Atos Healthcare

Debate between Lord Grayling and Stephen Timms

Tuesday 4th September 2012 Westminster Hall

[Chris Grayling]

It is a matter of record that since we implemented changes as a result of the Harrington process and the internal review that we inherited from the previous Government, the number of people going into the support group, including the number of people with mental health conditions, has increased. That is a good thing and I am pleased that we made those changes.

The issue of cancer has been raised. It has taken us longer than I expected to address that, because of various issues that arose in our discussions with Macmillan Cancer Support, but I believe that we are now in the right place. We will be making a formal announcement very shortly, but I have said before that I believe that we should extend to those receiving oral chemotherapy the access to the support group that is offered to people receiving intravenous chemotherapy.

[Stephen Timms]

Will the Minister give way?

[Chris Grayling]

I will give way very briefly, but this is the last intervention that I will take.

[Stephen Timms]

The Minister will acknowledge, however, that the new descriptors that have been proposed for mental health conditions and for fluctuating conditions are nowhere near being implemented. When does he expect that they will be implemented?

[Chris Grayling]

I will make just one more point and then I will answer that question.

It is really important to put it on record that Atos does not take decisions. In no circumstance does Atos take a decision about whether somebody receives a benefit or does not. A claimant will be asked to fill in a form that goes to Atos for consideration of whether they should be put to an assessment, or passported straight through to the benefit. Atos carries out the assessment, but the decision about benefits is taken by a Department for Work and Pensions decision maker in Jobcentre Plus. It is really important that people understand that Atos does not take decisions.

When we talk about Atos, we are talking about a team of perhaps 1,500 health care professionals, many of whom have trained in the NHS. Those professionals are carrying out an assessment that was designed by the DWP under the previous Government and that has been continued under the current Government. Atos does not take the decisions itself.

As a result of the Harrington recommendations, we have gone out of our way to address people much more directly. Rather than letters, they now receive phone calls, in which they are asked to bring forward additional evidence. A question was asked about the mandatory reconsideration phase. Effectively, that phase already happens. Every case in which the person says they are not happy will now involve a reconsideration within Jobcentre Plus. I am keen that we have that second opinion, because we will not always get things right and I want to try to see whether we can bring forward further evidence that would enable us to make the right decision before a case ever reached the tribunal service. Effort is being put in to make that happen.

The right hon. Member for East Ham (Stephen Timms) asked about recordings. Let me be clear that Harrington recommended that we carried out a pilot to test recordings. I was keen that we just did it, but Harrington said to me, “Actually, it may not work, so I really think that you should pilot it. It may prove to have a negative effect.” We therefore tested recording and found that there was little enthusiasm among those being assessed to have their assessment recorded. In the end, the conclusion was that we should make recording available on a voluntary basis, but it should not be something that we do across the board.

I do not rule out recording. If there was overwhelming evidence showing that it was necessary, I would make it available, but let me give some statistics. There are 300 claimants waiting for an audio-recorded assessment, while Atos is conducting 8,000 assessments a week. We are ordering additional audio-recording machines so that people can have their assessment recorded, if they want. They are perfectly entitled to bring their own recording equipment to an assessment as long as it can record two copies of an assessment, because they need to be able to take one copy with them and leave the other behind. That is why we have to buy what is fairly expensive equipment, and we have ordered additional equipment because there has been an increase in demand in the last few weeks.

I am perfectly relaxed about recorded assessments and perfectly happy to make recording facilities available. However, the advice that I received from Malcolm Harrington was that we should test recording. The result of the pilot was not only that there was not a need for recording, but that many people felt uncomfortable being assessed with a tape recorder running.

The right hon. Gentleman also asked about the new descriptors that were brought forward by the charities, but he is out of date. The charities have been working with us for the past few weeks on the assessment project of the package that they brought forward. The work was finished last week. The charities wanted more time to work with us because the process is complicated and we are trying to mesh mental health issues and fluctuating conditions. As I said in Westminster Hall about 12 months ago, the problem that I had with the recommendations that the charities made in the first place was that they came forward not simply with adjustments to the existing descriptors, but instead with a comprehensive reorganisation of the assessment, which would also have involved a redesign of the physical descriptors. Given that the right hon. Gentleman has carried out such projects in the DWP, he will know well that that would be a two or three-year project.

We have tried to take forward some of the suggestions that the charities made and embed them into elements such as the ESA50 form, and we are now working with the charities to road test all this work to see whether it really makes a difference. However, I am not going to embark on a major overhaul of the whole exercise based on recommendations that are not backed by evidence without our having tested them in the way in which the previous Government tested recommendations: by putting real cases against proposed descriptors and making a comparison between the outcomes of the theoretical new descriptors and the old descriptors. Such work is on track. We are pushing the charities to make progress, because I want to get the work done, and we are still on track to complete the gold standard review in the spring.

The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) referred to the National Audit Office report. I have had the benefit of having read that report, although I know that he has not. The reality is that the report highlights a number of what I regard as not particularly major areas of improvement. If he reads the report, he will see that it reflects a big and complicated contract. It makes some suggestions for improvement, but it is not as he portrays it.

When the hon. Gentleman talks about the performance of Atos during the last two years, the key point he must remember is that the recommendations that Malcolm Harrington made, combined with some fluctuation in volumes coming through to Atos, which are certainly beyond its control, have caused significant operational difficulties. I can give him my word that I have sat in meetings with representatives of Atos and put them under intense pressure. Atos has brought in extra capacity at cost. We have made sure that we deliver at every stage. However, it is not possible to change the goalposts totally and then expect the subcontractor to take it on the chin with no consequences.

We have seen some consequences of the introduction of the Harrington recommendations, particularly the personalised statement. However, as I stand here today, we are on track to close the backlog time to where it should be later this autumn. The numbers that the hon. Gentleman gave are already well out of date. We have brought down the backlog in the number of appeals that we inherited two years ago, but it is a big task. We are dealing with a large number of people and this is a big challenge.

Let me be clear that we want to get this process right and we want to do the right thing. I want people who need long-term ongoing support to be in the support group. The Government have no interest in doing anything other than looking after those people who need that, but we will also give encouragement and support—and a bit of a push—to those who can get back into work, because I believe that that is the right thing for them.

Oral Answers to Questions

Debate between Lord Grayling and Stephen Timms

Monday 25th June 2012 Commons Chamber

[Chris Grayling]

I studied that model carefully. One reason why we have adopted various programmes requiring people to undertake full-time work is to create a sense of urgency for them in finding employment. I am not convinced, however, that government is good enough at managing data to manage, for long periods—many decades—at a time, the kind of systems set up in the United States.

[Stephen Timms (East Ham) (Lab)]

The Minister did not provide the data that my hon. Friend the Member for North East Derbyshire (Natascha Engel) asked for. He holds the parliamentary record for the abuse of statistics, having been rebuked for three separate offences by the UK Statistics Authority. Will he now sort out the shambles in his Department, do what he promised in January and lift the Work programme data ban?

[Chris Grayling]

The right hon. Gentleman does talk a lot of nonsense sometimes. First, he cannot add up—I have not been rebuked three times by the Statistics Authority. Secondly, the Work programme is progressing well, and I will publish further data on it soon.

[Stephen Timms]

Until today, the Government have told us that benefit reform plus the Work programme would sort out the welfare system, but this morning the Prime Minister said that they will not be enough. Will Ministers now sort out this chaos? Would not lifting the ban on data be a good place to start?

[Chris Grayling]

Let me give the right hon. Gentleman one piece of data: 80,000 fewer people are on out-of-work benefits today than when his party was in power.

Oral Answers to Questions

Debate between Lord Grayling and Stephen Timms

Monday 23rd April 2012 Commons Chamber

[Chris Grayling]

First, I pay tribute to the work being done in the Moorlands by the job clubs there, which is making a real difference to the prospects of the unemployed. What I say to my hon. Friend and to every hon. Member is that there is a real opportunity for each of us, individually, to approach local employers and encourage them to provide work experience opportunities. Tremendous work is already being done by colleagues in organising job fairs and organising different opportunities for young people who are looking for work. We can all play a part in this; it is a way in which this House can be a real activist centre in trying to help unemployed young people.

[Stephen Timms (East Ham) (Lab)]

It is a good thing that the youth contract has finally started. The Deputy Prime Minister says that he told the Cabinet in January last year that something needed to be done on youth unemployment. Why has it taken the Department for Work and Pensions 15 months to make something happen?

[Chris Grayling]

I have great respect for the right hon. Gentleman, but on this occasion he has plain got it wrong. Over the past 12 months, we have put in place support through the work experience scheme, and we have put in place the Work programme and sector-based work academies. We have also given greater flexibility to job centres to use funding that is available to them to provide tailored support for people in their community. We have been working hard to tackle a problem of youth unemployment that built up and was left behind as a dreadful legacy by the previous Government.

[Stephen Timms]

In the youth contract, the wage subsidies are in a national pot to be handed out on a first-come, first-served basis, so providers will be competing to hand them out as fast as possible, whether or not they are actually needed. Surely it would have been far better to target subsidies where they are needed. Why has the youth contract been so badly designed?

[Chris Grayling]

Once again, the right hon. Gentleman has just got it plain wrong. We are targeting this support at young people who are struggling to get into work—the long-term unemployed. I am talking mostly about those who have been out of work for more than nine months, but sometimes this will go to those who have come from the most difficult backgrounds and who have been out of work for three months. This money is targeted absolutely at where it is needed, and I believe that it will make a difference.

Work Experience

Debate between Lord Grayling and Stephen Timms

Tuesday 13th March 2012 Westminster Hall

[Stephen Timms (East Ham) (Lab)]

I am grateful to you, Mr Crausby, for giving me this opportunity to speak. I also thank the hon. Member for Nuneaton (Mr Jones), who has done us a great service by securing a debate on this very important topic.

The Government have got themselves into an extraordinary muddle over work experience. Labour supports work experience. It can be invaluable in reconnecting people with the labour market; it has been a part of labour market intervention since the 1970s; and it was a key feature of the success of the new deal. Unfortunately, however, the Government have got themselves into a terrible mess.

On 29 February, the Minister—in an attempt to extricate himself from that mess—announced a U-turn and that the “Work Experience” scheme was to be fully voluntary. Previously, he had said that it was a voluntary scheme; I suppose that his announcement on 29 February means that it really will be voluntary. However, his problem is that the letters that Jobcentre Plus staff sent out to claimants said something quite different. He was memorably confronted on “Channel 4 News” with a letter that had been sent out to somebody who was being told about a placement on a “Work Experience” scheme; the hon. Member for Great Yarmouth (Brandon Lewis) quite rightly said that there are other schemes, but in this case the placement was part of a “Work Experience” scheme. The letter said:

“You have been referred to the following Opportunity: retail assistant…If you cannot attend for any reason or if you stop claiming Jobseekers Allowance please contact this Jobcentre immediately. If without a good reason you fail to start, fail to go when expected or stop going...any future payments of Jobseekers Allowance could cease to be payable or could be payable at a lower rate.”

There is no point in claiming that the scheme is voluntary if Jobcentre Plus staff—staff in the Minister’s job centres—are telling people precisely the opposite.

[Chris Grayling]

Has it crossed the right hon. Gentleman’s mind that nobody would receive a letter unless they had volunteered?

[Stephen Timms]

Let me tell the right hon. Gentleman what I suspect is the source of the confusion. It arises from the decision maker’s guide, which any Member of the House can read on the website for the Department for Work and Pensions. That guide says:

“JSA may not be payable or it may be payable at a reduced rate to claimants who are entitled to JSA and have...after being notified by an Employment Officer of a place on a Work Experience scheme, refused without good cause or failed to apply for it or to accept it when offered, or...neglected to avail themselves of a reasonable opportunity of a place on Work Experience.”

A Jobcentre Plus adviser who is doing their job and looking at the official guidance discovers that that is what the guidance is—a clear description of a mandatory scheme.

It is no wonder, therefore, that Jobcentre Plus staff have been so confused and have contradicted what the Minister has said. Of course, as we know, a number of businesses also lost confidence in the scheme. But the muddle goes even further, because the DWP’s provider guidance for the Work programme says:

“Where you are providing support for JSA participants, which is work experience, you must mandate participants to this activity. This is to avoid the National Minimum Wage Regulations, which will apply if JSA participants are not mandated”.

