Welfare Reform Bill

Lord Skelmersdale Excerpts

Wednesday 26th October 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, this is a probing amendment designed to focus on issues of in-work conditionality. We attach it to Clause 15, which is just on the “Work-focused interview requirement”, but it is intended to cover work preparation requirements as well as work search and work availability requirements.

The Minister will be aware that some of us were able to attend a briefing session with officials yesterday—I thank them for that. It is clear from that session that much of the thinking about in-work conditionality is at best embryonic, notwithstanding that we are being asked to give considerable powers to the Secretary of State in this primary legislation.

The proposition that conditionality should not stop when someone accesses work is not of itself unreasonable. The progression from a mini-job to a full-time job is to be encouraged for those whose health, family and caring commitments permit. How it will work in practice is what matters. We have only a few parameters at the moment. It is the express policy intent that conditionality will cease to apply for claimants without caring responsibilities or health conditions at a level of gross earnings equivalent to 35 hours per week at the national minimum wage, currently £212 per week, or £11,000 a year. Obviously, other things being equal, that would put someone within the tax and national insurance net and therefore into the higher tapers. Someone being paid twice the national minimum wage would have to work only 17 and a half hours per week; someone on lower pay twice that long. The threshold for an equivalent couple is double that for an individual, so the family income would need to be £22,000 before they escape conditionality.

It is not clear how well those parameters have yet filtered into the public consciousness. Perhaps the Minister can point us in the direction of the equality impact assessment which covered that issue. We welcome the fact that the Government have given some assurances about easements—for example, for lone parents with young children and for those with health challenges and caring responsibilities. There is also the flexibility promulgated for ways in which claimants can increase their earnings by supposedly increasing hours or pay, changing jobs or taking on a second job. That is nice in theory but likely to give rise to all sorts of practical problems.

The vagueness around the provisions, the extent to which providers or Jobcentre Plus staff will be making the determination, and the sources of capacity and training are a real worry. Affirmative regulations are all very well, but we know that they provide limited parliamentary oversight of what is a significant change.

A number of points arise: we know from the briefing that the ultimate requirement in terms of hours or overall remuneration will be included in the claimant commitment ab initio. How will this help those who wish to have a staged return to the job market? How will employers who are able to offer part-time work react to someone whose claimant commitment accepts that they are to achieve full-time work? It seems to me that this could damage their job prospects.

The test is apparently to be on gross earnings, so where does this leave, for example, employer pension contributions? These will be a significant feature, given auto-enrolment, which we know the Government are committed to introducing next year. What capacity will there be in the system to do the appropriate kinds of comparison? These will be complicated matters.

How will this work for the self-employed? What happens if the profits of the business are slower to materialise than hoped for, margins are squeezed beyond expectations, or the business operates in a fluctuating market? If it is a seasonal business, one can see the prospect of fill-in work, but on what analysis will Jobcentre Plus or providers seek to divert individuals from the sometimes painful process—particularly in the current economic climate—of building a profitable and sustainable business? What expertise will they be able to bring to bear?

Our discussions yesterday raised a number of issues about how the work programme fits with this, as well. There seems to be a potential conflict between work programme providers, which are remunerated by sustaining individuals in work for at least 16 hours per week, and in-work conditionality, which seeks to move people to 35 hours a week, if remunerated at the national minimum wage.

It is understood that there is scope to renegotiate outcomes with existing providers, but this could be a significant change of focus. What evaluation has been undertaken of the potential to renegotiate? Can the Minister tell us what discussions have taken place with the business community and, indeed, the TUC, on how this novel interaction with the labour market should proceed?

We acknowledge what the Government are seeking to achieve, but there appear to be so many unknowns—unless the Minister can give us comfort this afternoon—that it is difficult to accept that we should give the powers that the Government are seeking in this Bill. At the least, this looks to be a case for a sunset clause. I beg to move.

[Lord Skelmersdale]

My Lords, first of all, I should apologise to the Committee for not being here when it last discussed this Bill on Monday, and accord my grateful thanks to the noble Baroness, Lady Meacher, for speaking to some of my amendments in a large group which was somewhat precursored—I think that is the word—by the noble Lord, Lord McKenzie.

