Personal Independence Payments

Baroness Sherlock Excerpts

Tuesday 10th March 2015 Lords Chamber

[Lord Freud]

We have been working very closely with the providers to make sure that there is an identity of approach in training, right the way through the two different providers and DWP.

[Baroness Sherlock (Lab)]

My Lords, the Government have taken to using a variety of unpublished statistics in relation to PIP. When my noble friend Lord Dubs asked a Question on this very subject on 15 January, the Minister answering said that the backlog was down to 107,000—but was then obliged to write and say that that was not the case at all. So can the Minister tell me something very specific? The latest published figures cover only new applications for personal independence payments, not reassessments of the kind mentioned by the right reverend Prelate the Bishop of Leicester. People suspect that those on disability living allowance are having much slower assessments in order to enable the Government to fast-track new claims. Can the Minister reassure the House that that is not true and also tell us what the waiting times are for DLA?

[Lord Freud]

The two processes, for PIP and for DLA—or rather, for the WCA, which I imagine is what the noble Baroness meant—are separate, and separate contractors operate them. Indeed, Maximus has come in to run the WCA process. As for the figures, statistics will be released next week, on 18 March, giving the PIP clearance times and the waiting outstanding times. That statistical release has been preannounced, in accordance with the normal protocols.

Employment Levels of Older People

Baroness Sherlock Excerpts

Thursday 5th March 2015 Grand Committee

[Baroness Sherlock (Lab)]

My Lords, this has been an interesting short debate. I, too, thank the noble Baroness, Lady Greengross, for enabling us to reflect on this issue today and for her many years of championing older people in our society. I also thank my noble friend Lord Bhattacharyya for pointing out that we have Moses presiding over us today. I remind him that we also have a very young Daniel presiding over us. Perhaps that tells us something about the importance of both young and older people and the wisdom that they both have to offer to us in our judgments.

The noble Baroness, Lady Greengross, and the noble Lord, Lord Shipley, have done a fine job of debunking the lump of labour fallacy, thereby saving the Minister and me the need to do that. However, it is worth dwelling on it briefly. I am amazed by just how hard it is to persuade most people that something that seems as obvious as the idea that if more older people work, younger people will not be able to may not in fact be true. That is something for the Government to think about. How does one go about trying to make sure that everybody understands that things are a bit more complicated than that?

In the pack that the House of Lords Library made to help us with this debate, which was very helpful, they kindly included a very interesting report from the Institute for Fiscal Studies from 2008 called Releasing jobs for the young? Early retirement and youth unemployment in the United Kingdom. It could almost have been written for today. Of course, the IFS evaluated the job release scheme, which was designed precisely to release jobs for younger people, but also looked at the measures that Governments took between the late 1960s and 2005. Its findings precisely backed up the comments made by the noble Baroness, Lady Greengross. On the job release scheme, it found,

“some evidence that it reduced employment of the old but no positive effect can be found on youth employment”.

It went on to say:

“When looking at the entire 1968-2005 period, labor force participation of the old is positively associated with employment of the young … Overall we find no evidence of long-term crowding-out of younger individuals from the labor market by older workers. The evidence, according to a variety of methods, points always in the direction of an absence of such a relationship”.

So the evidence is really very strong, and I hope that we can all agree with that.

That said, I agree with the noble Lord, Lord Shipley, that there is an issue about youth unemployment, which needs quick and careful attention. I agree with my noble friend Lord Bhattacharyya about the importance of focusing on NEETs and the importance of skills, a point also made by the noble Baroness, Lady Greengross. However, despite the welcome improvement in employment rates generally, young people are now almost three times as likely to be unemployed as the rest of the population. The youth unemployment proportion is 13%, whereas it is only 4% for 25 to 64 year-olds. So something is going on there. Young people are now faring, comparatively speaking, worse than at any point since 1992, which means that the UK is now towards the bottom of the league table internationally when it comes to giving young people a fair chance, with the gap between the youth unemployment rate and the overall rate higher in the UK than in all but five out of 39 OECD countries for which data are available.

We need to see some good help being given to young people, but only 35% of young people find a job after two years on the Work Programme. Indeed, more people return to the jobcentre than find a job as a result of the Work Programme. Last summer, the Government announced that they had decided to scrap the Youth Contract ahead of its planned closure. The latest figures published by the DWP showed that two-thirds of the way through the scheme’s three-year duration, the Youth Contract had delivered less than 13% of the promised job placements, with 20,030 wage incentives paid rather than the target of 160,000. So there is reason to be concerned and need for action.

I agree with my noble friend Lord Bhattacharyya about the importance of careers and mentoring and getting education right, but we need more direct intervention, too. Labour would tackle this problem by bringing in a compulsory job guarantee for anyone under 25 who has been on JSA for a year or more, as well as reforming the Work Programme and introducing a new youth allowance to ensure that unemployed 18 to 21 year-olds who do not have the skills they need to get a decent job are training as well as looking for work. We simply cannot afford to have young people scarred by damaging periods of unemployment, which can carry on having effects throughout their working lives.

