Welfare Reform and Work Bill

Lord McKenzie of Luton Excerpts

Wednesday 9th December 2015 Lords Chamber

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

I can answer that. It is a general way across the world that social scientists compare family to family of different sizes so there are ways of weighting each child or adult in the family.

[Lord McKenzie of Luton (Lab)]

My Lords, this has been a thoughtful and extensive debate. Amendments 24 and 26 in the name of my noble friend Lady Lister and the noble Lord, Lord Kirkwood, would cause data on low-income families where one or both parents are in work—that is, in-work poverty—to be reported.

We support these amendments. We know, as we have heard, that some two-thirds of children living in poverty are in working families and that whatever the climbdown on tax credits, the Government have in-work support in their sights. If we are concerned with measures that look at the current experience of poverty as well as the risk of poverty, there seems no logic in including out-of-work but not in-work poverty, although the policy levers may be different.

Amendment 25 in the names of the noble Baroness, Lady Grey-Thompson, and the noble Earl, Lord Listowel, seeks to retain the current income measures in the Child Poverty Act. We, of course, support that. Our Amendment 46 does the same but retains that Act’s targets as well.

The absence of income measures cannot be justified and runs counter to pretty much all the evidence or views of those engaged with child poverty. The Government’s suggestion that income measures are a symptom of poverty, rather than a cause, is too simplistic. My noble friend Lady Blackstone gave us a great example relating to educational attainment. If people are poor they do not have the same opportunity to have the same equipment at home; they do not necessarily have books at home and they do not necessarily go to school with a meal inside them so that they can be more attentive at school. It is simplistic to say that one is looking at the experience of poverty and that it is not a symptom of poverty.

In its July 2015 response to the Government’s child poverty statement—a number of noble Lords referred to this—the Social Mobility and Child Poverty Commission stated:

“The commission has argued in the past that a more rounded way of measuring poverty—taking … account of causal risk factors—is sensible. The life chances of children, the poorest especially, depend on many things … It is not credible, however, to try to improve the life chances of the poor without acknowledging the most obvious symptom of poverty, lack of money”.

Pretty much every noble Lord who has spoken in this debate, with the possible exception of the noble Baroness, Lady Stroud, agreed with that proposition. She asserts that looking at simplistic measures of income contains a number of flaws, but my noble friend Lady Hollis made clear that the Child Poverty Act 2010 had four measures. You need to look at the circumstances in aggregate, not just at one snapshot in time.

CPAG says:

“We believe that poverty is a condition marked by a lack of adequate resources, some of which may not be financial. Nonetheless, an inadequate income remains the decisive characteristic of poverty and must remain central to any poverty measurement”.

A number of noble Lords referred to the Centre for Analysis of Social Exclusion at the LSE and the work that it did. It looked at the responses to the DWP’s consultation on child poverty measures, which sought to test the level of support for replacing the existing measures with new dimensions, including those provided for in the Bill. As we have heard, the research shows that there is a very high level of support for the existing measures in the current Act. Most wanted no change and those who countenanced additional dimensions saw this as supplementary information, but not as measures of child poverty itself. Most respondents were of the view that lack of material resources— income—was the very core of child poverty. We agree with that. It is suggested that respondents to the consultation saw the proposals to change the measures as bringing to an end the official measurement of child poverty in the UK. How does the Minister respond to that? He will doubtless tell us that the HBAI figures will still be published as now, but we know from our prior deliberations—the noble Baroness, Lady Grey-Thompson, made this point—that what gets reported under Clause 4 will be the focus of the Government’s attention. That is why they are approaching it this way.

[Baroness Lister of Burtersett]

I am sorry to intervene, but I wanted to ask the Minister whether he could answer a specific question relating to that. I know that there are some fears about this among academic social scientists and the voluntary sector. I absolutely accept the Minister’s assurances that the households below average income statistics will continue to be published, but will he assure the Committee that they will be really clear and published in an accessible form, not just as a load of Excel tables that some of us will not be able to understand? It is very important that we have that assurance on the record.

