Jobseekers (Back to Work Schemes) Bill

Mark Hoban Excerpts

Tuesday 19th March 2013 Commons Chamber

[The Minister of State, Department for Work and Pensions (Mr Mark Hoban)]

I beg to move, That the Bill be now read a Second time.

I hope that I conduct this debate in a workman-like way, as I did the debate on the allocation of time motion. The Bill will ensure that following the recent Court of Appeal judgment in the case of Wilson and Reilly v. the Secretary of State for Work and Pensions, the taxpayer will not have to repay to claimants the benefits lost because of their failure to take part in mandatory back-to-work programmes. It will also enable the Government to impose benefit sanctions on those who fail to participate in a mandatory programme where a decision has been put on hold because of the Wilson and Reilly case.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Is it not the reality that this is a multi-billion pound failed flagship scheme, which was condemned by the Public Affairs Committee as extremely poor? Having lost a case and fearing that they will lose the appeal, the Government, instead of respecting our justice system, are abusing our emergency procedures to fix the consequences of losing? Does that show not a shocking disrespect both for our courts and for the principle that workers should be paid the minimum wage?

[Mr Hoban]

The hon. Lady clearly has a press release that she wants to set out this afternoon. [Interruption.] From a sedentary position, she says that it is a good press release. I wish it were an accurate one. The reality is that our schemes are helping to get people back into work. It is vital that people who are looking for work are given help to get into work, and we are offering that. Up to the end of September, 200,000 people found work as a consequence of the Work programme. If she thinks that that is a failure, she is insulting the people who have got work through the Work programme. She should recognise the benefits that such schemes bring. To allow people not to take part in them is breaking a contract between us and the unemployed. We give them the support that they need to get back into work and we expect them to take up that offer of support. If they do not take up that offer, it is right that they are penalised.

[Dr Julian Lewis (New Forest East) (Con)]

Will the Minister tell the House how our employment rate compares with that of eurozone countries and even with that of the United States?

[Mr Hoban]

My hon. Friend makes a good point. The unemployment rate in the UK is below the average of the eurozone and the European Union. We are seeing one of the fastest rates of job creation in the developed world and we have record numbers of people in work, and record numbers of women in work. Our policies to help people into work are effective. On the whole, jobseekers welcome them and it is important that they continue to take advantage of the schemes that are on offer.

[John McDonnell (Hayes and Harlington) (Lab)]

Is it not true that the Office for National Statistics has confirmed that the Government have included in their employment figures those who are not being paid for their work?

[Mr Hoban]

If the hon. Gentleman looks at the detail of the Office for National Statistics labour force survey, he will see that there are people who are on schemes who say that they are in employment, but that was the case under the previous Government. I have raised that issue with the ONS, because I agree that they should not be included in the numbers who are employed, but it rejected the argument on the grounds of international consistency. We cannot ignore the fact that, excluding those schemes and any reclassification, we have seen more than 1 million net new jobs created in the private sector since May 2010. Perhaps the hon. Gentleman should congratulate us on achieving that.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Is it not the case that the employment rate now is lower than the rate—not the absolute numbers—in 2008?

[Mr Hoban]

The hon. Lady must recognise that we are in a very different economic climate from the one in 2008, when we saw a debt-fuelled boom that undermined the strength of the British economy. The economy is going through a healing process at the moment, and since May 2010 we have actually seen the private sector creating an extra 1 million new jobs. She should welcome that, because it has given people across the country an opportunity to get into work. We have seen the effectiveness of our welfare reforms—230,000 fewer people are claiming out-of-work benefits than they were in May 2010—and they have contributed to an increase in the numbers of people in work. People are coming into the labour market and finding jobs, and I would have thought that the hon. Lady would welcome that.

Before I go into the detail of the Bill and the background to the Court of Appeal judgment, let me outline why the Government believe that, in certain circumstances, jobseeker’s allowance claimants should be mandated to take part in employment programmes. and that when they fail to participate without good reason, they should face a benefit sanction.

