Welfare Reform Bill

Baroness Hollis of Heigham Excerpts

Thursday 6th October 2011 Grand Committee

[Baroness Campbell of Surbiton]

My Lords, I would also like to support Lord MacKenzie’s amendment and add something to this particular area. Can I ask the Minister to reflect on what happens when a disability assessment process, or an assessment process regarding a disabled person, is not properly developed and constructed in co-production with those who understand in detail what it is to live as a disabled person; that is, disabled people themselves? I know I am getting a bit of a reputation for banging on about involving disabled people in the issues that concern us. However, I understand from the disability charities and NGOs that I have consulted, as well as from the countless disabled individuals who have written to me over the past few months, that the universal credit assessment process, with particular reference to the work capability assessment process, is still deeply flawed due partly to disabled people’s lack of involvement.

This morning, I telephoned the chief executive of the Royal Association for Disability Rights, Liz Sayce. Many of you will know her because recently she conducted the Government’s disability employment support services review. She is very assiduous and capable. With a worrying example, she demonstrated where we are in danger of going wrong with one of the universal credit assessment processes, the work capability assessment. She told me about a woman who lives in the north-west and has end-stage multiple sclerosis. She can now move only one eyelid and murmur inaudible words. She was telephoned at home by Atos. They told her husband that she needed to attend a work capability assessment. When he explained that this was not possible, they said that they must speak to her on the telephone and read out a statement. When her husband explained that she could not speak, they asked him to hold the telephone so that they could read it out to her, so he put the speaker phone on. They said:

“This assessment is necessary and mandatory. If it does not go ahead, there will be consequences”.

The woman, of course, found this very distressing and scary. They continued, refusing to take into consideration that the woman was not able to be interviewed. They were working from a script in which there is no flexibility and no requirement on assessors to apply themselves to real-life situations or to take a different approach to different disabilities or health conditions.

This example, and I know that there are others, shows that the Government must develop a different approach to the universal credit assessment process. I know Professor Harrington has attempted to make this happen in his work; I have met him myself. He listens and he is a good man. He tries to understand and this is reflected in some of his recommendations, but the whole process has not been intelligently and systematically co-produced in any substantive way with disabled people and disabled experts. We have done it. It was and is being done through the Government’s Right to Control programme. Can we not do the same with this? The assessment process must not be driven by a script. It must allow for sensitivity and assessor judgment—personal judgment—as to when it is appropriate to change their behaviour and respond to a disabled person’s condition and situation. Can the Minister assure us that a more co-productive and intelligent approach to all the assessment processes for universal credit will happen, and happen more effectively?

[Baroness Hollis of Heigham]

My Lords, I shall speak very briefly in support of my noble friend’s amendment for two reasons. First, I was rather appalled by statements from the Prime Minister that the Government were for the first time tackling the issue of people who should be, but currently were not, in work. Really, that comes into the category of Boris-type statements, which are an imaginative reconstruction of events that did not occur. All parties—I am sure that I also speak for the Cross Benches on this—agree that we want to seek to help people into work, and we have been doing it.

When we came into Government in 1997, we had found that, particularly during the 1980s, thousands of people with some mild disability had been moved off unemployment benefit into what was then invalidity benefit, the precursor for incapacity benefit, in order to massage the unemployment figures. On behalf of the previous Government I took Bills to your Lordships’ House that brought in proposals for the New Deal for all sorts of claimant groups. It was never a problem, as it had never been a problem of trying to help the unemployed into work. They are always anxious and keen to do so. The problem has always been those who, for too long, have been economically inactive and marginalised from the labour market.

It is for that reason that I and my noble friend Lord McKenzie continued to follow these policies when he came into the department: to ensure that new deals into work for disabled people, lone parents and for the over-50s were brought in to help people who for some time had been at some distance from the labour market. I am delighted that, insofar as the decent supportive activity of the previous Government may be pursued by the current Administration, we should welcome it. Some horror stories are now coming through about Atos, and we should be joining our disabled colleagues in protesting about that deforming of what should be a decent policy.

Secondly, my noble friend’s amendment says that it is about supporting work for those who can provide security for those who cannot. I would like to spend a second to almost verbally amend it. Help into work those who can, provide security for those who cannot and support those who care; because those who care are left out of the equation. I do not doubt that the Minister’s intentions are as decent as those of any Member around the table in the Committee. However, one of our concerns is that of the 6 million carers, about 400,000 to 500,000 receive carers allowance, which is a passported benefit from what is currently the disability living allowance based on hours worked and the level of care needed.

