Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Tuesday 1st November 2011 Grand Committee

Moved by

[Baroness Lister of Burtersett]

51EA: Clause 22, page 10, line 32, at end insert—
“(4) Prescribed circumstances should include a claimant who is—
(a) a responsible carer for a youngest child aged 5 and 6, and(b) is undertaking further education and training up to and including level 3 until—(i) their youngest child reaches the age of 7, or(ii) their further education or training course ends.”

[Baroness Lister of Burtersett]

My Lords, I shall speak also to Amendment 71JA. These amendments have been tabled with the assistance of Gingerbread. The aim is to protect the opportunity for responsible carers to access further education and training up to and including level 3 when their children start school without facing the risk of sanctions. This means that responsible carers would be deemed to be fulfilling work search and availability requirements while studying until their youngest child reached the age of seven or the course ended. These amendments strike me as eminently reasonable, and indeed should be seen as totally consistent with the Government’s own anti-child poverty and social mobility strategy which emphasises the importance of education and training and the contribution they can make to ensuring that paid work represents a genuine path out of poverty.

The level to which a person is educated has a significant influence on how much they can earn and their ability to move up the earnings ladder. As Gingerbread points out, it is well established that holding a level 3 qualification can provide substantial economic value, particularly in relation to marginal wage returns. For example, only 25 per cent of people aged 25 to 29 holding a level 3 qualification are earning less than £7 per hour compared with 55 per cent of those with a level 1 qualification, and 37 per cent of those at level 2. Level 3 qualifications include access courses to HE as well as vocational courses. It makes long-term sense to enable lone parents in particular to improve their educational qualifications so as to maximise their labour market opportunities.

Until recently, lone parents on income support could complete a full-time further education course up to and including level 3 in preparation for entering the labour market or higher education. This meant that lone parents on income support had a two-year window of opportunity to access training with a fee remission when their children started school and before moving on to jobseeker’s allowance when their youngest child turned seven. As of September 2011, lone parents claiming income support are no longer eligible for fee remissions when accessing further education. Lone parents on income support will now have to self-fund as well as pay for any necessary childcare if they want to improve their chances of employment by undertaking training. Instead, fee remissions are available for individuals in receipt of JSA, but claimants will be required to continue actively seeking work while training, and if offered a job, be prepared to drop out of a training course or face a payment sanction. JSA work search and work availability requirements severely limit lone parents’ ability to train and gain skills that could help them find higher paid employment that is sustainable, and to make the most of opportunities to progress once working.

This modest amendment raises larger questions about some inconsistencies in government policy. On the one hand, as I have said, education and training are key elements in their child poverty and social mobility strategies. On the other hand, they are pursuing what in the jargon is called a “work first” rather than a “human capital development” approach to moving people from benefits into paid work. One of the risks of such an approach, identified by, for example, Dr Sharon Wright of the University of Stirling in a recent article, is that it can mean that large numbers of benefit recipients end up cycling or churning between unemployment and temporary low-paid jobs without advancement. Without the opportunity to train, lone parents face just such a future of low paid, insecure employment, cycling between in-work poverty and out-of-work benefits with little prospect of their financial or social circumstances improving. In our last session, we heard how they might then face in-work conditionality if they do not manage to improve their position to get themselves above the threshold which applies to them.

This amendment would go a small way to addressing the issue by ensuring that responsible parents, in particular lone parents, are better placed to advance in the jobs market and thereby lift themselves and their families out of poverty. I beg to move.

[Baroness Meacher]

My Lords, I support Amendment 51EA moved by the noble Baroness, Lady Lister. I was impressed when the Minister mentioned in an earlier debate that providers of support to claimants will be rewarded financially if their clients find a job and remain in it for two years. That claimants should achieve long-term employment is clearly the objective of the Minister and the Government. I have no doubt that it is a fine objective. Certainly it is supported by me and, I am sure, by other noble Lords around the table. However, this clause seems to run absolutely in the opposite direction. It encourages claimants with young children to rush into a low-paid and probably insecure job rather than taking the opportunity to train and prepare themselves for long-term work.