First, this is a policy that is supported not only by Members from all parts of the House, but by the vast majority of the British public. According to the British social attitudes survey, 85% of the public believe that someone who is unemployed and on benefits should be required to do some unpaid work in the community while keeping their benefits. Sir Stanley Burnton, one of the Appeal Court judges in the Wilson and Reilly judgment, said:

“Parliament is entitled to authorise the creation and administration of schemes that are designed to assist the unemployed to obtain employment...it is not easy to see what objection there could be to them. Parliament is equally entitled to encourage participation in such schemes by imposing sanctions, in terms of loss of jobseekers’ allowance, on those who without good cause refuse to participate in a suitable scheme.”

[Fiona Mactaggart (Slough) (Lab)]

Is not the issue the fact that sanctions can work if people know the consequences of failure to action? Did not the court rule that the information that was sent to people who were sanctioned did not comply with the regulations passed by this House?

[Mr Hoban]

A clear message was sent that people who failed to participate in schemes could lose their benefit for up to 26 weeks. That is the maximum they could lose. What the Court of Appeal said, and what the High Court said previously, was that we should make reference to the fact that if someone had committed a first offence, as it were, we should give details of the amount of benefit they would lose the first time they did not participate in a scheme. In fact, we have changed the notices as a consequence of the High Court judgment. The notice that we sent out said that people would face a loss of up to 26 weeks benefit if they did not take part in the scheme. What the High Court wanted was details of the lower levels of sanctions that could apply in that situation.

There is a broad consensus that mandatory back-to-work schemes are a necessary part of the approach that we take to get people back to work. When a person signs on to receive jobseeker’s allowance, they accept that they have certain responsibilities. It could be called a contract between the jobseeker and the taxpayer. We will offer a huge amount of support to jobseekers, including help to search for jobs, work experience and jobseeker’s allowance. That is our part of the deal. The jobseekers’ part of the contract is to take up the help that we offer. While the vast majority of jobseekers live up to their part of the contract, there are a small minority who are reluctant to do everything they can reasonably be expected to do to get back into work.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

rose—

[Mr Hoban]

In a moment. For that group of people, it is right that we have the power to mandate them on to different back-to-work schemes, which we think will help them improve their chances of finding work. I am sure that the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) supports that sentiment.

[Mr Byrne]

A couple of years ago now, the Secretary of State gave an assurance to the House that individual jobcentres or jobcentre districts did not have targets for sanctioning jobseekers and that there were not any kind of league tables that ranked jobcentres or districts for sanctions. Will the Minister confirm that that is still his Department’s policy?

[Mr Hoban]

Absolutely. There are no league tables in place. We do not set targets for sanctions; I have made that point in previous discussions with, I think, the right hon. Member for East Ham (Stephen Timms). The decisions that need to be made are the right ones. They need to be based on whether people have breached the agreements they have set out with the jobcentre, and there are no targets in place.

Let me set out in a bit more detail the programmes that exist. The programmes might vary from a training course that the Government have paid for so that the claimant gains some essential skills that will increase their chances of finding work, or they might involve a community work placement, whereby claimants can pick up the basic disciplines, such as turning up on time, that every reasonable employer will expect.

We also know that those schemes work. Recent research on our mandatory work activity scheme found that nine in 10 participants said that they better recognised the benefits of a working routine, and around three quarters said that their confidence and ability to work as a team had improved. More than half said that they felt more positive about work than they did before attending.

[Sheila Gilmore (Edinburgh East) (Lab)]

Is it not the case that the research on the mandatory work schemes found that, afterwards, people were as likely to be on benefit as they were before?

[Mr Hoban]

The scheme is used particularly for those who are some distance from the labour market. We know that we need to make a range of interventions to get people to move closer and closer to the labour market. The scheme changes people’s attitude to work. Those on the scheme can put that work on their CV and demonstrate to employers that they are ready for work. That makes a contribution to moving them closer to work. As the evaluation that the hon. Lady referred to pointed out, people themselves feel the benefits of taking part in the scheme. It is therefore right that when claimants refuse to take up the support that is available, and then fail without good reason to attend these mandatory programmes, they face the consequences of their actions—a benefit sanction.

[Mr George Howarth (Knowsley) (Lab)]

Will the Minister give way?

[Mr Hoban]

I want to make some more progress. We have four hours, and I am sure that the right hon. Gentleman will have time to make a contribution.

