Welfare Reform and Work Bill

Priti Patel Excerpts

Tuesday 23rd February 2016 Commons Chamber

[The Minister for Employment (Priti Patel)]

I beg to move, That this House disagrees with Lords amendment 1.

[Mr Deputy Speaker]

With this it will be convenient to discuss the following:

Lords amendment 8, and Government motion to disagree.

Lords amendment 9, and Government motion to disagree.

[Priti Patel]

The Bill is a vital part of the Government’s reforms that are moving this country to a high wage, low tax, low welfare economy. It is fundamental to our commitment to end child poverty and improve children’s life chances, and to ensure that work always pays more than a life on benefits and that support is focused on the most vulnerable.

As is right and proper, the Bill’s provisions have been carefully scrutinised by both this House and the other place. Where appropriate the Government have tabled amendments to bring clarity or to remove unintended consequences, and they have made important commitments on supported housing and the social rents measure, on kinship carers and sibling adoptions under clauses 11 and 12, and on guardian’s allowance and carer’s allowance in relation to the benefit cap. The Government remain firmly committed to the aims and principles of the Bill as it left this House, and for that reason we wish to resist the non-Government Lords amendments.

Before I address each area in detail, allow me to set out the key principles that underpin our disagreement with the Lords. Our view is that the addition of child poverty income measures is unnecessary because we have already committed to publishing statistics on children in low-income families through the “Households below average income”—HBAI—publication. Lords amendment 1 would also reintroduce a failed approach to child poverty that is focused on tackling its symptoms rather than its root cause, and it would drive perverse behaviour focused on lifting people just above the poverty line, rather than on a life chances strategy that could transform children’s lives.

[Stephen Timms (East Ham) (Lab)]

Does the Minister accept that income has a huge impact on life chances?

[Priti Patel]

Income is one of many factors that impact on life chances and poverty, which is why the Government are very much focused on tackling the root causes of child poverty. I will come on to discuss that issue even further—[Interruption.] I know that Labour Members disagree with that, and they will soon have their chance to comment.

On the change to the work-related activity component of employment and support allowance, and to the limited capability for work element of universal credit, I stress that the Government are fully focused on helping people who can work into work. We want to end a broken system that is patently failing those it should be helping, and ensure that a good proportion of the savings are recycled into long-term practical support that will have a transformative effect on people’s lives.

[Neil Gray (Airdrie and Shotts) (SNP)]

The Minister mentions the fact that income is a factor in poverty, but the executive summary of her own Government’s report from January 2014 states:

“The main factor is lack of sufficient income from parental employment, which restricts the amount of earnings a household has.”

It is not just a factor, it is fundamental.

[Priti Patel]

I say to the hon. Gentleman and to all Members that work remains the best route out of poverty. Moving people into work, and helping their income grow once they are in work, is exactly our focus.

[Mark Spencer (Sherwood) (Con)]

What would the Minister say to those of my constituents who have limited abilities? Would she say it is better to try to help and support them into some form of employment, albeit on reduced hours, or to write them off and say they cannot contribute to society?

[Priti Patel]

My hon. Friend is absolutely right. This is the fundamental difference between our party and the Labour party in government. We are committed to supporting people to get into sustained employment, rather than consigning them to a life of dependency on benefits, which has counterproductive consequences.

[Alison McGovern (Wirral South) (Lab)]

The Minister is wrong, isn’t she? The new deal got more people into work than ever before, whereas this Government are taking money out of the pockets of working families. How can she say that she wants working people to feel the benefit when universal credit will make them poorer?

[Priti Patel]

The hon. Lady is wrong in many, many ways. For a start, this Government have supported more people back into work than ever before. Our welfare reforms are helping, through universal credit and our work coaches in particular, and by giving individuals dedicated support to help them not just get into work but remain in work.

[Wes Streeting (Ilford North) (Lab)]

Will the Minister give way?

[Priti Patel]

I will come back to the hon. Gentleman shortly, but I would like to make a bit of progress. Before I come on to discuss the child poverty income measures, I would like to touch on ESA. I will come back to some of the detailed questions.

When the Labour party designed the work-related activity component, it was intended to act as an incentive for people to take part in work-related activity and therefore move into work more quickly. However, with just one in 100 work-related activity group claimants leaving the benefit each month, it is clearly not working. It is crucial to make sure we have the right support in place to help people move closer to the labour market. As we all know, a large body of evidence shows that work is generally good for physical and mental wellbeing. There is also a growing awareness that long-term worklessness is harmful to both physical and mental health. Indeed, some of the major charities that the Department is working with agree that work can be right for some people after a diagnosis, and that improved employment support is crucial to helping people with health conditions and disabilities to move into work or get closer to the labour market.

