Welfare Reform Bill

Baroness Morgan of Drefelin Excerpts

Tuesday 8th November 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, I thank the noble Lord, Lord Freud, for running through that timetable. Our Front Bench is signed up to using our best intentions to make sure that we stick to it. It is helpful for those who are not necessarily here for every bit of the Bill to know roughly what the schedule is. My Whip, my noble friend Lord McAvoy, has asked me to stress that these are firm intentions but not a straitjacket.

[Baroness Morgan of Drefelin]

My Lords, it is incredibly helpful for those of us on the Cross Benches to hear from the Minister what the timetable for the subject matter for debates might be. Can I also point out how difficult it might be for some of us, with the Health and Social Care Bill being in Committee at the same time as the Welfare Reform Bill? I have amendments down for both Bills and it will be difficult. I know that is true for many Peers.

[The Deputy Chairman of Committees]

My Lords, before I call the noble Lord, Lord McKenzie of Luton, can I point out that within this group is government Amendment 72? I have to inform your Lordships that if that amendment is carried, Amendments 73 and 74 will then not be spoken to because of pre-emption.

Clause 51 : Period of entitlement to contributory allowance

Amendment 71M

--- Later in debate ---

[Baroness Morgan of Drefelin]

My Lords, I have the second amendment in this group, Amendment 71N. It is a big and complicated group. I have also put my name to Amendments 73, 74 and 75. I am not going to say too much about those because the noble Lord, Lord Patel, is going to introduce them in some detail. I support his opposition to clause stand part, and I am sure that we will come to discuss that more generally.

Many people who are placed in the work-related activity group have a deteriorating condition—say, Parkinson’s disease. Some people with motor neurone disease or some forms of cancer have been told that they have only two or three years to live, so it is possible to be in the work-related activity group and still have a very limited prognosis. The purpose of this amendment is to allow certain groups to be exempt from time-limiting of contributory employment and support allowance. This is a probing amendment in many ways, but I would prefer there to be no time-limiting at all, to be clear. If we do have time-limiting, this amendment is intended to safeguard support for people who have had to give up work due to a degenerative condition or terminal illness—for example, Parkinson’s disease, motor neurone disease or cancer. This measure will affect people with a degenerative condition who qualify for the work-related activity group but whose benefit expires before their condition deteriorates, to the extent that they would be eligible for the support group. It will also affect people with a terminal prognosis of over six months who will qualify for ESA under exceptional circumstances.

The Government had originally promised those whose contributory ESA claim had ended at 365 days as their condition deteriorated that, if they qualified for the support group on either functional or terminal illness grounds, they would become eligible again for ESA. This commitment was made in response to a question from Dame Anne Begg MP by Chris Grayling MP. However, there are currently no provisions in the Bill that will allow for someone to restart a contributory claim after their 365 days have expired. Many people with degenerative conditions or a terminal prognosis of more than six months will find themselves without support in the final stages of their illness if they have savings or a partner in work, and therefore cannot seek support from means-tested benefits. People with a degenerative condition will face the impossible predicament of trying to remain in work for as long as possible in order to ensure that they enter the support group within a year of beginning their claim, or having to stop work and focus on managing their condition and thus risk seeing their benefit run out after one year. What a position that we contemplate these people being in.

I use the example of a person with Parkinson’s disease that was lent to me by the Parkinson’s UK charity. It described the following client. He had worked until the symptoms of his condition became too severe for him to continue. He explained that although he had good days, he had bad days. He would only have good days if he carefully conserved his energy. He said,

“but I’m better when I’m not doing anything. It sounds like a skiver’s charter but what it means is that the energy or concentration reserves needed to do simple physical or mental tasks are quite low so any difficulty encountered quickly drains those reserves and I get into a sort of ‘closing down state’. My thoughts slow down. My movements slow down. My breathing gets laboured. I want to sleep. I find it hard to swallow properly. I get headaches and experience a feeling of desperation”.

