Welfare Reform Bill

Stephen Lloyd Excerpts

Wednesday 9th March 2011 Commons Chamber

[Julie Elliott (Sunderland Central) (Lab)]

There have already been some excellent speeches in this debate on one of the most important issues that we have discussed so far in this Parliament. Before I talk about the issues, I want to align myself with the comments made by my hon. Friend the Member for Aberdeen South (Dame Anne Begg) about the problems with the Bill.

I support any attempt to reform the welfare system for the better, to make it easier to access and understand and to make people claim and receive the benefits to which they are entitled, and some measures in the Bill attempt to do that. For example, if universal credit can be made to work, that will be a good thing, but, as yet, I am not convinced that that will be the case. I await with interest the details of how the proposals will work. The jury is out for me on that point.

In the run-up to Second Reading, I have been contacted by many people who are extremely worried about the proposed changes and who are worried and frightened about the impact that those changes will have on their lives. The lack of detail about some of the proposals is one of the problems. The people contacting me have been, in the main, among the most vulnerable in our society. That was why I felt that I had to speak in this debate; I believe that, as an MP, I should speak up for the most vulnerable people I represent.

There are many reasons why I cannot support the Bill as it stands, many of which are set out in the reasoned amendment. The uncertainty about how the universal credit will work is creating fear for those people for whom benefits form all or part of their income. The Bill seems to contain disincentives to work, and that surely cannot be the intention.

I come from an area with long-standing high unemployment and I firmly believe that we need to incentivise work and to give people the opportunity to be aspirational about their lives and the chance to make things better for themselves. Although there is high unemployment in Sunderland and the north-east, there is also a strong work ethic. I was brought up in a family and community that believed that people should work hard and do their best, and I do not believe that that has changed over the years in the majority of families. Sometimes, people need help to do that. Such help includes the tax credit system, but there has been no clarification on what level of support parents will get for child care. The disincentives for people who save, who will be barred from the universal credit, seem unbelievable.

As the Bill disadvantages people suffering from cancer or mental illness through the withdrawal of the contributory employment support allowance, it is hitting hardest those whose needs are probably the highest.

[Stephen Lloyd (Eastbourne) (LD)]

Will the hon. Lady give way?

[Julie Elliott]

No, not at the moment, although I might in a minute.

As I said earlier, I want to focus my remarks on the most vulnerable. Many of the extremely vulnerable people who have contacted me are suffering from mental health issues and autistic spectrum disorders. Autism is a spectrum condition, which means that, despite some common characteristics, it affects sufferers in different ways and to differing extents. ASDs, as they are commonly known, are largely “hidden” disorders that affect a sufferer’s ability to communicate with others, which means that the annual review will be a real problem. ASD sufferers span the whole disability spectrum. Some are able to live relatively independent lives; others need a lifetime of care or receipt of specialist support.

Approximately one in 100 children and 350,000 adults of working age suffer from ASDs. Of the latter group, only 15% are in full-time employment in the UK. The disability living allowance has been a key benefit, providing for these people the help and support that the additional costs of their disability require. The £1 billion cut over the next three years, when the DLA is replaced by the personal independence payment—

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[Malcolm Wicks (Croydon North) (Lab)]

It is a pleasure to follow my Blairite colleague on the Government Benches. May I say, by way of introduction, that I judge, as many of us would, that wise social security policy seeks to relate the issues of benefits to the issue of employment? I would argue that we should start the discussion with work. I wish to analyse the Bill and some of its proposals in that important context, because surely for those able to work the best social security policy is a job—things start from there.

I often quote William Beveridge at this stage, partly because it reminds us that there was once an era of great Liberal reform. In his famous 1942 report, he talked about the giants of want, disease, ignorance, squalor and idleness standing in the way of social reconstruction once peace had come. He said that the giant of idleness, by which he meant unemployment, was the largest and fiercest of the giants and that if we did not overcome it all the other social goals of peacetime reconstruction would be out of reach. If one thinks about the implications for health and education, one sees exactly and empirically what he meant, so that is my starting point.

Skipping forward 65 years from the great Attlee reforms that implemented the Beveridge recommendations and many others to the present day, it seems to me that there are three issues or obstacles that we must address or overcome if we are to get right the balance and relationship between what I still prefer to call social security—I find the term “welfare” pejorative—and work.