Then there is the position of older workers, described very movingly by the noble Baroness, Lady Greengross. If you want to see the effects on older people of being able to turn up every day for work, to feel that they have a sense of worth and something to contribute and to mix with friends and colleagues, we do not have to look very far from this Room. The House of Lords shows just what a positive effect having a role to play in society can have on some people at quite a considerable age.

However, as the noble Lord, Lord Shipley, and the noble Baroness, Lady Greengross, pointed out, there are still too many older people who would like to work but cannot get a job or who lose their job in their 50s and then struggle to get back in, despite having great skills and experience. If the state pension age is to continue to rise, we need to ensure that older people can stay in employment on the kind of wages that enable them to carry on saving for a pension. Otherwise, not only will they end up struggling to get by on benefits designed for those who are temporarily unemployed, they will not be able to build up the kind of pension provision that they will need to have a comfortable retirement when they get there.

The noble Baroness, Lady Greengross, mentioned that the DWP will be giving more tailored support, and I will be very interested to hear what the Minister has to say. At the moment, it is not working. In fact, the Work Programme works even less well for older workers than for younger workers. In the latest figures available, 30% of 18 to 24 year-olds achieved a job outcome, but of 50 to 54 year-olds it was just 17% and it fell to 13% of 55 to 59 year-olds and of those who were 60-plus fewer than 7% achieved a job outcome. Whatever is happening now is simply not working for older people who want to get back into the workforce.

Labour would reform the Work Programme, devolving it to make it more responsive to the needs of older people in different areas of the country. We would also introduce a compulsory jobs guarantee to ensure that older jobseekers who have been unemployed for more than two years are guaranteed the offer of a paid job, and we would look to help more older workers save for a pension. With the latest figures showing that less than a third of self-employed workers are currently saving into a pension—older workers are more likely to be self-employed—we would act to find ways to help older self-employed workers to save for a pension. We would cut red tape for older workers. The new universal credit rules threaten 600,000 self-employed workers with a huge increase in red tape, and that is something that Labour is committed to addressing. We would also introduce a higher rate of jobseeker’s allowance for those who have contributed for longer, funded by extending the length of time for which people need to have worked to qualify.

I will be very interested to hear from the Minister what the Government’s strategy is to address that very serious problem. I have two other specific questions for him. First, what thought are the Government giving to ways in which employers as a whole can think about the way workers move into retirement? We have known for a long time that it is not always the most healthy thing for someone to go from a full-time, very high-stress job into nothing at all. It is not good for their physical or mental health and is certainly not good for their spouse or partner in many cases. Have the Government given some thought as to how strategically as a country we might approach that? Secondly, have the Government considered what impact, if any, the new pension freedoms might have on the pattern of labour market participation by older workers?

There is a challenge for us as a country to ensure that neither older nor younger workers are left behind as the economy slowly recovers. Fortunately, I do not believe that the people of our country will warm to a public debate that divides generation from generation. After all, many older people are deeply concerned about the opportunities and prospects for their children and grandchildren, and conversely the young do not want to see their parents and grandparents thrown on the scrapheap at 50 when they have so much to contribute. Apart from the individual costs, our country can ill afford to lose the talents and energies of either our younger or our older workers. If we do not tackle those challenges, we will all be the poorer.

Universal Credit

Baroness Sherlock Excerpts

Wednesday 4th February 2015 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I, too, am grateful to the noble Lord, Lord German, for giving us the opportunity to debate this issue again and to all noble Lords who have contributed tonight. I am particularly grateful to the right reverend Prelate the Bishop of Portsmouth for sharing his experience. It was a brave thing to do, and we benefited greatly from it—and to the noble Baroness, Lady Miller, for the same thing. To come to the House and share things from one’s knowledge is one thing, but to share it from one’s experience is quite another. I really appreciate that.

I, too, have some experience, but from rather longer ago. My mother died when I was eight, and my father had to cope. He did go out to work, but that had consequences as well. It may have been unrelated—and I did not realise it until some time later—but I went on to run a charity that worked with single parents, so I met a number of single parents who had become so involuntarily, because their partner or spouse had died. I am very conscious of the consequences of that, so I am grateful to have the opportunity to talk about this today.

We heard evidence during previous stages of the Bill, when many of us were assembled—and particularly from the noble Lord, Lord German, who talked about the longitudinal study, to which he referred again tonight, and about the importance of the capacity and availability of the other parent. So we know quite a lot about what it is that makes a difference. I absolutely take the point made by the noble Baroness, Lady Finlay, that the impact on the children is often hard to detect from their initial behaviour. They can be told to be brave because mummy or daddy is struggling—so they can often end up behaving in ways that may seem not to be distressed when, actually, they are.

I am very grateful to the Minister for having agreed during the passage of the Pensions Bill to take this issue away. When he comes to reply, I would be very grateful if he could take the House through what happened in the review, as the noble Lord, Lord German, suggested. What advice was he given and what brought him to make the decisions that he or the Government did in its wake?

