Welfare Reform Bill

Lord Freud Excerpts

Wednesday 11th January 2012 Lords Chamber

Moved by

[Lord Freud]

33: Schedule 3, page 126, line 3, leave out “and (2)” and insert “(2), (2A), (3) and (4)”

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

My Lords, I speak in support of the amendments tabled by the Government in relation to Clauses 51 and 52—namely Amendments 33, 34, 37, 39, 40, 41, 43, and Amendments 63 to 67.

The important issue of the impact of time limiting on those with deteriorating conditions was raised in Grand Committee. I outlined in debate the existing safeguards which would protect people in these circumstances. However, when we looked again at the safeguarding provisions, it was clear that a person would be able to requalify only in very limited circumstances. In light of that helpful debate, we have decided that further clarification should be provided on the face of the Bill and are therefore moving these amendments.

The government amendments will enable people whose contributory ESA, while in the WRAG, has ceased as a result of time limiting, to requalify for an award of ESA if, after their award ends, they continue to have, or are treated as having, limited capability for work, and—I stress this point—at any time thereafter they develop and continue to have limited capability for work-related activity and would become eligible for the support group. The substance of this new category of entitlement is found in Amendment 43, which provides for claimants to have further entitlement after time limiting has been applied to an award of contributory ESA. I note with pleasure that the noble Lord, Lord McKenzie, and the noble Baronesses, Lady Morgan and Lady Meacher, have added their names in support of Amendment 43.

Without wishing to anticipate or foreshadow the debate on Amendment 42, tabled by the noble Lords, Lord Patel and Lord McKenzie, I trust that the noble Lord, Lord McKenzie, having lent his support to Amendment 43, may feel able not to proceed with Amendment 42. I shall endeavour to explain why shortly.

I turn to the remainder of the government amendments in this group. In previous versions of the Bill, the time-limiting provisions for ESA youth appeared in Clause 52. As a result of the amendments, we have moved to provide for new entitlement to contributory ESA through deterioration, and it has been necessary to amend how the time limiting of ESA youth awards will work to provide for the new deterioration category. This is because we wish the category of further entitlement to ESA after deterioration to cover both claimants who deteriorate after their time-limited contributory ESA awards end and claimants who deteriorate after their time-limited ESA youth awards end. We have therefore moved amendments to provide for Clause 51 to deal with the time limiting of ESA youth awards where a claimant is in the work-related activity group. To be clear, the clauses as revised by the government amendments still have the effect that claimants awarded ESA on grounds of limited capability for work developed during youth will have their awards time limited, if the claimant is not in the support group.

Amendment 42 is similar in a number of respects to Amendment 43, and I think I can probably say was the inspiration in an earlier form for that amendment. However, the point is that Amendment 42 is less favourable than Amendment 43 in one important respect, as it states that a claimant must be assessed as having limited capability for work-related activity within five years of the termination of the first ESA award. The approach taken by the government amendments would not seek to put this time limit on the new form of entitlement to ESA for claimants whose condition deteriorates. We would allow a claimant to return to a contributory ESA award at any time after their time-limited award has ended, as long as they develop limited capability for work-related activity or fall to be treated as having it, and as long as they have continued to have or be treated as having limited capability for work throughout the period after their time-limited award ended.

On this basis, I trust noble Lords will agree that Amendment 43 and the supporting government amendments provide a more generous approach than would be provided by Amendment 42. I beg to move.

[Lord Patel]

My Lords, I speak to Amendment 42, to which the Minister has just referred. Before I start, perhaps I might wish him a happy new year and, in doing so, thank him enormously for his Amendment 43. It may be claimed that it was in response to my amendment in Grand Committee; if so, I am very grateful for it. I thank him and I do not need to go any further.

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[Lord McKenzie of Luton]

My Lords, I start by also thanking the Minister for Amendment 43 and wishing him a happy new year. I am sure it will become happier when we get into February. That is the case for several of us. Perhaps I can comment first on some of the other amendments to which the noble Lord referred. I understand that Amendments 33 and 34 are consequential. The fact that they include references to provisions that cover 365 days or the clock for counting those days already being under way does not imply our acceptance of them. They are the subject of subsequent amendments that we are about to come to. Similarly, as we have heard, Amendments 37, 39, 40 and 41 are the formulation to confirm the intention that the limit should apply to contributory claims under the youth condition. Again, as will be clear, we do not support the 365-day limit or the future denial of claims under the third condition, and we will address this by amendments in the next group. Therefore, our not challenging these amendments should not be taken as accepting this as the final position; likewise in relation to Amendments 63, 64, 65, 66 and 67.