On 12 February, the Jobseeker's Allowance (Employment, Skills and Enterprise Scheme) Regulations 2011 were found to be ultra vires by the Court of Appeal on the ground that the programmes covered by the regulations were not described in the regulations in sufficient detail. Those are the regulations that provide for most of the mandatory back-to-work schemes, such as the Work programme and the day one trailblazers, which we are running at the moment.

The Court of Appeal also held that the notices sent to claimants advising them that they were required to take part in a programme within the ESE scheme did not comply with the requirements of regulation 4 of the ESE regulations. It is important to remind all Members that the Court of Appeal has ruled that there was no breach of article 4(2) of the European convention on human rights, meaning that these schemes cannot be equated with slave labour. As I have already stated, the judgment was supportive of the principle and policy of our employment schemes.

[Mr Howarth]

Will the Minister confirm that he intends to appoint an independent person to produce a report on this matter? The intention is that they will report within 12 months and the Secretary of State will consider that report for some unspecified period. I know that it is a complex issue, but does the Minister agree that that could be done much more quickly, and the issue could be resolved much more quickly, if that process were shortened, rather than the period being 12 months and then as long as it takes to consider the report?

--- Later in debate ---

[Mr Hoban]

I will touch on this in a bit more detail later, but we will appoint an independent reviewer to look at the way in which the sanctions regime works under the Bill and to report to Parliament; that is dealt with in new clause 1, which we will discuss later. The Secretary of State will lay the report before Parliament. The operation of the sanctions regime will be looked at within a 12-month period. If it could be looked at more quickly, that would be a good thing. That is one of the helpful products of the discussion between the two Front-Bench teams over the past couple of weeks. I hope that that gives Members reassurance on the nature of the review. I will come back later to the new clause, which will provide further reassurance.

In response to the judgment of 12 February, the Department laid new regulations, which came into force with immediate effect, so that we could continue seamlessly to mandate claimants to these vital back-to-work schemes. We have also written to everyone already taking part in the schemes to ensure their continued participation in schemes designed to help them to get back into work.

[Derek Twigg (Halton) (Lab)]

Could the Minister clear something up? Does he believe that the Court’s judgment is basically about a technicality, or was there a serious oversight by the Department? Many of my constituents think that there was a serious oversight.

[Mr Hoban]

No, there was not a serious oversight; the judgment was about a technicality. The High Court agreed that the regulations were satisfactory. It did not have a problem with the amount of detail in the regulations, whereas the Appeal Court did. I therefore believe that the judgment was about a technicality; it was about the amount of detail in the regulations. The Appeal Court thought that there should be more detail about the schemes. We felt, for reasons of efficiency and responding quickly to identify schemes that would help people to get back into work, that it was helpful to have some detail in the regulations but not as much as the Appeal Court wanted. To ensure that we could respond flexibly to the changing labour market and the changing needs of the unemployed, we designed the regulations in the way we did. We are seeking leave to appeal to the Supreme Court to continue to press that point about the amount of detail that should be in the regulations.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

On the very points that the Minister is making, of course it is right that those involved in the system—those seeking employment and training—should have as much information as possible. Does he recognise that the wider public need to be confident that the system—what is happening out there to find employment and training for those in need—should be robust and stand up to scrutiny, including scrutiny by the courts?

[Mr Hoban]

I think that the system is robust and that it does stand up to scrutiny by the courts. That is why the High Court accepted the amount of detail in the regulations. The Appeal Court disagreed with that and we are seeking leave to appeal to the Supreme Court to argue that point. It is not unusual for there to be a limited amount of detail in regulations and much more information to be supplied in guidance or notices provided not just by the DWP but by other Departments.

[Fiona Mactaggart]

Will the Minister give way?

[Mr Hoban]

I have given way already to the hon. Lady. I want to make some progress.

As I have made clear, the Department fundamentally disagrees with the Appeal Court’s verdict, which is why it has applied for leave to appeal to the Supreme Court in respect of both grounds. We believe it is right that the regulations should allow for flexibility, so that we can respond rapidly to improve jobseekers' chances of finding work, such as trialling new approaches in Derbyshire and London to help young people get vital experience to bolster their CV. A more prescriptive approach—the one proposed by the Appeal Court—to the content of the regulations would create inflexibilities that would ultimately hinder the jobseeker's chance of finding work.