[Lord McKenzie of Luton]

I thank my noble friend for that intervention. I doubt there is much that she does not understand or is incapable of understanding, but she asked a highly relevant question. I hope that the Minister will give that assurance.

We have had a number of contributions to this debate. My noble friend Lord Liddle took us back in history but stressed the importance of the work that went into developing these measures in the first instance, enjoining the skills of Tony Atkinson. The right reverend Prelate the Bishop of Durham recognised the value of having worklessness and educational attainment as part of a measure. However, he said that that was not sufficient; there needs to be a focus on income if life chances are to be influenced and addressed.

The noble Earl, Lord Listowel, supported the existing measures in legislation. I think that the Child Poverty Act was the first legislation that the Minister worked on in opposition when he joined this place. At the end of the day, I thought that we had pretty much cross-party agreement, although it is fair to say that the Minister said there were other aspects of poverty which he thought should be reported as well. However, I do not believe that is the same as tearing up the Child Poverty Act, which is what this piece of legislation seeks to do. This is a very important issue because, unless we look at income, we will not address the here and now of poverty. It is all very well looking at some of those factors which have medium and long-term effects on people’s life chances, but we also need to address how people without resources exist today. That is why we need these amendments.

[Lord Freud]

My Lords, if we are taking a trip down memory lane, I remind the noble Lord, Lord McKenzie, that he unceremoniously threw out my amendment to put in four key life chance measures, which I said at the time would better reflect the real drivers of poverty, so clearly the debate has not moved on a lot.

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[Lord McKenzie of Luton]

Does the noble Lord accept that the issues he was talking about were quite properly to be included in the building blocks of the strategy, which the Bill also required? It did not eschew the measures themselves.

[Lord Freud]

I shall address the amendments. I am sure the noble Lord will come back to me on some of these issues as I go through my remarks. Amendment 25, in the names of the noble Earl, Lord Listowel, and the noble Baroness, Lady Grey-Thompson, seeks to expand the report to include data on children living in households with low relative income combined with the other three income measures in the current Act, as we have discussed. The reason that we do not want to include those is that they fail to tackle the root causes of child poverty and focus on symptoms, which we want to replace. I will set out my argument in full. The effect of Amendment 46, in the names of the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, is wider still. It would prevent the repeal of those measures from the Child Poverty Act 2010.

I shall try to explain why we find the four income-related measures unfit for purpose, particularly as regards treating them as targets. The income measures they are based on are a poor test of whether children’s lives are really improving. As my noble friend Lady Stroud pointed out, in the past, they have shown child poverty falling when the economy was in recession. Much more importantly, when you look at them as a driver of decisions by a Government, they are inherently unpredictable and would lead a Government to spend finite resources on action that does not produce the best results for children.

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[Baroness Blackstone]

My Lords, though the Minister makes a commitment, will he accept that, as is so often said in this House, if there is no statutory requirement and nothing on the statute book any one of his successors could abandon that commitment? That is why we who have concerns about children in poverty want this measure to go on being collected and to be done under statute.

[Lord McKenzie of Luton]

I agree that we should have this in legislation but can the Minister confirm that his personal commitment will cover the circumstances and the work that needs to be done to identify whether somebody is experiencing material deprivation? That is not just an income issue.

[Lord Freud]

I think the noble Baroness, Lady Lister, will support me here but my memory is that the material deprivation figures are in the HBAI statistics. She nods that that is the case, so I can confirm that.

I shall summarise briefly. I am not in a position to give noble Lords the one word they want, but hope I have indicated that the measures will be available to see what is happening to relative child poverty. I am convinced that it is our new life chances measures—the measures rejected six years ago by the noble Lord, Lord McKenzie, which focus on the key drivers of worklessness and educational attainment—that will make the biggest difference to children, and that these amendments, were they on a statutory basis, would dilute that focus. We want to focus on the measures that make a real difference to children’s lives. I therefore invite the noble Baroness to withdraw her amendment.

