Welfare Reform Bill

Baroness Hayter of Kentish Town Excerpts

Thursday 6th October 2011 Grand Committee

Moved by

[Baroness Hayter of Kentish Town]

21: Clause 4, page 3, line 3, at end insert—
“( ) Prior to the implementation of regulations made under this section, the Secretary of State shall initiate and respond to a public consultation concerning the operation of the claimant commitment.”

[Baroness Hayter of Kentish Town]

I beg to move Amendment 21, which stands in my name and that of my noble friend Lord McKenzie. It relates to subsection (7) on the top of page 3; an important, albeit small clause, stating that,

“regulations may specify circumstances in which a person is to be treated as having accepted or not accepted a claimant commitment”.

Amendment 21 would add:

“Prior to the implementation of regulations made under this section, the Secretary of State shall initiate and respond to a public consultation concerning the operation of the claimant commitment”.

Central to the Bill, as my noble friend said in an earlier debate, is the twofold aim of supporting work for those who can work alongside providing security for those who cannot. Key to the former is the availability of work, as was stressed by the noble Lord, Lord Wigley, who is not in his place now, but also assisting those who can work back into the workforce after a period of unemployment, illness or injury or the raising of children.

As the Government have reiterated, one aspect of returning to work or entry to the workforce lies firmly in the hands of the potential employee or claimant of universal credit under this clause. This is not new and not simply from when my two noble friends were Ministers, but, as briefings provided by DWP have said, the requirement to seek or accept suitable work has long been part of the benefit system. Indeed, it has been a condition of receipt of unemployment benefit for 100 years, since 1911 when the system required claimants not to have left work without just cause and disqualified them if they refused to accept a suitable offer of employment. So, in slightly new wording, the Bill seeks to capture that responsibility and to enhance it by way of a claimant commitment. What is new is that for the first time, this covers those in work.

Commitment is an interesting choice of word. Any dictionary tells us that a commitment is an obligation, a promise that restricts one’s freedom of action. That is fine. The problem is that such a commitment appears one-sided. It lays obligations on the claimant but, unlike the National Insurance Act which offered a guarantee of unemployment insurance for a fixed period for those who paid contributions, we are told nothing as to what commitment the state will make to the claimant under universal credit. Yet looking or preparing for a job is meaningless if no employer is under an obligation, or indeed helped, to create or provide jobs. There is also no commitment for an employer to be willing to take on someone who perhaps lacks an established work record or satisfactory referees, or someone who may have lost their job—for example, in Sheffield because the Government refused the loan to Sheffield Forgemasters, or in Derby because the Government did not help with a vital contract there, as my noble friend referred to earlier this afternoon. A one-sided commitment will mean little if the Government do not work with employers as actively as they work with claimants. I hope I may be forgiven for quoting something I said at Second Reading. It is a quote from the Work and Pensions Select Committee in the other place, which called on the Government,

“to pay as much attention to getting employers to take on someone who has been out of work as they do to getting the claimant ‘work ready’”.—[Official Report, 13/9/11; col. 364.]

Those were wise words which I repeat today.

There is also no commitment that a parent will be better off in work, despite the voiced aim of the Government, due to the strong likelihood that support for childcare costs for working parents will be reduced. Modelling by Gingerbread and the Resolution Foundation suggests that under one of the Government’s options, to pay 70 per cent of childcare costs up to £125 per week for one child, a single parent on minimum wage who needs childcare for each extra hour of work would keep only 6p out of each pound earned for each hour over 24 hours per week. That is hardly a just reward, and certainly higher than the 50 per cent tax rate that so upsets Boris Johnson. With the option of paying 70 per cent of childcare costs up to £210 per week for two children, a second earner on £7.20 an hour would keep only 9p of each pound earned and would take home no extra cash at all from working beyond 30 hours per week.

We are still awaiting an announcement, perhaps very soon, on how childcare is going to work under universal credit. But how can a claimant commit to take a particular job if they are not sure that they would be better off after paying for childcare? The draft regulations state that if there is no suitable and affordable childcare that may, at the discretion of the adviser, be good cause for turning down a job offer, but it is not a certainty.

There is no commitment in the Bill that second earners will always be better off in work. Indeed, the DWP’s own impact assessment suggests that nearly 1 million second earners will face increased costs on entering work compared with the situation now. We do not yet know how many hours people will have to work in order to escape conditionality. The DWP briefing note published yesterday said that the department will set an earnings threshold above which claimants will not be subject to conditionality, so that single claimants will have to earn £212.80 before being free of conditionality. Lone parents with children aged 5 to 12 will be expected to work within school hours, but no limit has been set for the number of hours that they need to work. A couple, neither of whom has health issues or caring responsibilities, will both be subject to conditionality until they earn £425.60 per week between them, but we do not know what thresholds will be set for couples who do have caring responsibilities.