This proposal promises to create a two-tier system. The rules around national insurance contributions are extremely complicated. I do not claim to be an expert in any way, so it is hard to present a hard-and-fast case, but one scenario that might occur is that someone whose condition deteriorates to the extent that they are eligible for the support group on day 365 of their claim receives indefinite support, while someone who becomes eligible on day 366 gets nothing. What action is the Minister taking to ensure that the Government honour their commitment that those who become eligible for the support group after their 365 days’ claim has expired can receive support through contributory ESA?

I understand that there are exceptional circumstances which are catered for in legislation, in the Employment and Support Allowance Regulations 2008. Someone with a life-threatening condition who would not meet the normal criteria for ESA can qualify under exceptional circumstances and be placed in the work-related activity group. The example given in the guidance for healthcare professionals carrying out the assessment is someone with motor neurone disease. As I have said, we know that the average life expectancy post-diagnosis for someone with motor neurone disease is one to four years. A 62 year-old client of a citizens advice bureau in the south-east had worked all his life, until he became too ill to carry on. He was diagnosed with motor neurone disease and experienced chronic fatigue and reduced mobility. He applied for ESA and was placed in the work-related activity group. What does the Minister intend to do to ensure that people in that situation, who qualify for ESA under these exceptional circumstances, do not lose out as time-limiting is introduced?

The equality impact assessment accompanying the proposal to limit payment of employment and support allowance to people in the work-related activity group partly justifies that measure on the basis that ESA is a “temporary benefit”. This ignores the reality that it is impractical to expect someone with a terminal prognosis to return to work. We are seeing people with a terminal prognosis being put in a work-related activity group, which is being classified as a temporary benefit. If ESA is a temporary benefit, what action is the Minister planning to take to support those for whom a return to work is not an option?

I, like many here, find these clauses desperately unfair to some of the most vulnerable people in our society. I oppose time-limiting for 12 months for ESA, which appears to me to be completely arbitrary. It is not appropriate that we should be looking at this implementation retrospectively. The assessment period should not count towards any time-limiting and it is not appropriate that people coming out of the support group, if they only have a month left of their time-limiting, should be expected to find work in a month. This is an extremely important debate and I hope very much that the Minister will be able to come back fully with answers to my questions.

[Baroness Thomas of Winchester]

My Lords, at this stage, I am not going to go into all the arguments about the time-limiting of ESA to one year. My noble friend Lord German will address the main issues in a short while. I shall speak to my Amendment 72A to my noble friend the Minister’s Amendment 72, the purpose of which is to question the whole business of the retrospective nature of this provision. Under this part of the new clause, the clock has already started ticking for existing claimants, regarding their entitlement to contribution-based ESA in the work-related activity group rather than in the support group, who have been receiving the benefit for 12 months or more. For them, their claim will stop as soon as the Bill becomes law, which is estimated to be April of next year. By starting the clock well before Parliament has made its decision on the Bill, the Government seem to be acting like a private insurance company that changes the rules of someone’s policy after they have made the claim.

However, this does not seem to have been the plan in October last year. If one looks at the Spending Review 2010’s policy costings, published in October last year, on page 6—it is repeated in the Library briefing pack on the Bill—it is stated at the first bullet point that,

“for existing contributory ESA customers, the time limit will apply at the point they reach one year including the assessment phase. Those with a claim duration of one year or more when legislation comes into effect will have their benefit time-limited immediately and will have at least 12 months to prepare for the change”.

Perhaps the Minister can throw some light on why and when the Government changed their minds and decided to make this provision retrospective—thus allowing hardly any time at all for some claimants to prepare for change. Just to be clear, someone whose claim started in April this year may find by the time the Bill becomes law in April next year that their claim will cease immediately.

Parliament has always deplored retrospective legislation. In 2009, the Constitution Committee of your Lordships' House, in its report on the Banking Bill, drew attention to the need for there to be,

“a compelling reason in the public interest for a departure from the general principle that retrospective legislation is undesirable”.