As I understand it, the Government’s intention is that bereaved parents should not have conditionality applied for the first six months of universal credit after bereavement. I confess that, when I was trying to go through all the repeatedly amended regulations, I struggled to find the section where that is set out. I would be grateful for my own ease in my future work if the Minister would share that with us. The Government then brought forward the Universal Credit and Miscellaneous Amendments (No. 2) Regulations 2014, which amended the universal credit regulations. Regulation 8 seems to have the effect that work search or availability requirements may not be imposed on a parent or responsible carer claiming universal credit in the event of the death of the child’s other parent or carer or a sibling or another adult living in the family, or if the child has suffered or witnessed violence or abuse.

The bit that I am not clear about is that, from my reading of the regulations, the suspension of conditionality seems to be available not if the parent can demonstrate the distress of the child but if they can show that their childcare arrangements have been significantly disrupted as a result of the events that have happened. Could the Minister clarify that? When the Minister for Employment, Esther McVey, made a ministerial Statement in another place on 23 October 2014, she said:

“We do not intend to seek evidence of the child’s distress, but rather on how the situation has impacted the day-to-day functioning of the parent/family”.—[Official Report, Commons, 23/11/14; col. 82WS.]

She gave the example of having to go to statutory appointments. Is that the intention, and could the Minister elaborate on that?

I would like also to understand a few other questions. First, is anyone currently affected by these provisions? The answer may not be known because of timing, but perhaps the Minister could advise us on that. Could he give us a sense of how many parents he thinks might be eligible when it is rolled out fully, and what sort of take-up he expects? Furthermore, what steps have the Government taken or will they take to make sure that any parent who is eligible is aware of these provisions, particularly the extra one-month provisions?

When we debated the Pensions Bill in Committee, my noble friend Lady Hollis expressed a lot of concern about the level of discretion being awarded to young staff. The question of the training of work coaches has been raised by various noble Lords. In addition, what work has been done with decision-makers? He may be able to explain this to us, but my understanding is that, if a bereaved parent does not fulfil the work requirements because, for example, they have not been able to demonstrate what is needed to get the extra month, or maybe they need more than a month, presumably the work coach would refer them to a decision-maker in the department, who would sanction their benefit—in other words, stop or reduce their universal credit. Is that the case? Could the Minister confirm that? If so, what steps have been taken to train the decision-makers to understand the consequences of these provisions? If that is the case, if the person then wished to challenge a decision, would they have to go through the process as with other benefits of first seeking mandatory reconsideration from the department before being allowed to appeal a decision? If so, how long could that take? We are getting reports of delays of many months with regard to other benefits—but I hope that that will not apply here.

The Childhood Bereavement Network was mentioned by the noble Baroness, Lady Finlay. I am sure that we have all had briefings from that organisation, and the Minister will be aware that it remains very concerned about the provisions. What plans do the Government have for evaluating those provisions, and at what stage? Would the Minister be willing to commit to sitting down again with key stakeholders at a certain period, perhaps after a year or two, to discuss with them the evidence and see whether it has worked as they hoped it would?

On the childcare point, if it is the case that the parent would have to demonstrate that their childcare arrangements had been significantly disrupted, what would happen in the case raised by the noble Baroness, Lady Finlay, of a teenager who manifests some behaviour—for example, by developing an eating disorder or getting into trouble at school? A teenager would not necessarily have childcare and a parent of a teenager would be expected to go to work full-time. So there may be no disruption to childcare in that case, but the parent might then feel that the right thing would be to be at home every day when that teenager came home from school to make sure that the new problems that had manifested themselves were dealt with. How would that work?

Finally, how will in-work conditionality be applied for this group? If a bereaved parent of a teenager takes a job below the target for a single earner—in other words, less than the equivalent of a full-time job at the minimum wage—as I understand it, the in-work conditionality rules for universal credit would mean that they would be called and then required to go out and increase their hours. What steps will be taken to make sure that they may need to work only school hours or fewer hours in that circumstance? Could the Minister explain that?

I want to say how much I appreciate the fact that he has taken the issue away and taken the time and trouble, as with so many aspects of universal credit, to supervise it personally. I know that he cares very much about how it works in practice. Therefore, I look forward to what he has to say.

Universal Credit (Work-Related Requirements) In Work Pilot Scheme and Amendment Regulations 2015

Baroness Sherlock Excerpts

Thursday 22nd January 2015 Grand Committee

Finally, I have a statistical question. I may have heard my noble friend incorrectly, but I thought he said that there could be up to 15,000 people involved in this piloting, testing and trialling work. At the moment there are 27,000 people on universal credit. A pilot of 15,000 out of 27,000 seems an extensive test. It would be more than half the people on universal credit, which is why I return to my first remark, which encouraged my noble friend to tell us where we might be on numbers on universal credit by the end of March.

[Baroness Sherlock (Lab)]

My Lords, in thanking the Minister for that explanation, I am expressing more than just the usual courtesy. As has been alluded to, the Secondary Legislation Scrutiny Committee commented on the very wide nature of the powers that the Government are seeking through these regulations and the remarkable paucity of information in any of the material available to us about the way in which they intend to use them. Therefore, although I am very grateful, and without sounding too churlish, I would rather have had some of that information so that I could have considered it more carefully before getting to the stage where we are asked to consider the regulations. I will do my best, but I may end up intervening in the Minister’s reply. I hope that he will bear with me if I have misunderstood some of the information that he gave us today. However, I thank him for it.

