Welfare Reform Bill

Lord Freud Excerpts

Wednesday 11th January 2012 Lords Chamber

Moved by

[Lord Freud]

40: Clause 51, page 37, line 5, after “(1)” insert “or (2A)”

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[Baroness Lister of Burtersett]

My Lords, in Grand Committee the question of the assessment period got a bit lost because there were so many issues that the Minister had to deal with. I asked the Minister why the assessment period was not included but never got an answer.

We talk about the time limit kicking in after a year but it is a year minus 13 weeks because for those first 13 weeks people affected will be paid at JSA rate, which is lower. Quite a number of us were confused, but the upshot was that the Minister said:

“I have to admit that I am not particularly happy about the assessment phase of ESA and how it is working … I would like to look at it. It is difficult to have a set of principles around something that one is somewhat unhappy about”.—[Official Report, 8/11/11; col. GC 46.]

I hope that the Minister has looked at it in the interim and has perhaps realised that there is no principled reason for the clause as it now stands and there is every principled reason for supporting the amendment. I hope that the Minister will see reason and it will not be necessary to test the opinion of the House in the way that the noble Lord, Lord Kirkwood of Kirkhope, was suggesting.

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

My Lords, I shall leap straight in on the issue raised by the noble Baroness, Lady Lister, on the assessment phase. What I was really alluding to was the upcoming sickness absence review, which is an important review of how we treat sickness absence. One of the things it has looked at is the interrelationship between sickness absence periods and the ESA regime. Basically the review sees no real reason for the assessment phase. As we look at this we must ask: are we structuring ESA and sickness absence so that it is a vulnerable or difficult process? I am sympathetic to my noble friend when he says that there might be a way through this. I want noble Lords to be aware that huge weaknesses have been found. We are pushing people through a process that puts them in limbo for a long period of 92 days or more. The sickness absence review states that that is deeply unsatisfactory, and I suspect that a lot of noble Lords in this Chamber who understand the system also believe that. In that area, I am not sure that this is genuinely the direction in which I want to go because I am not sure that it is something we want to maintain.

Moving on from that, let me set out some of the technicalities of the assessment phase. It usually ends after 13 weeks unless by that point there has not yet been a WCA determination. If a WCA has not been carried out by the 14th week, the assessment phase ends when a determination about limited capability for work has been made. So if the claimant’s assessment phase lasts longer than 13 weeks and they are found to have limited capability for work or work-related activity, the payment of additional components is then backdated. That is the existing system, which I am not that happy with. The effect would be to exclude it in terms of counting to the 365 days, or at least the 730 days depending on where we are, but in practice it does not always happen within 13 weeks and we have a lot of disparity of treatment. Even if we were to stay with the regime, it would be a pretty messy system.

I know that noble Lords hate me when I go through figures, but let me give some—I shall do my best because these figures have been running around. Purely on this basis, there is a cost of an extra £430 million cumulative to 2016-17 over the five-year period. I shall try to make a quick off-the-cuff assessment of how much extra it is when we look at it on top of the two years, and it is not actually a hugely different sum. It is £200 million on the SR period and £400 million on the total period of five years. I know that noble Lords feel that hundreds of millions are easily obtainable, but it is not an insignificant amount of money.

Moving on to Amendment 40B, the effect of this amendment would be that for existing ESA claimants, the one-year time limit would be calculated from the date the clause is commenced, and none of the time already spent on ESA would count towards the 365-day total entitlement. I want to have a word about retrospection. The noble Lord, Lord McKenzie, used the word slightly freely and in fact slightly aggressively. I was upset but not ashamed. I can understand that noble Lords are unhappy that we are taking account of days before the clause is brought into account, but this is about the question of whether noble Lords feel that this is the right approach; it is not about retrospection. Retrospection involves interfering with a claimant’s past entitlement and we are not doing that with this measure.

It is worth explaining what retrospection of time limiting would involve if we were to do it, which we will not. It would involve interfering with past entitlement to ESA. An example would be: at the date we commence the time-limiting provisions, if a claimant who had been receiving contributory ESA in the WRAG for 18 months, it would be retrospective if we demanded repayment of the extra six months of benefit he had already received because that would interfere with the claimant’s past entitlement. We absolutely are not doing anything which is retrospective in that sense. We are redefining the terms on which claimants are entitled to ESA in the future.

