Welfare Reform Bill

Lord McKenzie of Luton Excerpts

Monday 23rd January 2012 Lords Chamber

[Baroness Thomas of Winchester]

I have a more specific question about disability living allowance and I think this may be the right place to ask it. If someone living in a high-cost rental area on local housing allowance has a serious accident or is diagnosed with a serious long-term condition, perhaps next March, and is placed in the ESA work-related activity group, they might apply for disability living allowance. They might have had a stroke that was not bad enough to take them out of the jobs market for a very long term but that would require them to take a long period of recovery, and they might have been quite badly affected. This person will have to be assessed and then wait for a qualifying period of three months. If during those three months the person in the household falls foul of the benefit cap, will they be penalised immediately or will their application for DLA be taken into account, which of course will then exempt them from the cap? This is an important matter which we have not heard anything about. It might be part of the transitional arrangements that we hope we will hear about, but I would hate that person, with all their difficulties, to have to think about having to look for another place to live when they are trying to recover from quite a serious illness.

[Lord McKenzie of Luton]

My Lords, Amendment 60A seeks to protect carers from the impact of the benefit cap in cases in which they are not living with the person for whom they care. On the last day on which we debated the Bill, the Minister told us of the value that the Government place on carers and their work. However, the Bill is drafted in such a way that this work will be valued only when the carer lives with the person for whom they care and thus excluded from the benefit cap by virtue of that person’s eligibility for DLA or PIP. Carers who are not part of the DLA claimant’s household, as we have heard, will be subject to the benefit cap. They are therefore likely to lose their carer’s allowance, suggesting that the Government place no value on their care.

As we have heard, the latest impact assessment estimates that 5,000 carers will be affected by the cap—that is the number provided by my noble friend Lady Lister—and yet not only does such care save the taxpayer thousands of pounds but the carer will be almost unable to work—or at least full time—by virtue of their caring. So they may face the choice of ending their care role in order to live. This is not theoretical. One in six carers has made the difficult decision to give up work to care, leading to an average loss of £11,000 a year. Many such families struggle to make ends meet as they cope with both a drop in income and the increased costs of caring—for example, through buying extra support and equipment and travelling to hospital and doctors’ appointments.

The impact of the cap will be to make this struggle significantly more difficult. Carers affected could lose £87 a week. Indeed, it may mean that some carers are faced with a tough choice between giving up caring—imposing significant costs on health and social care services—or taking a significant financial hit.

The Secretary of State for Work and Pensions told the BBC on Friday that people were “not suffering” as a result of his welfare reforms. Perhaps he would like to reconsider whether carers are likely to suffer if the amendment is not passed.

The Secretary of State might also consider the case of some of our service personnel. War widows are excluded—quite rightly—from the benefit cap, but should a mother helping to look after her son, injured in Kabul or Iraq, and claiming carer’s allowance for this, still be subject to the cap? Is that fair? I look forward to the Minister’s response.

Amendment 61, which relates to temporary accommodation, was to a degree dealt with in the first amendment we discussed today. It was a component of that broader amendment. We certainly support the amendment. I took it from what the Minister said in response to that general debate that something was afoot to address this issue but, without having had the chance to read Hansard yet, it was not totally clear what. Perhaps he will take the opportunity of saying it again, expanding, promising to write or whichever of those options he feels appropriate. It sounded as though there was a recognition of the need to address the issue that has been raised by the amendment. I certainly support the fact that there should be a move to address this and I look forward to receiving further information.

We very much support Amendment 60 and a period of grace. We would have been happy to support 52 weeks, but if 26 weeks is what the noble Lord, Lord Best, is pressing for, we would certainly support that should he wish to press the matter.

I say to the noble Lord, Lord Stoneham, that there are two things here. There are issues around transition. I see that the Lib Dem Benches are placing great faith in what might flow from transition and the offers that might come. However, I think that is different from an ongoing period of grace. The purpose of this, as the noble Lord, Lord Best, and my noble friend Lady Drake have enunciated, is to help people who fall out of work and to allow them a period of adjustment or a period of grace before the cap hits. There might be a transitional component to that, but this needs to be something of a permanent feature of the arrangements to make sense.

I suppose that six months corresponds with the contributory JSA period. My noble friend Lady Drake may be more up to date than I am on the data. It used to be 50 per cent back in work in three months and 75 per cent in six months. The data may have moved on. Certainly, given the unemployment figures that are around, I think even the longer period suggested by my noble friend must be somewhat difficult. The arguments in favour of a period of grace seem to be overwhelming. For someone to have to cope with all the traumas of losing their job and at the same time have to face changes in accommodation and moving to a new area, which could be a direct consequence of the cap, would be unforgivable. I hope that the Minister can say something positive on that as well.

