Parliamentary Under-Secretary of State for Welfare Reform (Disabled People)

Anne Begg Excerpts

Tuesday 28th October 2014 Commons Chamber

[Dame Anne Begg (Aberdeen South) (Lab)]

It is a great pleasure to follow the new Member, my hon. Friend the Member for Heywood and Middleton (Liz McInnes), and I add my congratulations to her on her maiden speech.

Let me make clear how many disabled people across the whole of the United Kingdom are feeling just now: they are feeling beleaguered; they are feeling that they are being asked to pay for the mistakes of the bankers and bear the brunt of the austerity measures. Regardless of whether Members on the Government Benches believe that themselves, they must understand that many disabled people are feeling that. They feel that a lot of the Government’s welfare reforms are less about reform and more about saving money, and because of that particular atmosphere many of them are feeling that somehow everything that is being done with regard to welfare reform is landing on their doorstep. I therefore make the plea I have made umpteen times before: because we do not know the full impact these reforms have had on disabled people, will the Government carry out a cumulative impact assessment?

We have asked for that time and again. It would at least begin to quantify for individual families the money they are losing as a result of these reforms. At the moment, there is mention of them losing £2 here or £8 there or that they are experiencing a few extra difficulties in accessing funds or support. Unless we actually look at how each of these changes is impacting on each individual family, we are never truly going to understand why they feel the way they do and the consequences of that.

It is not just the changes to the obvious benefits that affect disabled people. There are changes to benefits that are aimed particularly at them: the changes from incapacity benefit to ESA, and the move from DLA to personal independence payments and Access to Work, which the Minister mentioned. As he said, he will be appearing in front of my Committee tomorrow morning. Those benefits are obviously targeted at disabled people, but there are others, including jobseeker’s allowance, that are aimed at those who have gone through the work capability assessment and been found fit for work even though they have major health problems. Those people find themselves on jobseeker’s allowance. There is also housing benefit, and we have all heard about the bedroom tax. All these arrangements disproportionately affect disabled people. In jobcentres, there are not enough disability employment advisers. My Select Committee found out that there was one for every 600 claimants, but I understand that the figure is nearer to 900. The Work programme is not delivering as it should for disabled people.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

My hon. Friend is making an excellent speech. The right hon. Member for North West Hampshire (Sir George Young) mentioned one of my predecessors, Alf Morris, who introduced the Chronically Sick and Disabled Persons Act 1970. That Act was described as the Magna Carta of legislation for disabled people. It was the first piece of legislation in any nation anywhere in the world to recognise the rights of disabled people. We on this side of the Chamber are angry because we feel that that disability agenda is being set back by this Government’s policies. Does my hon. Friend agree that that is what is happening?

[Dame Anne Begg]

I do, and that is certainly how many disabled people feel. One of Alf Morris’s great achievements was the Motability scheme. He used to joke that the only organisation that had more vehicles than that scheme was the Chinese red army. I benefited from having a Motability car when I was a student—I was among the first to get one—so I understand from a personal point of view how important those changes were and how long and hard the fight has been to persuade the people that disabled people deserve opportunities, support and help.

One of the main ways in which disabled people are helped into work is through the Work Choice programme. It is the only specialist disability employment programme in existence, and it sits outside the Work programme. One would expect the people on the Work Choice programme to be in receipt of disability benefits, but that is not necessarily the case. I have visited the two Work Choice providers in Aberdeen, and almost all the people there are on jobseeker’s allowance. Yes, they have disabilities or ill health problems, but they are not the most severely disabled people. That is one of the problems: the very programme that was meant to help those with the most profound disabilities is helping those who are less disabled—albeit successfully; the Minister quoted the results.

The opportunities for supported employment or sheltered employment, both of which Government Members have put forward as answers to the problem, have decreased. We have not yet seen the redeployment of the Remploy money into helping people into supported or sheltered employment. The crux of this debate is the fact that there is still a need for such support to allow those with the most profound disabilities to get into work.

Another big problem, which was mentioned by my hon. Friend the Member for Stretford and Urmston (Kate Green), relates to people with progressive illnesses being stuck in the work-related activity group. My Select Committee looked into the workings of the employment and support allowance and the work capability assessment, and we found that the work-related activity group had become the default destination for everyone, and that the system was therefore not working as efficiently as it should. People who are neither too ill nor too well, who are disabled but not too disabled, or who are on a trajectory towards either getting better or getting worse will not qualify for jobseeker’s allowance at one end of the spectrum or for the ESA support group at the other. Those people will end up in the work-related activity group. That includes people with progressive illnesses, who face conditionality and even sanctioning. That illustrates an element of the design of the ESA that is fundamentally wrong.

The crux of the matter is that the Government have tried to implement too much welfare reform too quickly. They have forgotten the lesson that these matters are incredibly complicated. There are always unintended consequences, and it always takes far longer than anyone anticipates to implement the changes. That is why disabled people are feeling so aggrieved: they feel that no one is listening.

Separated Families Initiative

Anne Begg Excerpts

Tuesday 21st October 2014 Westminster Hall

[Pamela Nash (Airdrie and Shotts) (Lab)]

I congratulate my hon. Friend the Member for Edinburgh East (Sheila Gilmore) on securing this important debate. I will not repeat the points hon. Members have made, but this is a welcome opportunity to discuss the impact of HSSF, as well as the expectations of it and of the new CMS.

The goal of the CMS must, of course, be to ensure that children are well provided for and looked after by both parents when those parents are separated. At a time when child poverty is rising—latest figures show that one in four children in my constituency live in poverty—maintenance has a crucial role to play. For the poorest single-parent families, it can provide up to a fifth of their household income, which is a huge amount for them. It is therefore important that the Government make this good new project a success, and if they are to reduce the use of a statutory maintenance service, which they have said is their goal, and to support families to form their own maintenance agreements, the success of HSSF will be absolutely fundamental.

The service is in its early stages, but the case of a constituent who came to my surgery last week gave me some concern about its success so far and about how it might be improved. My constituent’s case made me feel that it is not really clear when a case is eligible to be referred to the CMS, and I would love the Minister to give us some clarity today. At the moment, parents are required to seek advice first and then to get a reference number to go to the CMS. I should have thought that that would happen when the parents had exhausted all other avenues in trying to come to an agreement on their own.

My understanding from the information my constituent gave me, however, is that he had paid maintenance regularly every month for more than 10 years and had, indeed, upped the payment following a request from the receiving parent, but that he then received a letter from the CMS with a payment plan. My understanding is that he was not contacted previously about any mediation and was not involved with HSSF, and his record of paying monthly on time for more than 10 years was not taken into account.

As a result, my constituent was assessed as having to pay £236.71. Previously, he was paying £250; now, he has to pay £283.99 because of the 20% fee. There must be a failure somewhere in the HSSF process in my constituent’s case, and I worry that the problem is more widespread. The child in this case now has less money per month, while the father is paying more per month. How can that possibly be of any benefit to the child or the parents involved?

[Dame Anne Begg (Aberdeen South) (Lab)]

I am quite disturbed to hear of that experience, because it sounds very much like the criticisms we made of the previous Child Support Agency. Often, the non-resident parent was chased for extra money without having gone through an understandable reassessment. That is quite concerning, because the whole point of the new system was to sort cases out long before they got to the CMS itself.

[Pamela Nash]

I completely agree with my hon. Friend. The reason the issue has upset and angered me enough that I have come here to make my case today is that we were all very hopeful when we knew a new child maintenance service was required. As constituency MPs, we all have big CSA work loads—like others, I have personal experience of this issue—and we wanted the proposals to be a big success. I therefore hope that my constituent’s case is indicative just of teething problems, not of how the CMS will work in the future.

My constituent’s case also underlined my general concerns about the introduction of fees and how they will impact on children and families. I therefore renew my plea for the Government to publish, at the earliest opportunity, the information and analysis they have on the impact the measures are having on children. I hope the Minister will be able to tell us today when that might be.

The debate also gives me the opportunity to discuss the closure of cases from the 1993 and 2003 schemes and how those might go through HSSF and into the CMS. Will the Minister update us on what progress has been made? My understanding from a written answer from the Minister for Pensions is that the closure process is due to go on until May 2018 and that the last cases to be covered are those in which

“Enforcement action is under way”—[Official Report, 1 July 2014; Vol. 583, c. 526W.]

In many ways, those are the cases deemed most difficult to deal with.

To return to the matter we are debating, I am concerned that the HSSF initiative is due to be funded only until March 2015, whereas the process of case closure is due to go on until May 2018. The cases involved are the most difficult and would, I imagine, need the support HSSF offers to make a successful transition. Does the Minister share my concerns? Are the Government considering extending the funding of the HSSF initiative beyond March and indeed until after May 2018, when the case closures are due to end?

Let me finish my short remarks by returning to where I started and to the reason why we are all here. Child maintenance is a crucial part of fighting child poverty and making children feel not only financially supported, but supported by both parents, and that is important for their well-being. The Government are continually telling us they are putting families at the forefront of their policy, and I hope they are doing everything they can to make their proposals a success.

Affordable Homes Bill

Anne Begg Excerpts

Friday 5th September 2014 Commons Chamber

[Sir Tony Baldry]

I will give way in a second.

The current Government have extended the same principle to social housing tenants of paying the benefit on the size and composition of household.

[Dame Anne Begg (Aberdeen South) (Lab)]

Will the right hon. Gentleman give way?

[Sir Tony Baldry]

I will certainly give way to the Chair of the Work and Pensions Committee.

[Dame Anne Begg]

I assume the right hon. Gentleman wants savings in the housing benefit bill. Rents are much higher in the private rented sector, yet that sector is growing, partly as a result of the bedroom tax. Does he accept that the bedroom tax pushes people who are in cheaper social housing into more expensive private housing, which results in a greater call on the housing benefit bill?

[Sir Tony Baldry]

The hon. Lady is missing the point I seek to make, which is that the Labour Government, whom she supported, introduced almost identical provisions for tenants in the private rented sector, and there seems to be no reason why tenants in the private rented sector should be treated differently from social housing tenants.

Pension Schemes Bill

Anne Begg Excerpts

Tuesday 2nd September 2014 Commons Chamber

[Steve Webb]

I am grateful to my hon. Friend for that question. The number is substantially higher. I had to apologise to the Select Committee in oral evidence recently that we had grossly underestimated the success of our policy. We had thought that the staying-in rates for workplace pensions might be as high as two thirds, but in reality the number of people who, having been automatically enrolled, are staying in is touching nine tenths. Even so, with each passing month, as new figures come out, the sceptics keep saying, “Oh, as we get to smaller firms, the opt-out rates will shoot up,” but we are certainly seeing no evidence of that so far. I think there is a sense that people knew that they needed a pension and knew the value of an employer contribution and tax relief, and when we remove the barriers for them they are delighted to accept it.