The first issue is employment policy. Where is the Government’s full employment policy? Is it their ambition to move back towards full employment? In my Croydon constituency, literally hundreds of job losses have just been announced at the Home Office’s Border and Immigration Agency. In addition, the council will contribute hundreds of job losses and there will be job losses in the health service with the reform of primary care trusts. That is just the start in an area that is very dependent on public sector work. What we are seeing is not ambition for full employment but a move towards further unemployment, which concerns me greatly.

One of the great tragedies is that many of our fine young people leaving school and getting vocational qualifications and degrees are finding that no jobs are available. We must all think long and hard in the short, medium and longer term about whether we can somehow move towards a job guarantee for our young people, many of whom do so well in education and skills. We will betray a generation if we cannot soon offer them work that suits their skills, creativity and qualifications.

On the contentious issue of immigration, it is clear to me, from a London perspective, that eastern European immigration has made it more difficult for people on the margins of the labour market to get jobs. It is a simple matter: if an employer is presented with a British person of whatever ethnic group who is not job-ready, as opposed to someone from Lithuania or Poland who is clearly eager to work and will probably turn up on time, who will they employ? How, in those circumstances, can we enable British people to get the work that our country owes them?

[Stephen Lloyd]

That is an important point. Does the right hon. Gentleman agree that a key area in the Bill—within the black box that was discussed earlier—is the fact that the Department will pay providers upwards of £14,000 to help into work people who have been away from work for a while and to sustain them in work over a couple of years? Does he agree that that is a positive step?

[Malcolm Wicks]

Of course, which is why the Labour Government, under the former Secretary of State for Work and Pensions, my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), established such policies with Jobcentre Plus. Of course that is the right thing to do.

The second of the three issues I mentioned is wage levels. I recall from my history that the Speenhamland system was created in the late 18th century. As far as historians can judge, that was the first direct wage subsidy in Britain. Since then, we have had a number of policies, starting with family income supplement, tax credits and so on that could be said to subsidise low wages. I am proud that a Labour Government introduced the minimum wage, but Conservative Members will not be so proud that their party vehemently opposed it. As we move back towards economic growth and greater affluence, should we be talking about not just a minimum wage but a living, or adequate, wage, not least for people who are employed by multinationals that make large profits? Otherwise, the social security system will continue to subsidise low and sometimes exploitative wages.

The third issue is the work ethic, on which my hon. Friend the Member for Sunderland Central (Julie Elliott) touched. I believe the work ethic is alive and well in many parts of Britain. I also recognise that because of the de-industrialisation during the Thatcher years the work ethic among some individuals in some communities had the stuffing knocked out of it, and there are now communities where three generations of people have been nowhere near a job for a very long time. We need to think through the implications of that.

Where people can work and where jobs are available, working-class people on our estates are angered by spongers and shirkers. Those people do exist and we should not ignore that fact, but in a culture in which bankers can stick two fingers up to democracy, to Parliament and to the Government and in which multinationals brag about avoiding paying tax, we have become an amoral, if not sometimes an immoral, economy. If we are to preach honesty and responsibility to the poor, as I think we must, although it can be difficult at times, then responsibility is also good enough for the rich and powerful.

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[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

These debates about our welfare system or, as I should say, heeding the comments of my right hon. Friend the Member for Croydon North (Malcolm Wicks), our social security system—whether in the House, the media or the pubs and living rooms of our constituencies—often become a magnet for two opposing arguments. The first is that everyone on welfare is somehow undeserving and all the money is spent incorrectly; the second is that every penny spent is 100% effective and should be beyond question. We have heard those views today, but both are extreme and neither is true.

I will always support our welfare state, and I want to live in a country where we accept collective responsibility for the people who are most in need. We would all be much poorer if we did not enable the most vulnerable members of our society to live with dignity, and it would be a far more daunting society without the support that we currently offer to people who are searching for work. I admit, however, that our system is not without its shortcomings, and it could benefit from some reforms. Unfortunately, those are not the reforms suggested in this Bill.