Will the Minister explain the rationale behind the lack of protection for carers responsible for very young children aged five or six while they complete a training course up to level 3? Does he see the apparent inconsistency between the aim of placing people in long-term employment, which we all support, and incentivising them to take low-paid work rather than educate and train themselves in order to better their future? I will be interested to hear what he says about that.

My second point is about the unreliability as an employee of a primary carer of children who are in the first two years of school. Having had four children, I have strong recollections of the childhood illnesses they pick up in the early years: for example, a cold, an infection or German measles. If you have four children, it is not one lot of German measles but four, one after the other. Employment? Forget it. This is a serious point. The strain of working when your young children are starting school and picking up all those bugs has to be experienced to be fully understood. In education and training, one can catch up when life settles down and the kids go back to school. I know because I did it. I did an economics degree when I had three children under seven.

We know that the Minister is under enormous pressure to deliver cuts through Parliament, but perhaps this issue is worth fighting for in terms of the Government's own admirable priorities of encouraging claimants to undertake training in order to improve their long-term employment prospects for the future.

--- Later in debate ---

[Lord Freud]

My Lords, we are getting into philosophy here. I accept the point and have always been uncomfortable with the “work first” philosophy. It worked in the short term, as the noble Baroness has said, but the evidence is that, in relative terms, we have a poor workforce because we have too many people with no skills and too few with intermediate skills by comparison with our main competitors. We have to think about the balance between “work first”—which does get people a job—and the risk that training is sometimes used as an excuse to do nothing. There is a difficult balance here. We have not got it right. We had a welfare-to-work system that got it completely wrong. We are trying to pull it together. I do not think that this is going to be a rapid process but everyone in this room knows that it is very important to get this right. It will take some years to get it right but we are beginning to travel in the right direction.

[Baroness Lister of Burtersett]

My Lords, I thank all the noble Lords who have spoken in support of this amendment and who have helped to push the Minister slightly further than he had intended to go when originally reading from his brief. I am pleased to know the Minister is not a “work first” devotee. I was going to say, “You could have fooled me”, but his response to the noble Baroness, Lady Meacher, has confirmed that is the case and I welcome the spirit in which the Minister has responded. Even I am beginning to pick up the ministerial nuances to understand that was a helpful response.

My noble friend Lady Hollis helpfully reminded the Committee of some of the exemptions that exist and it is helpful to have on record that those exemptions will continue. The noble Lord said that it is always possible to do training in the evening. If you are a lone mother, trying to bring up children, trying to do your job and support them in their education, and to keep them off the streets, is it realistic to think that you are also going to do training as well? It is asking too much of lone mothers when we already ask too much of them. We expect them to be responsible, in paid work, in education, keeping their kids off the street and so forth. I hope the noble Lord will come back at Report with some response to what the noble Baroness, Lady Meacher, suggested in terms of opening up the potential for the future in the flexibility of this clause.

The noble Baroness also raised a question about the context of government expenditure cuts. It is not clear that this is going to cost very much to extend beyond the exemptions that already exist for this group. It would be helpful to know what the cost would be of doing it now rather than at some future date. Perhaps the noble Lord could let the Committee know. I suspect it would not be very much at all. In the spirit of the human capital approach, I am not sure what the stumbling block is to doing it sooner rather than later. I beg leave to withdraw the amendment.

Amendment 51EA withdrawn.

--- Later in debate ---

[Lord Freud]

My Lords, it is important that the coalface does not do the sanctioning. It is important that there are really well trained people doing this. This is a complicated area that needs to be got right. These are some of the most highly skilled people in Jobcentre Plus aiming to do that with all these supports.