The DWP was saying that until a few weeks ago, but that particular statement has now been deleted from the guidance on the website.

Therefore I want to ask the Minister three specific questions. First, now that there are no sanctions in work experience other than for gross misconduct, will he amend the decision maker’s guide? Secondly, how will he ensure that the policy is now implemented in line with what he has announced? Thirdly, what has changed in the legal position so that work experience no longer has to be mandated to “avoid”—to quote the guidance that was on his Department’s website—the national minimum wage rules?

The Work Experience scheme is too valuable to let this muddle continue. And as we have already heard in the debate, there are other schemes apart from the “Work Experience” scheme. In fact, Inclusion says that there are seven different current work experience schemes, which may be part of the reason for the muddle. At the time that some claimants are starting on the “Work Experience” scheme, others start on mandatory work activity, which was the scheme referred to by the hon. Member for Great Yarmouth. That may well be another source of the confusion. As the name of the mandatory work activity scheme suggests, it is not voluntary. It is designed for people who are a long way from the labour market and who have no experience of work or the work ethic. Placements are for a similar period to those in the Work Experience scheme, and they are sourced through private welfare-to-work providers. The total value of the contracts for mandatory work activity is £32 million. I have repeatedly asked the Minister to tell the House what the average cost of such a placement is, and various other details. He has repeatedly refused to answer those questions, claiming that it is “Commercial in Confidence” although heaven knows why.

[Stephen Timms]

I very strongly support work experience and I strongly support the contribution of employers. However, what I regret and deprecate is the extraordinary muddle and confusion that the Government’s handling of the Work Experience scheme and the six other similar schemes has created.

On mandatory—[Interruption.] Time is running out and I want to give the Minister every chance to respond to these points, so let me just tell the House about one of my constituents. She was put on to mandatory work activity. She was not a long way from the labour market; indeed, after I inquired about her, she received a phone call to say that she should never have been put on mandatory work activity in the first place. The letter that was sent to her initially was a classic of incomprehensibility; I sent a copy of it to the Minister. It instructed her, a resident of east London, to go to an obscure Sheffield postcode, and it said that if she had any queries she should ring telephone number 000. Her placement was at a charity shop. When she arrived, there were 14 other people on mandatory work activity who had also been sent to the same charity shop to help out. There was nowhere near enough work to go round, although presumably all 15 of those people attracted a payment to the provider from the Minister’s Department.

Experiences such as that will not help anybody into work. I ask the Minister: what checks is he making on placements to mandatory work activity? In fact, does he know if his Department is being ripped off on a large scale, as the example that I just gave suggests? Also, why does he insist on secrecy about all of this, when the openness that is being promoted by the Cabinet Office would help to resolve all these problems? This Minister has some form on this. He has been officially rebuked for misusing statistics—I think more than any other Member of the House—including on three separate occasions since he has been a Minister. That is a pretty extraordinary record.

[Chris Grayling]

On a point of order, Mr Crausby. Is it in order to make allegations about another Member without giving details? I am certainly not aware of the issues that the right hon. Gentleman has just raised. He has made quite a serious comment about another Member. I have no knowledge of any such occasions since I have become a Minister.

[Stephen Timms]

I can tell the right hon. Gentleman that the three occasions are all on the UK Statistics Authority’s website: first, data relating to the flexible new deal; secondly, data relating to worklessness statistics; and thirdly, data about benefit claims on the part of immigrants. The first and third of those were widely publicised at the time. I have the letter on the second in front of me. The Minister publishes statistics that he thinks advance his partisan case, but he refuses to publish straightforward, routine data that certainly should be in the public domain.

[Chris Grayling]

Further to that point of order, Mr Crausby. Since becoming a Minister I have not received, to the best of my knowledge, any communication from the UK Statistics Authority questioning any statistics that I have published. I want to place that on the record and ask whether it is in order for a shadow Minister to make an allegation of that kind.

--- Later in debate ---

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

We have just heard a clear example of why the Opposition have yet to adapt to opposition. In long years of opposition, we learned that there are times when one should simply accept that what the Government are doing is right. I am sorry to hear the right hon. Member for East Ham (Stephen Timms), for whom I normally have a high regard, misrepresenting the situation around any letters or communications that the Department has received from the UK Statistics Authority. I am also sorry that he is dancing on a sixpence to try to oppose something that he should support.

Mr Crausby, if you had told me three months ago that we would be dealing with protests against the work experience scheme, given all the difficult decisions that we are taking in the Department for Work and Pensions, I would have thought you were mad. Among all those difficult decisions, this is a positive programme that is designed to help. It is innocuous. It does what it says on the tin. It started as a result of a complaint that I personally received from the mother of a young woman who said, “My daughter has arranged a month’s work experience for herself and been told she will lose her benefits if she carries out that experience.” I regarded that as unacceptable, so we started to use the teams of people we have in Jobcentre Plus to look for opportunities for young people to do work experience, precisely because of the issues raised by my hon. Friend the Member for Great Yarmouth (Brandon Lewis). It is all well and good if someone comes from a prosperous background, but not everyone does. Helping young people find work experience opportunities is enormously important.

I will deal straight away with the issue raised by the hon. Member for Edinburgh East (Sheila Gilmore). I am afraid she needs to look in the mirror and ask the question about being a job snob. The row came about because of a computer error, which published an internal bulletin about a work experience placement at Tesco. Had it been Airbus, this would never have been a story, and the hon. Lady would not be complaining today. I commend Airbus for joining our scheme, along with many other manufacturers.

About 12 months ago, I met an older, former unemployed worker at an Asda store in Birmingham. He said: “I came here after years of unemployment. I got a job at the bottom level of the scale. A few months later, I was running a department with a staff of 20.” The job of running a high street retail branch—a big supermarket—can be a job that oversees a large staff in a business turning over tens of millions of pounds a year. In a large company such as Tesco, there are a vast range of opportunities in IT, HR, logistics, or community outreach. There was magnificent community work at Asda in my own constituency. There are all kinds of opportunities for someone to go in at the bottom and work their way up.

Let me explain to the hon. Member for Edinburgh East how the scheme works. Our advisers sit down with young people and talk about different career options. They ask them about the sectors that interest them, and find them—if we can—a placement in one of their preferred sectors. It is their choice. We listen to them and try to find the opportunity. Unfortunately, we cannot find opportunities for all the young people, because the scheme is over-subscribed. That is the nature of what we are trying to do. We expect them to turn up, if they have taken a placement from someone else; we expect them to fulfil the placement if they stay beyond the first week’s grace; and we expect them to behave themselves. It is the lightest-touch conditionality anywhere in the welfare system. We have listened to the employers—given all the brouhaha—and accepted that we would remove the attendance requirement. We still have sanctions in place for things such as racism in the workplace, theft in the workplace and abusive behaviour towards customers or fellow co-workers. Only about 200 out of 34,000 participants have been sanctioned.

The scheme was and will continue to be a voluntary scheme that is positive and beneficial. Some of the coverage—particularly the BBC’s—and wilful attempts to mislead were disgraceful. My hon. Friend the Member for West Worcestershire (Harriett Baldwin) is absolutely right. The way in which this was covered was nothing short of disgraceful. The scheme is aimed at the under-24s. Putting people in their 40s on the TV was nonsensical and extremely poor-quality journalism. However, a small number of older people do get work experience placements: for example, long-term carers and people who have been out of the workplace for long periods for whom such experience is beneficial.

The right hon. Member for East Ham raised a variety of questions about letters and so forth. Of course, someone does not get a letter about the scheme unless they have volunteered to be on it. It is as simple and straightforward as that. I will tell the House a simple story, which was fed back to me by one of our Jobcentre Plus teams a couple of weeks ago. They were briefing a group of young people about the work experience scheme and opportunities. One of them—a young woman—said, “I don’t wanna do that. It’s slave labour.” Our staff said that they did not have to do or say anything at all, because the rest of the group turned on her and told her in no uncertain terms how important the opportunity was to them and how important it was that they all took part. By the time they had finished discussing it as a group, she was going to take part, too. There was no mandation from us, but mandation from her peers.

The scheme is positive. It is not about retailing. The tragic aspect to the debate is the absurd discussion about whether we should be helping young people get work experience places—of course we should. There should be no doubt about that. We are still not hearing, especially from the right hon. Member for East Ham, “This is a good scheme that we will back publicly. It is the right thing to do. We will continue it if we get back into Government.” All we hear is cavilling about this and that detail. Let us stand up and say, “We have a problem with youth unemployment. We need to do something about it. We will do something. We will all work together.” Every single one of us in this House, whether it is the right hon. Gentleman, me or any other Member here, could do a power of good for this scheme, Mr Crausby. Indeed, you could yourself, sir, in your constituency. We can talk to local employers and say, “Get involved.” This is a real way to help young people. It makes a difference. It is great. They go on into employment and many of them look back and say that it is the best thing that ever happened to them.

We do have mandatory programmes. The mandatory work activity programme gives our Jobcentre Plus advisers the discretion to refer someone whom they believe is struggling, not pulling their weight or having real difficulty in their work search to a month’s full-time activity. We do not mandate to go and work for private companies—they would not take it even if we did. The same is true of the Work programme. We cannot send people against their wishes to work for a big retailer.

[Stephen Timms]

Will the Minister give way?

[Chris Grayling]

I will not, because I have very little time.

Mandation in our system will apply to community benefit schemes and to nothing else. We are absolutely clear about that. It is the same for the Work programme. The work experience scheme is a good scheme, which must and will continue. It will now grow, because more people are coming forward to help—after all the publicity, ironically. The protesters are plain wrong. They are misguided. It is a tragedy that they are supported by the unions and Labour MPs, but we will not listen to them. We will listen to the young people who say, “This is the best thing that could happen to us.”

Welfare Reform Bill

Debate between Lord Grayling and Stephen Timms

Wednesday 1st February 2012 Commons Chamber

[Chris Grayling]

I can indeed confirm that that is the case. We have listened very carefully on this issue, and it was a point well made by my hon. Friend the Member for Cardiff Central (Jenny Willott) in Committee. We have listened and we have taken appropriate action. It is important that we look at such details to ensure that we get them right, but that does not detract from the overall principle of what we are trying to achieve.

I believe that a time limit of one year is the correct approach. It applies the right balance between restricting access to contributory benefits and allowing those with longer term illnesses to adjust to their health condition and surrounding circumstances. There is also a very strong financial argument. If accepted, this amendment would reduce the total savings in the spending review period by around a third by 2016-17, which is £1.6 billion. Given the current fiscal climate, we cannot afford to forgo these savings and this is one of a number of very difficult decisions the Government have had to make because, as the shadow Secretary of State pointed out at the time, there was no money left.

Lords amendment 18 would mean that no time limit would be applied to contributory ESA for those claimants receiving treatment for cancer if they have or are treated as having limited capability for work, or they have or are treated as having limited capability for work as a consequence of a cancer diagnosis. The whole point of our approach on these matters is that we have always looked at the effects of a condition on an individual, rather than at the condition itself. We can all think of other cases which could equally be regarded as special cases. We are trying to be sensitive to the very real concerns of individuals suffering from cancer, and since we took office we have made significant changes to improve the protection and support that we provide to them.

Most individuals with cancer are placed in the support group at the outset of their treatment. We have increased the scope of the support group for cancer patients. We have been working closely with Macmillan Cancer Relief to improve how the WCA assesses individuals being treated for cancer. We are now consulting on our proposals, following work by Macmillan and Professor Harrington, our independent assessor of the work capability assessment.

We are clear that our proposals, which are now out to consultation, include a presumption that someone with cancer will be in the support group. What we simply do not accept is that in all circumstances, regardless of the impact of cancer on an individual’s ability to work or otherwise, they should be guaranteed a position in the support group. We have not taken that approach with any other condition and we do not believe that we should take it with cancer.

[Stephen Timms (East Ham) (Lab)]

I know that there has been some discussion in the last few days about whether, if a doctor or nurse were able to provide confirmation that a person with cancer was not able to work, that person would be automatically passported into the support group. Is that something that the Government intend to introduce?