Amendment 43, tabled by the Minister, obviates the need for Amendment 42. It covers the same point and, as he said, goes further in that there is no time limit. This is to be welcomed. This enables someone to reconnect with contributory ESA after time-limiting should their condition deteriorate and they become eligible for the support group. It would appear that this applies equally to those with an existing youth condition claim and those accessing contributory ESA via the first and second national insurance contributions. Perhaps the Minister would just confirm that. It would appear that there is no time-limiting factor—I think that he confirmed this—so the gap between the time limiting of the contributory allowance and arrival in the support group could be five or 10 years or, in theory, even longer. I touch on this particularly because I am bound to say that this is not something to which the Minister warmed in Committee. On 8 November, at col. 33 of Hansard, he stated in relation to Amendment 71P:

“However, this could mean benefits being reinstated 10 or more years after the claimant last worked, which is not reasonable”. —[Official Report, 8/11/11; col. GC 33.]

Further, he stated that,

“people in the WRAG who have gone through their time-limited period do not then have a right to go into the support group on a contributory basis”.—[Official Report, 8/11/11; col. GC 36.]

I do not wish to be churlish about this but that is why we included the five-year limitation in Amendment 42, which sought to meet the Government at least part way. However, the Government are to be congratulated on Amendment 43, which deals with the disconnect from the national insurance contributions and also addresses the concerns powerfully expressed in Committee about people with deteriorating conditions who are initially placed in the WRAG. My noble friend Lady Morgan of Drefelin spoke about people with Parkinson’s disease, motor neurone disease and some forms of cancer. The Government will fulfil their stated intent that the time limiting of contributory ESA will not affect those in the support group.

However, as ever, I have a couple of questions. Amendment 43 states that the employment and support allowance entitlement,

“is to be regarded as a contributory allowance for the purposes of this Part”.

Why is “regarded as” used rather than “is”? Is it or is it not a contributory allowance? The requirement is that the person remains assessed as having limited capability for work. How is this to work in practice in circumstances where entitlement to the contributory allowance has lapsed and income or capital levels preclude entitlement to income-related ESA? Does it require the individual to be subject to the crediting-only arrangements? Would a claimant commitment still have to be in place? If somebody’s prognosis of limited capability for work has lapsed but there has been no reassessment because nothing is due, how does this affect the position in practice? Where someone’s reassessment has initially led to a fit-for-work designation but this has been overturned on a reconsideration or appeal, will the claimant be treated as being continuously in the WRAG and remain entitled to the benefit conferred by the government amendment? The noble Lord’s letter of 8 January, which I received yesterday, suggests that around 4,000 people will benefit from this measure by 2016-17. This may be only a small proportion of those damaged by the general time limiting. Nevertheless, I stress that it is welcome.

Amendment 42A, spoken to by the noble Baroness, Lady Meacher, and supported by my noble friend Lady Morgan and the noble Baroness, Lady Finlay, raises an extremely important point about individuals with life-threatening diseases where there is evidence that their diseases are uncontrollable or uncontrolled by a recognised therapeutic procedure. It requires them to be treated as being in the support group to obtain the benefit of the easements in the Government’s legislation. I would be interested to know how often such individuals would not be assessed as being in that group anyway. I think that we heard some examples from the noble Baroness, Lady Meacher. I await the noble Lord’s reply but I hope that he can give her a sympathetic response to this important issue.

[Lord Freud]

My Lords, picking up the point of the noble Lord, Lord McKenzie, about the discrepancy between Amendments 42 and 43, sometimes when a powerful argument is made in Committee, it succeeds even more than do the proponents of that argument. In this case we went back, thought about the measure and said, “If we are going to do it, let us do it properly”. That is why the measure is indefinite and not for five years. The noble Lord asked whether Section 1B on further entitlement after time-limiting covered contributory ESA under the first and second contribution conditions and the ESA youth awards. The answer is yes

Let me turn to Amendment 42A. I very much understand noble Lords’ concerns on this, but the amendment would not achieve the stated aims of placing in the support group individuals with conditions that reduce life expectancy to two or three years. Substantial provision is already available to ensure that individuals with life-limiting diseases are provided with appropriate support. The amendment seeks to ensure that individuals with uncontrollable diseases who do not meet the support group criteria of the WCA, set out in regulations, are treated as having limited capability for work-related activity. Under the current system, individuals who meet this provision and are treated only as having limited capability for work will have a condition that does not significantly limit their functional ability such that it would be reasonable to expect them to undertake work-related activity. However, anyone who has an uncontrollable condition may still meet the current support group criteria if, as a result of their condition, there would be a substantial risk to their health if they were held to be capable of work-related activity. A large number of protections are therefore built in.