We do not know what thresholds will be set for those with health issues. Will those with disabilities be expected to find work for 35 hours a week before they can escape the threat of benefit sanctions? The briefing note suggests that the DWP will set what it calls “personalised thresholds”, but without defining what they are, claimants are being asked to sign up to a commitment when its details have not yet been written. The number of hours are to be set in legislation, but it is unclear when these will be decided.

--- Later in debate ---

[Lord Freud]

My Lords, these amendments would require a formal consultation on the operation of the claimant commitment and a yearly review on its impact. We will have the opportunity to discuss the claimant commitment in detail when we reach Clause 14, so right now I would like to make some specific points. Before I do that, I would like to make a more general response to some of the general points that the noble Baroness, Lady Hayter, made around the mutual obligations she said are not there and the argument that this is a one-sided commitment. Clearly, it is not one-sided. Part of the Government’s side of this is to pay the benefit to the claimant. The other part of it is to help claimants to find work through, in the case of Jobcentre Plus, adviser interviews and, more importantly, through the investment in the work programme which is, as noble Lords know, a very substantial investment in this country to help people back into the workplace. I will not go further on childcare costs, which the noble Baroness thought would be revealed very soon. Let us have some facts, and then have a discussion on them.

There is genuine mutuality, a two-sided commitment, in the claimant commitment. It is intended to be of benefit to claimants. It will provide all claimants with a single, clear statement of their responsibilities. This will ensure that claimants understand those responsibilities from the very start of their claim and help to improve compliance. Indeed, I am spending quite a lot of time to make sure that the commitment is helpful, understandable and specific to an individual. We are spending a lot of time and energy doing that because, up to now, similar measures have been rather vague and more general.

The content of a claimant commitment will include the hours the claimant is expected to work and it is drawn up between the claimant and the adviser in dialogue. The threshold for things such as the time spent on job search per week will be set according to personal capability and circumstances rather than being prescribed in legislation. The regulations set out only the maximum limit beyond which we will never apply conditionality, so some of the newspaper articles—I am not sure whether this was an upmarket favourite read or in a more downmarket one—apply to the maximum expectation. Clause 17 sets out the kinds of activities we might expect claimants to undertake, and we will get to it later.

We will ensure that the process of accepting a commitment is not onerous. For those claimants who have limited responsibilities—for example, where the only requirement placed on the claimant is to report changes of circumstance—the commitment will be an integrated part of the claims process and could be accepted online or via the telephone. For other claimants, primarily those we would require to look for work, their requirements will need to be discussed with an adviser face to face. They will be able to accept their commitment at their first meeting.

However, we recognise that there may be some very exceptional cases where the claimant cannot fulfil the requirement to accept a commitment: for example, where the claimant is suddenly incapacitated through illness or where the office we were expecting a claimant to attend is forced to close as a result of flood or fire. We will be using regulations under subsection (7) of this clause to cover such circumstances and enable us to treat the claimant as having accepted the commitment. Noble Lords may have spotted that we have responded to the Delegated Powers Committee and agreed to make these regulations affirmative for their first use.

My third and final point is that the claimant commitment is not an entirely new invention. It builds on similar products in the existing benefits regime, most notably the jobseekers’ agreement which JSA claimants must agree to as a condition of entitlement. Operationally, we already have good experience of the use and implementation of such products. Obviously we feel that the claimant commitment is an improvement on the jobseekers’ agreement. Most notably it will bring together all the requirements placed on the claimant, while the jobseekers’ agreement covers only some requirements. We intend to introduce and implement the claimant commitment in JSA in advance of universal credit, and we will, of course, be looking to learn from that experience in advance of universal credit. As I said, I will be able to explain more about this process later as we get to those clauses. I urge the noble Baroness to withdraw this amendment.

[Baroness Hayter of Kentish Town]

I thank the Minister for that reply, and, through him, I thank his officials for the examples they sent through of the individual claimant. I have only two points to make. First, the Minister said that part of the Government’s commitment is to pay the claimant. Many of these benefits are earned and contributed and are something that people have paid for, so it is not quite the act of generosity and philanthropy that he made it sound.

Secondly, on the individual threshold and the negotiation to make sure that the claimant commitment is tailored to particular needs, I echo a point that was made by at least two other noble Lords about the training of staff. Getting that right will be key to this and is important. As we go through, I look forward to further discussions on this. As I said, such a commitment is not new, but we want to make sure that it does what it is intended to do, which is to assist someone in finding their way into work or back into work rather than to be an excuse for sanctions as an end in themselves. I beg leave to withdraw the amendment.

Amendment 21 withdrawn.