[Baroness Thomas of Winchester]

My Lords, perhaps I may make a small point. Were claimants who were receiving ESA last April told by the benefits office or whoever pays their benefit that it might be subject to this one-year cut-off? I ask this because the Government had already announced it in their comprehensive spending review. Were claimants warned then? I know that they were sent a letter in September saying that their claim was likely to end this April if it had started in the previous April. However, were they warned in April 2011?

[Lord Freud]

My Lords, it was a reasonably well publicised announcement by the Chancellor. There was no formal process of warning afterwards. That process began, as my noble friend points out, in September. How much warning people had is an issue, but the essential fact is that we are redefining the terms for entitlement to ESA. That happens quite a lot. Examples of future changes to entitlement include, among others, changing the descriptors to the work capability assessment.

I understand noble Lords having concerns about the fairness of the measure. Again, fairness is a matter of achieving a balance in our policy, so that as many claimants as possible who are in the WRAG are entitled to ESA for the same period.

The noble Lord, Lord McKenzie, asked for figures. We expect that, by April 2012, around 100,000 people will have been receiving contributory ESA and been members of the WRAG for more than 12 months. If the amendment were accepted, we would have another substantial decrease in our savings forecast and a real problem.

Amendment 41A would enable claimants to start a fresh 365-day period if they moved from the support group back to the WRAG—I am not sure whether we are now talking about 365 days or 730 days, so let us leave that on one side for a minute. In practice, for those claimants moving between the two groups regularly—it is funny how, when things are encouraged financially, regularity seems to increase—the amendment would be likely to mean that they would be able to remain on contributory ESA indefinitely.

We have always made it clear that, when addressing claimants in the WRAG, our aim is for as many people as possible to receive contributory ESA for the same period. This will be a period of 365 days on our original formulation and at least 730 days on the basis of the amendment that passed. Restarting that period each time a claimant moved from the support group to the WRAG would lead to inconsistent periods on benefit for claimants.

I accept the amendment that has just gone through, but, on the basis of the period—whether one year or at least 730 days—we do not think that we need to make any of these additional changes, particularly given their high cost in the current fiscal climate. I urge noble Lords not to press these three amendments. We do not consider them consequential upon each other.

[Lord McKenzie of Luton]

I thank the Minister for that reply and all noble Lords who have contributed to this short and rather interesting debate.

I suppose that whether something is retrospective depends on what one’s definition is, but if somebody’s entitlement was put in place at a certain time and under a certain set of rules, to have that entitlement restricted by subsequent legislation and to have the clock running from that earlier date would be, in most common parlance, retrospective. We can argue about the semantics all night and not change anything, but the way in which the Government have gone about this is particularly unfortunate.

I acknowledge the contribution and concerns of the noble Lord, Lord Kirkwood, and my noble friend Lady Lister over the assessment phase. My noble friend instanced the concern that the Minister expressed about this in Committee; I think that he has gone a little further today. As I understood it, he said that the assessment phase, when put in the context of a sickness absence policy, perhaps did not make a lot of sense. If that is the case, I presume that these issues will have to be addressed at some stage and some adjustment made to the process.

Rather than put us in a position where we would wish to test this issue by a vote—there is clearly a degree of support behind me on this and a strong degree of support on the Liberal Democrat Benches—can the Minister offer some comfort that there will be a chance to review this before we sign off the Bill? The consensus of those who have participated is that things are not satisfactory as they stand. Quite what would have to change in the light of any sickness absence policy which is developed would depend on where that policy is heading.

Certainly on issues of fairness, by taking account of the assessment period you are docking three months of someone’s employment and support allowance. Most people would see that as being the period when you get the addition because you are in one of the two ESA categories and therefore the Government are restricting it to only nine months.

[Lord Freud]

Let me clarify that—I hoped I had. Clearly you may not know what category of ESA you are in but you receive the money for the full 12-month period once it is decided. So there is not a problem like that. It is not nine months; it is a full 12 months.