Perhaps I may provide an example of how that might work—and does work. Consider an individual with extremely severe uncontrolled hypertension, who has little or no symptoms or functional impairment. This individual will not meet the test of limited capability for work-related activity necessary to go into the support group, or even the test of limited capability for work to go into the WRAG. As a result of their condition, work-related activity is likely to pose a substantial risk to their health.

[Baroness Meacher]

I apologise for interrupting the Minister. The point that I was trying to get across was in the example of the woman to whom I referred. It may be that today she could do a little bit of work—although probably not. The difficulty is that the assessors do not take into account the likelihood over a number of weeks that this person simply will not be able to maintain an employment pattern. No employer in their right mind would therefore take them on. The issue that I am trying to raise is that the assessment processes, as I understand them, absolutely do not go anywhere near that level of sophistication. I agree that we are not talking about large numbers of people, but each and every case is a tragedy in its own right. There will be people who, for reasons that we can understand, will be assessed as not qualifying for the support group at this moment, yet for whom employment is completely unrealistic. I hope that the Minister can get the sense of what I am trying to say.

[Lord Freud]

I am sympathetic to this issue—one has to be. Clearly, we are continuing the whole time with improvements to the WCA process. We are getting a lot of improvements. We are beginning to sense that. Although the figures do not show it, the anecdotal feedback is becoming much more encouraging. This is an area in which we can make the assessments with the kind of detail that is necessary as we work through the process. Indeed, that is where it should be done. As the noble Baroness, Lady Finlay, said, in these situations it is extraordinarily difficult to come up with a six-month or a year’s prognosis. We all know that. The position, on the balance of probabilities, is that if the prognosis is six months, people go straight into the support group. That has happened since 2008 and for about 10,000 people.

The data are extraordinarily imprecise. There is great variability among clinicians. It is very hard to pin down anything that we could use with any consistency stretching out to two or three years. Medicine is advancing with great rapidity, so whatever we decide on today may be radically different in two years’ time. A longer prognosis could mean that a condition could be very well controlled for a period and then deteriorate dramatically towards the end. The amendment concerns only conditions that are uncontrolled and uncontrollable. Clearly, that may not be the case for many life-limiting diseases. I think there is consensus around the House that in many circumstances work is beneficial and important for those with life-limiting conditions. Some will want to continue to work, and it is important that we have a system that does not write people off but allows for that.

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Moved by

[Lord Freud]

34: Schedule 3, page 126, line 3, at end insert—
“( ) section 1B(1) (as inserted by section (Further entitlement after time-limiting) of this Act;”

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[Lord Freud]

My Lords, I start with government Amendment 45A, on which the noble Lord, Lord McKenzie, ended his remarks. We have already discussed government amendments to provide for further entitlement to ESA after a contributory award has been time limited. As I mentioned in the previous debate, it has been necessary to amend how the time limiting of ESA youth awards will operate as a result of providing for that new category of entitlement. We have introduced the amendments so that the deterioration category will be open to both claimants with a time-limited contributory ESA award and claimants with a time-limited ESA income-related award. In practice that means that the substance of the ESA youth time-limiting measure has been placed in Clause 51 instead of Clause 52. The government amendment preserves the intended policy for preventing new claims to ESA youth from being made in the future. The amendment to Clause 52 seeks to remove the substance of ESA youth time limiting, which will now feature in Clause 51, but to retain the measure that prevents new ESA youth claims being made.

Our proposed changes to the condition relating to entitlement to ESA on grounds of limited capability during youth are part of, basically, a set of principles around the form, where we are trying to focus our support for the poorest people. We are seeking to avoid duplication and to redefine the contract between the state and individuals as we move towards introducing the universal credit, which is clearly a far more efficient way of directing our resources to the poorest people.

As we go through some of the specific areas, I should remind the House that the universal credit, when it is introduced, is designed to focus each year an extra £4 billion into the pockets of the poorest people. On the other side, we do not think it is right in principle that, for example, a claimant who under the existing youth provision has qualified for contributory ESA as of right and then comes into a large amount of money—for instance, an inheritance from a parent—should then be in a position to continue to receive the scarce resources of the state in terms of contributory ESA without having paid any contributions. The figures available show that there is support for these youngsters in income-related ESA and that, indeed, 90 per cent of existing recipients will go from contributory to income related.

