(11 years, 1 month ago)
Commons ChamberThat evidence is now becoming well known, and we have had more evidence circulated by great organisations, such as Carers UK today, about the impact this tax is now having on some of the most vulnerable people in our community, including hundreds in the Minister’s constituency.
Will the right hon. Gentleman give way?
In a moment. Perhaps when the Minister intervenes he can justify what Carers UK found:
“Three quarters (75%) of carers having to pay the ‘bedroom tax’ are being forced to cut back on essential spending on food, electricity and heating.”
Will the Minister justify that to the House?
In a moment. What is the Minister going to say to councils up and down the country surveyed by Channel 4 for tonight’s broadcast showing that one third of councils are having to deny help to disabled people because the provision of the discretionary housing payment fund is, frankly, insufficient? What is he going to say to those councils and what is he going to say to those disabled people in his own constituency?
But reform is needed, too, to make sure that we spend money carefully. We need to think about how we deliver services. That is why joining up care and health in a single budget is vital if we are to tackle problems on the ground, enable local authorities and the health service to work together, and really make progress.
The Minister is being characteristically generous in giving way. If he believes what he has just said, will he explain why the duty to co-operate in the Care Bill does not extend to the Department for Work and Pensions? Will he table Government amendments to the Bill to ensure that those duties to co-operate bite on local authorities, the NHS and his Department?
I think that the Minister would sort of accept that we were not introducing some of the biggest cuts to disabled people’s services or benefits for a generation, so the premium on a cumulative impact assessment was not quite as great then as it is now. He said to the House on 5 July that cumulative impact assessments were “a coalition initiative”, and I assume that they are an initiative of which he is proud. If he is so proud of them, why does he not equip himself with one before the Secretary of State goes to see the Chancellor, as he no doubt will, so that he can argue on behalf of disabled people before the autumn statement?
I do not want to spoil the excitement that is felt about the later parts of my speech—you are right to pull a wry face, Mr Speaker—but the challenge when one is trying to carry out a cumulative impact assessment that covers a wide range of policy areas for a defined group, as the right hon. Gentleman knows, as he was in the Treasury and in government, is that resources and information are not there to enable people to do it. That is the problem that the last Government faced, and we face the same challenge. Unlike that Government, we have produced a cumulative impact assessment at major fiscal events, but that cannot be disaggregated to the sort of level that the right hon. Gentleman is referring to. He knows that, because he has been through that process.
Bodies such as the Institute for Fiscal Studies have said that giving that level of detail is impossible and have stepped away from doing so. I know that the right hon. Gentleman has got into trouble on spending plans; he tried to dig himself out of a hole earlier and did not manage to do it, and there is a bit of chaff for him, but let us be very clear: this was a challenge when he was in government, and it remains a challenge.
Let me move on to employment. We all know that work brings self-esteem and dignity. It enables people, whether disabled or able-bodied, to look after themselves and their families. Nearly half of disabled people are in work. Only one in 10 working-age disabled people have never worked, and for those aged over 25 it is only one in 20. If we want to make a sustainable difference, we must do all that we can to help more disabled people who can work to get into mainstream employment and stay there. The spending review allocated £330 million to programmes and support for disabled people or those with a long-term health condition, so that they can move into and stay in work.
I want to move on. I have been very generous in giving way to the right hon. Gentleman, as he acknowledged.
We all know that some disabled people face extra costs as a result of the impact of their disability. The main source of financial support, disability living allowance, has not been fundamentally reformed since 1992. Our welfare reforms presented an opportunity to start afresh, keeping the best elements of DLA that people value, but bringing the benefit up to date to make it fit for the 21st century. The personal independence payment—PIP—is easy to understand and administer. It is financially sustainable and more objective. It will be better targeted on those in most need. Throughout the whole development, we have consulted widely with disabled people and have used their views to inform policy design. We have continued to listen and consult, ensuring that these reforms continue to be shaped by the views of disabled people themselves. In other words, reform is not static and this Government are committed to listening and acting where change is required.
