Welfare Reform Bill

Baroness Lister of Burtersett Excerpts

Tuesday 13th September 2011 Lords Chamber

[Baroness Lister of Burtersett]

My Lords, as a member of the night shift, I will inevitably cover issues already eloquently discussed by other noble Lords, but I shall do so by focusing on some of the Bill’s gender implications and drawing on the work of the Women’s Budget Group, of which I am a member.

First, simplification is one of the main aims of the Bill and has long been the holy grail of social security reform. The Bill bears out an earlier warning from the Social Security Advisory Committee that there is a limit to the simplification that is possible with means-tested benefits. The closer we study it, the more we see how new complexities spring up, hydra-like. While the Minister may be a self-styled revolutionary, in the words of my noble friend Lady Sherlock, I fear that he is no Heracles. Where universal credit represents a welcome breakthrough is in the integration of in-work and out-of-work support, thereby potentially reducing the insecurities associated with the transition into and out of paid work. That is very important. That is about the only positive thing I am going to say, I am afraid.

Means-testing will be extended as a result of the arbitrary time-limiting of employment and support allowance for those in the work-related activity group. A disabled woman who has written to me—one of many—voicing her fears about the Bill’s overall impact on sick and disabled people, asks, “What do we do then?”. The Government’s answer is: claim income-related ESA. However, 34 per cent of men and 46 per cent of women affected will not be eligible. Where they have to depend on a working partner instead, their financial autonomy will be eroded. This matters to people. Indeed, Professor Roy Sainsbury told the Public Bill Committee in the other place that in research with claimants,

“individual assessment spontaneously arose as a thing that people were very keen on”.—[Official Report, Commons, Welfare Reform Bill Committee, 23/3/11; col. 16.]

Women’s financial autonomy is also likely to be eroded as a result of measures that reduce incentives for some second earners, as my noble friend Lady Hollis of Heigham has already talked about. A new separate earnings disregard for second earners would go some way towards addressing this and I would welcome the Minister’s views on that possibility.

We should also note Carers UK’s concerns about the loss of a bespoke disregard for carers. Furthermore, we still do not know what is proposed for childcare costs, which is one of many gaping holes in the Bill that must be filled before Committee. The attempt to fit a childcare quart into a funding pint pot will aggravate the work disincentive for second earners and lone parents, as we have already heard. The disincentives faced by many second earners will encourage what we academics call a male breadwinner model. This sits uneasily with the Government’s very welcome goal of encouraging shared parenting. It is also very short-sighted from a dynamic perspective. If a woman is in paid work while living with a partner, she is better equipped to remain in the labour market should that relationship break down.

Research demonstrates the extent to which women remain the main managers of poverty. This means that women are likely to bear much of the burden of measures such as the abolition of part of the Social Fund and the introduction of a benefits cap. I am concerned about both, but will focus for now on the cap. I have been struck by the number of noble Lords from across the House who have raised very serious concerns about this cap. I hope that the Minister is getting the message. The 50,000 or so households that stand to be affected will receive less than Parliament has decided is necessary to meet their basic needs, as the noble Lord, Lord Kirkwood, has eloquently explained. The Secretary of State has justified the cap in the name of fairness, claiming that it is about those who we believe should be able to go to work but are not doing so. However, it will apply to some groups that are not even expected to work.

In the other place the Minister claimed that the cap is about ensuring that there is a level playing field for everyone, but this is not a level playing field. The benefits and tax credits received by working families are being ignored. If they were all taken into account, official figures show hardly anybody would be affected by the cap. As a number of noble Lords have said, it is particularly unfair that child benefit is not added to the comparator earnings but is treated as income for the purposes of the cap. Could the Minister please explain to the House how this can possibly be justified?

The Minister also assured the committee in the other place that the cap is not about creating hardship, but hardship will be created, as the Centre for Social Justice has pointed out. Hardship could also result from the proposal to pay benefit monthly rather than fortnightly on the grounds that this is in line with the demands of modern life, and we have to prepare people for paid work. However, over a fifth of workers—and a higher proportion of low-paid workers—are still paid weekly or fortnightly, according to the department’s own figures. While the earlier switch from weekly to fortnightly payments may have caused few difficulties, the leap from fortnightly to monthly is much greater.

Nearly two in five families with children—the lowest income fifth—already run out of money regularly. So this is not a problem for a small minority to be solved as proposed by appropriate budgeting support and more frequent payments in exceptional circumstances. Again, it is women, as the managers of poverty, who will bear the main brunt. I hope that the Minister will be open to persuasion on an administrative matter that has significant consequences.