Those are the arguments that we will make before the Supreme Court, if we are granted permission. Those arguments will not be affected by the Bill. We are hopeful that we will obtain permission and that we will win our appeal. There is, however, no guarantee that we will be granted permission to appeal, or that we would win the appeal. Were that to happen, claimants who have been subject to a sanction for failing to take part in the schemes would be entitled to a refund of that sanction. It would also mean that we had no power to impose sanctions in relation to failures under the ESE regulations, in cases where no sanction decision has yet been taken—the so-called stockpiled cases. If that were to happen, the cost to the taxpayer would be up to £130 million.

It is vital that, in the present economic climate, the public purse be protected from such claims. The Bill will ensure that the taxpayer does not have to repay benefits lost by claimants who have failed to participate in employment programmes, and can properly impose sanctions for such failures. It would be unacceptable for claimants who have failed to take all reasonable steps to increase their chances of finding work to receive an undeserved windfall payment. The Bill will prevent that by providing that any decision to reduce jobseeker's allowance under the ESE regulations cannot be challenged on the grounds that the ESE regulations were invalid or the notices given under them inadequate. It makes similar provision in relation to the mandatory work activity regulations in respect of notices given under those regulations.

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

Following on from the intervention by my hon. Friend the Member for Halton (Derek Twigg), who pressed the Minister on whether the judgment was about a technicality or not, may I draw the Minister’s attention to the comments of Lord Justice Pill? He said:

“Claimants must be made aware of their obligations and of the circumstances in which, and the manner in which, sanctions will be applied.”

I do not think that he regarded it as a technicality, but if it is, next time the Department makes a mess, will the Minister come and seek a further retrospective Bill, in the way he has done today?

[Mr Hoban]

The High Court upheld the steps that we took in setting out the detail in the regulations. As I said earlier, the letter that we sent to claimants who were required to participate in the schemes set out the fact that they could be subject to sanctions of up to 26 weeks’ worth of benefits. That is not the only communication we have with jobseekers. The jobseekers who come into Jobcentre Plus will have discussed the requirements with their personal adviser, so there is a range of ways in which we will communicate to jobseekers their obligations under the schemes. That is vital. It is important that people are aware of those obligations. We believe that the notices and regulations provide sufficient detail, and that will be backed up by the conversations and other communication that jobseekers have with personal advisers.

[Sheila Gilmore]

rose—

[Mr Hoban]

I want to make some more progress.

The Bill will ensure that the Government will not have to refund sanctions on the basis of the Court of Appeal’s judgment and will be able to make a decision in cases where no sanction decision has yet been made.

As I have previously stated, the Government have applied for leave to appeal to the Supreme Court. However, to ensure that we are not faced with having to repay benefit sanctions, we have had to press ahead with this fast-track legislation.

I would like to put it on record that I am grateful for the constructive way in which the right hon. Members for Birmingham, Hodge Hill and for East Ham have approached this topic. In supporting the Bill, they have allowed us to expedite its progress, thus safeguarding taxpayers’ money.

Following discussions last week with the shadow Secretary of State, the right hon. Member for Birmingham, Hodge Hill, we will be proposing two Government amendments in Committee. The first will reiterate in the Bill that a claimant’s appeal rights against a sanction decision remain unchanged in all matters, apart from those covered by the High Court and Court of Appeal judgments. For example, when a claimant felt that they had good cause for not participating in one of these schemes, they would still be able to appeal to the first tier tribunal on the basis of good cause. That is a helpful reconfirmation of the right of claimants to appeal. Similarly, the Bill will not overturn appeals that have succeeded on the basis of good cause. I hope that our amendment on that provides the clarification that the right hon. Gentleman seeks.

[Mr Byrne]

Will the Minister now confirm that the grounds of good cause in respect of appeals will remain undisturbed and will include the grounds covered in DWP guidance, which says that good cause can include an unsuitable course, full-time study, health and caring reasons, travel time that is inappropriately long, religious belief, bereavement, attending court and other emergencies? Will he also confirm that, ultimately, the timetable for lodging appeals will remain at 13 months?