[Baroness Meacher]

My understanding is that many of these people may receive some income-related benefit but not at the same level of the contributory benefit that they would receive under the amendment. My second point is that the Minister has frequently referred to the £4 billion addition in the Welfare Reform Bill: is that a monetary addition rather than a real-terms addition because surely in real terms there will be a considerable drop in the overall welfare reform cost under the Bill?

[Lord Freud]

To be absolutely honest, unwinding the effects of the first full year, which will be in 2017, is quite hard to do in simplistic terms when compared to an SR. The simple answer is that the £4 billion is a real £4 billion, not an eroded £4 billion. The impact assessment makes it clear that it is made up of roughly half and half efficiency; it is a much more efficient system. We have taken the efficiencies that we have gained and put them back into the pockets of people, plus an extra amount of £2 billion. That is where the money is coming from. The bulk of it is going into the lowest two quintiles in a rather efficient way; I forget whether it is 80 per cent or 90 per cent, but the bulk of that money is directed very efficiently.

I turn to Amendment 45 in the names of the noble Lord, Lord Patel, and the noble Baronesses, Lady Lister and Lady Finlay. Clearly, the design of that amendment removes Clause 52 altogether. As I have just mentioned in my remarks on Amendment 45A, we have a principled approach to reform, in which we are trying to modernise and simplify the current welfare system and remove duplicate provision when our resources are limited.

As we move towards universal credit, on which I have just spent a bit of time, there are other areas of rebalancing the relationship between the state and individuals. I remind noble Lords again that the small number of youngsters who do not qualify for income-related ESA are in this position only because they have alternative resources available to them. All those in the ESA support group will continue to receive unlimited support. We will also, of course, provide support to ESA youth claimants whose awards end, and they later become vulnerable through their conditions deteriorating so they develop limited capability for work-related activity.

[Baroness Lister of Burtersett]

Does the Minister accept that there may be resources available to that group but that they are not resources over which they would have control, as they do not provide those young people with any form of independence, as does the contributory ESA?

[Lord Freud]

My Lords, where they have other resources, as they move into young adulthood, clearly they have to be resources of their households at that stage and their own capital and household income. The reality is that very many of this small group of youngsters are inheriting very substantial sums of money; that is why they are in the position that they are in. That is a decision in principle over whether we should support people who have very adequate resources of their own. We will continue to support those who have deteriorating conditions even when they have a high income. They just go back into the support group.

Let me just go into the rather complicated position with European law and the specific judgment here, which I am looking at. I do not know whether the noble Lord, Lord McKenzie, will regard it as recent enough—this is the Lucy Stewart case on 21 July last year. It is within half a year, so I think that is recent. We have a code for soon and sooner or whatever; recent is within half a year. That judgment made it clear that we cannot use the past/present test to deny access to a benefit if a claimant demonstrates a genuine link to the UK in other ways, which may include consideration of the relationship of a claimant and the social security system of the competent member state or claimants’ family circumstances. The past/present test requires that a claimant must be present in Great Britain for 26 weeks out of the last 52 preceding a claim for employment and support allowance. We still lost the case, even though we had lots of powers on residence. Clearly, the view of this Government is that it should be a matter for the Government of this country to decide how people qualify for benefits. The effect of this judgment is that young people can qualify for a benefit even when they have not lived in this country for many years.

I cannot be absolutely hard and fast on the European benefit-shopping issue; I can tell your Lordships only that this is causing us enormous concern at a number of levels and we are currently challenging Commission lawyers on it. The issue, at the simplest level, is that if you can call something social support it is much less likely to be abused and taken abroad than if it is a contributory right. That is where the battleground is and your Lordships can clearly see what we are doing here. When we are asked for a concession and whether we can get round the European law, what we are looking at is a system that basically provides the support for the vast bulk of the youngsters whom we want to support without opening our doors wide to current and future dangers of this kind of benefit exportability. That is the approach that we have adopted to try to get round this problem.

[Baroness Hollis of Heigham]

It is a dilemma. I think that the entire House sympathises with the noble Lord. Many of us have been faced with this dilemma in the past. You are eligible for benefits in the UK if you are ordinarily resident. Much of the protection has been about whether you are allowed to go away for extended periods of holiday and still continue to claim. That is secure, but the problem of contributory benefits is that which flows out of the free movement of labour and, as a result of that free movement, generates you a right to a contributory benefit whichever state you may subsequently live in.

