and propose that there should be a duty on Ministers to consult not only with regard to the primary legislation, but with regard to the impact of the orders that will be coming from the primary legislation. If it is in the Bill, there will be no excuse for not consulting at the appropriate time.

--- Later in debate ---

[Lord Freud]

Currently, my understanding is that there is not a formal duty, but I have a commitment, and I am informing the Committee that we have an intense consultation process and we will continue that. I think it is an entirely unnecessary, bureaucratic thing to change that. The Committee has my assurance that that process will continue with a great intensity, as it has up to now.

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[Lord Newton of Braintree]

Having been restrained by my noble friend Lord Kirkwood from what would have been some inflammatory remarks at an earlier stage, can I ask two questions at this stage before my noble friend sits down? First, if we are to go down this path, can we also have an obligation imposed on the devolved Administrations to consult on legislation they pass that has a significant knock-on effect in England, of which we have just heard another example in the housing field? Secondly, and quite separately, could he say a word about Northern Ireland, which to my recollection did not accept UK legislation but passed the same thing through its own procedures? Is that going to be the future situation as well?

[Lord Freud]

Yes, my Lords. In Northern Ireland they have a system of what they call parity. In practice they pick up Great British legislation.

[Lord Newton of Braintree]

It is not an exempted issue but they do the same thing.

[Lord Freud]

They do the same thing. It is a different arrangement. I have gone to Northern Ireland particularly on this matter. I am anyway, as you might imagine, not in a position to offer duties of this or that either way. However, I would not want to go back and try to do it under any kind of pressure because we are talking about the implementation of a very complex set of changes. Having a bureaucratic to-and-fro process is exactly the wrong way to do it. The right way to do it is the way that we are doing it, which is in intense dialogue and working it through. If noble Lords are interested in practical implementation of complicated transformative changes to our social welfare, they should allow us to do it this way because that is the best way that it will be achieved to time, to budget and to the betterment of the people in all the countries that we are talking about. I beg the noble Lords to withdraw the amendment.

[Lord Foulkes of Cumnock]

My Lords, there seems to be some encouragement from the other side.

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[Lord McKenzie of Luton]

My Lords, I am not quite sure what was in the mind of the noble Lord, Lord Kirkwood, when he drafted the amendment. He may want to take the opportunity to enlighten us. But looking at the distinction between “awarded” and “paid”, our attention was drawn in particular to Schedule 1, paragraph 6. This paragraph enables an award of universal credit to be paid in whole or in part by means of provision of a voucher. Perhaps the Minister could expand on the intention behind this paragraph, and on the circumstances in which it might apply. I am aware, of course, that there are existing programmes where vouchers are used: in health, for example, for specs and contact lenses and for the Healthy Start food initiative. I know that the Minister has turned his mind to vouchers in the past. I think it was in connection with the sanctions regime on an earlier piece of legislation we were debating. Does this provision herald a new approach, or does it simply look to replicate existing arrangements? If so, what are they? I beg to move.

[Lord Freud]

My Lords, regarding the reference to vouchers in paragraph 6 that the noble Lord, Lord McKenzie, picked up—very sharp-eyed, as I would expect—we are looking at an option of paying childcare through vouchers. It is similar to some of the ways currently used by employers. It allows the flexibility of a parallel system with the employer system. I have to tell noble Lords that it is not the approach we are expecting to use. It is very much an option, but as I intimated earlier, we will announce our childcare proposals very soon.

On the voucher system, we have used the term “award” here because it is widely used across social security legislation and therefore makes a link to other legislation that provides for claims, payments and appeals. Changing the word would remove those links and require major changes in legislation across the piece. For that reason I ask for the amendment to be withdrawn.