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

My Lords, Amendment 60 would require us to provide for a period of 26 weeks during which we could not apply the benefit cap. The period would start from the date that a claimant’s welfare benefits first exceeded the level of the cap. It would therefore not only apply to new claimants, but also to existing claimants who have a change of circumstance that results in the level of the benefits that they receive exceeding that of the cap. We have said all along that we would look at ways of easing the transition for families. We do not want families to be taken by surprise by the cap or to create problems that people can avoid by taking appropriate steps. We want to ensure that people who might be affected by the cap know what to expect and can consider the options open to them.

There has been a lot of speculation in the press about whether a grace period is what the Government have in mind. Clearly, a grace period could be a way of easing transitions, especially for people who have recently been in work and can be expected to return to work within a short period. A grace period would mean that their benefit entitlement would not be affected when they first leave work. This would avoid the risk that they would be prevented from looking for work because of the need to adjust their circumstances because of the cap. That point has been made in the debate.

However, people who have recently enjoyed a high income are better able to deal with temporary shortfall and can and should be expected to have made their own provision if they know that there are limits on benefit entitlement. A grace period also carries the risk that people are likely to stay on benefits for longer than they would otherwise simply because a higher rate of benefit is temporarily available to them, so while the grace period approach is clearly one possible approach, it needs careful consideration. Issues with run-ons and things like that would need to be looked at very carefully. We also need to consider whether other approaches may be just as effective or indeed more effective for some groups. What I can say today, as I said in Grand Committee, is that we are well aware of the issues, we are confident that we have the powers we need to ease transitions and we will consider the case for a grace period along with the other options that might be available.

Amendment 60A seeks to exclude carers from the benefit cap. For carers the benefit system is designed to provide financial support where caring responsibilities prevent carers working full time and, as such, carer’s allowance should be treated in the same way for the purposes of the cap alongside other income maintenance benefits. However, households which include a member who is in receipt of DLA, PIP on its introduction, attendance allowance or constant attendance allowance, will be exempt from the impact of the benefits cap. Households where a member receives carer’s allowance but no members receive DLA, attendance allowance or constant attendance allowance, will not be so exempt. As the noble Baroness, Lady Lister, who is a fast reader, pointed out, the revised impact assessment states that 5,000 claimants fall into this group. One of the reasons that the number is rather less than one might have expected—or that I suspect the noble Baroness, Lady Hollins, expected—is because we are looking at two benefit units, so the disabled person retains all their disability benefits and the rest of the benefits are received by the other householder. That is one of the reasons why the figures net down to rather a small number.

--- Later in debate ---

[Baroness Meacher]

My Lords, I rise to move, very briefly, Amendment 62 on behalf of my noble friend Lord Ramsbotham, who apologises to the House for not being able to be in his place. As noble Lords will know, he generally speaks with little in the way of notes, so I shall do my best.

The purpose of the amendment is to ensure that regulations will provide for prisoners who were receiving benefit at the time of their imprisonment to be assessed during their time in prison or custody for their eligibility for benefit on their release from custody. I passionately agree with my noble friend Lord Ramsbotham that the amendment has huge merit. In Grand Committee the Minister outlined the arrangements that have been made to cover those who claim jobseeker’s allowance, which my noble friend accepts, but the Minister did not accept my noble friend’s proposal that all prisoners should have claims to other benefits processed before release.

Last week my noble friend had an extremely useful meeting with officials in the DWP, with whom he discussed the situation, reaching the following conclusion—that my noble friend Lord Ramsbotham would now table an amendment to the Legal Aid, Sentencing and Punishment of Offenders Bill, putting the onus on the Ministry of Justice to confirm a prisoner’s national insurance number and current entitlement to benefits on reception into prison. Before release, these should be processed in time for suspended benefits to be resumed and necessary arrangements made to cover the gap before any payment could otherwise be made, subject to payment in arrears. This will require protocols between the DWP and the MoJ to be established. The question is whether the Minister will be prepared to support this proposal.

The arguments in support of the amendment were put by my noble friend Lord Ramsbotham most forcefully in Committee and I shall not repeat them. I beg to move.

[Lord McKenzie of Luton]

My Lords, I shall speak briefly. The thrust of what the noble Lord, Lord Ramsbotham, is trying to achieve has considerable merit. I wonder how some of the detail in the amendment about assessments when people start their sentence would work in practice, particularly if someone is likely to be in prison for some while.