[Chris Grayling]

It is very much our intention—especially for those who have finished their treatment but are not yet prepared to return to work—to have a simple system that enables a medical professional to indicate to us that that person is not yet sufficiently recovered to make a return to work. Our proposals are out to consultation at the moment, but our overall clear goal is that, in the vast majority of cases, someone who is undergoing treatment for cancer or is recovering from the aftermath of that treatment should be in the support group. What we cannot accept is a principle for absolutely all cases and regardless of circumstance, and some people with cancer do work—

--- Later in debate ---

[Stephen Timms]

Will the Minister confirm that the case in question relates to a disabled young woman who is living with her British parents—in Spain, I think—but who was born and brought up in the UK?

[Chris Grayling]

It relates to someone who has not lived in the UK for most of the past 15 years, although she is a British national and has a link to the UK. The implication of the court case is that somebody who has a link to the UK but who has had no recent contact with it is none the less entitled to receive benefits. That is where we disagree with the European Court and why we think that its decision was wrong.

We think that the best way to close this door is to abolish the ESA youth provision, but it is not the only reason we are abolishing the youth provision. It is by no means the sole rationale for doing so, but as a matter of principle it is our view that we should make every effort to ensure that our benefits are paid only to those whom we think should be paid UK benefits—those who have recent connections to, or have lived in, the United Kingdom.

--- Later in debate ---

[Chris Grayling]

I would love to secure a more pragmatic and sensible approach to the regulation of social security in Europe. I have been working on it for the past 18 months with my counterparts in other member states, and I hope that we will make progress as soon as possible. Right now, however, we must obey European case law as delivered to us by the European Court—much as it sometimes might be frustrating to do so.

I have a couple of technical points to make before I finish. As a result of providing for the new category of entitlement, in respect of claimants whose health has deteriorated to such a degree that they are placed in the support group—I referred to this earlier in response to the hon. Member for Aberdeen South (Dame Anne Begg)—it has been necessary to remove the substance of the ESA youth time-limiting measure from the original clause 52 and to insert it in clause 51 via a new subsection in section 1 of the Welfare Reform Act 2007. The Opposition amended that new subsection by changing the period of the time limit from 365 days to a period to be prescribed of at least 730 days. That is Lords amendment 19. As a result, the House will need to agree to amendment 19 but with an amendment consequential upon the rejection of the other amendments providing for entitlement to ESA to be for 730 days rather than 365 days. This will restore the Government’s intention.

A similar complexity surrounds amendment 22, which was voted for in the other place and which ensures that no new claims can be made under the youth provisions in the future—in effect, from whenever that provision is commenced by order. This amendment would amend clause 52 by removing the substance of ESA youth time limiting, which is now included in clause 51, but would retain the key provision in clause 52 preventing new ESA youth claims from being made.

I am afraid that this position is further complicated by the fact that also in the other place amendment 23 was not pushed to a vote and therefore also stands part of the Bill. Amendment 23 effectively allows claims to be made to contributory ESA under the youth provisions for those that are placed in the support group. We therefore now have two conflicting clauses for conditions relating to youth. Finally, if amendment 23 were to be accepted, it would reduce the expected cumulative benefit savings by around £17 million by 2016-17—savings that would need to be found elsewhere in the benefits system.

In the light of these arguments—the urgent need to address the fiscal deficit we have inherited and the need to deliver principled reform to our welfare state—I hope that hon. Members will feel able to support the Government.

[Stephen Timms]

The Government are determined to insert some terrible things in the Bill, and none of them is worse than the indefensible one-year time limit on contributory employment and support allowance for people in the work-related activity group. Amendment 17 removes that one-year limit. The Government are trying to put it back. Now, with the blanket appeal that we have heard for financial privilege, they are trying to prevent the other place from daring to disagree with them once again.

The measure is literally indefensible: the Government have been unable to defend it. The Minister made no effort to defend it in his speech, other than to point out that it would save a great deal of money. He referred to what happens in other European countries, but there, of course, the support that people fall back on is much more generous than here. There is no defence for the one-year time limit, and the House needs to be aware that this change will start to impact in two months’ time, at the beginning of April. According to the Government, 100,000 people will lose contributory benefits at the beginning of April this year, having already been in receipt of contributory ESA for more than one year, and another 100,000 will lose it as they reach the one-year stage of their claim over the following 12 months.

Some people argue that ESA should not be limited at all—for example, the Liberal Democrats. At their party conference, they opposed any arbitrary time limit on how long claimants can claim contributory ESA, and the Liberal Democrat peer Baroness Thomas of Winchester told Members of the other place that what troubled the conference last year was

“the arbitrary nature of the one-year cut-off.”—[Official Report, House of Lords, 11 January 2012; Vol. 734, c. 158.]

Liberal Democrat party policy is clear on this, but we understand that today its elected representatives will take no notice of it.

The Lords amendments that the Government want to overturn are much more modest. They argue that the time limit should be not less than two years and, crucially, that the limit should be set down in regulations rather than in primary legislation. If the Government get their way, absurdly it would require a new Act of Parliament to change the limit. Throughout debates on the Bill—many Members have been present in Committee and other stages of the Bill—the Minister has told us that the purpose of the Bill is to provide the structure and that the details would be in regulations. On this measure, however, with no explanation, the opposite approach has been applied. These debates provide a clear indication of whether Ministers mean what they say when they tell us these things, or whether they are simply reading the script put in front of them.

We do not quarrel with time limiting. As the Minister said, contributory jobseeker’s allowance has been time-limited to six months for many years. The rationale has always been that within six months more than 90% of jobseekers are back in work. If it is to be fair, however, a time limit for ESA must also give people a reasonable chance to get back into work. A year is not enough. The Government’s own figures suggest that 94% of those who qualify for ESA are still on it a year later, so fewer than 6% are managing to get into a job within a year.

[Chris Grayling]

May I ask the right hon. Gentleman how he has factored into his considerations the typical six-month period that somebody in that position would have spent on statutory sick pay before they started on contributory ESA?

[Stephen Timms]

The question is: how long do people need to be on ESA before they get back into work? According to the Minister’s figures, only 6% are off the benefit within a year, whereas 90% are off contributory jobseeker’s allowance within the period that is being allowed for that benefit.

[Chris Grayling]

I would be grateful if the right hon. Gentleman answered my question. I asked him to what extent he had factored in the additional six months that most people would have had on statutory sick pay before starting 12 months on contributory ESA.

[Stephen Timms]

I answered the Minister’s question. What his figures show is that only 6% of those who go on to ESA—no doubt many of them will have been on statutory sick pay before that—are in a position to come off the benefit within one year. That is not a reasonable chance to get back to work, as I think the Minister will recognise if he reflects on the matter.

As the Minister said, Lords amendment 18 specifically addresses cancer. I do not think that anyone in this House will be surprised to learn that, for many cancer patients, 12 months is not long enough to become well enough to get back into work. At 12 months, many people are still experiencing debilitating physical and psychological effects from the cancer and from its treatment. People cannot go back to work in those circumstances, and that is why Macmillan Cancer Relief, which my right hon. Friend the Member for Cynon Valley (Ann Clwyd) referred to, says that

“proposals that ESA claimants who are expected to carry out work-focused activities will only receive the benefit for one year, without being means-tested, will hit cancer patients particularly hard”.

Macmillan also says:

“Three quarters…of people with cancer placed in the ESA Work-Related Activity Group are still claiming ESA 12 months later.”

--- Later in debate ---

[Stephen Timms]

My right hon. Friend is absolutely right. I am afraid that the message that this measure is sending to people in that situation is, “You’ve wasted your time.” Indeed, that is the case not only if they have a partner with an income, but if they have any savings. If they have more than £16,000 saved, there will be no means-tested support at all.

Members need to be clear about what the Government will be doing if they get their way. Under this measure, people who are in the middle of a health crisis will be plunged into a financial catastrophe. People who have worked and paid into the system all their lives—people who have, as my right hon. Friend says, done the right thing—will find that the system is not there to help them when they need it.

[Chris Grayling]

The shadow Minister has just talked about the position of somebody who has a spouse who is earning £7,500 a year. Will he confirm to the House that as a result of a diminution of household income, they would also be entitled to working tax credit, housing benefit, council tax benefit and possibly to child tax credit, and that therefore the amount of support that they will receive is substantially more than he is suggesting?

--- Later in debate ---

[Stephen Timms]

The hon. Gentleman is absolutely right. The young person will be robbed of their independence.

[Chris Grayling]

If someone is living independently, they will be entitled to income-based ESA.

[Stephen Timms]

The hon. Member for North Antrim (Ian Paisley) was talking about young people who are living with their parents, who might have a little bit of income or savings. My hon. Friend the Member for Aberdeen South was seeking an assurance on that point, and if the Minister were able to give her that assurance, it would be most welcome.

[Chris Grayling]

Once someone becomes an adult, they count as living independently.

[Stephen Timms]

Can the Minister tell us at what age a person becomes an adult?

[Chris Grayling]

When their child benefit stops.

--- Later in debate ---

[Stephen Timms]

To be fair to the Ministers, I think that there is some confusion on the Front Bench over the position on this. The Minister was asked by my hon. Friend the Member for Aberdeen South, who chairs the Select Committee, to give the House a straightforward assurance. He failed to do so—

[Chris Grayling]

rose—

--- Later in debate ---

[Stephen Timms]

Perhaps he is going to have another go.

[Chris Grayling]

Let us be absolutely clear: when someone leaves child benefit—which can be at the age of 18 or 19, depending on their circumstances—they are deemed to be an independent adult. The only issue around the savings rule comes in if they actually hold and own the money themselves. So, if someone gets a £1 million inheritance, they will not carry on getting benefits. Surely the right hon. Gentleman does not disagree with that principle.

[Stephen Timms]

The Minister talks about people getting £1 million, but people who have £16,000 will get absolutely nothing. That is the system that he is putting in place, and I am not surprised that he is ashamed of it.

Youth Unemployment and Bank Bonuses

Debate between Lord Grayling and Stephen Timms

Monday 23rd January 2012 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

We have had a very good debate. In June last year, the Prime Minister told the House that cutting the deficit faster would revive private sector confidence. That was the basis of the strategy with which we were presented for private sector investment and jobs to surge. Tragically, that has not happened. The business confidence monitor from the Institute of Chartered Accountants says:

“UK Business confidence has collapsed”.

It says:

“Confidence has declined across all sectors and all regions.”

Nobody now claims that the coalition strategy is working to boost confidence. Confidence has evaporated, and the strategy has clearly not worked.

We are debating the consequences tonight: unemployment rocketing; youth unemployment of over 1 million, and becoming worse—the highest that it has ever been. My hon. Friend the Member for Wigan (Lisa Nandy) drew attention to the growing sense of hopelessness and the long-term damage to our economy. My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) pointed to the growth of long-term unemployment among young people as particularly damaging.

As a result of that failure, the Government have to spend a great deal more on benefits. It is worth comparing the latest forecast from the end of last year showing how much they intend to spend on benefits in the year after next with the forecast a year earlier. Projected benefit spending in the year after next has gone up by £5.4 billion. The overall estimate of borrowing has gone up by £158 billion—a figure at which the Chief Secretary to the Treasury balked at admitting. The Government are determined to press ahead with their version of the benefit cap, which the Department for Communities and Local Government says will add 20,000 to annual homelessness figures, with massive Exchequer costs. The ill-judged attack by the Secretary of State for Work and Pensions on the bishops at the weekend has led to yet another defeat for him in the other place.

All along, we have been told that the solution to all these problems was the Work programme. Let me begin by welcoming the U-turn by the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling). I welcome his change of heart, because until now he has refused to allow Work programme providers to publish any data on their performance. Today, he has announced that he is going to change his policy.

[Chris Grayling]

rose—

[Stephen Timms]

Perhaps the Minister will tell us when the guidance to which he referred will be published.

[Chris Grayling]

I am a little puzzled. I could be wrong, but I thought I heard the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) say that the Labour party supported the benefit cap, but the right hon. Member for East Ham (Stephen Timms) has just said that they do not. Would he tell us which is right?

