Health: Pneumoconiosis

Lord Freud Excerpts

Wednesday 29th February 2012 Lords Chamber

[Lord Wigley]

To ask Her Majesty’s Government how many payments of compensation were made, in the most recent year for which figures are available, under the provisions of the Pneumoconiosis Etc. (Workers’ Compensation) Act 1979, and how many of these were made to former slate quarrymen.

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

In the year from April 2010 to March 2011, 2,820 payments were made in total under the Pneumoconiosis Etc. (Workers’ Compensation) Act 1979. We are not able to identify how many payments were made specifically in respect of former slate quarrymen.

[Lord Wigley]

My Lords, the Minister will clearly be aware that, while the 1979 pneumoconiosis Act was primarily triggered by the plight of slate quarrymen who were unable otherwise to secure compensation for industrial lung diseases they suffered, most of the beneficiaries have, quite fairly, been from other industries. Is he aware that while some coal-miners suffering emphysema and chronic bronchitis have secured compensation under the 1979 Act, former slate quarrymen suffering emphysema and chronic bronchitis—which are equally endemic in slate quarrying as in coal-mining—cannot be compensated under the Act? Will he discuss this with fellow Ministers so that this small but long-suffering group of slate quarrymen can achieve the justice to which they are equally entitled?

[Lord Freud]

My Lords, I was not aware of this discrepancy, so I will go back and have a look at exactly what is behind it, because I just do not know.

[Lord Roberts of Conwy]

My Lords, as many of us will know, many of the sufferers from pneumoconiosis were victimised by avaricious lawyers and lost a substantial portion of their compensation awards. Was that money ever recovered and returned to the proper beneficiaries?

[Lord Freud]

Again, my Lords, I am regrettably not an expert in that matter. As far as I am aware, there was not any movement to restore it, but I will have a look and write to the noble Lord on that matter.

[Lord Morris of Aberavon]

My Lords, I am encouraged by the statement of the Minister that he will look to see if there is a gap in the legislation that needs to be covered. The Act was one of the proud achievements of the Labour Government of 1974 to 1979. Its intention was to apply generally where there was a problem. In particular, the question of the quarrymen had been raised and pushed forward very strongly. We take pride in having passed the Act and the Minister has encouraged me by saying that he would look for any gaps in it.

[Lord Freud]

My Lords, I will look at the Act. The 2008 Act and the 1979 Act were intended to help people with this set of diseases. We are very conscious that some people miss out because they cannot trace claims. That is another matter that we are looking at very actively.

[Lord Roberts of Llandudno]

My Lords, I am grateful for the Act, and of course some who advocated it are present in the Chamber this afternoon. At its height, the Welsh quarrying industry employed some 17,000 quarrymen. As the years have gone by, the numbers suffering from pneumoconiosis and silicosis have fallen. How many people now have been diagnosed with these two diseases, which the Act was introduced to cover?

[Lord Freud]

As noble Lords may imagine, when I was asked this Question I tried to get more fine detail, but it simply is not available. There is a division between those suffering from mesothelioma and those suffering from other diseases; that is the only breakdown that we have. I cannot provide the information that the noble Lord requested.

[Lord Morgan]

My Lords, perhaps in common with other noble Lords I have members of my family who worked in the slate quarries and died as a result of their employment. When the Act was passed by the Callaghan Government in 1979, Members of the Commons were assured that there would be an equality of authority for workers in the slate quarrying industry—a small, fragmented, rural industry—and those in more powerful and numerous groups working in, let us say, the coal-mining and textile industries. In view of the figures given by the noble Lord, Lord Wigley, can we be sure that those assurances have been met?

[Lord Freud]

My Lords, the 1979 and 2008 Acts were drawn very precisely to cover certain diseases. I am sure that noble Lords know that these range from asbestosis through mesothelioma, relevant silicosis and other illnesses contracted from cotton, clay, and so forth. The Acts that cover these diseases are very precise. Other industrial diseases are covered by the Industrial Injuries Advisory Council, and industrial benefits are based on those diseases.

[Lord Cormack]

My Lords, while strongly supporting the pleas made by noble Lords who come from Wales, could I, who represented many thousands of coal-miners in England, emphasise to my noble friend that the problem is by no means confined to the Principality, and that there are people in Staffordshire, Yorkshire and all over England who will want to hear what he says and who will hope for a positive result?

[Lord Freud]

My Lords, if there are discrepancies between miners and quarrymen, I will go back and look at them. I was not aware that there were such discrepancies. I will look at them and take whatever measures are required.

[Lord McKenzie of Luton]

My Lords, as we know, one of the challenges of long-latency diseases is the tracing of old employer liability insurance policies. The noble Lord referred to that a moment ago. Will he be more specific about progress on the Employers’ Liability Tracing Office, and in particular whether it is now accepted that there should be back-filling of policies to November 1999—the start of the code—rather than applying it only to future policies? Will the Minister also say whether there has been progress on ELIB, the bureau of last resort when employer liability policies cannot be traced?

[Lord Freud]

My Lords, although there has been silence since the document came out in May 2010, I assure the noble Lord that there has been a lot of activity behind the scenes. I am holding discussions with all the relevant parties and I hope that I am making progress on the matter of tracing. Noble Lords will be aware that when a company disappears some claimants simply cannot find their insurance. That matter is under active discussion.

Employment: Work Programme

Lord Freud Excerpts

Wednesday 29th February 2012 Lords Chamber

[Lord McKenzie of Luton]

To ask Her Majesty’s Government what progress is being made by the Work Programme in assisting benefit claimants to find employment.

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

My Lords, the Work Programme provides personalised support for the long-term unemployed and those at risk of long-term unemployment. By the end of October 2011, 332,000 people were already receiving this support. We will publish the first statistics on job outcomes in the autumn.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his reply. As the recent NAO report made clear, the Work Programme has been bedevilled by the speed of its introduction, which included a lack of piloting, going live before the IT was in place, and compiling the business case after the decision to proceed. Perhaps this is why the Government are a little coy about releasing data, although such relevant data as we have show that benefit off-flow rates are down, not up; that referrals to the Work Programme include only a trickle of the hardest to help; and the haemorrhaging of voluntary and community sector providers. Will the Government now at least permit providers to publish their own performance data and, under the Government’s own data work programme, arrange for the publication of user satisfaction information?

[Lord Freud]

My Lords, I must point out that the NAO acknowledged that the Work Programme addressed significant weaknesses of previous programmes; that key elements within it improved affordability and drove value for money; and that it was a significant achievement to introduce it in a year. It is expected to help more people more effectively and for less money than previous programmes. As for information, ERSA has put out some information about what happened to the first cohort. It said that people got into jobs at a rate of between 18 per cent and 23 per cent, which was more or less in line with the expectations of the industry.

[Lord German]

My Lords, up and down the country there are third sector and charitable organisations supporting the Government in delivering this Work Programme as subcontractors. However, the National Audit Office report shows that many of these subcontractors are concerned about the way they are being treated by the prime contractors, and recommends that the Government should institute a programme of spot checks to ensure that they are fulfilling the standards which I know the Government have put in place. Can my noble friend tell me whether these spot checks have taken place yet, and if not, when are they likely to take place, and will he report to the House?

--- Later in debate ---

[Lord Freud]

My Lords, we monitor very closely what is happening within each of the prime provider contracts, and we have introduced—I think for the first time by any Government, in this country certainly—a process where the prime providers look after their supply chains, which we call the Merlin Standard. That is the main protection for subcontractors to make sure they are treated appropriately.

[Baroness Sherlock]

My Lords, when travelling the country with the Riots Communities and Victims Panel, a frequent complaint was that the Work Programme did not have any subregional targets. For example, if you had a couple of wards with very bad unemployment, which could potentially be a reason for future disturbances, a contractor could actually meet all its targets by cherry picking people from other areas who were easier to move into work, and leaving that area untouched. Can the Minister tell the House what the Government are doing about that?

[Lord Freud]

My Lords, the way that we are trying to reduce the cherry picking, which has been natural in all of the programmes that have been introduced, is to try to fine-tune the financing so that providers are incentivised to help the hardest to help. That is why providers can earn up to £14,000 to help the very hardest to help. If we see problems developing, in that we have not priced accurately, we will need to look at pricing structures, because that is the way to solve the problem.

[Lord Knight of Weymouth]

My Lords, the Department for Work and Pensions says that, of those referred on to the Work Programme—those unemployed for more than 12 months—30 per cent would get a job anyway, regardless of any intervention. I gather that the minimum contract performance on the Work Programme is to get 33 per cent into work. Therefore, for a difference of only 3 per cent, they can start making a profit. Is it not therefore vital that there is full disclosure region by region or contractor by contractor in real time—that is what is wanted from employers for universal credit—so that we can make sure that those contractors are doing a lot better than a paltry 3 per cent?

[Lord Freud]

My Lords, this is designed so that people are investing their own money, which they will get back when they start making a return above what would have happened anyway—that is, in the jargon, above the dead weight. We will produce statistics to national statistics standards. Clearly, we can do that only once we can see some results. This is a long-term programme in the sense that you start getting rewards, even your first reward, possibly only after six months of that person being in work. Then you start getting further rewarded as you keep the people in work. The first time we think that it is sensible to have national statistics is around the autumn. That is what that process has come up with. I assure the noble Lord that I am looking forward a lot to showing noble Lords what those figures say. From what I am hearing anecdotally, I think that I shall be feeling very smug at that point.

[Lord McKenzie of Luton]

My Lords, perhaps I may ask the Minister to answer the question I posed. Will the Government now permit providers to publish their own performance data?

[Lord Freud]

My Lords, I thought that I had made that clear. Some performance data have been put out by ERSA. We are discussing with ERSA what kind of performance data it can put out. Clearly, we have to be careful that the information that goes out from the providers cannot undermine what the national statistics will say. That is the issue.

Jobseeker’s Allowance (Domestic Violence) (Amendment) Regulations 2012

Lord Freud Excerpts

Wednesday 29th February 2012 Lords Chamber

Moved by

[Lord Freud]

That the draft regulations and orders laid before the House on 19 and 30 January be approved.

Relevant documents: 39th and 40th Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 27 February.

Motion agreed.

Welfare Reform Bill

Lord Freud Excerpts

Wednesday 29th February 2012 Lords Chamber

Moved by

[Lord Freud]

That this House do not insist on its Amendments 3B and 26B to which the Commons have disagreed.

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

My Lords, I am sure that all noble Lords will agree that we have debated this measure comprehensively over the passage of the Bill through this House. Perhaps, though, your Lordships will allow me to take some of our time this evening to explain again why we believe that this change is necessary.

We have been open about the fact that this measure is essential to curb housing benefit expenditure. Left unchecked, expenditure on housing benefit would reach £26 billion by 2014-15. That is unsustainable and unjustifiable, not least because of the current economic climate. As I have said before during our earlier debates on this subject, we do not think that it is reasonable to expect the taxpayer to fund the cost of somewhere approaching 1 million spare bedrooms. At £500 million a year the cost is substantial, and there is no realistic possibility of finding that money elsewhere.

Some in this House, and indeed in the other place, have suggested that we should perhaps abandon this measure altogether as it will not deliver savings if substantial numbers of tenants move into the private sector. I assure noble Lords that if that really were the case, we would not be implementing this change. It is important to look at the bigger picture. If there were movement into the private rented sector, that would free up accommodation in the social rented sector, enabling it to be let to others who may otherwise have been renting privately. Alternatively, it could be offered to people who are currently placed in often expensive temporary accommodation. So, while I can understand how some may conclude that this measure would result in an increase in housing benefit expenditure, I firmly believe that it will achieve precisely the opposite as the effects ripple outward.

During this final stage of the Bill’s passage, the noble Lord, Lord Best, has offered amendments to protect some social sector tenants, all of which would reduce the expected savings from this measure. I pay tribute to him for the manner in which he has pursued his amendments and the wealth of knowledge that he brings to bear on this issue. I do not doubt for one moment that these were anything other than well intentioned but the Government have been unable to accept them. Aside from the financial implications, there is an important issue of fairness. We have talked about that a lot in the context of these changes but we must make sure that we recognise the need to be fair to tenants living in the private sector in receipt of housing benefit.

On the face of it, what has been suggested through earlier amendments is an approach that protects claimants in social housing but not those in the private sector. I do not believe that there is a clear rationale to pay claimants in the social sector to keep a spare bedroom but not those renting from a private landlord. The Government’s clear view is that we do not fund spare bedrooms in the social sector or the private sector. The cost to the taxpayer would be excessive and totally unjustifiable.

Although we have had to take a tough decision to press ahead with these changes, that does not mean we will not protect people in vulnerable situations. As noble Lords know, we are adding £30 million a year of extra help to the discretionary housing payments fund from 2013-14 for disabled people living in significantly adapted accommodation and for foster carers. Local authorities will of course still be able to consider discretionary housing payments for other groups. I realise that the noble Lord, Lord Best, and others would prefer the certainty of specific exemptions for these groups. We understand the arguments for that but do not believe that a blanket exemption is the most effective or affordable approach. Any exemptions would also add complexity to the system, which we want to avoid.

We also have special rules to provide protection for groups such as the recently bereaved, so that they do not see an immediate reduction in their housing benefit. I know that the noble Baroness, Lady Hollis, who I do not see in her place tonight, is concerned about the impact of these changes on those who need care. Therefore, I reassure her once more that we will allow an extra bedroom for those requiring overnight care from a non-resident carer, in the same way as we do for claimants in the private sector.

We have more than a year before these changes are due to come in and we recognise how important it is to prepare for them. It is essential that all those affected by this measure, whether directly or indirectly, understand how the change will affect them so that they can take action well before April 2013. Therefore, we will use this lead-in time as effectively as possible to support local authorities, customers, landlords and others to plan for these changes. I beg to move.

Motion A1 (as an amendment to Motion A)

Moved by

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, we support the Motion proposed by the noble Lord, Lord Best, and I, like others, thank him for the persistence, diligence, precision and passion with which he has pursued this subject from the start of our proceedings. I very much agree with the noble Lord, Lord Kirkwood, who said that this is no way to go about tackling issues of underoccupation; a much broader, more sophisticated approach is needed. It is a pity that we are stuck at this stage with, basically, having to live with what is in the Bill, subject to the review.

We have been told again that the amendment that we sent to the other place is an infringement of its financial privilege. It disdainfully clings to that financial privilege, which it could waive, without regard to the consequences for hundreds of thousands of households who will bear the financial burden of these cuts, in the same dismissive way that the Prime Minister today announced that the Bill would complete its parliamentary passage before noble Lords had even convened to consider it further. They brush aside our amendment, with its protection for families, notwithstanding that for some there are no smaller properties for them to move to; regardless of the fact that, for some, their disability involves them in additional costs which will be more difficult for them to meet and given their housing benefit reductions; and ignoring that many do not have a route to work to mitigate loss of benefit. The noble Lord, Lord Best, was absolutely right not to water down the amendment further and try to pick and choose which of those categories of individual is more deserving of escaping this iniquitous provision than the others.