We dealt with regulations about a fortnight ago on the importance of people being able to get into the work programme on immediate release from prison. However, I was a little disturbed that, as the Minister explained, applying for JSA was voluntary but that once on JSA there was an inevitable path into the work programme. That of itself is fine, except that it may not take account of many good programmes that are already around in prisons where people are supported sometimes before they leave prison and certainly supported when they do. The route via the work programme might pre-empt and override all of that. The noble Lord, Lord Kirkwood, was involved in that debate.

The thrust of trying to get as many benefits as possible sorted out for individuals before or at the point they leave prison must be helpful to them. The opportunity for them to have resource—presumably under the advance payment arrangements if it happens immediately, because typically benefits would be payable in arrears—is fine, but there is a concern about potentially damaging those good programmes in prison, where they exist, which help people to adjust to the world of work before they formally finish their sentence.

--- Later in debate ---

[Lord Kirkwood of Kirkhope]

My Lords, I concur with the noble Baroness, Lady Lister.

[Lord McKenzie of Luton]

My Lords, for the sake of brevity, I can say that I also concur with my noble friend and with the noble Lord, Lord Kirkwood. My noble friend is simply seeking to have the issue on the record.

[Lord Freud]

My Lords, I shall speak to Amendments 62ZA and 62B. I could almost do so like my noble friend Lord Kirkwood, but I will speak at slightly greater length.

I would like to assure noble Lords that we are in agreement on the need to ensure that a claimant’s childcare responsibilities are taken into account when setting work-related requirements and when determining whether a claimant has good reason for failing to meet a requirement. For the record, let me set out how we intend to do this.

The legislation will provide clear safeguards. When a child is under one, support will be unconditional. When a claimant’s child is under five, we will ask the claimant only to attend work-focused interviews. If claimants fail to meet this requirement for no good reason, they will be subject to the lowest level sanction; the sanctionable amount for these claimants will be limited to 40 per cent of the sanctionable amount for other claimants.

Secondly, advisers will take childcare responsibilities into account when setting work-related requirements, and we intend to set out some specific safeguards on this issue in regulations. Regulations will prescribe that claimants with a child under 13 will be able to limit their work search to jobs that fit around their children’s school hours. This is key. The best way to prevent the inappropriate application of sanctions is to ensure that requirements are reasonable in the first instance.

Amendment 62B seeks to introduce a blanket exemption from conditionality sanctions for claimants who can demonstrate that they did not have guaranteed and predictable access to suitable childcare. We do not think such a legislative exemption is needed. As I have previously explained, when a claimant fails to meet a requirement, a sanction will be imposed only if the claimant does not demonstrate that there was a good reason. In considering whether there is good reason, we will consider all relevant matters raised by the claimant, which could include the availability and cost of suitable childcare. This flexible, case-by-case approach is the right one, but to be absolutely clear, when a claimant demonstrates that a lack suitable childcare meant that the claimant was unable to meet a work-related requirement, a decision-maker should determine that the claimant has good reason and a sanction will not be applied.

Noble Lords have previously raised concerns about where the responsibilities lie in relation to the provision of good reason. I would like to take this opportunity to clarify the position. We have a responsibility to ensure that claimants understand the decision-making process and that they have an opportunity to explain the reason for a failure to meet a requirement. The onus is then on the claimant to tell us the reasons and provide supporting evidence where necessary. The department must then determine whether the reasons raised are relevant and whether any of those reasons constitute a good reason. The current practice of visiting ESA claimants with a mental health condition or learning disability before the application of a sanction is a good example of the proactive process required to collect evidence of good reason in some cases. I can assure noble Lords that we will review our approach to collecting evidence of good reason for all claimants to ensure that we get this process right.

The final safeguard is the appeals system. Any decision to reduce an award as a result of a sanction can be appealed to the First-tier Tribunal. Amendment 62ZA seeks to require the tribunal to consider whether the claimant had guaranteed and predictable access to childcare. We do not want to go down the route of prescribing specific matters to be taken into account by an independent body; the existing legislation is clear and sufficient. The First-tier Tribunal must consider any issue or circumstance raised by the claimant that is relevant to a valid appeal, so in an appeal against a decision to reduce an award of benefit because of a sanction where a claimant cites lack of suitable childcare as a good reason for failure, this should be considered by the tribunal because it is plainly relevant to whether the award ought to have been reduced.

Given the safeguards we have in place and the commitment I have made to reviewing our processes for collecting evidence for good reasons, I hope I have provided the assurances on the record that were required by the noble Baroness and I urge her to withdraw this amendment.