Welfare Reform Bill

Debate between Lord Patel and Baroness Lister of Burtersett

Wednesday 11th January 2012 Lords Chamber

[Lord Patel]

My Lords, I speak to my Amendment 45, which takes a much more radical view and proposes leaving out Clause 52. I guess the happiness will end now. However, I take note of the comments made by the noble Baroness, Lady Meacher, about the anxiety over abuses in the system, and I will listen carefully to the response from the Minister, because it is an important issue. I agree with the noble Baroness that it will not be worthwhile pressing any of the amendments if the Minister’s response is that there is a need to reconsider matters in the light of our comments.

I will outline the reason for my suggestion that we leave out Clause 52 by exploring historically why youth ESA was set up. Under the provisions, a person under the age of 20 who is not in full-time education or who has had a limited capability for work for 196 consecutive days can gain entitlement to contributory ESA despite not having reached the contributions threshold. This measure has existed in some form in the benefits system for nearly 40 years to enable young people to access contributory benefits if they are unable to work because of illness or disability.

The youth rules were introduced for incapacity benefit in April 2001 as a result of provisions in the Welfare Reform and Pensions Act 1999. They were intended to refocus benefits on people disabled early in life who had never had the opportunity to work and gain entitlement to incapacity benefit through the payment of contributions. The rules were carried over into ESA as part of the Welfare Reform Act 2007, again to ensure that young people who had not had the opportunity to build up a sufficient contribution record would not be excluded from the non-means-tested allowance.

With the Welfare Reform Bill the Government now intend to abolish the youth condition, as well as time-limiting its receipt to 12 months for existing claimants. The justification for this change, as set out in the impact assessment, is that it,

“will simplify the benefits system and ensure a consistency of treatment for those claiming ESA”.

This assessment completely fails to recognise that young people with long-term health conditions or disabilities are already in a place of disadvantage in comparison with older adults, hence the introduction of the youth condition in the first place, and that this change will entrench this disadvantage. This will mean that young people, including those unable to work because of cancer, will be extremely unlikely to be able to access the contributory element of ESA and will have recourse only to the means-tested income-related element to be subsumed into universal credit. Young people who are ineligible for the income-related component, which will include those with a partner who works more than 24 hours a week and full-time students, could therefore lose up to just under £100 a week. This will have a devastating impact on those who are unable to work and are struggling with the significant additional costs of a cancer diagnosis—and, believe me, there is a significant cost for all kinds of reasons once cancer is diagnosed.

The eligibility of young people for benefits is extremely dependent on their circumstances and particularly on their education status. I have serious concerns about how students, for example, are treated under the system. Full-time students are able to claim income-related ESA only if they are already in receipt of DLA. This is another example of how the eligibility rules at present disadvantage young people. I am also concerned about the knock-on effect of many young cancer patients who are students becoming ineligible for DLA as a result of the introduction of PIP—and we will discuss that later. I believe it is critical that the Government ensure that the eligibility of students with long-term health conditions and/or disabilities for ESA is not dependent on their receipt of DLA.

Let me give an example. David was diagnosed with stage 4 Hodgkin's lymphoma when he was 22. Before he was diagnosed, he received a full wage working for the NHS that stopped when he was undergoing treatment. As he had been working for his employer for only six months, he was entitled to three weeks’ paid sick leave. He was subsequently unable to claim any benefits, including ESA, because he was forced to move back home with his parents. David told me: “It can be really difficult for young people to build up time with one employer so that they are entitled to sick pay at full pay”. Similarly, it is extremely difficult for young people to build up national insurance contributions, so I am thankful that at present the youth rules enable young people, including those with cancer, to access contributory ESA, which can be a lifeline when they are already impacted by a loss of earnings.

DWP statistics show that 17 per cent of the current caseload of ESA claimants aged 16 to 24 are currently accessing contributions-based ESA, or both income and contributions-based ESA, and could therefore be negatively affected by this change. The DWP impact assessment estimates savings of only about £11 million per annum while noting that 70 per cent of those affected will lose £25 a week as a result of qualifying for income-related ESA only, which equals about £1,300 a year. A further 10 per cent will lose almost £100 a week by virtue of not qualifying for income-related ESA. Over a year, this amounts to almost £5,000. Only 20 per cent, or just under 3,000 claimants, will get exactly the same amount of income-related ESA that they would have got under the youth provisions. Based on the Government’s own estimates, this loss of income may affect as many as 10,000 people by 2015-16.