[Mr Hoban]

We have been very clear in this amendment. We are confirming the right to appeal, and appeals can proceed on the grounds that are usually available in these situations, which the right hon. Gentleman has listed. The Bill does not change people’s right to appeal, save for appeals based on High Court or Supreme Court judgments.

The second Government amendment that we will bring forward in Committee will require the Secretary of State to appoint an independent person to carry out a review of the operation of the sanctions validated by this legislation during the first 12 months after Royal Assent. That review will report as soon as possible after the 12-month period, and the report will be laid before Parliament. I hope that these assurances are satisfactory.

To conclude, this Bill is necessary to ensure that the taxpayer does not have to repay up to £130 million in benefits lost through the failure of claimants to take up the Government’s offer of support. It is vital that scarce public resources are targeted at those who need and deserve them most. It would be unacceptable for claimants who have failed to take all reasonable steps to increase their chances of finding work to obtain an undeserved windfall payment. This Bill will prevent that, and I commend it to the House.

--- Later in debate ---

[Mr Hoban]

But the people taking part in the schemes knew at the start that, if they did not take part, they would be sanctioned. They knew there was a penalty for not taking part in the schemes. Does the hon. Gentleman think it right that they should not be penalised?

[Ian Lavery]

I am certain that the 300,000 people the Court says have a claim because of the illegal actions of the Minister’s Department should receive it—there is no doubt about it. The Bill is being introduced by the DWP and the Government to deprive many hard-working people, and many people who want to be hard-working, of any finance whatever. Is that in the best interests of the economy? It is an absolute disgrace. Those people will spend money in the economy. They might get £50, £100 or £72 a week, but they will spend it, because it is the only money they have. The Minister should not seek to deprive those people and leave them with no finances whatever.

[Mr Hoban]

Does the hon. Gentleman disagree with Opposition Front-Benchers, who earlier argued in favour of sanctions?

[Ian Lavery]

I have not disagreed with anyone up until now other than the Government, because they wish to deny ordinary, hard-working people—people who wish to get on in life—what the Court of Appeal says they should have.

--- Later in debate ---

[Ian Lavery]

Members of Parliament discuss with constituents, and often people away from the constituency, the merits and otherwise of policies. I often meet people with a very different view from the people the hon. Gentleman has met. That is not to say that that has not been said, but the people I meet want decent jobs. They want the opportunity to get up in the morning and go to work for a decent wage. They would accept the minimum wage even though, at this point in time, it is not high enough. Where I live, 25 people are after every single job in the jobcentre. That means that 24 are not getting employment for every single opportunity. People want to work for the best intentions and the right reasons. They want self-esteem and finances. People where I live want to work—I am sure that extends throughout the country.

Saying that paying claimants the money that the Court says they should be paid—the result of the ruling means that the £130 million can be paid—does not represent good value for the taxpayer is an absolute disgrace. It is not the type of language we would expect from any Government. It is not right to talk about people as, “This group of claimants.” They are ordinary people with feelings, and many of them want to get on in life.

[Mr Hoban]

If they want to get on in life, why have they turned down the opportunity to get the training and support that will help them to get a job?

[Ian Lavery]

People have received sanctions for a range of reasons. The Government should not overrule a Court of Appeal ruling and introduce retrospective legislation against people just because they have received sanctions. I am sure the Minister is not suggesting that people who have, for whatever reason, received a sanction, should under no circumstances claim some sort of subsistence, even if the courts have agreed in a ruling that they should receive it.

[Ian Lavery]

I fully understand my hon. Friend’s point. As I have said to the hon. Member for North Swindon (Justin Tomlinson), every MP has received many representations with regard to the wide and various workfare schemes.

The impact assessment states:

“If the Department cannot make these retrospective changes, then further reductions in benefits might be required in order to find the money to repay the sanctions.”

That is blackmail of the highest order—I make no apology for the strength of my feeling on that. If people are due finances, they should get them, particularly following a court ruling, but the Government are saying, “If we pay these people, we might have to cut benefits for other people as a result because that is where we have to find the money.” That is emotional blackmail. It is totally and utterly bang out of order. They are trying to set people who are looking for work and on benefits against each other. That is absolutely unacceptable.