On the question of what is to happen to the assessment phase, I will not be in a position by Third Reading, which is not far away, to give an answer. I am sure the noble Lord will have read the sickness absence review. It is an interesting piece of work which severely criticises the assessment phase. If we need to change it, we will give our response later this year. It is a substantial piece of work and it will take time to work through. It seems that it will become an area for regulations and if one is going to tie a lot of weight on this particular formulation it would probably be easier for the noble Lord to add another three months to his 24 months, if that is what he is trying to do. If it is a formulation of protection to add on another three months, it is not one that anyone would want to rely on for that reason.

[Lord McKenzie of Luton]

Tagging on three months is not the purpose of the amendment or of anyone who has spoken to this. There is concern about unfairness. The Minister said that you get the money from day one, but the point is that you get the money only at the basic JSA rate for the first 13 weeks. You do not get the enhanced funding that comes with the employment and support allowance when you are in either the not-fit-for-work group or not-fit-for work-related activity group. Those premiums do not kick in until after week 13. The Minister is frowning. Someone will correct me if that is wrong but I am getting support from the Liberal Democrat Benches.

I realise that we are not going to get definitive answers on any potentially significant policy development and change in the sickness absence report between now and Third Reading. However, rather than cause us to press this to a vote tonight, could not the Minister at least agree that we can have some further engagement between now and Third Reading to understand a little better the parameters of what is happening on sickness absence and how it might affect the assessment phase?

Seeking to press an issue that, given the hour and whose troops are available, we may or may not win would not be particularly constructive. People are trying to end up in the same place on this issue, which is very much the thrust of what the noble Lord, Lord Kirkwood, is saying, so could the Minister at least assure us of further engagement so that we can understand where this may be heading and the parameters within which it will be considered? Otherwise we move to Third Reading stuck with an assessment phase that we do not think is particularly fair and, in the Minister’s own words, not particularly sustainable. That does not seem a very sensible position to be in.

I do not propose to press the amendments tonight on the other two issues, retrospection and not accumulating the time spent in the work-related activity group, but I am seriously minded to press the issue of the assessment period, because we could have further engagement on that that might be of benefit to noble Lords, some of whom may be more supportive of these measures than others. We are genuinely trying to help the Government, and if they do not want to be helped we might have to look at the alternative. Perhaps the Minister can help us.

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[Lord Freud]

My Lords, I am in a difficult position here. My view on the assessment phase is not going to have developed much further in the next two weeks. All I can say is that—well, let me just say what I would say in two or three weeks. I do not think that the assessment phase adds any value to the process; it puts people in limbo. It was meant to be a period in which people adjusted and settled down, and then they had their assessment. It does not seem to be working in that way at all, so we have had the very firm advice that we should get rid of the sickness absence review. If you want to be on ESA you apply for ESA, and if you pass the WCA you are on it, but you do not have all this messing around. That is what our firm advice was from an extraordinarily interesting and important piece of work, and that is where we will end up. If we start sticking other things on to a very shaky process that we want to get rid of, it does not seem a very useful thing to do at all.

[Lord McKenzie of Luton]

The Minister has advised us of an extremely helpful point. Would it follow that if the assessment phase disappeared, once the assessment had taken place and someone was assessed as being appropriate for putting into the WRAG or support group, the levels of funding under the ESA would kick in from day one? If they would, and that is the implication of what the Minister says, and the assessment phase went, that would be the difference between what we are facing at the moment and what might be the future. It would mean in effect that there would be no assessment phase and no period when people were paid at a lower rate than the work-related activity group component rate or the support group rate. If that is the case, we will not have quite the beef that we have at the moment with including the assessment phase.

The noble Lord has been helpful. We are just trying to see here and now how that formulation and prospect features in the Bill before us. At the very least, I ask that we agree to have another look at this, given what the Minister has said and that he is not going to be able to say anything much further between now and Third Reading, rather than having to take a decision on something tonight on which we would have only three-quarters of the information that we need. The Minister has been genuinely helpful, and we have to see how that translates into what we are considering.