Throughout the various stages of the Bill, we have sought to press on the Government the innate unfairness of the provisions concerning underoccupation. As we have heard, the arguments advanced have variously included the following. There is the appropriateness of adopting the CLG definition of underoccupation—a measure which provides sensible flexibility for households as family arrangements wax and wane, health conditions change, and young children grow older. There is the acceptance that only if there is suitable alternative smaller accommodation should families be expected to move, notwithstanding that that may be totally disruptive to their lives, and that meeting a housing benefit shortfall by getting a job or working more hours should not be insisted on where claimants are simply not able to work.

The losses in housing benefit a week, whether of £12, £13 or £14, cannot be borne without driving more households closer to or into poverty. Most are not sitting on substantial savings to cushion the loss of benefit; if they were, they would be ineligible for housing benefit in the first place. Moving to the private sector is likely to lead to increases in housing benefit costs for the Government rather than reductions. Taking in lodgers to contribute to the housing benefit shortfall will simply not be possible or desirable in many family circumstances. It is a false economy to force disabled people to move from a property which has been substantially adapted. To make it more difficult for those involved in foster caring makes no sense on many levels.

Your Lordships have supported those arguments, but they have been rejected by the Government in Committee, at Report and, now, at ping-pong. The only acknowledgement of the havoc, despair and poverty they will create is a £30 million annual top-up to discretionary housing benefit. Even that, as we heard from the noble Lord, Lord Best, is funded by an increase in the housing benefit reductions for all.

The Government know full well that these clauses will not solve the problem of underoccupation of social housing. They cynically do not want to solve it, otherwise their intended savings will simply not materialise. The offer they make is to move further afield, away from your community, support network, friends and jobs—not a sensible proposition, as we heard from my noble friend Lady Lister—to take a lodger, to use your savings or to earn more money. That is essentially a bogus offer, because most will simply not be able to take it up.

If we cannot persuade the Government, the least we can do is to have arrangements which will confront them with the consequences of what they implement. That is why we support the Motion tabled by the noble Lord, Lord Best, which requires an independent review of the consequences of Clauses 11 and 68. Of course, it will not be just that review which explains what is going on. Local authorities, councillors, MPs, and voluntary and community organisations—and, indeed, the courts—will get the blast from this in little over a year from now, as the cuts begin to bite.

We do not deny the need to tackle the deficit, nor that that means some hard choices, but it is genuinely difficult to understand why this contribution is sought in this way to this extent from this group of people. The alleged cost of our previous amendment, £100 million, is, when we think about it, just 20 per cent of one company’s tax avoidance schemes.

However, that is what both partners in government have chosen to do, and we have not been able to persuade them otherwise. We hope that an independent review will reinforce the points that we have made and still persuade the Government to a different view. If the review concludes otherwise, we can have no complaint.

This is not the end of the matter; it remains work in progress; but this debate marks the conclusion of our deliberations on the Bill, a Bill that we have been able to improve in some respects, but which, in too many ways, imposes unacceptable burdens on the most vulnerable. They are entitled to better from their Government.

[Lord Freud]

My Lords, let me start with two points. The first is that we plan to move ahead with these changes. The second is that I pick up the point made by my noble friend Lord Kirkwood. I heard very clearly what he said about housing strategy. On this measure, of the 3.3 million tenants living in the social rented sector and receiving housing benefit, only about one in five is expected to be affected by this change. Some will move to more suitably sized accommodation and will get support to do so. However, if social sector tenants choose to stay where they are and meet the shortfall through employment, we will offer them help in doing that. As noble Lords know, this measure applies only to working-age people. The substantial investment that we are making in the work programme and in universal credit will ensure that people are supported to find work and that work really will pay.

Jobseeker’s Allowance (Domestic Violence) (Amendment) Regulations 2012

Lord Freud Excerpts

Monday 27th February 2012 Grand Committee

Moved by

[Lord Freud]

That the Grand Committee do report to the House that it has considered the Jobseeker’s Allowance (Domestic Violence) (Amendment) Regulations 2012.

Relevant document: 39th Report from the Joint Committee on Statutory Instruments.

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

My Lords, the Jobseeker’s Allowance (Domestic Violence) (Amendment) Regulations 2012 were laid in draft before the House on 19 January. They are regarded as being compatible with rights under the European Convention on Human Rights and are being introduced so that recipients of jobseeker’s allowance who have been victims of actual or threatened domestic violence can continue to receive jobseeker’s allowance without having to meet the requirements to be available for and actively seek employment, and to have a jobseeker’s agreement. The term “domestic violence” is defined in the regulations and includes physical, psychological, financial, emotional and sexual abuse.

The regulations apply to victims of actual or threatened domestic violence by a partner, former partner or certain family members of the claimant, their partner or former partner, and allow them to access the exemption from the jobseeking conditions for an initial period of four weeks if the incident took place within the 26 weeks before the claimant notifies Jobcentre Plus about it, provided that the claimant is not living at the same address as the perpetrator at the time of the notification. If the claimant then provides written evidence of the kind required by the regulations during the initial four-week period, the easement period will in effect be extended to 13 weeks. Claimants will be able to access the easement only once in any 12-month period.

During debates on the Welfare Reform Act 2009, the Lords requested an automatic 13-week period due to concerns that jobcentre advisers might refuse access to the existing domestic emergency exemption in such cases because they may not understand the impact of domestic abuse on individuals and their children. The domestic emergency deferrals are allowed at the discretion of Jobcentre Plus advisers and allow four one-week periods within 12 months for individual incidents of emergency, such as a death in the family or domestic violence. These four one-week periods can run consecutively, if appropriate. For those with dependent children, one of the weeks may be extended to eight weeks, resulting in a total maximum of 11 weeks’ deferral.

The main differences between the domestic emergency process and the new domestic violence process is the need for evidence in the 13-week deferral and the fact that victims without dependent children receive the same number of weeks’ exemption as those who do not have dependent children. Clearly the domestic emergency exemption also covers a wider range of situations. We would not expect victims of domestic violence to use both exemptions routinely, but the fact that they have an alternative available when they do not want to produce evidence, and in appropriate cases could use both exemptions in order to extend the time they are exempted from the jobseeking conditions, shows how seriously the Government take this issue.

During the debates on the Welfare Reform Bill 2009, noble Lords were concerned about the impact of domestic violence on lone parents with older children as, prior to the introduction of changes to entitlement to income support for lone parents, this group would have claimed income support and not have been required actively to seek work until their youngest child reached the age of 16.

Currently, a lone parent can claim income support only until their youngest child reaches the age of seven and this age is being lowered to five later this year, subject to Royal Assent of relevant provisions in the Welfare Reform Bill and the making of regulations. There is strong evidence to support the amendment. Although no research exists on the impact of domestic violence on JSA recipients in particular, there are data on the incidence of domestic violence in the wider community.

We are aware that 7 per cent of women and 5 per cent of men reported having experienced domestic abuse in 2010-11. This is the equivalent to an estimated 1.2 million female victims of domestic abuse and 800,000 male victims. We also know that non-physical abuse, such as emotional and financial abuse, was the most common type of abuse, with the figures showing around 57 per cent of women and 46 per cent of men being victims. Furthermore, the British Crime Survey 2010-11 showed that three-quarters of all incidents of domestic violence were experienced by previous victims. Of the victims interviewed, just under one-half had been victimised more than once and nearly one-quarter had been victimised three or more times. We are also aware that four out of 10 lone parents reported domestic abuse in their previous relationship.

The proposed exemption is designed to reflect the fact that victims may experience domestic abuse at the hands not just of partners but of other family members. This can include parents and a range of other relatives, including children. This is wider than the group originally envisaged by noble Lords in the original debates in 2009 as the Government recognise that domestic violence is not restricted to those in intimate relationships and believe that support should be offered to those victimised by family members, including members of a partner or a former partner’s family.

For victims on JSA to take advantage of the exemption they would need to disclose the abuse. There is a consensus within the evidence that domestic abuse is underreported and that victims may be unwilling to disclose abuse, particularly to officials. For example, figures from the British Crime Survey 2008-09 show that only 3 per cent of victims have disclosed abuse to a benefits agency. For this reason we think that the exemption may be taken up by about 3,000 JSA claimants per year.

In order to help formulate the policy, the department undertook informal consultations with specialist organisations, such as Women’s Aid and the Child Poverty Action Group. As a result, a number of changes were accepted. These included the first four weeks to be consecutive; all claimants will be able to access this time, if they meet the conditions, without the need to provide evidence. The remaining nine weeks need not be consecutive and can be accessed only on the production of relevant evidence.

Jobcentre Plus will introduce a pro forma for use by victims and organisations who wish to use it; and employers and trade union representatives were added to the list of those eligible to provide evidence. Those consulted expressed concern about imposing limits on the time a claimant can have to obtain evidence and about having a maximum allowable deferral period. This was because research on behaviour in abuse cases shows that victims may take two or three years to leave the abusive relationship permanently, there may be a number of incidents of abuse in that time and the victim may therefore need support over a longer period than 13 weeks.

The Government consider it unacceptable to offer longer periods on jobseeker’s allowance without the need to meet the jobseeking conditions, because JSA must remain a benefit for those able to seek and undertake work. It is therefore necessary to limit the time that claimants can be treated as meeting the jobseeking conditions. Those with problems that cannot be resolved within the 13 weeks of the deferral may be able to be treated as available for and actively seeking employment for up to a further 11 weeks under the procedures for claimants experiencing domestic emergencies. The Government consider that anyone who is not able to undertake jobseeking activity after the maximum periods that these two deferral periods allow should not be eligible for JSA.

Although the easement has much to commend it, thanks in large part to the research and consultation that have been undertaken since the introduction of the easement under the Welfare Reform Act 2009, it leaves us with duplicate processes that are more complex to operate than we would wish. I have therefore requested that, in advance of the introduction of universal credit in October 2013, staff should consider ways of streamlining the support system for victims of domestic violence who are jobseekers to keep the best of the two systems and to simplify the process.

I hope noble Lords will agree that these current changes are worth while and necessary to ensure that victims of domestic violence receive the support they require to help them achieve financial independence at a time when they are unable to take up work. With those words, I commend the regulations to the Committee.

[Lord McKenzie of Luton]

My Lords, I am grateful to the Minister for introducing these regulations so comprehensively and for setting out the scale of domestic violence, which sadly is prevalent in our society. As he says, the measure flows from the Welfare Reform Act 2009. I recall being pressed hard on some of the issues in which we engaged at that time.

I have a few questions for the Minister. I understood that he referred to a definition that included psychological pressure. However, the definition in the regulations states that,

“‘domestic violence’ means abuse of a kind specified on page 11 of section 2.2 of ‘Responding to domestic abuse: a handbook for health professionals’”.

I raise that in particular because a cross-government consultation has been undertaken to look at a general definition of “domestic violence” that could be shared across all departments. I want to be clear about that. I am not sure whether I have missed anything, but that is what I understand the position to be.

Why does the measure apply only once in a 12-month period? Why is that a “magic” cut-off point and does it reflect reality? Why can it operate only when the victim, or potential victim, of domestic violence is not living at the same address as the alleged perpetrator? That seems to me to be a valid point, particularly as part of the rationale for the four-week and 13-week periods was to enable someone to look for alternative accommodation. They may have short-term accommodation in a refuge, but I am not sure that an individual would be able to move out of a house in all circumstances, particularly if the abuse is threatened rather than actual. I wonder why that constraint is included. How will the measure be carried into universal credit? I accept entirely what the Minister said about rationalising the two systems so that they operate more effectively, which I think includes the assurance that the measure will be carried forward into universal credit.

In a similar vein, there are provisions in the housing benefit regulations that allow housing benefit to continue to be paid—I think sometimes for two addresses—when someone has had to move out of accommodation because of domestic violence or a threat of domestic violence. Do we have an alignment of the definitions for those purposes so that the two concepts sit together? The reforms to legal aid will restrict access to representation in family court proceedings, which makes these provisions all the more important. As regards legal aid, there are concerns about the high level of evidence that has to be produced. I do not know whether the Minister can comment further on the type of evidence that it is envisaged will be needed to access the benefit of these easements. I was pleased that, as I understand it, after 13 weeks there can be, if necessary, a further 11 weeks under the domestic emergency provisions, after which someone should cease to be on JSA if they are traumatised and in difficulty because of these circumstances.

As I understand it, the cross-government consultation has not just looked at making sure that coercive control using power and psychological control is brought within the definition of domestic violence or threats of domestic violence but at the age cut-off point. Currently, the definition extends only to someone who is 18 or over and not to 16 or 17 year-olds. Clearly there could be some circumstances in which 16 or 17 year-olds come within the scope and are able to claim JSA. There is a mismatch here, and I wonder how it will be dealt with.

All in all, I am pleased that the regulations have been brought forward and I congratulate the Government. However, I would be grateful for the answers to my few questions.

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[Baroness Lister of Burtersett]

My Lords, I, too, welcome the order. I particularly welcome the very broad consultation that appears to have taken place, and the fact that—for once—there have been changes as a result of that consultation, which is very good to see.

The Explanatory Memorandum says that concerns were raised about some of the detail. In particular, it discusses:

“imposing time limits on the time a claimant can have to obtain evidence, and about having a maximum allowable deferral period”.

Were any other concerns raised that are not discussed in the Explanatory Memorandum? If so, perhaps the Minister could relay them.

The main issue I want to raise is in support of what my noble friend Lord McKenzie said about this being confined to victims of domestic violence or abuse where the perpetrator is living at a different address. Research in the United States shows that it is not unusual for a man who is abusing his partner to use violence to prevent her seeking paid work—for the obvious reason that he wants that woman under his control and if she gets paid work she can be independent of him economically. We know that economic dependence is linked to psychological dependence and makes women much more vulnerable to abuse. I am not aware of similar research having been done in this country but it seems quite plausible, now that partners are subjected to conditionality rules, that there will be situations in which someone may be prevented from seeking work by the violence or abuse of someone they are living with—and this will not allow for that. I would welcome the Minister’s response on that.

[Lord Freud]

My Lords, as one would expect, this has been an interesting debate with some valuable contributions. I shall try to deal with the questions—slightly at random, if noble Lords will forgive me.

The evidence can be supplied by a very wide range of bodies: healthcare professionals, the police, registered social workers, employers, trade union reps, and public, voluntary or charitable bodies. My noble friend Lord German was concerned about the process being slow, but that is probably a pretty rare circumstance. Clearly there is the back-up of the domestic emergency discretion that is allowed to Jobcentre Plus when, after four weeks, the letter has not arrived and it looks as though the body is being slow in supplying it.