[Dame Anne Begg (Aberdeen South) (Lab)]

May I be very clear that both the Select Committee and the Opposition welcome auto-enrolment and are very glad that it has been so successful, because one of the good things the coalition Government did was carry on the policy legislated for by the previous Labour Government? Perhaps some credit should be paid to them.

[Steve Webb]

The hon. Lady will be aware that there was a decade between the first stirrings of the Turner report and the implementation of automatic enrolment. She will also be aware that there is a risk—this is an important point and although I would not accuse the hon. Lady of doing this, perhaps it is relevant to her more partisan colleagues—of rewriting history on this issue. Had we implemented automatic enrolment as envisaged by the Opposition, it would have crashed and burned. Let me explain why I say that, because it is very important.

Had we auto-enrolled people into schemes without any prospect of a charge cap, they could have been exposed to something the Opposition call rip-off pension charges. When in government, the Opposition proposed no consumer protection on charges. Secondly, they would have auto-enrolled people the second their earnings were a pound above the threshold, so people would have been enrolled into pension schemes into which literally pennies were being put by employers and employees. That would have created derision and undermined auto-enrolment. Thirdly and crucially, auto-enrolment was envisaged without any reform of the state pension, so we would have had a state pension of about £5,000 a year and a means test of about £7,000 a year. Therefore, the first £2,000 a year of private saving would have been largely clawed back by means- testing. There would have been stories in the press of mis-selling and of people saying, “Why did I bother saving for a small pension?” I still remember a national newspaper journalist telling me that only when we reformed the state pension did we remove the fundamental objection to auto-enrolment for people on a low wage.

We would, therefore, have had rip-off charges, nugatory amounts going in and means-testing of savings; if we had not addressed those things, auto-enrolment would have failed. I believe that the coalition made that policy work and were right to do so.

As well as making sure that we have mass membership of workplace pensions, we have had to address a number of other crucial issues, including, as I have mentioned, scheme quality and ensuring that people do not face excessive charges. From next April, default funds for auto-enrolment schemes will be capped at 0.75%. Certain forms of charges over the coming years will be banned altogether. The so-called active member discounts, which mysteriously increase charges when someone is no longer an active member of a pension scheme, and commission charges and consultancy charges are all banned by this coalition Government. We are putting in place new measures to ensure quality governance of schemes—not just trust-based schemes but contract-based ones—with independent governance committees acting in the members’ interests for the first time.

This is a huge, positive agenda, but there are two big areas where further work is needed. The first is the move from defined benefit to defined contribution—a long-term, decades-long trend transferring risk from being wholly on the employer to being wholly on the individual. We remain concerned that that transference of risk causes problems for individuals and that we need to enable, encourage and foster risk-sharing models, and that is what this Bill does.

Secondly, what happens at the end? What happens when someone has accumulated a pension pot? What can they do with it? Again, the previous Government failed to address the fact that, all too often, people with a pension pot defaulted into an annuity with the provider they had already saved with and did not get the best value for money—they made a once-in-a-lifetime retirement choice that all too often resulted in poor value for money. That is why the Chancellor’s groundbreaking Budget announcements, which the Opposition are still fundamentally ambivalent about at best, were so important. They gave people freedom and choice in what to do when they have accumulated a pension pot. This Bill and the amendments that will follow provide for guaranteed independent guidance for people making those choices, which is something that far too many people do not have at present.

--- Later in debate ---

[Dame Anne Begg (Aberdeen South) (Lab)]

It is a pleasure to follow the hon. Member for Cities of London and Westminster (Mark Field). A number of the companies that would be affected by these reforms are in his constituency.

One of the issues around pensions is complexity. The coalition Government, following on from what Labour had started with the Turner consensus, were beginning to simplify things and make them more understandable and to make pensions something that younger people talked about, as well as people who had already reached pension age and therefore had a direct interest in the money they were receiving each week or month. However, my concern about the more recent proposed changes both in the Budget proposals and this Bill is that they are adding more complexity back into the system and making it even more confusing for consumers. While it may on the surface be a great thing that there is going to be pension liberalisation and that people will not automatically have to buy an annuity, there are also certain risks in that.

The hon. Member for Cities of London and Westminster mentioned some of the concerns, as did the shadow Minister. If people found pensions too confusing and did not always know with surety that they were buying the best product, how will making even more products available and taking away some of the constraints on what they can choose make things easier for them? There are fairly major dangers of mis-selling and of products being offered that are not fit for purpose unless the governance is right and the regulation is correct. That is a very real fear, and I certainly have that fear about the changes that would allow people to access their pension pot more easily at an earlier age without putting any constraints on how it might be invested. The hon. Gentleman made the point that, in building up that pot, most have enjoyed tax relief on their subscriptions, and the understanding was that that tax relief was to encourage them to make sure they had retirement savings. However, if they turn their retirement savings into just savings, why would those savings get an extra allowance in the form of tax relief? Future Governments might be tempted to look at that whole area of tax relief.

The Minister said that we had a binary model at the moment, and he is absolutely right. We have either defined-contributions schemes or defined-benefits schemes. The Bill will introduce an extra layer. If we ask people whether they would like to share the risk, they will say yes. Even companies might think it a good idea, but it is open to question whether companies will take advantage of the provisions in the Bill to set up a defined-ambition scheme. The Minister said that there was an appetite for this kind of reform, but I am not so sure that people are clamouring at his door—or at anyone else’s—saying that they are desperate to have collective, defined-contribution schemes. I concede that, from a consumer point of view, the members might want such schemes, but it will be the employers, not the members, who will be setting up the pension funds and schemes.

The Minister admitted earlier that it was unlikely that those affected by the legislation would be small and medium-sized enterprises, and that it was more likely to affect bigger companies. We know, however, from the roll-out of auto-enrolment that most of the bigger companies are already enrolled in the auto-enrolment scheme, and that the SMEs have still to enrol. They are the ones that have more choice, because they are having to set up the scheme from scratch. Perhaps this legislation has come a bit too late for the people who wanted to take advantage of this offer. I am still puzzled as to who the Minister envisages taking advantage of it. Perhaps he will tell us when he winds up the debate.

I am still not 100% sure how all this will fit in with auto-enrolment. I am still unclear as to how it will work in practice. I also do not understand how, in a scheme with collective risk, we can work out what people would get if they wanted to take their pension pot with them under the liberalisation arrangements. I am not clear how the two would fit together, although I have raised these matters with the Minister in the past.

There is an inherent tension between the different parts of the pensions system, and it has been introduced by the Government, even though they were on the right track and things were going quite well. The Minister was quite dismissive when I suggested he pay tribute to the last Government for accepting the Turner recommendations and for legislating for auto-enrolment. He suggested that that had not been good enough and that his Government had done all sorts of other things, but what we did was part of the process. He said that there had been no reform of the state pension, even though that had been part of the Turner proposals that the last Government were introducing, but who can say what another Labour Government might have done?

Other matters that the Minister mentioned had been recommended by the Select Committee. I would love to take credit for those recommendations on behalf of the Committee, and I would like to think that they have had some influence on the Minister, particularly with regard to protecting consumers from high costs and charges. I hope that any other Government would have made a similarly sensible decision, so let us not suggest that only the coalition could possibly have introduced such measures, given that they did not fit in with the consensus that had been built up. So far, so good: things were getting simpler and easier to understand, but the proposals in the Budget threw everything up into the air again.

It was interesting to hear what the Minister said about the need for a single regulator. The Select Committee has made that proposal on a number of occasions. The Minister’s admission that he is coming round to that view, and that he had not wanted to introduce the proposal because the Government had only just set up the Financial Conduct Authority, suggests that the last reform of the regulator was perhaps a bit botched. As a result, we cannot get what we need—namely, a separate regulator. There is absolutely no doubt that if we go ahead with defined-ambition schemes and collective defined-contributions schemes, it will be imperative that people know who is regulating which bits of their pension. This is an incredibly complex area, but it is important for people to know who they can complain to.

Governance will be an important matter, and I, too, was dismayed to discover that there were no details of it in the Bill. My hon. Friend the shadow Minister said that those details would be introduced through secondary legislation. Governance is important in all pension schemes, but it is even more important in this instance. The fact that there are no details for Parliament to scrutinise is particularly worrying.

Another matter that I find particularly worrying is the absence from the Bill of information on the guidance guarantee. I had expected such details to be in the Bill by now but they are not, which worries me even more because the Government are obviously still working them out. My concern is about this coming later in amendments. We are already on Second Reading and I worry whether it will be worked out properly by the time the Bill goes into Committee for proper scrutiny. I wonder what the difficulties are—I suspect there are a lot, as a result.

As a result of all that, the Bill is vague, in an area that does not need to be or should not be vague—it is too important for that. Although the principle of defined ambition or collective defined contribution schemes is a good one, and I think we would all welcome the sharing of risk, it is hard to see who is going to be supplying these products and who will sign up to them, because at the moment it is much easier for people to understand the binary model, of which the Minister was critical.

I received a communication from the Law Society of Scotland, which has some concerns and questions about the Bill. I wonder whether I might mention them now, so that by the time the Minister sums up he might have some replies. I do not know how difficult the questions are but I will go through them, as the LSS has obviously sought clarification on certain points. Is it the intention that shared-risk schemes will cover existing schemes or only new ones? That should be an easy enough question for the Minister to answer. The definition of a pensions promise in the context of shared-risk schemes refers to factors “other than longevity”, so does that mean that these promises with an element of longevity are exempt, or does the promise have to be entirely based on longevity? Guaranteed annuity options or rates are based on longevity but also on factors such as long-term gilt yields. Is it the intention that the annuity quotes are included under the definition of a pensions promise? The definition of shared-risk schemes talks about promises made

“at a time before the benefit comes into payment”.

Does “come into payment” mean when an annuity is set up or when the first payment is made? Would third party promises include an arrangement whereby the insurer, as opposed to the scheme, made the promise? If the LSS is asking those questions, I suspect they may be ones that others also want answered.

Most of the briefings we received from various organisations and companies were generally supportive of the principle of defined ambition, but we all accepted and agreed on the principle of universal credit, and look where that has got us. The Government should not necessarily say, “Oh well, everybody supports it in principle, so everything is all right.” It is part of the role of a Select Committee to look at this. I know the Minister will be appearing before us at some point—perhaps he does not know this yet—certainly before November, to talk about the progress on auto-enrolment. One key thing for both the Government and the Select Committee is the success of auto-enrolment; it has to succeed simply because it is too big and too important for it not to do so. At that time I hope he will be able to answer some of the questions I have raised about the interplay between auto-enrolment, defined ambition and the changes introduced by the Treasury on pensions liberalisation, as well as the other questions we will have. I look forward to the Minister’s appearance before us in due course.