[Lord McKenzie of Luton]

My Lords, I am grateful to the Minister for that explanation. I have no particular problem with the term “award”: it was just the passing reference to the use of vouchers. I took it from the Minister’s reply that it is only in relation to childcare that this is to be developed, and that does not look as though it is the front runner. We will know that soon. The only plea I would make is that if we go down the path of vouchers, we should do so sensitively. The prospect of stigmatising people who access facilities by paying cash or providing a DWP voucher has significant ramifications. It appears from what the Minister says that we will not have to face that in practice. On that basis, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I will speak briefly on this issue in support of the amendment proposed by my noble friend Lady Hollis and the exceptionally powerful case made by her and by pretty much every other the noble Lord who has spoken on the issue. The noble Lord, Lord Skelmersdale, raised an interesting point about how you would extract the payment. My noble friend Lady Turner asked whether it was a rebate, a discount or quite what it was.

I recollect that she pressed us in Government on behalf of the Royal British Legion, who were campaigning to have the term rebate replacing the benefit. We all signed up to that at the time. I am not quite sure what progress was made. I think that it went to local authorities. However, I remember that there was a potential price tag of tens of millions of pounds to local authorities just for that one system change. These are not inexpensive projects that we are dealing with. I cannot believe that this is what the noble Lord or the DWP want. The noble Lord is an exceptionally logical person. He analyses things. The scale of the problems that the localisation of council tax would bring seems to me to be totally out of kilter with all of the work and analysis that has gone on in producing plans for the universal credit. As everyone has said, it undermines the universal credit—the benefits of the single taper in particular. With all the raft of issues about how people would understand what their position was, the simplicity of the system would fall away.

We had a meeting with officials. As ever they were very helpful. We explored this issue a little bit. My understanding is that it was not until March of this year that the department started to contact local authorities to get their minds around how it would work. To produce something in a Bill and develop a policy on an assumption that this component can be dealt with separately without any clear knowledge as to how that will work in practice seems unusually foolhardy. Again, I cannot believe that the Minister believes that this is the best way forward. There are lots of practical issues. We know lots of local authorities will have outsourced their arrangements in respect of housing and council tax benefits. You would have to break the costs involved in the multiplicity of contracts. I do not know if the Minister has any idea of what would be involved in that exercise.

What we are seeing here is what we have seen in the Localism Bill writ large. There have been a lot of instances where the Government and the Secretary of State have said that they want to devolve power and give more freedoms to local authorities, but have then realised the consequences and drawn those back with all sorts of regulation powers, which, as my noble friend Lady Hollis said, would have to be there if you were going to make any sort of sense of this proposal to have any sort of understanding of whether it is regional systems, which are common.

There is another component as well. It relates to the cut in the total amount available. I agree with the noble Lord, Lord German, that in a sense there are two issues: the financing and what cash sum is available, and how it should be dealt with. This Government have a record of imposing on local authorities and getting them to take the pain, the heat and the difficult decisions, and seeking to walk away scot free. We will see and debate what is going to happen with the social fund. That is another example—no duties on local authorities and no ring-fenced funding from it.

My noble friend Lady Hollis made a telling point. If our understanding is correct—and the Minister will doubtless confirm this—this is switching AME to DEL, the reverse of what I think the Minister himself negotiated so effectively when he was dealing with work programmes. It does not make any sense. I know that the Minister has to do his job. We have all been in the position of defending the indefensible before. However, I cannot believe that it is going to end up as currently proposed because it would seriously undermine the universal credit and all the good work that the Government are trying to do on that.

[Lord Freud]

My Lords, I am grateful to noble Lords for raising this series of amendments. Clearly a point of real substance has been discussed this afternoon. The group of amendments would have the effect of incorporating help with council tax for those on low incomes into universal credit and state pension credit.

Noble Lords will be aware that we are proposing to abolish council tax benefit and replace it with localised schemes of support to be set up and run by local authorities. The Department for Communities and Local Government is currently consulting on proposals for local schemes in England, as a number of noble Lords have pointed out. This approach will allow local authorities, who determine and administer this tax, to have a say in how the burden of paying for services is shared across their local community, taking account of local priorities.