Both the noble Lord, Lord McKenzie, and the noble Baroness, Lady Lister, raised the issue of not living at the same address. Of course, that is how the primary legislation was framed; it says something about having to leave the address. The regulations provide financial support for a person when they have left the address, and the support is provided in order to help a person to move on. However, this is an interesting point. The noble Baroness, Lady Lister, talked about the interplay between conditionality and violence. I will bear that in mind as we look at universal credit, for which we are ramping up the conditionality. There might be households in which on the one hand the state says “go to work” and on the other hand the partner is using violence to prevent that. I suggest that that is an interesting, although I suspect rather narrow, group, but we need to keep it in mind. Overall, the purpose of this easement is to support changes in individual circumstances. That is what it is for, and clearly staying in the same place would not mean that such a change was made.

[Lord McKenzie of Luton]

It would be consistent with what the noble Lord has just said if a claim could be made without the claimant having had to have moved out of the accommodation. The claimant might wish to do that and be in the process of trying to move on. I am not sure how this is framed in the primary legislation and maybe that is where the problem lies. The prohibition seems to relate to living at the same address at the point when the claim is made, but that might just be a temporary transitional arrangement as someone seeks to move on for obvious reasons.

[Lord Freud]

I will come back with formal written confirmation, but my understanding is that the legislation is framed in terms of there having been a move rather than a move being contemplated. As I say, I will write to confirm that, but I feel relatively confident about that point.

I want to pick up on the point made by my noble friend Lord German and by the noble Lord, Lord McKenzie, about the definition. For technical reasons the word “abuse” was not used in 2009. The term used was “violence”, but I think that things are moving on. However, the substance of the title makes it clear that we are not referring to situations in which there is physical abuse—my noble friend read out the wide definition set out in the handbook. On the point made by the noble Lord, Lord McKenzie, we are using a wider definition than the cross-government one that is in current use. I refer in particular to the point about the under-18s because we do have people who are less than 18 years old and they are not excluded from this regulation. That is one of the issues that the Government are looking at in the cross-government discussion.

Social Security Benefits Up-rating Order 2012

Lord Freud Excerpts

Monday 27th February 2012 Grand Committee

Moved by

[Lord Freud]

That the Grand Committee do report to the House that it has considered the Social Security Benefits Up-rating Order 2012.

Relevant document: 40th Report from the Joint Committee on Statutory Instruments.

[Lord Freud]

My Lords, the Social Security Benefits Up-rating Order 2012, the Guaranteed Minimum Pensions Increase Order 2012 and the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) Order 2012 were laid before the House on 30 January 2012, and I am satisfied that they are compatible with the European Convention on Human Rights. I will speak first to the two smaller orders: the first order makes minor amendments to protected rights; the second order increases guaranteed minimum pensions—GMPs. We will then discuss the up rating of state pensions and benefits.

The Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) Order 2012 makes minor amendments to the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) Order 2011 in relation to amendments to be made to the Insolvency Act 1986 and the Pensions Schemes Act 1993 in respect of protected rights payments. By way of context, the 2011 order, which was approved by the House early in June last year, makes consequential amendments to primary legislation as a result of abolishing contracting out on a defined contribution basis on 6 April 2012, which is provided for in the Pensions Act 2007 and the Pensions Act 2008.

Just before the debate in the House last June, an issue was noted that related to how the proposed amendments in Article 3 of the 2011 order would work. When introducing the debate, I therefore outlined the background to the Committee and said that we would address the issue, which we are doing now. Having previously made that statement, I do not propose to take up more time with further explanation, other than to say that the instrument before the Committee amends the 2011 order, before it comes into force, to remove the exclusion of protected rights payments from what counts as income for the purposes of income payments orders made under Section 310 of the Insolvency Act 1986, and from the scope of Section 159 of the Pension Schemes Act 1993, which provides that GMPs and protected rights payments cannot be assigned or charged. Both the amendments will ensure consistency with changes made to the Bankruptcy (Scotland) Act 1985 by Article 2 of the 2011 order. This is consistent with our original policy intention that the tracking of protected rights would cease after the abolition of DC contracting out.

The Guaranteed Minimum Pensions Increase Order 2012 provides for contracted out, defined benefit schemes to increase their members’ guaranteed minimum pensions that accrued between 1988 and 1997 by 3 per cent. Such increases are in line with the growth in prices or 3 per cent, whichever is the lower, and this year the 3 per cent cap will apply as inflation is higher.

On the uprating order, I am sure noble Lords will welcome our decisions on increases to benefits in 2012. In total, the Government will spend £6.6 billion on uprating benefits in 2012. Alongside other measures that we have taken, it will deliver fairness to those who have worked hard all their lives, and protection to the most vulnerable in society during these difficult economic times.

The consumer prices index, the CPI, remains our preferred measure for pensions and benefits indexation. We made this change at last year’s uprating; some noble Lords may remember our extensive discussion on the relative merits of the price indices. I will not repeat myself on these points—despite the enjoyment I would gain—save to reiterate that the CPI is the Bank of England’s target and the headline measure of inflation in the UK. It relates to a basket of goods, which is more appropriate for pensioners and benefit recipients because it excludes mortgage interest and is less volatile than the retail prices index, the RPI, which fell negative two years ago, with the result that many pensioners had their additional state pension frozen. The CPI methodology takes into account how consumers respond to price changes—an advantage that has won the support of many experts. Last year, the High Court upheld the Government’s decision that the CPI could be used for pensions and benefits uprating, and we have robustly defended our case in the Court of Appeal. In April the Government will implement the full September CPI increase of 5.2 per cent across pensions and social security benefits.

I will now discuss in more detail the individual benefit rates amended by the legislation. One of this Government’s first actions was to restore the earnings link with the basic state pension. We went a step further and promised a triple guarantee to increase the basic state pension by the highest of the growth in earnings, the growth in prices or 2.5 per cent. In line with the triple guarantee, the basic state pension will rise 5.2 per cent to £107.45 per week, in line with the growth in the consumer prices index. This is an increase of £5.30—the largest ever cash increase to the basic state pension. This means that this year the basic state pension is forecast to increase to 17.1 per cent of average earnings, which is a higher share of average earnings than in any year since 1997.

The basic state pension goes to more than 11 million pensioners in this country, and both this year and in the long term the triple guarantee will ensure that the basic state pension will provide a solid foundation on which recipients can build a retirement income. The triple guarantee will protect the value of the basic state pension in the long term. It is estimated that the average pensioner retiring this year on a full basic state pension will gain £13,000 over the course of their retirement as a result of the triple guarantee, compared with the old prices link.

From April this year the additional state pension will also rise by 5.2 per cent, which will mean that those with a state second pension or state earnings-related pension, SERPs, will see the 5.2 per cent increase in both their basic and additional state pension income. This means that the increase in total state pension income for someone with a full basic state pension and an average additional state pension will be about £6.70 a week: £348 a year.

The standard minimum guarantee in pension credit is the means-tested support that ensures all pensioners a minimum level of income in retirement. The legislation requires us to increase the minimum guarantee at least in line with earnings, so that over the long term the poorest pensioners see their incomes rise in line with that of the working population. However, this year the relevant earnings index stood below inflation at 2.8 per cent. We judged it unacceptable that the poorest pensioners on the guarantee credit would see the lowest increases. We wanted to ensure that those pensioners saw the full increase given to the basic state pension, and we will therefore increase the single rate of the standard minimum guarantee by £5.35, taking it to £142.70 per week in 2012.

To ensure that the overindexation of the guaranteed credit is affordable, we will make some changes to the savings credit element of pension credit. In April, we will increase the savings credit threshold to £111.80 for individuals. This will mean that those with higher levels of income may see less of an increase, but no one should have a lower weekly income as a result of the uprating. This policy also enables us to focus spending on the poorest pensioners on guaranteed credit.

On working age benefits, the Government have ensured that, even in these difficult economic times, benefits for disabled people and their carers and for those out of work and seeking employment will see the full CPI increase of 5.2 per cent. This increase will ensure that the most vulnerable people in society are protected and that those looking for work get the support they need to move into the labour market.

Through the uprating order, the Government are spending an additional £6.6 billion in 2012. This means £4.5 billion more on pensioners, more than £1 billion more on disabled people and their carers, and more than £1 billion more on people who are unable to work through sickness or unemployment. Even in these tough economic times, the uprating commitment that I have outlined today will give real support to the poorest and most vulnerable in society. I therefore commend the orders to the House. I beg to move.

[Lord McKenzie of Luton]

My Lords, at the start, we acknowledge that the Government have rejected the voices within their ranks that would have watered down even the full CPI increase for these upratings. The order before us deals with most out-of-work benefits, but it of course does not deal with changes to tax credits, which we shall debate shortly.

We have heard from the Minister that the upratings order amounts to increasing benefits by £6.6 billion, but that is dealing on one basis with the effects of inflation; it is not addressing the real cuts that are being made to employment support allowance, housing benefit, support for disabled children, DLA, council tax benefit, child benefit and tax credits. By 2015-16, just three years hence, the Government will be pocketing £10 billion-plus per year from the CPI switch to benefits, tax credits and public service pensions.

We have no points to raise on the Guaranteed Minimum Pensions Increase Order, and support it.

On the abolition of protected rights consequential amendments order, we have some brief questions. Post-abolition of contracting out on a DC basis, schemes will not be required to keep track of protected rights payments, so, as we have heard, the court will not be able to identify them when setting income payment orders for a debtor. Consequently, protection of accrued rights payments from income payment orders will now be retrospectively removed. Does that mean that creditors can ask for income payment orders to be revisited in the light of that loss of protection? If trustees amend their scheme rules to reflect the abolition of protected rights and a scheme member is subsequently subject to an income payment order, could the trustees be in breach of Section 67 of the Pensions Act 1995, a section that protects accrued rights and for which there is no statutory override? The order has the consequence of retrospectively removing protected rights accrued, albeit in the instance of an income payments order being issued. Is a precedent being set here, and would it not have been possible to set some sort of pension income threshold below which the courts cannot take account of income when issuing income payment orders as an alternative approach?

--- Later in debate ---

[Lord Freud]

My Lords, it is a lot easier to spend £6.6 billion extra than to remove it. I accept that noble Lords are pleased that we are sticking to the CPI September figure—the 5.2 per cent—even though it is a high figure. It is important for the Government to do that because once you start moving the figure around to suit your convenience the suspicion arises that there is no principle behind that decision and that it is done to save money. Therefore, you save money in one year but there is a lack of confidence in the longer-term strategy. The point about the CPI is that these things even out, although the figure that is arrived at in a particular year might be painful for the Government’s finances. Clearly, this year it is painful to stick with that figure. However, if you stick with the same month, given that it is an annualised figure—it lasts a whole year—it should even out. Albeit that this is a very difficult year, there were some siren voices demanding that we take a particular course, as the noble Baroness, Lady Lister, said. However, it was decided that to do something other than what we have done would undermine the principle of the measure.

I would like to pick up on the point about the triple lock. I think that the noble Lord, Lord McKenzie, has been a little grudging about what we are doing with that, which is trying to drive up, over the long term, the level of the basic pension compared with average earnings, because it has lost that relationship. The problem with that is that more and more people go on means-tested pension support, with all the complexity that noble Lords complain about. Clearly one thing that we are trying to do with the pension reform that we have consulted on is to get a liveable rate without all these special levels of support, and the triple lock is another mechanism to do that.

While I am on the topic, I confirm to my noble friend Lord German that the switch from the guaranteed credit to the savings credit and the closing of the thresholds was done precisely so there would not be a cut in the basic pension for those pensioners. While I am touching on CPI versus RPI—we will not have a major debate on that, although we all enjoy it—I want to make the point that there is work going on on the CPI. Only a relatively small proportion of the difference between RPI and CPI is because of the housing element; the rest is the substitution effect—the bulk, as noble Lords will all remember. When that work on a new CPI comes in, the Government will need to look at it and take a decision on what to do. I think that that is the best response I can give to the noble Lord, Lord McKenzie.

However, I need to defend myself slightly from the noble Baroness, Lady Lister, on what was a very interesting and excellent letter that I got on my description of the differences between CPI and RPI. I must point out that it was only one letter, which is unusual—I did not get every economist in the world writing to complain or differentiate—but I did enjoy it.

The noble Lord, Lord McKenzie, asked a large number of very good questions—as I would expect—some of which I can answer and others I will write to him about. In particular, I will write to him on the issue of guaranteed minimum protections on contracted-out pensions. That really is complex and I need to provide specific chapter and verse on those protected arrangements.

The noble Lord asked about the local housing allowance. It will be set in April 2012 to establish the baseline, and it will be uprated from a year on, based on September-to-September figures. On the migration from IB to ESA, these are technical provisions but there are some potential effects for individuals. Again, I think that that is a matter for a letter. On service charges, it is the elements of the individual items such as fuel that are raised in line with their particular price increases, and that is done—and has been done for some time—by convention rather than the aggregate.

On non-dependant deductions, as noble Lords will remember, there was an announcement that they would be moved up to match the level that they would have been at if they had not been frozen in 2001. The increases in 2012-13 have been calculated based on forecast rent growth. New income bands determine the amount of the deduction, based on earnings growth. Will passported benefits be taken into account? The answer is yes, when looking at the financial effects of uprating individual benefit elements that give rise to derived entitlements.

With regard to the effect of statutory payments on small businesses, again, I think that that is a matter for writing. We will discuss this with colleagues in BIS who are responsible for those payments and get the most up-to-date figure for the number of small businesses that have been reimbursed.

On the savings credit changes, the £200 million savings on savings credit are recycled into the guaranteed credit, so there is no net saving to the Government. This means that 30,000 fewer people will receive savings credit. Some will have their entitlement extinguished because their income is above the new maximum savings credit level. I say that in response to my noble friend Lord McKenzie—sorry, the noble Lord, Lord McKenzie. I was looking at my noble friend Lord Kirkwood, who is the other person who asks impossible questions.

The noble Lord, Lord McKenzie, asked about the impact assessment. In practice, last year’s assessment sets out the shape of the effects of applying CPI as the preferred index. That is why we have only conducted an additional equality impact assessment this year for the pension credit measures, as they are the novel measures.

I will talk to my noble friend Lord Kirkwood about his particular interest, the national insurance fund, where he looks at the way that the fund balance is moving. It is expected that it will be above the recommended level, which is a sixth of annual benefit expenditure, but I think that I will need to write to him about any change in the balance in recent years.

I think that I have dealt with all the questions. If I have missed anything, I will, of course, write. In the words of the Chancellor of the Exchequer, the uprating order of 2012 will provide support for those who have worked hard all their lives—

[Lord McKenzie of Luton]

Perhaps I may intervene. I am sorry, but I did not know whether the Minister was about to wind up, so perhaps I could revert to a couple of the questions which are left outstanding.