Another payment issue of great concern to many organisations is that the whole of the universal credit will be paid to one partner with, in particular, no routine provision for payments for children to be paid to the main carer, usually still the mother. Not only will this in many cases represent a further erosion of women’s financial autonomy, but also research that I and others have carried out shows that income is not always shared fairly within families and that money labelled for children and paid to the main carer is more likely to be spent on the children. As Fran Bennett of Oxford University warns, payment into a joint account—a so-called “nudge”, as the Minister has said—is not necessarily the answer, because research shows that joint accounts do not guarantee both partners equal access.

We see here an inconsistent approach to public and private dependency which could undermine some of the Government’s own objectives. A driving motivation behind the Bill, as we heard from a number of noble Lords, is to address what in my view is a damagingly inflated problem of public welfare dependency without any regard for the consequences of private economic dependency within the family. This could create a new couple penalty as the fear of a loss of financial autonomy and security could discourage women from committing to a new relationship.

In conclusion, while I was focused on the Bill’s potentially damaging impact on women, this also has implications for children, given the link between women’s and children’s poverty. I hope that in this House we will be able to deliver the concessions necessary to protect women, children and disabled people and achieve the fairness that the Minister assures us this legislation is supposed to be about, but at present signally fails to deliver.

Child Poverty

Baroness Lister of Burtersett Excerpts

Tuesday 17th May 2011 Lords Chamber

Asked by

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what steps they will take to build on the reduction in child poverty in 2009–10 reported in Households Below Average Income, published on 12 May.

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

My Lords, I welcome the reduction in child poverty from 2.8 million to 2.6 million children, but despite £150 billion spent on tax credits since 2003-04, largely aimed at families, that figure is a long way off the previous Government’s aim of halving child poverty by 2010. Noble Lords will be aware that the Government published their child poverty strategy on 5 April, showing how our radical reform programme will help to transform people’s lives and break cycles of disadvantage.

[Baroness Lister of Burtersett]

My Lords, I thank the Minister and I welcome the Government’s commitment to the eradication of child poverty. However, given that improved financial support for children played a key role in the previous Government’s achievement in reducing child poverty to its lowest level since 1985, will he comment on the Institute for Fiscal Studies’ prediction that cuts in such support could contribute to an increase in child poverty? Will he also explain why the child poverty strategy contains no specific, quantified targets for the period that it covers?

[Lord Freud]

My Lords, that is a complicated question. As noble Lords know, fundamentally, child poverty has been stuck at the same level since around 2004-05. We have seen a statistically significant reduction this year, but it is very much the same figure as it was five years ago. The IFS, as the noble Baroness pointed out, predicts an increase of 200,000 in the number of children in poverty in two or three years’ time. That may or may not be true, but our fundamental reforms, particularly of the universal credit, will start to drive that figure down. We are predicting, as has already been announced, 350,000 fewer children in poverty as a result of the universal credit when it is introduced and 300,000 fewer workless families.

Jobseeker’s Allowance (Mandatory Work Activity Scheme) Regulations 2011

Baroness Lister of Burtersett Excerpts

Tuesday 10th May 2011 Lords Chamber

[Baroness Lister of Burtersett]

My Lords, being new to the House, I am no connoisseur of Merits Committee reports, but on reading its 27th Report over Easter, it struck me as being damning in its conclusion that the lack of information attached to the regulations was unacceptable. The noble Baroness, Lady Thomas of Winchester has confirmed that view.

I am rather more familiar with the reports of the Social Security Advisory Committee, having read many of them over the years. Its report on these regulations, to which the Merits Committee refers, is at the more critical end of the spectrum of SSAC statements. Its key recommendation was that mandatory work activity should not proceed. Nevertheless, it is proceeding on the basis of regulations deemed inadequate by the Merits Committee for their lack of clarity of purpose. As the committee underlines, these are important regulations, the effects of which could have serious implications for the livelihood of thousands of unemployed people. As we have heard, where sanctions are imposed, JSA will be withdrawn for 13 or 26 weeks and, if further primary legislation is passed, we could be talking about loss of benefits for 156 weeks for a third so-called offence from April 2012.

The evidence suggests that it is often the most vulnerable who are subjected to sanctions. Both the Merits Committee and SSAC comment on the ambiguities surrounding the scheme's purpose. The department denies any punitive intent, emphasising how the scheme is supposed to help customers develop behaviours and attitudes required to get and keep work, yet it is adamant that sanctions must be applied to those who do not comply. I do not find the department's response to SSAC’s concerns very convincing. The velvet glove and warm words about support surrounding the iron fist of sanctions look rather threadbare.