Instead of simply cutting money from everyone, we chose the more difficult but principled option of modernising the benefit and focusing support where it is most needed. PIP will be awarded on the basis of a fair, consistent and objective assessment which will enable us to target support on those who face the greatest barriers to independent living. More than one fifth of PIP recipients will get both of the highest rates, worth £134.40 each week, compared with only 16% on DLA. That demonstrates that we are focusing support on those in most need.
(11 years, 1 month ago)
Commons ChamberIf my hon. Friend looks at the three main benefits—jobseeker’s allowance, employment and support allowance and lone parent income support—he will see that, since the general election, there has been a reduction of 300,000 in the number claiming those benefits. That is a consequence of the measures that we have taken to get people into work, and of welfare reform.
Will the Secretary of State tell the House whether he thinks the bedroom tax is proving a runaway success?
(11 years, 3 months ago)
Commons ChamberAn evaluation that we published last year shows that young people who have had work experience have a better chance of getting off benefit and into work. I am grateful to everybody, including my hon. Friend, who makes available work experience places to give young people a chance to get out of unemployment and into employment.
Can the Secretary of State give the House his personal forecast for when this year’s allocation for the discretionary housing payment fund will run out?
(11 years, 5 months ago)
Commons ChamberA 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.
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.
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?
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.
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.
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?
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.
(11 years, 5 months ago)
Commons ChamberThe sinner has repented on this occasion.
Let me be clear. I want the review to proceed as quickly as possible. It is in all our interests for it to do so. I am keen that we improve the quality of decision making on sanctions and that we ensure that they are applied consistently. The right hon. Member for East Ham was right to highlight the fact that my right hon. Friend the Secretary of State made it clear that there should be no targets, and that if there was evidence of targets being used at any jobcentre, we would stamp them out. We do not want targets; we want good quality decisions made consistently from jobcentre to jobcentre. I do not think targets have a role to play in that regime. [Interruption.] The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) laughs. Is he saying we should have targets? I suspect not.
Given that my right hon. Friend said that he would stop the practice, we would stop it again if it reappeared. We do not want to see it happening.
I want to pick up on some of the points raised in the 10 or 11 questions put by the right hon. Member for East Ham. We have published, and will publish annually, tables setting out the number of sanctions. The data for 2011-12 were published online on 15 August 2012, and we gave a breakdown of sanctions, so it is not correct to say that there is no information. There were 108,000 variable length sanctions for employment-related failures; 378,000 sanctions were of fixed length, which included 58,000 that were for not attending ESE—employment, skills and enterprise—regulation schemes, 55,000 for not complying with training requirements or for not carrying out a jobcentre’s direction or for a failure to participate in mandatory work activity.
The reason there is a range in the impact assessment is that we were trying to be helpful to the Committee. We used a combination of official statistics and an estimate based on management information to give Members an up to date figure of the numbers involved. The final numbers will be available when we publish the next official statistics. Having been a DWP Minister, the right hon. Gentleman will appreciate that we take the validation and verification of statistics seriously. These are official national statistics and they need to be published to appropriate quality. That is the basis for the numbers in the impact assessment.
Communication is really important, and we need to ensure that we get it right. We talked about some of the measures that we set out in the recent regulations to ensure clarity in universal credit. There is a challenge here. We want to ensure that communications between the Department and jobseekers are clear, whether they are oral communications between a personal adviser and a claimant, or items of correspondence. But I think there is a tension here. The hon. Member for Slough (Fiona Mactaggart) said in her Second Reading speech that she felt that the notice we sent out was defective, and the courts said the letter should have contained more detail about the sanctions regime.
(11 years, 6 months ago)
Commons ChamberMy hon. Friend makes an important point: poor literacy and numeracy are big barriers to employment. For that reason, personal advisers in jobcentres are trained to identify signs and to signpost people to appropriate course providers. Fareham college in the constituency adjacent to hers is one such provider, but I am sure there are other local providers.