The Government’s approach addresses concerns that have often been expressed about the complexity of council tax benefit and, particularly, that council tax support should not be part of the social security system at all. Nevertheless, in localising support, we need to ensure that the improved work incentives that universal credit will bring are not undermined in any way. We believe that the key principles required to incentivise work can be delivered through local schemes and therefore that localisation is the right approach.

[Baroness Hollis of Heigham]

How, precisely?

[Lord Freud]

As I was about to say, we will soon publish an impact assessment on the universal credit that incorporates this approach. As noble Lords will be aware, the existing impact assessment assumes council tax in the system. This one will assume council tax out of the system.

[Lord Skelmersdale]

My Lords, does that mean that in this impact assessment, there will be an assumption that the taper will be the same? That seems to me to be all-important.

[Lord Freud]

I ask my noble friend to resist pressing me, which I know he enjoys doing, at this moment. Let us wait for the new impact assessment.

[Baroness Hollis of Heigham]

Will there not be 400 impact analyses?

[Lord Freud]

The impact assessment that I am talking about is the one on universal credit and how it will respond to the exclusion of council tax. We will not have an impact assessment from DCLG available for some time. I do not know when we will have that impact assessment, but I will write to the DCLG and find out.

[Lord Newton of Braintree]

That means that this impact assessment will not be an impact assessment of the effect of these proposals on poor people.

[Lord Freud]

Without being overdrawn on the impact—

[Lord Newton of Braintree]

I am not going to press my noble friend further, but that is what it means.

[Lord Freud]

I think noble Lords will be somewhat relieved at the approach and will get quite a lot of information from the impact assessment on universal credit on its own. If it comes out soon, as I expect, there will be an opportunity to debate it again, perhaps around Clause 11, or possibly Clause 8, when we can look at the taper, so there will be a chance reasonably soon to look at the implications again.

[Lord McAvoy]

Before the Minister passes on to the next issue—that may have been a Freudian slip—he has charmingly used the words “soon” and “very soon” to, quite frankly, parry requests for a wee bit more detail on timing. Can he give us an idea whether the assessments that he keeps referring to are operating at a normal pace? Is there an expectation about how long that should take? Are these assessments that we are waiting on taking longer than he would expect?

[Lord Freud]

No, we had anticipated that this impact assessment would come out during Committee stage, and I think we said that. I hope I gave noble Lords a reasonable clue when I suggested the opportunities we might have to debate it because I referred to a couple of clauses that, depending on our speed of progress, we will get to soon.

I shall return to the main topic and the question of pensioners. Noble Lords will be aware that there have been persistent concerns about the low level of take-up of council tax benefit among pensioners. I know that the noble Baroness, Lady Turner, has had this as her absolute central focus. As the noble Lord, Lord McKenzie, pointed out, there was cross-party consensus on the word “rebate” a couple of years ago. Many have argued that the reasons that pensioners are reluctant to claim are because it is an income-related benefit and because they believe that the process for claiming it is complicated and intrusive. We believe that there is a strong and persuasive case that council tax support for pensioners will be better delivered through localised schemes of support. Noble Lords will have seen that DCLG’s consultation paper stresses that the position of current and future pensioners should be fully protected.

I will take the opportunity to answer the specific questions raised by my noble friend Lord Newton. The allocation of cash to local authorities will be based on existing CTB expenditure, less 10 per cent. The current cost of delivering housing benefit and CTB is £500 million per year. I am not able to say what the new system will cost, mainly because the consultation that DCLG is conducting has not been concluded.

My noble friend raised the appeal process. The consultation paper does not set out a final view on what that process might be, and it is the subject of one of the consultation questions. The nature of the appeals system will depend on the final design of the system.

