Jobseeker’s Allowance (Sanctions) (Amendment) Regulations 2012

Lord McAvoy Excerpts

Monday 8th October 2012 Grand Committee

[Lord McAvoy]

My Lords, the report from the Secondary Legislation Scrutiny Committee says:

“This instrument is drawn to the special attention of the House on the grounds that it gives rise to issues of public policy likely to be of interest to the House”.

In addition, part of that public policy focus would take into account the threat made by the Chancellor at today’s Conservative Party conference: that he intends to further reduce the welfare budget by £10 billion, added to the already £15 billion taken from some of the poorest people in this country. I join those who welcome the noble Baroness, Lady Stowell, to the Dispatch Box but for slightly different reasons from those of my more diplomatic noble friend Lord McKenzie of Luton. I welcome her appearance on this—it is not personal—because I, along with others, intend to highlight the consequences of the Welfare Reform Act. We are now down to the nitty-gritty from the Labour Front Bench and from some very knowledgeable people in other parts of the House as to what is happening here.

I listened very carefully to the noble Baroness and when she was speaking, it seemed like an appeal to the average Sun reader, with phrases such as “not tough enough”, “we require” and “there will be fewer claimants in the whole structure”. There was very little about the consequences on the people affected.

Perhaps the noble Baroness can take a note of this and answer it. Nothing was mentioned about the administration costs of implementing the policy—the extra staff who will presumably be required—or about the monitoring of the implementation of this draconian policy and attitude towards poorer people. I do not know whether that language is a bit robust for this place, but there we go. Millions of people outside need to be heard here today. I wonder how many people here or elsewhere on the Conservative Benches should declare an interest, as the millionaires among them gain a £40,000 tax cut every year for the next few years which goes to the wealthiest people in this country. That is coming straight from the people who will be suffering from these cuts. The Liberal Democrats should look at themselves as well. I am not sure how many millionaires they have, but they certainly marched through the Lobby in support of the Act—with a few honourable exceptions.

I do not think that those in the government ranks realise how draconian the three-year policy is. What research is there to justify it? Those affected are imperfect people who will make mistakes and will not be mentally fit to deal with the situation. I echo what my noble friend on the Front Bench said: I am no sort of social liberal when it comes to benefit fraudsters and anyone fiddling their benefit. Please do not paint me as a softie or as someone who wears rose-tinted glasses. It is said that only a few claimants will be caught by the policy. I do not see any research; I see justification for a hard-nosed policy which is politically desirable to the sort of people who think that everybody on benefits is a fraudster, when they are not.

To their credit, the Government have a policy of trying to get people with mental illness of various kinds to come forward to get help but, at the same time, how many people who are suffering from undeclared mental disorders will be caught up in this draconian policy? It is a horrible fact of life that some people may die because they are deprived of money for three years. They will sink into the gutter, homeless, and will be driven there through the policies of this Government. There is a strategy here of stigmatising benefit claimants. Again, I refer to the fact that I am not a social liberal on such issues.

There was a lively debate in the other place on this. I compliment my honourable friend Mrs Anne McGuire for the salient and powerful points that she made. I am glad that we opposed there, as we do now, the three-year sanction. It is a disgrace and should be reconsidered. There are things in the regulations that we support, but the price of that support in getting consensus to tackle reform of the welfare system should surely be some recognition of those draconian aspects.

Going back to what I said about people with a mental disorder, it was stated that plenty of people within the department were trained to spot that and deal with it. How many people are employed specifically for that task? Are any of them employed by private, outside agencies, such as the department’s pride and joy, Atos, making mistakes and penalising people all along the line? We need to clarify how many people are professionally trained to spot people who, bearing in mind the background of this country, are naturally reluctant to demonstrate or admit to—and even then they are not using that word—some kind of mental disorder.

Therefore, there is a whole series of questions about how the department is going to handle that. I should like to hear some answers and I may come back on this issue, depending on the content of the answers.