[Stephen Timms]

We do support the benefit cap. The version that the Minister is pressing through is, as the House of Lords has rightly pointed out, going to cause huge costs for the Exchequer. I hope that even now the Secretary of State will think again before returning to the House with the measure next week.

The Work programme was rushed, and badly prepared. As we pointed out at the time, there should have been a plan for transition to the new programme. There was no plan. We can glimpse how the Work programme has been going by looking at the number of people coming off benefit each month. The number plummeted last May, when the flexible new deal stopped, and it stayed low as the Work programme got going. I invite the Minister to compare the months after May with the same period the previous year, because he will see that poor Work programme performance resulted in 86,000 people not getting into work who should have done. That is probably a permanent unemployment rise. The damage will be with us for years.

The Government told us that the Work programme would enlist an army of voluntary organisations to give specialist help to jobseekers. To begin with, we were told that 508 voluntary sector organisations would be involved. By August, that number had fallen to 423. Next week the Government will count once again. Last week, apparently, at a crunch meeting, voluntary sector organisations told the Minister that they were being used as “bid candy” to win contracts. Some of them still have not had a single referral since the Work programme began last summer.

The “Open Public Services White Paper” promised, as I quoted to the Minister earlier:

“Providers of public services from all sectors will need to publish information on performance and user satisfaction.”

I welcome the Minister’s U-turn on performance. What about user satisfaction? Let me tell him about the satisfaction of one user, the father of a constituent of mine, who came to me to complain about his daughter’s experience on the Work programme. She received a letter referring her to mandatory work activity. It was completely incomprehensible; I will send the Minister a copy. She lives in my constituency in east London. The letter appeared to require her to report on an unspecified date to an address with a postcode in Sheffield, and the telephone number was given as 000. It was a shambles. It is no wonder the Work programme is not delivering and youth unemployment is rocketing.

Oral Answers to Questions

Debate between Lord Grayling and Stephen Timms

Monday 23rd January 2012 Commons Chamber

[Chris Grayling]

When I visit Work programme providers —I have now visited most of them—I certainly find a great deal of enthusiasm, a sense of purpose and successful progress. I hope that that will show through in the official statistics when the time arises. I am not in the business of burying good news, and I very much hope that we will be getting the good news about the Work programme out there as soon as we possibly can.

[Stephen Timms (East Ham) (Lab)]

I welcome the U-turn on the publication of data that the Minister has just announced. The White Paper, “Open Public Services”, which was published only last summer, included the following commitment:

“Providers of public services from all sectors will need to publish information on performance”.

So why did he write into the Work programme contract a ban on the publication of performance data by those providers?

[Chris Grayling]

As we can all see, one of the challenges that Labour Members face at the moment is that they are all over the place on policy. On Friday, they were attacking me for allegedly misusing statistics; today they are asking why I am not going round the rules set out for us by the Office for National Statistics. They need to make up their minds about what they really stand for, because at the moment they have no idea.

[Stephen Timms]

The Minister has signally failed to answer the question. We know that he did not ask the UK Statistics Authority, whose rules he regularly quotes, before he imposed this absurd ban. I welcome the fact that he has finally announced a climbdown today, but he cannot blame anyone for asking him what he was trying to hide.

[Chris Grayling]

I have absolutely nothing to hide. I have to say to the right hon. Gentleman, as I have been saying to him for weeks, that I am not in the business of burying bad news. None the less, the statisticians expect us to make sure that we have robust and clear statistics before we publish them. As the Work programme has been going for only six months, and we have barely started to make payments for providers’ success in getting people into work, he is, I am afraid, not portraying the reality of the situation. I am glad that he is pleased that we are going to try to get the good news out there as quickly as possible, but we have to stick by the rules.

Unemployment

Debate between Lord Grayling and Stephen Timms

Wednesday 14th December 2011 Commons Chamber

[Chris Grayling]

May I ask the right hon. Gentleman, who is a decent man, to go and look at the original quotation? If he does so, he will find that I said that the actual figure for youth unemployment was 730,000. The 1 million figure is not a true reflection of the position, because it includes a large number of full-time students looking for part-time jobs. I do not count those as being unemployed.

[Stephen Timms]

The Minister should take that up with the Office for National Statistics.

Last month the Government finally recognised that they had to do something and announced the youth contract, but they have not made up their minds about the details. There appears to be some haggling with the Chancellor about how it will work, and it is clear that the Government’s providers have no idea how they are supposed to be delivering it from next April. A year after the Deputy Prime Minister said—so he tells us—that something needed to be done, there has still been no action.

Although we do not know the details, we can say one thing for sure: it was folly to scrap the future jobs programme and allow youth unemployment to rocket. As was recognised by my right hon. Friend the Member for Rother Valley (Mr Barron), my hon. Friends the Members for Bolton West (Julie Hilling) and for Stretford and Urmston (Kate Green), and, indeed, the hon. Member for Salisbury (John Glen), a generation of young people will bear the scars of that folly throughout their working lives because Ministers were asleep at the wheel. All along, we were assured that the solution would be in the Work programme—that it would solve all the problems—but the truth is that the programme was rushed and inadequately planned. As we pointed out at the time, there needed to be a plan for transition from the previous programmes to the new one, but there was no such plan.

So how has the Work programme fared? As my hon. Friend the Member for Stretford and Urmston pointed out, Ministers have gone to extraordinary lengths to block the publication of data about what it is achieving. I am told that officials have threatened Work programme providers that if they publish any figures, they will lose their contracts. I well understand the concern of the provider in the constituency of my hon. Friend the Member for East Lothian (Fiona O'Donnell) who said, “I should not show you this, because if I do I may lose the contract.”

Absurdly, the Minister of State claims that the purpose of the ban was to meet the requirements of the United Kingdom Statistics Authority. As we have been reminded, he has some form with the authority. However, its chairman wrote to me last week:

“The Statistics Authority has not been consulted on whether it would be appropriate for Work Programme providers to publish their own performance data.”

It was the Minister's decision to hush things up, not that of the United Kingdom Statistics Authority. As I told the Minister yesterday in Committee, the same organisations published their performance data in the flexible new deal, under the same United Kingdom Statistics Authority rules. They actually want to tell people what is going on and what is happening. The Minister must lift the ban.

According to the foreword to the White Paper “Open Public Services”, signed by the Prime Minister and Deputy Prime Minister in the days when they used to agree with each other,

“it is only by publishing data on how public services do their jobs that we can wrest power out of the hands of highly paid officials and give it back to the people.”

How true that is, but in this case the Minister is resolute: they shall not know.

As it happens, it is possible to glimpse how the programme has been going by looking at the number of people coming off benefit each month. It is no surprise that the number plummeted in May, when the flexible new deal ended. The fact that it continued to be low as the Work programme got going should also have been no surprise, because that always happens. If we compare the months after May with the same period last year, we see that poor Work programme performance resulted in an estimated 86,000 people who should have obtained work not obtaining it. That is probably a permanent unemployment rise. The damage will be with us for years.

Incidentally, to deliver that worse performance, the Government had to pay out millions. I have heard that they had to pay tens of millions in penalty charges for early termination of flexible new deal contracts. I wonder whether the Minister can tell us how many millions of pounds the Government had to pay to prevent those 86,000 people from obtaining jobs.

The Government told us that the Work programme would enlist an army of voluntary organisations to give specialist help. To begin with, we were told that 508 voluntary sector organisations would be involved. By August, the number had fallen to 423. I met a group of them last month—superb organisations such as St Mungo’s, with a great track record in helping homeless people into work. They had agreements with three different prime providers in London. How many people had been referred to them for help under the Work programme in the six months since it started? None—not a single person. Dyslexia Action has Work programme agreements in six different areas. How many referrals has it received in the six months since June? I checked with it yesterday. None; not a single person; nobody at all. These are good organisations. They tooled up and acted in good faith on what the Minister said. He led them up the garden path; he has not delivered. The Merlin standards that he said would safeguard them have proved completely worthless.

Others who have had referrals told us that relationships in the Work programme are terrible. Prime providers are not talking to sub-contractors; jobcentres are not talking to prime providers; and as was rightly said earlier, there are persistent rumours of serious financial problems ahead in the new year. Can the Minister who is winding up tell us what contingency plan he has for the eventuality of a Work programme provider failure? The Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell has indicated that he is relaxed about that eventuality. What will the Department do if it occurs?

It is clear that we need a new approach. We have spoken about the alternative five-point plan, which my hon. Friend the Member for Swansea West (Geraint Davies) was right to underline. That, at last, would give us a chance, and it is a chance we desperately need.

Oral Answers to Questions

Debate between Lord Grayling and Stephen Timms

Monday 28th November 2011 Commons Chamber

[Chris Grayling]

My hon. Friend makes an important point. There are several aspects to the scheme that we intend to review and consider as time goes by to see whether changes can be made to make the scheme even more effective. I will happily give serious consideration to the point he raises.

[Stephen Timms (East Ham) (Lab)]

The Low Incomes Tax Reform Group points out that tax credits today support self-employment much better than the proposals for universal credit will in future because universal credit will assume that people are earning at least the minimum wage, which is completely unrealistic in the early years of self-employment. Will the Minister look again at that particular problem with universal credit at least for people in the first year or two of self-employment?

[Chris Grayling]

We will monitor carefully how the decisions we have taken on universal credit work. As the right hon. Gentleman knows, we want to encourage and support self-employment, and we cannot allow people to shelter themselves on benefits under the false excuse that they are self-employed. In order to encourage people and to make sure that claimants are genuine, we are putting in place new rules. However, as I have said to him in Committee, every individual will have the right to self-assess or self-refer each month, so that we always get amounts right and do not penalise people who are trying to do the right thing.

Oral Answers to Questions

Debate between Lord Grayling and Stephen Timms

Monday 24th October 2011 Commons Chamber

[Chris Grayling]

My hon. Friend is absolutely right. The whole point of the Work programme is real investment in the long-term unemployed. Providers will take the requisite time to get them into work, but the Government will pay the bill only when people are successfully in long-term employment. That is a much better deal than under previous schemes from the previous Government. He is right that the Work programme is a much better deal for the taxpayer.

[Stephen Timms (East Ham) (Lab)]

The Minister for the Cabinet Office and Paymaster General says that openness and transparency on public services data will be a

“core part of every bit of government business”,

so why not this bit of Government business? Why is the Minister not only refusing to publish performance data but banning Work programme providers from publishing their own data, as many did under the new deal and would like to do now? He is threatening to withdraw their contracts if they publish that data. What is he trying to hide, and will he at least lift that ban?

[Chris Grayling]

The right hon. Gentleman clearly was not listening to the answer I gave a moment ago, but he would also do well to remember that his Government set up the current rules on national statistics. He would surely want statistics to be published properly and in an appropriate time frame, under the guidance of the UK Statistics Authority. I do not believe in giving information out haphazardly. Let us do it properly, according to the guidance and process he set up when he was in government.

Youth Unemployment

Debate between Lord Grayling and Stephen Timms

Wednesday 22nd June 2011 Westminster Hall

[Chris Grayling]

The actual number in the last figures was 895,000, which is lower than at the general election.

[Stephen Timms]

Those were not the Office for National Statistics figures. The figure, as I read the release, was 935,000, which is 31,000 more than last summer.

Of course, it is no surprise that unemployment rose sharply in the downturn. However, a year ago, with the youth jobs guarantee and the future jobs fund in place, youth unemployment was starting to fall steadily, including in the constituency of my hon. Friend the Member for Kingston upon Hull East (Karl Turner). As we have heard, one of the new Government’s first acts was to scrap that successful programme, and we can see now some of the damage that has resulted. The rise in unemployment means the benefits bill is going up by more than £12 billion. As we have heard, that comes at a time when other Government decisions, such as scrapping education maintenance allowance and removing Connexions, are making it harder for young people who are starting out.

As my hon. Friend the Member for Birmingham, Selly Oak said in opening the debate, the Labour party is arguing for a second, one-off £2 billion tax on bankers’ bonuses. Of that, £600 million should be used to help create 90,000 more jobs for young people at this crucial time, when those jobs are so badly needed. The remainder of the funding should be used to build more affordable homes—that, in itself, would probably create about 20,000 jobs for young people—and to support small businesses by increasing the regional growth fund. Later this month, we shall seek to legislate for that proposal through an amendment to the Finance Bill.