To summarise, the approach the Government are taking on the aspects that this amendment raises is the right one. Therefore, I thank noble Lords—

[Lord Wigley]

Is the Minister going to respond to the point made by Lord German earlier about the application in Wales, Scotland and Northern Ireland? I am sorry to come back to that like a bad penny, and I will try not to do it all the time, but in this instance, it is of direct material consequence, particularly this week when one is aware that the money to freeze council tax, so far as England is concerned, when transferred to Wales, will not be used for that purpose. Will the resource that the Minister sees going to local government in Wales go directly to local government or via the Assembly? Has he discussed this with the Welsh Local Government Association and Assembly Ministers?

[Lord Freud]

My Lords, without being over-coy on that question, this matter is out for consultation and we expect the responses from Scotland and Wales to be incorporated as part of it. So the answer, I guess, is that it will be looked at in that context. With that, I ask the noble Baroness to withdraw the amendment. I am sure that we will return to the some of the substance later.

[Baroness Hollis of Heigham]

Yes. Before coming back to some of the main themes that your Lordships have adduced, could I thank everybody who has taken part, because all sorts of issues have come up that I had not fully clicked on? I now have an even clearer sense of indignation at what these proposals might mean for—as the noble Lord, Lord Newton, rightly said—the poorest people in the land. I appreciate your Lordships’ contributions.

I am sure that the noble Lord, Lord Freud, will take this Committee’s views back to his close working colleague Mr Pickles. Bar a couple of open questions, I think they were unanimous in being deeply concerned both about the effect on the individual and on universal credit.

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[Lord McKenzie of Luton]

My Lords, this is a probing amendment, which would delete subsection (2), which states:

“Regulations may specify circumstances in which a member of a couple may make a claim as a single person”.

As I say, it is a probing amendment to seek some clarity as to the likely scope of such regulations. I accept that the Notes to the Bill refer to circumstances where one member of a couple does not have the right to reside in the UK and is not entitled, so the other member will be able to make a claim as a single person. My question is: what other circumstances might be envisaged? It is understood from the notes circulated that further work is ongoing in this regard, but perhaps the Minister can help us with the following questions. When, for example, a couple are in the process of separation or divorce, will they be treated as being a couple or two individuals? Under what circumstances will members of a couple be legally entitled to live separately and receive universal credit independently of each other? In particular, will there be any scope for individuals who are in an abusive relationship to receive universal credit independently of their partner?

These sorts of issues highlight how convoluted some people’s lives can be. There are circumstances where, under existing provisions, people are treated as no longer being a couple: for example, if either or both is in custody, has been released on temporary licence from prison or is a compulsory inpatient detained in hospital under mental health provisions. Those sorts of arrangements exist at the moment. Are they going to be built in to universal credit? In what other circumstances might a member of a couple claim as an individual? I beg to move.

[Lord Freud]

My Lords, to summarise, the general principle is that a couple should make a joint claim for universal credit to ensure that both members of the couple take responsibility for the claim and obtain support to find work, where appropriate. This principle is already established in jobseeker’s allowance for joint claims, and we are extending it to universal credit, so that both members of a couple will have equal opportunity to access the support.

As explained in the briefing material sent to Peers last week, there will be a fairly limited range of circumstances in which only one member of a couple is eligible for universal credit, such as the example that the noble Lord, Lord McKenzie, raised where a claimant’s partner is a person from abroad who has no right to reside here. However, there are other circumstances, such as when people are students and so forth, when they will not be eligible for benefit support.

This amendment would remove our ability to make these exemptions. I understand that it is a probing amendment implying a series of questions. We are currently developing detailed regulations on this. There is no intention to change some of the existing protections—the noble Lord mentioned people in custody and people detained in hospital. In the work we are doing, as we build a coherent single system, it is fascinating to see how many different definitions of the same thing there are scattered through the current system. One thing we are doing is trying to get a consistent definition. We have four meanings of the word “work”—or is it five? When you are writing a computer program in code, that kind of thing needs to be precise.

