Welfare

Lord Freud Excerpts

Monday 21st March 2016 Lords Chamber

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, with the leave of the House, I shall now repeat the Statement made in the Commons by Stephen Crabb, the Secretary of State for Work and Pensions. The Statement is as follows.

“It is a privilege to stand here at the Dispatch Box as the new Secretary of State for Work and Pensions. First, I pay tribute to the work of my predecessor, the right honourable Member for Chingford and Woodford Green. My right honourable friend came into this job six years ago with a real sense of mission and purpose to transform people’s lives for the better, and he achieved some remarkable things. I intend to build on this success.

As a one-nation Conservative, my vision is to support everyone to achieve their full potential and live independent lives. That means people having the stability and security of a decent job, and children growing up in a home with the benefit of that stability. There are now over 2 million more people in work than in 2010, and almost half a million more children now grow up seeing a mum or dad go out to work each day. We are ensuring that these opportunities extend to all those in our society, including disabled people.

Today, there are more than 3 million disabled people in work. In the last 12 months alone, 152,000 more disabled people have moved into work, 292,000 more over the past two years. That represents real lives transformed as we support people with disabilities and health conditions to move into work and to benefit from all the advantages that that brings. But we are also supporting the most vulnerable, and are determined that those with the greatest need are supported the most.

Our reforms have seen support for disabled people increase. In the last Parliament, spending rose by £3 billion. We are now, rightly, spending around £50 billion on benefits alone to support people with disabilities and health conditions. Devoting this level of resources is the mark of a decent society.

Personal independence payments were introduced to be a more modern and dynamic benefit to help to cover the extra costs faced by disabled people, something that its predecessor benefit, the DLA, did not do. PIP is designed to focus support on those with the greatest need, and we have seen that working. For example, 22% of claimants are receiving the highest level of support, compared to 16% under the predecessor benefit, DLA.

Before Christmas, the Government held a consultation on how part of the PIP assessment works in relation to aids and appliances. As the Prime Minister indicated on Friday, I can tell the House that we will not be going ahead with the changes to PIP that had been put forward. I am absolutely clear that a compassionate and fair welfare system should not just be about the numbers. Behind every statistic there is a human being, and perhaps sometimes in government we forget that.

I can also confirm that after discussing this issue over the weekend with the Prime Minister and the Chancellor, we have no further plans to make welfare savings beyond the very substantial savings legislated for by Parliament two weeks ago, which we will focus on implementing.

I want to turn directly to the welfare cap. First of all, it is right that we monitor welfare spending carefully. The principle of introducing a welfare cap is the right one, given the huge increases in welfare spending we saw under previous Labour Governments—up nearly 60%. The reality is that if we do not control the public finances, it is always the poorest in society who pay the biggest price, so we need that discipline. The welfare cap strengthens accountability and transparency to Parliament—something that simply was not in place under Labour. We make no apology for this. As we are required to do, we will review the level of the cap in the Autumn Statement when the OBR formally reassesses it, but I repeat that we have no further plans to make welfare savings beyond the very substantial savings legislated for by Parliament two weeks ago, which we will focus on implementing.

Against this backdrop, I want to build on the progress we have made in supporting disabled people. We made a manifesto commitment to halve the gap between the proportion of disabled people in work compared with the rest of the labour market. As I have outlined, we have made good progress in supporting disabled people into work, but to go further will require us to work in a way that we have not done before, to think beyond the artificial boundaries of organisations, sectors and government departments to an approach that is truly collaborative. That is why today I want to start a new conversation with disabled people, their representatives, healthcare professionals and employers. I want the welfare system to work better with the health and social care systems. Together we can do so much better for disabled people.

This is a hugely complex but hugely important area of policy to get right. Disabled people themselves can provide the best insight into how support works best for them. So I am determined that all views are listened to in the right way in the weeks and months ahead. I will be personally involved in these discussions. The events of recent days demonstrate that we need to take time to reflect on how best we support and help to transform people’s lives. That is the welfare system I believe in. I commend this statement to the House”.

That concludes the Statement.

--- Later in debate ---

[Baroness Manzoor (LD)]

My Lords, I wish the new Secretary of State for Work and Pensions every success in his new role—I mean that sincerely—and I am sorry that the Government find themselves in a difficult place. In fairness, however, they have had significant notice that there was much wrong with the way the welfare reforms have been tackled and are to be implemented.

As the Minister knows, we on these Benches have seen the welfare reforms through the prism of work, so we opposed cuts to tax credits, cuts to universal credit, the removal of support for people with disabilities, and measures that increased child poverty. We on these Benches want to ensure that government policy enables a fairer and more compassionate society, where the weak and the vulnerable are protected and people are supported to work, and supported in work when their incomes are low.