As we speak, the Government are working on a White Paper for this year, which will set out plans to improve support for people with such conditions, including the role of employers and improved integration between health and employment. I will expand on that later, but I will begin by addressing Lords amendment 1 in detail.

Lords amendment 1 is wholly unnecessary, as statistics on low income are already published in the HBAI report. That information is available for all to see, and it will continue to be so. [Interruption.] Labour Members are chuntering away. They will get their chance to speak shortly. I think they should show me the courtesy of allowing me to make my points. Ministers in both Houses have committed to the continued publication of the information contained in HBAI. I hope it is clear to hon. Members that more than adequate safeguards are already in place to secure the continued publication of low income data.

[Dawn Butler (Brent Central) (Lab)]

Macmillan Cancer Support has warned that cancer patients could be at risk of losing their homes if proposed Government cuts to ESA go ahead. Does the Minister have anything to say to Macmillan?

[Priti Patel]

What I would say is that Macmillan has also said that many people diagnosed with cancer would prefer to remain in real work or return to their job during or after treatment. It is important that the House recognises—[Interruption.] If the hon. Member for Pontypridd (Owen Smith) would like to intervene he is very welcome to do so, but I think he should let me finish my point before he starts chuntering away. It is essential that people suffering with cancer get the right support. Obviously, when people are in the ESA support group and are unable to work, they will remain in the support group and be supported financially.

If I may come back to the point on Lords amendment 1—

[Owen Smith (Pontypridd) (Lab)]

rose—

[Priti Patel]

Is this on Lords amendment 1?

[Owen Smith]

It’s about Macmillan.

[Priti Patel]

I give way to the hon. Gentleman.

[Owen Smith]

I am grateful to the Minister. She prays in aid Macmillan. Will she confirm that it is opposed to the £30 a week reduction for members of the ESA work-related activity group? It is not in favour of it; it is opposed to it.

--- Later in debate ---

[Priti Patel]

I think Macmillan, alongside the Government, recognises that those on the support group will, rightly, not be affected. They will be supported, because they are in the support group and therefore obviously ill.

[Neil Gray]

Will the Minister give way?

[Priti Patel]

No, I will not give way. I am speaking to Lords amendment 1.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Will the Minister give way?

[Priti Patel]

I am going to make some progress on Lords amendment 1, and then I will give way to the hon. Gentleman.

I turn to why statutory income measures failed. They are flawed as they do not drive the right action to transform children’s lives. It is worth demonstrating that with a few examples. The Government are undertaking crucial reforms to improve people’s life chances, such as introducing the national living wage and increasing the personal allowance for the hardest-pressed families. Those policies will provide support for the hard-working families who need it the most, yet, according to Labour’s failed approach to measuring child poverty, their introduction would have supposedly led to an increase in child poverty. That failed approach incentivised the wrong actions. For example, it led the previous Labour Government to tackle the symptoms of poverty through expensive income transfers, such as spending more than £300 billion on working-age welfare and tax credits between 2003-04 and 2008-09, with very little return. The strategy failed to tackle the root causes of child poverty and did not make a long-term difference to children’s prospects.

[Several hon. Members rose—]

[Priti Patel]

I will give way shortly.

The number of children in relative poverty remained broadly unchanged. In short, there are fundamental weaknesses in that system, which the Government are seeking to put right through our life chances measures.

[Andrew Gwynne]

The Minister would perhaps want me to remind her that child poverty fell by 1 million under the Labour Government, which is something we should be proud of. Her own advisers advised against removing the child poverty indicators, so why is she headstrong in ignoring the advice not just of the other place but her own commission, which has said that this is wrong?

[Priti Patel]

We discussed this issue in Committee. I just reiterate that the Government are right in our approach: we are focused on tackling the root causes of poverty. Ultimately, as the Prime Minister said in his recent life chances speech, we are here to make sure we can tackle those long-term root causes. This is not just about measurement. The economy cannot be secure if we spend billions of pounds on picking up the pieces of social failure. Economic reform and social reform are not two separate agendas, they are connected to one another. Therefore, it is imperative that we focus our resources on how we can transform people’s lives, which is through tackling the root causes.

The path I urge the House to take is the one that will incentivise the right action, and the one that the evidence tells us will make the biggest difference to children’s life chances. That is precisely why the Government are seeking to introduce the life chances measures contained in the Bill. The statutory measures on worklessness and educational attainment, combined with the non-statutory measures in the forthcoming life chances strategy—such as family breakdown, problem debt, and drug and alcohol dependency—will drive the right actions to transform children’s lives.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Will the Minister give way?