We are going to have to get the timing of when people separate and all that precisely right, and that is work in progress. We are aware of the issue. It is being addressed, and it will be much more coherent than it has been in the past for that reason. Therefore, I ask the noble Lord to withdraw this helpful probing amendment.

[Lord McKenzie of Luton]

I am grateful to the Minister for that information. I am going to have to allocate a bit more of the weekend to catching up on all the briefing material that we have. I understand that there is no basic intent to change the current provisions. I am interested in the range of different definitions. The next group of amendments will touch on that a little as well. I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McAvoy]

My Lords, I ask the Minister for some brief clarification. If I am picking it up correctly, the definitive removal of any option for anybody aged 16 to apply for these benefits under the special circumstances is proposed. I have the benefit—it might not have seemed like a benefit at the time—of 23 years of parliamentary surgeries as a former Member of the other place. There is one thing these surgeries teach you, and that is that there can be no definitives in dealing with human beings. I can certainly recall occasions—not hundreds but certainly scores over the years—when people of that age had special circumstances. I am worried about the reasons for removing the possibility of applying, and about the alternatives being brought into legislation to account for that option being removed. I always worry about definitives and a lack of options, and I would like to hear what the Minister has to say on that.

[Lord Freud]

My Lords, Amendments 18 and 19 seek to amend the basic conditions of entitlement to universal credit and would in effect limit our ability to provide for exceptions to those conditions. Amendment 20 would create a new regulation-making power to set out circumstances in which certain groups are to be treated as not receiving education: specifically, young people, parents and disabled students. Clause 4 sets out the basic conditions that must be met in order to be entitled to universal credit. These basic conditions are designed to be simple and easily understood, fitting together with the support for people in education and for older people through state pension credit. However, as I am sure noble Lords will agree, there are always exceptions to the general rule, and it has never been our intention that these basic conditions will be so prescriptive as to prevent certain groups of people being entitled to universal credit. In that sense, we are entirely in accordance with the sentiments just expressed by the noble Lord, Lord McAvoy.

Amendment 17 seeks to make universal credit adopt the principle that entitlement to support begins at 16 rather than at 18. We intend to maintain the current rules where 18 is the minimum age. This is consistent with the approach taken by the previous Administration, and we see no reason to change it. Equally, however, there are circumstances where people aged 16 or 17 should be entitled to universal credit in their own right. This includes people with responsibility for a child, disabled people and people estranged from their parents. Sixteen and 17 year-olds should be in education or training and not living on benefits. If we were to set the lower age limit to 16, we would send the wrong message to young people and their parents about the value of education and the strength of the family unit.

We will continue to support young people who find themselves in straitened and difficult circumstances through leaving care, family break-up or whatever, at the age of 16. We are not planning to change the rules for care leavers in any way. However, as a result of the last Government’s Children (Leaving Care) Act, care leavers cannot usually claim benefits until the age of 18. That is why the Bill makes provision in subsection (3) of this clause, and why I do not think that the amendment is necessary.

Amendment 18 seeks to remove the regulation-making powers that will allow us to provide for exceptions to the basic conditions. While we would still be able to specify some of them through other subsections of the clause, the amendment would limit our ability to make provision in all cases. I am sure that noble Lords will appreciate the importance of flexibility in these matters. The power can in any event be used only to extend eligibility, not restrict it.

Amendment 19 would remove subsection (5), which allows us to make regulations in respect of residence and presence. We have been clear that migrants will generally be able to claim universal credit only if they have a right to reside here and are habitually resident. This position has not changed—and was reiterated by the Secretary of State and Minister for Employment just last week. In the tough financial conditions we currently face, it is particularly important that UK taxpayers should not have to subsidise people with very tenuous links to this country. “In Great Britain” is the same formulation as in the primary legislation for income support. Nothing sinister is implied by the wording.