In relation to the savings credit and passported benefit, the issue is that if there are, as we now know, 30,000 fewer people claiming savings credit, presumably there are some savings in respect of passported benefits that would go with that. The question is whether those savings are factored into the savings needed to produce the guaranteed credit upratings.

There were a couple of other items. In relation to non-dependant deductions, it was asked whether we could be told what the reduction in housing benefit and council tax benefit is estimated to be as a result of those changes. In relation to the small business issue, and the £45,000 threshold, I was trying to determine whether, because of increases in national insurance and fiscal or national insurance drift, the same thing would happen as with tax drift, where effectively more people are being excluded from the benefit of 100 per cent reimbursement, because in real terms it is declining.

There is one other issue—perhaps the Minister could deal with it in writing—which is the relationship between the uprating of guaranteed credit and the basic state pension. I am indebted to my noble friend Lady Drake for bringing to my attention some interesting material produced by the PPI showing the impact of pension credit over several years. The component that would produce the biggest reduction in the percentage of pensioners living below 60 per cent of median income would be if the current policy plus guaranteed credit were indexed to the triple lock. That would have a more beneficial outcome than the current policy, where guaranteed credit is indexed to earnings, although I accept that this year it is earnings-plus, but that is still not the same as earnings plus the 5.2 per cent.

[Baroness Lister of Burtersett]

To save the Minister getting up and down, I would appreciate a comment on the point that I made about child benefit. Perhaps it is more appropriate for the noble Lord, Lord Sassoon. What is the logic of putting so much emphasis on increasing personal tax allowance in real terms and then freezing child benefit, which is the equivalent of a personal tax allowance?

[Lord Freud]

Perhaps I may deal first with the point made by the noble Baroness, Lady Lister, although I am sure that my noble friend Lord Sassoon will provide a much more sparkling answer. My answer is that, as we look forward into a world where the poorest are supported by universal credit, which is very targeted—

--- Later in debate ---

[Lord Freud]

My Lords, I was talking about child benefit, which was an issue raised by the noble Baroness, Lady Lister. She referred to the relationship between child benefit and tax thresholds. As you move towards the universal credit system, that is the way you keep the incomes of the poorest in line. That can be done elegantly and in a more focused way than by using universal benefits, which of course is what child benefit is—using a lot of money and giving it to all in order to target the poorest. That is certainly the direction of travel that I am taking. We could possibly debate this at great length at some stage, and no doubt we will.

I will write to the noble Lord, Lord McKenzie, on the question of those excluded on the non-dependant deductions. That is a matter for a letter. I will also write on the point about small businesses because I do not have all the information to hand. On the point about passported benefits and savings credit, the 30,000 who will not receive savings credit would actually not have been passported to the full housing benefit or council tax benefit, so they could establish a claim on the ground of low income. However, the £200 million being recycled to the poorest pensioners includes an assessment of the additional cost of passporting more of those pensioners by disproportionately uprating the standard minimum guarantee.

As regards the triple lock on guaranteed credit, we are planning to retain the link with earnings. Clearly, our aims are to reduce reliance on means-testing, which is why we are protecting the position of those receiving the contributory state pension. But we do not have the funding to uprate the guarantee credit on the same basis as the underlying state pension. Depending on how we change the system, the basic pension would be larger and protected in that way.

This order will provide support for those who have worked hard all their lives, poorer pensioners, people who are not able to work through their disabilities and those who through no fault of their own have lost their jobs and are trying to find work.

[Lord McKenzie of Luton]

I tried to avoid getting to my feet but there is an outstanding issue related to the Work Programme and the reports on that.

[Lord Freud]

My concentration has been completely broken as to that point.

[Lord McKenzie of Luton]

Because there was no impact assessment with the orders and the issues around the Work Programme, can we have an update on its performance?

[Lord Freud]

I thank the noble Lord for reminding me. Because the Work Programme is a payment-by-results system, you see the results later than with those programmes paid for on a pro forma basis. I am not sure of the exact date but I think that we are looking to publish the entrants to the programme in the next couple of months. We expect to start publishing the performance figures of the Work Programme providers in the autumn. These figures are being done to the sophisticated standards required in order to become national statistics.

Perhaps I may correct myself as regards referrals. They are expected rather sooner than in two months’ time. The first set of figures is expected this month.

[Lord McKenzie of Luton]

Are they expected in February?

[Lord Freud]

Yes, so we are expecting them reasonably soon. I can say to the noble Lord—I cannot give anything away and I have only anecdotal feedback—that I am looking forward very much to these figures. I know that he will want, as he has in the past, to say that the Work Programme was a stepping stone from some of the programmes introduced by the previous Government. I am happy with that and I think that he will want to be associated with it. I feel that I will enjoy myself when I make some of these announcements later in the year. I just want to let him know that, because it is based on my own feelings.

Despite these difficult economic times, this year’s uprating will put an additional £6.6 billion into the pockets of the poorest in our society. We have discussed the GMP increase and the amendment order to the Pensions Act 2008. I commend the order to the House.

Motion agreed.

Guaranteed Minimum Pensions Increase Order 2012

Lord Freud Excerpts

Monday 27th February 2012 Grand Committee

Moved by

[Lord Freud]

That the Grand Committee do report to the House that it has considered the Guaranteed Minimum Pensions Increase Order 2012.

Relevant document: 40th Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) (Amendment) Order 2012

Lord Freud Excerpts

Monday 27th February 2012 Grand Committee

Moved by

[Lord Freud]

That the Grand Committee do report to the House that it has considered the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) (Amendment) Order 2012.

Relevant document: 40th Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Youth Unemployment

Lord Freud Excerpts

Tuesday 14th February 2012 Lords Chamber

[Baroness Hughes of Stretford]

To ask Her Majesty’s Government what is their response to the call in the report by the Commission on Youth Unemployment published on 6 February for action to address youth unemployment.

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

My Lords, the Government share a number of the concerns raised in the report produced by the Commission on Youth Unemployment. We are already taking action to address youth unemployment and have a clear strategy to support young people into work.

[Baroness Hughes of Stretford]

My Lords, I thank the Minister for his Answer. However, as he will know, the analysis in the report not only scotches the myth that youth unemployment is being driven up by immigration or the minimum wage; it demonstrates clearly that the Government’s measures, welcome though they are, are wholly inadequate to deal with this rising crisis and prevent another generation of young people, as well as the country, paying a terrible price. Will the Government respond specifically to the report by front-loading the youth contract to double the number of job subsidies this year, extending the work programme beyond the 10 per cent only of young people who are currently on it, and bringing in a specially targeted approach for those 600 hotspots that, the report shows, now have double the national average of youth unemployment?

[Lord Freud]

My Lords, the noble Baroness might have been interested in one of the annexes in that report that indicated that actually there is concern about the national minimum wage. The point that she makes is towards the end of the report. There are a lot of measures to solve youth unemployment. I will pick up some of those that the noble Baroness mentioned. The first one is rebalancing the youth contract, to which she referred. We are already front-loading the wage incentives that we are introducing in April. We are doing more than the average in that period. We are trialling a community action programme for people who have been through the work programme, and we are looking at how we work in areas in an equivalent way to the youth employment partnerships.

[Lord Roberts of Llandudno]

My Lords, what are the Government doing to tackle long-term, structural unemployment? In 2007, 2.4 per cent of our young people were designated as long-term unemployed. Now the figure has risen to 4.6 per cent, and it is going upwards throughout the world. What have we got to offer young people in the long term to deal with structural unemployment? Are we doing anything seriously about that?

[Lord Freud]

First, long-term youth unemployment has not changed a lot. What changed is that youngsters were put on training programmes and, when they came off them, they were called newly unemployed. The underlying position has not changed very much in terms of long-term youth unemployment. I am not saying that that is not a real problem but I am saying that it has not grown as much as one might think, looking at the raw figures. Clearly we need to help youngsters in long-term unemployment, and one of the things that the work programme is specifically designed to do is to get support for youngsters on an individualised basis.

[The Lord Bishop of Ripon and Leeds]

My Lords, what are the Government doing to improve careers advice in schools so that young people can be helped into appropriate employment?

[Lord Freud]

My Lords, we are making it a statutory duty to ensure that schools take up their responsibility to provide careers advice, so that it is supplied at the point it should be, right where it is best received. Existing provision has been much too patchy.

[Lord McFall of Alcluith]

My Lords, the International Labour Organisation has said that youth unemployment is facing the greatest crisis in a generation. The global crisis has added to youth unemployment here. As someone who taught in the Glasgow area in the 1980s, I saw young people leave school and met them 10 years later when they had partners and children, but they did not have a job. Is it not a crying social and economic shame that we do not do more for young people at this stage to ensure that they adapt to the workplace and play a full role in society?

[Lord Freud]

My Lords, a point that I have made here in the past is that we have had a structural issue with youth unemployment for more than a decade, The number of youngsters inactive or unemployed has been growing steadily, right through to the end of the longest boom that we have ever had. My view—and the Government’s view—is that the best way to tackle that is to make sure that youngsters have education that gets them fit for the workplace. That is why this Government have taken on in toto all of Professor Wolf’s recommendations, because they deal with these core issues.

[Lord Forsyth of Drumlean]

My Lords, on that point, does my noble friend not agree that one of the mistakes we have made over the past 15 or so years is to encourage youngsters to go for degrees at university rather than vocational courses that provide them with the skills that are demanded and, indeed, are in short supply in the labour market?

[Lord Freud]

My Lords, the most shocking thing in Professor Wolf’s report was when he said—I shall quote it—

“as a society we are failing at least 350,000 of our 16-18 year olds, year on year”,

because we had been providing them with vocational education that did not lead them anywhere. That is why our strategy to increase apprenticeships and get vocational training back under control is so important for this generation.

Welfare Reform Bill

Lord Freud Excerpts

Tuesday 14th February 2012 Lords Chamber

Moved by

[Lord Freud]

That this House do not insist on its Amendment 1 to which the Commons have disagreed for their Reason 1A.

LORDS AMENDMENT 1

1: Clause 10, page 4, line 34, at end insert “, such additional amount to be paid at either a higher rate, or a lower rate, which shall be no less than two-thirds of the higher rate as may be prescribed”

--- Later in debate ---

1A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

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

My Lords, before I go into this Motion, I would like to pick up some of the points raised by my noble friend the Leader of the House about how what we are considering today is impacted by the ping-pong process that we are going into. The question asked by my noble friend—

[Lord Laming]

My Lords, I am sorry. This is a really important statement that we are all terribly keen to hear but are unable to do so amid all this noise. Perhaps it is my position in the Chamber, but I wonder if the noble Lord could start again.

[Lord Freud]

My Lords, I apologise, I was keen not to waste time. I want to pick up on the comment made by my noble friend: why would we bother with all this? I am considering all the work that has been done on this Bill, and as I look around noble Lords I can see that the most astonishing amount of energy has been put into this Bill through its Committee and Report stages; I am the first to register that. I want to assure noble Lords that the debates we have had have been heard, that I have represented the points made with great vigour in government, and that I have seen a lot of changes in this Bill as a direct result of that work. I shall name a few of those changes because it is easy to forget what we have done with this Bill.

On ESA time-limiting, we accepted the need to make amendments to protect those with degenerative conditions. On the benefit cap, we have put in a nine-month grace period and exempted those in the support group of ESA, again in response to debates in this House. On PIP, we have made a number of changes to the required-period condition and have restored the mobility component for those in residential homes. Within universal credit, we have put in £300 million a year to afford additional childcare. That all added up in this spending review period to £638 million. Looked at as an ongoing cost when universal credit is introduced, it amounts to an extra £518 million per annum in a steady state. Each of those concessions was made as a direct result of the debates that we had in this House. I think, bluntly, there was a point at which the Government decided they could not afford any more. The cost of the amendments that we sent through would have been £2.1 billion in this spending review period and another place decided that that was more than could be afforded. I think that we reached the limit and the way to interpret what has come back from another place is that we cannot afford any more. Despite that, I want noble Lords to know that I am going on listening today and I hope that there will be several areas where I can move things along in a way that is helpful to the mood and views of many Peers.

I turn to the Motion. Noble Lords will remember that this is about having just two rates in universal credit for disabled children which align with adult rates. Our objective is to distribute resources fairly and simplify the current systems of support. The idea is to target the money on need and not on age, because of the problem of when people move from the child system to the adult system.

We are absolutely committed to supporting disabled people, to improving their quality of life and to tackling poverty at its root. We need to assess how to invest scarce resources in the most effective way. It is clear that this has been a matter of great concern to noble Lords. I have been exploring that concern and trying to get to its root. The concern lies in whether we are channelling the money to the right children. At the moment, children are passported from DLA and the question is whether we have the right definitions. I understand that concern and am taking steps, subject to your Lordships’ response, to do something about it.

If we are going to have a system of alignment between children and adults, and make sure that that works effectively and that we minimise disruption, then we have to be certain that the categorisations are consistent through that age gap. This is not an easy thing to do, because at the moment the definitions in these areas are linked to DLA for children. We need to be careful not to pre-empt any decisions on the future applicability of that, because we may be looking to change from DLA for children to PIP for children. We need to spend a considerable time to get that move—if it happens—right. Children are different from adults and have different needs from them at different times in their lives. Just as for adults, we need to have a system that is fair and consistent for children.

We need to learn from the introduction of PIP for those aged 16 to 64, which will start in April 2013 and continue through to 2016 as people switch over. We need to build learning from that process. We are also looking at moving towards a single assessment process for children’s social care, health and special education needs. By the start of 2015, we should have gathered sufficient evidence to be able to consider our future approach.

On the basis of that timing and on the basis that the noble Baroness, Lady Meacher, withdraws her new amendment, I am therefore happy to give a commitment to the House that, by the end of 2015, we will review the current definitions, working carefully through the issues with disabled people and disability organisations, so that we have a gateway in place that ensures that the most severely disabled children get the right support.

Before noble Lords say that 2015 is a long way away, I point out that it is not quite as far as it seems. Universal credit will start to roll out in October 2013, and we will migrate claimants into it slowly over the next four years. In practice, people with disabled children are likely to be towards the end of that migration queue anyway. In addition, we have transitional protection for the existing groups. In practice, the timings would mesh quite elegantly. It would mean that the commitment is there to either look at it in the context of a move to child PIP or to have a proper look at it anyway within the context of DLA.

I hope I have been able to demonstrate to the House that we are taking this issue very seriously. It is an important issue that has been raised, and it is one we have thought about very deeply, in order to get this process right. I therefore urge the House not to insist on Amendment 1. I beg to move.

Motion A1 (as an amendment to Motion A)

Moved by

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[Lord McKenzie of Luton]

My Lords, like other noble Lords, I think we should be grateful to the noble Baroness, Lady Meacher, for keeping us focused on the issue of disabled children, and to all noble Lords who have spoken in this short debate with a great deal of expertise and knowledge on the subject. They reminded us that even in this rich country there are people and families who still live in poverty and are challenged by poverty. The deliberations that we bring to bear through legislation may seem somewhat detached from that, but that legislation has a real effect on real people’s lives.