This means that only 20 per cent of claimants will be financially unaffected by these changes. I believe that it is wrong that these savings should be levied from such a small group of vulnerable young people. Indeed, the department’s own impact assessment notes that:

“The abolition of the ESA ‘Youth’ provisions is more likely to have an impact on disabled people because ESA is directly targeted at people with health conditions that limit their ability to work. There is a risk that the affected group will be more likely to need more support because of their condition than all ESA customers”.

I therefore believe it is wrong that the Government should seek to remove a vital form of financial support for young people with serious long-term health conditions. For a proposal that by the Government’s own admission will impact around 10,000 young people, the cumulative savings will be only £11 million.

In Committee, the Minister stated that he believes that his,

“proposals have built-in support for this group of claimants”.—[Official Report, 8/11/11; col. GC 58.]

I can assure the Minister that this is not the case and that his proposals will have a significant financial impact on young people with serious health conditions who may have no other option for financial support. For example, young people with cancer are not always able to access DLA, particularly if they have a treatment period of less than nine months. ESA may be their only option while they are undergoing treatment.

The Minister has also argued that no other group has this kind of concession in contributory benefits. However, that is exactly the point: the rules exist precisely because it is unlikely that young people will have been able to build up the requisite national insurance contributions, but they should still be able to access a benefit designed to provide financial support to those unable to work because of illness or disability. I do not see how this proposal can be part of a “principled approach to reform”, which is the basis for the whole of welfare reform.

The measure will remove a vital source of financial support for young people with serious health conditions and disabilities. I hope that the Minister will give some indication that he recognises this and that he is willing to look at it again or at least give it further thought. I take the point made by the noble Baroness, Lady Meacher, about the abuse of the system, which certainly needs to be addressed. When the time comes for me to decide whether to press my amendment, I will be mindful of that.

[Baroness Lister of Burtersett]

My Lords, I support Amendments 45 and 46, to which my name is attached. The purpose of the amendments has already been explained and the case has been made convincingly. I simply want to add to that. Young people who are disabled from birth or early in life have been entitled to claim ESA or its predecessors from the age of 16 since 1975, as the noble Lord, Lord Patel, pointed out. That has been accepted by all the main parties as a fair and proper way to treat young disabled people. Indeed, my noble friend Lord McKenzie did not thank me for reminding the Grand Committee that in a previous Parliament he was urged to be more generous to this group of young people by the then Opposition spokesperson, the noble Lord, Lord Skelmersdale. I was therefore rather surprised when the Minister argued in Grand Committee that no other age group can qualify for contributory ESA without having paid, or been treated as having paid, national insurance contributions. That is because all other age groups will have had the opportunity to earn such contributions, as the noble Baroness, Lady Meacher, and the noble Lord, Lord Patel, have already pointed out.

We are talking about a very small group. According to the Government’s figures, about 15,000 young people are likely to be affected each year. Some of these will qualify for income-related ESA, although sometimes at a lower rate, when there will be an estimated average loss of £25 a week, which is a significant sum for those on a low income. They may become automatically eligible for passported benefits such as free prescriptions, depending on the outcome of the review currently being undertaken by the Social Security Advisory Committee, but that does not justify removing their underlying entitlement to a weekly income. One in 10—or 1,500 a year—will lose all entitlement to benefit, perhaps because they have a partner in full-time work or because of the capital rules.

Welfare Reform Bill

Debate between Lord Patel and Baroness Lister of Burtersett

Tuesday 8th November 2011 Grand Committee

[Lord Patel]

My Lords, I thank noble Lords who have supported my amendments. There are three amendments in my name: one to ensure that any period of time-limiting contributory ESA restarts following any period a person spends in a support group, one to ensure that the assessment phase is not included in any time limit of contributory ESA, and one to ensure that time-limiting contributory ESA for those in the WRAG is not applied retrospectively.

Many groups, including Macmillan, Disability Alliance and others, oppose the introduction of a 12-month limit to the amount of time someone is able to claim contributory-based employment and support allowance for those in the work-related activity group. Macmillan, the Disability Benefits Consortium and others in the wider disability sector oppose the principle of time limiting ESA. People with a disability or illness who have paid into the system should be able to receive support for as long as they meet the eligibility criteria for ESA and are unable to work due to their condition.