We understand the Minister’s dilemma very well, but I would have thought that there is a route out, which is of course to recategorise this as a special non-contributory benefit. That has a long pedigree in social security and European Union co-ordination of benefits and would therefore take it out of the label “contributory”. It would take it out of the labour market eligibility, because these young people have never been in the labour market. We are trying to apply a label to them that is not appropriate. By relabelling this, perhaps along the lines suggested by the noble Baroness, Lady Meacher, we should in my view be secure.

[Lord Freud]

My Lords, I do not think that we ought to spend a huge amount of time on this—it is really difficult and moving very fast. The principle is that it is the automatic entitlement that makes us vulnerable. If it is for income supplement and social support, it protects us. Your Lordships can see that the change that we have made here is to cover the vast bulk of the youngsters with support, but it is not automatic. That is precisely the safety that we are going into with this European legislation. I do not think that the precise workaround from the noble Baroness, Lady Hollis, works or that we should sit round this Chamber and work something out. All I can tell your Lordships, for your consideration, is that this is the way that we have found to get round it while, as I say, covering 90 per cent of those youngsters.

I ought to hurry along, but let me move to giving your Lordships the figures on Amendment 45. The reduction in the cumulative benefits savings by 2016-17, over five years, would be around £70 million, which we would need to find elsewhere. A little bit here and a little bit there—it is a very hard thing finding bits of money.

[Baroness Lister of Burtersett]

I am sorry to interrupt again but in Grand Committee the cumulative saving during that period was £10 million. Now, suddenly, it is £70 million. Where has the other £60 million been accumulated?

[Lord Freud]

The figure that is closest to the one in Grand Committee is the one relating to Amendment 46, which I will come to, which is closer to £17 million. This one is £70 million.

Amendment 36A, moved by the noble Earl, Lord Listowel, and the noble Baroness, Lady Meacher, and Amendment 46 would allow new claims to ESA to be made by those claimants who at the end of the assessment phase would be placed in the support group. We understand the purpose of Amendment 36A to be to provide support for Amendment 46. I have already listed the rationale for rejecting Amendment 45, which would remove Clause 52, and that rationale applies to Amendments 36A and 46 as well. In addition, Amendment 46 would have accepted considerable unwanted—

[Lord May of Oxford]

At the risk of exposing my lack of full comprehension of this, I have been listening to the debate and I resonate with the concern that the Minister has expressed about the abuse of this system, but at the same time I have not heard clearly that his resolution of one problem has not created a different and arguably more severe problem that has been emphasised by people who really understand this.

[Lord Freud]

My Lords, we have had a pretty good Socratic debate on the welfare Bill for some time. I hope that I can get over to noble Lords that the move from an automatic payment system, which is what we have for these youngsters, to one based on their income needs will pay them effectively the same amount depending on the position of their disability, will cover 90 per cent of the same people and will leave out the last 10 per cent who have their own means of one kind or another. That is the solution that works best in terms of the European legislation.

[Lord McKenzie of Luton]

Before the Minister sits down, is the ruling in question a concern only in relation to the youth condition that we are discussing today, or does it have a wider implication? If the latter, how are the Government proposing to address that?

[Lord Freud]

My Lords, I am being dragged a long way away from my brief. This is a widespread concern that runs to benefit tourism. We are currently challenging the Commission in the Court on one of its findings and trying to build a constituency with other European countries that are also enormously concerned at the implications of this. As I say, though, the principles are that these automatic payments leave us far more vulnerable than income support in this area.

I know that noble Lords are listening very hard to this, because it is an important concern that we all have. I hope that I have been as clear as I possibly could have been on this issue. It is a moving target and changing all the time. It is not settled at all, so I cannot lay it out absolutely—I can talk only about the risks involved.

[Lord McKenzie of Luton]

I think that we all understand that, but the Minister is praying this EU ruling in aid of his desire to stop the youth condition continuing in future. He has already said that that ruling has much wider implications, and that there will be a wider need to look at how it can be fully addressed. In those circumstances, is it not unfair of him simply to target this particular benefit and say, “This can be dealt with by stopping it”, rather than addressing a wider solution in due course?

[Lord Freud]

My Lords, not really. This is a prime area in which we have automaticity without any payment system. This is one of the areas where we are very vulnerable so it makes enormous sense to look at it now and as it comes up. Therefore, I would not agree with that point. Shall I rattle along?