The Minister will have read about the cases of Becky Bell raised by my hon. Friend the Member for Hartlepool (Mr Wright) and of Angel Hooper, the disabled child whose parents have been told that they will lose £20 a week because her specially adapted room will not be shared with another family member. They are two of the 660,000 families being told they will have to fork out extra or move under the bedroom tax. Will he confirm how many one-bedroom properties will be needed for people to downsize to as the bedroom tax kicks in?
(11 years, 11 months ago)
Commons ChamberFirst, I thank the right hon. Gentleman for his congratulations; he and I have worked together from different sides of the Dispatch Box before, during his previous incarnation at the Treasury.
We have said that we will publish information. The first official statistics on Work outcomes will be published in November this year. We are keen to see providers, local authorities and other partners working closely together and using the available data to develop the right response. We are seeing success stories—such as in Barking recently, where there has been that local collaboration.
We are seeing that the flow from benefits is continuing at the same level as expected, but payment by results focuses providers’ minds on getting people into sustainable employment, and we will see the first results in November.
May I associate myself and my hon. Friends with the Secretary of State’s words of congratulations to our extraordinary Paralympians, who have simply dazzled us over the past couple of weeks?
I am delighted to see that the Secretary of State has survived the enthusiastic support of his friends in the Treasury, but may I press him on the price of his survival? When universal credit is fully rolled out in 2017, the Office for Budget Responsibility says that the extra costs will be £3.1 billion. The Treasury in its budget says that the price must be no more than £2.5 billion. With whose estimate does the Secretary of State agree?
(14 years, 1 month ago)
Commons ChamberWith permission, Mr Speaker, I would like to make a statement on Equitable Life.
Both coalition parties are committed to justice for Equitable Life’s policyholders; we each made manifesto commitments, and these are reflected in our programme for government. No one should be in any doubt about our commitment to policyholders, who have waited a decade for justice. We are committed to implementing the parliamentary ombudsman’s recommendation, made two years ago, and
“to make fair and transparent payments to Equitable Life policyholders through an independent payment scheme for their relative loss as a consequence of regulatory failure.”
We have taken important steps towards implementing that commitment. We announced in the Queen’s Speech that a Bill would be presented to Parliament in this legislative Session, and today we are doing just that.
When I came into office, I reviewed Sir John Chadwick’s terms of reference and asked him to complete the work that he had started. I can tell the House that Sir John’s report, alongside the extensive actuarial advice underpinning it, has been published today, and copies have been placed in the Vote Office. I want to thank Sir John for his dedication in completing this complex and challenging task. Sir John has helped to progress the aim to establish a scheme that is fair both to policyholders and to taxpayers. He has proposed a flexible approach to determining losses that eliminates the need for policyholders to show what they would have done if the maladministration had not occurred.
I want to stress, however, that Sir John’s review is just one of the building blocks in resolving what is a complex matter, and that there are other judgments to be made in determining the final shape of the scheme and the amounts that will be paid out. I have always been committed to dealing with this matter with the utmost transparency. I therefore want to set out to the House today the key elements of Sir John’s methodology and the figures calculated at each intermediate step in quantifying losses according to his approach. First, however, let me make it clear that these are preliminary figures. There is further work to be done before a final estimate can be produced. These figures have been produced for the Treasury by Towers Watson, and I have placed a copy of its letter in the Vote Office.
Let me remind the House that the ombudsman considered that the financial loss suffered by policyholders was a consequence of the reduction in policy values in July 2001. These amounted to a reduction in the gains they expected to make from their policies, rather than the sums they were contractually entitled to. As a result, Equitable Life’s policies are lower in value today than they would have been without these cuts. The difference is the absolute loss, which Towers Watson estimates as being between £2.9 billion and £3.7 billion. Sir John then goes on to identify relative loss—that is, the difference between the returns that policyholders actually received from their Equitable Life policies and the returns they would have received if they had invested in a comparable product in an alternative life insurance company. This step produces a loss of between £4 billion and £4.8 billion.