Our welfare system can be daunting and is too complex, and universal credit could be a positive step forward if it simplifies the system, but simplicity and transparency, welcome objectives that they are, are not enough on their own; the welfare system must also be fair and effective and, above all, enable the transition from welfare to work. The proposals in the Bill fall short of those measures, and as a result, despite being a supporter in principle of welfare reform, I cannot support them today.

The Government need to realise that we can support the welfare system and make it stronger only if we are also willing to support the labour market. Helping the transition from welfare to work will be successful only if there is work to take up, yet the scale and pace of the cuts that we currently see threaten to send unemployment soaring, just as happened under the previous Conservative Government, when it topped 3 million on two separate occasions.

Government Members tell us that the welfare bill is expensive, but so is mass unemployment. I believe enormously in the power of work. Employment brings dignity, respect and decency to life, and getting more people into work should always be one of the prime objectives of the Government. In my constituency there are 16 people chasing every advertised job, and, with some of our major employers, such as the council and the police force, axing hundreds of jobs, that will only become worse. Residents are concerned about their jobs, and with youth unemployment at record levels they are worried that there will be no work for their children.

The Labour Government took deliberate and positive steps to reduce youth unemployment by introducing measures such as the future jobs fund. By September, almost 700 young people in my borough had completed placements funded by the scheme. The scheme was an opportunity for participants to learn new skills, to develop confidence, and to learn about the things that might be holding them back in the jobs market. Many of the people who completed it went on to further education or training. Where was the sense in axing such a scheme, which was already proving successful in stemming the increase in youth unemployment?

It seems to me that schemes such as the future jobs fund were cancelled not for economic reasons but for political ones. The Government appear intent on spinning the myth—

[Stephen Lloyd]

Will the hon. Gentleman give way?

[Jonathan Reynolds]

I will, because I believe that I could not give way to the hon. Gentleman on Second Reading of the Health and Social Care Bill, and I do not want to be discourteous a second time.

[Stephen Lloyd]

I thank the hon. Gentleman. On the future jobs fund, does he agree that the percentage of people who went into paid work afterwards was incredibly low? One of the reasons why the Government have decided to focus more on apprenticeships, where they have invested much more money, is that with apprenticeships the jobs that people get tend to stick.

[Jonathan Reynolds]

When I looked into this, anticipating such an intervention, I found that it is difficult to get precise figures on a constituency basis, but the information that my local authority could give me shows that two thirds of the people who were employed through the future jobs fund in my borough went on to paid employment or training. I appreciate that that is not quite the answer to the hon. Gentleman’s question, but it is the best one I can give him.

The Government seem to want to create a year zero and pretend that no reform went on over the past 13 years, in order to create a benchmark by which they can measure their own progress. However, it is a false benchmark because it fails to recognise the progress that was made. Returning people to employment was an integral part of the last Labour Government’s policy, and many advances were made. The Benefits Agency-Jobcentre Plus merger, which is always identified as best practice, allowed people to look for work at the same time as claiming as benefits. We launched the new deal, under which, for the first time, people were told that they could not refuse help to find work, and it was the Labour Government who toughened sanctions against those who could work but refused to do so. Some of the measures now being proposed dilute the sanctions imposed by the last Labour Government.

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[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Like many hon. Members on both sides of the House, many of my constituents and many organisations have contacted me about their concerns about the Bill. Given that many other hon. Members want to speak, I shall highlight only a few of those.

The changes in housing benefit will in due course feed into the housing element of the universal credit. Without going into all the details, there is no doubt that many people in my constituency will be seriously disadvantaged by those proposals. People will be driven into poverty, and in some cases, driven out of their current housing. The fact is that for all the press stories we read—they are sometimes repeated by Government Members—about people living in luxury housing benefit accommodation, any such cases are few and far between, if the ones we read about are genuine, which is doubtful. We should not allow the debate to be distorted by a few extreme examples that, if genuine, need to be tackled.

Hon. Members will recall that in his Budget statement last year, the Chancellor of the Exchequer referred to

“families receiving £104,000 a year in housing benefit.”—[Official Report, 22 June 2010; Vol. 512, c. 174.]

I pursued that with a number of written questions. I have still not had the exact figure from the DWP, which I suspect is because only a handful of families are in that situation. If we are to have a serious debate, we should talk about the realities on the ground, not fake figures that are designed to scare people and distort the real debate that we need to have.