In response to the concerns raised by the noble Lord, Lord McKenzie, on Amendment 51FB, I want to make it absolutely clear that there are no benchmarks and no targets for sanctions referrals. Jobcentre Plus gathers a range of management information to support its work, as you would expect us to do. On the issue of numbers, over the last year, the number of sanctions and disentitlements rose by around 270,000 from approximately 490,000 in 2009-10 to around 760,000 in 2010-11. There are a complex range of reasons for this increase, including the introduction of new requirements, a slight increase in the average claim duration and a refreshed approach to monitoring compliance with requirements designed to maximise claimants’ chances of finding work. A particular reason is due to the 2010 rule change that led to a sanction rather than disentitlement for failing to attend an employment interview. The number of sanction referrals to decision-makers is a key piece of management information. It helps local mangers assess how consistently JSA conditionality and sanctions are being administered in their area. Managers may compare rates of referrals across different areas when analysing the data, but there is no benchmark and certainly no right or wrong level of referrals. The collection of management information also allows the department to monitor and evaluate the impact of sanctions. I urge the noble Lord, Lord McKenzie, to withdraw the amendments.

[Baroness Lister of Burtersett]

My Lords, my attention may have strayed, but did the Minister answer the question of the noble Lord, Lord Boswell, about the reports over the weekend that fines deducted from benefits are going up to £25, which seems to be a draconian response in the context of the riots in which we read about it? Is this something that can be done by regulation, or will it be an amendment to this piece of legislation? It is an issue about which some of us are very concerned.

[Lord Freud]

My Lords, the press reports were about the level of deductions to pay fines and whether the current limit was right for people who had committed a crime and been fined. Although this is breaking news, this is not an area I am confident we will consider in this particular Bill because it is about fines. It is not a matter today that we will need to consider.

--- Later in debate ---

[Baroness Sherlock]

This is the last time that I shall intervene; I shall stop. I want to come back to a point raised initially by the right reverend Prelate: one of the problems, as I know the Minister understands, is that in areas of mental health a lot of problems are not diagnosed and are not necessarily known to be such problems. They can present as behavioural problems but in fact these have underlying causes that may, complete rationally, be wholly unknown to decision-makers and the person themselves may not be willing to disclose them. I am not expecting decision-makers to be able to know that in advance; I am more interested in how the system can deal with that if at some point this information surfaces. It may be that I have simply misunderstood the explanation that the Minister has given. I would be grateful if he could clarify it for me.

[Baroness Lister of Burtersett]

Is my noble friend’s point not that it is at the point where someone has said they will engage with the regime that you are more likely to achieve that outcome if you then withdraw the sanction? You have achieved your end but there is still a sanction. I do not think that the Minister has addressed that point.

[Lord Boswell of Aynho]

I am sorry for the Minister being put under, I think, unreasonable sanctions or pressure himself, but I suggest that it might be unwise to get into a situation either where we were softies and were not prepared to take these things seriously or where, in circumstances where someone had been sanctioned, if they were to get into the frame of mind of saying, “There is nothing to be lost; I shall carry on because it’s going to happen to me anyway”. There ought to be at least an opportunity for at least a negotiation on a restart of compliance.

--- Later in debate ---

Amendment 52A not moved.

[Baroness Lister of Burtersett]

I will just stay standing until my noble friend Lady Howe is here to move her amendment.

[Baroness Hollis of Heigham]

Perhaps we can ask the Deputy Chairman of Committees to inform the usual channels that it is not possible for us to get down to vote and back up again given the queues of people voting, as well as make oneself comfortable, in 10 minutes. I wonder whether we could ask, through the usual channels, whether 15 minutes might be more acceptable.

Amendment 52B

--- Later in debate ---

[Baroness Howe of Idlicote]

My Lords, I am delighted to have actually made it. With regard to the previous amendment and the proposal for pilots, it may well be that pilots are relevant here, too.