[Priti Patel]

Just bear with me a second. [Hon. Members: “Ooh!”] There is no need to be childish. I will give way to the hon. Member for Ilford North (Wes Streeting).

[Wes Streeting]

I am grateful and surprised that the Minister has given way. I am sure the Prime Minister is delighted to see her back on message today, as she has not been in the past few days. She talks about the measures in the Bill. How can she go against the advice of her own Government’s commission when it says that

“it is not credible to try to improve the life chances of the poor without acknowledging the most obvious symptom of poverty, lack of money.”?

When is she going to listen to the Government’s own advisers?

[Priti Patel]

Let me remind the hon. Gentleman that we continue to publish data on low-income households. This information is still being published—[Interruption.] It might not be the information that the hon. Gentleman wants to know about, but we are publishing it, alongside doing something that previous Labour Governments successively failed to do—transforming lives, addressing the root causes of poverty and, importantly, ensuring that we tackle the causes that have led to child poverty in the long run.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

The hon. Member for Denton and Reddish (Andrew Gwynne), who made a point about child poverty but is no longer in his place, seemed to indicate that owing to the recession under the last Labour Government, child poverty fell. Does that not show the fallacy of Labour arguments and reveal that we are trying to seek the root causes of poverty rather than provide some measure that simply does not work?

[Priti Patel]

My hon. Friend is right. It is absolutely clear that when children are the future of our country, it is right to focus on delivering better life chances for them. When we publish the life chances strategy in spring, we will make the biggest difference to children’s life chances now and in the future. We must seek to rescue a generation from poverty by extending life chances right across our country. We must build a country where opportunity is more equal, with stronger communities and young people who can face the world with a background of experiences and characteristics that we know are vital for their success. As my right hon. Friend the Prime Minister said, we must seek to

“transform the life chances of the poorest in our country and offer every child who has had a difficult start the promise of a brighter future.”

[Stephen Timms]

Did the Minister see the report published by the Centre for Social Justice last month, which set out a way of combining the life chances indicators—interesting information will be provided in them—with income indicators, so that we do not ignore income, which is so clearly a key aspect of the whole issue?

[Priti Patel]

I thank the right hon. Gentleman for his intervention and his comment. We will publish the life chances strategy in the spring, and I think it will give us every opportunity to consider holistically all the factors that can lead to better outcomes for children and families. I recognise the right hon. Gentleman’s point. On the back of the remarks I have made, I urge hon. Members to support the Government motion and reject Lords amendment 1.

Let me deal now with Lords amendments 8 and 9, which as you indicated, Mr Deputy Speaker, impinge on the financial privileges of the House. These amendments would simply delete clauses 13 and 14 from the Bill. This would reverse the plan, announced in the summer Budget and endorsed by this House, to align the amount paid to ESA claimants in the work-related activity group to that which is paid to JSA claimants, and to align the amount paid to universal credit limited-capability-for-work claimants to that of the UC basic rate. Let me take this opportunity to stress the Government’s strong belief that this reform is the right thing to do. It is part of our efforts not just to improve people’s life chances but importantly to support them going into work so that they can reach their full potential. Let me explain why.

Record employment levels and strong jobs growth in recent years have benefited many, but those benefits have yet to reach those on ESA. While one in every five JSA claimant moves off benefit each month, this is true of just one in 100 ESA claimants in the work-related activity group. This Government believe that people with health conditions and disabilities deserve better and deserve more support. [Interruption.] I appreciate that Labour Members have no solutions for tackling the wider issues surrounding welfare and would rather simply continue to spend public money in an unsustainable way. We have listened to charities and campaigning organisations who say that improved employment support is key to helping people with health conditions and disabilities to move closer to the labour market and, when they are ready, into work.

[Neil Gray]

I look forward to reading the Minister’s White Paper, but is she not approaching the matter the wrong way round? Should she not introduce the White Paper first and then look at making changes to ESA? What does she say to her colleague, the hon. Member for South Cambridgeshire (Heidi Allen)—I look forward to hearing her contribution later—who said on “ConservativeHome” this morning:

“The beauty of this intermediate WRAG group is that it is just that—intermediate, on the road to returning to work but not quite there yet”?

[Priti Patel]

I rather think the hon. Gentleman makes my point for me in the sense that those in the work-related activity group need more support. Currently, they have been getting too little support. That is exactly the purpose of our reforms. We believe that we must tackle this issue, and provide—yes—the right financial security for individuals, but at the same time also look at the most effective ways to improve the wellbeing of those individuals by giving them support to get back to work. Almost half a million people in the work-related activity group get too little support to move back into work. We currently disincentivise them from doing so. As I say, they deserve better than that, and the Government are determined to take the necessary steps to transform their life chances by supporting them into work.