For a number of policyholders, because of the strong performance of comparable life companies, their relative loss is greater than the absolute loss they suffered. Consistent with the ombudsman’s recommendation, Sir John has advised that relative loss for an individual policyholder should be capped at the absolute loss they suffered. It is hard to see how it would be fair either to the taxpayer or to other policyholders if some policyholders received more through redress than they had actually lost. If the proposed cap is adopted, then the figure will be £2.3 billion to £3 billion.
Sir John and the Equitable members action group—EMAG—are in agreement that not all policyholders would have decided against investing in Equitable Life had its regulatory returns not been subject to maladministration. There is scope for debate about by how much investment would have been reduced. Sir John advises that the majority of policyholders would have invested in Equitable Life irrespective of maladministration. He therefore proposes that policyholders should receive only 20% to 25% of the capped figure that I mentioned. I know that some stakeholders will dispute this proportion. This results in a figure of £475 million to £650 million.
Another difficult aspect of Sir John’s methodology is the assessment of internal relative loss—the loss that policyholders have suffered as a result of keeping money in Equitable Life when it was not being regulated properly. Taking this step into account, Sir John’s final loss figure is £400 million to £500 million. This figure is lower principally because a number of policyholders made relative gains as a result of maladministration.
As I said earlier, Sir John’s work is a building block that helps us to produce a fair and transparent payment scheme. I am aware that some of his findings will be contentious and are based on complex analysis, so I will reflect on his report and I will listen to representations by interested parties, including Equitable Life and EMAG, which has campaigned tenaciously on behalf of policyholders. As is apparent from the letter from Towers Watson, further work needs to be done over the summer to produce a final estimate of loss.
As the ombudsman noted, it is appropriate to consider the impact of any scheme on the public purse. The scheme will be a significant spending commitment for this Government and will therefore be considered in the light of what is affordable as a part of the spending review. I will set out the funding available for the scheme at the spending review on 20 October, alongside the final loss figure.
The ombudsman also concluded that the design of the scheme should be independent of the Government. I support this view, and I announced on 26 May that I would establish an independent commission to advise on the best way to allocate payments to policyholders and help to develop the design of the scheme. Today I can announce that Brian Pomeroy, John Howard and John Tattersall have agreed to form the independent commission on Equitable Life payments. I believe that their experience and expertise will be invaluable to the commission, and I am confident that we have the right people to do the job. The commission will start work imminently so that we can begin making payments as soon as possible. I have asked the commission to report by the end of January 2011.
The final question that I would like to address is how soon policyholders will receive payments. I would like to end the plight of policyholders as quickly as possible, and I aim to begin making payments in the middle of next year. If we are to achieve this goal, however, it is important to avoid any unnecessary delays. I will do all that I can to make sure we stick to this timetable, and I hope all interested parties will help us to do so. This is, however, a very complex task. We have made much progress since the Government were formed, but there is a great deal left to do. We need a simple, transparent and fair scheme that meets the needs of 1.5 million policyholders who have between them 2 million policies and have made 30 million premium payments. It is in the interests of each of those policyholders to complete this task quickly, but also carefully and thoughtfully.
In the past two months, we have published Sir John’s report; set up the independent commission on Equitable Life payments; published the first robust figures surrounding the calculation of relative loss; opened up the process, making it much more transparent; put in place a framework for the payment scheme; and produced legislation to give the Treasury statutory authority to make payments. We have achieved more in two months than the last Government did in the two years since the ombudsman reported. The coalition Government have demonstrated their commitment to justice for Equitable Life policyholders, and I commend this statement to the House.
I thank the hon. Gentleman for early sight of his statement and for the opportunity to review Sir John’s report in full at the Treasury this morning.
I would like to start by repeating the words of apology to Equitable Life policyholders that I made to the House earlier this year for the failure of regulation of Equitable Life under successive Governments between 1990 and 2001.