There are precious few areas in which forcing down housing benefit costs will affect market rent. In most cases, the market rent will become further diverged from housing benefit. As I said, as a result, people will be driven out of their housing, and perhaps forced to leave their communities or forced to go to areas where they do not get support from family and friends either in or out of work.

It may be the case, as the hon. Member for Bromsgrove (Sajid Javid) said, that the Government’s changes will affect the market in cases where housing benefit tenants form a large proportion of the rented market. However, in constituencies such as mine, there are lots of student properties, holiday lets and those whom one might describe as young professionals. They are a major element in the rented housing sector, and they are certainly not going to go away, meaning that those on housing benefit will no longer be able to afford their existing housing. That is certainly a concern that has been expressed to me by housing associations in my constituency.

[Stephen Lloyd]

Does the hon. Gentleman see nothing untoward about more than 5,000 families in the UK receiving more than £25,000 a year in housing benefit, which is equivalent to earning a salary of £80,000 to £90,000 a year?

[Mark Lazarowicz]

In each case, we have to look at the circumstances of the individuals concerned. However, the idea put forward by the Government that at the top end of the scale there are large numbers of people receiving £104,000 a year illustrates the distortions that some people want to introduce into this debate.

Another concern that housing associations in my constituency have raised with me is about the over-accommodation rules, which were mentioned by the hon. Member for Manchester, Withington (Mr Leech). Those rules will have many consequences that will be detrimental to both housing providers and individual tenants. One of the housing associations in my area has made the point that it may have a perfectly reasonable policy of providing people with an extra room, so as to allow access visits by children from a relationship, but those people would then no longer be entitled to housing benefit to reflect that extra room.

Parents and carers for adults with autism have also raised concerns with me, although other hon. Members have also discussed those concerns today, so I shall not repeat them. There have also been concerns about child maintenance charges being imposed on those still required to use the child maintenance system.

I want briefly to refer to concerns about the changes to DLA. When I intervened on my right hon. Friend the Member for Stirling (Mrs McGuire), I mentioned the concerns raised with me by a number of parents of children with disabilities in my constituency. Of course I recognise that the children concerned will not be subject to regular reassessments while they remain children. However, those parents have raised with me their concerns that in years to come their children may no longer have their support and assistance in submitting applications for DLA or its successor. Those children will find themselves in a vulnerable position if they are forced to undergo regular reassessments for conditions that will quite patently not change.

Those parents are right to be concerned—indeed, it is not surprising that they are—given that the backdrop to the Government’s policies is a 20% cut in the DLA budget. The Government may say that some of the fears that have been expressed are unfounded. However, if that is the case, they have brought it on themselves by rushing the consultation on DLA, which closed only nine days before the Bill was published, and because so many of today’s measures depend on further regulations being introduced at a later stage. Unsurprisingly, that has led to suspicions on the part of those who are likely to be affected by the changes.

Perhaps the underlying reason for those concerns is that we know that today’s changes are being driven in two ways: by a wish to reform the system—I accept the Government’s good intentions in that—but also by a wish to cut spending. The fact is that the Government’s prime concern is cutting the budget as soon as possible—that is the driver for today’s proposals—not, I am afraid, reforming the welfare system, which is something on which we should all able to agree across the House, if we had the time to discuss and debate it, and if we had the time to consider the views of outside organisations that have real concerns about it.

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[Stephen Lloyd (Eastbourne) (LD)]

Given the breadth of the Bill, I intend to focus on the work aspects.

The right hon. Member for Croydon North (Malcolm Wicks) is no longer in the Chamber, but I trust that he will not mind if I, too, quote Beveridge, who famously said:

“Want is one only of five giants on the road of reconstruction; the others are Disease, Ignorance, Squalor, and Idleness.”

As we all know, those words were written at a time of real poverty for many people in the United Kingdom. How do they apply today, in the 21st century? Indeed, do they apply today? My supposition is that they do. Today, 10.4 million people of working age in the United Kingdom are not working, 5.9 million are claiming out-of-work benefits, and more than 2 million children live in households in which no one is working. It was the great Nye Bevan who said:

“There is no test for progress other than its impact on the individual.”