Last year, the bankers’ bonus tax brought in £3.5 billion. By comparison, the current Government’s bank levy will yield less than £2 billion in the current financial year. It is estimated—conservatively, I think—that a repeat of the bonus tax could bring in an additional £2 billion this year. That funding could be put to extremely good use.

As my hon. Friend said, youth unemployment in the 1980s continued to rise for four years after the recession was over. We need to act now to avoid another lost generation of young people. A fair tax on bank bonuses can help to get young people off the dole and into work. It would be hypothecated, and people would see where the money was coming from, what it would do and where it was going.

Official figures show that between October 2009 and January 2011 there were, as I said in an intervention, 91,890 starts in future jobs fund vacancies. The hon. Member for Harlow (Robert Halfon) made some telling and important points, but his case was rather undermined by his suggestion that only 5,000 people started on the future jobs fund, which is not correct; it was well over 90,000, and the programme would have been well on track to achieve the 150,000 target had it been allowed to continue for the full two years for which it was planned.

A strikingly large proportion of those who started on the future jobs fund went on to other jobs when their placement ended. The crucial point, however, is that having a proper job for six months at an early stage potentially transforms a young person’s future career and life chances. That is why that intervention was so important and effective. More than 10,000 of the 90,000 were in the region of my hon. Friend the Member for Birmingham, Selly Oak—in the west midlands.

Of course the new youth jobs fund would be different. It would be linked with other schemes and with employers, to ensure that real jobs came out of it. No doubt lessons would need to be learned from the experience with the future jobs fund, and I agree about the importance of linking with apprenticeships; but the principle that substantial effort and investment are needed to safeguard the current generation of young people should be agreed across the House. The Government need to take that seriously, not just addressing the incentives for work, but taking responsibility also for there being jobs for young people to do.

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

I too congratulate the hon. Member for Birmingham, Selly Oak (Steve McCabe) on securing the debate. I want to set out, as several hon. Members have requested, the details of the Government’s strategy to deal with youth unemployment, but I should start by giving a little context to the problem we now have.

Let me be clear, first, that the shadow Minister is plain wrong and a month out of date: the latest unemployment figures, published in the past month, show that the total number of young people who are unemployed in this country, according to the International Labour Organisation measure, is 895,000. That is 35,000 lower than at the general election. Let us put that in context. We have heard a lot of rhetoric and comments in the debate about the record of the previous and present Governments, but we should be clear that youth unemployment—happily, and long may this continue—has fallen since the general election.

[Stephen Timms]

The Minister made a case in an earlier intervention for perhaps taking some people out of that figure, because they are full-time students looking for part-time jobs. Is he suggesting also that the number of full-time students with part-time jobs should be taken out of the employment count?

[Chris Grayling]

I have issues generally with the way some of the ILO’s data are collected. Perhaps the right hon. Gentleman or some of his colleagues would like to request another debate, and we can consider the question at length. What pleased me most fundamentally about the last set of figures was that the drop occurred not in the group of those in full-time education, looking for a part-time job, but in the group of those not in full-time education or employment. That is a welcome development.

There is a big challenge for us.

Employment and Support Allowance

Debate between Lord Grayling and Stephen Timms

Tuesday 21st June 2011 Ministerial Corrections

[Stephen Timms]

To ask the Secretary of State for Work and Pensions if he will estimate the number of recipients of employment and support allowance there would be in the (a) work related activity group and (b) assessment phase (i) with and (ii) without time-limiting in place for each financial year from 2011-12 to 2015-16.

[Official Report, 16 May 2011, Vol. 528, c. 94-5W.]

Letter of correction from Mr Chris Grayling:

An error has been identified in the written answer given to the right hon. Member for East Ham (Stephen Timms) on 16 May 2011.

The full answer given was as follows:

[Chris Grayling]

The first table shows the estimated future recipients of contributory employment and support allowance (ESA) in the work related activity group (WRAG) with and without time-limiting in force.

--- Later in debate ---

[Chris Grayling]

The first table shows the estimated future recipients of contributory employment and support allowance (ESA) in the work related activity group (WRAG) with and without time-limiting in force.

[Stephen Timms]

To ask the Secretary of State for Work and Pensions if he will estimate the cost to the Exchequer of excluding from the 365 day period of eligibility for contributory employment and support allowance any days that the claimant spends in the assessment phase in each of the next five financial years.

[Official Report, 7 June 2011, Vol. 529, c. 266-67W.]

Letter of correction from Mr Chris Grayling:

An error has been identified in the written answer given to the right hon. Member for East Ham (Stephen Timms) on 7 June 2011.

The full answer given was as follows:

[Chris Grayling]

As part of the Welfare Reform Bill we have set out our intention to introduce a time limit of one year for those claiming contributory employment and support allowance (ESA) and who are placed in the Work Related Activity Group (WRAG). The intention is that time spent in the assessment phase will count towards the 365 day period of the time limit. In total the policy is expected to generate annual benefit savings of £400 million in 2012-13 rising to £1.1 billion by 2014-15.

If the proposal were to change so that the time limit period is extended by the length of time it takes for each person to undergo a work capability assessment to determine entitlement to ESA, this would reduce the expected benefit savings.

The following table shows the expected change in the annual savings if the time spent in the assessment phase were excluded from the period of the time limit. It shows estimated overall costs to the Exchequer of around £200 million by 2014-15.

Welfare Reform Bill

Debate between Lord Grayling and Stephen Timms

Monday 13th June 2011 Commons Chamber

[Chris Grayling]

That would depend on the circumstances. It is obviously important that a deduction of earnings takes into account the potential impact on the individual, so we would need to take into account other payments. Ultimately, it is a basic principle that recovery of overpaid benefits should not cause undue hardship, so all circumstances would need to be taken into account. I should clarify that council tax benefit will be deducted from council tax liability, so it will not be administered in quite the same way.

Imposing a DEA is intended to be an administratively simple process that replaces the current practice of obtaining an attachment of earnings order by application to the court. The ability of the Department for Work and Pensions to make DEAs on its own authority sends out a strong signal to potential fraudsters and will prove a useful tool in the fraud and error strategy. I hope, particularly given the comments made today by the Leader of the Opposition, that the Opposition will welcome this as a sensible measure to take against people who defraud the system.

We think that the measures will also encourage claimants in debt to be more aware of the possibility of deduction at source, reducing any expectation that they will avoid repaying debt. There is always a concern that they will think that they can just pile money up and up, and that there will be no day of reckoning. The proposals make it much simpler for us to ensure that there is indeed a day of reckoning.

The measure will make use of an existing process used by the Child Maintenance and Enforcement Commission, with which businesses are already familiar. It is a matter of routine for an employer to make a child maintenance-related deduction from a person’s salary cheque each month, and this measure will use the same process. The provision also allows for the levy of an administration charge against the debtor by the employer administering the deduction, offsetting any increased administrative costs resulting from the increased use of earnings attachment as a recovery method.

Using a DEA to recover debt does not remove a debtor’s rights to challenge any decision relating to the recovery of benefits or the imposition of a civil penalty. This relates to the point just raised by the hon. Member for Banff and Buchan (Dr Whiteford). For example, when an overpayment occurs in relation to an award, an independent decision maker decides whether a recoverable overpayment exists. As I set out in Committee, there are circumstances in which overpayments will be recovered, and circumstances in which they will not. We will focus on offering discretion to our front-line staff in judging what is right and what is wrong. We accept that there will be times when an overpayment results from an administrative error within the Department, and that we should accept the blame for that and not seek recovery of the overpayment. The general position, however, is that if someone receives money that they should not have received, we will expect them to pay it back. If they refuse and have already started work, this mechanism will enable us to recover the money.

In addition, there will be a right of appeal to an independent appeal tribunal, should the person be unhappy with the original decision. So there is still a full judicial process available, similar to the one available when a sanction is imposed that could lead to the withdrawal of benefits. The claimant has the right first to go to the decision maker and then to a tribunal, and those rights will remain in this situation. However, we will not have to go to court to secure the original order to make a deduction of earnings.

Before taking action to impose a DEA, we will ensure that the debtor is aware that we are taking such action. We are also keen to remain mindful of our welfare obligations. We do not, for instance, want to push the debtor into leaving work in order to avoid a repayment under a DEA. This measure must be applied with common sense and care. In certain instances, it might be determined that another method of recovery should be employed, or that arrangements should be made so that the DEA commences only after other commitments have been cleared. This relates to the point that my hon. Friend the Member for Brigg and Goole (Andrew Percy) raised a moment ago: we will take into account other commitments.

The DEA is designed to recover debt from those who currently seek to avoid repayment—those who hope that they can avoid paying the money back. Those who comply with requests for repayment and who either come to a reasonable arrangement to repay or can show that they are currently unable to repay will not have a DEA imposed. I am sure that hon. Members will agree that when someone refuses to meet their obligations to repay benefit debt, such powers should be available to the relevant authorities to make recovery.

That is all that the new clause and the other amendments are designed to do. They are designed to ensure that we treat people fairly and appropriately within the system. When necessary we can recover benefits directly from people who are still on benefits, but we cannot currently do that easily, without going to court, from people who have moved into PAYE employment. These provisions will allow us to change that. I believe that this is a prudent and sensible step. It is very much in keeping with our anti-fraud strategy, and I hope that it will be in keeping with that of the Opposition as well. I hope that the new clause will command support on both sides of the House.

[Stephen Timms (East Ham) (Lab)]

I welcome this opportunity to respond to this first group of amendments. It is certainly one of the less contentious groups that we shall consider, and the Minister should not imagine that we will be equally amenable throughout the debate today. The new clause aims to amend the Social Security Administration Act 1992 to allow the Government to recover overpayments resulting from mistakes or fraud in out-of-work benefits and housing benefit, as well as in universal credit and the other contributory benefits.

I can well see why the Minister wants to make these changes. In particular, because universal credit will encompass people who are in work as well as those who are out of work, it makes sense for the recovery of overpayments to be extended into earnings received in work, as he has outlined.

However, a number of questions need to be asked about these plans. The Minister has already been pressed about the mechanism for appeals. The changes will certainly require a good deal of co-operation from employers, as those are the organisations on which the Government will be serving notices to deduct from earnings. Employers will bear the burden of the administration of these deductions through having to pay in amounts, keep records of those amounts, and keep the Secretary of State informed if the person concerned leaves their employment.

The Minister has made the perfectly reasonable point that a system already exists for child support payments, but in order to take into account the additional burden that he is imposing, the Government are allowing for the employer to deduct an amount in respect of their administration costs. We need to have some idea of the amount that employers will be permitted to deduct, which should be seen to be fair by the person whose pay is being deducted, while adequately compensating employers. Will the Minister tell us a little more about how that amount will be calculated, and how it relates to the existing arrangements for child support that he touched on?

The amendments allow for a level of earnings below which earnings must not be reduced by the deductions. Again, that seems appropriate, but we need to know how that level of earnings will be prescribed. There could be a significant impact on work incentives, particularly for people who have received overpayments and who may well have been acting entirely innocently, having been confused or having made a mistake—or perhaps the job centre has made a mistake. If the amount is too low, claimants who are out of work could see little gain from moving into work. Additionally, if the deductions are at a flat rate or not a percentage of hourly pay, the work incentives that the universal credit taper mechanism is designed to provide will be compromised. Will the Minister tell us how the minimum level of earnings will be calculated? Will he ensure that people who are repaying overpayments will still be better off if they increase their income through working additional hours?

Subsection (3)(i) of new section 71ZCA of the Social Security Administration Act 1992 creates a criminal offence for non-compliance with the regulations, with a fine of £1,000, which would be a hefty sum for a small business. Small businesses have less time and energy to spend on administration or human resources, so the additional burdens being placed on them could prove a significant disincentive to their recruiting new employees who have overpayments hanging over them. That would result in those people finding it more difficult to get into work. Will the Minister tell us a little more about how he thinks that the new provisions will affect people who are paying back overpayments while trying to find a job? How he will ensure that the provisions do not create a new barrier to those people getting back into work?