To conclude, I have some questions for the Minister to answer in his winding-up speech. Is it right that claimants face financial penalties for failing to participate in schemes when the possibility of those penalties had not been properly explained to them? Is it right that the Government can flout the will of Parliament, which had clearly expressed its wish to have some oversight of the schemes, especially given that the schemes that were designed and imposed on claimants without an opportunity for parliamentary scrutiny do not appear to be working?

Is it true that the DWP continued to issue letters to claimants that did not explain things properly even after the High Court had stated that the letters were inadequate?

[Mr Hoban]

That is not true.

[Ian Lavery]

From a sedentary position, the Minister says that that is not true, but I hope he will clarify that.

[Mr Hoban]

Let me clarify that now. When the High Court issued its judgment, we changed the letters to comply with its rules.

[Ian Lavery]

That is debatable.

Finally, what is the Department’s understanding on whether section 27 of the 1998 Act protects people from having to repay some of these sanctions? Some 300,000 people will be denied their legal rights if the Bill is passed. This is just another ideological attack on the unemployed and the less well-off, despite a High Court judgment. Why does the Minister not just accept the court of law? Give these people what they are entitled to. It is the Minister’s mess. Why should they suffer?

--- Later in debate ---

[Mr Brown]

My hon. Friend is correct. It is as if time has stood still for all these people. The only thing they have felt all this time is pain and hardship.

I told my hon. Friend the Member for Coventry South (Mr Cunningham) that I would mention the national minimum wage. When we introduced it, the assessment showed that for every £1 million that we gave to poorer people and which went into the economy, we created 40 jobs. Even if every £1 million now created only 10 new jobs, that £130 million would create more than 1,000 jobs.

[Mr Hoban]

If we had to pay out this £130 million, we would have to find it from another group—potentially other benefit claimants who had done the right thing.

[Mr Brown]

In life, when things regrettably go wrong, we have to face the consequences. I firmly believe that the Government should be facing the consequences in respect of this £130 million penalty. Can the Minister tell me exactly how many of these people were, like Reilly and Wilson, innocent? I think that a fair number of those 300,000 should have had their money repaid to them.

I know that other colleagues want to contribute, so I shall finish by saying that this is a tough decision for all of us in opposition. We still believe in sanctions—in government, we recognised that we needed them—but the Government have got it horribly wrong. On behalf of both the Ministers, I am disappointed that, up until now at least, we have not heard any attempt from Government Back Benchers to defend what is happening.

--- Later in debate ---

[Fiona Mactaggart]

I withdraw that word, Mr Deputy Speaker.

The Minister suggested that claimants knew the consequences. I refer him to the statements of judges on the matter. Judge Foskett said that

“the words…in the letter received by Mr Wilson were that his benefits ‘may be stopped’, perhaps conveying the impression that sanctions are not necessarily automatic.”

He goes on to say that

“the information given concerning sanctions is unclear and opaque.”

I accept that, since then, the Minister has improved the letters. I think that is right, and I do not oppose the possibility of sanctions; I believe that sanctions can work if people know that they are at risk of being sanctioned.

[Mr Hoban]

May I point out that, actually, sanctions are not automatic? Sanctions may be applied, because actually we disregard sanctions—sanctions do not apply—if there is good cause not to apply them. So “may” sounds right to me. The problem that the courts had was not specifying the graduated approach to sanctions.

[Fiona Mactaggart]

As I said, the judge said that

“the information given concerning sanctions is unclear and opaque.”

If the Government want sanctions to work, people need to know the consequences of their actions, and this is a debate about the consequences of actions—the consequences of the Government’s actions in failing to ensure that they complied with regulation 4 of the regulations in every communication with claimants. It seems to me that the Government should bear the consequences, and the consequence in this case is up to £130 million. When the Government do wrong—and let us be clear, the Government have been found to do wrong in this case—it is not just to be overlooked. This is a series of court judgments which say, in respect of individual citizens, that they have been wrongly treated—the Government must give those citizens back their money. It is not the Government’s money; it is their money. The Government have wrongly kept it from them, and it is quite clear that that is what the courts have decided.

If the Government are going to say that a sanctions regime is necessary so that people know the consequences of their actions—an argument that I would support—it seems right to me that the Government themselves should bear the consequences of their wrong actions, and they should not be coming to Parliament to ask us to give them a free pass for breaking the law, because that is what the Bill is doing.