--- Later in debate ---

[Nigel Mills]

That is a helpful clarification, but we have still had the bizarre situation in which the Pensions Regulator is responsible for auto-enrolment even though most of the schemes into which people are enrolled are not regulated by the Pensions Regulator. I sense that we are introducing further uncertainty into what schemes there are and people need to understand exactly what is going on.

Trying to create a new form of pension that can try to stop the bleed away from defined benefits is the right direction in which to travel. If we are to have a credible pensions industry, we need to ensure that people can have certainty or at least confidence that if they keep paying into their pension funds with their employers at the rate that they are they will have some idea what they will get rather than a vague hope that they might at some point get something suitable. That is the thing that does most discredit to the pensions industry. People end up getting so much less than they thought they would, despite what they thought they were paying and would be entitled to, that they decide the whole thing is not worth doing at all.

That question takes us to a fundamental part of pensions policy. We are spending a lot of taxpayers’ money on tax relief for pensions and if we end up with just a glorified savings vehicle with no direct link to pensions, we must wonder whether we will be distorting the investment market quite horribly. We need a clear and confident link, so that people know that the money they are putting away is meant to get a retirement income that they are happy with and is not just a super-glorified pre-tax income ISA, which I fear we might be drifting towards.

The Work and Pensions Committee considered the principle of collective schemes briefly in our inquiry on a pension governance a couple of years ago. The idea that we can somehow share risk between the generations, smoothing things out so that if there is a market crash just before someone expects to retire they do not suddenly have their pension income destroyed in a way that they cannot possibly recover from—clearly, that can be smoothed out by reducing the risk profile of investments, as is done now—looks to be a perfectly sensible and attractive way forward. I am a little intrigued about how we can go from having none of those schemes to having them in place, having enough people in them and having enough confidence that people will continue to join them to ensure that the intergenerational thing can work. Some European countries have had such schemes for 60 years and we can see how they work, but the question is how we go from zero to having three generations of people without the first lot thinking that they are taking all the risk for no advantage, although perhaps if their grandchildren join it might all be okay. I am sure that the industry will work out how to devise schemes in a way that will get people involved.

Let me turn to greater flexibility in the pension world. I can see that if we say that we do not think people are sufficiently engaged with pensions to join a scheme we must ask how we can be confident that they are sufficiently engaged to make even more difficult choices when they retire about what they want to do. There is a big difference. I might not be too bothered about pensions when I am 30, as I might have more pressing things to think about such as buying a house, paying for my children or sorting out other stuff, but perhaps when I am closer to retirement age and thinking about what my income will be in six months’ time, a year’s time or perhaps even a little further away, I will probably be much more engaged in the best choices for me and will perhaps be more inclined to go out and look at the various options.

One issue that we have had until this point has been that the option has been to have some kind of annuity that is lower than I would like. If I try to shop around, I find differing levels of things I do not like. That is not a great motivation to go shopping. If I know that I am not going to want to buy any of the things I am offered but I have to, I might as well just default to the first thing I get. There does not seem to be any advantage to shopping around.

[Dame Anne Begg]

Does the hon. Gentleman agree that often when there is too much choice people are paralysed and end up grabbing at the first thing that comes along rather than the thing which is best?

[Nigel Mills]

Yes. Some data suggest that the optimum number of choices is four. If there are 20 choices in a mobile phone shop, people walk out without buying one. If there are not enough, they do not ever have a phone. We need enough choice to see a difference, but not so much that we are completely baffled by our options.

I think that we are hoping that the market will innovate certain things that will mean it will not be a choice of annuity into which we will opt for life that will give the same amount for the rest of our lives or some kind of draw-down in which we keep spending our pots and hoping that they will last. I suspect that we will end up with people taking some kind of fixed guaranteed income, so that no matter how long they live they will have the quality of life that they want, but they might be able to choose to use some of the rest of their money to fund travelling in early retirement, paying off the mortgage or doing something for their children or grandchildren. Perhaps we could have an annuity that varies, which is higher at the start, dips and then goes up at the end when people need care fees.

I think that we are hoping that most people with a small or medium pension pot will not be faced with a blizzard of hugely complicated financial products, but that there will be options that they can match to their personal choice for their retirement. That is where high-level guidance is important.

People need to understand that there are different things out there for them to look at. I suggest that they do not just immediately accept the annuity offer that their pension provider makes. They should at least think about what would suit their lifestyle, what their existing financial position is and what they and their spouse want to do. That is where guidance is very important. It is very different from financial advice, which might be, “Take out this annuity with this provider, on these terms.” I suspect there is no way to get such specific guidance, and we should never want such specific guidance. That would be a horribly expensive programme, which would only be appropriate for a relatively small band of people.

Those who retire with huge pension pots should already be taking such advice and can afford to pay for it. Those with small and medium pots will not have that advice and, I suspect, in many cases will not need to spend thousands of pounds getting advice; it would not be a worthwhile use of their money. It is people in the band in the middle who perhaps could really benefit from expensive financial advice. How we get that guidance to work, and when people receive that guidance, is very important.

I think that we shall see a move away from retirement at one’s 66th birthday, or another fixed date. People may gradually step down to working four, then three days a week. They will have small amounts of income coming in from different sources. Lifestyles will vary, and they will start varying, perhaps, in people’s mid-50s. Some people will work full time right into their 70s. Possibly, they will not want advice at the age of 65 and a half or 66; they will need to think, “Do I want my pension fund to start de-risking my investments now, at age 55, or would I rather they did that for part of my pension fund, so that I know that I will get something when I am 66 but I will keep some higher-risk investments to get a higher yield for a few more years?” When we make that guidance available, and when people can choose to receive it, will be a key aspect; otherwise, people will end up in a default fund that does not suit what they plan to do with their own hard-saved income.

It is clear that the change is a very positive step in the right direction. If people are responsible enough to save for their retirement, I cannot see them frittering the money away on the proverbial Lamborghini when they hit 66. This flexibility will give people the chance to have the retirement that they want without being ripped off by the annuity market.

Some of us had wrestled with the question of how we could fix the broken annuity market. I had come up with the suggestion of splitting the pension fund industry and the annuity market, which did not meet with much approval in the industry. But what the Government have done is far more radical. An annuity may be the right thing for many, many people; but for many, it will not. Now there will be no compulsion or expectation for people to take out an annuity when they hit retirement age. That has to be the right answer, and I fully welcome the Bill.

Oral Answers to Questions

Anne Begg Excerpts

Monday 1st September 2014 Commons Chamber

[Mr Harper]

My hon. Friend makes a very good point. He will know that we have committed to two independent reviews of the PIP assessment, the first of which will report to Parliament at the end of this year. Last week I had the opportunity to meet Paul Gray, who is carrying out that review, and I am confident that his report will give us lots of useful things that we can do to improve matters on top of the things that we already do.

[Dame Anne Begg (Aberdeen South) (Lab)]

Delays in getting a decision are causing other problems which I hope the Minister will look into. First, people are waiting so long that the sum they eventually get from the DWP puts them above the capital limits, which can affect their income-related benefits and cause problems with their housing benefit. Secondly, there seems to be some sort of computer glitch that means that when somebody is on ESA and is then awarded PIP the ESA stops and it takes some time for them to get that payment. Will the Minister consider both problems?

[Mr Harper]

I will certainly consider the points that the hon. Lady makes. I am due before her Select Committee a week Thursday for an extensive session on the personal independence payment. I am sure that she will ask me that question then and I hope that I will have a detailed answer prepared for her in advance.

Jobcentre Plus

Anne Begg Excerpts

Thursday 10th July 2014 Westminster Hall

[Dame Anne Begg (Aberdeen South) (Lab)]

I am delighted to lead this debate on the report by the Select Committee on Work and Pensions, “The role of Jobcentre Plus in the reformed welfare system”. It is a bit of a mouthful, but the report contains a lot of interesting things. We published it at the end of January this year, and the Government responded at the beginning of April. It seems a long time between that and this debate, but that is because Parliament prorogued somewhat earlier than expected and our debate got dropped as a result. Some of our findings, therefore, might be slightly out of date, but in general, most of what we discovered when we considered the work of Jobcentre Plus is as relevant today as it was in April and May.

Jobcentre Plus is at the coal face of the benefits system. It is part of an administrative system that processes out-of-work benefit claims from hundreds of thousands of people each year. At the same time, its staff work with people one-to-one to help get them off benefits and hopefully back to work. They are both difficult tasks, but Jobcentre Plus performs them well with limited resources. It is well organised, has hard-working staff and has been officially recognised by the National Audit Office as offering value for public money. Jobcentre Plus has also coped well with the inherent uncertainty that it faces, not least from the large fluctuations in the claimant count brought about by the economy’s shifting fortunes. It has even coped with the innumerable policy changes imposed by the Government.

It was in the context of the unprecedented change brought about by the current Government’s extensive welfare reform agenda that we considered Jobcentre Plus’s effectiveness now and the challenges that it will face in future. Our central finding was that JCP is not currently good at prioritising those claimants who need the most help looking for work and providing them with the personalised support that they need. I know that that is no easy task, and given the volume of out-of-work claims made each year, Jobcentre Plus does remarkably well, but a range of witnesses, particularly those representing the most vulnerable groups, told the same story: there is generally very little in-depth assessment of claimants’ needs at the start of the job-seeking process, meaning that claimants facing particular disadvantages—the homeless, people with disabilities or people with drug or alcohol problems—all too often go unrecognised and get no help beyond a brief fortnightly signing-on meeting at the jobcentre.

Not for the first time, my Committee called for a much more systematic approach to the initial assessment of claimants’ needs. A classification instrument, to use the jargon, was the first of our key recommendations. In plain English, that means making a thorough, systematic assessment of each claimant’s needs and categorising them according to the level of support they require. That must surely be the logical first step in all effective employment support; otherwise, claimants with the most challenging barriers to employment will continue to be poorly supported and will remain unemployed for much longer than they should.

For some reason, however, the Government continue to dither on the issue. The Department for Work and Pensions told us that classification instruments are the holy grail. I thought universal credit was the holy grail of welfare reform—if so, it has not been found—but if the holy grail is classification instruments, it has already been found. They are already in use in Australia, where a jobseeker classification instrument has been used to good effect for more than 15 years and has been honed and improved through several iterations during that time. I would be grateful if the Minister could offer a proper explanation as to why we in the UK cannot replicate something similar here.