This amendment would introduce a specific earnings disregard within the universal credit to ensure that carers juggling work and care are not left worse off as a result of the new system of disregards. Approximately 250,000 carers currently in receipt of the carer premium to means-tested benefits such as income support, will be moved to universal credit. Under that, the earnings taper will be more generous than the withdrawal rate of existing benefits. Many claimants who are in work, including many carers able to juggle work and care, will be able to keep more of their benefits as they earn. However, this will depend on which earnings disregard they have access to and their level of earning.

Under existing plans, it appears that certain groups of carers would see the size of their earnings disregard in universal credit reduced, compared to their existing income support disregard. Currently, individuals in receipt of income support are eligible for a £20 a week earnings disregard, that is £1,040 a year, which allows them to earn £20 a week before their benefits start to be withdrawn. The Government have announced the following disregard groups for universal credit claimants, with approximate disregard levels: for a single person without children it is £700, about £13.50 a week; for a couple it is £1,920; for a lone parent £2,260 plus £520 for the first child and £260 for the second and third children; and for single disabled people or a couple where at least one person is disabled it is £2,080.

The Government have said that, taken together with the taper, this would leave couples, singles, lone parents and disabled people significantly better off in low-paying jobs. That is good as far as it goes. However, it does not apply to single carers, who currently have access to £20 income support through receipt of the carer premium, but who would be able to access only a basic single person disregard of about £13.50 a week under universal credit. Although £13.50 would be an improvement for unemployed single people being moved onto universal credit from jobseeker’s allowance, where they currently receive only £5 a week disregard, it would see the earnings disregard for single carers on income support drop from £20 a week, that is £1,040 a year, to £13.50 a week, or £700 a year.

Those carers who would see their disregard reduced would be those unable to access the higher disregards for couples, lone parents and those with children or covered by a disability disregard. Carers losing out would be those living on their own, who do not have children and who are caring for a disabled person who does not fall within their universal credit household. This latter group includes carers looking after a disabled or elderly friend or relative living elsewhere and carers looking after an adult disabled child, a parent or other elderly relative living with them but who is not considered to be within the same household for the purpose of universal credit.

The Government have estimated that around 20 per cent of households that receive means-tested benefits and include a carer would not have access to any of the higher disregards for couples, lone parents or households that include a disabled person. With approximately 250,000 carers on means-tested benefits, this would leave approximately 50,000 carers able to access only the lowest earnings disregard if they were able to juggle work and care.

I end with a case study to put this in perspective. Sheila is on income support and cares for her mother, who is 58, has early-onset dementia and receives disability living allowance. Sheila is single and has reduced her working hours as a librarian to just two hours a week. She currently earns £20 a week and, because of the existing £20 disregard, her benefits are unaffected. Under universal credit she would be eligible only for a single person's earnings disregard of £700 a year—around £13.50 a week. Sheila's earnings above £13.50 would be subject to the universal credit taper, which would mean that she would be £15.75 better off from her £20 earnings. She would be £4.25 a week—£221 a year—worse off than under the current system even though she would be earning the same amount.

I will not go on to outline the full impact because I have given an impression of what it would be. I look forward to hearing how this unfairness can be tackled. I beg to move.

[Baroness Lister of Burtersett]

My Lords, I am pleased to support the amendment moved by the noble Baroness, Lady Howe of Idlicote. I am glad that she was able to get to her place in time. I welcome the fact that a single person's disregard was included in the latest round of announcements about universal credit. I also welcome the more generous disregards being made available for most recipients.

I have banged on for many years about the importance of disregards. For me, this is one of the plus signs of universal credit. However, the interaction with housing costs and the complexities that will be created have qualified my enthusiasm for the new disregard regime. It sullies the supposed simplicity of universal credit. I came across some of my noble friends one evening last week wandering around in a state of utter confusion, trying to understand various calculations that we had been given on disregards. I should add that these noble friends are extremely expert.