I thank Sir John Chadwick for his detailed report, which we commissioned. He has taken on an extraordinarily complex matter, and he has done an admirable job. I also thank officials at the Treasury for the work that they have done over the past six months in getting ready the legislation which I am glad to see that the hon. Gentleman has published today. I, too, thank EMAG. I am grateful for the work done by the all-party Equitable Life policyholders group, chaired by the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) and my hon. Friend the Member for Leeds North East (Mr Hamilton).
When I came to the House earlier in the year, I said that there was a clear ethical obligation, even if not a legal obligation, for compensation for Equitable Life policyholders. Equally, however, I knew that case-by-case compensation for policyholders, as suggested by the ombudsman, was not practical. I said that there were two tests for the right solution—speed and justice. I went on to say that we expected the Government to produce a report within two weeks of Sir John’s final report, which we wanted to see in May. So here we are in July, and there are a few questions that I should like to put to the Minister this afternoon.
First, is the Minister actually accepting Sir John’s recommendation? Earlier in the year he did a good impression of wanting to ditch Sir John’s approach and revert to the one set out by the ombudsman. Today, Sir John makes it clear in paragraph 10.17 that the ombudsman’s approach
“poses very difficult issues of principle, and would be impossible to implement within any realistic time-frame.”
Can the Minister confirm that Sir John’s approach is the right one? He called it one of the building blocks, but will he set out whether he is accepting Sir John’s report?
The second question that the House will want to know the answer to is who precisely will be entitled to help. Sir John states in paragraph 6.3 that help should cover new investments made between 1 September 1992 and 31 December 2000. Does the Minister agree with that approach? How many policyholders will be included on that basis, and how many will be excluded?
Thirdly, how much are policyholders actually going to get? Part 6 of the report sets out an approach and a method for calculating losses. Can the Minister confirm that what he has just said is that the maximum compensation will be based on a quarter of the relative losses faced by policyholders, and that that figure will itself be capped at absolute loss? Many policyholders will find that hard to square with what he said in the House earlier this year. What the House will want to know this afternoon is how much, on average, policyholders will actually get.
Fourthly, how quickly does the Minister want to complete this process? I am glad that he wants to get started next year, but the House will want to know how quickly he wants the final payments to be made. Finally, what appeal mechanism will the Government put in place for those policyholders who want to challenge their individual determinations?
It is incumbent on all of us to speed this matter to resolution. I am glad that the Minister has set out legislation this afternoon, and we will support it going through as rapidly as possible, but there are questions that our constituents will want answers to today. I hope that he will be as full as he can in replying to what I have asked.
I find the right hon. Gentleman’s comments rich, as he was a member of the Government who for nine years sought to frustrate, block and delay investigations into Equitable Life and its regulation; who ignored Lord Penrose’s findings of maladministration in 2004; who did everything they could to stop the ombudsman’s second inquiry; who bombarded the ombudsman with new documents and comments on her draft report; who took six months to reply to her report when it was published; and who set up a review by Sir John with a report carefully timed to be released after the general election. I will take no lessons at all from him about speed of response.
Sir John’s report sets out a range of approaches to calculating loss. As I said in my statement—the right hon. Gentleman had sight of it, as he said—I have not accepted that report. I will reflect on Sir John’s findings and think very carefully about them. The amount that policyholders will receive will be determined by a number of factors, and partly by the compensation figure set as part of the spending review process, as I said very carefully in my statement. The independent commission will need to respond to that matter when it designs the payment scheme, which was a key recommendation of the ombudsman that the right hon. Gentleman and his colleagues rejected but we are prepared to accept and put in place. He will have to wait until that scheme design has taken place and we have worked through its implications across 1.5 million policyholders, their 2 million different policies and the 30 million transactions that they entered into.
I am determined that the scheme will proceed as quickly as possible and that we can resolve the problems faced by Equitable Life policyholders—problems that the right hon. Gentleman and his party did little to sort out over the course of the past nine years.