The Government are committed to ensuring that disabled people are able to participate fully in society, and we have set out our ambition to halve the disability employment gap. It is a duty of Government to support those who want to work to do so, and most people with disabilities and health conditions, including the majority of ESA claimants, tell us that they want to work. Some 61% of those in the work-related activity group tell us that they want to work, and we mean to put those people’s ambitions at the centre of what we do.

[Stephen Timms]

We have established that Macmillan Cancer Support disagrees with the Minister on this issue. Parkinson’s UK, Mind, and Rethink Mental Illness, whose chief executive wrote to all of us, say that they strongly disagree. So can the Minister tell us the name of any organisation representing disabled people that agrees with the position that the Government have taken?

[Priti Patel]

What I would say to the right hon. Gentleman is that we have been working with organisations and disability groups, and we have actually been listening to them. [Interruption.] Rather than making generalised comments from a sedentary position, Labour Members should realise that we are working with those organisations as we move forward with our White Paper—

[Dr Roberta Blackman-Woods (City of Durham) (Lab)]

Will the Minister give way?

[Priti Patel]

No, I will not.

The ESA system was set up by Labour in 2008 to support people with health conditions and disabilities into work. Despite being set up with the best of intentions, it has failed the very people it was designed to help. The original estimates were that far more claimants would move into work. A White Paper was published in 2008, setting out that the then Labour Government aimed to reduce the number of people on incapacity benefits by 1 million by 2015.

We have spent £2.7 billion this year on the ESA work-related activity group, but as I mentioned earlier, only around 1% of people in this group actually move off the benefit every month. I think it is fair to say that this benefit is not working as anyone intended it to work and, most importantly, it is failing claimants badly. The Government are committed to spending taxpayers’ money responsibly in a way that improves individuals’ life chances, and helps to move people off benefits and into work.

Those in the work-related activity group are given additional cash payments, but very little employment support. As the Prime Minister has recently stated, this fixation on welfare treats the symptoms, not the causes of poverty, and over time, it traps people into dependency. That is why we propose to recycle some of the money currently spent on cash payments, which are not actually achieving the desired effect of helping people move closer to the labour market, and put it into practical support that will make a genuine difference to people in these groups.

In addition to the practical support, which is part of a real-terms increase that was announced in the autumn statement, we need to reflect on how spending the £60 million to £100 million of support originally set out in the Budget will be influenced not only by Whitehall, but by a taskforce of representatives from disability charities, disabled people’s user-group organisations, employers, think-tanks, provider representatives and local authorities. So far, we have worked with charities including Scope, Leonard Cheshire Disability, the Royal National Institute of Blind People, the National Autistic Society and the Disability Action Alliance.

During the passage of the Bill, Members of this House and the other place raised concerns that we are expecting claimants who have been found “not fit for work” to be able to work. That is not the case. Claimants in the work-related activity group have been found to have “limited capability for work” and that is very different from being unfit for any work. Of course there may be limitations on the type and amount of work people in the work-related activity group can do, and they may also need workplace adjustments, but employment is not ruled out. That is the reason for the ESA permitted work rules. The distinction is important, because the misconception helps to drive people further away from the labour market, perpetuates the benefit trap, and undermines the life chances of claimants.

[Greg Mulholland (Leeds North West) (LD)]

The Minister has mentioned fluctuating conditions. It is well known that mental health problems cause fluctuating conditions which are very hard to deal with, but 50% of the people affected by the cut in ESA have such problems. Surely that has not been built into the Government’s thinking. What analysis has the Minister made of the impact?

[Priti Patel]

I have just touched on what we are doing to find extra employment support. As I have said, we are working with other organisations, and I have named only some of them. However, the issue of mental health is crucial to the way in which we connect our systems, working with the NHS. A joint working group from the Department for Work and Pensions and the Department of Health is looking into how we can help members of the ESA work-related activity group with mental health conditions, provide signposts for them, and secure treatment for them as well.

[Richard Graham (Gloucester) (Con)]

When the Opposition talk about income, what they really mean are welfare benefits. That is not what we mean when we talk about income. All the evidence shows that 75% of children in relative poverty will be removed from the poverty indicator if both parents in the household are working. There are now more children in families in which people are working than ever before: that is this Government’s record.

As for ESA, some of us have met people with significant disabilities who are working, such as the people from National Star College in Gloucestershire who are now working with EDF Energy. It is amazing to see what a difference that makes not just to their incomes, but to their overall life chances and life happiness.