Clause 51 amends the Welfare Reform Act 2007 to introduce a 12-month limit to the amount of time a person is entitled to contributory ESA for those in the WRAG. In my view, Clause 51 should be removed from the Bill. Removing this clause would ensure that disabled people would continue to receive critical financial support for as long as their disability or long-term condition limits their ability to work.

The Government’s own figures show that 94 per cent of people in the WRAG will need ESA for longer than 12 months. Those affected, including 7,000 cancer patients, will lose up to £94 a week in vital support. The Government’s proposal is based on their objective to make savings. However, they have provided no evidence to demonstrate that a 12-month time limit is reflective of the amount of time people in the WRAG need in order to be able to return to work.

The coalition agreement promised, I believe, to protect the vulnerable from spending cuts. In his first party conference speech, the Prime Minister last autumn said:

“People who are sick, who are vulnerable, the elderly—I want you to know we will always look after you. That's the sign of a civilised society, and it's what I believe”.

It cannot be right for the Government to propose such a significant policy change without providing evidence that the measure is appropriate and reasonable. Can the Government publish evidence to demonstrate that a 12-month time limit reflects the likely needs of people in the WRAG? What organisations or experts were consulted before the decision was taken to introduce a time limit for contributory ESA?

The time limit will be imposed on people who are in the WRAG. Those in the WRAG are people who, following a work capability assessment, have been found to be not fit for work due to their disability or illness. While those in the WRAG are expected to carry out some work-related activities in order to help them return to work, they are still considered to be not fit for work. If following the WCA they had been found to be fit for work they would be ineligible for ESA and placed on jobseeker’s allowance.

People in the WRAG could still be severely disabled or disabled, as is the case with people recovering from aggressive cancer treatment and other debilitating conditions. I have one example. Martin was diagnosed with primary progressive MS in February 2007. He continued to work until November 2009, albeit with difficulty. He cannot walk or stand up, has incontinence problems and suffers badly with fatigue and muscular weakness in his legs and back. Martin recently received a letter from the DWP outlining how the Government are seeking to change the rules of ESA and impose a time limit on the benefit. He said:

“The real sting in the tail is that the ‘clock’ starts ticking from the date you first ever started receiving the benefit. In my case that is since June 2009, so some 27 months, so in their eyes I am 15 months over the limit! Therefore, my payments would stop immediately once the policy comes into force next year”.

Poor old Martin. What is he going to do?

Currently, no one is placed in the WRAG indefinitely. Only those who meet the strict eligibility criteria for ESA and are unable to work will be able to continue to receive ESA. People in the WRAG can be called for an assessment at any time and will lose the benefit if they are found fit to work. The government proposals will affect only those vulnerable people who are too unwell to work. The vast majority, patients with cancers and others, want to work if they are able to and do not need an incentive. Unlike incapacity benefit, the WRAG or ESA is clearly focused on supporting people into work and receipt of the benefit is conditional on claimants taking agreed steps on activity to move towards work. That can include training, education or condition management. Claimants who take the agreed steps to return to work should not be penalised simply because they need longer than one year.

Many disabled people will simply not be fit enough to return to work after just one year. For example, people with cancer will often experience side-effects of their condition and treatment, such as severe fatigue or depression, for many months and in some cases years, even after their treatment is finished. People with cancer face a range of barriers that impact on their ability to return to work. They can experience debilitating physical and psychological effects from cancer and its treatment, including severe pain, fatigue, nausea, fever and diarrhoea. The majority, 53 per cent, are not advised by medical professionals about the impact of their cancer diagnosis on their working lives and how they can manage their condition. They are not routinely offered the range of back-to-work services they need, such as counselling, retraining and workplace advocacy. They are less successful in securing workplace adjustments to which they are legally entitled and which would help them return to work. This is likely to be linked to the fact that just 43 per cent of employers know that people with cancer have legal protection against discrimination.

Means-testing thresholds are such that thousands of people will lose all their ESA if their partner earns as little as £150 a week. The Government’s own estimates predict that 700,000 people will be affected by time-limiting by 2015-16. Of those who actually lose out, 51 per cent are in the lowest third centile for income; the average drop in income would be £52 a week, but for those in the lowest centile—the lowest third—this figure is £35 a week, a significant amount of money for people struggling to make ends meet. What estimate has the department made of the number of people who will fall into poverty as a result of time-limiting contributory ESA?