Like my noble friend Lord Peston and the noble Baroness, Lady Howe, I was a bit confused as to how this amendment became caught up in the issue of financial privilege because I thought that the Minister was on record as saying that this was not an issue of money. Indeed, the noble Baroness, Lady Meacher, confirmed that. I did not intervene in the earlier exchanges on this issue but I am somewhat concerned about aggregate figures of costs flying around, whether we agree with them or not, and tagging on to them a provision that has no cost implication at all. If that is permitted under these arrangements, it is a bit of a slippery slope.

However, we should be grateful to the Minister for his engagement running right across the Bill, particularly on this issue, and for his promise of a review on definitions and access to the various benefits. I hope that he will take account of the point made by my noble friend Lady Hollis and others that the issue of costs does not correlate exactly with severity of disability. If I have to take issue with the Minister, I wish that he had not said that his commitment to undertake this programme was conditional on the noble Baroness withdrawing her amendment. Frankly, if it is right to do it, it is right to do it.

Perhaps I may pursue one point with the noble Lord. He previously stated that families would obtain the benefit of transitional protection so that the cash amount of support under universal credit would not reduce. That would not of course protect the position in real terms but perhaps we can at last understand a little more—on the record, I hope—about how transitional protection will work. Is it to be applied separately to the differing components of universal credit or will it be looked at in aggregate? Could an increase in the housing amount, for example, mean an effective reduction in the protected disability addition? Can we also get some clarity around changes of circumstances and what types of situation would cause the transitional protection to be removed? What about, for example, a move in accommodation that might have been caused by the underoccupation provisions that we debated previously and will debate again shortly? Could that represent a change of circumstances that could cut off that vital transitional protection?

I do not wish to go over all of our powerful debate on this issue. I acknowledge the commitments that the Minister has made but repeat that we should be thankful to the noble Baroness, Lady Meacher, for keeping us focused on this important issue.

[Lord Freud]

My Lords, many specific points have been made and I shall try to deal with them. We have debated this issue a lot and perhaps I may gently remind the noble Lord, Lord Peston, that we actually voted both ways on very similar issues. I recall that we had a plus two and a minus 16 on this issue—I think it was this issue. When we talk about the message coming from the Lords to the Commons, there were a number of votes in this area.

[Lord Peston]

Is the noble Lord saying that we are being unreasonable for expecting some reasonable arguments from the other place?

[Lord Freud]

Gosh, that is a good question. I had better hold my counsel on that.

The amendment inserts a third rate for disabled children. It sets fixed relationships between those rates. With our primary structure, we are trying to have two elements—for disabled children and adults—aligned at the same rates, which are principled changes so that we have some consistency and make the system simple and fairer. I am trying to take out complexity from a system that, if your Lordships remember, is falling down because it is so complex. So simplicity has a value in itself. If the amendment went through, we would have different rates and a mismatch within the structure of universal credit.

I have been asked a lot of questions about the amount of money. The noble Lord, Lord McKenzie, will be pleased to know that I did not include this figure in the £2.1 billion that I cited earlier. To maintain the level of £77, under the original amendment, would have cost £200 million, which is why the Commons attached financial privilege to it, in answer to the question of the noble Countess, Lady Mar. To answer the noble Lord, Lord McKenzie, the reason why it is conditional is that there is not much point in having all the paraphernalia and trauma of a review if we have an amendment of this nature where we are locked anyway. That is why I made it conditional.

To answer the questions of the noble Lord, Lord Wigley, about how it would work, we start the universal credit timeline in late 2013, collecting information up to 2015, so we will have the information to undertake the review in 2015. The changes that the review will presumably recommend can be incorporated from then on.

[Baroness Meacher]

This is an important point. Can the noble Lord make clear that, having undertaken the review, the Government could adjust the rates for disabled children with different disabilities within the current legislation so that we would not have to wait for new legislation? If we had to do that we would be talking not about 2015 but an uncertain date in the future.

[Lord Freud]

It will depend on what comes out of the review. If it concerns child PIP, which it may very well be, which is a recasting of the whole structure, we may need primary legislation; but if it is an adjustment of DLA, I think we may not. It will depend on the outcome of the review, which will be serious and substantial. One issue that noble Lords are raising is that there is dissatisfaction with the way that we are applying these rates. There is general dissatisfaction about whether we are using the right criteria. We have one rather simple criterion at the moment. Building that review of how we do it will be a substantial exercise. The interesting thing about this debate is the general level of dissatisfaction about whether we are using the right definitions to get to the right children and the right families. Funnily enough, that has been one of the main things driving us to make this commitment.

We have here a commitment that either we are going with a major review of the child PIP or, if not, a fallback where there will be a review anyway, albeit within the context of the DLA. That is the commitment, and I can tell your Lordships that it has been somewhat hard fought.

[Lord Wigley]

I am grateful to the noble Lord for the clarification, which is very helpful. With such an important review, would it be reasonable to assume that, in the normal way of things, there would be opportunities to debate the outcome of the review here in the Chamber before orders were drawn up to implement any of the conclusions?

[Lord Freud]

I think that we will be discussing this a lot in the years to come—it is not a dead issue. When you set up such a review, it generates its own momentum. Noble Lords know how powerful a review in this kind of area is. Once you have a review like this and the momentum that follows from it, something happens reasonably rapidly. I do not think that you have set it in absolute terms because it becomes an irresistible force. Therefore, I do not think that that is a concern. The exact nature of what we then do begs a lot of questions that we simply do not need to ask. However, with regard to how we carry out the review, the involvement of this House will be taken very much into account.

[Baroness Meacher]

I really do not want to hold up the House at this stage but this is such an important point. My understanding is that the details are going to be in regulations. If that is the case, a review will be undertaken and I have no doubt that it will show that these rates are unfair. Why cannot regulations be changed within current legislation to achieve a fairer distribution of additions? That is my only question.

[Lord Freud]

I am saying that that may be one outcome but there may be a much more radical outcome in the introduction of PIP for children. The question is: are you better off doing that or adjusting DLA with the passporting arrangement? That is very difficult to prejudge when we have not done the review. Therefore, there is method in the, or perhaps I should say there is some method behind—

[Noble Lords]

Oh!

[Lord Freud]

Nearly. I hope that I have made it clear that I really understand the concerns being expressed not just by the noble Baroness but right around the House. I think that our commitment to carry out this review—it is a significant review that will look at the issue properly—is the right way of approaching the matter. It is far better than adding an unnecessary and untested complication to the design of what is meant to be a universal credit system which people can instinctively understand. If it is an offer, I urge the noble Baroness to accept it and withdraw her amendment.

[Lord McKenzie of Luton]

Before the noble Lord sits down, will he write on the issue of transitional protection and changes of circumstances?

[Lord Freud]

Yes, my Lords. I am sorry; I forgot to answer that. At this stage, I am not in a position to lay out transitional protection because we are currently looking at how it will work. However, it will be a bundled up protection. The work in progress effectively involves taking someone’s existing entitlement, comparing it with their universal credit entitlement and paying the difference as a lump sum, which is then maintained. However, in the context of what we are talking about, the migration process is rather more important than the transitional protection. In the vast bulk of cases, it is when those families move on to universal credit that will matter more than transitional protection, which will be towards the tail end of this period, if at all.

[Baroness Meacher]

I thank the Minister for his response. I accept what he says about the simplification of the system. That is absolutely right. However, I do not accept the suggestion that this system—certainly in this part of the Bill—is fairer. The fact is that it is not; it is deeply, deeply unfair. I find myself in a situation where we are either going to have the Minister’s acceptance—I think we do have that—that this is unfair and needs a full-scale review, or we have nothing. As the noble Lord, Lord Peston, indicated, maybe we are being bullied. My sense is that there are perhaps some rather large, old, hefty powers from another place leaning on us. Therefore, I would not wish to allege that the Minister is bullying us. I accept that if one has a full-scale review, there is a momentum and we will be there to see what happens and to try and make sure that the right thing does happen.

Disabled people and the disabled organisations who will be involved in the review will be on the case. Therefore, I feel reasonably confident that we will get there. My biggest worry concerns the timeframe and the need for further legislation. I still hope that if the Government get to the right answer in terms of the allocation of benefits to families with disabled children they could make adjustments to regulations while we await new legislation. That matters a great deal. We should not leave families newly coming on to these benefits severely damaged and, I think, cruelly treated. With that, I beg leave to withdraw my amendment.

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Moved by

[Lord Freud]

That this House do not insist on its Amendments 2, 3 and 26 to which the Commons have disagreed for their Reasons 2A, 3A and 26A.

LORDS AMENDMENTS 2, 3 AND 26

2: Clause 11, page 5, line 2, after “credit” insert “, subject to subsection (3A),”

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26A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Lord Freud]

We have debated this measure at length and I am grateful for the intensity and conviction of those who have spoken both in support of the measure and those who have challenged the Government. I acknowledge that the noble Lord, Lord Best, remains concerned about our proposals to reduce housing benefit and universal credit for working-age claimants living in social sector properties who are under-occupying their accommodation. Before I go into the detail, I remind noble Lords that we have announced an additional £30 million of funding for discretionary housing payments from the 2013-14 period, aimed at those living in adapted accommodation—disabled people who need those adaptations—and for foster carers.

I remind noble Lords of the core argumentation. We do not think that taxpayers should be expected to meet the cost of somewhere approaching 1 million spare bedrooms, a cost of around £0.5 billion every year. Clearly this is unfair, or certainly different, to those in the private rented sector who receive benefits based on their household need. Based on our estimates, the original amendments could potentially reduce those savings by around £300 million, in addition to the £30 million to which I referred. That is real money. Maybe I should—or should not—remind noble Lords of the message from Moody’s. One of the things they make clear is that the Government’s “necessary fiscal consolidation” is key in stopping that potential downgrade.

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[Lord McKenzie of Luton]

My Lords, the Government have moved in a number of ways on the issues that have been returned from the other place. Along the way, they have also accepted a number of other changes that were pressed on them by your Lordships’ House. However, the Bill remains unchanged in some of its most unacceptable provisions, not least of which are those relating to underoccupancy. That is why we support the amendment in lieu, which was moved with such precision and expertise by the noble Lord, Lord Best. As we have heard, the amendment is less ambitious than that previously accepted on Report, reflecting our obligation to take account of the financial strictures of the Government. However, the amendment is not cost-free and cannot be if it is to provide protection for hundreds of thousands of households that, on average, could see their income fall by £14 a week.

It is clear that, under the guise of addressing underoccupation, the Government seek to make further savings on housing benefit on top of the multiplicity of restrictions—the CPI uprating, the 30 per cent percentile, the rent and size caps and the shared-room rate—that are already in play. Savings from some of these are being made in parallel with the benefit cap. The Government’s stated aims for the underoccupation rules are to encourage greater mobility within the social rented sector; to make better use of the available social housing stock; to improve work incentives; and to curtail housing benefit expenditure. The amendment in lieu addresses each of these issues. It is clear that, should a suitable offer of accommodation be forthcoming, there is an expectation that an underoccupying tenant should take it up, whether or not they have only one spare bedroom or fall into any of the exemption categories listed. If they did not, the housing benefit reduction would ensue. What is suitable would have to be defined in regulations and would have to reflect the circumstances of the household, including its need for adapted property, transport links, access to support services and appropriate schooling.

However, there is no merit at all in an economic incentive to move to smaller properties when there are no smaller properties to which people can move. Therefore, the amendment provides that, with no suitable alternative offer, the underoccupation deductions—the room tax, in the terms of the noble Lord, Lord Best—would apply unless there was no more than one spare bedroom and one or more of the other exemption criteria applied. As for improving work incentives, this can surely have no application for those who have no work requirement placed upon them, for example because of a severe disability. These are people who the Government themselves recognise cannot work and should not be expected to work, so what is the purpose of an economic work incentive for them?

We know that disabled people face extra costs in their daily lives and that it is harder for them to take the hit of reduced housing benefit. Indeed, the Government have already recognised this in the benefit cap by exempting certain categories of individuals from loss of housing benefit or universal credit. These are the self same categories listed in paragraph (b) in the amendment, mainly those on DLA or PIP. War widows or war widowers are similarly included in the exemption to parallel the arrangements in the benefit cap—no more, no less. The noble Lord, Lord Best, referred to the sources of funding on offer to deal with foster caring. It is hoped that the Minister will be able to dispel any suggestion that the new money to which he referred is just being cynically recycled. The Government’s other solution is for people to take in paying lodgers. Perhaps the Minister can say what assessment has been made of this possibility.

We agree that underoccupation in the social housing sector should be addressed and clearly the lack of social housing and the need to build more is part of that, but it is clear that the Government do not see these provisions as a route to doing so. Their assumption is that most people will not move and will take the hit and that is how the Government will get their savings. These amendments would stop them getting those savings from the most disadvantaged in our country. We support them.

[Lord Freud]

My Lords, the amendment in lieu of the noble Lord, Lord Best, seeks to exempt certain categories where the tenant underoccupies by one bedroom and no suitable alternative accommodation is available, those not required to seek work, carers, disabled people, war widows and foster carers. Our estimate of the cost of this amendment is slightly lower than that of the noble Lord. He suggested that it was £150 million. We estimate that it would cost up to around £100 million in 2013-14. We have already announced an increase of £30 million in the discretionary housing payments aimed at some of these categories—those living in adapted properties and foster carers. Others in vulnerable situations can also apply to the fund where they have difficulty meeting the shortfall.

I say to my noble friend Lord Kirkwood that that £30 million is an ongoing rate. The amount will be kept under review to see whether it is meeting the level of demand in different areas. We set the amount at £30 million based on the numbers likely to be affected by the measures. We think that the £30 million could help about 40,000 cases based on the average reduction of £14 a week. That figure is based on the group of 35,000 potentially affected claimants who are wheelchair users and live in accommodation that has been adapted to suit their needs, although, of course, not all of these would need to apply for a discretionary housing payment. We estimate that around 5,000 foster carers, including those in between assignments, could be affected by the measure.

My noble friend Lord German referred to the type of housing that would be affected by the measure. We decided to tackle this matter through discretionary housing payments, as introducing exemptions and classification is very difficult in practice. Therefore, we are leaving it to local authorities to make some very tough judgments on where it makes sense to offer that support as they have a lot of local knowledge. Regrettably, £100 million is a lot of money in the present climate, even though it is less than the £150 million figure estimated by the noble Lord, Lord Best. Clearly, it is difficult to agree amendments and send them to another place when they have such significant costs attached to them.