Amendment 46 would create considerable and unwanted uncertainty for claimants and operational difficulties for the department. A claimant would need to claim ESA and go through the assessment phase without any entitlement to ESA at all until the question of limited capability for work-related activity was determined at their WCA. This is because, under Amendment 46, only claimants who were found to have limited capability for work-related activity at the end of the assessment phase would be entitled to ESA on the grounds of youth. As I have already said, the amendment would save rather less—£17 million until 2016-17. The discrepancy is in the SAR, which is covered by a very similar amendment, to pick up the point of the noble Baroness, Lady Lister.

I confirm that the Government see Amendment 46 as linked to Amendment 36A, but none of the amendments in this group is consequential on any other. We would expect the House to make a decision on each individually. In due course I will move the amendment in my name, Amendment 45A, and I urge noble Lords not to press theirs.

[Baroness Meacher]

I thank the Minister very much for his reply to the various amendments, and many Members of the House for their contributions. What we have here is an attempt to protect the dignity of a very vulnerable group of severely disabled people at a cost of £10 million, which is absolutely paltry. I refer to Amendment 46.

I feel that we are being somewhat sidetracked by the intervention on the European Union. Contributory benefits of all sorts are vulnerable to this situation. I think that the whole House has made it very clear that we are behind the Government’s fight to make sure that benefits tourism is stopped. We do not want to see it happen.

[Lord Freud]

My Lords, can I make it absolutely clear that contributory benefits per se are not vulnerable because they are paid? The vulnerability is in assumed contributory benefits, where they have not been paid.

[Baroness Meacher]

If I may say so, that brings me back to the point that I made earlier. We need to find a way of making it clear that this is a non-contributory benefit for people who, sadly, will never be able to contribute towards a contributory benefit. This is a social benefit for very disadvantaged and disabled people—a very small group of such young people, who will never have a chance, almost certainly in the rest of their lives, of any sense of independence or dignity, unless we give it to them today at a cost of £10 million to the entire tax-paying population of this country. On that basis, I do need to test the opinion of the House. However, I respect the Minister’s position and hope we can have further discussions about how we can prevent benefits tourism, which is completely unacceptable.

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Moved by

[Lord Freud]

37: Clause 51, page 36, line 33, at end insert “by virtue of the first and second conditions set out in Part 1 of Schedule 1”

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[Lord Strasburger]

My Lords, I fully support the Government’s efforts to address the huge deficit which they inherited. However, my noble friend the Minister needs to explain why I should support this attempt to penalise some of the most vulnerable and disadvantaged people in our society for the greed of the financial services industry and the incompetence of the regulators. Do these sick and disabled people have the broadest shoulders, which we keep hearing about, to carry the burden of the cuts?

[Lord Freud]

My Lords, before we consider this group of amendments, it is important to remember the context within which they are proposed. I remind noble Lords that our proposal to time-limit ESA applies only to contributory ESA claimants in the work-related activity group, or WRAG. Those in the support group and those claiming income-related ESA are unaffected by the proposals.

We will always provide a safety net for those who have limited income, and people will still be able to claim income-related ESA subject to meeting the conditions of entitlement, including an assessment of means. In addition, other benefits such as housing benefit and council tax benefit will be available. However, it is only right that those claimants in the work-related activity group who are above the income threshold for income-related ESA should have their contributory benefit time-limited in a similar way to contributory JSA.

Amendment 38, tabled by the noble Lords, Lord Patel, Lord McKenzie and Lord Low, and the noble Baroness, Lady Hollins, requires the time limit for claimants receiving contributory ESA in the WRAG to be a minimum of 730 days and to be prescribed in regulations. Amendment 39A, tabled by the noble Lords, Lord Patel and Lord McKenzie, is designed to have the same effect for claimants whose ESA youth awards are time-limited.

We understand noble Lords’ concern about the proposal to introduce a time limit of 365 days for these claimants and the reasoning behind their request for the limit to be a minimum of 730 days. However, as I said in Grand Committee, the 365-day time limit is not an arbitrary one. It is similar to the limits applied in several countries overseas and around the world, including France, Ireland and Spain, and strikes a reasonable balance between the needs of sick and disabled people claiming benefit and those who have to contribute towards the cost. We strongly believe that a time limit of one year is the correct approach for a number of reasons. It strikes 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, and it is double the length of time allowed for contributory JSA in recognition of that fact.

There is also a very strong financial argument. As requested, I shall give my noble friend the figures on the costs. The total costs in this SR period are £1.1 billion —next year it is £270 million, then £420 million, and then another £420 million—and then £360 million, and then £140 million in 2016-17. Over the full five years it will be £1.6 billion, including £1.1 billion in this SR. It is a very large sum.

