Social Security (Jobseeker’s Allowance and Employment and Support Allowance) (Waiting Days) Amendment Regulations 2014

Lord Freud Excerpts

Wednesday 19th November 2014 Grand Committee

[Lord McAvoy (Lab)]

My Lords, I, too, thank and congratulate the noble Lord, Lord Kirkwood of Kirkhope, on moving this Motion which allows us to elaborate further on this pernicious policy. Like many others, I am still waiting for the rationale behind what the noble Lord described as a mean policy. I do not get the stated—or, rather, not yet stated—rationale behind it.

I would like to repeat some of the comments made by the Secondary Legislation Scrutiny Committee. It stated:

“DWP estimates that this change will generate savings of approximately £50 million in 2015-16, although these will decrease in subsequent years as Universal Credit is rolled out”.

Can the Minister say whether there has been any change in that estimate? If that is the case, I would like to hear what it is. The Secondary Legislation Scrutiny Committee also says:

“DWP states that these savings will be invested in new measures to support people into work”.

Therefore, work must have been done on allocating money to these new measures to support people into work. I would like the Minister to indicate what new measures are planned and their estimated benefits.

The Social Security Advisory Committee has issued a report on this measure, which, again, has been referred to. The Secondary Legislation Scrutiny Committee states:

“An Impact Assessment is now attached to the instrument which indicates that approximately 70% of JSA claimants and 40% of ESA claimants will serve waiting days ... reducing the value of their first benefit payment by an average of £40 for JSA claimants and £50 for ESA claimants”.

I fully understand why the noble Lord, Lord Kirkwood, described this measure as mean. There is no doubt that the country faces a difficult situation caused by the downturn initiated in America in 2008 to 2010 and that difficult decisions would have to be made by whoever was in authority. The noble Baroness, Lady Thomas of Winchester, mentioned the Labour Party. We have repeatedly expressed concern about how the administration of universal credit will impact on those on low incomes. The reform represents a significant change in the rhythm of social security payments for a group for whom this is a main source of income and whose well-being will be profoundly affected by any delays or problems experienced in receiving it.

My noble friend Lady Lister of Burtersett and the noble Baroness, Lady Thomas of Winchester, both referred to the role played by food banks and charities. Like many people, I am outraged that food banks have had to be established to deal with the society that we live in. This measure has not taken into account the dire straits that some people will find themselves in when trying to deal with it. The Labour Party convened a universal credit liaison committee which reported in June 2014 and made several recommendations on the payment of universal credit which we believe the Social Security Advisory Committee should have considered, including one on the scope of the regulations.

I ask the Minister whether consideration was given to making the first payment of universal credit earlier. If that was the case, it should be widely publicised. The cost of allowing claimants that choice of payment date, as with direct debit payments, should also be looked at. Has that happened or was any consideration given to it? Did the Government ever seriously consider implementing it?

In order to mitigate any hardship that may arise from the recommended move to a seven-day waiting period, we asked that sufficient attention should be drawn to the recourse available to claimants through short-term benefit advances. Noble colleagues have mentioned this aspect. In fact, the Social Security Advisory Committee itself recommended that the DWP should:

“Strengthen the existing process for highlighting the availability of STBAs and ensure that they are proactively and consistently signposted. In particular, it will be important to ensure that staff (through training and appropriately worded scripts) are encouraged to identify potential hardship and, where it has been identified, explain the process to the claimant. It is also important that the Department ensures that all supporting information channels, such as GOV.UK, highlight the existence of STBAs”.

Will the Minister give the Government’s response to that view and say whether they have given any consideration to implementing it?

The claimant should be made fully aware of budgeting advances and more discretion should be shown in order to mitigate any hardship that may arise from the recommended move. Attention should be drawn to the existence of budgeting advances and, in certain circumstances, we hope that discretion is given to advisers to waive the eligibility criteria whereby claimants need to have been in receipt of benefits for a period of six months in order to apply for an advance. I ask the Minister to respond and indicate what consideration was given to the measures that I have outlined or other measures from a variety of sources. The Minister has an overriding duty to explain the rationale behind the measure and go into detail about its implementation.

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

I thank noble Lords for their many helpful contributions to the debate. It is clear that this measure has generated a great deal of interest, not just within this House but outside among voluntary and public organisations, which have also presented their views to the Government. The principle behind this extension from three to seven waiting days is that benefits are not intended to provide financial support for very brief periods, for instance when someone is between jobs or during a short period of illness. This measure will generate savings of £125 million over five years. It is money that, as noble Lords have touched on, will be reinvested to help those most at risk of long-term welfare dependency. As noble Lords know, the measures will fund schemes including additional support for lone parents and improving literacy and numeracy skills.

To pick up the question from my noble friend Lady Thomas about any change in those estimates, they were based on departmental forecasts which themselves were based on OBR economic assumptions at the Autumn Statement 2013 and in Budget 2014 and there have not been any updates to this analysis since then, although we are, of course, awaiting another financial event quite shortly.

On the related question from my noble friend Lord Kirkwood and the noble Baroness, Lady Lister, about what and where these investments are, we are expanding on measures that are already in place. They will introduce more rigorous scrutiny on the hardest-to-help claimants. The English language provision is new and will ensure that claimants have the language skills for the workplace. Those methods should enable the claimants to enter the workplace sooner than they otherwise would, which means that they will be earning sooner and not receiving benefits.

[Baroness Lister of Burtersett]

Perhaps I may ask the noble Lord the question raised by SSAC. Is it likely that the people who are going to be adversely affected by this change will be the people who will be helped by these measures?