[Stephen Timms (East Ham) (Lab)]

I welcome the report. One of the points it makes is that the Government’s response on that issue was not entirely clear: was it that they cannot do that kind of segmentation assessment, or was it that they are developing something along those lines? It was not clear to me from the Government response which of those was the Government’s position. Has my hon. Friend been able to work that out?

[Dame Anne Begg]

I am not sure whether I can shed any more light on that than my right hon. Friend. Perhaps the Minister can reply. Certainly, in our briefings with the DWP and relevant officials, they have suggested that the Government are trying to work something out, but that they believe either that it is not effective—although the figures that they quoted to us did not necessarily have the interpretation that could have been made from the reports that have been published—or that it might cost too much money in the long run, because an up-front payment would inevitably be involved in setting up a classification system.

The Committee contends, however, that doing it properly at the beginning would ultimately save the Government money by ensuring that the correct level of help was given and that the barriers to work were identified early, so that a much more personalised approach could be taken to jobseekers in particularly vulnerable groups. We are talking about more vulnerable and difficult-to-reach groups, because we know that by any measure, Jobcentre Plus is relatively successful in getting mainstream jobseekers into work. That is what it does; it is Jobcentre Plus’s bread and butter. It is what staff do week in and week out.

[Stephen Timms]

One point in the Government response is that if there were such a tool, it would be only 70% accurate. That struck me as not bad, actually, compared with what happens at the moment. What did my hon. Friend think of that particular statistic?

--- Later in debate ---

[Dame Anne Begg]

We have been consistent in requesting that the Department introduce a classification tool, so the Select Committee has certainly been convinced of the efficacy of such a tool, and 70% seems not too bad. I think the figure ranged between 50% and 70%, but that is better than nothing. At the moment, it can be a bit hit and miss whether someone is even identified as homeless. Their personal adviser has to recognise that the address they have given indicates that they may be homeless. As well, people with mental health problems will not necessarily reveal all in a short, cursory interview with a complete stranger, but that kind of information would be and is useful to anybody trying to get an individual into work or back into the workplace.

Our report recognised that JCP is good at what it is currently being asked to do: it has become adept at getting people off benefit in as short a time as possible. Since April 2011, JCP’s primary performance measure has been what is called “benefit off-flow”. The old mantra “What gets measured gets done” certainly comes to mind. About 75% of jobseeker’s allowance claimants come off benefit within six months, and some 90% are off benefit within a year. But—and this is a big “but”—is getting someone off benefit quickly always good enough? Is off benefit always a good and sustainable outcome?

Our answer to those questions was a clear no. The evidence suggests that measuring JCP performance primarily by benefit off-flow is unsophisticated. Jobcentre staff are likely to say to themselves, “Let’s concentrate our efforts on people who are most likely to come off benefits quickly—we need to meet our 13-week target—and let’s keep a very close eye on anyone coming up to 26, 39 or 52 weeks on benefit too.” Who can blame them for that? That is how their efficiency and effectiveness is measured, and that is the task that they have been set by Ministers, but JCP needs to be incentivised to take a more sophisticated approach.

Our second key recommendation was that JCP’s performance measures be amended to ensure that Jobcentre staff are more clearly incentivised to get people not just off benefit but into sustainable and long-term employment.

[Nigel Mills (Amber Valley) (Con)]

Does the hon. Lady agree that that would also tie in with the way we assess the Work programme providers and make much more sense in the world of universal credit, assuming that it is fully rolled out? Under universal credit, people will not be coming off benefit. Their level of benefit will perhaps decline based on how much work they are doing, but their level of work could fluctuate from week to week or month to month, so the measurement would be largely meaningless.

[Dame Anne Begg]

Indeed; that was one of the things we pointed out in our report. We drew particular attention to it in our more recent report on the implementation of universal credit, which was debated in the Chamber on Monday—that is two reports in a week, showing that we are a really busy Committee. Although we might be sceptical of how far universal credit is being rolled out, there is no doubt that, as my friend the hon. Gentleman pointed out—he is my friend because he is on the Select Committee—its introduction provides an opportunity for the Government to think differently about how to measure the real success of Jobcentre Plus.

[Sheila Gilmore (Edinburgh East) (Lab)]

The other side of the question of what is being measured is the lack of any measurement and follow-up on people who are not moving into work—it appears that no record is kept. A large number of people flow off benefit, but not only do they not flow into sustainable employment, they appear not to flow into employment at all.

[Dame Anne Begg]

I think people would be surprised to learn that Jobcentre Plus does not routinely record the reason why someone leaves benefit. As far as JCP is concerned, because the primary focus is on benefit off-flows, the important thing is that the person is no longer on a job-seeking benefit. However, as my hon. Friend says, why are they no longer on a benefit? It could be because they have a new job—that is what we hope—and it is possible that they have transferred to a different benefit because they have become ill, but they might be in prison or have gone into the black economy. We do not know, and nor does JCP because it does not gather that information or track claimants’ destinations. We think it is important that JCP does that in order to judge how efficient and effective its work is.

At some point, hopefully in the not-too-distant future, off-benefit is likely to cease to make much sense as a performance measure, particularly with the introduction of universal credit. I think Members agree that a system that merges out-of-work benefits and in-work tax credits, and in which benefits taper off gradually as earnings increase, would be a huge step forward. That is what universal credit is intended to do, but it will require creative thinking from the Government about new performance measures for JCP.

The Department says that it will think about how to formulate such measures once universal credit is implemented—whenever that is going to be. We think that it should be thinking about and testing them now, not leaving it until much later. Even if universal credit continues to slow down, the Committee certainly thinks that the development of a new measure is worth while anyway, whether in conjunction with universal credit or not. The Department must pilot more meaningful performance measures that track JCP’s effectiveness at getting people into work and helping them to stay there for the long term. I hope that the Minister can reassure us that the Government understand the importance of achieving longer-term positive employment outcomes.

Another part of our report that has received quite a lot of attention—perhaps because many Members have experience of it in their constituencies—is Jobcentre Plus’s use of sanctions. There is an inherent tension in what JCP does, between helping and supporting people to find work on the one hand, and, on the other, enforcing strict rules, including financial penalties for claimants deemed not to be trying hard enough to find work. Such is the everyday experience of the Jobcentre Plus adviser and the job-seeking benefit claimant, and it can make for an uneasy relationship.

[Pamela Nash (Airdrie and Shotts) (Lab)]

Does my hon. Friend share my concern about sanctions data? In preparation for this debate, I requested figures on sanctions from my local jobcentre. The staff there said that they had not received any data back since March and so are themselves unable to keep track of the number of sanctions being issued and the reasons for them.

--- Later in debate ---

[Dame Anne Begg]

I see the Minister taking a note, so hopefully she will address that in her response. It is important that we track very carefully not only the number of sanctions but to whom they are issued.

Almost by definition, the payment of unemployment benefit has always been conditional. To get the dole, people had to prove that they were both out of and looking for work. The concept of conditionality is not new, but conditionality enforced by financial sanctions is much newer. My Committee’s view has been consistent throughout this Parliament: we agree that a conditionality regime is necessary, but have noted the lack of evidence that sanctions on their own incentivise claimants to look for work.

Meanwhile, the system has become progressively more stringent and punitive. Tougher sanctions legislated for in the Welfare Reform Act 2012 include stopping a claimant’s jobseeker’s allowance for three years; prior to the Act coming into force, the maximum sanction was six months. Not only have sanctions become tougher, but they have been applied much more frequently in recent years. The pre-eminent expert in this field, Dr David Webster of the university of Glasgow, highlighted a “dramatic rise” in the use of sanctions under the coalition Government.

Currently, if someone is on JSA for any length of time, there is a good chance that they will suffer a sanction. Sanctions do not happen only to a small minority; some 860,000 people were sanctioned in the year to June 2013. That is almost 1 million in a year, and the more recent figure might have reached that level, although it is difficult to find out the exact figures locally. Over 5% of all JSA claimants are sanctioned every month, and that proportion rises to over 8% for jobseekers aged between 18 and 24. We should ask whether that is a reasonable proportion—is that the proportion of JSA claimants who are not doing enough to find work? It seems particularly high to me.

The evidence we heard suggests that it is not a reasonable proportion, and that a significant number of sanctions are incorrectly and unjustly applied. There are innumerable examples of people being wrongly sanctioned, and I suspect that some colleagues might want to discuss some from their own constituencies. Many people—we heard lots of examples—have been sanctioned for missing a jobcentre appointment when they had good cause and had informed Jobcentre Plus in advance or, indeed, had not received notification of the meeting until after it was due to have taken place.

A wide range of witnesses believed that JCP staff were generally much too quick to refer a claimant for a sanction. We were given many real-life examples of JCP applying the strict letter of the law in circumstances in which common sense would suggest that discretion should have been applied. Just yesterday I heard an example of an older person who had fallen out of work and was sent off to use Universal Jobmatch, the new computerised job-search system that all JSA claimants have to use to apply for jobs. But this person had no IT skills, and so was sanctioned for not applying for enough jobs. That is the kind of thing that we feel should be weeded out of the system, because it does not demonstrate the proper use of sanctions.

What is the impact of all these sanctions? The truth is that we do not really know. The assumption of the policy is that it will positively affect the behaviour of claimants who are not doing enough to find work, but does it actually work? The evidence seems flimsy at best. If so many people are having to be sanctioned, presumably the punishment is not working. If the punishment is supposed to reform behaviour, why are people being sanctioned more than once and why are the numbers so high? As an ex-teacher, I always thought that I had failed if I had to repeat a punishment, or indeed if I had to carry out the punishment, because the threats had not worked beforehand.

There is certainly a need to find out whether these sanctions are just punitive, whether they are just to increase the numbers of people off-flowing from benefits, or whether they are working more effectively. There is evidence that sanctions increase benefit off-flow because people who are not receiving any money do not bother to turn up to sign on. Of course, if they turn up to sign on, they remain on the unemployment register, but if they do not turn up they drop off it. That is another reason why benefit off-flow does not necessarily indicate a positive outcome.

The Public and Commercial Services Union represents Jobcentre Plus staff, who are the real experts on this issue, and it told us that sanctioning

“just does not work in terms of getting people into work.”

Perhaps the Minister can refer to some hard evidence to the contrary—evidence that sanctioning has a positive impact on employment outcomes—as the Government’s response to our report could not do so.