[Lord Kirkwood of Kirkhope]

My Lords, it is a pleasure to follow the noble Lord, Lord McAvoy, who has been a good friend and colleague over many years. I plead guilty to being a softie but I am not a millionaire. I just want to make that clear. I do not mind being characterised as soft but I am not rich.

I should declare an interest. Noble Lords probably know this but I continue to be a non-executive, non-remunerated director of the Wise Group in Glasgow. The Wise Group is an intermediate labour market provider and has been in that business for 25 years. It is a privilege for me to work with the group and it gives me an insight into some of the implications of the important regulations that we are debating this afternoon.

As I said during the main body of the debate on the Welfare Reform Bill, as it then was, language is very important in all this. If anyone doubts that, they have only to look at the headline in the tabloid press today—I think it is the Express—which declares that the Government are declaring war on the workshy. I do not think that that is helpful language for anyone. I do not necessarily accuse Ministers of doing it but I think that the Government could do more to stop that kind of stigmatisation. The noble Lord, Lord McAvoy, talked about people who are workless. I understand that the public have a perception that it is right to crack down on benefits but I believe that it is a wholly mistaken view based on very little background information and detail. If the real facts were known to the wider general public, I think that public opinion would be different.

In passing, I want to contrast that with fraud. I think that the policy contained in these regulations will be counterproductive—it is a policy objection that I have more than anything else—and that it will make things worse rather than better. I draw a clear distinction between handling sanctions and conditionality and fraud, which the Government have to attend to with more vigour and energy. To be fair to the noble Lord, Lord Freud, I think that he is aware of that and that he is doing more to try to deal with the problem. However, here we are dealing with regulations which will take people out of benefit if the sanctions are applied to the extreme for three years.

Last week, I noticed that there was an identity theft fraud case in which £90,000 had been fraudulently taken out of the benefits system by someone who had stolen 13 identities. He got two years in prison. Here is a criminal defrauding the benefits system of £90,000 and he gets to stay at Her Majesty’s pleasure for two years, whereas somebody who falls foul of the sanctions regime gets no money for three years. You begin to ask yourself, “Is that balance correct?”. I leave that question hanging but I have a very clear idea about it. If we are going to be tougher, we need to be tougher on fraud. We need to stop talking about fraud and error in the same sentence and in the same way, because in my view they are entirely different. I am with the Minister—I welcome her to the Dispatch Box and wish her many happy hours there in the future—but I think that we need to drill into and make better progress on the whole question of how we deal with stigmatisation and fraud.

From my association with the Wise Group, I am very clear that you need three things to get people into fulfilling long-term work pathways. You need to have trust between the claimant and the adviser—the person doing the coaching, steering and supporting—and the trust needs to be both ways. The claimant needs to be aware that the person on the other side of the desk is on their side. That sometimes takes time and is difficult to achieve, because some of the claimants are a long way away from the labour market. You also need to motivate the claimant and need to persuade him or her that they are in control of their own pathway back into work.

I have said this many times before. The Paul Gregg report that was done for the previous Labour Government in 2009 made perfect sense to me. It was a positive case for conditionality. But the essential condition that he applied was that the claimant had to be in control of the pathway. The destiny of the pathway had to be felt by the claimant to be something that he or she wanted to do. If they offend against the jobseeker’s agreement in that context, once you have established the trust, then conditionality is necessary because some people need a wake-up call—even I know that. We have all learnt that from our American friends. But only a tiny percentage of people should be in that situation and should be considered for conditionality.

As the noble Lord, Lord McKenzie, said, some of the figures that are beginning to emerge from 2010 are deeply frightening. They will get worse if we are not careful. You need a trusted adviser relationship. You need the person to feel that they are in control of what is being done to them and you need employers who understand all that and are willing to come to the table and say, “Okay we will be part of this process to get this individual back into gainful, full-time employment”. All of those elements need to be present for this important public policy to work, and I support it.