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[The Lord Bishop of Durham]

My Lords, I rise to speak first to Amendment 31. Given the serious enthusiasm that the Government have for introducing “life chances” as a title and theme, it would make complete sense for the Government to want to report on improvement in children’s life chances in the future. So I commend this as being entirely in line with the purpose of the whole Bill—it would make sense to report.

I will speak now to Amendments 36 to 40 and 42 to 45, and I would like to keep us in the north-east of England. Yesterday, it was my privilege to open the new building for Holy Trinity primary school in Seaton Carew in Hartlepool, and to then go to Prior’s Mill primary school in Billingham, both of which are Church of England schools. I add that I have visited the school in Berwick that the noble Baroness mentioned and can confirm what she said; it is a very fine school but it has not produced people for higher education in the way that it should.

The proposal to change from a “Social Mobility Commission” to a “Life Chances Commission” gives us a very rare opportunity to change the title of a government commission so that it is understood by the very children whom it seeks to serve. Most of our departments and so on do not resonate with the life, language and conversations of children themselves. However, in both the schools I visited yesterday, I found myself talking with those children about their hopes and their dreams and their fears, but they were longing to talk about the chances and hopes that they had in life. Those were not purely about money: they were about work and home and family and so forth. Not once did I hear any of them talk about social mobility possibilities.

In all seriousness, I say that it would be a much more sensible heading and title for the commission and it would fit much more accurately with the aims and purposes that the Government have stated for life chances, so I would seize this with every opportunity. It would please the children of the nation if they understood what the commission was about.

[Lord McKenzie of Luton]

My Lords, I shall be brief because I know that we want to make progress today. I support wholeheartedly my noble friend Lady Lister, with her brilliant exposition as to why we should substitute “life chances” for “social mobility”. I join her in opposing the proposition that Clause 5 stand part of the Bill. We have a very specific amendment in this group, Amendment 41, which is merely to delete the words, “on request”, so that the commission, whatever its final title and remit, can be proactive in offering advice to the Minister. That obviously carries the implication that the commission must be appropriately resourced. Perhaps the Minister will tell us what is intended in this regard. I hesitated to raise that issue, because I feared that the Minister was going to tell me that we put it there when we were in government, but I hope that he will not. Even if we did, it seems to be entirely reasonable that it should now be expunged from the provision.

I also support those who argue that there should be proper strategies, so that you do not just have odd reporting obligations: there must be an intent to come forward with a strategy focused on life chances and on fuel poverty. As the noble Baroness, Lady Grey-Thompson, said, if we do not have a strategy, where is all this reporting going to lead? Given the hour, I think I will leave it there.

[Lord Freud]

I hope that what I have to say on this group of amendments will be a little more pleasing, although I do not think it will please everyone on everything. I will divide my remarks into two areas: the first on strategy and targets, and the second on the commission. It is a wide group of amendments, and that is the way they break down.

Starting with Amendment 33, I think that noble Lords who put that forward would accept that we have dealt with that pretty thoroughly when we considered Amendment 25, so I shall not reiterate all of my arguments on that matter. Noble Lords have heard my concerns about the implications of legal targets when the financial figures are so difficult to forecast.

Amendment 31 sets out exactly what information should be in the Secretary of State’s report. I think that I am going to please the noble Baroness, Lady Lister, when I explain where we are. We will publish a strategy on life chances, so that is the noble Baroness’s strategy. We will then publish an annual statutory report on the new measures: I think that is effectively what the noble Baroness is driving at. The Government have produced major new strategies, and I think that noble Lords all around the Chamber will accept that we have tried to transform all the structures of the benefits system and the support we provide for people in a coherent way.