The move towards allowing deductions from earnings to repay benefits lost due to error or fraud is sensible, particularly because universal credit will be paid to people in work as well as out of work. The Government are already introducing several penalties for those whom they feel have negligently made incorrect statements. It is important that we do not penalise people who have made mistakes but have done so honestly, by placing new and unnecessary barriers to employment in their way. The minimum level of earnings and the red tape that this will mean for small businesses could have that result if the Government get the judgments wrong. I hope that the Minister will be able to give us some reassurances about how the measures will work in practice.

--- Later in debate ---

[Chris Grayling]

I start by saying that I very much appreciate the comments of the hon. Member for Stretford and Urmston (Kate Green). I listened carefully to her points, a number of which she made in Committee. She has given a great deal of thought to these matters, and although I cannot offer her a guarantee that we will do all the things she wishes, I can say to her that we will take great care, in the regulations attached to the Bill, to ensure that we get the right balance. It has been clear for a long time in this country, and remains absolutely clear under the current Government, that in setting the levels of any deduction we have to be extremely careful not to tip people into hardship. In particular, we must not encourage them to leave work and end up moving them and their families down the poverty scale.

The hon. Lady and the right hon. Member for East Ham (Stephen Timms) asked how we would determine the level of earnings below which deductions for overpayments cannot be made. Of course, there is no one-size-fits-all approach, and the circumstances of different families are very different. There may be a case in which, as my hon. Friend the Member for Brigg and Goole (Andrew Percy) suggested, there is a deduction for child support, or the number of children in a family or a disability may be factors. Great care therefore has to be exercised.

The minimum level that we will pursue will be determined to ensure that the debtor is left with sufficient income to maintain themselves and their family, in line with similar provisions in the Attachment of Earnings Act 1971. We therefore plan to use the same basis that the previous Government used—for example, to determine deductions from benefit payments.

In many cases, however, a direct earnings attachment will be implemented with little negotiation with the debtor. There will be a prescribed minimum level that will not take account of individual circumstances. We will try to create a system whereby we are mindful of the need to reflect the circumstances of the individual, but we cannot go the whole way, and we certainly cannot go quite as far as the hon. Member for Stretford and Urmston would wish.

If a debtor finds that they are unable to cope with the deductions being made from their earnings, they should contact us to discuss an alternative payment rate. Of course, they can avoid being placed in that situation, bearing in mind that we are discussing not people who are struggling to deal with something that they have already agreed but those who have wilfully refused to enter an agreement with us and are basically saying, “I’m not paying the money back”, or who have not even got to the point of saying anything to us at all.

Debtors who are repaying their overpayment by means of a direct earnings attachment will, in line with those repaying by other methods, be able to claim that the repayment rate causes them hardship and ask for it to be reduced. Although we of course have a responsibility to recover overpayments in order to protect public funds, we also take into account an individual’s financial and personal circumstances. The hon. Lady articulated a strong case for her points, but I cannot offer her quite as much as she would wish. However, I can offer her an assurance that we will always take an individual’s circumstances into account, particular where poverty, deprivation and hardship could arise.

The right hon. Member for East Ham made a point about employers. We will, of course, use the same mechanism for the attachment orders in the Bill as is used for child maintenance deductions. That process is well established through the Child Maintenance and Enforcement Commission system, and prior to that through the Child Support Agency, so it should not cause employers to recast their processes and do things very differently. On that basis, I am confident that it should not represent a significant additional burden on employers.

The right hon. Gentleman mentioned the provision for a £1,000 fine. In truth, there is no excuse for a refusal to engage in any part of the process. The orders will arise only because an individual claimant has refused to engage, and there is no real excuse for an employer to refuse to engage either. The matter should not be complicated, and it certainly should not be complex enough to cause an employer to decline an expansion in business or a recruitment to fill a vacancy. The process is established and many employers up and down the country are used to dealing with it, and I do not believe there will be significant extra burden on business.

The right hon. Gentleman asked how much employers could deduct for the administration charge, and the answer is an amount not in excess of £1 for each deduction. He asked for an assurance that the measure will not damage work incentives. The answer to that is that, as with all debt recovery, we must of course be mindful of the Department’s welfare obligations. As I said, recovery of overpaid benefits should not cause undue hardship. In the calculation of a repayment, we certainly would not want to push someone into a position in which they have to leave work to avoid payment under a DEA.

The operation of the DEA does not mean that the debtor will commence the repayment of their debt earlier than they would under another repayment method. The debtor will have had ample opportunity to make other arrangements to pay, or indeed to show that suspension of recovery was applicable in their case. We are not talking about people who have had no chance to engage and discuss.

[Stephen Timms]

Will people who receive pay rises always receive some benefit from it, or could they lose all of that increase in additional repayments required by the Department?

[Chris Grayling]

It is very difficult to give an absolute answer to that question. It is unlikely that we would seek to withdraw an entire pay rise, but clearly, if we had given somebody a lot of slack in making their repayments, and their financial circumstances improved, we would not allow them simply to continue paying at the hardship rate that they had previously paid. We would expect an improvement in the terms based on their improved circumstances.

The right hon. Gentleman, as a former Minister, knows the reality. Well-established hardship considerations are in place. If the customer engages with the Department, their circumstances could suggest that another method of recovery should be employed. Arrangements are made so that the DEA begins only after a period time, but only in exceptional circumstances would we waiver repayment.

Common sense lies at the heart of this measure. It is our job to recover funds that have been overpaid to a claimant when there is not a good reason for waiving the repayment because of departmental error. At the same time, it is not in any of our interests for the system to force people into severe hardship and poverty—the system should reflect the reality of people’s financial situations.

There is a clear obligation to repay. The Leader of the Opposition spoke this morning of responsibility, and he was right to do so. Those who we are talking about have a responsibility to repay the money that is due to us. However, the Department, and indeed the courts, must apply common sense to the process, achieve the right balance and ensure that we recover the money that is due to the taxpayer correctly and sensibly.

I welcome the Opposition spokesman’s positive comments. We are likely to have livelier debates as the hours go by, although I hope, having heard the Leader of the Opposition’s comments this morning, that such debate masks their willingness to support the Bill. It would be disappointing if the Opposition did not support the Bill. If they decline to support it, I will look forward to having a debate in public on who is right and who is wrong, but for now I am delighted that there is cross-party co-operation on this group of amendments and the new clause.

Question put and agreed to.

New clause 1 accordingly read a Second time, and added to the Bill.

Clause 102

Recovery of benefit payments

Amendments made: 1, page 67, line 35, at end insert—

‘() by deduction from earnings (section 71ZCA);’

Amendment 2, page 68, line 17, at end insert—

71ZCA Deduction from earnings

(1) Regulations may provide for amounts recoverable under section 71ZB to be recovered by deductions from earnings.

(2) In this section “earnings” has such meaning as may be prescribed.

(3) Regulations under subsection (1) may include provision—

(a) requiring the person from whom an amount is recoverable (“the beneficiary”) to disclose details of their employer, and any change of employer, to the Secretary of State;

(b) requiring the employer, on being served with a notice by the Secretary of State, to make deductions from the earnings of the beneficiary and to pay corresponding amounts to the Secretary of State;

(c) as to the matters to be contained in such a notice and the period for which a notice is to have effect;

(d) as to how payment is to be made to the Secretary of State;

(e) as to a level of earnings below which earnings must not be reduced;

(f) allowing the employer, where the employer makes deductions, to deduct a prescribed sum from the beneficiary’s earnings in respect of the employer’s administrative costs;

(g) requiring the employer to keep records of deductions;

(h) requiring the employer to notify the Secretary of State if the beneficiary is not, or ceases to be, employed by the employer;

(i) creating a criminal offence for non-compliance with the regulations, punishable on summary conviction by a fine not exceeding level 3 on the standard scale;

(j) with respect to the priority as between a requirement to deduct from earnings under this section and—

(i) any other such requirement;

(ii) an order under any other enactment relating to England and Wales which requires deduction from the beneficiary’s earnings;

(iii) any diligence against earnings.’

Amendment 3, page 69, line 22 , after ‘71ZC’ insert ‘, 71ZCA’

Amendment 4, page 70, line 13 , leave out from ‘etc)’ to end of line 15 and insert—

‘(a) for subsection (4) there is substituted—

(4) If the recipient of a notice under subsection (3) above agrees, in the specified manner, to pay the penalty—

(a) the amount of the penalty shall be recoverable from the recipient by the Secretary of State or authority; and

(b) no criminal proceedings shall be instituted against the recipient in respect of the conduct to which the notice relates.

(4A) Sections 71ZC, 71ZCA and 71ZD above apply in relation to amounts recoverable under subsection (4)(a) above as to amounts recoverable by the Secretary of State under section 71ZB above (and, where the notice is given by an authority administering housing benefit or council tax benefit, those sections so apply as if references to the Secretary of State were to that authority).’

(b) in subsection (9), the definition of “relevant benefit” is repealed.’—(Chris Grayling.)

Clause 112

Civil penalties for incorrect statements and failures to disclose information

Amendments made: 5, page 75, line 29, after ‘71ZC’ insert ‘, 71ZCA’

Amendment 6, page 75, line 31, at end insert—

‘(and, where the appropriate authority is not the Secretary of State, those sections so apply as if references to the Secretary of State were to that authority)’

Amendment 7, page 76, line 24, leave out ‘Secretary of State’ and insert ‘appropriate authority’

Amendment 8, page 76, line 26, leave out from ‘71ZC’ to end of line 27 and insert—

‘71ZCA and 71ZD apply in relation to amounts recoverable by the appropriate authority under subsection (4) as to amounts recoverable by the Secretary of State under section 71ZB (and, where the appropriate authority is not the Secretary of State, those sections so apply as if references to the Secretary of State were to that authority).’—(Chris Grayling.)

Schedule 14

Repeals

Amendments made: 9, page 155, line 37, at end insert—

--- Later in debate ---

[Stephen Timms]

I am grateful to my hon. Friend, who is absolutely right about the centrality of free school meals entitlement in the system. The Government have simply failed to work out who, under their proposals, will be entitled to free school meals. It is not that I am disagreeing with the Government’s policy: the problem is that they have no policy. We have no idea whom they believe should be entitled to free school meals. As far as we can tell, they have not got a clue, either.

As my hon. Friend points out, free school meals are an important part of the system. They can be worth more than £350 a year to a family with one child in a primary school and easily more than £1,000 a year to a family with three or more children at school. Clearly, that makes an enormous difference.

Families currently receive free school meals until they work for more than 16 hours, at which point they receive working tax credit so that they are not worse off as they move into additional hours of work. The universal credit White Paper suggested that the Government intend to remove entitlement to free school meals at a fixed income threshold. That may partially answer my hon. Friend’s question. However, if they do that, it creates precisely the sort of cliff edge that we were told the Bill would eradicate. I presume that that difficulty has prevented the Government from setting out their policy and is the reason for the Bill’s silence on the matter and the absence of notes on the regulations to explain the Government’s policy.

If a lone parent with three children lost entitlement to free school meals at some level of earnings—say, £150 a week or more—their net household income would fall unless they earned more than £4,000 extra a year. If the new system works like that, it will be a disaster. It is exactly the sort of disincentive that we have been told all along that universal credit is supposed to remove. If the Government introduced such a policy, universal credit would make the problem of work disincentives far worse than it is in the current system.

Our proposal in new clause 3 is that the value of free school meals should be paid through universal credit and then tapered away gradually as household income rises. I recognise that there is concern among many who follow these matters closely that that could mean that the cash is not used for school meals but other expenses. Given the pressure on household budgets, one can well understand how that might happen. I therefore suggest that the solution is for the cash to be paid on to an electronic card, which could be used only to purchase school meals. An arbitrary cut-off in income, whereby all support for free school meals was withdrawn, would be damaging.

[Chris Grayling]

Does the right hon. Gentleman accept that his proposal flies in face of the admirable position at the moment whereby, in the lunchtime school queue, there is no obvious and visible difference between those who receive free school meals and those who do not? A provision that would effectively give some, but not others, a particular card with money on it would surely stigmatise those kids who get free school meals.