[Lord Freud]

My Lords, I do not want to reopen this matter at Third Reading on the basis of things that I will have no further information on at all. That does not make much sense. The noble Lord is absolutely right that if we were to get rid of the assessment phase—and clearly that is something on which, as those who know how government works will know, we would have to do some work—it would be a big change. It would tie in with a lot of other changes, with work that we are going to be doing this year. We are utterly committed to this sickness absence review, which has been a very important document for us. My noble friend said that there was some value in using this assessment phase in this way in the future. I am trying to say that I do not think there is, because I would not want to put any weight on it. There might be other things that we can do to get out of a hole—if we are in a hole—but I honestly do not think that this is a promising line. I do not want to have this debate again at Third Reading. I have said everything I can on it, but I hope that I have said enough.

[Baroness Lister of Burtersett]

I apologise, but I wonder whether the Minister could say one more thing now so that we do not have to come back to it at Third Reading. If the assessment phase is done away with, clearly there is no issue. Given that the Minister himself is clearly suggesting that he would like to see that, would it be possible for him then to say whether, in the event that the assessment phase is not abolished, he would accept the spirit of this amendment now?

[Lord Freud]

I am clearly not in a position, and it would take more than a couple of weeks to get into a position, to make that kind of assurance. I know how skilfully your Lordships ask me these questions, and I deeply appreciate it, but I cannot do that. All I can tell the noble Baroness is that we have had a very powerful report on sickness absence, which I am personally very closely associated with and have sponsored. It made this recommendation, and most people in this Chamber who understand these matters would say that that is the way to go—as I would. Noble Lords must take their conclusions from that, but I cannot go much further or make promises on hypotheticals, because that is not how the system works.

[Lord McKenzie of Luton]

I understand the noble Lord’s dilemma; he is creating a bit of a dilemma for us. Can we at least agree that if we do not press the amendment tonight we preserve the right to bring back the issue at Third Reading, while accepting that the Minister might not be able to say anything further? It would at least give those of us who are not as close as the Minister is to the detail of the sickness absence stuff and where that might be heading a chance to reflect on what that might mean for this; and in particular if there were to be a change—as the Minister seems to want—and the assessment phase went, how that would be accomplished within the framework of the legislation.

[Lord Freud]

My Lords, I do not think that I can do that. We need to take a view now on this. All I can say is that Third Reading is probably not the time anyway for some of this stuff to come to a head. It is not the point at which my noble friend is thinking about it coming to a head. This kind of thing will probably come to a head when we have the debate between the Commons and the Lords. That is when some of these issues need to be looked at, so it is not helpful or productive to think of it happening at Third Reading. This kind of thing may become more relevant at a later stage, but not at Third Reading.

[Baroness Hollis of Heigham]

Does the Bill contain power by regulation, or would the Minister welcome an amendment to introduce it so that at some point down the line, possibly after further consultation and so on, he can make the changes which at the moment he is minded to make but is not yet in a position to introduce?

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[Lord Freud]

Without having those in my ever helpful Box right behind me to respond to that—I hope that they are writing—my strong impression would be that I would have powers in regulation. No, my strong impression is the opposite. I am on my own.

[Baroness Hollis of Heigham]

Perhaps the Minister could write to us.

[Lord Freud]

I think I will owe noble Lords a letter. Thank you very much.

[Lord McKenzie of Luton]

That was an extremely pertinent question. If in essence we can deal with this in due course when further analysis has been undertaken though regulation, that is fine; we would be happy to rest our case there. If the Minister is saying that primary legislation would be needed to deal with this —if that is the message coming from the Box—we are unlikely to have that opportunity for some little while.

[Lord Freud]

We are looking at the sickness absence review process, which is what this is about, and that is a substantial change that will need primary legislation. So I think my reply is to presume primary legislation.

[Lord McKenzie of Luton]

The Minister has not made this easy. I have been trying as best I can to avoid having a vote on this today.