The Government have led us to believe that the weak and the vulnerable are being supported, but the events of the weekend say that this is not only about ensuring adequate support for disabled people but has been—as Iain Duncan Smith’s letter says—about unnecessary cuts to hit a politically motivated target. If that is the case, I am sad to say that the Government may have lost their moral compass. Do the Government accept IDS’s criticism, and do they not therefore owe disabled people an apology for being used as pawns in a cynical political game? I am pleased to note that the reassessment for PIPs will now be kicked into the long grass, but that is not good enough. The entire PIP cuts plan should be stopped. Will the Minister confirm exactly what the intentions for changes to PIP are? Are they to be fully stopped, as the Minister indicated, or just paused for the next six months or so?

Finally, given that the Government consulted on these proposals and until last Friday were saying that they were about giving the right support to disabled people, what is the Government’s actual view on the use of aids and adaptations by disabled people? If they have changed their mind for political reasons, does that mean that the foundation for the Government’s original claims was false, and—as IDS says—just an excuse to cut money? I am concerned about how the Government have treated the consultation process. Should there not be a review into whether they have made misleading claims in order to justify the cut, while ignoring the outcome of the consultation process?

We all have a duty of care to protect the most vulnerable in our society, to preserve their dignity and to help them live full and independent lives. All Governments should take that responsibility very seriously. To that end, I am pleased to note that the Statement says that the Government have no plans to make any further cuts in welfare, but can the Minister confirm that this applies throughout this Parliament? I am also pleased that they are re-setting the conversation, which is vital. I hope that this new conversation about welfare, health and social care will benefit the majority.

[Lord Freud]

There were a number of questions there. One of the main questions is about what is happening to PIP in terms of costs—various claims have been made. I reassure noble Lords that in this Parliament we are seeing an increase in the DLA PIP budget in real terms. I accept what the noble Baroness, Lady Sherlock, said; namely, the contrast between the PIP process we were undergoing last week and the tax cuts was wrong. This is almost history, but the reality was that we were looking at the issue in its own terms, following a report by an independent review that said there was a problem in the PIP process. Fundamentally, putting the two together has caused a great deal of upset. Indeed, Iain Duncan Smith raised that very point himself.

I shall not spend the whole time going through the PIP issue. I assure noble Lords that we have now stopped the PIP adjustment, full stop. It is not being delayed; rather, it is not happening. The question—a suspicious question from the noble Baroness, Lady Sherlock—is: where is the money coming from? I see. The answer is that we are not seeking to replace that money within the welfare budget. That is the point of the very explicit statement, which was made twice, that, looking ahead, we are not looking for welfare savings.

The noble Baroness asked about the White Paper process. That would be a reform process; there may be changes in the way we do things and how we support people, but that is following a consultation on what will work best and is not to do with the savings process that I described. There is no intention to use it in that way.

I shall pick up some of the other issues raised by the noble Baroness, Lady Sherlock, including, for instance, whether we will reconsider other things. There are 24,000 more people on Motability than at the start of 2013. They may be different people, but the process is being directed at the people who need it. The independent living fund was a transfer. The noble Baroness uses one set of statistics on who is disabled and the RSRS. The numbers come down very considerably when one looks at them on ESA. The final issue she raised was the ESA and WRAG. I remind noble Lords, and her, that that was voted on repeatedly in another place.

On the points made by the noble Baroness, Lady Manzoor, I reiterate that there is a full stop here; we are not moving things around on PIP changes. I defend the consultation process that we undertook. We made some changes as a direct result of the consultation, although we did not use four of the options. We went to one and then adapted option 5. I think I have now dealt with the Front Bench questions.

--- Later in debate ---

[Lord Freud]

I take that point from the noble Lord, who is very well informed in this area, on advisement. I accept his point that George Osborne is a pussy cat compared with some previous Chancellors sitting not very far from me.

[Lord Low of Dalston (CB)]

My Lords, as the Minister has confirmed, events at the weekend have made it clear beyond any doubt that the Government’s welfare reform programme has run out of road. Its contradictions stand revealed for all to see. Since exactly the same criticisms apply to the cuts to the employment and support allowance enshrined in the Welfare Reform and Work Bill as apply to the cuts to the personal independent payment, I repeat the question asked by the noble Baroness, Lady Sherlock: will the Government now reconsider implementation of the cuts to the employment and support allowance? They may have been voted through, but it is still open to the Government to reconsider the matter, as they have with the personal independence payment.