At least the letter to claimants that was sent out recently by the DWP is headed:

“Possible changes to your ESA”,

and states that the changes the Government want to make have not yet been approved by Parliament. The letter continues by providing the ramifications of the change. I gather that many claimants who have received such a letter are telling citizens advice bureaux up and down the country that they do not know what this letter means for them, and that they are very worried by it. They have good cause to be worried. Not only are the Government breaking the understanding that national insurance contributions—perhaps paid for years and years—protected a person against the loss of employment on health grounds, but many claimants, as we have heard, are likely to be left with only their partner’s extremely modest income, which may push them out of eligibility under the means-tested ESA.

I turn back to the policy costings document of October 2010. Under the heading, “Uncertainty”, we read that the migration from IB to ESA was the cause of particular uncertainty. We now know that a high proportion of IB claimants are being found to be fit for work as a result of the migration to ESA, in spite of appeals. I therefore ask my noble friend whether the Government can now start to quantify savings that might be made on the ESA bill, in spite of an increasing JSA bill—given high unemployment—and whether they will consider reverting to their original plan and drop the retrospective nature of this clause.

We all know of the need for the Government to cut public spending by an eye-watering amount as soon as possible. The Government’s argument may be that JSA is time-limited, so why not ESA? However, in my view, a claimant’s health is a much more emotive subject for their employment—or lack of it—and being ill can be a very expensive business. Using retrospection in this way, when it directly affects someone’s income in an unforeseeable way, seems to be thoroughly bad practice. Is it really good governance to cut massive corners by bringing in this policy in such haste?

--- Later in debate ---

Noble Lords will note from debate on this amendment the impression that the Government need to rethink some of the ways that this will impact on the poorest and most vulnerable in our society. We certainly do not want to be a Government who provide a terrible time for people in the last months of their lives. The amendment proposes a way for the Government to set a bar at an appropriate level to the financial circumstances, but which could be improved over time. It will give the support that is needed to the most vulnerable.

[Baroness Morgan of Drefelin]

Before the noble Lord sits down, he said that there was a sense that the work capacity assessment needs to be right and that he was thinking about arbitrary cut-offs and temporary classifications. Is he saying that, in order to get this right, we have to look again at the support group? Because of the functional impairment or prognosis of the people whom I am concerned about—those who are known to be facing a terminal prognosis of two years—perhaps they should automatically be in the support group. If that were the case, there would not be a problem

[Lord German]

I can answer that question by simply stating that the work capability assessment, if done accurately enough, should place people in the most appropriate group. Of course, one of the questions in the work capability assessment is, “What are you capable of?”; “capability” is in the title. If you are capable, with an illness, to do some work, and if you know that that will diminish over time, logic tells me that you need to think again about the way that that group of people is affected by such a proposal.

In a sense, what it means is that a clear definition between support on one side and being work ready on the other is not necessarily the only appropriate distinction you can make. It is part of the issue about having clear cut-offs and clear decisions of this sort. You need to be flexible for the people who need it most and whose circumstances will have changed.

--- Later in debate ---

[Lord Freud]

My Lords, one can clearly see the process here, as you move through the bulge, of stopping as you take on the transfer from IB to ESA. You can see that the effect of moving from one year to two years is a reduction as you go through that group—the bell curve, as the noble Baroness described it.

[Baroness Morgan of Drefelin]

I wish to be sure that I understand what the Minister has just said. He said that there are two reasons for choosing the 12-month period and that it is therefore not arbitrary. Therefore, the choice was made, first, due to the need to make financial savings and, secondly, because 12 months was sufficient time for people to adjust to their illness and make arrangements. Did I get that right?