We are still awaiting what will happen to PIP and the number of disabled people currently on DLA who will receive the higher or lower element of PIP and whether the carers benefit will be passported from the higher rate or from both rates. Until that happens, not just disabled people, but thousands of carers are worried, anxious and distraught that they may lose the carer’s benefit that they currently enjoy. I know that the Minister is engaged with this issue and I am not pretending it is a simple one, but I would be very grateful if he would, acknowledge first, the work done by the previous Administration in bringing those who are economically inactive back into the labour market, and secondly, that we all share a concern for the position of carers and if he could give us some idea as to when we will know what their situation is.

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[Baroness Hollis of Heigham]

Just as a correction, there is no division on the opposition Front Bench. That is absurd. This is an addendum to a very well thought out amendment.

[Lord Newton of Braintree]

I rest my case.

[Baroness Hollis of Heigham]

So do I.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, Amendment 2 would define the purposes of universal credit as,

“to support work for those who can and provide security for those who cannot”.

In Tuesday’s debate on Amendment 1, several noble Lords stressed the importance of language and risk. I am not sure that a definition that divides the caseload between people who can and cannot work is particularly helpful in that respect. However, it clearly is the purpose of universal credit to support people in or out of work, provide security and remove risk.

With regard to supporting people into work, I hope that it is already clear that work is at the centre of the new benefit. In designing universal credit our clear aim is to make work pay. In Tuesday’s debate I referred to the significant improvements that we expect, overall, in terms of participation tax rates, marginal deduction rates and levels of worklessness. Key to this is the single taper, which will ensure that claimants see the benefit of every extra hour worked. We will debate the level of the taper in a later session. For now, I hope your Lordships will agree that the principle of replacing the current tangle of overlapping tapers is the right one and a major step forward.

Other key elements of the work focus of universal credit are the work-related requirements set out in the Bill, the work programme and support for childcare. I said on Tuesday that I hope soon—very soon, in fact—to be able to give more details about the childcare element of universal credit. This is clearly an essential part of supporting parents in work.

[Baroness Hollis of Heigham]

My Lords, if “soon” is around a week, is “very soon” around a day? An hour?

[Lord Freud]

“Soon”, you can measure in weeks; “very soon”, you can measure in days. Well, let us say that noble Lords in this Committee can.

To pick up the point made by the noble Lord, Lord McKenzie, on the application of conditionality; in the Bill conditionality is linked only to employment outcomes, but any responsible Government will always want to look at options for achieving other outcomes for individuals, taxpayers and society as a whole. Indeed, I remind the noble Lord that the previous Government tried sanctions as a way to improve compliance with community sentences.

On the related point of the noble Baroness, Lady Hollis, on IB and ESA numbers, I need to point out that the numbers were pretty much the same in 2008 and 1997. I welcome her focus on reducing inactivity. That is exactly the right thing. One can get pretty historical going over who is to blame or who is not to blame. This is the situation we are in and I do not think that any Peer in this Room would disagree with the proposition that we now have a benefits system that traps people in inactivity through its structure, and certainly one that does not apply substantial help to people to get out of that trap. She asked me to acknowledge the continuity between the two Governments, and I am pleased to do that. I can absolutely confirm that the design of the work programme, for instance, is very much based on the fact that the employment zones pilot initiated by the previous Government was clearly the most successful pilot. We picked that up, effectively, in the work programme and made it a national programme.

While the aim is clearly to help as many people into work as we can, universal credit will also provide for those who cannot work. We have ensured that it is specified in the Bill that a number of groups will receive unconditional support without having to meet any labour market requirements. This will include those assessed as having limited capability for work and work-related activity; claimants with regular and substantial caring responsibilities; and lone parents or nominated carers with a child under the age of one.

In terms of benefit payments, the structure of the benefit is similar to existing provision for people who are out of work. We have announced changes where we believe change is needed, and the Committee will be looking closely at specific points, such as disability support, housing benefit and the household benefit cap, when we reach the appropriate clauses.

It is important to be clear from the outset that universal credit is overwhelmingly not about taking money away from people who are out of work. That much is very clear from the impact assessment, which shows that the majority of losers are people in work, many of whom have higher earnings. As I said on Tuesday, I hope that an updated impact assessment will be available soon, but the fact is that most workless people are not losers and the overall impact of the reform is progressive.

I shall here refer to the important matter raised in particular by the noble Baronesses, Lady Campbell and Lady Wilkins, of the work capability assessment. We continue to work with Professor Harrington to ensure that that assessment works effectively. Clearly, he is involving disability groups in that development in a very proactive way. I obviously know the concerns of disability organisations in this area and I will aim to explain that in much more detail when we get to Clause 12, if that would be acceptable to noble Lords. It is also slightly misleading to talk about losers when we have a package of transitional protection to ensure that there are no cash losers as a direct result of the migration to universal credit, where circumstances remain the same. I understand that noble Lords are concerned that any claimants should be worse off under universal credit, but the fact is that we cannot simplify the system while retaining each and every element of all the existing benefits. That would be simply unaffordable.