[Priti Patel]

My hon. Friend is right to highlight the importance of work to people who have previously been locked out of employment opportunities. We have many schemes, but Disability Confident is a very good example of how we can work with employers to deliver sustained employment opportunities for people with disabilities. The Government are doing additional work on a wide-ranging employer strategy, working with employers specifically to establish how we can address the disability employment gap and how they can give people with disabilities more structured and sustained employment opportunities.

It is important to recognise that the changes in employment and support allowance and universal credit work together, and cannot be dealt with in isolation. We have invested a significant amount in universal credit to ensure that we keep people connected and engaged with the labour market from the outset of their claims. Unlike those claiming employment and support allowance, universal credit claimants with a health condition or disability are offered labour market support, when that is appropriate, at the very start of their claim. That helps them to remain closer to the labour market, even if they are not immediately able to return to work. It also provides them with employment support, advice or training to get back into work, which, in the long run, will help them to obtain jobs.

I stress that this change does not affect those in the ESA support group or the universal credit equivalent. It also does not affect the premiums that form part of income- related ESA. Moreover, existing ESA claimants will not be affected. There will be no cash losers, and the policy applies only to those who apply for ESA and subsequently enter the WRAG from April 2017. We also aim to protect those who move off ESA to try to work. Those who were receiving the component and returned to ESA within 12 weeks because they could not cope with work will be able to reclaim ESA and receive the component again. Hopefully, that will help to dispel the myth that everyone who is currently in the work-related activity group will be affected by the change. Universal credit works in a different way from ESA, but we aim to put similar protections in place.

This reform is a first and necessary step towards a wider reform package. In the autumn statement, my right hon. Friend the Chancellor announced that the Government would publish a White Paper this year that would set out our plans to improve support for people with health conditions and disabilities to further reduce the disability employment gap and promote integration across health and employment. That will include exploring the roles of employers.

Clauses 13 and 14, together with the additional practical support announced in the Budget, will provide the right support and incentives to help people with limited capability for work move closer to the labour market and, when ready, into work. In the light of those arguments, I hope that Members will feel able to support the Government.

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

I support Lords amendment 1, which deals with child poverty reporting obligations, and amendments 8 and 9, which relate to the proposed cuts in the employment and support allowance work-related activity component and the universal credit equivalent.

Lords amendment 1 places a reporting obligation on the Secretary of State, requiring an annual report on child poverty to be laid before the House. The amendment stipulates that the report must include information on the percentage of children living in poverty as originally described in the Child Poverty Act 2010, and based on household income and material deprivation.

The Bishop of Durham, who moved the amendment in the Lords, emphasised the importance of income to an understanding of child poverty and children's wellbeing and life chances. He said that income measures would not supplant the Government's other measures relating to worklessness and educational attainment. These measures will ensure that the income-based measures of child poverty, which have been collected in the UK and other developed countries for decades, will be retained, allowing year-by-year comparisons and holding the Government to account.

Various charities, including the Children's Society, the Child Poverty Action Group and End Child Poverty, have called on the Government not to abandon the income-based measures of child poverty, as has the Equality and Human Rights Commission. In a letter published in The Times today, 177 child health academics have written in support of retention of those measures. Even UNICEF has urged the Government to retain the income-based measures that are used in the 35 OECD countries, and that allow inter-country comparisons.

As has already been mentioned, the Government’s own 2014 evidence review of the drivers of child poverty found that a lack of sufficient income from parental employment—not just worklessness—was the most important factor standing in the way of children being lifted out of poverty. Even the Minister, in a recent Westminster Hall Debate, acknowledged that

“Income is a significant part of this issue, but there are many other causes as well.”—[Official Report, 26 January 2016; Vol. 605, c. 72WH.]

The Social Mobility and Child Poverty Commission’s 2015 annual report found that 2.3 million children were living below what is currently defined as the child poverty line, and the Resolution Foundation has estimated that in 2016 alone a further 200,000 children, predominantly from working households, will fall into poverty. That is on top of the projections of the Institute for Fiscal Studies that the falls in child poverty at the beginning of the century risk being reversed. The 1% uprating of benefits by itself in 2013 was estimated to have pushed 200,000 more children into poverty.

Given the Bill and the four-year benefit freeze, it is entirely probable that the increase in child poverty will rise even more steeply. A recent inquiry by the all-party parliamentary group on health in all policies into the impacts of the Bill on child poverty and health showed clearly that it could lead to an increase in the number of children facing the misery and hardship of poverty by as many as 1.5 million by 2020.