On the question of the noble Lord, Lord McKenzie, about the EU ramifications, we do not expect to have to renegotiate social security treaties, although he will be aware that there is considerable movement currently going on about export of benefits, which we are concerned about. Removing the powers in this subsection would also prevent us providing for circumstances in which a person can be treated as being in Great Britain although they are temporarily absent. Current provisions allow us, for example, to pay benefits to people who may have gone abroad for a short period of time to receive medical treatment for themselves or their children. They also, in the case of tax credits, ensure that service personnel and their families are not prevented from claiming because they have been posted overseas. We want to replicate this position within universal credit. The amendment would prevent us doing that. This is a valuable thing for us to be able to do: I am sure that that is not a contentious claim to make in this Committee.

Amendment 20 would require the Secretary of State to specify the circumstances in which certain groups will not be treated as receiving education. There is a long-standing principle that in general the benefits system should not be a source of financial support for those within the education system. Young people are primarily the responsibility of their parents until they leave school. Students in higher education have access to a comprehensive system of student loans and grants. However, there have always been exceptions to the general rule and, as the Minister for Employment made clear during debate in the other place—and I am happy to repeat here—the current boundaries that exist in relation to income-related benefits will not be redrawn.

We do not wish to widen the extent of support for those in education. Nor do we intend to remove support from those groups of young people and students who currently receive it under the current system, such as lone parents, disabled students and youngsters in non-advanced education who are living independently. The powers we need to do this are already contained in subsections (2) and (6)(b) of the clause. We do not need to make the extra provision that this amendment would provide.

I apologise if that was a lengthy summary of our position. I need to track back a little bit because I may have inadvertently misled noble Lords on the point of support for care leavers. I want to make absolutely clear with regard to care leavers that our support is constrained by the previous Government’s Children (Leaving Care) Act, which starts the clock for them at 18. I think that I inadvertently said 16 earlier and want to make sure that that is absolutely clear and on the record. With that explanation and assurance, I urge the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

I am grateful to the Minister for that explanation. As I hope I explained, these were probing amendments to get answers on the record.

I shall follow up on two points. On Amendment 17 concerning16 and 17 year-olds, there are currently different rules for different benefits. There is the JSA rule and rules for other means-tested benefits. For the latter, you must be in a vulnerable group: for JSA, you must be facing severe hardship. Given that we end up with just one benefit, universal credit—plus a bit of council tax—will all the easements for 16 and 17 year-olds be reflected in the universal credit, or only some of them? As I understand it—I am not sure that I have my mind fully round this—there is currently a patchwork of provision, and it is a question of seeing whether that is brought forward in its totality.

That is the first question. I will pose a second one as I see that the team are working hard at the back there. In relation to definitions around residence, I think that the noble Lord said that “in Great Britain” is used for income support. Certainly, the text that I have is that you must satisfy the “habitual residence” and “right to reside” tests and be “present in Great Britain”. I accept that there is nothing sinister in it, but I am trying to understand what “in Great Britain” actually means. Does it mean physically here, and that you have to remain physically in Great Britain throughout the period for which you are seeking to claim? What about periods abroad for whatever reason? It looks to me as though that is a change of formulation. It may just be an attempt to simplify the language, but I am a little mystified by it. Perhaps the Minister can help.

[Lord Freud]

Yes. On the first question about all the rules, our intention, from the policy principle area, is to reflect the current rules. I am hesitant to make an absolute commitment because I am conscious of our work to smooth them out, and there may be some wrinkles. Wrinkles do appear in this area, surprisingly. The main principle and direction will be to take them over in their entirety in the universal credit. Clearly, to the extent that there are wrinkles, when we get to regulations—in some time—we will end up discussing them. We will be able to look at that and discuss it at the appropriate time, but that is the general policy intention.

The expression “habitual residence” is the one used in secondary legislation. That reflects what the primary legislation says, which is “present in Great Britain”. That is the relationship. Clearly, “present in Great Britain” now has a case-law framework around it to define what it really means. Can you pop over to Calais for lunch and still be present in Great Britain?