I am reinforced in that view by my reading of a recent systematic review of international evidence on the impact of benefit sanctions published by the Joseph Rowntree Foundation. The review questions the efficacy of sanctions in changing claimants’ motivation or attitude towards work. It suggests that although sanctions may have a short-term effect in shortening unemployment spells, the longer-term effects can be counterproductive in jobs and earnings progression. It is worth citing the report's conclusion:

“this report brings into focus the gulf between the rhetoric of welfare reform and the evidence of the effects of sanctions … policy-makers continue to justify the extension of sanctions (and sanction-backed conditionality) on moral philosophy grounds while taking an ambivalent attitude to the evidence … with evidence being marginalised by discussion of principles and what can be expected of claimants in return for benefits”.

I fear that, in a moral crusade against the supposed welfare dependency, Ministers read the evidence through a distorting lens. As the TUC warned in its submission to SSAC, these regulations seem to move employment policy further away from an evidence-based approach. The SSAC report comments:

“The evidence on the efficacy of ‘workfare’ schemes is, at best, mixed”,

as the noble Countess has already pointed out.

Personally, I was unhappy about the previous Government's work-for-your-benefit proposal, but at least, as the Merits Committee notes and my noble friend pointed out, it was to be a pilot scheme with a clear evaluation plan aimed at examining whether mandatory work activity had demonstrable benefits. These regulations introduce mandatory work activity nationwide without any such evidence.

That makes all the more important the monitoring of placements to ensure that, among other things, participants are treated properly and are not used to replace waged workers. I am pleased that the department has accepted SSAC’s recommendation on that point, and I would welcome more information from the Minister about the placement monitoring system. However, as the Child Poverty Action Group points out—I declare an interest as its honorary president— there are no guarantees of minimum standards that can be expected from employers. I regret that the department has rejected SSAC’s recommendation that detailed guidance should be given to employers about placements.

My other main concern, which was also picked up by the Merits Committee and SSAC and was commented on by the noble Countess, is the question of discretion. The Merits Committee questioned how the scheme can be delivered with any degree of consistency given the degree of flexibility and discretion built into it. In its 28th report, drawing attention to oral evidence provided by the Minister for Employment, the committee observed that,

“The targeting of the Mandatory Work Activity Scheme is to be left almost entirely to the discretion of Jobcentre Advisers, and the Minister is sanguine that there will be local variation and a lack of consistency in the way that the Advisers apply their judgment”.

That is just one example of how discretion is being extended in the social security system, and I find it worrying.

Flexibility sounds very positive, but its flip side is a lack of clear rights and the danger of arbitrary and inconsistent decision-making and lack of transparency. Moreover, the JRF review suggests that the administration of sanctions is not rational or equitable and can lead to bias, including racial bias. Important decisions with implications for a claimant's livelihood will be taken on the basis of what SSAC refers to as the

“views and opinions of the personal adviser”—

views and opinions about attitudes and motivations that will require considerable skill to interpret correctly. I would be grateful if the Minister would tell us about the kind of training that advisers will receive to make these decisions, and whether all advisers will have received this training by later this month when the scheme is introduced.

Will the Minister also clarify the department's response to SSAC's recommendation that,

“detailed information is provided to potential participants about the criteria for selection”?

In its response to SSAC’s report, the department says that it accepts the recommendation, but in explaining how it accepts it the department does not state explicitly that potential participants will be told the criteria for selection. I would be grateful if the Minister would confirm whether they will be told.

Another extension of discretion lies in the refusal to prescribe in regulations factors to be taken into account when deciding whether someone has good cause for failing to take part in the scheme when required to do so. This point was made by the noble Baroness, Lady Thomas of Winchester. The department's response to SSAC, namely that doing so risks limiting the circumstances in which good cause could be applied, again is unconvincing. Clear good-cause provisions in the regulations would provide a safeguard for claimants, without necessarily limiting the circumstances to those listed.

In conclusion, the Merits Committee complains about the vague and insubstantial basis on which we are expected to assess whether the regulations will achieve their objective. On the basis of research evidence, I fear that the regulations will do more harm than good. I support my noble friend's prayer that they be annulled, and the Motion of Regret tabled by the noble Countess.

[Lord Kirkwood of Kirkhope]

My Lords, the House owes a debt to the noble Countess, Lady Mar, for raising these regulations this evening. As always, it also owes a debt to the Merits Committee and the Social Security Advisory Committee for their excellent work. The debate highlights very important points, many of which have already been made.