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[Lord McKenzie of Luton]

My Lords, this is an extremely important group of amendments. On behalf of the Labour Benches, my noble friend Lady Sherlock and I will oppose Clauses 13 and 14 standing part of the Bill and will support Amendments 50 and 53, in the name of the noble Lord, Lord Patel. We support the thrust of Amendment 52 in the names of my noble friend Lord Layard and the noble Baronesses, Lady Hollins and Lady Tyler, which concerns access to psychological therapies. I acknowledge the campaigning work conducted by my noble friend when we were in government and the fact that he managed to move the issue of psychological therapies up the political agenda. More than that, he was significantly responsible for people getting treated.

As we have heard, Amendments 50 and 53 defer the changes to ESA coming into force until their impact on individuals’ physical and mental health, their financial situation and their ability to work has been estimated. All these matters have, in one way or another, been the subject of real concern since the substance of this policy—a £30 a week docking of the WRAG rate—became apparent. The noble Lord, Lord Patel, explained that he was particularly focused on people moving from the support group to the WRAG who were recovering from cancer. In so far as the Government’s impact assessment seeks to address these matters, it seems to conclude that it is doing claimants a favour by removing the WRAG rate and its equivalent in universal credit because this will encourage them to take steps back to work, with a consequent improvement in their health and the life chances of their children.

We should be ashamed, if not surprised, that a priority for our Government is to reduce the income of disabled people—individuals who have been assessed as not currently fit for work—from the current rate of £102 a week to just £73 a week, and to pray in aid a 10 year-old OECD report which, by all accounts, does not make a single reference to disabled people. We should also be concerned about the attempt to incentivise and coerce people into work when they have been found by a rigorous assessment not to be fit for work. There is either a lack of understanding of, or a callous disregard for, the financial circumstances that many in the WRAG face today, let alone in the future—circumstances that mean they struggle to pay their bills and maintain their health, rather than not drift into social isolation and focus on activity that will move them closer to work.

Of course, this is not a small group. There are nearly 500,000 disabled people within the ESA WRAG, almost half of them with a mental and behavioural disorder, including learning disabilities and autism. These are individuals who will need time and proper support to make it back to the labour market. Far from help with their struggles, the ESA cut will add to debt, stress and anxiety, making their journey more difficult, if not impossible, and pushing them into further poverty.

Most noble Lords here today will have received a raft of substantial and authoritative briefings from charities and other organisations whose opposition to this particular cut is remarkably consistent. We should thank them for their defence of disabled people, particularly their robust challenge to the proposition that cutting the WRAG is a work incentive. We also now have the benefit of the formal review of the proposed reduction in the employment and support allowance and how it will assist the Government’s declared aim of halving the disability employment gap.

The report was led by the noble Lord, Lord Low, and the noble Baronesses, Lady Meacher and Lady Grey-Thompson, at the request of a group of charities. We should acknowledge their commitment and the clarity of their conclusions and recommendations. I hope we will hear from them and have the benefit of their expertise during this debate. One of their central recommendations was to reverse the removal of the ESA WRAG component and the equivalent payment in universal credit. This is precisely what our amendments will do. But the review is not just about objecting to the change that the Government are seeking to impose. It sets out a series of recommendations focused on helping the Government to help more disabled people move closer to and into work. Perhaps a recast amendment on Report might better capture this broader approach.

I will not attempt to outline each of the 11 recommendations of the review in the hope that others will cover some of them but of particular significance is the call to redesign the WCA, focusing on a holistic approach which understands the barriers to work that people face, and ensuring that this information is used to provide appropriate support. Not only did the review find no evidence that the £30 a week WRAG component is acting as a disincentive to work, or that reducing the payment will incentivise people to seek work, it received evidence to the contrary—that the reduction would hinder rather than help people take steps towards work.

The extra money individuals in the WRAG receive is to recognise that they are likely to be unemployed for a longer period than those receiving JSA, and that once out of the workplace disabled people find it more difficult to return. The typical time for which claimants were expected to be in the WRAG was two years; for those on JSA it was much less. This loss of resources is being imposed on a range of other measures that can affect disabled people—council tax support cuts, the bedroom tax, the benefit cap for those not on DLA/PIP—and benefit freezes are in place. The review reminds us why this extra income is so important to disabled people and why the threat of its loss—as well as the reality, should it come about—is so hazardous to their health and well-being.