[Lord McKenzie of Luton]

Not on JSA rates.

[Lord Freud]

There are some very cheap fares now; £12 return on P&O, I think. So maybe even on JSA you can have the occasional treat. Joking apart, there is a context and an understanding. We are not planning to change that. Clearly, when one abandons those key words it has a lot of ripple effects, not least in the social security treaty network that we have.

[Lord McKenzie of Luton]

I am grateful to the Minister for each of those additional explanations. I understand the point about the terminology being primary and the secondary legislation having these other descriptions. Could I ask the noble Lord about this current debate on the exportability of benefits and their components? How, if at all, does he see the universal credit fitting in to that debate?

[Lord Freud]

We expect the universal credit to be treated as social assistance, which is within the rules, so we can keep a reasonable amount of control over it. This is something that is causing great concern to countries throughout Europe. The European Commission is taking infraction proceedings against us. Twenty members have expressed strong concern. Fourteen member states have joined the UK in calling for a debate on the matter with a view to amending EU social security rules as soon as possible. This is a live and changing issue but currently, as we understand it—nothing is locked down in this area—we have designed the universal credit in a way that it is protected from some of the exportability concerns. That is our intention.

[Baroness Hollis of Heigham]

Could the Minister help us a bit further? It might be more helpful to have a letter on this later on. The benefits that he is bringing together have different rules—or they had different rules—according to whether they were regarded as coming within the free movement of labour and the support for this through some of the tax credit rules and some of the other benefits that were localised and related only to being present and so on. By bringing them all together, does this mean that, for the first time, universal credit, with a much bigger price tag—so to speak—on the individual entitlement, could now be freely exported to people who are coming to work in this country and whose family members are living in other European countries?

Lord Freud: As with the current income-related benefits, workers who come into the UK from other European Economic Area countries may be entitled to universal credit, but only if they meet stringent conditions. This ensures that the benefit tourist cannot take advantage of our benefits system. European Economic Area nationals who are neither in work nor seeking work will not generally be able to access universal credit. They will be required to be self-sufficient while they remain in the UK. Let me stand back generally. This is not currently a stable area of EU law and we are watching it very closely for the reason that the noble Baroness raised.

[Baroness Hollis of Heigham]

If the Committee will excuse me, I have one further point. One of the things that I thought was deeply unfair, but about which we could do nothing, was that a British citizen who took her child to Bangladesh, Pakistan or India for 12 weeks or so thereby lost her child benefit. However, if a worker from one of the eastern European countries came here, and their family had never even visited the UK and their wife and children and so on remained in their home country, they were able to continue to enjoy such benefits.

[Lord Freud]

I am slightly at a loss to respond, mainly because the noble Baroness has opened the door to such an enormous area. It is so complicated that I have spent quite a long time going through it. Yes, there are lots of anomalies because it is not a stable area of law, but the bottom-line point is we do not think that with universal credit we are putting ourselves in any worse a position than that we are currently in.

[Lord McKenzie of Luton]

I am grateful to the Minister for those explanations. At some stage may we have a little note which sets out the existing benefits and components that are going to go in to universal credit and what the exportability issues and access by non-residents are? That would be helpful to us. We accept that this is a moveable feast, but a note based on our best understanding as of today?

[Lord Freud]

Having checked with my officials, I am happy to provide a letter summarising the position. I have had a reasonably recent brief on it, and although I cannot remember the detail, I will get the salient points circulated.

[Lord McKenzie of Luton]

I am grateful for that and for the other explanations we have received. I beg leave to withdraw the amendment.

--- Later in debate ---

This amendment writes that need into the Bill. I beg to move.