The first thing that I will say relates to the initial observations about procedures made by the noble Lord, Lord Knight. I would support him in pursuing the clarity that we need to enable the House to demonstrate and exhibit displeasure to the department without necessarily seeking to completely torpedo and annul regulations. The Motion in front of us in the name of the noble Countess, Lady Mar, is well judged. It is not always a Minister's fault—indeed, I completely absolve my noble friend from some of the worst excesses of this order. However, we should have the ability to make it clear that if there is insufficient detail, and if we do not feel that it is safe to endorse proposals that are brought to the House by the department via Ministers, we should have a method of expressing that in a grown-up way, and we should be able also to test opinion in the Division Lobbies. I encourage the noble Lord to pursue that line of thought.

Secondly, my noble friend must have bigger fish to fry. I have spies everywhere and they tell me that this is an £8 million scheme. That does not mean that it is not important—there are important principles here—but he has much more important things to worry about, such as universal credit and the work programme, which are both crucial. I also understand that we have managed to get such a keen price out of the contractors that we have been able to double the number of places for the mandatory work activity scheme and are now thinking about 19,000. That raises questions about the quality of the schemes that will be provided. I have a calculator, and I can divide 19,000 into £8 million and see that it works out at something like £430 per four-week placement. These figures need to be confirmed; otherwise, we will all be confused. The point I am making is that, if we have four-week schemes that are costing £430 to provide, one wonders about the disproportionate sanctions referred to by colleagues earlier in this debate of £1,800 or thereabouts, being equivalent to 26 weeks’ benefit at £67.50. There is a disproportionality about some of this, as well as the question of whether the quality can be delivered on a four-week scheme for £430. We need to keep this in context, but there are some really important questions that worry me about these regulations that are creating potential precedents. These deserve attention.

First, if I understand it right, contributory JSA benefit claimants are covered by these regulations. Contributory benefit claimants are different from means-tested JSA benefit claimants. They have been paying national insurance contributions to enable them to be entitled to this benefit, at least in the first year, before they go into the work programme, as I understand this scheme as it is going to be rolled out. They are going to be tapped on the shoulder by some Jobcentre Plus personal adviser and be told that they are going to be subject to the mandatory work activity scheme. People who make contributions through the national insurance system should be in a different place from those on a means-tested JSA regime. I would like the Minister to comment on whether that is correct.

I also worry greatly about the way we are potentially interfering with the well-established legal definition of “actively seeking work”. The way I read this—and again, I would like to be corrected if I am wrong—being able to do just enough to satisfy JSA legal entitlement requirements is not going to be enough anymore under this scheme, because if you are only undertaking activity that is just enough to satisfy your personal adviser, you can still be mandated to be put on this mandatory work activity scheme. So I think we are stretching some of the well-established concepts. What people really clearly understand about “actively seeking work” has been built up over years in case law. We interfere with that at our peril, and I hope the department is thinking carefully about that.

I also concur with the comments made about adviser discretion, which is unappealable, to nominate candidates for this scheme. Obviously, the decision about a sanction is appealable and that is understood, but the noble Baroness, Lady Lister, was right to draw attention to giving discretion to advisers, as other colleagues have done in terms of local flexibility to contractors.

Part 6 of these regulations causes me some concern because I do not know that I have ever seen anything like this, but I may be wrong. Part 6 talks about “contracting out certain functions in relation to the scheme”. If we are starting to contract out certain functions of the scheme—I understand that does not include sanctions—that is new territory as far as I am concerned. We have to be very careful about what Jobcentre Plus staff and personal advisers can do, as well as some of the providers of these schemes.

Social Security Benefits Up-rating Order 2011

Baroness Lister of Burtersett Excerpts

Monday 14th March 2011 Lords Chamber

Tonight’s debate has focused mostly on the two issues of the basic state pension and of CPI/RPI or any other form of index-linking. Contained within this order is a raft of changes to benefit levels that will have a significant effect on the lives of many. We are not able to support the order in its totality because of the long-term commitment that it presages to the switch to the CPI. On that, we must remain apart.

[Baroness Lister of Burtersett]

My Lords, I wish to speak particularly on the shift from the RPI to the CPI. The Minister in the other place acknowledged that no single index is perfect, and the noble Lord, Lord Freud, said something similar this evening. Given that, I argue that the criterion that we should use is which index best protects the living standards of some of the poorest members of our society. That is not the CPI. Typically, the CPI rises more slowly than the RPI—15 times in the past 20 years, according to the Minister in the other place—and, of course, that is why it represents a spending cut. We should not underestimate the significance of this shift, which is easy to do when we get caught up in technical jargon about geometric means and so forth. A 2008 Joseph Rowntree Foundation study concluded that uprating policies have big effects over time. This change will have a very damaging effect over time on the living standards of some of the poorest members of our society. As my noble friend Lord McKenzie has said, these are people for whom substitution is rather difficult because they have already substituted a lot in adapting to living on such low incomes.