The noble Lord, in his speech to this probing amendment, asked a whole string of questions which I am not in any sense qualified to respond to. I am able to respond to the amendment, which leaves out,

“or more paid work or better-paid work”.

The object of the exercise, we all agree, is to get as many people as possible into work, through this system. The trouble is, if the words I have just quoted from lines 10 and 11 on page 7 of the Bill are left out, then once the claimant has got paid work that is the end of the Secretary of State’s responsibility.

What happens if the claimant decides that the hours he is doing are not sufficient for his needs, even with the universal credit? I accept there are the pension commitments and various other commitments that the noble Lord, Lord McKenzie, spoke about. Is the claimant going to go back to the provider or to Jobcentre Plus and ask how he is to increase his earnings? If so, there is very good reason to have these words remain in the Bill. The question—

[Lord McKenzie of Luton]

My Lords—

[Lord Skelmersdale]

Can I just finish? The key question asked by the noble Lord, Lord McKenzie, is to what extent there will be bullying, by either the provider or the Jobcentre Plus officials. I hope to goodness that there will be none.

[Lord McKenzie of Luton]

The amendment, as I explained, was a probing amendment and was not of itself meant to be taken literally. It was the peg on which to hang the argument and this very important debate, which we should have. The noble Lord was musing about what would happen with claimants who wish voluntarily to increase their hours. There is nothing to stop them doing it, and we would all applaud that if they were able to, and to do so without further pressures on Jobcentre Plus or the providers. There is nothing wrong with that.

[Lord Skelmersdale]

No, my Lords. The reason I added my last sentence and prevented the noble Lord, Lord McKenzie, from rising to interrupt me was for the simple reason that the claimant may well need guidance and help in order to get the extra hours or money that he requires. Therefore, I am asking the Minister to what extent this is going to be driven by the claimant, or by the job provider, education or Jobcentre Plus. I said that I hoped it would be claimant-driven, and nothing else.

[Baroness Hollis of Heigham]

My Lords, I wonder whether I could add to the burden of questions that the Minister will be facing. This will appear somewhat on the tangent but, in my view, it is not, as it feeds into a lot of our other discussions and is related to work conditionality. At the moment, as I understand it, a lone parent is regarded as being in full-time work for the purposes of conditionality or eligibility for tax credits if she is working 16 hours a week, and is then topped up. With a child under, I think, 12—although coming down to 10, seven et cetera—that 16 hours kicks in at an earlier stage. As far as I am aware—and I stand to be corrected on this—there is no point at which the lone parent is expected to increase her hours beyond that as the child gets older. With a couple, the main claimant, as we know, may claim on behalf of both. I have no objections at all in principle with expecting either claimant in a couple relationship to be available for work; and, in certain circumstances, both.

What concerns me, and what I would like to ask the Minister about, is the impression that the support papers that I have read so far seem to give: that when a child is 12, whether you are a lone parent or in a relationship as a couple, all such people must work a full-time job, which is now defined as 35 hours a week. If I understand it correctly, it could mean that a lone parent with a 13 year-old could be expected to move from working for 16 hours to 35 instead, as part of work conditionality; and a couple—a husband and wife, or two partners—with children of 13 and 15 might each be expected to work 35 hours a week. If I have understood the proposals correctly, then I would like to come back on that because I find it antithetical to everything we know about the need for children to have support. I have no problem at all with couples and the second partner, or a lone parent, being asked to find work within school hours. However, if the Minister is saying that at the age of 12, both partners in a couple, as well as a lone parent, are expected to be in what we would traditionally regard as full-time work of 35 hours-plus, then this is certainly something that we would like to revisit. I would be grateful if the Minister could help us to be sure that we have the facts right, as this is part of a wider debate on conditionality.

--- Later in debate ---

[Lord McKenzie of Luton]

I thank the Minister for his reply and will certainly withdraw the amendment. One point pressed on us was that if there is a recognition that volunteering programmes can be beneficial, perhaps that could be recognised by Jobcentre Plus in the other programmes that it is structuring for individuals. There have been suggestions that sometimes people slip out of volunteering programmes because they cannot keep the commitments, because they have work-focused interviews or other mandatory activity.