What about the impact of sanctions on claimants? Do they cause severe financial hardship? Some witnesses were convinced that they do, to the extent that claimants often require charitable handouts to feed themselves and their families. During our inquiry, Oxfam and Church Action on Poverty published a report that made a direct link between the undoubted increase in sanctions and the unquestionable increase in referrals to food banks during the past few years, and many hon. Members wrote to the Committee to ask us to look specifically at this particular issue. The report estimated that in May 2013 half a million people in the UK were reliant on food aid, and that up to half of that number turn to food banks

“as a direct result of having benefit payments delayed, reduced, or withdrawn altogether”.

So, some of that is about sanctions, but in other cases it is about the barriers that many people face in accessing the welfare system, including benefits.

The Trussell Trust recently published data that showed a 54% increase from 2012-13 to 2013-14 in the number of meals provided by food banks. In total, some 20 million meals were given out to people in food poverty last year. We were unable to confirm a conclusive causal link between sanctions and food poverty, as there are insufficient hard data on this issue. While JCP does refer people to food banks, for some reason it does not record the number of referrals it makes or the reasons for those referrals.

I think that is bizarre. By their own admission, it is sometimes necessary for the Government of the UK in the 21st century to refer people to food banks because they cannot afford to feed themselves or their families, but the Government do not take a note of how often that happens. I cannot understand why they would not want to know why this is happening but, judging from their response to our report, it would appear that they do not want to know. They reject outright our recommendation that the DWP monitors the extent of financial hardship caused by sanctions, including collecting and publishing data on the number of claimants referred to food banks by JCP. I look forward to the Minister explaining why the DWP could not accept this perfectly sensible recommendation.

Our other key recommendation in this area was for a thorough and fundamental independent review of the operation of the conditionality and sanctions regime across the jobcentre network. We want a much wider reaching review than the limited one recently undertaken by Matt Oakley, whose report—by the way—is now more than three months overdue. We understand that it has been finished, but it has not been published.

The review that we called for would investigate whether sanctions are being made appropriately, fairly and proportionately across the jobcentre network; the link between sanctions and benefit off-flow; and, crucially, whether sanctions are having the desired effect of encouraging claimants to engage more actively in job-seeking.

In evidence given to us, the Minister appeared to provide an assurance that a proper and in-depth review, along the lines that we suggested, would happen. In fact, she told us that she had “already started” on one. Perhaps she can now explain why the DWP has utterly backtracked from that position. It is very clear from the Government’s response to our report that there are no plans for a second, broader independent review. The Oakley review looks only at communications, but I would have thought that it was crucial for the Government to find out whether or not the sanctions regime actually works.

The use of sanctions has been increasing inexorably in recent times, but what is the evidence that sanctions are having a positive effect on the behaviour of job-seeking benefit claimants? Given the widespread concerns about the severe impacts that sanctions can have, and the tensions they inevitably create in the relationships between JCP advisers and the jobseekers they are trying to help, surely it is time to establish whether or not they actually work?

My final set of recommendations concerns the issues with the Universal Jobmatch system. Trying to match jobseekers to suitable job vacancies is a core task for JCP. For years, the system involved jobseekers checking vacancies posted on cards stuck on boards in the jobcentre. Things have moved on quite a way from there, through vacancy databases to “job points” in the jobcentre, and Universal Jobmatch is the latest development. It is essentially a recruitment website, with a vacancy database and an online platform through which benefit claimants and other jobseekers—that is quite important to point out, as other jobseekers are able to access this system too—can search for and apply for jobs.

Expert witnesses broadly felt that Universal Jobmatch represented an improvement on previous systems, and they also believed that it had huge potential to improve the efficiency and effectiveness of claimants’ job-seeking. However, improvements to its functionality are required if it is to reach that potential, but that is not the responsibility of Monster Government Solutions, the company that developed Universal Jobmatch; improvements depends on what the DWP asks the company to do and what it is willing to pay for.

Universal Jobmatch is currently a pretty basic online jobs board. To transform the job-seeking experience, the system needs further development to provide, for example, the functionality to offer online training modules or to assess the quality of claimants’ CVs. The Government’s response to our report talks vaguely about planned updates to the system. I would be grateful for some more detail today on the Government’s plans to improve the functionality of Universal Jobmatch, because I am pretty sure that the people who run the system would be happy to do more work in that area.

More worryingly, we found that the DWP appeared to have very little oversight of the vacancies being posted on Universal Jobmatch. Witnesses reported seeing highly dubious vacancies, such as for “diplomats” in the north-east of England; large numbers of duplicate vacancies; and a significant number of vacancies that were no longer in date. This issue is extremely important. Universal Jobmatch is increasingly being used to monitor claimants’ job-seeking, and to check that they are fulfilling their obligations to look for work and apply for jobs. With a significant proportion of dubious, duplicate and out-of-date vacancies on the system, claimants could be wasting their time applying for vacancies that offer no prospect of employment, and they could even face sanctions if they refuse to use the system.

The Government “partly agreed” with us that the oversight of Universal Jobmatch needed to increase. Will the Minister set out what the DWP has done so far to purge the system of those types of vacancies, which threaten to undermine its effectiveness? Just today, I received a briefing from Monster Government Solutions, in which it said it had been working hard to provide an update on fraudulent and duplicate job postings. However, I know from experience that it is quite easy to post a job on Universal Jobmatch, whereas it has actually got much more difficult to take it down.

My right hon. Friend the Member for Birkenhead (Mr Field) and the media have highlighted a very worrying issue, which is the appearance of fraudulent jobs or jobs that would defraud the claimant. The incident highlighted by my right hon. Friend involved a bogus employer fraudulently charging jobseekers £65 for “criminal background checks” as part of a supposed recruitment process, only for the jobseekers to arrive for what they anticipated would be their first day in a new job and finding that no job existed. The concern is that Universal Jobmatch is open to abuse of this kind because it has been designed as a self-service system, making it easier for employers to use. In effect, this means that anyone can advertise on the site with a few clicks of a mouse, and it can make a job more difficult to take down.

The Minister told us in her reply to our letter that the number of fraud cases was “very low” and that DWP has

“well-established procedures to minimise the risks of fraud occurring”

on Universal Jobmatch. I should be grateful if the Minister reassured us today that DWP takes fraudulent use of the system seriously and if she updated us on the actions the Government are taking to tighten up the system, to protect claimants from this type of unscrupulous behaviour and from being accused of not applying for jobs that do not exist.

Our report highlighted the fact that JCP staff have proved themselves capable of responding well to change and continue to deliver a value-for-money service under difficult circumstances. However, it is crucial that the systems they are asked to administer work in the best interests of benefit claimants and taxpayers. It was not clear to us in the course of our inquiry that that is always the case. I look forward to the Minister’s response to the specific points I have raised.

--- Later in debate ---

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to speak in this debate and to follow the hon. Member for Oldham East and Saddleworth (Debbie Abrahams). Members of the Work and Pensions Committee have been debating different aspects of the Committee’s work in various rooms this week, and it is a pleasure to do so again.

Trying to think back six months to when the report was published was quite challenging, and it was interesting to see what has changed since. There have certainly been various improvements to various things. I was keen that the Committee held this inquiry because, with all the changes to the welfare system, actually trying to work out where best Jobcentre Plus fits and where it can contribute the most was not straightforward. At one extreme, one could say that if the Work programme is the way to go, why do we wait for people, with all their different skills, incentives and expertise, to spend a whole year unemployed before passing them on? Perhaps we should completely divorce the welfare enforcement and welfare support roles. We could use providers to do support and Jobcentre Plus could concentrate on enforcement. It was clear from the evidence received by the inquiry—I asked that question of nearly every witness—that there was no motivation for that at all. It would have been costly and would have undermined the great work that jobcentres do in all our constituencies by providing the right amount of support at the right stages for each individual claimant. The Committee completely rejected the idea of such a divorce and we can see that jobcentres have an important role to play in the future of tackling unemployment.

We are left with what the hon. Member for Aberdeen South (Dame Anne Begg), the Committee’s Chairman, referred to as the holy grail challenge. Everyone recognises that we need to provide the right kind of support at the right time. In an ideal world, that support would be more individual and focused for some and much more light touch for others. A lot of people who fall out of work might find more pretty quickly by their own endeavours, so they do not need much money spent on them. The holy grail is how to work out early in the process which people need more intensive support and which ones can be left pretty much to their own devices.

If we could find an assessment tool to do that, it would tackle the awful situation of people who have fallen out of a job but who will struggle to find another one, even though they might have had a long and successful work history—perhaps after they have been in the job for a while, their industry has left the area completely, or their skills have become completely out of date—because nothing they have been doing before is still there for them. It is a horrible situation of someone falling through the holes, because we do not realise how much support they need to reskill until they have been jobseeking hard for six months, and they will have become demoralised by failing, and so are getting further from the labour market as the weeks go by. There is a danger of that awful progress—the longer it takes someone to find a job, the harder it gets.

I agree entirely with having a tool to identify who needs intensive support right at the start, so that we can get them the retraining, the new skills or whatever early in the process, rather than leaving it for six months, until the Work programme or, heaven forbid, even until after the Work programme has failed them as well. That has to be the right answer; a key to enable the Department to focus its resources on those who need them, rather than risking simply helping those who might not need them.

In another situation, Government policy is to ask jobcentres to do a whole new area of work, in-work conditionality. If the journey of claimants with the jobcentre does not end when they find their job—once they have found a job, we want to help, support and encourage them, and perhaps even stronger than that, to increase their hours or their wage rate to get their level of benefit claim down even further—how we find the resources and mechanisms to support people on that continued journey will be a real demand on a jobcentre. It will require a different set of skills and approaches of jobcentre staff. Helping someone who does not have a job to find one in the first place, with job searches and so on, is different from helping them to increase their skills while in work or to look for extra hours or ways of getting more skills to get promoted.

How we resource and skill that policy is important if we are to make in-work conditionality work. Otherwise, I suspect, it can only be a phone call every few months to say, “What are you doing to find extra hours?”, “What are you doing to look for a better job somewhere else?”, or “Do you realise you can’t just stay where you are, doing exactly what you are doing?”, and I am not sure that that is a helpful process to get into. Exactly how we mesh that with universal credit and changes to how advisers approach such situations leaves us looking for a relatively fundamental change in work processes. Almost certainly, that means that the existing target—how many people can you get off benefits?—will no longer be a meaningful target.