[Lord Freud]

Yes; I thought that I had made that clear—that the intention is to focus on the people with longer-term difficulties. So, yes, the intention is that it will be those people.

This measure means that many people who make a new claim for jobseeker’s allowance and ESA will see a reduction in their first benefit payment. However, we have measures in place through exemptions and the offer of advances and signposting advice to ensure that claimants who are most in need will continue to be protected.

I hope that I can pick up all the points that have been raised. On the point raised by my noble friends Lord Kirkwood and Lady Thomas on the exemption of ESA claimants, if there had been a differentiation between the two types of claimant there would have been a perverse incentive for people to self-certify sickness for a week and claim ESA rather than JSA in order to get an additional four days’ benefit. There is no evidence that ESA claimants are at greater risk of financial hardship than JSA claimants. Furthermore, to exempt ESA claimants to make that differentiation would be inconsistent with future proposals for universal credit, where our intention is that all ESA-type claimants will be placed in the all work-related requirements group and therefore subject to waiting days. Clearly, waiting days themselves have been a feature of ESA since its introduction in 2008. This measure has simply extended that existing provision for those who do not qualify for an exemption.

The point that my noble friend made about exempting vulnerable groups is clearly one into which we put a lot of consideration, particularly around care leavers, sufferers of domestic violence and ex-prisoners. Bluntly, they were exempted on grounds of practicability. It would have introduced an unworkable, three-tier system and these groups are already required to serve three waiting days, so the only other option would be a full exemption which would go beyond the scope of this change. Despite what my noble friend said about the UC provisions in this line, we are able to make an exemption for these groups in the UC-equivalent provisions. Perhaps that will leave my noble friend somewhat more relaxed about those.

--- Later in debate ---

[Baroness Lister of Burtersett]

I am sorry to intervene on the Minister. I was not asking about savings, because that is in the public sphere. My question was whether there was any information about people who come out of work in debt or arrears?

[Lord Freud]

I was coming on to that. The noble Baroness asked a series of questions. We do not currently have the information on the proportion of people coming on to benefit who are likely to be in arrears or debt. I am not aware of any published analysis that would allow us to estimate this quickly. All noble Lords who spoke raised the question of short-term advances. SSAC recommended that communications about them should be strengthened.

--- Later in debate ---

[Lord Freud]

A number of noble Lords raised the communications issue around short-term benefit advances. We have taken the recommendation of the committee and issued communications to all staff to improve staff awareness of benefit advances and to remind them of the circumstances in which an advance can be considered.

On the point made by the noble Baroness, Lady Lister, on the report on food banks, I was not at today’s press conference but no one takes the decision to use a food bank lightly. The factors driving food-bank use are many and complex, as today’s report recognises. The report said:

“The immediate income crisis that predominantly led to food bank use was often one incident in a complex life story, in which several other factors had combined to leave people vulnerable and less able to cope with dramatic changes”.

[Baroness Lister of Burtersett]

I agree that we are talking about very difficult lives here, but it is very clear from this research, which is not a huge study but it is from a number of different places using a number of different methodologies, that benefit delays were a very important factor. Given that, does the noble Lord not accept that this measure could well make it worse?

[Lord Freud]

My Lords, I would be the last person to say that the current benefits system was easy to navigate. One of the things that has been driving the reform that we are introducing, universal credit, is the production of an in-work and out-of-work benefit that is easy to navigate. I started researching this area in some depth in 2006 and the irony is that benefit delays under the existing, rather complicated system have actually been improving. That is why I revert to the point that this is a complicated matter, as is acknowledged in today’s report and in other reports. That is the only point I want to make.

There was a series of questions on universal credit and the noble Baroness raised the point about TUC concerns about the length of time claimants have to wait for payments under universal credit. Clearly we have an advances process built in, but probably more important is the system that is now developing of universal support delivered locally, which is designed to work in the local community, both with councils and with voluntary organisations, to bring the support that is specifically required by vulnerable people. The estimated saving from increasing the waiting days in universal credit is £200 million per annum once it is fully rolled out, but this figure will be reviewed and updated with the Autumn Statement. I have talked about exemptions within universal credit.

The noble Lord, Lord McAvoy, asked about our consideration of whether we add waiting days to the assessment period in universal credit or whether we have partial periods of universal credit. We spent a great deal of time considering that issue. Universal credit is an in-work and out-of-work benefit, paid on a monthly basis. That monthly basis is designed to help households to budget on a monthly income and eases the transition from and back into paid work. The one-month assessment period is therefore central to universal credit, and the waiting days in universal credit are days of non-entitlement. I need to remind noble Lords that because universal credit is an in-work and out-of-work benefit, one might not experience waiting days anything like the same number of times as, especially if one is moving from low-paid work to being out of work, one is likely to be consistently on universal credit. That is one of the safety features of universal credit in this regard.

With that I think I have dealt with all the questions raised today and thank my noble friend—

[Lord McAvoy]

I may have missed it, but I do not think I did. Does the Minister have any response to the point made by the Social Security Advisory Committee about short-term benefit advances?

[Lord Freud]

Yes, we have accepted the communications issue there and have already, on the basis of that recommendation, issued communications to our staff to improve awareness of the availability of short-term advances and remind them of the circumstances in which those advances can be considered.

As I say, I think I have dealt with everything. I thank my noble friend for the opportunity to discuss this important topic and to address all the concerns and matters that have been raised.

Motion agreed.