[Stephen Timms]

No, the Minister is mistaken. All pupils in the school would pay for their meals with the card. The difference would be how the money got on to the card. Some would pay cash as currently happens and others would have the money placed on the card through universal credit. The Minister is right to raise the matter, which is important, but my solution would solve the problem.

[Chris Grayling]

rose—

[Stephen Timms]

I gladly give way to the Minister again. Perhaps he will tell us how the Government propose that entitlement to free school meals will be determined.

[Chris Grayling]

If the right hon. Gentleman will forgive me, I will try to catch Mr Speaker’s eye in a moment to answer questions, but for now, perhaps the right hon. Gentleman can answer one for me. As different schools today use different systems—some use fingerprinting, some use an electronic card system and some still use cash—does he envisage his proposal requiring schools up and down the country to scrap their current systems and have a new, harmonised system? If so, has he calculated what the cost of that system would be and how long it would take to introduce?

--- Later in debate ---

[Stephen Timms]

My hon. Friend is absolutely right. For that very reason, the risks are great indeed. When I come on to speak to amendment 24 in a few moments, I will point out that if people go beyond a prescribed level of savings, they will lose all that help under all those headings.

[Chris Grayling]

Will the right hon. Gentleman clear up one point of confusion for me and, I suspect, for my hon. Friends? Over the past two or three months, he has said that he supports the universal credit in principle. However, his remarks and those of his hon. Friend the Member for Stretford and Urmston (Kate Green) imply some distancing from the proposal. Does he intend to support the Bill on Third Reading or not?

[Stephen Timms]

The right hon. Gentleman will find out the answer to that question in due course. We have been consistent in supporting the principle of universal credit. We think that bringing in-work and out-of-work benefits together is a good idea that has a number of attractions. The problem is that the detailed work to make that policy fly has simply not been done by the Minister and his hon. Friends. There are desperate, gaping gaps in the policy and fundamental questions that he is unable to answer or explain about how the arrangements will work. As a result, the Bill, on departing this House, will leave many households, and many working families in particular, in a very precarious position.

Having talked about a lot of things that we do not know about, let me now deal with some things that we do know about. Clause 5, which I touched on a moment ago, will badly undermine the aspirations of people who are in work on modest incomes. Under the current rules—they have been a long-standing feature of the system—people who are out of work but who have above a prescribed capital sum are expected to use it to support themselves before claiming income-related, out-of-work benefits. If somebody has more than £6,000 in savings, the Government assume an income from them, which is then subtracted from the benefit entitlements; someone with more than £16,000 in savings will not receive means-tested, out-of-work benefits at all. Those two figures were increased from £3,000 and £8,000 by the last Government to help people retain some of their savings when they lost work. For people in work, the story has been very different. There is no savings cap at all on tax credits. Clause 5 will change that fundamentally by extending the rules on savings for those who are out of work to people who are in work.

The Conservative party used to tell us that it wanted to encourage people to save. Clause 5 will not just discourage people from saving; it will make it impossible for them to save. Anyone on a modest income who decides to save for a deposit to buy a house in the future, or for the cost of university education, will suffer an extraordinary punishment under the clause. It is impossible to buy a house today, or to obtain a mortgage for shared ownership, with a deposit of less than £16,000. However, if people have savings of £16,000 towards, say, the deposit for a mortgage—if, as Ministers seem to believe, they start to get ideas above their station—they will lose all their universal credit. Typically, that might be £5,000 a year. In addition, they will lose any support that they receive for the costs of child care, and on top of that they will lose any help that they are given with housing costs.

Those measures will add up to an extraordinary punishment for saving. They will make saving literally impossible, because as soon as people have managed to save £16,000 from their earnings, the Government will drain their savings away. The problem will start as soon as they have saved £6,000. The hon. Member for Redcar (Ian Swales)—who, I am pleased to see, is present—said in Committee that the problem would not last very long because people’s savings would soon be gone, and he was absolutely right. These proposals mean that if anyone attempts to start building up a saving that would be enough for, say, a deposit on a house or a contribution towards higher education costs, the Government will take it away by withdrawing their universal credit. The message being sent to people on low incomes who are doing the right thing and working to support themselves could not be clearer: “This Government will not support you.”

Amendments 23 and 24 would change that. They would allow people to save money in an individual savings account—up to £50,000 if they are in work. Ministers have told us that it would cost just £70 million a year to exclude all working households from the savings cap, and this measure is obviously more modest than that.

Surely we should be encouraging people to save, not punishing them for saving. People work to improve their lives and the lives of their families. They are aiming not for a bit more spending money each month, but for the means to buy a house, to help their children through university, to start a business or to pay for a child’s wedding. If they are to achieve such aspirations, people need to be able to save from their earnings, but clause 5 denies them the chance to do that.

--- Later in debate ---

[Chris Grayling]

The right hon. Gentleman will remember that we debated this matter extensively in Committee, so it is not quite the bolt from the blue that he suggests. Is it his party’s policy that people under retirement age who happen to have a partner who is over retirement age should, through that partner, be able to access means-tested support from the state without any obligation to look for work themselves?

[Stephen Timms]

In government, we set out the arrangements for pension credit as they stand. In our view, those arrangements made sense. If the Government want to make a case for changing those arrangements, I simply suggest that they need to announce that change and to stand up openly and say that they have decided that in future people cannot have pension credit if their spouse is under pensionable age. We could then have a debate. I would have thought that such a measure ought to be in the Pensions Bill. The Minister is right that we were able to spot the change in Committee and to discuss it then, but this is certainly not an example of the Government’s being open—far from it. They seem to have hoped that they could slip this measure through and nobody would notice.

For those couples for whom there is a substantial age gap—in 40% of those cases, the partner will be younger than 55, so the gap will be more than five years—this measure could represent an enormous cumulative loss of £5,000 a year for five years or more.

[Chris Grayling]

May I take the right hon. Gentleman back to the key question? We are talking about people of working age whose households would be in receipt of means-tested benefits from the state without being obliged to look for work. Is it his policy that those people should not have an obligation to look for work and that their households should be able to continue to receive means-tested benefits from the state?

[Stephen Timms]

As far as I can see, the arrangements for pension credit have worked perfectly well up to now, presumably with the feature that the Minister is now deprecating. My case is that if the Government want to change the rules for pension credit to discriminate against people who have a spouse under pensionable age, they should do so openly. They should announce the change: it should have been in the Budget, the welfare reform announcement or the Pensions Bill. We have a Pensions Bill going through Parliament at the moment—why was it not included there? Instead, the change was slipped into a schedule to this Bill and no Minister, until asked, said anything about it.

--- Later in debate ---

[Stephen Timms]

No, it is not. Any income to the household from a working spouse will be counted in the household income for pension credit purposes. My argument is that if there is a case to be made for a change to pension credit, it should be made openly, and it should have been in the Pensions Bill, which Parliament is currently considering.

[Chris Grayling]

Forgive me for probing. The right hon. Gentleman has rightly set out his case as an amendment, but I wish to press him on the following point. If a household is receiving elements of pension credit that gives them the wherewithal to survive, is he saying that a 45-year-old should have no obligation to work while the household receives means-tested benefits from the state? It would be helpful to understand that. If that is his party’s policy, will he say so clearly and unequivocally?

--- Later in debate ---

[Stephen Timms]

I look forward to reminding the hon. Gentleman of that comment in September 2013.

The intention of universal credit is that work should always pay. Without decisions and policies on child care or passported benefits, we cannot know whether work will always pay, and all the indications are that the Government will in due course, when they finally put a policy together, introduce one that will mean that for many work will no longer pay.

On savings, I am afraid that the Government are heading to crush the hopes of many people in work. On the self-employed, the Government will crush the hopes of many who want to set up their own businesses. As Policy Exchange recently argued in its report, universal credit has been oversold by Ministers. I very much hope that the House will support our amendments so that universal credit can support the aspirations of families across the country.

[Chris Grayling]

I should like to start by making the same point that I made in Committee. I have listened to the right hon. Member for East Ham (Stephen Timms) setting out a vast range of measures and details that he wants us to write into the Bill. He is conveniently forgetting the first fundamental element of a Bill, and the lesson that he taught me 10 years ago, when I was first elected to the House, about the nature of primary legislation. I remember, as a new Member of Parliament, debating an education Bill in Committee and asking why there was not more detail in the Bill. I proposed amendments to provide certain details. I remember the right hon. Gentleman, as a Minister, arguing why that should not happen. He explained that it was a piece of enabling legislation to create a framework for the changes that his Government were seeking to put in place, and that my amendments were all unnecessary. Today the roles are reversed, and the right hon. Gentleman has conveniently forgotten everything that he, as a Minister, taught me all those years ago. Instead, he is telling me that I should put all kinds of new details into the Bill that I have introduced. I am sure that hon. Members will therefore forgive me if I take some of his proposals with a pinch of salt.

[Stephen Timms]

Is the Minister seriously saying that how the cost of child care will be supported is a detail?

[Chris Grayling]

I am saying to him precisely what he said to me all those years ago—that many of the details will be dealt with in secondary legislation. The Bill contains a framework that will include, among other things, provision for a child care element in universal credit. That is fundamental, and we all agree that there should be such an element, just as there should be elements relating to disability and to other aspects of the current benefits system that need to be replicated in universal credit.

--- Later in debate ---

[Chris Grayling]

I cannot remember the previous Government doing more than we have to engage people in Westminster, people around Parliament, third sector groups and members of the public. We are making a genuine attempt in a number of complex areas to get things right and to involve everyone in the decision-making process, and that will continue. Notwithstanding this afternoon’s amendments, we will continue to be delighted to seek and involve the input of Opposition parties, including the Labour party and the nationalist parties. As the hon. Member for Banff and Buchan (Dr Whiteford) said, it is right and proper that we have full dialogue with the Administrations in Cardiff, Belfast and Edinburgh, and with the Members of Parliament who represent Wales, Northern Ireland and Scotland.

[Stephen Timms]

It is certainly the case that the previous Government never got to this stage in a Bill’s passage with such an enormous hole in the policy as there is in this Bill.

[Chris Grayling]

The technical response to that is, “You wish!” I remember many occasions on which we came to a debate and asked what the Labour Government were planning to do. Did we ever get an answer? Not at all. The right hon. Gentleman and I have different memories of the way things were.

It is important to remember that this Bill creates a structure for universal credit, and that the details will be set out in regulations. The Opposition amendments relate mainly to issues that will be dealt with in regulations, and which do not affect the structure of universal credit as set out in the Bill.

I have accepted certain recommendations from the Opposition. The Bill as introduced provided that the regulations will be subject to the negative procedure. In Committee it was suggested that that would not provide the right level of parliamentary scrutiny and control. The right hon. Member for East Ham identified a number of provisions that he thought should be subject to the affirmative procedure, and I gave a commitment in Committee on 28 April to consider those provisions carefully.

There are two provisions, in clauses 22 and 25, relating to conditionality, for which we do not think the affirmative procedure is appropriate, because they do not introduce new principles. Although we intend that regulations will be much less prescriptive than the current jobseeker’s allowance regulations, the powers in the Bill will be used to create a regime for jobseekers that is broadly similar to the current one. We have therefore formed the view that there is no necessity to subject those two to the affirmative resolution procedure. Of course, it always remains within the gift of Opposition Members to pray against regulations if they want a matter to be debated. They could, of course, do so anyway, but we are making their life a bit easier by providing for the affirmative procedure.

I have thought long and hard, and apart from those two specific provisions I agree with the right hon. Gentleman’s suggestion that regulations should be made under the affirmative procedure in the first instance. I say “in the first instance” because it does not seem sensible to repeat the process year in, year out when the regulations are regularly renewed.

As set out in amendment 14, that principle covers all the key regulation-making powers relating to the universal credit, including the rules on capital, the calculation of income, the treatment of self-employed people’s cases, and the amounts of the elements within an award, including those for disabled children, housing and child care. Opposition Members might say that that is not enough to allay the concerns that they have raised on specific issues, and I shall deal with some of those specific concerns in a moment. However, I made it clear in Committee that we recognised the importance of getting the details of universal credit right. We are working hard to do so in consultation with key stakeholders, and we are listening to their concerns.

