Welfare Reform Bill

Debate between Lord Strasburger and Lord Freud

Wednesday 11th January 2012 Lords Chamber

[Lord Strasburger]

My Lords, I fully support the Government’s efforts to address the huge deficit which they inherited. However, my noble friend the Minister needs to explain why I should support this attempt to penalise some of the most vulnerable and disadvantaged people in our society for the greed of the financial services industry and the incompetence of the regulators. Do these sick and disabled people have the broadest shoulders, which we keep hearing about, to carry the burden of the cuts?

[Lord Freud]

My Lords, before we consider this group of amendments, it is important to remember the context within which they are proposed. I remind noble Lords that our proposal to time-limit ESA applies only to contributory ESA claimants in the work-related activity group, or WRAG. Those in the support group and those claiming income-related ESA are unaffected by the proposals.

We will always provide a safety net for those who have limited income, and people will still be able to claim income-related ESA subject to meeting the conditions of entitlement, including an assessment of means. In addition, other benefits such as housing benefit and council tax benefit will be available. However, it is only right that those claimants in the work-related activity group who are above the income threshold for income-related ESA should have their contributory benefit time-limited in a similar way to contributory JSA.

Amendment 38, tabled by the noble Lords, Lord Patel, Lord McKenzie and Lord Low, and the noble Baroness, Lady Hollins, requires the time limit for claimants receiving contributory ESA in the WRAG to be a minimum of 730 days and to be prescribed in regulations. Amendment 39A, tabled by the noble Lords, Lord Patel and Lord McKenzie, is designed to have the same effect for claimants whose ESA youth awards are time-limited.

We understand noble Lords’ concern about the proposal to introduce a time limit of 365 days for these claimants and the reasoning behind their request for the limit to be a minimum of 730 days. However, as I said in Grand Committee, the 365-day time limit is not an arbitrary one. It is similar to the limits applied in several countries overseas and around the world, including France, Ireland and Spain, and strikes a reasonable balance between the needs of sick and disabled people claiming benefit and those who have to contribute towards the cost. We strongly believe that a time limit of one year is the correct approach for a number of reasons. It 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, and it is double the length of time allowed for contributory JSA in recognition of that fact.

There is also a very strong financial argument. As requested, I shall give my noble friend the figures on the costs. The total costs in this SR period are £1.1 billion —next year it is £270 million, then £420 million, and then another £420 million—and then £360 million, and then £140 million in 2016-17. Over the full five years it will be £1.6 billion, including £1.1 billion in this SR. It is a very large sum.

The noble Lord, Lord McKenzie, said that Governments have to justify reductions, and clearly reductions are difficult. However, when he proposes reducing our cuts by £1.6 billion over five years, he should consider that he also supported the move late last year on the social sector size criteria, which will cost £700 million in the SR period and £1.5 billion over five years. He is already up, over five years, to above £3 billion in reductions in cuts. The opposition Benches have also voted for or supported universal credit changes in excess of £600 million a year on an annualised basis once the system is introduced. These are huge figures which we will have to find elsewhere. Before one starts making such reductions, one has to ask: where are the alternatives? Where will we find these sums? That is why it has been such a difficult process for the Government to find ways of reducing the deficit while causing the minimum difficulties possible. Clearly, one makes the cuts where there is the most expenditure, but the expenditure has been provided to those who are the most deserving. That is the natural structure of it. That is why it is so difficult to do this.

The effect of Amendment 38A would be that no time limit is applied to contributory ESA for those claimants receiving treatment for cancer or where they are receiving benefit because of a diagnosis of cancer. Another effect of the amendment would be to extend the 12-month time limit for claimants in the WRAG if they are either having cancer treatment or their limited capability for work is caused by the effects of their cancer. I understand noble Lords’ concerns in tabling the amendment and can confirm that at present around two-thirds of those with a primary diagnosis of cancer who complete their WCA are placed in a support group. This means that they would not be affected by time-limiting.

We want to make sure that the system is as accurate as possible and that is why we asked Professor Harrington to carry out his review.

--- Later in debate ---

[Lord Freud]

Clearly, there is nothing in any amendment or proposal to stop people going back to work should they wish to go back to work, but we are talking about the expectations that there are between the citizen and the state. That is a really important psychological relationship between the two, and that is what we are talking about rather than anything else.

I pick up the point made by the noble Lord, Lord Patel, when he quoted Citizens Advice. We were disappointed by what it said, not because it said stuff that we did not like to read but because it was based on the evidence of 37 work capability assessments when there were more than 600,000 completed in the year to May 2011. That report also relied solely on Citizens Advice’s own interpretation of the healthcare professional’s report and did not allow the HCP the opportunity to explain the reasoning.

Our view and policy is that the right way to address cancer diagnosis and treatment is by ensuring that the WCA provides an accurate and effective dividing line between the support group and the work-related activity group. We want the WCA to consider and assess fully the effects on an individual from both their cancer and the treatment they are receiving for that cancer. As I said, sufferers will be entitled to any income-related ESA.

I pick up the point raised by the noble Lord, Lord Wigley, on the burden on those who can least afford it, because some quite simplistic numbers are flying around here. We have said that income-related ESA will be available to those with the lowest incomes. I accept that if an ESA claimant’s partner has earnings of £152.70 a week, no income-related ESA will be available, but that does not mean that the couple will be £94.25 a week worse off when the contributory ESA is withdrawn. I give an example of why that is not the case. A couple with a rent of £100 a week and council tax of £25 a week, one with the earnings of £152-odd and the other with a contributory ESA of £94, will have a total income of £291 before ESA is withdrawn and £277 afterwards. The main reason is that housing benefit and council tax rise substantially. So there is less income but there are not these very dramatic changes when you go through the actual sums—

[Lord Strasburger]

Do the same figures apply to a couple who own their own property?

[Lord Freud]

My Lords, as noble Lords know, we have two systems of housing support. We have housing benefit for those who rent their property and support for mortgage interest for those who need support with their mortgage payments. Currently mortgage payments are running rather lower than benefit, but that is only because mortgage rates are lower and that can change. We are looking at the whole system of support for mortgage interest, but there is a system in place to support people whether they are home owners or payers of rent.

On the basis of what I have said, I hope that the noble Lord will feel able to withdraw his amendment. Before I ask that he do so, I confirm that the Government see Amendment 39A as linked to Amendment 38, but that none in this group is consequential on another, and we would expect the House to make a decision on each individually.