The noble Lord, Lord McKenzie, said that Governments have to justify reductions, and clearly reductions are difficult. However, when he proposes reducing our cuts by £1.6 billion over five years, he should consider that he also supported the move late last year on the social sector size criteria, which will cost £700 million in the SR period and £1.5 billion over five years. He is already up, over five years, to above £3 billion in reductions in cuts. The opposition Benches have also voted for or supported universal credit changes in excess of £600 million a year on an annualised basis once the system is introduced. These are huge figures which we will have to find elsewhere. Before one starts making such reductions, one has to ask: where are the alternatives? Where will we find these sums? That is why it has been such a difficult process for the Government to find ways of reducing the deficit while causing the minimum difficulties possible. Clearly, one makes the cuts where there is the most expenditure, but the expenditure has been provided to those who are the most deserving. That is the natural structure of it. That is why it is so difficult to do this.

The effect of Amendment 38A would be that no time limit is applied to contributory ESA for those claimants receiving treatment for cancer or where they are receiving benefit because of a diagnosis of cancer. Another effect of the amendment would be to extend the 12-month time limit for claimants in the WRAG if they are either having cancer treatment or their limited capability for work is caused by the effects of their cancer. I understand noble Lords’ concerns in tabling the amendment and can confirm that at present around two-thirds of those with a primary diagnosis of cancer who complete their WCA are placed in a support group. This means that they would not be affected by time-limiting.

We want to make sure that the system is as accurate as possible and that is why we asked Professor Harrington to carry out his review.

[Baroness Morgan of Drefelin]

The Minister referred to the position of two-thirds of cancer patients. Is that before or after the changes coming from the Harrington review with regard to intravenous chemotherapy versus oral chemotherapy and the automatic move of patients into the support group?

[Lord Freud]

The figure that I quoted is the existing one. I shall come straight on to the cancer issue because it is clearly of great importance. On the basis of the Harrington recommendations, the figure is expected to go up by about 10 per cent on the existing figure on our modelling basis.

There is a great deal of misinformation about the position and I shall try to pull out some of the main issues on cancer. First, the Guardian printed a letter from Professor Harrington in which he said:

“I believe the government’s proposals would significantly improve on the current system and would be of considerable benefit to those who face the real personal challenge of a cancer diagnosis and subsequent treatment”.

He went on to say:

“The government’s proposals have been developed as a result of evidence submitted to me by Macmillan and discussions with cancer specialists. The proposals would considerably increase the number of people who receive unconditional support in the benefits system. They would also reduce, not increase, the number of face-to-face assessments that individuals suffering from cancer would undergo. The proposals are underpinned by a presumption that people undergoing cancer treatment will be entitled to the benefit if they have the necessary supporting evidence. They widen the scope of the people this applies to, while also allowing people who want to work to do so. This will mean better provision all round. Delays in these proposals may ultimately affect individuals and their quality of life”.

We have now published the Macmillan evidence, which I hope is available and of great interest to noble Lords. What is interesting about the evidence is how many professional oncologists support this approach. I have a few quotes here which I would like to share with the House. The first states:

“Not all patients will experience toxicity related to treatment … Not all patients should be exempt”.

The next states that,

“some people on long-term maintenance treatments may have little or no upset and be quite able to work”,

and so on. That evidence is available to noble Lords.

As to where we are on the important issue of cancer, we are now carrying out a consultation with the industry. That will be ready in March, when we will pick up the responses and apply them. The noble Lord, Lord Patel, may take some comfort from the fact that there is now a major process going on as we consider this issue, and he would be right to take such comfort.

On the point raised by my noble friend Lady Thomas on the WCA, we are absolutely committed to making it as effective as possible. It is beginning to move quite quickly now in the right direction. We have taken forward all of Harrington’s recommendations from year one, which means that decision-makers are better supported and have received new training, and all the ATOS reports now have a justification. Professor Harrington has praised the improvements that he has seen so far.

The other point raised by the noble Lord, Lord Patel, was—

[Baroness Finlay of Llandaff]

Before the Minister moves on, I wonder if I could ask for some clarification. When he talked about the evidence from oncology, he implied that patients would have to be not working for two years. I do not see anything in any of the proposed amendments that stops people going back to work as soon as they want to go back to work. Indeed, one hopes that many people will get back to work, perhaps on a part-time basis or whatever, within months of having their treatment, but the purpose of the amendments is not to force those who are so debilitated post-treatment or during treatment, particularly with fatigue that can go on for weeks or months before it improves, and not to make them subject to a guillotine coming down at the end of the year. Can the Minister clarify that there is nothing in the amendments that stops people going back to work as quickly as they want to?