If one of the advantages of universal credit is that people can be in work for a few weeks and drop out again, but their benefits will go back up automatically, or they find more work or perhaps their hours fluctuate, the target to get people off benefits will not apply, because they will not ever be off benefits under the new definition. Currently, people move off out-of-work benefits, on to tax credits and, heaven forbid, back again. Now, however, as a way of measuring what we are trying to achieve, we will need to find a more sophisticated target, one which looks at sustained employment or at how we follow people into and through their jobs. We heard evidence to say that that was a hard thing for jobcentres to do—finding out who people were employed by, phoning up the former claimants or their employer—when neither had any great need to engage. If people have found a job and stopped claiming, phoning the jobcentre a few weeks later is not on their agenda.

[Dame Anne Begg]

The hon. Gentleman suggests that people, once they have gone off benefit, are not interested in engaging at all. One of the excuses that the DWP gave us for not doing any measure other than the benefit calculation was that people did not want to be bothered, or that employers were not interested in letting the jobcentre know that the person was still in a job.

[Nigel Mills]

That is exactly the problem—how we motivate engagement on both sides, which we will need with universal credit and any in-work conditionality. We have to find a way of gathering reliable data. It is similar to a high-level instinct, or perhaps real-time information will provide something. Perhaps the RTI feed will show that the person is still in employment or even at the same employer—if we wanted to track the data that far back—but that looks to be a pretty clunky and limited way of checking things. Unless there are flags that show when employment has stopped, flagging it back to the jobcentre, we would not know that people had ceased to be in sustained employment, perhaps meeting the 12 or 26-week target, or whatever was set in that situation. I am not sure that there is an easy solution to anything, but for us to find a set of targets and work routes that work in such a situation will be important to how the jobcentre role develops.

The next area that I want to touch on is one that was topical last summer, when we started the inquiry: what happens to people when their two years on the Work programme finishes and they become the jobcentre’s responsibility again. This time last year, I remember speaking to the staff at my local jobcentre and they were not entirely sure what they were going to be doing with people in that situation when the first Work programme cohorts finished. Jobcentres have an important role to play, because we are talking about people who have not got a job in their first year of unemployment and who then got through the Work programme for two years and have not found sustained work. We could expect them to need some intensive support, but it is a little hard to see that jobcentres would be geared up for that, having not been doing it for people in that key two-year period previously. So what would we do with them?

Last week, I was pleased to meet a new subcontractor, Acorn, which is in Derbyshire dealing with what I think are now called community work placements, a new set of rolled-out private sector providers offering a different type of Work programme service that is not the Work programme and does something subtly different. I confess that the procurement of the service and how we chose the providers has passed me by, but in the east midlands, for example, we have G4S. Luckily for the east midlands in some ways, it is not one of the Work programme providers, because we have a completely separate, third firm in Derbyshire to do things. We have, however, found a sensible programme of community placements that are not meant to be free labour for unscrupulous private sector operators, but are meant to be getting people who have gone through three years of support finding something that at least gets them used to working normal working hours and some skills on their CV, making them more employable.

--- Later in debate ---

[Dame Anne Begg]

I have less than a minute to respond. I pay tribute to the hard-working Jobcentre Plus staff; they do their core ventures well, work in difficult and ever-changing circumstances and they are at the front line, having to take a lot of the criticism of Government policies, which they are implementing but over which they have no control.

There are a lot of questions that the Minister did not manage to answer. We still need the best help for those facing the highest barriers. There is a huge increase in the use of sanctions and we need an independent inquiry on that. The Minister did not give any reasons why there is such a huge increase in food banks and, unfortunately, she has not said anything about off-flow measures.

The Minister’s own Universal Jobmatch has thrown up a job that was supposedly 20 miles from her constituency, but was actually in Japan.

Universal Credit

Anne Begg Excerpts

Wednesday 9th July 2014 Commons Chamber

[Mr Duncan Smith]

I am quite happy to deal with that. I have also said to the Chair of the Work and Pensions Committee that we are happy to talk through that. We have an invitation from the Committee to come in and discuss it.

[Dame Anne Begg (Aberdeen South) (Lab)]

In April, the Work and Pensions Committee published a report on the progress of universal credit implementation, which said:

“DWP told us that it intended to clarify the impact of the changes to the implementation timetable on the overall costs and savings of the programme in the revised Business Case for Universal Credit, which it has now presented to the Treasury. We recommend that DWP makes its revised Business Case available to this Committee.”

Just two weeks ago, we got the Government response, which said that, no, they would not give us sight of the business case, but that some officials might talk us through it. For my Committee to be able to do our scrutiny role properly, that is not good enough. I join my colleague on the Select Committee, the hon. Member for Amber Valley (Nigel Mills) in making this plea: why will the Secretary of State not make the revised business case available to the Select Committee?

[Mr Duncan Smith]

I have said to the hon. Lady that we are happy to sit down to discuss this matter with her. I remind her that no other Government have ever published business cases, but I am happy to consider what she asks.

Universal Credit

Anne Begg Excerpts

Monday 7th July 2014 Commons Chamber

[Dame Anne Begg (Aberdeen South) (Lab)]

Universal credit is a major welfare reform. It will eventually replace tax credits and most existing working-age benefits, including out-of-work benefits and housing benefit. It is estimated that, by the time it is fully implemented, universal credit—or UC, as it has now become known—will be paid to 7.7 million households, and we hope that that will be the case.

During last week’s debate on work and pensions, I said that the problem with welfare reform was that it was devilishly complex, took a long time to implement, and always had unintended consequences. I think that all three of those things apply to universal credit. We can agree that its design should bring some advantages. It should improve the position of claimants when they move into work or take on more work, because their benefit will be reduced gradually on the basis of how much they earn, rather than suddenly being cut off if their working hours exceed a certain limit. It should remove many of the “cliff edges” that exist in the current system. Because it is both an in-work and an out-of-work benefit, it will remove the constant applying and reapplying for different benefits as someone moves in and out of work.

However, it is wrong to talk about UC’s “simplifying the benefits system”, because that is not possible to any significant extent. The benefits system is complex because people’s lives are complex, and are constantly changing. UC will be a more streamlined system, but it will not be a simple one. That is clear from the problems that have been encountered in efforts to implement it. The national roll-out of new UC claims was due to take place between October 2013 and April this year. Existing claimants of “legacy benefits”, including jobseeker’s allowance, employment and support allowance and housing benefit, would then be migrated to UC between April 2014 and the end of 2017. However, problems with IT systems meant that major changes to the implementation timetable were made in July 2013, and then again in December last year. That slowed down the process dramatically.

UC claims were introduced on a very small scale from April last year in a few jobcentres in Greater Manchester, which were initially called “pathfinders” but are now referred to by the Department for Work and Pensions as “live service sites”. In the event, national roll-out from last October amounted to the expansion of new UC claims to only a further six jobcentres around Britain, and it has recently been expanded again to a further nine sites in the north-west, bringing the total number of jobcentres where UC is available to 19, less than 3% of the jobcentre network—hardly a national roll-out.

New claims to UC are now not expected to be extended to the whole of Great Britain until 2016 and the bulk of existing claimants will not be moved on to UC until 2016-17. The process will not be completed until later than the original target date of 2017.

The Secretary of State brushes aside any criticism of the very small number of people who are on UC by arguing that the Government are

“taking a careful and controlled approach to achieve a safe and secure delivery.”—[Official Report, 30 June 2014; Vol. 583, c. 645.]

I think we would all agree that it is right to ensure that the system works properly before extending it, but, as the Work and Pensions Committee said, there is a difference between cautious progress and a snail’s pace.

The facts are clear. Since UC started in April last year fewer than 7,000 claims have been processed. By comparison, more than 1 million people claim just jobseeker’s allowance. In January this year alone, there were almost 250,000 new jobseeker’s allowance claims. That is how much churn there is in the system. Almost all the 7,000 UC claims are from people in the simplest circumstances: young, single, and usually recently unemployed. Last week, 15 months after UC began, claims from couples started to be accepted—but only in a handful of the live service sites. We have been told that claims from people with children will begin “later in the summer”. We all know what Parliament’s timetables are like and we wonder when “summer” actually is, so can the Minister give us an idea of what “summer” means in this context?

Achieving only that tiny number of claims to date illustrates the scale of the challenge still facing the Government in trying to replace existing working-age benefits and tax credits with UC by 2017, including migrating all the claimants of the relevant existing benefits over to it. Given the excruciatingly slow pace of roll-out to date, it is hard to see how the target date can be met.

To put this into context, the other new benefit which has had its implementation slowed down is the personal independence payment, although even PIP has more new claims in payment than UC. By March this year 83,900 PIP decisions had been made, which is far higher than for UC, and that involves a smaller cohort and has been done in a shorter time scale. In our report, we asked the DWP to set out its revised estimates of UC caseloads and costs for each year to 2017-18, to reassure Parliament and the public that there is a clear and detailed revised implementation plan. The Government’s response to our report did not include any of that information.

The problems with implementing UC arise largely from failure to get the IT right. Problems with Government IT systems have happened so frequently that they have almost become a cliché, but the UC IT challenge seems especially difficult to tackle and to be throwing up particular challenges. Some £40 million in IT expenditure had to be written off in 2012-13, and a further £90 million is being “written down” in five years instead of 15 because the useful life of the software is much shorter than anticipated. That may seem like an accounting detail, but it shows that the use of public money has not been cost-effective to date, and a great deal more public money is at stake in the UC programme.

The Government’s current approach to the IT problems is to continue to spend millions of pounds—between £37 million and £58 million—on the old IT system during 2014 to extend its functionality so that it can cope with a wider range of claimants in the live service sites. At the same time, extensive sums are being spent on developing IT for the long term. That has had various names and various incarnations: first it was called “the digital solution”, then “the end-state solution”, and the latest terminology seems to be the “enhanced digital service”. Unfortunately we on the Select Committee still do not know what that means. The Secretary of State’s explanation last Monday did not help us clear that up.

The National Audit Office has summed up very well the lack of information available on how the IT for UC will be taken forward. It said last December that the uncertainties include the following: how it will work; when it will be ready; how much it will cost; and who will do the work to develop and build it. We still do not have answers to any of these questions. It would be helpful if the Minister provided some answers to those key points in her response to the debate, because the Work and Pensions Committee has still not had an explanation.

We have asked Ministers for more information about the IT during three evidence sessions over the space of nine months. We repeated this request in our report, including asking the DWP to set out the costs of the IT development work, because the published information on IT costs does not take us beyond November 2014, but we received no answers in the Government response to our report. All it said was that UC will be delivered via

“a multi-channel service that makes greater use of modern technology to ensure the system is as effective, simple and transparent as possible.”

I still do not know what that means, and I do not know if anybody does.