In summary, we believe it is right and fair to proceed with the measure as it is in the Bill. We will apply a percentage reduction of 14 per cent for those underoccupying by one bedroom and 25 per cent for those underoccupying by two or more bedrooms. That comes in in April 2013. The noble Lord, Lord McKenzie, asked me to disavow any cynical recycling. I am in a position to do that, as we announced a range of these reductions of between 10 and 15 per cent for one room and 20 to 25 per cent for two rooms. When I fixed the rates in December, I was able to do that within the bands that we had set.

[Lord McKenzie of Luton]

Is the noble Lord saying that those rates would be lower if the £30 million had not been made available?

[Lord Freud]

My Lords, we have to look at these things in the round, as we did with the Bill. The reality is that we had a range and we set the provision at an affordable level within that range. Noble Lords may argue that saving money is a cynical thing to do but, as I say, we had a range and we set the provision within the range. We have found the money to ameliorate the measure through the discretionary housing payments process.

My noble friend Lord Newton made an important point about changing circumstances. We have rules within housing benefit to protect people when their circumstances change. Among those changes are going into hospital, being on remand and the death of a member of a household which would result in a reduction in housing benefit. Those same rules will apply in the social rented sector and provide protection for such claimants. For example, housing benefit currently provides 12 months’ protection from rent restrictions where there is bereavement, so there are ways of dealing with such circumstances.

The noble Baroness, Lady Hollis, referred to couples who have health problems. I re-emphasise the point that they would not be pensioners by definition as they are excluded from this measure, so we are talking about couples of working age. Clearly, if there is real difficulty in that regard and separate bedrooms are required, where discretionary housing payments would be considered, and where the couple required an overnight carer, whether non-resident or otherwise, the size criteria would be increased to provide additional room. However, we should consider what happens to people who are renting in the private sector. These situations are already faced by more than 1 million people—I think it is 1.3 million people—renting in the private housing sector.

This is part of a package of reforms to keep the housing benefit bill under control. I have never tried to disguise that in any way. This is a way of trying to control the housing benefit bill that is moving up towards £26 billion, if we do not take the £2 billion of savings across the piece as we are planning to do. That is the saving that we are trying to make within the social rented sector as opposed to the private sector. We are trying to sort out our budget deficit, and we need to make sure that we spread that load right across society in as fair a way as we possibly can.

We realise, obviously, that we need to support tenants, their advisers and housing providers in preparing properly for what is a very substantial change happening in April 2013. Work is well under way to support social housing providers, local authorities and other government departments. An important point raised by my noble friend Lord Kirkwood is the impression that it is all happening on one day. It might be happening on one day, but in practice there is a year before it culminates in which we are aiming to get a very smooth implementation process. We are working closely with the stock team, which is part of the Chartered Institute of Housing, funded by the GLC. We are putting a tool-kit out for local authorities, which involves working on who will be affected; advice on data sharing; allocations policy; tackling worklessness; taking in lodgers; letting spare rooms; reducing arrears; national home-swap schemes; affordable rents; and alternative housing options. We are working on all those areas.

A behavioural response is required right across the piece on something like this. We are looking to help claimants. Those who can must look for a job. Those who are in work can increase earnings by getting more hours. We have discussed taking in a lodger, moving to a smaller property or moving into the private rented sector. Landlords need to have responses. They need to give permission to accept lodgers, identify those affected, communicate changes, train staff, review their allocation policies, look at where the discretionary housing payments need to be made, and so on. There is a range of things on a substantial scale that need to happen, just as the Government have to do a huge amount of work to ensure that they do happen.

We are not expecting the 670,000 people who are affected to move. As I have tried to describe, there are a number of ways in which claimants can make up any shortfall and stay where they are. So I ask the noble Lord to withdraw his amendment.

[Lord Best]

My Lords, I am extremely grateful to people from all parts of the House who have joined in this debate. My thanks go to the noble Baroness, Lady Hollis, who has been tireless in supporting this amendment and so many others during the course of this Bill; to the noble Lord, Lord Newton, who has been a hero in bringing common sense and good judgment to this Bill at all kinds of stages; to the right reverend Prelate the Bishop of Ripon and Leeds for his support; and to the noble Lord, Lord German, who raised a number of important points. Perhaps I could respond to his point that 1 million bedrooms—I am not sure whether he actually quoted this number—are underoccupied in the social housing sector, and that it would be good if we could get those used. In this country there are, I think, 6.8 million empty bedrooms in houses where there is already one spare room. We have lots and lots of spare rooms, but they are in the owner-occupied sector, and nobody is suggesting that we levy a bedroom tax on the occupiers in the owner-occupied sector—quite rightly; I absolutely would oppose that. However, on council estates now, people who have exercised the right to buy and are homeowners are living next door to tenants in identical circumstances. One of them will be penalised and one of them will not.

I am also grateful to the noble Lord, Lord McKenzie of Luton, for his contribution and indeed to the noble Lord, Lord Wigley. I single out the noble Lord, Lord McKenzie of Luton, because he has brought the expertise of a previous Minister on this key issue to all of our debates and has been more than helpful to me in my formulation of the amendments that we have before us today.

I was greatly encouraged when the Minister said that the cost of this has come down from the earlier amendment, which found favour with your Lordships and did not do so badly in the other place. The cost has come down from some £300 million to about £100 million. I think the Minister said up to £100 million. This, I agree, is serious money, but it is set against the savings in housing benefit that the Minister mentioned again that he is seeking to achieve of over £2 billion. The £100 million is for particularly vulnerable and low-income households. I was not convinced by the argument from our earlier debates in Committee for the increase in the amount that will be charged each week. It will rise from £13 per week to £14 per week, which happens to be the amount required to find a further £30 million of discretionary housing payments. That, I fear, has meant that we are robbing Peter to pay Paul. We are charging another 50 quid to everybody else to pay for the ways in which we can exempt certain people, people in houses that have been expensively adapted, and indeed those who regularly have foster children in the home. That is excellent, but it is being paid for by pushing up the total bedroom tax for everybody else to £728 a year. That is three-and-a-half times the winter fuel payment, for example. That is a serious amount for people on the lowest incomes to find.

I do understand the pressures on the Minister to help the Government achieve deficit reduction, but I see it as incumbent on us in this House to take a stand, even a modest one, to draw a line where deficit reduction is at the expense of many thousands of the very poorest households. We have to say: so far, and no further. Applying the bedroom tax to these vulnerable groups, set out in this amendment, where there is no opportunity for those on very low incomes to avoid the tax, is going too far. I wish to test the opinion of the House.

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Moved by

[Lord Freud]

That this House do not insist on its Amendment 4 to which the Commons have disagreed for their Reason 4A.

LORDS AMENDMENT 4

4: Clause 11, page 5, line 23, at end insert—
“(4A) Regulations shall not permit any reduction of housing benefit or amounts included for accommodation in an award of universal credit in respect of under occupation, deemed or actual, where—
(a) the landlord is a local authority or a registered provider of social housing, and
(b) any such landlord is not able to offer suitable alternative accommodation which would not cause a person to under occupy.
(4B) Regulations may make provision for determining when accommodation is suitable for the purposes of these provisions.”

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[Baroness Hayter of Kentish Town]

My Lords, as we have heard, without our amendment, the Bill will deny thousands of disabled people aged under 20 the right to a non-means-tested ESA when they reach working age. These young people are exactly those whom we discussed in the first amendment—disabled since either birth or childhood. When they grow up they will no longer be entitled to a benefit in their own right but instead will have to rely on means-tested benefit, depriving them of an independent income as an adult. As it stands, even those young people unlikely ever to be able to work will never be entitled to non-means-tested benefits as they will never have the chance to build up a national insurance contribution record. That means that those with early-onset conditions will for ever be disadvantaged compared with those who become disabled later in life and have therefore had time to build up enough contributions to receive non-means-tested benefits.

Clause 52 abolishes the right of people under 20 with work-limiting conditions to be treated as if they had met the NI contributions. I wonder whether our colleagues in the Commons really meant to reject our amendment in the knowledge that it affects young people, some with profound disabilities from childhood, and those with the greatest disadvantage in the labour market. The Bill removes their access to an independent income and reduces their chance of achieving independence. As my noble friend Lady Lister said, it was not to save money—at least that was not listed as a policy intent in the Government’s paper. Therefore, it can only be about changing behaviour, but how do these youngsters change their disability? Most of them would love to work but it is the behaviour of others, particularly understanding employers, which will be the biggest determinant of whether they can find work.

As my noble friend Lady Lister said, these changes are, for the country, tiny—£17 million cumulative—but the impact on young disabled people will be huge. On average, 70 per cent will lose about £25 a week, but 10 per cent of those 15,000 youngsters will lose entitlement altogether, because they have either savings or income from another family member. The Minister spoke earlier about inheritance. I do not know people who go around inheriting lots of money; maybe he does. The idea that because some people may inherit, everyone should be denied access to benefit, I find very strange.

The impact assessment also does not look at the effect on other family members. The introduction of a means test will undoubtedly decrease the incentive for anyone living with a young disabled person either to work or to build up savings. Indeed, these young disabled people will actually have a huge negative dowry to bring into any relationship, because the earnings of the person whom they would love to move in with will immediately kick in against the means-tested benefits of these young disabled people.

We do not know—we cannot work it out from the income assessment—exactly which people will be affected. However, the figures for those under 16 claiming DLA show that 41 per cent of them do so in relation to a learning disability. It is reasonable to assume that a large proportion of the people affected will also be in this group. As my noble friend has said, this is not the amendment she wanted to table. While we must accept that the Commons has given its decision on this provision that removes the right from these people, we ask the Government to monitor its impact, if only to assure both Houses that our fears for these young people are not justified.

The Minister has said that he will review all such policies and impacts of the Bill. We hope as we begin the ending, if you like, of this period of the Bill that the Government can say yes to this very small amendment, which only writes in that such a review should take place.

[Lord Freud]

My Lords, the short answer is that we will monitor it. However, I do not accept the amendment and I will explain exactly why. It does not work in the way that is intended. It is designed for us to have a full formal review. As noble Lords will recognise, we do have reviews and we treat them very seriously. If you look at the example of the Harrington review of the WCA, you see that they can be of immense value in the development of policy.

The way this one would work is that we would have a review one year after the measure came into force. The amendment would require that that report—a big formal report—is laid before the Houses of Parliament within three months, an incredibly rapid timescale as I am sure that the noble Baroness will recognise. We will monitor this and use evidence from a large number of sources on the experiences and outcomes of those affected. We will use DWP administrative datasets to monitor the trends in both the caseloads and in the level and distribution of benefit entitlements.

I want to put into context the huge paraphernalia that this amendment would require in practice. We are looking at the region of 15,000 claims to ESA youth every year. We expect 10 per cent of those not to qualify for ESA—not to be in the system. That is 1,500 people. It is not appropriate to have on the Bill a major Houses of Parliament review when the numbers are so small. The timing is not right. One does not look at a policy like this only once; one needs to keep it under review and look at it over a number of years, not do it in an inflexible way. I am trying to say that I buy the point that we need to watch it, but I do not think this amendment works. We can evaluate detailed specialist research. Broad surveys will be useless. It is too small and we will not pick up anyone if we do it on the FRS. It will be five people if we do it like that. We will have to review it very differently and then use it to inform how we guide our future policy direction and, potentially, operational improvements.

I do not wish to row about benefit tourism. The reason that it came through late, to be blunt, is that my blood was chilled towards the end of last year when I started working through some of this stuff. That is why I missed it in November. I had not really absorbed the implications. I do not think I would call it a panic—

[Lord Lester of Herne Hill]

I was troubled when the noble Baroness, Lady Lister, alleged that the use of EU law was a pretext—I think she said pretext—which means it was a kind of sham. May I take it that the analysis given about the decision of the European Court of Justice was based on legal advice and that what has been said explaining EU law is the Government’s understanding on the basis of EU advice as to what that judgment means and its effect, or is it some kind of political pretext?

[Lord Freud]

No, my Lords. The department has an international wing that monitors this matter very closely and is on top of it. It has lawyers and also takes advice from lawyers—although formally I am not allowed to say that we ever consult lawyers internally for advice. I think that is the position. All I can say is that there are many ramifications to this. I am not playing games. I am quite worried about the implications for our whole benefits system.

[Baroness Hollis of Heigham]

In my experience in the department, over eight years and with a dozen Bills, the legal advice was usually gold-plated. When I scratched it, I realised that we were going over the top. Most outcomes that were predicted on such things as pensions did not occur. I urge the Minister to adopt an appropriate degree of scepticism toward the legal advice that comes his way.

[Lord Freud]

My Lords, I am always delighted to take the advice of someone who occupied my room in the department for so many years—although I think that there is a progression and that ignoring it early on does not mean that it will not come back. I will not go into this in too much detail. I am sure that the noble Baroness did not mean to say that I was making it up, because I was not.

[Baroness Lister of Burtersett]

Before the noble Lord moves off the point, will he give us the assurance I asked for that, whether or not this is a pretext this time, the argument will not be used to bring forward proposals to abolish attendance allowance, DLA or PIP on the grounds that it is the only way to deal with such cases?

[Lord Freud]

My Lords, that is an enormous question. In this context, I am in no position to give the undertaking. We will have to look very carefully at how we frame our benefits if we do not want them all to be very freely and widely used. That is all I am saying. How we will frame them in the years ahead I do not know. I have not started to think about it. Clearly, we are going through a huge exercise to introduce PIP and it is very unlikely that anything will reverse it for many years. I cannot answer the question because it is too big. However, these are real concerns.

I will go back to a narrower point. We want to modernise and simplify the welfare system. We want to avoid duplication of provision, and to redefine the basis of the contract between the individual and the state. We need to do that in advance of universal credit coming in. We want to place claimants on the same basis as everyone else. All those who do not qualify for contributory benefits will qualify for income-related benefits. The effect in practice will be a streamlined system for these youngsters to receive passported benefits.

The amendment does not work, but I take the point. We will monitor this very closely and keep the outside world, including the Chamber, informed.

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Moved by

[Lord Freud]

That this House do not insist on its Amendment 17 to which the Commons have disagreed for their Reason 17A and do agree with the Commons in their Amendment 19A.

LORDS AMENDMENTS 17 AND 19

17: Clause 51, page 36, line 19, leave out “365 days” and insert “a prescribed number of days which must be at least 730”

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19A: Line 4, leave out “a prescribed number of days which must be at least 730” and insert “365 days”

[Lord Freud]

My Lords, there has been extensive debate in both Houses on ESA provisions. Many points were made and we made a number of changes as a result, which I know that noble Lords acknowledge. Amendments 17 and 19 would increase the time limit for claimants receiving contributory ESA in the work-related activity group from the proposed 365 days to a minimum of 730 days. This would have to be prescribed in regulations. I fully recognise the concerns expressed by noble Lords who supported the amendments, in particular their concern for claimants suffering from cancer. We will debate the cancer point again in a while. On time limiting, I stress again that it will affect only contributory ESA claimants in the WRAG who would normally expect to be able to return to work with appropriate support. Time limiting will not apply at all to claimants who are placed in the support group. They will continue to receive unlimited support for as long as they need it.