The Minister mentioned that these powers are very wide, and that is certainly true. This is quite an interesting point for us to be at. We discussed the question of in-work conditionality extensively when the Bill was going through this place, particularly in Committee. One reason that it is so worthy of attention is that it is very new. The Minister mentioned that it is new internationally, but certainly people currently in work are going to get a bit of a shock. At the moment, if you have been on benefits and you get a job, you do not expect the department to ring you up at work saying, “Come and talk to me because you’re not working enough”. I think that people who feel that they have escaped the tender ministrations of the jobcentre are going to be a little taken aback when they find that it starts following them to work.

I wonder what thought the Government have given to this cultural shift and how they are going to engage with people who, when they think they have done the brilliant thing of getting a job, will find that it might be a job but it is not good enough, not big enough or not well paid enough. Under the current system, if someone is working at least 16 hours a week, they can claim tax credits. However, under universal credit there will be no minimum hours requirement, which is the Government’s reason for introducing conditionality for people in work.

I should like some clarification on how this is going to work. Some points have been touched on by the noble Lords, Lord German and Lord Farmer; others have not. First, in the various pilots, will there be the same level of income which triggers entry to or exit from the scheme? I am also interested in hearing the answer to the question from the noble Lord, Lord German, on what that level of income is. Will the income threshold be the same for a household or a benefit unit—the rather ugly phrase favoured by the DWP? In other words, is it a threshold for each individual in a household of, say, two or more adults, or is it for the whole household? For example, if one person in a couple were earning more than the threshold for two individuals, would the second person then not be under any pressure to increase their hours, change their working pattern or increase their income?

Next, the Explanatory Memorandum states that the DWP will impose,

“different sets of requirements on different groups of claimants selected for the pilot”.

The Minister began to outline how that might happen, but the committee’s report flagged up the ethics of an approach which deliberately seeks to test different approaches to claimants simply to work out the behavioural impacts. The noble Lord, Lord Farmer, commended the benefits of randomised control trials to test the evidence if done in a low-risk, controlled environment. However, the problem here is that the risks are not merely to the resources invested by the state but the impact on the individuals. Can the Minister tell us what discussions the department had about the ethics of that? I will come on to the question of sanctions in a moment. In a randomised control trial of, say, pharmaceutical drugs, there can come a point where a trial is stopped because it becomes clear that the evidence is very strong one way or the other and, as the drug is so effective or so ineffective, allowing a control group to carry on without it or continuing to give it to the group being tested would simply be unethical. Has any consideration been given to how the ethics would be weighted as the requirements are imposed and the evidence starts to come in?

Next, I turn to the numbers, which the noble Lord, Lord German, began to prod. I am very interested in them. I think that we all want to know what the denominator is. Are the numbers going to change? If we start off with, say, 15,000 out of 55,000, is that going to change proportionately? Will we see a different proportion of the universal credit claimant base involved all the way through? What proportion of that 55,000 will be eligible for the scheme? It presumably includes some people who would not, for a variety of reasons, be eligible, so that is not necessarily the denominator. What is the denominator? This was something that the Secondary Legislation Scrutiny Committee specifically asked the Minister to tell us, and I shall be very interested to hear what he can tell us about this.

I am also interested in having more information about the control groups. The Minister mentioned one control group, which I think he said would get just the occasional phone call. How big will that control group be, and can he tell us more about it? Will it be spread right across the country? Will it cover the full range of categories of claimants who will be covered by the other pilots? Will that change as different categories of claimant come on-stream with universal credit? That question applies also to the pilots. Will the pilots cover all the different categories of claimant as different kinds of people are brought on?

Secondly, on the flexibility of trends, I understand why the Government want a flexible power to tweak things as they go. However, coming back to the points made by the noble Lord, Lord Farmer, I want to understand how that impacts on the Government’s ability properly to evaluate the evidence. If you try to compare the effectiveness of a strategy with the control group but you are constantly tweaking things, how good will the data gathering be? How well will the department be able to understand the causality to enable it properly to understand what happens? The state generally does not always have a great track record on this. If we are to spend all this time and money on a trial, as well as put people through it, we want to be really sure that the findings are robust. I am very glad that the Minister committed to publishing the findings, but we want to have confidence and know the study is replicable. If it is tweaked too often or becomes too different, it will be quite hard to evaluate that. Could the Minister explain that?

Next, could the Minister say a little more about what kind of support will be offered to people in work? He indicated what kind of pressure or interventions there are in terms of encouraging them to come in, but what help will they then be given? I seem to recall that this was advocated at one point by saying, “People get lots of help to develop their careers if they are high-flying executives, but get nothing if they are lower than that”. What actual help will be offered to them? Will it be mentoring or work coaching?

Then there is the voluntary or otherwise nature of this, which was flagged up before. Again, will any of the pilots make this a voluntary option or will it always be compulsory? This point was raised in the other place by the Conservative MP Nigel Mills, who in fact suggested that the Government trial both. He also asked how soon after taking a job in-work conditionality would kick in. For example, if I got myself a job for 16 hours a week, it goes really well and I have been out of work for a long time, presumably the department would not ring me up on week two and say, “No, tough: you now need a better job on 30 hours a week or one that is better paid”. How long will a claimant get in a job before in-work conditionality kicks in?