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Moved by

[Lord Freud]

41: Clause 51, page 37, line 14, after “(1)” insert “or (2A)”

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Moved by

[Lord Freud]

43: After Clause 51, insert the following new Clause—
“Further entitlement after time-limiting
(1) After section 1A of the Welfare Reform Act 2007 (as inserted by section 51 above) there is inserted—
“1B Further entitlement after time-limiting
(1) Where a person’s entitlement to a contributory allowance has ceased as a result of section 1A(1) or (2A) but—
(a) the person has not at any subsequent time ceased to have (or to be treated as having) limited capability for work,(b) the person satisfies the basic conditions, and(c) the person has (or is treated as having) limited capability for work-related activity,the claimant is entitled to an employment and support allowance by virtue of this section.(2) An employment and support allowance entitlement to which is based on this section is to be regarded as a contributory allowance for the purposes of this Part.”
(2) In section 1 of that Act (employment and support allowance), in the definition of “contributory allowance” in subsection (7), after “subsection (2)(a)” there is inserted “(and see section 1B(2))”.”

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Moved by

[Lord Freud]

45A: Clause 52, leave out Clause 52 and insert the following new Clause—
“Condition relating to youth
In section 1 of the Welfare Reform Act 2007 (employment and support allowance), after subsection (3) there is inserted—
“(3A) After the coming into force of this subsection no claim may be made for an employment and support allowance by virtue of the third condition set out in Part 1 of Schedule 1 (youth).””

[Lord McKenzie of Luton]

This amendment was in the same group as the amendment on which the Government were defeated but runs contrary to the decision that the House made previously. The assumption is that this matter will not be pressed. Otherwise, the Government give us no alternative but to force a vote on it.

[Lord Freud]

Yes, my Lords, we would like to take this to a vote.

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[Baroness Hollis of Heigham]

My Lords, I was the person who drafted Amendment 36A. The noble Baroness, Lady Meacher, clearly introduced it as the paving amendment to Amendment 46. So the Government cannot do as they are now suggesting.

[Lord Freud]

My Lords, let me read out what I said in my speech. I said that I confirm that the Government see Amendment 46 as linked to Amendment 36A, but separate Divisions will be required on all amendments in this group.

[Lord McKenzie of Luton]

My Lords, the noble Lord does not make that happen just by asserting it. One amendment is consequential on the other. We have had a very clear and substantial vote on this, and it is quite disgraceful that the Government are seeking to undermine that.

[Baroness Hollis of Heigham]

I am sure that the noble Lord, Lord Freud, does not wish to appear to be subverting the view of the entire House, which was expressed in the full knowledge that the amendment which we voted on was devised—I devised it—as a paving amendment to a substantive one, so that we could debate it in good time. Most of the population of the House has gone home, believing in good faith that the previous vote has established the principle—as it has. However, the noble Lord is trying to renege on that by forcing a vote despite the late-night keeping of the roster. That would be quite improper and quite unprecedented, and I strongly suggest that he think again.

[Lord Freud]

My Lords, I cannot understand this. I was extremely clear, and have been really clear all the way through, about which amendments relate to which, and which have to be taken separately. I read out what I said. I said it quite loudly and all noble Lords heard it. I cannot feel that it is right to accuse me of anything but absolute clarity in the House.

[Lord Bassam of Brighton]

My Lords, this is somewhat unprecedented, and I am trying to be helpful here. The House is in danger of getting into a considerable muddle. I respectfully suggest to your Lordships that we should perhaps adjourn to try to sort this out, or perhaps come back to it when the House is in fuller session. I do not think that anyone on our side wants to accuse the Government of sharp practice, but that is certainly how it feels at the moment. That is not right or good for the reputation of the House. I ask the Minister to reconsider the course upon which he is currently embarked. Perhaps I may continue with a few more words, and perhaps the Minister will be enabled with a response that can help. I do not want the House to lose the respect that it has, and it should not be frustrated in the way in which the Minister is currently suggesting. My noble friend Lady Hollis made a very reasonable point earlier in addressing this issue. It would serve the Government better if they withdrew for a moment and paused to think about where they are going, so that we can better reflect and try to sort this out in the way that is usually in the House’s best tradition.

[Lord Freud]

My Lords, I have thought more deeply and accept that the amendment is consequential.

[Lord Bassam of Brighton]

I thank the noble Lord for that moment’s reflection, which does great service to your Lordships' House. I am very grateful to him.