Welfare Reform

Lord McKenzie of Luton Excerpts

Thursday 11th November 2010 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I thank the noble Lord, Lord Freud, for repeating the Statement that was given in another place today and acknowledge his personal and detailed engagement in the development of these proposals. On this side, we are grateful for advance sight of today’s Statement. Beyond the normal courtesy of being sent an advance copy and being able to hear it in the other place, we have of course been able to read about it in the newspapers over the past couple of months.

On the substance of the Statement, we have always been clear that we agree with the broad principles of what the Government are doing. We made good progress through the introduction of tax credits and the minimum wage to make work pay, and we made good progress in reducing the number of workless families by 350,000 and the number of unemployed lone parents by a similar amount, but there is plenty more to be done. The system is too complex at present.

The right honourable Secretary of State and the Minister have on more than one occasion gone on the record in acknowledging the work that we did in government that they are building on. We agree that work is the best route out of poverty and we agree with strong conditionality in the welfare system so that benefit recipients get something for doing something. We agree with the principle of a single welfare-to-work programme—we were introducing the personalised employment programme to do just that but at a much more modest pace than the Government are proposing in the work programme. In successive policy, we set out our long-term aspiration for a single working-age benefit papers that would simplify the system, as the universal credit seeks to do. Attaining that would be a significant technical as well as policy achievement, so on our part there is no opposition for opposition's sake.

On this side, we will offer constructive opposition to try to help the Government make their principles a successful reality. It is in that spirit that I raise some concerns. First, it is right that there should be a contract setting out the expectation between the state and the claimant to enshrine the something-for-something nature of things, but as well as providing benefit is there not an obligation on the state to grow employment? Will the Minister agree to publish, perhaps with his friends in the Treasury, targets for employment growth and unemployment reduction? I notice the claims in the media, which we have heard repeated today, that the tougher conditionality will reduce unemployment by 350,000. I would be interested to see the evidence supporting that.

The noble Lord, Lord Freud, will recall our extensive debates on conditionality during the passage of the Welfare Reform Act 2009. In particular, he will recall the consensus that lone parents, particularly mums, should not have to be available for work outside school hours, that there needs to be affordable childcare and that transport costs should be taken into account in assessing availability for work. Can the Minister confirm that tougher conditionality is not to weaken these protections and that good cause will still apply? What is proposed for the protection of children when benefits are withdrawn? Will hardship payments still be available and, if so, at what level of benefit?

Through the future jobs fund and the young person’s guarantee, we found that offering a real job on the minimum wage lifted people's aspirations and got a lot of really good work done for the community. That is what the unemployed—all the way back to the “Boys from the Blackstuff” in the 1980s—have always wanted: they want a job. The new work programme is dependent on successful job outcomes, so they need this too. When will the Government publish a credible plan for jobs growth? The Bank of England said this week that the prospects for growth are highly uncertain, but it is certain that more than 1 million people will lose their jobs as a result of the comprehensive spending review. Can the Minister give hope to those who are currently unemployed that the number of vacancies will start increasing again?

The benefit of work is in building self-confidence and self-esteem. How will the work experience proposals offer that and other gains such as something on the CV and a good reference? How will it be different from the community payback work that we successfully introduced in government? Will it just look like another form of punishment? How will he find these work placements and guarantee us and the work programme providers that the scheme will not just displace other jobs that are needed to get people permanently off benefit? In our experience, as with apprenticeships, it is easy to announce the policy and the funding, but it is much harder to persuade employers to take them up.

On universal credit, there are many points of detail that we wish to explore about how the credit will operate, but those questions are mostly for other occasions. We recognise that the proposal is ambitious, but can the Minister comment on the reports that, in order to fulfil the commitment that no one will be worse off under the proposals, up to an additional £2 billion a year will be required after 2016? Given the time that will be taken to introduce the universal credit, has any thought been given to utilising the better-off-in-work credit in the interim?

We will need to explore the detail in the White Paper on what is included within the credit. Can the Minister say today whether DLA is in or out and whether it is to be subject to the taper? Given that the previously announced decision that council tax benefit—with a 10 per cent cut, of course—is to be devolved to local authorities will potentially lead to differential arrangements up and down the country, what is the Minister’s understanding of what that will mean for the universal credit?

There has been much debate about the draconian changes to the housing benefit regime. In due course, we will want not only to unpick the evidence base on which that is predicated but to look for answers, which to date have not been forthcoming. Will the universal credit allow the separate net identification of components of the credit, given the possible combination of overall caps, individual rent caps and the standard tapers? Does that preclude the direct payment of rent to RSLs and landlords in the private rented sector? If child benefit is to be included, how does the Minister respond to the point that one consequence will be potentially to reverse the hard-won campaign that such support should be a resource that transfers from the pay packet to the purse?

I reiterate our concerns about what is being cut to pay for the proposals. The arguments setting out our opposition to the unfair and damaging cuts to housing and child benefit are well rehearsed and will be made again and again. I should also say that the noble Lord could avoid these damaging cuts by taking more time and, in doing so, he could possibly lower the risks around the delivery of the proposals. We can achieve political consensus on this and agree a programme that goes beyond a single Parliament. That would allow time to build employment in the economy, get reassurance about the success of the IT upgrade on which the universal credit is dependent and allow a smoother transition from the flexible New Deal to the work programme, thus avoiding a damaging gap in provision that potentially will hurt contractors and, more important, vulnerable job seekers.

Let me be clear that we support the strategic direction of the proposals, but what counts is the decency with which they are implemented. We will work constructively with the Government to seek to ensure that that is the case.