Just how complex the calculations are was brought home to me by Sue Royston of Citizens Advice, who kindly e-mailed me to point out the implications for carers. I will read out what she said because if I try to paraphrase it I could get in a hopeless mess and get it all wrong. She wrote:

“The proposed levels of disregards have added a whole new area of complexity ... The new disregards have given single adults a disregard floor of £13.50. I have assumed in the calculations that CTB will pay council tax in full for those on JSA or ESA levels and that any excess earnings will be clawed back at a 65% taper as I would be very surprised if any Local Authorities were more generous than this. For the first £13.50 a single claimant will not be subject to a taper of UC but will be subject to a CTB taper so will gain 35% of their earnings. However, every £10 they earn beyond that will be subject to a taper of 35 per cent from universal credit and will then be subject to a further taper in council tax benefit, leaving them with a gain of £1.22 for every £10 they earn … a single carer who at the moment can simply earn £20 and keep all £20 as well as their benefits in full will now have to earn over £55 even to get a £10 gain if they pay council tax at £18. When someone is no longer subject to the combined taper will depend on the amount of council tax they are responsible for paying”.

She goes on to observe that:

“People will have to go through complex calculations to work out given extra costs of working, what level of hours they can afford to work and how much they will gain at different levels of income”.

I hope that I have not lost noble Lords in that, but if I have, it makes the point that this is extremely complicated. If we cannot understand it, how do we expect recipients and carers who are trying to juggle work and care to do so?

Juggling work and care is no easy matter. I have not had to do it myself, but anyone who has done so or with relatives who have knows that it is difficult and stressful. According to Ipsos MORI research commissioned by Carers UK and the DWP for Carers Rights Day 2009, about one in six carers had given up work or reduced their working hours in order to care. A major barrier is the availability of suitable replacement care. In a separate survey and research by Carers UK and the University of Leeds, over 40 per cent of carers who gave up work did so due to a lack of sufficiently reliable or flexible services. A similar percentage, 41 per cent of those surveyed, said that they would rather be in paid work, but that the services available do not make a job possible. I am not saying that a disregard will magically create these services, but it would certainly help to pay for the things needed to support the combining of paid work and care. We know the arguments around childcare, but we seem to forget them when we talk about other forms of care.

There is evidence about the stress and ill-health suffered by carers who do this juggling act, and of course we are talking about more women than men here. That is because while,

“women represent 58% of all carers, they make up 73% of carers on benefits. They are substantially less likely to be in work. One third of heavy-end male carers are in full-time work, but only 13% of heavy-end female carers are working full time”.

I, too, will end with a case study which I have been given by Carers UK, and I have a couple of questions.

“Cheryl is 45 and lives in Stoke on Trent—she has been her elderly father’s full time carer since her mother died in 2008. Spinal problems, a heart condition and arthritis mean her father needs full time care so he has come to live with Cheryl, her husband and their 5 year old son. Alongside providing childcare and supporting her father with everything including eating and personal care, Cheryl works for an hour on three evenings each week as an NHS cleaner, once her husband is home from work and can support her Dad and son. The only social care support she gets is six hours of respite care each Monday—time she uses to do food shopping and spend some time with her son who she hardly sees in the evenings. She wants to work more”—

clearly she has the same philosophy as the Government in that she believes in paid work—

“but has no one else to look after her Dad, can’t afford replacement childcare and would have to find a different or second job as her current employer is not able to give her more hours. Any work has to fit around her son’s school hours, school holidays, her husband’s working hours and his ability to provide childcare and her father frequent doctors, physio and hospital appointments during the day”.

That gives a flavour of how difficult life can be for carers. As I have said, a more generous disregard is not a magic wand, but it could ease that life and it is a way for the Government to say, “We recognise that the position of carers is different from that of other single adults”. It has been recognised in the past that there is a case for a higher disregard for carers.

Can the Minister explain why carers appear to be the only group whose earnings disregard will be reduced as they move on to universal credit? Not surprisingly, there is a feeling that that is discriminating against carers. Secondly, what assessment has been made of the impact on carers and particularly on their work incentives?