Next, and this is a really important point, can the Minister tell us more about how caring responsibilities will be taken into account? This is something that exercised the Grand Committee considerably when the Bill went through the House. I have met many people in this circumstance. The noble Lord is aware that in the past I ran a charity that worked with single parents. We ran programmes helping people into work. We often found that lone parents took a job, say on 16 hours a week. One of the reasons employers liked these people was that they stayed in the job a long time so the employers had much lower turnover than with some other employees. One of the reasons that the lone parents stayed a long time was that they had found an employer who enabled them to combine their job with their families. For example, the employer would be flexible if occasionally a child was sick or if the employee had to leave early because a problem arose at school. The employee would be very loyal to that employer and stay for a long time because it worked for both of them. However, it meant that they might work fewer hours than they were capable of. I am just concerned—and raised this in Grand Committee at the time—about what happens to those people and what pressure they will be put under. Presumably, we would not want to see a lone parent who had been in a very successful job for maybe 10 years but at 16 hours a week being pushed into giving it up to take a better paid but less flexible job that she might have to give up anyway or that could be less secure. How will the Government deal with something like that?

Also, how will the Government consider the impact on childcare? I raised the issue in Grand Committee of a lone parent of a 13 year-old who began to have problems at school. That parent had taken a job of 25 hours a week because that enabled her to get home in time to make sure that the teenager came home from school and was not out on the streets having “difficulties”. If she were required—the implication is that she now would be—she would have to take a job of, say, 35 hours a week at minimum wage. She could also be forced to do 90 minutes’ travel either way because that is what the guidance says. Those are then very significant hours, and getting childcare for a 13 year-old is not easy. It is not often available, and it is very hard to get them to accept a child like that. So how much flexibility will be there?

I do not apologise for the large number of questions as these are very significant matters. Next is the issue of sanctions. Is it intended to use the full range of sanctions available? In other words, could somebody lose all their universal credit for three years for failing to take action that they were advised was necessary to increase their hours or earnings, such as, that lone parent? What if someone is concerned about jeopardising their existing job for other reasons? It has been confirmed that universal credit claimants will have to take a zero-hours contract, although not an exclusive one. If they were, for example, required to take additional hours at short notice but were also expected to take a job interview elsewhere or meet their adviser to think about getting a different job, they could be at risk of jeopardising things.

--- Later in debate ---

What are we looking for? We are looking to help people to earn more, which is not just about looking for more hours; it could involve more skills. We will find that out. That is a good outcome. I think that I have dealt with all the issues.

[Baroness Sherlock]

The Minister has done very well. I do not like all the answers, but he has done very well at trying to address many of the points. I will just pick up a couple of them.

First, can he tell us who will deliver the support? Will it be Jobcentre Plus staff or others, and what are the resource implications for the public sector? On the business case, if the £15 million and the light-touch control group are in the original business case, what about the rest of it? I may have misunderstood his comments on that, but where is that to be found?

As for tracking outcomes, obviously RTI works for those who are paying tax and national insurance, but for this to work properly the Government would also need to track people who were not to be found on the system and to find out why not. I am sure the Minister would rebut this, but there is a growing concern—he will have seen both recent media reports and the work of the Work and Pensions Committee—that the ways in which sanctions are being imposed at the moment are completely arbitrary. The only success measure for Jobcentre Plus staff is how many people are driven off the benefit rolls rather than into work. No one bothers to find out the numbers, but the suggestion is that only about one-fifth of people leaving benefits go into work—nobody knows what happens to the rest.

This was a real issue, as I am sure the Minister is aware, in one well known phase of welfare reform in the United States. Researchers tracked people longitudinally and found that a lot of them had simply ended up dropping out of the system completely. At this stage I am not making a value judgment about that, but for this to be properly effective the Government would need to follow those people through and find out what had happened to them to understand what the consequences of that were.

The Minister mentioned skills and the kind of support that is available. If one of the barriers to someone’s progression that is identified is a lack of skills, will the pilots be able to provide skills, or resources to enable people to get skills, which might enable them to earn more and break free of the threshold that would be constrained by this? I also asked whether the same income threshold would be applied for entry to or exit from all the pilots. Is that one of the things that is going to be flexed in any way? Is it the same for all of them?

On the question of ethics, the Minister said at the start that these regulations comprise strictly defined limits. In a manner of speaking they do, but only in the sense that I am strictly defined by the law of gravity, which still gives me quite a lot of latitude in how I go about behaving. The Minister also said that he will give us no information on numbers. Presumably, that could theoretically mean that the entire universal credit population could be put into this without any need for further recourse to Parliament. Is that right? In other words, when does this stop being a pilot? I am trying to establish whether the regulations were really designed to be able to pilot something. The scale of this is such that I am beginning to wonder whether Parliament would really see this as being a pilot. Although I am very glad that the Minister is going back to the SSAC, there is no obvious way to scrutinise this here. Will he give some more thought to that?