Yet, today 3.9 million children still live below the poverty line. Some progress! Surely it is time to do something different.

I support the Bill’s Second Reading because I believe that, in the main, it approaches this intransigent issue intelligently and constructively. The nation has got stuck, and it has got stuck because of the system. I do not think that anyone in the Government is particularly at fault, because the problem has built up over the past 40 years. A key part of breaking the system, which I believe the Bill is doing, is making work pay—a concept that the Secretary of State has championed for some time—and that means changing the tax and benefit system.

I will not go into all the details, because I am sure that everyone in the Chamber is well aware of them, but, as some Members have already pointed out, more often than not there is no point in people coming off benefit and going into work because they will be worse off as a result. A constituent of mine, a single mum with three kids who is on housing benefit and the rest, has not worked for 15 years. The rational option for her is to stay on benefit, and if I were her that is what I would do. It would be insane for her to come off benefit: she would probably lose out under the system that we have had for years, and what would happen if she lost her job in a few months’ time? The system is insane, and the Bill attempts to transform it.

[Naomi Long]

Another potential benefit of removing the limit on the number of hours that can be worked by claimants—currently about 16—is that employers would be more likely to take on people part-time, such as lone parents, because they would have more flexibility.

[Stephen Lloyd]

I agree with every word that the hon. Lady said.

How are we to help people back into work when they have been receiving incapacity benefit, jobseeker’s allowance or a similar benefit? As I said when I intervened on the right hon. Member for Croydon North, the Bill will provide much more money for training providers to give them an incentive to focus on people who have been on benefit for a long time, and make it worth their while to spend extra time and resources helping those people back into work. The right hon. Gentleman said that the Bill copies measures taken by the previous Government in that regard. That is true to an extent, but it does a great deal more than that.

In the past 24 hours, I have been in touch with the National Audit Office, according to which the average payment from the DWP to training providers for pathways to work was £1,003 per job. Under the current proposals, providers will be paid a minimum of £3,800 and a maximum of £13,700. What lies behind the Bill is our recognition of the fact that people have been “parked” for years, which is outrageous. Whichever side of the Chamber we are on, we know that if the many people who have been out of work for a long time are to be helped, they will need that extra effort, extra mentoring and extra time. The only way in which we shall persuade training providers to do that is by stuffing their mouths with gold, as Bevan said in the ’50s in respect of the British Medical Association. The Bill attempts to achieve that by making training providers feel it is worth their while expending the extra effort to get people back into work, which is tremendous.

The previous Government introduced the black box concept, and I am glad that we are building on that to start using subcontractors’ imaginative ideas. That is all good and very rational, and it is a simple solution, too. Members on both sides of the House know that, where possible, work is the best route out of poverty.

There are downsides, however. The economy is challenged—that is the best word I can use. I spoke to a senior disability spokesperson the day before yesterday. I said, “Well, it’s obviously very hard for us to get all these extra people into jobs when we’re faced with such a difficult economic situation.” She replied, “Stephen, you’re absolutely right, but at least if we start doing the spadework now it is just possible that when the economy turns in a couple of years the foundations will have been laid and a lot of people who might have seen themselves as never working again could, through the mentoring, be in a position to be able to be swept along with the upswing in the economy.” I certainly hope so, because it is very difficult to achieve such radical reforms now when we face an economic crisis.

I want to give a message to the Minister, and I am sorry that all his colleagues are not present, as this applies to the entire ministerial team. The Bill is tremendous; it is a glass-half-full Bill and it recognises that we have to spend money, which is why I appreciate the Secretary of State getting the £2.5 billion from the Treasury. We have to pour money into this problem to transform the situation, but we must change the language if we are to get people who for years have been on IB or other benefits back into work.

The Bill is clearly designed to do that, which is why it approaches the issue in such a constructive way. I was in Burnley with the Work and Pensions Committee a couple of days ago. A training provider who is very successful in getting people into work said, “If there’s one message to give to the Government it is this: respect. Use the right words, and treat people who have been on IB and on benefits for a long time with respect.” I therefore say that we must use the right words.

The Bill is fit for purpose. I think it will transform the situation, and I will support it on Second Reading.