Furthermore, people who are currently covered by special rules and can reasonably be expected to die within six months are automatically placed by the support group and will not be affected by time-limiting. However, people who have a terminal diagnosis but who are expected to live for longer than six months currently can still be placed in the WRAG and will therefore be subject to time-limiting. This means someone who has a prognosis of two years and is placed in the WRAG could lose their support after one year, even though they may have only one year left to live. Many of these people will not go on to claim a pension and therefore may receive only 12 months of ESA for all their national insurance contributions. People who lose their contributory ESA due to time-limiting will not be able to claim contributory ESA if they have subsequently become terminally ill and are covered by special rules. This is despite the assurances given by the Government that people who are terminally ill will not be affected by time-limiting.

The Government have claimed that there are alternative means of support available for those who lose their ESA, such as housing benefit or tax credits. However, these are dependent on personal circumstances and many cancer patients will be ineligible. For instance, a couple without children who own their home will not be eligible for housing benefit and they will qualify for tax credits only if the working partner works more than 30 hours, which may not be possible due to caring commitments. My question, therefore, is: can the Government publish evidence to demonstrate what alternative means of support is available for people who lose ESA and give the number of people who are eligible for this support?

For cancer patients, financial worries are second only to worries about their condition and treatment. I have serious concerns about the impact that time-limiting will have on the psychological well-being of sick and disabled people who might already be experiencing depression and anxiety. This will also put pressure on mental health services funded by local authorities. What assessment have Ministers made of the impact that time-limiting will have on health and social care budgets and services, and what discussions have they had with the Department of Health?

Calls for a rethink on the time limit have not been limited to people with cancer and certain disabilities. Concerns about the impact of the proposal is widespread. I noticed that at the Liberal Democrat conference in September delegates voted unanimously to make it Lib Dem party policy to oppose an arbitrary time limit on ESA. I wonder what discussions the Minister has had with his Lib Dem colleagues about alternatives to the 12-month time limit following the Liberal Democrat vote at the party conference, about which no doubt Liberal Democrat noble Lords will correct me if I am wrong.

It is to be welcomed that the Government have recognised the need to make changes to the work capability assessment, and I commend them for at least recognising that. However, I look forward to the Government’s proposal to make more widely available the automatic entitlement to support groups which is currently available to groups such as patients receiving intravenous chemotherapy. As I said, I commend them for that. However, the necessary changes will take time to be implemented, and that will not improve the situation for cancer patients who have finished their treatment and need sufficient time to recover before they are well enough to return to work.

It is widely recognised that the WCA needs to be significantly improved before it is fit for purpose. The introduction of a 12-month time limit for ESA will compound the existing problems relating to the WCA. Instead of taking away support from sick and disabled people who are still unable to work, the Government should be working with disability organisations to design back-to-work programmes that offer personalised support appropriate to customers’ needs. I sincerely hope that the Minister will be sympathetic to the cause and that we will have some proposals from the Government that are encouraging to them.

[Baroness Lister of Burtersett]

My Lords, I am pleased to rise in support of the vital amendments tabled by the noble Lord, Lord Patel, and in opposition to the Question that Clause 51 stand part of the Bill. I am afraid that this will be another of my rather long speeches but this is such an important issue that it is essential that we spend time on it.

The noble Lord, Lord Patel, speaks from his considerable experience as a clinician, particularly with regard to cancer patients. The cause of cancer patients has also been well served by Macmillan Cancer Support, which has done so much to bring this issue to public attention and to brief noble Lords. I shall not focus on this particular group because I cannot possibly bring to the matter the same level of expertise as that of the noble Lord. Instead, I shall discuss some of the wider implications for our social security system, including the gender implications of relying on income-related ESA as an alternative to contributory ESA.

In the other place, the Minister of State told the Public Bill Committee:

“It is a long-standing principle of our contributory system and the JSA system that we allow those who have paid in to draw back out money for a period of time, but that there is a limit to the amount that they can draw out again”.

He continued:

“There has been an enormous inconsistency between JSA and ESA and its predecessors, in that somebody who manages to get themselves on to our sickness benefits is there indefinitely, whereas somebody who is on JSA is there only temporarily. That creates a perverse incentive in the system”.—[Official Report, Commons, Welfare Reform Bill Committee, 3/5/11; col. 650.]