[Lord Freud]

The welfare reform programme is massive and we are pushing ahead with it. At its heart is universal credit, which is now moving at a pace. As I speak, more than 400,000 people have made an application for universal credit. We have a lot more to do, and we have a lot to do to implement the Bill that we have just passed. I have to disappoint the noble Lord by saying that there are no plans to reconsider the changes to ESA WRAG that we put through in that Bill.

[Baroness Thomas of Winchester (LD)]

My Lords, it is excellent news that the cuts announced in the Budget have been abandoned, but there is an existing cut that urgently needs to be reversed. It has had less attention but is badly affecting working-age claimants of PIP. I refer of course to the 20/50 metre issue in the “moving around” section of the PIP assessment, which is resulting in 400 to 500 Motability cars a week having to be handed back. Will the Minister ask the new Secretary of State to look at this again, not least because reversing the cut would save money by helping many disabled people to get into work and pay taxes?

[Lord Freud]

At one level, the new Secretary of State will clearly look at his whole portfolio with a critical eye. At another level, there may be changes in who gets the higher-rate mobility component to allow them to qualify for the Motability scheme. More people are on the higher rate under PIP than was the case under DLA. Indeed, more people with mental health issues are going on to PIP than would have received DLA. So, while there is a change in who gets the top-level mobility component and is therefore entitled to the Motability scheme, the absolute number qualifying for the Motability scheme is now moving up. As I said, there are now 24,000 more people on the Motability scheme than there were in 2013.

[Lord McKenzie of Luton (Lab)]

My Lords, the Minister will recall that we recently debated issues around rent restriction policy and local housing allowance changes for supported accommodation. There is a commitment in the Statement that there are no further plans to make welfare savings beyond the substantial savings legislated for recently. Are the proposed changes to supported accommodation now off the table, and does the commitment also run to pensions and pensioner benefits?

[Lord Freud]

Supported accommodation is a vital issue and I am grateful for the noble Lord’s question as it gives me a chance to offer the industry as much reassurance as possible. We have delayed two of the changes—the rent reductions and the LHA cap on supported accommodation—for a year because that will give us time to really understand the sector. In the short term, I expect to get a report on how the sector works so that we can look at how to support it most efficiently with funding and finance. The noble Lord will probably not remember how it is financed, as I do not think that anyone knew at that time. It has been quite a complicated issue. As for his question about the commitment and pensions, the pension element is growing rather rapidly, so, far from cuts, that becomes an irrelevant consideration.

[Lord Lansley (Con)]

My Lords, those of us who know Stephen Crabb well are very hopeful about the approach that he will bring to this very important and challenging task. From these Benches we should pay tribute to Iain Duncan Smith for what he achieved as Secretary of State and indeed even before he became Secretary of State in his ambition to help the poorest and most vulnerable in society. Coming back to the questions that arise today, will my noble friend confirm that the OBR forecast published alongside the Budget now appears to indicate that the anticipated disability benefit budget, having risen by about £4 billion since 2010, will rise over the next four years by about another £2 billion? That highlights that, if we are to achieve meaningful reform in the future, it is not about, as my noble friend said, changing the amount of money paid to people with specific needs but about helping people back into work. The focus of welfare reform should be not diminished but refocused on the work and health programme and halving the disability employment gap.

[Lord Freud]

I am grateful to have the opportunity to pay tribute to Iain Duncan Smith. He was a remarkable champion for reform in the welfare state. I say with feeling that there is a reason why no one has transformed the system in the last 70 or 80 years and that is that it is very difficult to do. He had the political guts to get on and do it, and I am very proud to have supported him in getting the programme as far as it is. I think that he will go down in history for that achievement.

As my noble friend said, the OBR forecast shows that we gave more money to the disabled in the last Parliament, and the same is projected for this Parliament. In particular, a real-terms increase in the area of PIP/DLA is now baked in. My noble friend is of course right that the next step in the process is the need to find the right way to help disabled people back into the workplace and to achieve our objective of halving the disability gap.

[Lord Davies of Stamford (Lab)]

My Lords, the noble Lord gave an assurance that the DWP will not replace the £4.4 billion of savings from the PIP programme, which it is now going to abandon, with cuts elsewhere in the DWP budget. However, he has not answered the obvious and important question of how those savings are going to be compensated. Surely there are only three possibilities. They will have to be compensated by spending cuts in other departments, by tax increases or by an increase in the fiscal budget being run by the Government. Which is it, or will it be a combination of all three? Surely it is the height of fiscal irresponsibility simply to announce that £4.4 billion of projected savings will no longer be arriving without any idea at all of how they will be replaced.