Finally, I want to clarify something relating to the sanctions. If the Minister is saying that the requirements will be no worse for people in work than for those out of work, my response would be that I would hope not, otherwise the incentive for getting a job would seem to be rather small. However, that presumably means that somebody could lose all their universal credit for three years for a failure to comply with a brand new requirement exercised by his staff—something that has never been done before. Is the Minister confident about that? I realise he has said that nobody will be sanctioned without good cause, but we both know that there are plenty of examples of people who have been simply because there is a significant amount of error in the way that the guidance has been applied. Cases are constantly being brought forward, and he will be aware of that. How will he check up on that? How will he quality-test the nature of that?

I am aware that I have asked a lot of quite specific questions. I would be grateful if the Minister, with his normal customary kindness, would allow his officials to go through the record and write to me on anything that has not been picked up.

[Lord Freud]

I will certainly go through the record but I am doing my best to answer everything. There is a technical question about income in and out. At the top end, a single person stops being in this trial when he or she hits 35 times the minimum wage—I think, from memory, that it is £116-something. I may be corrected, but that is the top end. The bottom end for a single person is, effectively, £76, and for a couple it is £116, we think.

Essentially, we are trialling this group because people would have come off the out-of-work benefits system at 16 hours times the minimum wage up to where they would get out of conditionality entirely because they would have satisfied 35 hours times the minimum wage. We do that for singles and couples. My figures are being hastily checked but that is the principle behind the answer.

[Baroness Sherlock]

Is that for all pilots? It is not a variable?

[Lord Freud]

Yes. Let me make absolutely sure that I have got the figures right. It is £76 for the individual. However, it is not £116 but £126 for the couple. The figure for an individual at the top end which gets you out of conditionality is £230. So it is within that range of earnings. Clearly quite a lot of people may be doing fewer hours if they are earning rather more.

[Baroness Sherlock]

I am grateful to the Minister and I thank him for establishing those ranges. However, what I am trying to get at is whether exactly the same ranges will be applied in all the different pilots, or are the Government testing whether the ceilings should be set at different levels?

[Lord Freud]

We are going to stay in that range because that is the group for which in-work conditionality would apply. There is no point in testing other ranges. However, we will have information, which I think is the underlying point of the noble Baroness’s question, on how different segments of earnings within that range respond to the different types of regime.

[Baroness Sherlock]

The Minister is being incredibly helpful. I apologise for my having to work this out on the hoof, but I think the Minister is saying that only people whose earnings are within that range will be subject to a pilot. I am trying to establish whether people who are at different points in that range may be subject to different trials. I will say that again. Will people on the same income within that range be subject to different pressures or levels of support requirements?

[Lord Freud]

The answer to that is no. We will put people in within that range. We will then have a process of personalising and tailoring the claimant commitment, which may contain an element of what their earnings are or could be. So I can answer no and yes. It will not be done at a mechanical level but may be done at an individual level.

[Baroness Sherlock]

I am very grateful to the Minister—I had not understood that at all. In that case, we are saying that each of these 15,000 people might have a different target of earnings that would allow them to exit from the conditionality and the programme. That raises some very significant ethical questions and I would strongly ask the Minister to consider giving more thought to this. I am very slowly doing a PhD. Before I am allowed to do anything involving other people—human subjects—I have to go to an ethics committee which puts me through my paces quite carefully. The consequences here are not just differential levels of support but that, potentially, two people in almost identical circumstances might do the same things, but one would lose three years’ worth of universal credit while the other loses nothing. That is a radical step for the Government to take. Has the Minister really thought through the ethics of that?

[Lord Freud]

This is how one delivers personalised support. The claimant commitment is in the system. Elements of the claimant commitment have a mandatory aspect but with others it is just an agreement. In reality, in the trials we will set the claimant commitment rather carefully. It is an agreed document between the work coach and claimant. Elements of that claimant commitment may be mandatory but quite a lot of it will not be. The likelihood is that as we run the trials we will look extraordinarily closely at making sure that we do not have any unsatisfactory sanctioning behaviour. We will test for that. This is a trial.

Although 15,000 people sounds a lot, when universal credit is fully rolled out, we will be dealing with 20 million people—8 million-odd households, comprising 12 million-odd adults and then a number of children. We are talking about a very small number so that we can micromanage it in terms of that kind of concern. The noble Baroness, rightly, is focused on us getting that right, and we are utterly conscious of that particular issue. The numbers will allow us to make sure that there are not those kind of arbitrary differences, as she described them, particularly when the sanctioning regime can move quite rapidly.

Skills is clearly one area where we could do a lot more development as we find the programme beginning to work. In this first trial, we plan to signpost the National Careers Service and colleges. There will be money available to support that through the adviser discretionary fund.

On RTI, the figures are that around 94% of people in formal employment are captured in the PAYE process. Some self-reporting may be required but we will get the bulk of them. Clearly, we will look at other things than just the RTI, but the RTI should give us a good feel for this. We will look at whether there are some anomalies going on where people fall off the system. That is one of the most important things that we will find out from the trial.