But conditionality wrecks the relationship between the adviser and the claimant. The trust goes out of the window because people are being told what is good for them. They start to think that the system is against them and then they go AWOL. After they go AWOL, the system ignores them, in the main. Nobody follows them wherever they go—to a life of working in the grey economy, crime, drugs or anything at all. Nobody follows them and nobody has a responsibility to ask, particularly over a three-year period, where have they gone? Our American friends got a real fright about the number of people who disappeared off the rolls. In terms of three-year sanctions in the future, we will have a real problem in trying to get back the relationship once these sanctions are applied to the extent that we are talking about today. Sanctions are a punishment. They are counterproductive. They may be necessary, but they should be used with great discretion and in very specific circumstances.

I have a number of questions. The noble Lords, Lord McKenzie and Lord McAvoy, and my noble friend are keen to pursue this. When the policy is rolled out in the pilot areas it needs to be absolutely monitored to death in terms of what is working and not working. I do not believe that it will get people into work. It will get people off benefits: I can see that. It is stark staring clear that you can get people off benefits by sanctioning them, but does it get them into work? That is the important question. Some people in the Committee may think that getting them off benefits is enough, but not me. The policy is deficient in the second half of the necessity of supporting people and getting them into fulfilling long-term work.

If I had more time, I could develop the point about the difficulties facing single parents, people in rural areas and in destroyed labour market areas, who have no real prospect of finding work because the labour market is so difficult in different parts of the United Kingdom. People with disabilities will obviously also find it difficult and will struggle.

I am in favour of clarity. The current policy is deficient in that most people do not know why they are being sanctioned, and that is not just those who have a mental illness, because the system is so confusing. I am in favour of conditionality, but I think that this is overdone. I believe that in the fullness of time it will not work. If I am wrong, I will be the first to admit that. I want answers to some of these important questions, even if they are in a letter, because I do not think the Minister has a realistic chance of answering them all in detail. I want an undertaking that the sanctions applied during the pilot phase will be analysed and followed through by the department to see what is actually happening and how they work out in practice. If I am right, these conditionality requirements will make things worse. That is not in anyone’s interests—not in the interests of the claimant, the Government or anyone else. So we need to be cautious about how we roll out this policy.

--- Later in debate ---

[Baroness Stowell of Beeston]

I am grateful for the contributions that have been made in the debate today. A number of points of detail have been raised which I will do my best to go through before I conclude my responses. I will try to cover these points in groups rather than going through every individual one systematically, as I feel that it is important to cover some of the general points made by noble Lords that fall under several headings.

I am grateful to the noble Lord, Lord McKenzie, for welcoming me warmly to the Dispatch Box, but of course I am disappointed that he does not feel able to support these regulations. I have listened carefully to all the points that have been made today, and most of them have been questions about the regulations and concerns expressed about them. In answering them, however, I can go a long way to addressing them.

The people I think about most when I consider what we are doing today is those who find themselves suddenly out of work through no fault of their own, and who are desperate to get back into work and are doing everything that they possibly can to do so. When they go on to jobseeker’s allowance, or in due course when they are receiving an element of benefits that will apply under the universal credit, people will want to know that while the rest of us are fortunate to be in work at that time, a regime is in place that respects those who are doing everything that they can while penalising clearly and appropriately those who do not. They will want to know that they are entering into a regime that is properly labelled and properly reflects that they are trying their best to do what they can for themselves, and we will not do them any service by putting in place a regime that is not clear.

The noble Baroness, Lady Turner of Camden, used some colourful language that she may have been trying to ascribe to those of us in government regarding what we are doing. I assure her that we are not saying that.

There were concerns about what will happen if people find themselves affected by the sanctions and not in receipt of benefits. Let us not forget that the reason why people are entitled to jobseeker’s allowance is that they are fit and able to look for work. Because they are fit and able to work but are not able to find work at that time, the payment is made to them. If they are not doing what is required of them to entitle them to the benefit, then it is only right that they should be sanctioned; there should be a clear deterrent in order that they should comply with the expectations placed upon them. If they are sanctioned, then what they lose is the jobseeker’s allowance—they do not lose any of the other benefits that they may be entitled to, such as a hardship payment or housing benefit. While this measure may look very severe, it is important to bear it in mind that this is about jobseeker’s allowance; it is not about all benefits over a period of time. I will come back to the politics to which the noble Lord, Lord McAvoy, referred, because they are worth addressing, but not until I have dealt with some other matters.