If I can touch on the introduction of the PIP on carers, which was raised by the noble Baroness, Lady Hollis, and my noble friend Lord Newton—

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Moved by

[Baroness Hollis of Heigham]

12: Clause 1, page 1, line 13, at end insert—
“( ) an amount for council tax,”

[Baroness Hollis of Heigham]

My Lords, I am grateful to the noble Lord, Lord Kirkwood, for his efforts to bring this on and for the support for a similar amendment which seeks to deal with the same issue from the noble Baroness, Lady Meacher.

Council tax benefit is a social security benefit and in my view should be within universal credit. DCLG, in another turf war, disagrees and stays out. The effect of this will be very damaging. I remind your Lordships that council tax benefit is paid to 5.8 million people at a cost of £4.8 billion, the average benefit being about £16 a week. At the moment local authorities are reimbursed by the DWP for their actual expenditure. In other words, it is demand led: or, to be technical, it comes within annually managed expenditure headings.

In future, by going over to DCLG, local authorities will be awarded a fixed-rate grant to fund a local scheme which is also expected to carry a 10 per cent cut to their usual expenditure. Given that that will now come within the departmental expenditure limit, the level each and every year will have to be negotiated with the Financial Secretary to the Treasury. It will not be demand led. Before the Minister says—I do not know whether he will—that local authorities are in a position to top this up, I am sure that he will be aware of the situation that local authorities find themselves in, which we can perhaps go into later.

In August the DCLG sent out a consultation paper, Localising Support for Council Tax in England. This consultation closes on 14 October. DCLG proposes to localise council tax benefit. Every local authority and every shire district within every county will have its own scheme. If that is not administratively complex enough, they will be required to make 10 per cent cuts in it.

On whom will the cuts fall? Pensioners—we are not sure yet whether it will be the over-60s or the over-65s—are 42 per cent of the recipients and will be protected. So the 10 per cent cuts rise to 20 per cent for everybody else. Thereafter, protecting other vulnerable groups is discretionary. If the local authority protects disabled people and families with children as well—a further 25 per cent of the client group—cuts of 40 per cent will fall on the rest. Finally, if a local authority went further and sought to protect those on 100 per cent council benefit, on IS or on JSA, cuts of 10 per cent would fall on the residual 9 per cent: the working poor, the working population. My Lords, do the maths. They will get no CTB whatever. If that does not impede the move into work, I do not know what does. So low-income families, encouraged into low-paid work by universal credit, which I strongly support, will find that the cuts from HB, which we will come to, and these huge cuts, given the protected groups in CTB, may wipe out any gain from work. What is the point of universal credit if it does not do what it says on the tin and make it worth working? Is this cut in CTB necessary? Why is it fine for DCLG to find £800 million to freeze council tax for all of us around this table today, while cutting £490 million from the poorest, who depend on council tax benefit? I think that it is disgraceful.

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[Baroness Hollis of Heigham]

How, precisely?

[Lord Freud]

As I was about to say, we will soon publish an impact assessment on the universal credit that incorporates this approach. As noble Lords will be aware, the existing impact assessment assumes council tax in the system. This one will assume council tax out of the system.

[Lord Freud]

I ask my noble friend to resist pressing me, which I know he enjoys doing, at this moment. Let us wait for the new impact assessment.

[Baroness Hollis of Heigham]

Will there not be 400 impact analyses?

[Lord Freud]

The impact assessment that I am talking about is the one on universal credit and how it will respond to the exclusion of council tax. We will not have an impact assessment from DCLG available for some time. I do not know when we will have that impact assessment, but I will write to the DCLG and find out.

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[Lord Freud]

My Lords, without being over-coy on that question, this matter is out for consultation and we expect the responses from Scotland and Wales to be incorporated as part of it. So the answer, I guess, is that it will be looked at in that context. With that, I ask the noble Baroness to withdraw the amendment. I am sure that we will return to the some of the substance later.

[Baroness Hollis of Heigham]

Yes. Before coming back to some of the main themes that your Lordships have adduced, could I thank everybody who has taken part, because all sorts of issues have come up that I had not fully clicked on? I now have an even clearer sense of indignation at what these proposals might mean for—as the noble Lord, Lord Newton, rightly said—the poorest people in the land. I appreciate your Lordships’ contributions.

I am sure that the noble Lord, Lord Freud, will take this Committee’s views back to his close working colleague Mr Pickles. Bar a couple of open questions, I think they were unanimous in being deeply concerned both about the effect on the individual and on universal credit.