Your Lordships should read the report and understand the strains of daily living for so many of our fellow citizens—individuals who would welcome the chance of moving towards and into work if we would only invest in tailored and personalised programmes to make this a reality for them. I urge the Government to reject these misguided cuts, listen to the views of those whose lives would be made a misery if they proceed, and instead grasp the opportunities that could genuinely transform the lives of so many disabled people.

[Baroness Manzoor]

My Lords, we on these Benches strongly oppose the question that Clauses 13 and 14 stand part of the Bill, along with the opposition party. At Second Reading, I made it clear that these were the clauses that the Lib Dems were most concerned about—in a Bill which had little to be joyous about.

Clause 13 legislates to reduce the amount of money that new claimants receive within the employment and support allowance work-related activity group—known as ESA WRAG—by £29.05 per week or nearly £1,500 a year. This cut is mirrored in Clause 14 for the equivalent payment in the new universal credit, called the limited capability for work group. As the Disability Benefits Consortium says, this is despite the fact that the WRAG is specifically there to provide support for disabled people who are assessed as being not fit for work, as the noble Lord, Lord Patel, stressed.

In his summer Budget, in order to make savings on welfare expenditure, the Chancellor announced that he would reduce the level of benefit paid to claimants in ESA WRAG to the value of jobseeker’s allowance—JSA. How can that be right? These are people who have been deemed to be ill. This is despite the fact that, as the noble Lord, Lord Patel, and others have said, the people receiving ESA WRAG and the limited capability for work element of universal credit have been independently medically assessed by government assessors as being too ill to work—not by their own GPs but by independent assessors, and that is really key. These are people with disabilities—nearly 500,000 people; people with long-term health conditions such as mental health and behavioural disorders—nearly 250,000 people; and people with cancer or progressive motor neurone illnesses such as MS and Parkinson’s disease.

I entirely agree with Macmillan Cancer Support, the Disability Benefits Consortium, Mind, Mencap, Leonard Cheshire Disability, Scope, the Rowntree Foundation and many others—they cannot all be wrong—that reducing the amount of money received by individuals on ESA WRAG and the limited capability for work element of universal credit will make it harder for individuals to cope with the financial impact of their condition and to afford what they need to support their recovery. The additional pressure to seek work when not fit could detrimentally impact on an individual’s health and recovery. I have seen this, having worked in the NHS for many years. This could actually move them further from the labour market. That is not what the Government want to do. The negative impact of returning to work before individuals are fit to work compromises them and is unsustainable, and may lead individuals to require welfare support for longer or indeed move them into the support group, where they do not work again. That cannot be right.

The Government’s impact assessment states:

“Someone moving into work could, by working around 4-5 hours a week at National Living Wage, recoup the notional loss of the Work-Related Activity component or Limited Capability for Work element”.

Frankly, that is unbelievable, as people in this group have been found not fit for work. That is the hub of the whole issue. Clauses 13 and 14 have no place in a caring and compassionate society and I urge that they be removed from the Bill. It is far better that the Work Programme trains advisers better to understand conditions so that the most appropriate support and help can be given to individuals to return to work. Barriers to employment such as lack of job opportunities, attitudes and transport difficulties must also be addressed by the Government, and employers should be given the necessary training and support to enable them to take on more disabled people so that people can return to work when they are deemed fit to do so.

I urge the Minister to exempt people on the ESA WRAG and that Clauses 13 and 14 do not stand part of the Bill. The Government must give people hope and support. I fear that these measures are merely about the Treasury wanting to demonstrate that it can achieve a budget surplus—how wrong is that?—without, I fear, the Treasury thinking about real people and real lives, and the impact it will have on those people. This is not about figures on a balance sheet but people who will find the impact of these clauses deeply damaging, as they will affect their life chances. This is not just about the young. I agree with the noble Lord, Lord Patel, that these clauses are not sensible or morally right.