The one thing we do know is that the new “enhanced digital service” will not be ready to test before the end of this year, and even then it will only be tested on 100 claimants to start with. We still have no indication of when it will be possible to test it on a bigger and more representative group of claimants. The challenge of getting from an IT system that is capable of processing 100 claims by the end of 2014 to one that can deal with frequently changing claims from more than 7 million households by 2017 is clearly an extreme one.

Our report recommended that, given the small number of people currently claiming UC, the Government should consider whether it would be a better use of taxpayers’ money to abandon further development of the existing system and focus solely on the end-state solution. The Government said in answer to a recent parliamentary question—although this was not set out in their response to our report—that the enhanced digital service will be integrated with the existing UC service where

“it is both practical and operationally sensible”.—[Official Report, 30 June 2014; Vol. 583, c. 434W.]

Again, I am not sure what that means, so perhaps the Minister can translate those vague phrases into something more meaningful and detailed when she responds.

[David Mowat (Warrington South) (Con)]

The Chairman of the Select Committee talks about the enhanced digital solution, which I think has the characteristics of a front-end which is then fed by a number of the legacy systems, which is why applications development work must be done on both of them. In terms of the technical architecture, I do not think that is altogether surprising, different or new.

[Dame Anne Begg]

I have to say that that is a better explanation than anything I have heard from any of the Ministers—although I am not sure I even understand that explanation—but the question of what this digital solution actually entails is concerning: is it a complete rewriting of the IT or is it, as the hon. Gentleman says, about bringing the legacy systems in and developing them? That was not the original impression we were given, however. Is there to be an original design or the use of the original IT—although, as we know, there is a failure to develop that or to adapt it to cover the different circumstances that people have?

The Committee was also concerned—we expressed this quite forcefully in our report—about the DWP’s lack of co-operation with our formal role in scrutinising UC. I am sure the House would agree that, as our report says, effective Select Committee scrutiny depends on the provision of accurate, timely and detailed information by Government Departments. The DWP has not always provided that to the Committee in the case of UC.

As well as publishing a highly critical report on UC last September, the National Audit Office was then involved in a long-running dispute with the DWP about how much it should write off for the wasted IT. Because of the accounting concerns, the NAO refused to sign off the DWP accounts for 2012-13 for six months, which delayed their publication from June to December. The Secretary of State was, not unreasonably, unwilling to appear before the Committee to give oral evidence about UC until the accounts were published, so our own scrutiny process was delayed and hampered.

The DWP has also been very reluctant to provide us with information about UC and the serious problems it has encountered with it. When the NAO reported on those problems in September last year, it came as news to us, because the Government had not told us about their own concerns about UC and the actions they had taken to address them during 2012 and early 2013, even though our Select Committee had held several oral evidence sessions during that time and published a substantial report. On two occasions the Government published details about major changes to the timetable for UC implementation only when forced to do so by the prospect of the Secretary of State having to appear before us to give oral evidence. Information was released at the session itself on one occasion, and two working days before on another—even then, very little detail was available. That, of course, gave the Committee no time to assess the implications of these announcements properly before we put our questions. We believe that it is unacceptable for the Government to provide information about major policy changes to Committees only when forced to do so by the imminent prospect of being held to account in a public evidence session.

The Committee does not, as the Secretary of State has suggested, want to run his Department—far from it—but we do expect to have access to the information we need to scrutinise it effectively. However, the Secretary of State told us in February:

“I do not have to tell the Committee everything that is happening in the Department until we have reached a conclusion about what is actually happening”.

That view was reiterated in the formal Government response to our concerns, which said that the DWP

“does not regard it as necessary to provide a running commentary on the day to day management of the many large and complex programmes currently underway”.

I will let hon. Members come to their own conclusions about what that implies in terms of respect for accountability, transparency and the formal scrutiny role of departmental Select Committees.

Our report also highlighted the problems the UC delays are causing for other key organisations, particularly local authorities. Local authorities currently administer housing benefit on the Government’s behalf but were expecting the introduction of UC to mean that new claims for housing benefit would end by April this year. The UC implementation delays mean that local authorities will now be administering housing benefit until at least 2016. It is very difficult for them to know how best to run and staff their housing benefit departments until the Government clarify what funding they will make available for that. We asked the DWP to clarify the funding that will be available in 2014-15 and 2015-16 to cover the additional costs to local authorities, but no details were provided in the Government’s response; they simply said that they would ensure that they were in a position to inform local authorities of their individual budget allocations

“in sufficient time before the start of the 2015/16 financial year”.

Local authorities will also have an important role in helping more vulnerable claimants cope with the transition to UC. Our 2012 report on UC examined the implications for vulnerable people in detail. Since then, the fundamental problems with implementing UC have, understandably, dominated public debate and the Committee’s attention. Ensuring that vulnerable people are not excluded from, or disadvantaged by, UC should remain a priority for the Government, and how vulnerable people will be supported through the transition remains a key concern for the Committee. The Government have acknowledged that vulnerable people will need support to adjust to UC. Lord Freud, the Minister with responsibility for welfare reform, told us that how support would be provided for vulnerable people was almost as important as UC itself. But it is still far from clear how that will work in practice, and a great deal still needs to be clarified about how that support will be provided and funded.

Working with the Local Government Association, the Government produced the first version of the local support services framework—LSSF—last year. That sets out how they expect support for vulnerable people to be provided, in partnership with local authorities, housing providers and the voluntary sector. However, there is little detail on how the LSSF will operate in practice and how it will be funded, even though an “update” was published at the end of last year. The Government said last December that the final version of the LSSF would be published in autumn 2014, but in their response to our report that date had changed to autumn 2015. We understand that the delays to UC implementation mean that the timetable for providing support to claimants will also need to change, but the organisations DWP expects to deliver this support—local authorities, housing providers and voluntary organisations —all need to know what they are expected to provide, so that they can plan and budget for these new responsibilities.

In all the debate about IT systems, costs and case loads, it concerns me that the central point of UC is being lost: it is meant to make the benefit system work better for millions of claimants, help them to move into jobs or work more hours, and make it less complicated for them to move on to and off benefit as their lives change. Until we have more clarity, transparency and detail from the Government about progress with the UC project, it is difficult for anyone, including my Committee, to make a proper assessment of whether UC will genuinely deliver the improvements for claimants that this costly and complex welfare reform was intended to deliver.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

Some social security commentators have described a universal credit-type proposal as the holy grail of social security thinking. It is certainly true that the idea is nothing new. It was not invented by the current Government; it has been debated and investigated by previous Governments. In an earlier debate on the subject—I think it was an urgent question —my right hon. Friend the Member for Edinburgh South West (Mr Darling) made it quite clear that when he was Secretary of State for Social Security, he looked at the project and concluded that without very significant time and money being invested, it would be too difficult to deliver.

There has obviously been a learning curve to which, for whatever reason, the current Government seem to have decided to pay no attention. If we sometimes seem quite cynical and sceptical about the whole process, it is because of a lot of what we have heard over the past four years. There was total confidence that UC would be the answer to all sorts of questions, and would be relatively easy. I do not think that many people present, except my right hon. Friend the Member for East Ham (Stephen Timms), were on the Welfare Reform Bill Committee in 2011. The then Minister of State for Employment, the right hon. Member for Epsom and Ewell (Chris Grayling), who responded to most of the debates in Committee, was prone to describing his proposals as an empty bookcase. The Bill was the architecture; a lot of other things would come along later. I think he spoke more truly than he thought he did, because clearly it was a rather empty bookcase; a lot of the issues had not been fully bottomed-out and talked about in the way that they should have been.

One example of that—I will come on to others—is free school meals. We discussed the issue in the Bill Committee in 2011. Various people made written submissions and proposals, and there were discussions, about how that might or might not work as part of the project. We learn now that the Department still does not know how it will deal with free school meals in the further roll-out of universal credit. Three years later, we have not made much progress on something quite important and basic.

[Dame Anne Begg]

Does my hon. Friend agree that anyone building a bookcase has to know the size of the books that will be displayed on it before they can get the architecture right? Perhaps that was a lesson that the Minister forgot.

[Sheila Gilmore]

That is a very good analogy for how we have arrived in this position. The trouble is that it is not some sort of blunder: my hon. Friends have referred to some of the other big changes going through the DWP, and the same pattern has been seen with disability living allowance and the personal independence payment. First, a straw man was erected: there was a statement about certain things in the previous system, some of which were not entirely accurate, being really bad and having to be changed. There was then a brief initial consultation period before the Department went ahead with the change, which was not properly piloted. As a result, every new PIP applicant since June 2013 is part of the testing process. That is not a pilot, unless it is a pilot on a gigantic scale. Many people who are anxious and worried while they wait for their PIP payments to come through, are being treated as guinea pigs, after a failure to analyse the problem, implement the scheme or test the proposals. The pattern is not unique to universal credit.

Had we been told from the outset that there would be a slow roll-out because of the need for testing, we might not be standing here now debating whether the glass is half full, but we have been told so often that the glass is full and everything is going well. When the Select Committee prepared a report in November 2012, we concentrated on vulnerable claimants. At that time we were told that all the implementation plans were on track for 2013, which was not the case. By February 2013, the Major Projects Authority told the DWP to reset the entire project—that was an internal, private report of which Members had no knowledge at the time. That information did not come out clearly until July 2013, when the Secretary of State told the Select Committee that there were major changes to the roll-out. The NAO reported in September 2013, and the Secretary of State’s response was, “Oh, I knew about all those problems all along.” Perhaps he did know about the problems all along, but he did not tell many people about them. There were further changes in December 2013.

Some speakers, in trying to support universal credit, suggested that at least we have some people on it. There are 6,000 people on universal credit, and it will be rolled out to more jobcentres, but those are the very simplest cases. In essence, for those claimants universal credit is little different from jobseeker’s allowance. There is little to say that universal credit is a big breakthrough to a different form of benefit, because until now claimants have been single people. Apparently, we are now able to roll out universal credit to some couples, but the claimants so far have been single people. Some 70% of claimants are relatively young. They are new benefit claimants who do not have complications, basically. If universal credit is to bring together various benefits successfully, the difficult cases will be the real test, not the straightforward ones.

One bit of universal credit thinking that has been rolled out is the claimant commitment, which has been rolled out to JSA claimants, not merely those who are technically in receipt of JSA-style universal credit. The Government have rolled out the stick without rolling out the carrot. One of the problems with the claimant commitment is not necessarily getting people to agree what they will do to find work but that minor breaches of that agreement can lead to loss of benefits. The carrot—the bit that is meant to help people not only to find work but to make work pay—has not yet been introduced because the vast majority of people are nowhere near being on universal credit.