We will come on to this in detail later, but I should briefly add that around two-thirds of those with a primary diagnosis of cancer who complete their WCA are placed in the support group and would therefore be unaffected by our time-limiting proposals. Additionally, claimants with the lowest incomes will be in receipt of income-related ESA and would therefore also be unaffected by this measure.

We have had a number of debates about whether the time limit is arbitrary. I do not accept that it is. A number of countries apply a similar limit to that provided by this Bill. The Government need to strike a reasonable balance between the needs of sick and disabled people claiming benefit and those who have to contribute towards the cost—which I acknowledge includes disabled people who pay their taxes. I believe that a time limit of one year strikes the right balance between restricting access to contributory benefits and allowing those with longer-term illnesses to adjust to their health condition and surrounding circumstances; it is double the time allowed for contributory JSA in recognition of that fact.

There is, of course, a strong fiscal case for this change. We estimate that this amendment would reduce the total savings by around £1.6 billion by 2016-17. We have discussed this again and again, but this is a very substantial figure, and this is one of a number of very difficult decisions the Government have had to make in order to stabilise the financial position. I beg to move.

Motion E1 (as an amendment to Motion E)

Moved by

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[Lord McKenzie of Luton]

My Lords, Amendments 17B, 17C, 17D and 19B relate to the time limit for the contributory employment and support allowance, and recommend that this can be increased by secondary legislation in the future.

The time-limiting of contributory ESA to just 365 days for those in the work-related activity group is one of the most indefensible provisions in the Bill. It is all about saving money and will bring what my right honourable friend Stephen Timms referred to in the other place as,

“a financial catastrophe for a very large number of people”.—[Official Report, Commons, 1/2/12; col. 836.]

I remind noble Lords that the number affected will rise by 2015-16 to something like 700,000, 40 per cent of whom will not be entitled to income-related ESA. It will hit some 100,000 claimants in a matter of a few weeks when they see their ESA disappear literally overnight, with losses in income of up to £90 a week and over half of those affected in the lowest three income deciles. The very manner in which this is being introduced, including the assessment period and time already on the clock, demonstrates that this is not about fairness but about money.

The arguments against this one-year limitation have been well rehearsed and I do not propose to develop them in detail again this evening. They were subject to a powerful amendment moved by the noble Lord, Lord Patel, on Report. The restriction has no credible evidence base, it undermines the contributory principle, it creates another couple penalty, and it simply fails to take proper account of the time that many will need to overcome their illness or disability so as to be able to access employment. The policy potentially overrides the WRAG conditionality, and the noble Lord, Lord Patel, is rightly pursuing the situation for cancer sufferers. We look forward to supporting him in his endeavours shortly.

Noble Lords sent a strong message to the House of Commons seeking a minimum of two years for the restriction, and for the restriction to be embodied in secondary legislation so that an evidence base could be brought to bear. That message fell on stony ground and the Government have brought the shutters down on our original amendment by claiming financial privilege. Of course, they did this with the full support of the Lib Dems, despite their party policy to oppose arbitrary time limits, but this is a reality that we have to face, if not forget.

In proposing this amendment in lieu, we do not abandon our determination to see this policy based on evidence; nor do we accept the 365-day arbitrary limit. Securing that an upward revision of this limit can be achieved by secondary legislation at least keeps the cause alive. The Minister has claimed international precedents—as he did a moment ago—as part of the evidence base for this policy. Perhaps we can ask the DWP to publish that research so we can share the benefit of it.

Nevertheless, I have some expectation that the Minister will feel able to accept this amendment and I thank him for his consideration if this is the case. For us, this is not the end of the issue.

[Lord Freud]

My Lords, Amendments 17B, 17C, 17D and 19B, tabled by the noble Lord, Lord McKenzie, mean that although a time limit of 365 days will still be applied to contributory ESA claimants in the WRAG, including those claiming under the youth provision, there would also be an order-making power that would allow the number of days to be increased in the future.

I thank the noble Lord, Lord McKenzie, for his amendment as this has given me the opportunity to consider again an order-making power for time-limiting. We have discussed at length our rationale for setting the time limit at 365 days. We have listened carefully to noble Lords’ concerns about this time limit. We have always said that, for clarity, we believe it is right to have the number of days specified in the Bill and that the time limit should not be subject to secondary legislation.

However, this amendment achieves an excellent balance of the two. A time limit of 365 days is still specified in the Bill, but with the added flexibility to increase the number of days by order. We welcome this amendment and I commend the noble Lord, Lord McKenzie, for tabling it.

To sum up, we have listened to the concerns raised by noble Lords and have made amendments to ensure that disabled people whose condition deteriorates are able to re-qualify for contributory ESA if they would be placed in the support group. This demonstrates our continued commitment to supporting those with the most severe health conditions or disabilities.

The noble Lord, Lord McKenzie, has tabled very well considered amendments, so I urge noble Lords to accept them. However, I need to make clear that accepting these amendments in no way changes the Government’s policy on the time-limiting of contributory ESA. The limit will remain 365 days. These amendments simply mean that a future Government—of any hue—would be able to change the limit by order, as well as by further legislation.

[Lord McKenzie of Luton]

My Lords, I am very grateful to the Minister for his acceptance of those amendments. He helped to draft them so he should accept them! I hear what he says about the Government sticking to their 365-day limit, but we will continue to work on him and his colleagues and hope to change their minds before we have a next Government.

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Moved by

[Lord Freud]

That this House do not insist on its Amendment 18 to which the Commons have disagreed for their Reason 18A.

LORDS AMENDMENT 18

18: Clause 51, page 36, line 21, at end insert “except—
(a) where a person is receiving treatment for cancer when entitlement shall continue for so long as the person has (or is treated as having) limited capacity for work; or
(b) the person has (or is treated as having) limited capacity for work as a consequence of a cancer diagnosis.”

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18A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Lord Freud]

My Lords, I beg to move Motion F. If I can just get to the right place—

[Baroness Hollis of Heigham]

Do the acceptance speech.

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[Lord Freud]

Thank you very much. I was about to launch into the wrong thing. This is about the ESA provisions for people with cancer, which has been a very sensitive issue. We have listened very carefully to those concerns and made a number of changes to clarify our policy intent to ensure that vulnerable people, such as those with deteriorating conditions, are protected.

The intended purpose of Amendment 18 means that no time limit would be applied to contributory ESA claimants who are receiving treatment for cancer, or have a diagnosis of cancer, for as long as they have limited capability for work as a result. This is clearly a sensitive topic, and we have said all along that we want to do the best for individuals suffering from cancer.

I have to repeat something I said a few minutes ago: that most individuals with cancer are placed in the support group at the outset of their treatment. This recognises the serious effects that cancer treatment can have on individuals.

We have been working closely with Macmillan to improve how the WCA assesses individuals who are being treated for cancer, and we are now consulting on our proposals. While it is important that we do not pre-empt the consultation, I can assure noble Lords that our abiding aim is to ensure that individuals undergoing or recovering from cancer treatment are not subject to unnecessary assessment. A process is in place to ensure that appropriate evidence is gathered to allow those who are unable to work due to the effects of their treatment to access the support group. In this way I believe that we can ensure that people with cancer are treated sensitively and receive the support that they need. I beg to move.

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[Lord Freud]

My Lords, I need to start by paying tribute to the noble Lord, Lord Patel, who has done some astonishing work in this area in bringing the issues vividly to life. We certainly have learnt and have appreciated some of the things that he has said. I hope that I will be able to give him and the House some reassurance about the progress we have made on this.

As noble Lords will know, we are committed to improving the WCA so that it accurately identifies the individuals who should be in the support group where there is no time limiting and no questions. That is why we asked Professor Harrington and Macmillan Cancer Support to look at the way in which individuals being treated for cancer are assessed. That is why we have proposed changes and those changes are what we are consulting on now.

The intention of our proposals is to introduce a presumption that most people being treated for cancer should be in the support group unless the evidence indicates that, exceptionally, the debilitating effects of treatment are likely to be more limited. We would expect this to increase the number of individuals going into the support group and to reduce the number of people called to attend a face-to-face assessment. We have been working closely with Macmillan Cancer Support as part of the consultation and to understand if, following the consultation, there are further areas where improvements need to be made.

I can report to noble Lords that our discussions with Macmillan Cancer Support have been constructive. As a result we have reached agreement in the following three areas, which I hope will deal with some of the searching questions raised by the noble Lord, Lord Patel. First, we have agreed that following the consultation we will work with Macmillan Cancer Support to develop the detailed guidance that underpins the regulations. Our aim is that the guidance should clearly specify the evidence required from a healthcare professional that would confirm presumption and allow immediate access to the support group without a face-to-face assessment. In our initial discussions we have agreed with Macmillan Cancer Support that evidence would be accepted from an oncologist, a GP or a specialist cancer nurse.

Secondly, we have agreed to review the guidance and process for people who are in the work-related activity group but whose condition deteriorates or relapses during the course of treatment so that they can access the support group quickly and smoothly. We would expect this to speed the process and reduce the need for face-to-face assessments. Thirdly, we have agreed with Macmillan Cancer Support to review the guidance for people who are in the recovery period following cancer treatment. That will ensure that individuals can remain in the support group for as long as appropriate during their recovery. Combining those three proposals will greatly improve the way we assess and support individuals suffering from cancer and reflect the particular challenges they face as a result of both the condition and the treatment.

As a result, we would expect that the majority of cancer patients are likely to be placed in the support group for the first six months while they undergo treatment. Following this, many are likely to have a further period in the support group while they recover from the residual effects of treatment. It could easily be up to a year therefore for many people with cancer before the clock starts running in relation to time-limiting. I know that the chief executive of Macmillan Cancer Support has welcomed these proposals and we look forward to working with his organisation following the consultation to help implement our proposals and to support people with cancer, where appropriate, to return to work.

Finally, in response to the noble Baroness, Lady Morgan, on the WRAG, we are looking at this in the round and it would be unwise to pre-empt the consultation. But, clearly, we would want to be in a position where those in the WRAG are genuinely able to do work-related activity. As I have said, we now presume that most people will end up in the support group for an extended period. On the basis of what I have said, I hope that the noble Lord, Lord Patel, will feel able to withdraw his amendment.

[Lord Patel]

My Lords, I thank the Minister for his very positive response. Like the noble Baroness, Lady Morgan, I pay tribute to the work Macmillan Cancer Support has done for cancer patients. To summarise, the Minister has been clear in accepting that the WCA assessment will be improved, that there will be a presumption that cancer patients in treatment will be in the support group, that discussions with Macmillan will continue following the consultation, and that guidance will be developed based on evidence from healthcare professionals to allow cancer patients either to remain in the WRAG or to go into the support group. He has also agreed to review guidance for patients in the WRAG so that if they deteriorate they can access the support group and to review guidance on the period of recovery following treatment. I have to say that it must be quite unusual to be content with the outcome on amendments on two successive days before two different Ministers. I thank the Minister very much for his summation. Cancer patients will be relieved. I am happy to withdraw the Motion.

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[Lord Empey]

My Lords, I have some remarks on Motion G2. I recall vividly that in the Autumn Statement there were indications that regional pay was to be examined and the Chancellor had asked regional bodies throughout the United Kingdom to report to him by next July on the issues of regional pay. From a regional perspective, I have to say to the noble Lord, Lord McKenzie, that I have great reservations about his proposals. While a cap is by definition a blunt instrument, and there always has been a specific London issue in pay for as long as I can remember anyway, if we go down the route of establishing a body to run around the regions—as the noble Lord, Lord Newton, has pointed out with his usual typical incisiveness, the variation is not only between regions but within regions and within cities, streets and districts—then I fear that we open the Pandora’s box not only of regional pay but of regional benefit, and sooner or later some people are going to say regional taxes. I fear that the amendment could inadvertently have a perverse effect on all of us, particularly in the regions. I understand that there is very much a London issue, but within regions there are vast variations.

If you want to encourage people to move to where they are more likely to get work, that tends to be in densely populated areas—that is just the reality of life. This measure, however, portends a reality where you could discourage people from going somewhere that they are more likely to find work. I fear that if we go down the road of the amendment, we could open up a range of issues in the regions relating to pay, benefits, taxes and the whole relationship that exists there.

When I heard the noble Lord’s colleague announce this policy in the other place some time ago, I was greatly surprised. Many of his colleagues spoke to me after I had made the point about regional pay and said, “Yes, we can see this is coming”. However, this would actually accelerate the process, so I hope that the noble Lord might not move his amendment and might instead reconsider the policy as it might apply to the regions.

[Lord Freud]

My Lords, in my opening remarks I described the measures that the Government are putting in place to ensure that the cap operates fairly. I explained that the exemption of people in the ESA support group ensures that the cap affects only people who, taking account of their health and any disability, can reasonably be expected to do work or work-related activity. I explained that the nine-month grace period will ensure that those who have been in work for 12 months or more will have time to find alternative employment or consider alternative options before the cap applies.

I have been asked a series of questions and I shall try to deal with them rapidly. On the question where the money is coming from, I think we shall leave that to the Budget.

Where one member of a couple satisfies the criteria for the grace period, yes, it will apply. The grace period will apply where either member of the couple meets the criteria.

I was asked which payments would be ignored. The noble Lord, Lord McKenzie, went through what I said in Committee and I do not think there is any reason to change any of that. We have to work out the exact nature of the work exemption but, in principle, I see no reason why the grace period should not apply when hours are reduced.

The question of the noble Baroness, Lady Drake, is so detailed that we need to wait for the regulations. That is a very good reason not to put some of this stuff in primary legislation.

An important point was raised by my noble friend Lord Kirkwood about monitoring people. We will monitor these cases very closely and keep track of their destinations. We already know who they are and will engage proactively with them from now on.

The right reverend Prelate the Bishop of Ripon and Leeds and the noble and learned Baroness, Lady Butler-Sloss, raised a question about kinship carers. In practice, the grace period is particularly helpful for kinship carers. We have the conditionality issues. Having this £80 million on a discretionary basis means that we can target those families of exactly the kind that will need such support. Therefore, the way that we have done it is rather more satisfactory in that area.

The right reverend Prelate raised the question of what a benefits system is for. We are constructing the universal credit to make a modern benefits system that does what we need it to do. He can take that as read.

Amazingly, I think I might have answered all the questions. The right reverend Prelate mentioned sweetness and light in relation to Motion G1. Fundamentally, I think that there is sweetness and light. I hope so, in that we are providing a grace period through regulations. We have all the powers that we need to do it, so in practice this amendment is unnecessary. It is sweetness and light in that sense and I hope the Motion will be withdrawn.