[Lord Skelmersdale]

My Lords, perhaps I might interrupt here as I am interested in volunteering, having been a volunteer in various fields myself, as I suspect most of us in this room have at one time or another. Volunteering strikes me as a way of getting work experience—not necessarily but it could be—and therefore is to be most definitely applauded.

[Lord McKenzie of Luton]

My Lords, I agree with that and I am sure that we all would. I suppose it depends a little bit on the precise programme and activity, but the point is not to lose that opportunity for individuals who are already undertaking it because Jobcentre Plus is imposing other requirements with clashing commitments, meaning that people have to drop out of the programmes. That was a particular point that was pressed on us. I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Skelmersdale]

My Lords, having been wonderfully rude about the first probing amendment of the noble Lord, Lord McKenzie, I am going to do exactly the opposite now because I regret that he announced that this was a probing amendment. This is the widest power that I have seen for many years in any potential Act of Parliament. Paragraph (d) of Clause 19(2) states that,

“the claimant is of a prescribed description”.

Subsections (3) and (4), which relate to the subsequent amendments as the noble Lord has explained, include the word “may”. However, if “may” is included, “may not” would also be included. The phrase that sprang to mind was, “How wide is the ocean; how deep is the sea?”. I actually think that for once the Merits Committee has not gone far enough; nor, as I said, has the noble Lord.

[Baroness Thomas of Winchester]

My Lords, just to correct my noble friend Lord Skelmersdale, it was the Delegated Powers and Regulatory Reform Committee, not the Merits Committee.

[Lord Skelmersdale]

Yes, my Lords, I am sure it was.

[Lord Freud]

My Lords, noble Lords will be aware that we intend to use the power in subsection (2)(d) to establish the conditionality threshold. In summary, the threshold will be defined by establishing the hours we expect each individual in a benefit unit to work, taking account of their particular capability and circumstances, and multiplying this by the relevant national minimum wage. We believe that setting their threshold in this way is the right thing to do. It will mean that we can impose work-related requirements only on those claimants working less than we could reasonably expect in benefit units falling under the threshold and it ensures that we take full account of a claimant’s circumstances and capability. As we have discussed, we believe that we must have the power to encourage and support such claimants to do more to support themselves. Without a threshold many more working claimants would fall into the all work-related requirements group. We do not want to bring into conditionality those claimants who are working as much as we can reasonably expect. Having a threshold is essential for this.

Finally, we intend to use this power to do more than set the conditionality threshold. We will also use this to add other categories of claimant to the no work-related requirements group, ensuring that particular groups of claimant are treated appropriately. This includes working claimants on jury service, claimants on adoption leave and claimants who are over state pension age. It is clearly important that such claimants remain out of conditionality. I should make clear to my noble friend Lord Skelmersdale that paragraph (d) is a protective measure. If we did not have it, we would not be able to protect those people from conditionality.

[Lord Skelmersdale]

My Lords, may I come back to my noble friend the Minister? I totally—surprise, surprise—trust this Government but one day there will be another Government, perhaps not even comprised of the party of the noble Lord, Lord McKenzie. That Government may use this power in ways that we cannot now foresee, which is why I do not like it.

[Lord Freud]

I thank my noble friend for that, although I think in practice paragraph (d) allows a Government not to impose conditionality. This measure protects the individual. Of course, I absolutely understand my noble friend’s suspicion that the measure might overrestrict what another Government might do, which would not favour getting people into work. I am sorry; that was meant to be a joke.

Let me come back to the matter in hand. Given that we expect the first use to set the principles and to remain broadly unchanged, I hope I can assure noble Lords that affirmative for the first use is appropriate. We have set out how we intend to use this power. We define a threshold, as we have set out in our note, and add in the additional groups, as in the draft regulations. I can assure the noble Lord, Lord McKenzie, that we do not expect significant changes to this. For this reason, I ask him to withdraw this particular amendment.