Several noble Lords, including the noble Baroness, asked when a three-year sanction will apply and how it will be communicated. The new system will be explained to claimants. It would apply where a claimant has three times failed to apply for suitable job offers for work which they are capable of doing. The regulations are not designed to leave people in hardship, as I said, but to be a deterrent. Claimants will still be able to claim a hardship payment of up to 80% of JSA for the length of the sanction. They still have access to passported benefits such as housing benefit, free school meals and free prescriptions.

I know that there is a lot of concern about those who may face a three-year sanction. It is important to say that we do not expect many people to end up being sanctioned for three years. If the system is to work properly, the deterrent should be strong enough for us to avoid that. However, during a three-year sanction, a person is still entitled to JSA although it is not paid. They may receive hardship payments, but to do so will still need to meet conditionality, and their adviser will still work with them to help them to find work during the sanction period—a point made by the noble Lord, Lord Kirkwood. In response to him, I repeat that we must be clear that JSA is a benefit for people who are deemed to be fit for work and not confuse JSA with other benefits of which they may be in receipt.

The noble Baroness, Lady Turner of Camden, asked: how can people who are sanctioned find work when there are no jobs to be had? I refute that point. At any one time, there are about half a million unfilled vacancies in the economy, but that is only a snapshot that hides the dynamism of the job market in which most vacancies are filled quickly and new ones are coming up for people to move into. It is worth noting that of those who come on to jobseeker’s allowance, about 50% leave within three months and 75% within six months.

Several noble Lords—the noble Lord, Lord McAvoy, in particular—asked about the evidence to support the introduction of the sanctions and what research had been done. Evidence from the UK and internationally shows that sanctions motivate claimants to engage with job search and other labour market requirements. For example, the DWP research suggests that more than half of claimants say that they are more likely to look for work because of the threat of sanctions.

Last summer, I spent about three days visiting jobcentres and spending time with advisers who were interviewing claimants as they came in. It was notable to me during those sessions how sanctions were a topic very much discussed and how once they became a possibility, some people who might not otherwise have done so changed their behaviour. Many noble Lords asked whether people under sanction would be supported by the jobcentre. I have already covered that; that is clear.

[Lord McAvoy]

The Minister is dealing with a series of complicated matters, but I seek clarification. In the other place, Mrs Anne McGuire said:

“It is important to remember that a person who is sanctioned will cease to receive their £71 per week in jobseeker’s allowance or the universal credit standard allowance”.

How does that fit in with what the Minister says? It was not contradicted by the Minister in the other place.

[Baroness Stowell of Beeston]

Could the noble Lord repeat the point he is making?

[Lord McAvoy]

I do not see any sign that Ms Baldwin rejected this. My right honourable friend said:

“It is important to remember that a person who is sanctioned will cease to receive their £71 per week in jobseeker’s allowance or the universal credit standard allowance”—[Official Report, Commons, Eight Delegated Legislation Committee, 11/9/12; col. 6.]

Is that the case, or has the situation changed?

[Baroness Stowell of Beeston]

That is the case. That is what I have explained. If you are sanctioned, you are not in receipt of jobseeker’s allowance. There may be other benefits that you are entitled to, such as housing benefit. I think it is the use of the word “entitled” that is confusing matters, and I must apologise if I am confusing the Committee.

If somebody receives a sanction which leads to them not receiving their jobseeker’s allowance, that does not mean that they are not entitled to jobseeker’s allowance; it just means that they are not in receipt of it because they have not done something that is required of them in order to be entitled to receive that allowance. To be disentitled means that you have to stop being—I forget what the precise language is—available and able to carry out work. I think I have used imprecise language, and I apologise.

The noble Lord, Lord McKenzie of Luton—