To be absolutely honest, there is less sweetness and light over Motion G2. I am resisting having some political knockabout on this. I know that it is not proper in this Chamber; let us leave that to another place. However, I find it very hard to think about having regional limits set by a new quango. My noble friend Lord Newton and the noble Lord, Lord Empey, have made the point that this could be very confusing and complex. If the noble Lord were sitting on my side of the Table at some future point, I would give him some advice: “You don’t want to do this”. Looking at it with a slightly stricter hat on, if we were to vote the Motion through it would mess up and delay the application of the cap. We are talking there about real money. We simply could not make the saving of £200 million a year because it would be such a complicated thing to introduce. Therefore, I hope that Motion G2 will be withdrawn. My mouth will be open if it is not.

There is an important principle in this debate. It is not fair that families on benefits receive more than the average working family. It is not fair to taxpayers. Indeed, it is not fair to benefit recipients who are trapped in a cycle of welfare dependency. Therefore, I urge the noble Lord not to press either Motion G1 or Motion G2.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his detailed responses, as ever. It is all sweetness and light as far as Motion G1 is concerned. It was tabled to get the very detailed answers that we got from the Minister and I thank him for that. I thank all other noble Lords who have participated in this debate. It is always good to hear from the right reverend Prelate the Bishop of Ripon and Leeds, who brings us back to issues of homelessness and vulnerable people. It is all too easy for us to forget about them in this environment.

The noble Lord, Lord Kirkwood, expressed his view that he was less than pleased with the benefit cap. I am well aware that he is not alone in that view. Interestingly, he referred to the cap as a sticking plaster. There is an interesting issue over whether the Government see it as a continuing part of the benefit system. We took it that they did, which is why we made some of our proposals, but maybe it is just a short-term measure.

I thank my noble friend Lady Drake for her support. The noble Lord, Lord Newton, asked about how local we would get in all this. Fundamentally, Motion G2 tries to highlight that rent is the big issue in all this. There are big disparities, particularly the London phenomenon, and rent will never be equalised across the country. I see and understand the potential risks in that, to which the noble Lord, Lord Empey, and others, including the Minister, referred. However, the intent is to focus on rents and that huge disparity. In the instance that I cited, the disparity is so big that how you make one cap fit all on an ongoing basis, without having to pile in more money every year to deal with the effects, is a real issue. The Government will have to face that in the months to come.

However, I should make clear that it is not my intention to press the amendments in Motion G1. On Motion G2, I am bound to say that my colleagues in the other place were denied the opportunity to vote on this. Therefore, I intend to test the opinion of the House.

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Moved by

[Lord Freud]

That this House do not insist on its Amendment 73 to which the Commons have disagreed for their Reason 73A.

LORDS AMENDMENT 73

73: Clause 131, page 101, line 27, at end insert—
“(3) In section 6 of the Child Maintenance and Other Payments Act 2008 (provision to allow charging of fees by the Commission), after subsection (2) there is inserted—
“(2A) Nothing in regulations under subsection (1) shall impose a liability on a parent with care for the payment of fees to the Commission where that parent has taken reasonable steps to establish whether it is possible or appropriate to make a maintenance agreement (within the meaning of section 9 of the Child Support Act 1991), and where, having taken such reasonable steps, it is either not possible or not appropriate for the parent with care to do so.””

--- Later in debate ---

73A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Lord Freud]

My Lords, clearly I am very aware of the strength of feeling that has featured in previous debates on child maintenance, and I look forward to hearing the views of noble Lords today.

Perhaps I may start from a rather different position from the one I took in the debate when we last looked at this issue. I shall quote the right honourable Frank Field, who is an acknowledged expert in this area. Even though he sits on a different side, he makes a point that is absolutely smack-on. He said:

“Is not the really big change that we are discussing the fact that when the CSA was first established, the maintenance moneys went to the Treasury to offset what taxpayers were putting up because, generally speaking, fathers were not prepared to do so, whereas now that money remains with the family? Is it not reasonable, in such circumstances, if people are going to get a top-up to their benefit that they should contribute to the cost of gaining that extra money? On the timing, should we not charge people once they are getting the money, not before?”.—[Official Report, Commons, 1/2/12; col. 910.]

That quote highlights the central point to the debate. We need to look at the proposed charges in the context of all the other financial support that the Government provide for lone parents. Child maintenance is only one aspect of that support.

I have made some rough calculations to give noble Lords a sense of the relative orders of magnitude involved. In the 12 months to December 2011, the CSA collected or arranged maintenance of more than £1 billion. However, by far the largest amount of money going from the Government to support lone parents is through the benefits and tax credits systems. The benefits system provides well over £5 billion of support to lone parents, and the Government provide more than £10 billion of further support through tax credits. Thereby, the total support going to lone parents—a few lone parents are bereaved but the bulk, 95 per cent, are not—in either direct state funding or with funds from state mechanisms is well over £16 billion.

Let us now look at the other end of the telescope. What are we asking the parent with care to pay for collecting that extra money? By the end of the next spending review we will collect each year between £50 million and £100 million in collection charges from parents with care. Those figures are based on the 7 per cent to 12 per cent range of collection charges set out in the Green Paper.

Let us take the figure of £75 million and compare it to the £16 billion of support that is being provided to this group, either directly or through the state. That ratio works out at less than one half of one per cent. I do not think that Barclaycard or other credit cards charge as little as that.

[Lord McKenzie of Luton]

To clarify the figures, is the £16 billion to which the noble Lord refers payable just to parents with care who are using the statutory CSA system, or to lone parents generally?

[Lord Freud]

This is paid over to lone parents as a group. That is what we are paying over to lone parents. Some of them have been bereaved, but the bulk of them have not. All of them could look to get support from the non-resident parent, whether or not they had lived with them at one stage. That is the figure I am trying to explain. All of them could look to get some maintenance.

Is it unfair or unreasonable to ask for a small contribution to the cost of running a child maintenance system against a backdrop of that financial support? I remind noble Lords that, as Frank Field said, there is no offset any more; it is money on top; it is disregarded. A lot of the debate we had when CSA started in the 1990s and was so controversial, and in the early 2000s, was framed by the concept that it was money going from the non-resident to the Treasury. Between 2000 and 2010, we moved to a 100 per cent disregard. That is the fundamental difference of which I remind noble Lords.

The next point is that we have committed to reviewing the charging powers and laying the review before Parliament 30 months after introduction. That is to ensure that we are able to test properly whether the intended incentive effects of the charges are realised and that we get the behavioural impact of the charging regime.

Again, simply, we are looking at a 1:2 charging regime in round terms, which is intended to incentivise both sides to reach agreement between them rather than going through the state system as the first option. One reason that it is so important that we encourage both sides to go independently is because research tells us that the children are better off if the parents can agree between them rather than using the state system.

I, and the Government, have the utmost respect for my noble and learned friend, Lord Mackay, and the intention behind the original amendment laid on charging for child maintenance services. The problem of asking for a test to establish when the parent with care has gone through a process is that it may not be a real test—anyone can say, “Yes, I have been through a process”. If that is the case, we will end up with everyone using the system as the first option. If it is a real test, we will have to go through all the work of checking whether they have made efforts and the rights and wrongs, and we will be pulled down the slippery slope that we are so keen to avoid. Because we would be pulling people into the system, that would have a substantial cost because of the pure volumes.

Charging must have a role in the new system to ensure that we do not repeat the failings of the CSA. The proposed charges create an incentive for parents to collaborate and take responsibility.

As a direct result of the concerns expressed in this House, we have also changed the fees to enter the system, to avoid the parent with care being deterred from using the state system. We have announced that we are reducing the maximum charge from £100 to £20 across the piece to ensure that it is not a potential barrier to entry. We are offering a very good service for that £20 in that we will be looking at the non-resident parent’s earnings, and that will be a real benefit for the parent with care.

With regard to reducing the maximum charge and completing the review, when we know how the system has shaken out we can ask whether we have got the figures right and whether the charges are right. That is the point of the review: we can ask whether we are getting the behavioural responses that we need. I hope that I have laid out the issues adequately. I beg to move.

Motion H1 had been substituted by Motion H1A.

--- Later in debate ---

[Lord Freud]

My Lords, I shall start by addressing Amendment 73C, tabled by the noble and learned Baroness, Lady Butler-Sloss, which relates to limiting collection charges for parents with care. This is a substantial amendment that is similar to my noble and learned friend Lord Mackay’s, and it would represent a similarly substantial level of cost.

Before I get into the figures—I know that my figures have not been popular today—I want to highlight an element of the proposed charges that I do not think we have conveyed with sufficient clarity to noble Lords: parents have the option of avoiding collection charges altogether by using maintenance direct. My noble friend Lord Boswell asked a series of questions on this.

[Lord McKenzie of Luton]

Is it not right that under the new proposals the non-resident parent makes the decision to use maintenance direct but that is no longer available to the parent with care? The parent with care cannot opt for that arrangement.

[Lord Freud]

I think it is clear that the way that maintenance direct works is that the two parents have to agree on it. That is the point of maintenance direct. Under that system the Government calculate how much child maintenance is payable, but the payments themselves are made directly by the non-resident parent to the parent with care. If the payments are made in that way, no collection charges apply. It is a mutual decision.

The Government will ensure that a service is provided that enables maintenance direct to be used without the need for any contact to be made or personal information to be divulged. By using this system, the parent with care has the security of knowing that where it is established that payment has not been made in full and on time by the non-resident parent, the case will be moved into the collection service and swift action can be taken to reinstate payments. They can switch back and forth into that system. I take my noble friend’s point that there is a lot of attraction in that system and it may be underpublicised. To the extent that it is, we need to do something about it.

Where the payments move back into the collection service, charges will then be imposed for its use and they are heavily weighted on the non-resident parent. That acts as a real incentive for non-resident parents to pay in full and on time, and indeed by the charge-free method of maintenance direct. On the question of some non-residents wanting to go on punishing their ex, the parent with care, that would be a very expensive way of doing it—it costs the non-resident roughly twice as much as it does the resident.

I want to come back to the noble Baroness, Lady Sherlock, who said that she would deal with my argument piece by piece. I did not particularly agree with her. I was adding up the benefits system but also the tax credits system, which presumably many of the others who were not on the benefits system would have been on. Tax credits were invented in the early 2000s. I am talking about what it was like in the 1990s. The process by which the state supplied money for lone parents grew gradually through the 2000s until there was a total disregard. Early on, that was in the form of tax credits. From 2008, a proportion was in the form of benefits. The full disregard came in 2010. Therefore, I do not particularly buy the dismantling of the noble Baroness, Lady Sherlock.

I want to go into the costs. We estimate that the cost of Amendment 73C would be around £190 million, although it would depend on the exact level of the collection charge. There are assumptions around that. Therefore, in response to the question of my noble friend Lord Higgins, I say that it would be only a little less than the cost of the original amendment tabled by my noble and learned friend Lord Mackay, which was £220 million.

I also acknowledge the serious and considered concerns that have been set out by noble Lords both today and in our previous debate on this. I am prepared to make some specific commitments to the House on the development and oversight of the regulations, along the lines suggested by my noble friends Lord Boswell and Lord Newton. Later this year we will bring forward the regulations. At that point, other Ministers and I would like to offer Peers the opportunity to meet in a special session in Parliament to gather their views. We envisage an agenda based around the regulations, covering those that relate to the key concerns expressed during the passage of the Bill. I will of course take direction from interested Peers—there are a lot of them—as to the structure of that session. We will set that up as required.

We will also conduct a public consultation on the regulations. Following the finalisation of regulations after consultation, we will bring them back to the House. At that point, we will again offer a session for Peers to complement consideration by the committees of the House. That will not be the last time that the House debates charging; we will bring the affirmative regulations forward for debate.

We also acknowledge the need to evaluate and review constantly the impact of charges on parents. In respect of that, we have already amended the Bill to ensure that the review is published within 30 months of its introduction. Again, I here commit that we will seek the input of Peers during the course of that review in advance of a report being laid before Parliament.

Let me also be specific about what we intend to look at as part of that review. We will want to look at the impact of the application and collection charges on the behaviour of both parents and at the outcomes in terms of establishing effective maintenance arrangements. In our report to Parliament, we will make clear our intentions, including a specific view on the position of the poorest parents.

[Lord Newton of Braintree]

Briefly, may I just—in the form of a question, as I think is appropriate—ask my noble friend whether he is aware that I think that is a significantly generous response to my request for proper, genuine consultation and a real opportunity for the House to have a say?

[Lord Freud]

I am very grateful to my noble friend for that. In that spirit, I turn finally to my noble friend Lord Boswell’s Amendment 73BA. In doing so, I thank him for his contribution to today’s debate, which, as one would expect, was thoughtful and wise, as many other contributions have been, even those I have not necessarily agreed with.

We absolutely acknowledge the concerns around vulnerable groups, particularly parents with care. Although we will not further amend our current proposals, we want to ensure that, going forward, especially at the time of the review, we have the powers to evolve charges in line with evaluation. As I have stated, we especially want to consider the behavioural responses of parents and the outcomes they reach as part of our review. If in the light of evaluation and review we need to change our approach, I believe that Amendment 73BA clarifies that we would have the ability to do so under the 2008 Act. Therefore, I welcome Amendment 73BA and the Government wish to accept it.

[Lord Boswell of Aynho]

My Lords, in view of the tenor of this debate, and specifically what has just been said, I can be very brief and merely express my thanks. Our thanks go first to all those who have participated in this debate and to the non-government organisations and other interested parties that have briefed us and encouraged us on our way. We are grateful to the Minister for the way in which he has set out a response to my noble friend Lord Newton in relation to the consultation exercise and, more specifically, because he has gone even further than his earlier “sweetness and light” and has now actually accepted an amendment from the Back Benches. I am very grateful to him for accepting my amendment. It is not something I do very often, or at least I do not succeed in getting an amendment accepted, although I may try.

There is a real concern about getting this matter right and not disadvantaging vulnerable parents or children. We need to have a fairly intense dialogue about that and a much clearer understanding of the rationale of what is being done. We want to make sure that we do not do the wrong thing and then regret it later because that has been—with respect to all those in this Chamber who have been involved—something of the history of the CSA and CMEC to date. We have a chance to build on that. We start in a very good spirit. We have even had the indulgence of the usual channels and the Scottish interests in enabling us to prolong not just our consideration of this amendment but our detailed consideration of all these Lords amendments.

In conclusion, I wish to say two things. First, I approached this issue by putting a pair of gloves in my pocket which I was prepared to leave on the Bench as a gesture of dissatisfaction if we had to fight our way through to the regulations. I have now metaphorically repocketed them because I think that we can now have a constructive discussion which will lead to a satisfactory outcome. Secondly, and finally, I express my thanks to my colleague in this endeavour—the noble Lord, Lord Newton of Braintree. I dedicate this minor success to our noble and learned friend Lord Mackay of Clashfern in his absence. He took the House with him and got something done, for which we are very grateful. In that spirit and to enable a positive response, I commend the amendment.