Welfare Reform Bill

Lord McKenzie of Luton Excerpts

Wednesday 11th January 2012 Lords Chamber

Moved by

[Lord McKenzie of Luton]

40A: Clause 51, page 37, line 13, at end insert—
“(d) does not include any days in which a claim in respect to ESA is in the assessment phase.”

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I shall speak also to the other amendment in our name in this group. Perhaps more than any other component of these changes, the inclusion of the assessment period in the tally of days which count to limit contributory allowance serves to underline that this is fundamentally about budget cuts. The assessment phase of an ESA claim normally ends 13 weeks after the beginning of an entitlement. It is the period during which DWP gathers relevant information about a claim to determine whether a person has limited capability to work or limited capability for work-related activity. While the assessment is under way, there is no entitlement to an additional component. Indeed, it is the additional component which is supposed to reflect the additional needs of those who are not job ready. If the assessment determines that a claimant should be treated as having limited capability for work or work-related activity, the relevant additional component will be backdated to the end of the 13-week period, albeit that the assessment period may have been longer. During the 13-week period, the individual is entitled to only the contributory ESA rate equivalent to the income support JSA basic personal allowance rate. This is the same rate as the contributory JSA rate. By including in the 365-day period the 13-week assessment phase with no additional component, the Government are denying the receipt of 13 weeks of the additional component at the end of the period. This is demonstrably unfair.

We will doubtless be reminded of the cost implications which are, I think, £20 million a year after 2012-13 and £115 million for that year, the accumulated effect of those hitting at the start of the system. The effect of what the Government are proposing is that the additional component receivable by those entitled to contributory ESA in the WRAG will be available for only nine months, not 12 months. This is an example of where somebody has looked at every conceivable means of clawing back moneys from sick and disabled people. The benefit to government is said to be £100 million in a year, but looked at another way, this is an additional £100 million in a year taken from the pockets of the disadvantaged.

Amendment 41A addresses the position of those with fluctuating conditions who might move between the WRAG and the support group. Fluctuating conditions have been a strong feature of our debates on this Bill and on previous welfare reform measures. Concerns have been expressed about how work capability assessment operates for those with such conditions, whether there is sufficient training for DWP staff and providers and whether there is appropriate expertise which can be brought to bear to make sure that the system works as it should for people with fluctuating conditions. This brings with it the prospect of individuals potentially moving between the WRAG and the support group when reassessment arises.

Movements into the support group have been protected by the government amendment, and for so long as somebody is in the WRAG or the support group movements into the latter would not be denied contributory ESA, but periods in the WRAG are accumulated for the purposes of the time restriction. The problem this brings is as follows: consider somebody with cancer or another fluctuating condition who has spent, say, 11 months in the WRAG, has moved to the support group for a period and whose condition subsequently improves so they move back into the WRAG on a reassessment. If the clock does not then start again, they are given one month to prepare themselves for the loss of contributory benefit and to seek to re-enter the workplace. This problem would be made worse if there was an extensive period in the support group because of the greater disconnect with prior work-related activity. It is submitted that the amendment is a narrow and entirely reasonable proposition. The Minister may have figures about how many people it might affect, but it is suggested that it is unlikely to be many.

Amendment 41A, which has been tabled by the noble Lord, Lord Patel, precludes the starting of the time-period limitation for contributory ESA until the relevant provisions of the Bill enter into force. It has our support as it stands. As we discussed earlier, the clock has already started. When this legislation enters into force—the earliest date being April this year—some 100,000 people will lose their contributory ESA overnight, and for some that will be as much as £94 a week. Some may have been receiving it for the bare 365 days yet have paid their national insurance contributions for decades. We await further comments from the noble Lord, Lord Patel, but on any reasonable analysis, this is retrospective legislation and should be opposed. If there is to be time limiting of contributory ESA, in the normal course of events one would expect it to operate for claims after the introduction of the legislation. The Government are applying it to existing claims. Worse, they are counting days for which the allowance has already been received. Letters of notification have served only to cause confusion and dismay. Just imagine the consternation that would be caused by having a letter drop on the doormat telling you that in six months’ time it is likely that you will lose as much as £94 a week of your income—overnight.