[Lord Freud]

My Lords, the Chancellor and the Secretary of State are saying that at the Autumn Statement we will look at the whole picture and at how the finances of the country should be organised. At that stage, there will be lots of moving parts and we will be able to see how this fits in.

[Baroness Masham of Ilton (CB)]

My Lords, I agree with the part of the Statement that says that disability is very complex. There are very many different disabilities and many of them involve extra expense, such as extra food to keep fit. I also agree with the noble Baroness, Lady Thomas, about Motability. If you live in a rural area and do not have a car, you cannot get to work and are therefore stuck. Another very important issue is the people who do the assessments, about which there has been a lot of criticism. Can the Minister arrange better training for the people doing the assessments?

[Lord Freud]

I accept that one of the issues around the disability element is that we have a fairly one-size-fits-all approach. One thing that the new Secretary of State will be very interested to hear is how best to manage the process in the light of that complexity—I know that he is very aware of it. I have tried to deal with the Motability issue. It is different people who are getting that and it is based on a better test; PIP is a better test than DLA. We are putting a lot of resource into assessments and their quality is now showing some good improvement.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am pleased that the Minister paid tribute to the outgoing Secretary of State for Work and Pensions. He is a man I have known over many years and he had a sense of mission, which I think we should acknowledge. I hope that the new Secretary of State will have an equal sense of mission, particularly in relation to universal credit, which was, I think, what drove the past Secretary of State to distraction and out of his office. To me, universal credit is the most important thing that the Government still have to deliver. Will the Minister assure the House that the conversation that the new Secretary of State has announced in relation to disability will not delay the forthcoming White Paper process too long? I am in favour of consultation, and I am also in favour of the Government paying attention to consultative responses, but can he assure the House that the White Paper is still on track?

[Lord Freud]

I have known Stephen Crabb for a time. He was a Whip for the department and then he was in Wales, where he dealt with welfare issues. I have high hopes for him in pursing the reform agenda. He is up for it and he will be pretty effective at it. I look forward to providing him with all the support that I possibly can in this agenda. Clearly, in getting this reform going, the conversation has to be balanced with the speed. He is conscious of that and will look to get something going at the fastest possible speed, commensurate with making sure that we get it right and get the views of quite a complicated set of constituencies.

[Baroness Hollis of Heigham (Lab)]

My Lords, as my noble friend said, I think the whole House recognises the honourable way in which the Minister has behaved over recent days. I would like to associate myself with her remarks to that effect. However, I want him to return to the answer that he gave to one of her questions: she asked whether he would accept that the original decision to cut PIP was wrong. Listening to the Minister, I think he appeared to suggest that what was wrong—he used the word “wrong”—was its conjunction in the Budget with reduced wealth taxes for the better off. Do I understand from that that according to the Minister, had it not been conjoined with those Budget changes benefiting the better off, he would have supported, welcomed and gone ahead with the PIP changes?

[Lord Freud]

The noble Baroness deals me a compliment with one hand and a blow with the other in the way that I enjoy so much, as a masochist. I am not sure it is worth chewing over what I thought last week. We could do it, but I am not sure that it would be a valuable use of Hansard inches.

[Baroness Hollis of Heigham]

To clarify, it was what the Minister said—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, this is not a debate; it is a Statement. The noble Baroness has asked her question and my noble friend is responding to it. He will respond to it in one go and then we will move on to the next question.

[Lord Freud]

We were told by Paul Gray, who did a study of this, that there was something going wrong with the way that the aids and appliances element was adding up. There were eight different categories and the points were tiered up. He thought that that was not going right and that a large number of people were getting PIP purely on this one category—that the figures were adding up in an odd way. That is what the consultation was about: it was driven by the need to make sure that it worked. When it got wrapped up into a debate on savings, that was not the driving force and it became something that was not acceptable to Conservatives in the Commons. It was decided, therefore, that we would not go ahead with it. That is the honest and full answer.

[Baroness Lister of Burtersett (Lab)]

My Lords, I welcome the Minister’s Statement. When he said that there would be no further social security cuts looking ahead, does that mean that there will be no further cuts for the lifetime of this Parliament, as was asked by the noble Baroness, Lady Manzoor? Having paid tribute to his former boss, could the Minister say whether he agrees with him that the reduction in the welfare cap following the election was arbitrary and that therefore he—Mr Iain Duncan Smith—no longer could support it?

[Lord Freud]

The Statement said—and I think I need to stay very close to the Statement—that there will not be any further welfare savings. That is the Statement and I will leave it at that. What happened with the review of the level of the cap was that it came down post-election. However, that was not arbitrary: it reflected the level of welfare payments in those categories and was fixed at that level with a projection that ran the same way. If that sounds complicated, it is because it is quite complicated.