[Lord Freud]

My Lords, no. I am making a different argument here. It is an argument about cost. However, I will come back to the “arbitrary” issue from the perspective of what happens elsewhere. Other countries do not have benefits which precisely mirror the design of the ESA, but a number of countries already impose time limits on eligibility for both sickness benefit, which covers temporary incapacity for work, and invalidity benefit covering long-term or permanent incapacity. For example, Austria, Belgium, France, Denmark, Ireland, Spain and Sweden all impose 52-week time limits on their citizens.

--- Later in debate ---

[Lord Freud]

My Lords, let me come back to that. It is to do with the debate about who should be in the unlimited support category for an unlimited time and who should not be in it. As I just said, we support the poorest on an income basis and those who are the most ill in the support group indefinitely.

Amendment 71N introduces another regulation-making power to the Bill. It would enable the Government, or a future Government, to exempt certain groups from the 365-day limit for those in the WRAG. This point was also raised by the noble Baroness, Lady Meacher. We believe that it is for the WCA to distinguish between those who are in the WRAG and those who should be placed in the support group and therefore be exempted from the time limit. As noble Lords will know, Professor Harrington has been working with Macmillan and other stakeholders to help us make sure that people are placed in the appropriate groups. Therefore, an amendment along the lines proposed by the noble Baroness is not necessary.

Amendment 71P introduces a new provision, which would mean that people whose contributory ESA exhausts after 365 days would be able to requalify for the support group if their condition deteriorates. However, this could mean benefits being reinstated 10 or more years after the claimant last worked, which is not reasonable. Moreover, we already have a series of safeguards in place that would protect people in this position. First, if the claimant leaves ESA before their contributory ESA exhausts, we have the linking rule, which enables the claimant to return to that contributory ESA within 12 weeks of leaving it.

Secondly, we already have within the ESA regulations an easement allowing a claimant to satisfy the first contribution condition for ESA if they have paid contributions in any tax year at a certain rate, and they had received a contributory ESA award in the last complete tax year before the current benefit year when they are claiming again. If it is decided that a person has limited capability for work-related activity, they will, of course, be placed in the support group. In addition, if someone qualifies for income-related ESA—as some 60 per cent of claimants will—eligibility for ESA can be reinstated automatically.

On the point raised by the noble Baroness, Lady Morgan, regarding protection for those who qualify under exceptional circumstances, time-limiting will apply in the same way as in all other cases. Those in the work-related activity group will be time-limited; those in the support group will be unaffected. Consideration of exceptional circumstances applies to those who do not have limited capability for work.

For those for whom work is simply not an option, we would expect them to be in the support group and not affected by time-limiting.

[Baroness Morgan of Drefelin]

Perhaps I may reassure the noble Lord that there are many people who would not be in the support groups specifically because of the way that a support group is designed. Some people with deteriorating conditions—perhaps motor neurone disease—can look forward to a time when they know that they will become increasingly ill, but on that day they are not in the support group. It is a difficult issue.

[Lord Freud]

I hear the point being made by the noble Baroness. What we are looking at in the WCA, in particular with regard to cancer patients, is to work our way through that position. We are expecting a report from Professor Harrington before Report stage. This is a very important point, also made by my noble friend Lord German, about how getting the right people into the support group, using the WCA mechanism, is such a key part of this system. I think that virtually everyone in this Committee Room would say that if the WCA test worked absolutely perfectly we would not have a problem. There are some concerns about getting that test absolutely right, and I hear those concerns; but that is the way to address these issues, and that is what we are planning to do.

[Baroness Morgan of Drefelin]

Perhaps I may make a small point before we move off this issue completely. I am also concerned about the definition of terminal. There is a question here. I cannot remember the correct terminology, and if the noble Baroness, Lady Finlay, were here she would tell me instantly, but during the six-month deadline or prognosis period, things may perhaps be moving on. Perhaps for some people we need to think about that period being longer than six months.

[Baroness Wilkins]

Does the Minister also accept that any recommendations made by Professor Harrington will take some time to put into effect—until 2014 at least? In this amendment, we are talking about this measure coming into effect next April.