In their understandable need to address the deficit, which we acknowledge, I believe the Government have lost all perspective and all sense of fairness. They have been thrashing around in all directions to grab back money on the flimsiest of propositions. Frankly, they should be ashamed of themselves.

[Lord Kirkwood of Kirkhope]

My Lords, I want to make a brief contribution to this debate because we have had a busy day and I think we all want to go away and reflect on what some of the earlier important amendments and votes mean for the rest of the Bill.

As I was preparing for tonight’s consideration of the Bill, I thought that Amendment 40A had some real potential to try to keep some channels open to the department. We have had some very powerful speeches and some significant decisions taken by the House. For myself, I want to go away and read all of those carefully. If we were looking for a way of trying to meet some of the obvious concerns that have been expressed in this debate, both internally and externally, this amendment suggests that there might be a possibility of getting something that can stand the test of time and that does not destroy the tight financial framework within which the Minister is seeking to operate. I know that he cannot on a whim say, “Yes, this is something that is possible for me to go away and look at”, but I think this is potentially realistic.

There are a number of reasons for supporting it, not just because it is realistic and meets some of the concerns but because it wins some extra time for everyone. The extra three months would be of significant advantage to the claimants concerned. My noble friend Lady Thomas made an important point earlier when she said that Harrington has a great deal of potential. I do not think that has been properly reflected in any of this evening’s discussions. The Government have set out their stall very robustly about the five-year set of annual reviews. I am well pleased, and I think everyone else is, about the progress that Professor Malcolm Harrington is making. Perhaps he should be invited to consider some of these things, including what might be done around the assessment phase. All I am saying is that I think there is some potential here for getting a compromise that might be winnable in terms of the financial constraints and might keep the channels open through the rest of the proceedings of this Bill—we might be able to come back to it at Third Reading.

In the balance of what else has happened today, this might seem nugatory or irrelevant, but I do not take that view. I think there is a mechanism here that is sensible and that may be doable. It will not be easy and there cannot be any guarantees, but I would really counsel my noble friend the Minister—who I know is actively concerned about all of this and is trying to find a way through that meets his financial framework as well as the concerns that have been expressed so powerfully by colleagues—to give this very careful consideration. The hour is not great but the House might be well advised to think carefully about this after the Minister has responded. I feel quite strongly that Amendment 40A may be worth considering voting on if we cannot get a response from the Minister that meets some of the concerns that have been expressed this evening.

--- Later in debate ---

[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.

[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.

[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.

--- Later in debate ---

[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.

[Baroness Hollis of Heigham]

If my noble friend will allow me, would the Minister be content if we were to introduce such a power by regulation at Third Reading, which would commit him to nothing or everything, according to how he wished to play it in future?

[Lord Kirkwood of Kirkhope]

Before whoever it is who is speaking sits down, I should say that I think that the Minister is making life difficult for himself. If he cannot take the advice that he is getting from all sides—and I, too, concur with what has been said—I, too, will look to get an expression of opinion from the House, which I really do not want to do. The suggestion that has been made about regulation-making powers is an easy out. I do not care what the Box thinks, actually; the Minister has the knowledge and the wisdom to take that decision right now, which would be a beneficial outcome for everyone.

[Lord McKenzie of Luton]

That has been helpful, as has been the intervention of my noble friend Lady Hollis, and I think that I can see a way forward. We do not need the Government’s permission to introduce an amendment in due course to take a regulation-making power, so if there is not that opportunity at the moment we will find out between now and subsequent Report days or even Third Reading. I think that that is what we will do; it will be a route through this. On that basis, and with that preliminary notice to the Minister, I beg leave to withdraw the amendment.

Amendment 40A withdrawn.

--- Later in debate ---

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.

--- Later in debate ---

[Noble Lords]

Not Content.

[Lord McKenzie of Luton]

Forgive me—are we not dealing here with Amendment 46, which the Government have accepted is consequential on Amendment 36A?

[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.