[Lord Freud]

Clearly, there is nothing in any amendment or proposal to stop people going back to work should they wish to go back to work, but we are talking about the expectations that there are between the citizen and the state. That is a really important psychological relationship between the two, and that is what we are talking about rather than anything else.

I pick up the point made by the noble Lord, Lord Patel, when he quoted Citizens Advice. We were disappointed by what it said, not because it said stuff that we did not like to read but because it was based on the evidence of 37 work capability assessments when there were more than 600,000 completed in the year to May 2011. That report also relied solely on Citizens Advice’s own interpretation of the healthcare professional’s report and did not allow the HCP the opportunity to explain the reasoning.

Our view and policy is that the right way to address cancer diagnosis and treatment is by ensuring that the WCA provides an accurate and effective dividing line between the support group and the work-related activity group. We want the WCA to consider and assess fully the effects on an individual from both their cancer and the treatment they are receiving for that cancer. As I said, sufferers will be entitled to any income-related ESA.

I pick up the point raised by the noble Lord, Lord Wigley, on the burden on those who can least afford it, because some quite simplistic numbers are flying around here. We have said that income-related ESA will be available to those with the lowest incomes. I accept that if an ESA claimant’s partner has earnings of £152.70 a week, no income-related ESA will be available, but that does not mean that the couple will be £94.25 a week worse off when the contributory ESA is withdrawn. I give an example of why that is not the case. A couple with a rent of £100 a week and council tax of £25 a week, one with the earnings of £152-odd and the other with a contributory ESA of £94, will have a total income of £291 before ESA is withdrawn and £277 afterwards. The main reason is that housing benefit and council tax rise substantially. So there is less income but there are not these very dramatic changes when you go through the actual sums—

[Lord Strasburger]

Do the same figures apply to a couple who own their own property?

[Lord Freud]

My Lords, as noble Lords know, we have two systems of housing support. We have housing benefit for those who rent their property and support for mortgage interest for those who need support with their mortgage payments. Currently mortgage payments are running rather lower than benefit, but that is only because mortgage rates are lower and that can change. We are looking at the whole system of support for mortgage interest, but there is a system in place to support people whether they are home owners or payers of rent.

On the basis of what I have said, I hope that the noble Lord will feel able to withdraw his amendment. Before I ask that he do so, I confirm that the Government see Amendment 39A as linked to Amendment 38, but that none in this group is consequential on another, and we would expect the House to make a decision on each individually.

[Lord Patel]

I thank the noble Lord for his response. I could pick up on each of the points that have been made and answer them, but the time does not allow that. I have to say to the noble Lord, Lord Blencathra, that we are talking here about the level of savings from welfare reform. We are not talking about the Government finding extra expenditure; it is the reduction in savings that we are talking about. The total reduction in saving of the whole welfare reform package will be in the region of £18 billion. We are talking here about not taking money away over five years even to the level of £1.3 billion from the most vulnerable in society. As I pointed out, they are those on the lowest third centile of income, to whom, as the noble Lord, Lord Wigley, said, it is £94 a week. If we are going to rob the poor to pay the rich, we are entering into a different form of morality. The noble Lord asked the question whether it is moral. I say that it is moral to look after those that are sick, vulnerable and poor. If that is immoral, what is moral is to pay the rich—and we are on a different planet altogether.

I come to the figures quoted. The figures are based on the assumption that no one goes back to work until they reach 24 hours. If you speak to cancer patients, you find out that their greatest desire is to go back to work, because it is part of therapy. Noble Lords should read the powerful article written by a very bold and courageous lady called Jenni Russell, which says:

“Not skiving, minister, just suffering cancer”.

She describes what it felt like to have treatment for breast cancer. If you speak to patients on chemotherapy—and my noble friend Lady Finlay sees them every day—they feel good after four days of misery following chemotherapy. By the time they feel better it is time for another period of misery. The effect is cumulative to the point that after a few courses they cannot get out of bed and they wonder whether death might not be better than the disease. It is those people that we are talking about. They are not skivers or benefit cheats. They are the last people who cheat. Are we going to make savings there? I was honest in accepting that what I proposed was costly, but I am not going to be dishonest and say that therefore we should let those people suffer. I ask the House to determine who should be supported.

--- Later in debate ---

Moved by

[Lord Freud]

39: Clause 51, page 37, line 4, at end insert—
“(2A) The period for which a person is entitled to a contributory allowance by virtue of the third condition set out in Part 1 of Schedule 1 (youth) shall not exceed 365 days.”