The light-touch regime in the business case is funded. Clearly, we will only introduce a less light-touch regime if it offers value for money. That will be part of a negotiation, if we discover it is worth doing. We will not spend hundreds of millions of pounds on a regime that somebody made up in a darkened room when it has no effect. That is why we are doing these trials. Who will deliver these trials? To start with, it will be Jobcentre Plus, as I have described. That is the first iteration; we could go on to other iterations. I described, I hope, the light-touch regime, which involves two work coach conversations. One happens when someone enters work and the other occurs eight weeks later. That is what the control is based on.

I think that I have dealt with the question of sanctions. The noble Baroness will be quick to correct me if I am wrong, but I think that I have covered everything. However, on her point about the numbers, by March, we will have moved to one in three jobcentres. I am sure that she will be the first to acknowledge that, and she will have seen the escalation: 54,000 have already applied for universal credit and the figure is moving up rapidly. That is when we will start pulling out the people on universal credit who are in work to test them.

This is about the commitment by this Government to deliver a universal credit that genuinely supports working-age people when they are out of work and then in work. It gets rid of the distinction which, in my view, has been invidious in our support system. If we are going to do that, we have to understand how best we can support the in-work claimants and get them to get their earnings up. The regulations before us today combine oversight and flexibility in the optimum way.

During the passage of the Bill I was very clear that, in driving through this approach, we would do it through a regulatory structure, so that we could have these debates, keep an eye on it and get that balance. It is a very delicate balance but we will build an evidence base on how we can improve people’s careers and improve earnings among the low-earning. If we get this right and learn how to do it properly, this piece of research will be a key element in improving the economic performance and productivity of the country. That and the fact that people’s lives will be better when they earn more are the two fundamental reasons that I commend these regulations to the Committee.

Employment

Baroness Sherlock Excerpts

Wednesday 21st January 2015 Lords Chamber

[Lord Freud]

My Lords, one of the myths about the improvement in employment is that it is concentrated in the south, particularly in London. The reality is that the bulk of the improvement—75% to 80% of it—has taken place outside London. The youth figures are extremely encouraging, because youth JSA figures are now running at some of the lowest levels we have seen for many years.

[Baroness Sherlock (Lab)]

On youth unemployment, maybe the Minister could look again at the figures. I welcome any rise in employment, but there are 763,000 young people out of work. Last summer, when the Government scrapped their youth contract wage incentive, youth unemployment started going up straight away and it has now risen for three months in a row. Will the Minister tell the House what he plans to do about it? Maybe it is time for him to look at Labour’s compulsory jobs guarantee for young people.

[Lord Freud]

My Lords, the trouble with Labour plans in this area is that they are extraordinarily expensive. The Future Jobs Fund, on which some of them are based, cost 20 times what Work Experience costs—and that produces just as good results. We cannot afford to have these artificial job creation schemes: we want real jobs in the real economy, and I am pleased to say that we now have the highest level of private sector employment that we have ever had.

Universal Credit

Baroness Sherlock Excerpts

Wednesday 10th December 2014 Lords Chamber

[Lord Freud]

One of the things that we need to do with universal credit is to make sure that everyone can take part in it. We are creating a system to do that through universal support, where we go into partnership with local authorities to help people, concentrating particularly on financial and digital inclusion. We then pull in all the other third sector companies, such as landlords, Citizens Advice and credit unions, to make sure that support is holistic.

[Baroness Sherlock (Lab)]

I do not doubt the Government’s intentions or the Minister’s commitment, but this has to be delivered to work. To go back to the original Question, the OBR said at the time of the Autumn Statement that, despite having already been delayed repeatedly and reset last year, it was assuming an extra six-month delay on top of the Government’s current plans because of what it called “optimism bias” in the DWP. Just right now, as the Public Accounts Committee is hearing from the Treasury, it was confirmed by the chair that the Treasury has not signed off the DWP’s business case for universal credit. What can the Minister say to the House? Universal credit is running almost four years late. It is costing money to taxpayers and vulnerable clients. It risks, frankly, making a laughing stock of the department. What can the Minister tell us to reassure us and how can we believe him?

[Lord Freud]

I re-emphasise that the Treasury has signed off the strategic outline business case. This plan is being done in a way that makes sure that we do it safely and securely—not the big bang method. As I said, it is being done more cheaply than originally envisaged. It is vital that we do not do the kind of thing that happened with tax credit when it was opened on one day and was a total shambles for millions of people.

Universal Credit

Baroness Sherlock Excerpts

Monday 24th November 2014 Lords Chamber

[Lord Freud]

The working allowances in universal credit are much greater than under the legacy system, so there is a freeze that will have a small effect. Nevertheless, the poverty impacts are to take 300,000 children out of poverty.

[Baroness Sherlock (Lab)]

My Lords, I would like to return to the question of arrears raised by my noble friend Lady Hollis. Not only are people paid universal credit once a month in arrears but that is compounded by the debts they are getting into by having to pay back some of their council tax and crucially by the bedroom tax. Has the Minister read the report of the fact that Iain Duncan Smith went to court to defend his department’s right to levy the bedroom tax on a council home whose spare room was in fact a panic room which a charity had paid to secure to protect a woman who had suffered rape, assault, stalking and death threats from her violent ex-partner? As the newspapers reported clearly, she could lose £11.65 a week or move to a home with no secure space. How can the Minister justify this?