Since our original debates on the Welfare Reform Act 2012, we have experienced obfuscation through the use of computerese. MPs, like many lay people, are not IT experts. Initially, concerns were raised about the size of the IT project—various Governments have run into trouble with IT in the past—and people asked, “How do we know this will be different?” Any concerns were simply brushed aside because the Government had a new “agile” way of doing things that meant everything was going to be fine. About 18 months later we learned that that way of doing things had been abandoned, so clearly everything was not fine, but that is what we were told.

Other things that were “fine” included security, establishing people’s identity and the difficulties with online transactions. Those concerns were raised from the outset. I recall an informal briefing at which the Minister, Lord Freud, was asked questions by people who were expert, such as people who had served on housing associations. They asked, “What about the verification of people’s housing claims? How is that actually going to be done?” At the moment, those claims are done fairly intensively with people having to produce information, although housing associations have been allowed to verify that information because they have seen the lease, and so on. Lord Freud simply ignored all that and said, “No, universal credit will have far less fraud and error, and it will all be fine.” But of course it has not been fine, and it is now recognised that the notion that everything could be done online has not only been delayed but will never happen. One reason why that will not happen is that security has been recognised as a major issue. The same Ministers who told us that security was not a problem have now told us that it is a problem. When a Department is paying out substantial sums of money to millions of individuals, doing it fully online is not practical. After Ministers initially enthused about how everything would be straightforward, and after having been told different things at different times—even when the reality was that something else was going on—we are somewhat sceptical.

As other speakers have said, we were told that a certain type of IT is being used for the very small number of current claimants but that, at the same time, the Department was working on what in February 2014 was called the end-state, open-source, web-based solution. [Laughter.] Exactly. I know the meaning of each individual word, but I have never been clear about what the phrase means. We were told that it was a digital solution—it therefore seems to be an important aspect of the whole programme—and that it would be ready to be tested on 100 claimants by November 2014. As the Select Committee report found, the system is still a long way from being viable. There is a huge difference between operating something like that for a small group of 100 claimants and operating it for far more people.

The Select Committee thought that what we were being told about was a different and digital way of doing things, and we specifically asked for more detail. The Government’s response to the Select Committee report evaded the question, and it is all there. First, the response talked about the claimant commitment, which I have already mentioned and did not have anything to do with the digital solution. Secondly, the response talked about a

“more challenging and supportive relationship between claimants and coaches.”

“Coaches” is the new name for jobcentre advisers. Again, that does not really tell us anything about the digital solution. There are concerns about how scalable those intensive relationships will be. Thirdly, we were told that there will be more online services, but many JSA claims are already made online, so again it is unclear whether that has anything to do with the end-state or digital solution.

Therefore, having gone around the houses about the claimant commitment, the things that are already happening online and the more supportive relationship, all that we have been told is that the digital solution is

“a multi-channel service that makes greater use of modern technology”—

I am glad that it makes use of modern technology, rather than ancient technology—

“to ensure the system is as effective, simple and transparent as possible.”

Those are all worthy aims, but they tell us nothing about what the end-state solution actually is, what it does, how much progress has been made towards it, how many people are working on it, what it will cost or what the interface will be between claimants and the system. It is nothing more than an aspiration.

--- Later in debate ---

[David Mowat]

The problem arises precisely because the systems are nearing completion. Costs in the life cycle of an IT project escalate the nearer to the end we get. To repeat a couple of the estimating parameters I used, Labour’s plan would require 11 new applications and 47 new screens. If the Labour party has its own estimate and it took it more than 11 minutes to put it together, I would be very happy to accept that it is right, but all it has done is write a sentence.

[Dame Anne Begg]

From the Select Committee’s point of view—not that of Labour Back Benchers—the problem is that we do not know any of those things. The hon. Gentleman has made assumptions, but we do not know whether the IT has developed sufficiently to take account of families with children or whether it would cost anything to make the payment to the primary carer instead. We do not know—that is our objection. We have not been told. We have not been kept in the loop.

[David Mowat]

The hon. Lady makes a reasonable intervention and I understand it, but if Labour Front Benchers, whose four-point plan this is, do not know the cost of their proposed scope increases—which is reasonable, because I do not know how much they would cost, either—we would expect them to say, “We don’t know the costs,” not, “These scope increases will be delivered within the same budget as the rest of the programme.” The point I am making is that that is irresponsible. It is not indicative of Front Benchers who take what has to happen to the programme seriously or who, 10 months from now, intend to be the Government of this country. The reality is that 10 years—two Parliaments—is too soon.

DWP: Performance

Anne Begg Excerpts

Monday 30th June 2014 Commons Chamber

[Dame Anne Begg (Aberdeen South) (Lab)]

We have to remember three things about welfare reform: first, it is fiendishly complicated; secondly, there are always unintended consequences; and thirdly, enacting such change takes a very long time and can often cost quite a lot of money. It is fiendishly complicated because people do not lead simple lives; they lead very complex lives. In modern Britain, we have very complex family circumstances. The welfare system has grown up over the decades with things being added and, very often, not being taken away because to do so might result in unintended consequences.

The unintended consequences arise because whenever any Government propose change, there are always things that they do not think about. I often think of welfare reform as being like a big blancmange—when you press down on one bit, something pops up somewhere else. For instance, when the Government decided that they were going to raise the pension age, I am pretty sure they did not think of the unintended consequences for the group of women born in 1953 or 1954 who have found that their state pension age has risen by almost two years. The Pensions Minister, who is in his place, has tried to get round that particular unintended consequence, but not with much success, and that group of people feel very aggrieved.

Even more complicated is universal credit, with six pre-existing benefits going into one benefit. It seems so simple to say, “Let’s have a single working-age benefit,” yet it is incredibly complicated. As soon as we start putting things together, as in universal credit, we get unintended consequences when we start to introduce things such as free school meals or child care and suddenly the disregards and tapers that were in the original plan seem to be not as good or generous as they might have been.

It takes a great deal of time to implement any change. That is why, over the years, previous Governments have looked at one area of welfare reform at most, and tackled that one area, only to find that it takes much longer than expected. When the previous Labour Government introduced employment support allowance and the work capability assessment, they thought that perhaps it could start to migrate two years into the process. Part of the problem in this area is that when the coalition Government came into office in 2010, they speeded up the migration process at a time when it was not working properly for new claimants. That is exactly what we see again with the introduction of the personal independence payment that is going to replace disability living allowance. The Secretary of State keeps saying, “We want to take time to get things right.” Well, there is taking time to get things right and there is a sensible speed of implementation.

The problems with ESA started when we started to migrate people from incapacity benefit to the new benefit. Those problems should have been solved for new claimants before the migration started. The Government have decided to slow down the migration of people from DLA to PIP for the very good reason that they have not got PIP working for new claimants. Part of the problem was that instead of doing a proper pilot so that there was a cohort who had gone through the whole process before it was rolled out across the country, the Government allowed only a month before rolling it out. As a result, not one single individual had gone through the whole process, so the Department did not know how long each assessment was going to take.

Reform takes a long time and needs to be done in stages. It is hard enough for any Government and any Department to implement change in one area of welfare, but this Government and this Department are trying to implement it in several areas. The problem is that they have bitten off more than they can chew. At last Monday’s DWP questions, I asked about the various backlogs. The Secretary of State said today that the backlog of those awaiting assessments for employment support allowance—work capability appointments—had fallen to 688,000. It was 700,000 at the beginning of last week, so it is certainly falling, but it is still a huge number and a huge backlog.

The Government have bitten off more than they can chew because they have forgotten the three basic lessons about welfare reform: it cannot be done easily, it cannot be done simply, and it costs a great deal of money.

--- Later in debate ---

[Mr Harper]

I will not give way, because I am very limited on time.

I am very pleased that Ministers took thoughtful action so that the contract could be ended with Atos having to pay compensation to the Department and to the taxpayer, rather than the taxpayer having to compensate Atos.

[Dame Anne Begg]

Will the hon. Gentleman give way?

[Mr Harper]

I will give way to the Chair of the Select Committee.

--- Later in debate ---

[Dame Anne Begg]

If the hon. Gentleman is right that the Atos contract for the delivery of the work capability assessment was a mess, why is he not criticising his Government for using the same company on a new contract for a very different benefit called personal independence payment?

[Mr Harper]

That is partly because she did not give me a chance. I was talking about the employment and support allowance and the work capability assessment. Atos has not performed well on the work capability assessment, and I am very pleased that that has been terminated, but it had to be done thoughtfully so that compensation was due from the company to the taxpayer, not the other way round.

The Secretary of State set out very carefully the Government’s approach to rolling out personal independence payment. It is the right policy to deliver more support for disabled people, and to help them to get into work and to live independent lives. I am not pretending that it is easy—it is a difficult thing to do—and I am pleased that the Secretary of State has had the courage to continue.

On employment, we must recognise that there are 2 million more jobs in the private sector. I forget which Opposition Member tried to suggest that all these new jobs are simply schemes. The fact that there are 2 million more jobs in the private sector means that, even with the difficult decisions we have had to take in reducing jobs in the public sector, there has been an overall net increase of 1.7 million jobs.

What I am proudest of—as a combination of our immigration policy, employment and welfare policies and skills agenda—is the fact that three quarters of the jobs created since the election have gone to British citizens. In the five years up to the crash, the Labour party’s policies meant that less than 10% of the jobs that were created benefited British citizens. That was a disastrous failure and a policy mistake that I am glad this Government have put right. My right hon. Friend the Secretary of State can be proud of his record, and this party can be proud to support him in the Division Lobby this evening.

Oral Answers to Questions

Anne Begg Excerpts

Monday 23rd June 2014 Commons Chamber

[Mike Penning]

There is no doubt that the Atos contract was taken out by the last Labour Administration. I would love to know exactly what the backlog was, but, as an incoming Minister, I am not allowed to see the figures. Perhaps Her Majesty’s Opposition would be happy to release them. If those documents were published, we would all know exactly what the backlog was before the present Administration came to power.

[Dame Anne Begg (Aberdeen South) (Lab)]

The backlog does not involve only ESA. There are also huge backlogs of decisions relating to personal independence payments and universal credit. Only 7,000 universal credit claimants have been dealt with, although at this stage the number should be about 1 million. In comparison with figures such as those, the passport fiasco pales into insignificance. Does the Minister not think that his Department has bitten off far more than it can chew?

[Mike Penning]

No, I do not. As the Chair of the Select Committee knows, there is no universal credit backlog, so her statement about that is not particularly helpful. I think that we need to concentrate on ensuring that benefits go to the people who deserve them. That is what is most important.