[Lord Freud]

My Lords, these amendments would require a formal consultation on the operation of the claimant commitment and a yearly review on its impact. We will have the opportunity to discuss the claimant commitment in detail when we reach Clause 14, so right now I would like to make some specific points. Before I do that, I would like to make a more general response to some of the general points that the noble Baroness, Lady Hayter, made around the mutual obligations she said are not there and the argument that this is a one-sided commitment. Clearly, it is not one-sided. Part of the Government’s side of this is to pay the benefit to the claimant. The other part of it is to help claimants to find work through, in the case of Jobcentre Plus, adviser interviews and, more importantly, through the investment in the work programme which is, as noble Lords know, a very substantial investment in this country to help people back into the workplace. I will not go further on childcare costs, which the noble Baroness thought would be revealed very soon. Let us have some facts, and then have a discussion on them.

There is genuine mutuality, a two-sided commitment, in the claimant commitment. It is intended to be of benefit to claimants. It will provide all claimants with a single, clear statement of their responsibilities. This will ensure that claimants understand those responsibilities from the very start of their claim and help to improve compliance. Indeed, I am spending quite a lot of time to make sure that the commitment is helpful, understandable and specific to an individual. We are spending a lot of time and energy doing that because, up to now, similar measures have been rather vague and more general.

The content of a claimant commitment will include the hours the claimant is expected to work and it is drawn up between the claimant and the adviser in dialogue. The threshold for things such as the time spent on job search per week will be set according to personal capability and circumstances rather than being prescribed in legislation. The regulations set out only the maximum limit beyond which we will never apply conditionality, so some of the newspaper articles—I am not sure whether this was an upmarket favourite read or in a more downmarket one—apply to the maximum expectation. Clause 17 sets out the kinds of activities we might expect claimants to undertake, and we will get to it later.

We will ensure that the process of accepting a commitment is not onerous. For those claimants who have limited responsibilities—for example, where the only requirement placed on the claimant is to report changes of circumstance—the commitment will be an integrated part of the claims process and could be accepted online or via the telephone. For other claimants, primarily those we would require to look for work, their requirements will need to be discussed with an adviser face to face. They will be able to accept their commitment at their first meeting.

However, we recognise that there may be some very exceptional cases where the claimant cannot fulfil the requirement to accept a commitment: for example, where the claimant is suddenly incapacitated through illness or where the office we were expecting a claimant to attend is forced to close as a result of flood or fire. We will be using regulations under subsection (7) of this clause to cover such circumstances and enable us to treat the claimant as having accepted the commitment. Noble Lords may have spotted that we have responded to the Delegated Powers Committee and agreed to make these regulations affirmative for their first use.

My third and final point is that the claimant commitment is not an entirely new invention. It builds on similar products in the existing benefits regime, most notably the jobseekers’ agreement which JSA claimants must agree to as a condition of entitlement. Operationally, we already have good experience of the use and implementation of such products. Obviously we feel that the claimant commitment is an improvement on the jobseekers’ agreement. Most notably it will bring together all the requirements placed on the claimant, while the jobseekers’ agreement covers only some requirements. We intend to introduce and implement the claimant commitment in JSA in advance of universal credit, and we will, of course, be looking to learn from that experience in advance of universal credit. As I said, I will be able to explain more about this process later as we get to those clauses. I urge the noble Baroness to withdraw this amendment.

[Baroness Hayter of Kentish Town]

I thank the Minister for that reply, and, through him, I thank his officials for the examples they sent through of the individual claimant. I have only two points to make. First, the Minister said that part of the Government’s commitment is to pay the claimant. Many of these benefits are earned and contributed and are something that people have paid for, so it is not quite the act of generosity and philanthropy that he made it sound.

Secondly, on the individual threshold and the negotiation to make sure that the claimant commitment is tailored to particular needs, I echo a point that was made by at least two other noble Lords about the training of staff. Getting that right will be key to this and is important. As we go through, I look forward to further discussions on this. As I said, such a commitment is not new, but we want to make sure that it does what it is intended to do, which is to assist someone in finding their way into work or back into work rather than to be an excuse for sanctions as an end in themselves. I beg leave to withdraw the amendment.