[Lord Freud]

We have a system with the spare room subsidy where there is support at a local level through discretionary housing payment, and this is exactly the kind of case where you would expect to see that payment made.

Introduction: Baroness Smith of Newnham

Baroness Sherlock Excerpts

Tuesday 21st October 2014 Lords Chamber

[Lord Freud]

Matthew Oakley was very concerned about the communications aspects of talking to claimants about sanctions. We have taken that point very seriously. Indeed, we have accepted his recommendations on that and are going further; we are reviewing and improving all our claimant communications on sanctions across every benefit, and we aim to ensure that people understand that they have received a sanction and why they have received it. We have introduced a claimant communications unit that tries to get the language right—because, as many noble Lords know, some of the language that the DWP put out in the past was clunky at best.

[Baroness Sherlock (Lab)]

My Lords, I wonder whether the Minister has taken the opportunity to read the evidence that was given to Matthew Oakley when he did this report. I accept that sanctions are a necessary part of the system, but it is quite clear that many people have been sanctioned who have done literally nothing wrong. Look at the evidence from the CAB of the man sanctioned twice for missing appointments with his Work Programme provider; in fact, he had been to all the appointments with a company to which it had subcontracted him, but he was sanctioned. Then there was the man who was sanctioned after being told to be in two different places at once and the woman who was sanctioned for being in hospital having treatment for cervical cancer, despite having given advance notice of her hospital appointment to the system before she went in. I could go on. There is a very real risk of claimants starting to believe that the Government are more concerned with cutting their benefits than getting them into work. Will the Government sort this?

[Lord Freud]

My Lords, it is clearly utterly important that the sanctions regime is fair to people. We have put in layer on layer of protections and safety nets in the machine. People have, to start with, five days to respond to the letter saying that we are looking at a sanction. Then it goes to a decision-maker and then, if claimants do not like that, to a mandatory reconsideration, which is an extra layer. Then you can go into the tribunal process, and we have hardship. We are putting many measures in to make sure that we run this system as fairly as we possibly can.

Youth Employment

Baroness Sherlock Excerpts

Wednesday 30th July 2014 Lords Chamber

Asked by

[Baroness Sherlock]

To ask Her Majesty’s Government what action they are taking to reduce levels of youth unemployment following the recent closure of the youth employment contract incentive scheme.

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

Tackling youth unemployment remains a priority for this Government, and our successful Youth Contract will continue. The wage incentive will end as planned next March, just three and a half weeks earlier than anticipated. The youth claimant count has fallen by 134,000—the largest annual fall since 1997—taking it to its lowest level since 2008.

[Baroness Sherlock (Lab)]

My Lords, I have asked repeatedly about the Youth Contract wage incentive scheme in this House, and the Minister has repeatedly assured us that all is well. On 20 March, in relation to youth unemployment, he talked about,

“just about the most comprehensive response that has ever been seen”.—[Official Report, 20/3/14; col. 280.]

On 5 February, of the Youth Contract, he said: “Our approach is working”. On 7 April, he said:

“Our approach continues to work”.—[Official Report, 7/4/14; col. 1129.]

On 17 June, we were back to “the most comprehensive response”, et cetera. Now we learn that the wage incentive scheme is being scrapped. Can the Minister tell the House, first, how many of the target 160,000 wage incentive payments have been made? The last note that I saw had a figure of 10,000. Secondly, when did he realise the scheme was not going to reach its target and why did he not tell the House sooner?

[Lord Freud]

My Lords, I am keen to reaffirm that the Youth Contract is both comprehensive and working. One element, the wage incentive, has now helped more than 65,000 youngsters into jobs. The other elements of the programme are performing powerfully: 148,000 youngsters have started work experience on the programme, and 46,000 have gone into sector-based work academies.

Universal Credit

Baroness Sherlock Excerpts

Wednesday 30th July 2014 Lords Chamber

[Lord Freud]

One of the things that we are doing as we roll this out is to watch key factors very closely. That is the point of going at this pace, so that we can see small numbers to start with and see what is happening. I will watch this very closely. I talked to the Women’s Aid groups intensively on a number of things of great concern to them and to me, and I will keep watching this one very closely.

[Baroness Sherlock (Lab)]

My Lords, although I welcome the Minister’s commitment to transparency, I was reading this week about the DWP’s battle to stop the publication of the risk register and other documentation relating to universal credit. The Information Commissioner said that the other papers should come out, and a tribunal added the risk register, but the department has appealed. One journalist has pointed out that the judge said that he could see,

“no support for the argument”,

and that the department had not, “provided any persuasive evidence”. The department now wants to appeal again. I have two questions for the Minister. First, what exactly are the Government trying to keep from us? Secondly, how much public money have they spent in the attempt?

[Lord Freud]

This is a government policy; it was equally a matter for the previous Government as it is for this one not to publish particular information about the business case, risk registers and so on. It is something that we are maintaining not just for this programme but generally. I will say, however, that there has been an enormous amount of information put out on this programme, more than for any of our other programmes. There have been reports from the SSAC, from the NAO, from the PAC; it was in the MPA; and it was in our annual report. We are talking to the Select Committee and going through the contents and information within those business plans without breaking the norms of what Governments do in terms of providing a specific document.