Queen's Speech

Lord McKenzie of Luton Excerpts

Thursday 3rd June 2010 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I start by offering my congratulations to the two new Ministers at the Dispatch Box today and indeed to the noble Lord, Lord Freud, whose areas of responsibility are covered in the debate. I acknowledge the two excellent maiden speeches and look forward to two more. I intend to focus my remarks on the labour market and benefit proposals in the Queen’s Speech.

Our starting position—hitherto shared around this House, I believe, if our recent debates on welfare reform are a benchmark—is the centrality of work, good work, as a means for people to stay out of poverty, improve their self-esteem and well-being, and meet their aspiration for a fuller life. It follows from this that we support a system in which nobody should be written off and which helps people get into work or move closer to the labour market—that is, a system in which people are better off in work than on benefits; one that places reasonable conditions on individuals to take up or prepare for work when they can and supports them when they cannot; indeed, a system that is built on partnership between government, employers, local authorities and providers, including the third sector.

That is what changes to the benefits system, including tax credits, have been about since 1997, why worklessness has fallen and why the action that the Labour Government took has prevented a big increase in inactivity during the current recession. It is why fewer people are on inactive benefits now than in 1997 and why we halved the number of people on tax and benefit rates of 90 per cent plus. But you do not have to take my word for it. Indeed, it was the noble Lord, Lord Freud, himself who stated in his 2007 report that:

“The Government has made strong, and in some respects, remarkable progress over the last 10 years. The New Deals … have been enormously successful”.

Given this assessment of our approach, it is shocking to see that one of the earliest acts of the Conservative-Lib Dem coalition has been to withdraw support for the Future Jobs Fund, in breach of pre-election promises, axing some 40,000 jobs for young people this year alone.

The coalition promises us an investigation of the benefits system to simplify it in order to improve incentives to work. This is not the first such investigation and no doubt it will not be the last. No doubt we will see the re-emergence of our old friend the iron triangle. However, as we debated earlier this year during the passage of the Child Poverty Act, we need to be cautious about the simplistic application of an economic model that looks at the relationship between the level of benefits, the earnings break-even point and the rate at which benefits are withdrawn—and especially about conclusions which suggest that benefit levels have to be reduced to maximise work incentives. Simplification of the benefits system is a worthy objective, but we know that, if it is done fairly, it costs money. I would be interested to hear about the resources that have been secured from the Treasury for this end.

We have heard from Ministers about plans to reassess everyone currently on the old-style incapacity benefit according to the work capability assessment. This was already in hand with a major programme to assess 10,000 people each week in addition to handling new claims. Is it proposed to continue with this migration process at the pace originally proposed or at a different rate, and what are the resource implications? Of course it is not just a case of assessing customers in receipt of incapacity benefit. We recognised that whatever progress had been made, more had to be done to tackle long-term worklessness. That is why we proposed back in March further changes to the assessment, with new help and stronger conditions to accompany them. The introduction in 2008 of the work capability assessment and ESA marked a new beginning in how people were assessed and supported, focusing on what people can do rather than what they cannot.

Concerns have been raised in this Chamber, most notably by the noble Baroness, Lady Thomas of Winchester, about how accurately the WCA assesses individuals, and more recently it has been challenged by Citizens Advice Scotland. So I urge the coalition Government to proceed with the improvements identified following an internal review of the WCA, and in particular for there to be greater recognition of fluctuating conditions within the assessment, to expand the support within ESA to cater for those with certain communications problems and those with severe mental health conditions.

As for sanctions, we will have to unpick the detail from the rhetoric, but I had a sense of foreboding last Sunday when I thought I heard the Secretary of State say in an interview that sanctions were not being properly applied or, indeed, being applied at all. In part as a result of arguments advanced in your Lordships’ House, we secured in primary legislation the recognition that good cause for acts or omissions includes the availability of childcare and a person’s health conditions, physical or mental; that victims of domestic violence should have extended exemptions from JSA conditionality; and that JSA and ESA agreements and action plans must have regard to the impact on the well-being of any children. We have otherwise secured that parents with young children have the right to restrict their availability for work to school hours. I take it that all of these are sacrosanct. If not, we will look to make common cause with all those who supported and pressed us on these matters.

There is much else to keep us occupied in this agenda: the creation of a single welfare-to-work programme, the realignment of provider contracts, and progress on the DEL-AME switch. The devil, of course, will be in the detail. If the effect of all this is to make progress on ending child poverty—I welcome the commitment, and it will be interesting to see what targets are used in that endeavour—to help more people into sustained employment, and to support those for whom escaping poverty through employment is not practical, the agenda will have our support. If not, we will challenge it rigorously.