The Opposition amendments would pre-empt our considerations and tie the hands of this and any future Government with regard to areas of policy in which it is important to retain flexibility. I believe that it is perfectly reasonable to say that as we reach a final conclusion on what is right, involving Members of all parties, the Work and Pensions Committee, organisations such as the Social Security Advisory Committee, and third-party groups, we will bring regulations to the House by the affirmative procedure. There can then be a full and proper debate in Committee and a vote on Floor of the House.

--- Later in debate ---

[Chris Grayling]

My hon. Friend makes his point in his usual forceful and inimitable way. He highlighted how Labour Members struggle to move on from traditional ways of things. Listening to the right hon. Member for East Ham, I am still not sure on which side of the argument he falls. Does he think that we are doing the right thing, but want to fine-tune it a bit, or is he trying to distance himself from the Bill, so that on Wednesday the Opposition can vote against it and so say to the pressure and lobby groups, “We are on your side”? I am genuinely not sure which is the case, although if they do vote against it, I will love it. I will look forward to arguing up and down the land that this Government have got it right on welfare reform, and that the Opposition have not. I wait with interest and enthusiasm to discover how they vote.

New clauses 3 and 4 provide an amount for school meals and health costs in universal credit. It is absolutely our objective to ensure that people on universal credit will continue to receive appropriate support for school meals and health costs, and that this support is withdrawn gradually to avoid damaging the incentives to work. However, entitlements to passported benefits are the responsibility of other Departments and devolved Administrations. We have been working closely with those responsible to consider the options, and we have commissioned the Social Security Advisory Committee to review passported benefits and how they interact with universal credit. The review was announced in a written statement on 23 May, and a copy of its terms of reference has been placed in the Library. To answer a question put to me earlier, I should say that the Committee will produce its interim report in September and a final report by January. The Committee provides a good way of considering this challenging and important cross-governmental issue. We are certainly well aware of the potential for a large cliff-edge reduction in a person’s income, if support for school meals is withdrawn completely when they reach a certain level of earnings, and we are working closely with other Departments on the matter, as well as on the review.

On health, we aim to ensure that passported benefits are awarded to broadly the same number of people as now. However, passporting is not the only source of help with health costs. Income-related help is also available through the NHS low-income scheme, which can be claimed by anyone on a low income who has capital of less than £16,000. For people on medication, pre-payment options can also significantly reduce the cost of recurring prescription charges. With a 12-month pre-payment certificate, the maximum cost of a prescription is £2 a week, although of course that is an issue only for England; for those with constituencies in Scotland, there are no prescription charges.

[Stephen Timms]

The Minister made an important point a moment ago. He said that he agreed that support for free school meals and prescriptions should be tapered away. That is different from the proposal in the White Paper to have an income threshold and no support. Is that a change in Government thinking?

--- Later in debate ---

[Chris Grayling]

My hon. Friend makes a good point, underlining the complexity of these issues and why I believe it inappropriate to set hard-and-fast rules in primary legislation. If we find that we have not got it right the first time around, or if things need to be done to remove anomalies, which they might well be, it makes no sense to have written the fine print into the detail of primary legislation, therefore making it more difficult to adjust accordingly. This is one reason why it is important to maintain as much flexibility as possible.

[Stephen Timms]

The hon. Member for Christchurch (Mr Chope) referred to rumour, but the White Paper said that self-employed people would be deemed to have earned at least the minimum wage for each hour of employment. Can we take it from what the Minister is saying that the Government are reconsidering that White Paper decision?

[Chris Grayling]

As I said to the right hon. Gentleman in Committee, we are looking at the best way of doing this. We cannot have a situation in which people who are receiving an entitlement to the universal credit while generating no income at all over long periods of time still say that they are self-employed. We must ensure that that does not happen, and we are looking for the best way of doing it. If we wrote the rules into primary legislation, we would not be able to take decisions and fine-tune on the basis of experience, as we would have to come back to primary legislation every time. That is why I think it inappropriate to accept the right hon. Gentleman’s amendments.

Let me make some further progress. Amendment 33 seeks to remove the restriction on eligibility for pension credit for couples where one member is below and the other is above the pension credit qualifying age. Suffice it to say that although someone over the retirement age should be able to receive benefits for the household under the pension credit system, someone under the retirement age being able to receive the benefits of a means-tested system without having to go out and look for a job is just plain wrong. I am afraid we disagree on that, and I am comfortable with the changes. They are set out in legislation, which is where one would expect them to be set out. I am disappointed at the right hon. Gentleman’s disappointment that we have not issued a press release on the subject, but I do not think that this is the kind of change that would command the front pages of any newspaper. It seems perfectly reasonable to set out proposed changes in legislation, given that it is legislation that is laid before the House with accompanying explanatory notes that Members can read and discuss and into which they have an input.

Amendment 68 would add additional provisions for carers to paragraph 4(4) of schedule 1. It is not necessary to set a minimum level of payments to carers. The risk is that the incentives for carers to get into work are blurred by the automatic payment of an amount that does not relate to their personal circumstances. We all agree that work, not benefits, is the best route out of poverty, and we must ensure that payment levels are not set so high as to undermine that.

Amendment 61 takes us back to an issue that was extensively debated in Committee in respect of the payment of universal credit. Opposition Members suggest that that default position should be that payments made in respect of children are routinely directed to the carer. The amendment would provide powers to specify other circumstances for paying a portion of the universal credit award to a particular individual.

We have published a policy briefing note setting out our intentions for payments. We have already said that couples will be able to choose which of them receives the award and they could direct it to a joint account for both to access. It is a core principle of our approach that individuals are best placed to make choices about what is best for their own circumstances. There will, of course, be some exceptional circumstances and there are powers within the Bill to amend the Social Security Administration Act 1992 to allow the Secretary of State to pay all or part of an award to another individual. We do not need this amendment to ensure that. However, the default position should be that we make payment to the person chosen by the couple, not by anyone else.

Many of the concerns raised in this debate are, of course, about the possibility that universal credit might be less generous to some people than the current system of benefits and tax credits. We propose a radical reform and a simplification of the welfare system. In that situation, it is not possible to replicate exactly every aspect of the current system. That is why we will introduce a system of transitional protection to ensure that there are no cash losers as a result of the move to universal credit.

Oral Answers to Questions

Debate between Lord Grayling and Stephen Timms

Monday 14th February 2011 Commons Chamber

[Chris Grayling]

I can absolutely give my hon. Friend that assurance. Indeed, I have asked Professor Harrington to work with people who specialise in ME as part of his review. I do not want us to write off everybody with a particular condition. It is important to identify who can potentially work and who cannot, and to provide them with the appropriate support. That is the goal of our policy and what we will seek to do, and I am mindful of the concerns that my hon. Friend raises.

[Stephen Timms (East Ham) (Lab)]

The sharp increase in job losses forecast this morning by the Chartered Institute of Personnel and Development will make it harder still for people with health conditions to find jobs. Last week, the Minister tabled regulations that modify the mental health descriptors in the work capability assessment, but at the same time, following his acceptance of Professor Harrington’s recommendations, to which he has referred, an alternative set of descriptors is being drafted by Mind, Mencap and others. Should he not wait until he has received their advice before he makes changes?

[Chris Grayling]

As the right hon. Gentleman knows, we ourselves had one review carried out last year by Professor Harrington, and we also inherited a set of recommendations from an internal review carried out by the previous Government. I considered carefully the recommendations left to us by the right hon. Gentleman and his party, and the internal review recommended changes that would increase the number of people with mental health problems who go into the support group and receive unconditional support. His party was right to make that recommendation, and I am pleased to accept it, but we will take all further steps necessary to ensure that people with mental health problems are treated fairly and properly by the system.

Oral Answers to Questions

Debate between Lord Grayling and Stephen Timms

Monday 10th January 2011 Commons Chamber

[Chris Grayling]

The simple answer to that question is yes, it will. The hon. Gentleman makes a very important point and I want to refer to one other dimension of the issue. A key point is giving those people opportunities to volunteer while claiming benefit. Volunteering can be an extremely important part of the pathway from a long-term problem into work. We have changed the guidance for Jobcentre Plus and will proactively promote volunteering opportunities to those who face those challenges in the hope that we will help them take that extra step on the way.

[Stephen Timms (East Ham) (Lab)]

Just before Christmas, the all-party Select Committee on Work and Pensions—may I be the first to congratulate its Chair, my hon. Friend the Member for Aberdeen South (Dame Anne Begg), on her well deserved honour in the new year’s list?—warned of a looming gap between the future jobs fund closing to new referrals of young people at the end of March and the start of the Work programme in June. In an article this morning, the Secretary of State, commenting on rising youth unemployment, promised that

“the programmes we inherited will remain in place until we replace them later this year.”

Can we therefore take it that referrals to the future jobs fund will continue until June?

[Chris Grayling]

I start by offering my congratulations to the hon. Member for Aberdeen South (Dame Anne Begg). There are moments when awards are acclaimed in all parts of the House, and hers certainly has been.

We have already extended the contracts for all the legacy programmes, which people will take advantage of until June. There will be people on the future jobs fund in the new financial year, and we are working through the detail of the transition for the final few weeks before people join the Work programme. Obviously, some people will be referred for a short period before the start of the Work programme, and we will negotiate with the would-be contractors to ensure a smooth transition. Our goal is to ensure that there is proper continuity for all those who need specialist support.

Oral Answers to Questions

Debate between Lord Grayling and Stephen Timms

Monday 22nd November 2010 Commons Chamber

[Chris Grayling]

We will provide enhanced support for people in that position through Jobcentre Plus for a short period, but I hope and expect that providers who are already in the framework and who win Work programme contracts will be able to take up some of the challenges that those people face and help them before the formal launch of the programme in the summer.

[Stephen Timms (East Ham) (Lab)]

There are some good ideas in the Work programme, and all of them were in the last Government’s flexible new deal. What proportion of the payment to be handed over to a Work programme provider in respect of a jobseeker will be handed over when that person obtains work, and how long will he or she need to remain in work before the whole payment is handed over?

[Chris Grayling]

I will publish the full details of the contractual arrangements for the Work programme in a few days’ time, but I can tell the right hon. Gentleman that we will not be paying up front as the flexible new deal did. Last year, the flexible new deal paid providers £500 million for 16,000 starts. That is £30,000 per job start, and in my opinion it was an inefficient use of public money. Even as the programme becomes more mature, the previous service fee arrangements would still mean a huge up-front cost. We will do things differently: we will pay providers when they succeed, and not before they have done so.

Oral Answers to Questions

Debate between Lord Grayling and Stephen Timms

Monday 18th October 2010 Commons Chamber

[Chris Grayling]

May I say what a great pleasure it is to have a question from my hon. Friend, and to see him in his place?

We are doing everything we can to ensure that the systems in place are suitable to ensure we have a mix of organisations. We have launched a specific new code of conduct for prime contractors—the Merlin standard—that is designed to ensure that they look after the commercial interests of smaller organisations on the framework, or that are working with framework providers. It is essential that we have a proper mix of organisations involved in the Work programme and we will take all the steps we can to ensure that that is the case.

[Stephen Timms (East Ham) (Lab)]

A great deal will hang on the Work programme. We all remember the damage in our constituencies when unemployment reached 3 million before, and we remember which party was in government at the time. The warning last week from PricewaterhouseCoopers that 500,000 private sector jobs, as well as 500,000 public sector jobs, are under threat makes clear the danger ahead. The Minister will know of the fear of the small providers we have been talking about—social enterprises, rural organisations, community groups and faith groups—that they will be included in bids for marketing purposes, but dropped once the contract is awarded. How will contracting address that danger?

[Chris Grayling]

I welcome the right hon. Gentleman to his position. I look forward to working with him, as well as debating the issues, over the months ahead.

PricewaterhouseCoopers’ chief economist said he expected the private sector to be able to take up the slack from changes in the public sector. On smaller providers, the Merlin standard is designed to achieve precisely what he aims for. Under the terms of the Merlin standard, a prime contractor who wins a contract off the back of an attractive-looking consortium of organisations but dumps them all the next day can lose its contract. We shall be assiduous in ensuring that the interests of smaller subcontractors are protected, particularly those with the specialist needs we absolutely need for the Work programme. That is what the Merlin standard is designed to achieve.