[Lord Foulkes of Cumnock]

I agree with every word my noble friend says about the revelations that have come out in this Committee, which have been fascinating on both sides. The Government do not seem to have had any support from anyone on any side. Is it not now clear why the Government Chief Whip wanted this Committee hidden away up here, rather than on the Floor of the House?

[Baroness Hollis of Heigham]

Actually, my Lords, it is oddly enough not about trying to win a vote in the House; that is irrelevant. We are seeking to persuade the department that this proposal is profoundly unworkable as well as profoundly indecent. It has to be taken away to the Leg Committee—to use the shorthand—and rethought. That is what I am trying to do. This is not meant to be a grandstanding effort on the Floor of the House, though it might get even more contributions there. It is trying to strengthen the DWP’s concerns between the lines, if I judge it right, and empower it with some of the powerful arguments advanced today by experienced people—a former Minister in your Lordships’ House, a former Secretary of State, and in particular people who speak directly from the nations of this country outside England—that this should not and will not run. It should be taken back to the drawing board to think again. Given that consultation on the document finishes on 12 October, this discussion today is designed specifically to take that debate forward. I thank the Committee, because I am confident that they have moved the debate forward.

I will pick up the point made by my noble friend Lady Turner and reiterated by the noble Lord, Lord Skelmersdale, about discounts, rebates and benefits. My noble friend is absolutely right. Discounts and rebates are, for example, a quarter off for a single person. This is a standardised figure, irrespective of the individual’s circumstances. That is why it is a discount or rebate.

One of the reasons why the British Legion was campaigning on this—and I stand to be corrected—was that it had succeeded in getting through the proposal that local authorities on a voluntary basis, but in practice fairly universally, awarded a 50 per cent rebate on the old council rates system for those veterans who enjoyed war pensions. I remember the debates vividly. If any council thought it might do otherwise, there was a march to City Hall and they occupied the first three rows in their uniforms and decorations as councillors tried—or did not try—to meet their concerns.

They were seeking a rebate. The difference about a benefit is that it is tailored to individuals’ circumstances and council tax benefit does precisely that. That is why one cannot put it into the same category as rebates, which are a category which does not depend on means testing.

Three issues have come up today, and I am very much indebted to your Lordships for these. First, there are worries about localisation as such. This was put powerfully by the noble Lord, Lord Newton, and I am very grateful. Added to that were the concerns—which I am sure are right—of the noble Baroness, Lady Meacher: the worry and stress that will affect individuals.

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[Lord Freud]

We expect the universal credit to be treated as social assistance, which is within the rules, so we can keep a reasonable amount of control over it. This is something that is causing great concern to countries throughout Europe. The European Commission is taking infraction proceedings against us. Twenty members have expressed strong concern. Fourteen member states have joined the UK in calling for a debate on the matter with a view to amending EU social security rules as soon as possible. This is a live and changing issue but currently, as we understand it—nothing is locked down in this area—we have designed the universal credit in a way that it is protected from some of the exportability concerns. That is our intention.

[Baroness Hollis of Heigham]

Could the Minister help us a bit further? It might be more helpful to have a letter on this later on. The benefits that he is bringing together have different rules—or they had different rules—according to whether they were regarded as coming within the free movement of labour and the support for this through some of the tax credit rules and some of the other benefits that were localised and related only to being present and so on. By bringing them all together, does this mean that, for the first time, universal credit, with a much bigger price tag—so to speak—on the individual entitlement, could now be freely exported to people who are coming to work in this country and whose family members are living in other European countries?

Lord Freud: As with the current income-related benefits, workers who come into the UK from other European Economic Area countries may be entitled to universal credit, but only if they meet stringent conditions. This ensures that the benefit tourist cannot take advantage of our benefits system. European Economic Area nationals who are neither in work nor seeking work will not generally be able to access universal credit. They will be required to be self-sufficient while they remain in the UK. Let me stand back generally. This is not currently a stable area of EU law and we are watching it very closely for the reason that the noble Baroness raised.

[Baroness Hollis of Heigham]

If the Committee will excuse me, I have one further point. One of the things that I thought was deeply unfair, but about which we could do nothing, was that a British citizen who took her child to Bangladesh, Pakistan or India for 12 weeks or so thereby lost her child benefit. However, if a worker from one of the eastern European countries came here, and their family had never even visited the UK and their wife and children and so on remained in their home country, they were able to continue to enjoy such benefits.

[Lord Freud]

I am slightly at a loss to respond, mainly because the noble Baroness has opened the door to such an enormous area. It is so complicated that I have spent quite a long time going through it. Yes, there are lots of anomalies because it is not a stable area of law, but the bottom-line point is we do not think that with universal credit we are putting ourselves in any worse a position than that we are currently in.