Oral Answers to Questions

Stephen Timms Excerpts

Monday 20th May 2013 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

The Secretary of State will recall that I wrote to him in November 2010 to warn that the IT system could not possibly be delivered in the time scale he was claiming—unfortunately, that has proved to be the case. In November 2011, he announced that 1 million people would be receiving universal credit by April 2014. What is his latest estimate of the number of people who will be receiving universal credit by April 2014?

[Mr Duncan Smith]

Let me remind the right hon. Gentleman of a quote from the Institute for Fiscal Studies about the way we are rolling the system out. It said:

“The level of problems caused to tax credit claimants and employers as the new tax credit systems went live in April 2003 demonstrated that there were undetected gaps in the design of the testing regime for the systems.”

This system is a success. We have four years to roll it out, we are rolling it out now, we will continue the roll-out nationwide and we will have a system that works—and one that works because we have tested it properly.

[Stephen Timms]

In November 2011, 1 million people were going to be claiming by next April: now, the Secretary of State has not the faintest idea how many there will be—so much for this project being on schedule. There were supposed to be four pathfinders, but now there is only one, under which the only people who can get universal credit are those in the most straightforward circumstances. How long will it now realistically be before he has an IT system that can cope with, for example, applicants with children?

[Mr Duncan Smith]

Interestingly enough, I had the right hon. Gentleman and the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) in to see me last year and I told them exactly how we were rolling the system out—[Interruption.] No, no. I told them that the pathfinder would continue first of all with single claimants. As for the idea that somehow things have changed—he knew about that then and the situation is exactly the same now.

Jobseekers (Back to Work Schemes) Bill (Allocation of Time)

Stephen Timms Excerpts

Tuesday 19th March 2013 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

We find ourselves in a deeply unsatisfactory situation with the Bill and, indeed, the programme motion. We do not quite know what happened between the court case and the decision that prompted the measure. My right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) and I were told about the problem a couple of weeks ago; there was a three-week gap when we did not know what was happening. The House of Lords Constitution Committee will, I believe, opine on the measure tomorrow, but equally we do not want to risk an additional £130 million cut to benefit spending over the period ahead, particularly not on a day on which it has emerged that the Government want to cut £2.5 billion from spending across Government, some of it doubtless from the budget of the Minister and his right hon. Friend the Secretary of State. Nor do we want to be in a position in which people who were sanctioned months ago—in many cases, well over a year ago—have to be refunded because of the appalling mess that the Government have got themselves into.

The way forward proposed by the Bill and the programme motion is deeply unsatisfactory, but it is less bad than the alternatives, and for that reason I shall not urge my hon. Friends to oppose it.

[Mr Speaker]

If no one else wishes to contribute, the debate has been pithily concluded.

Question put and agreed to.

Jobseekers (Back to Work Schemes) Bill

Stephen Timms Excerpts

Tuesday 19th March 2013 Commons Chamber

[Mr Hoban]

I beg to move amendment 1, page 3, line 11, at end insert—

‘() Subsection (12) does not affect a person’s ability to apply for a revision or supersession of, or to appeal against, a decision to impose a penalty by reference to other grounds.’.

We tabled the amendment as a result of discussions we had with the right hon. Members for Birmingham, Hodge Hill (Mr Byrne) and for East Ham (Stephen Timms), who expressed concern that existing appeal rights might be brought into doubt. The Bill as introduced to the House is clear in its intent. Its provisions refer solely to the consequences of the Court of Appeal and High Court judgments. The amendment, therefore, will have no effect on the overall purpose or intent of the Bill. However, after constructive discussions with the right hon. Gentlemen, we decided to include something in the Bill to put it beyond doubt that a claimant’s appeal rights against a decision to sanction their benefit will remain unchanged in all other matters.

The clause sets out that any decision to sanction a claimant for failure to comply with the employment support allowance regulations or the mandatory work activity regulations cannot be challenged on the ground that the regulations are invalid or that the notices given under them are inadequate, notwithstanding the Court of Appeal’s judgment. In practice, claimants will retain full appeal rights on matters where a sanction has been imposed but they feel that they had good reason not to comply with the requirements of the scheme—for example, if they failed to attend training because of illness of a family member or one of the other standard reasons set out in either regulation or guidance around good cause. However, claimants will not be able to appeal against a sanction decision on the ground of the High Court or Court of Appeal judgment.

I hope that the amendment meets the concerns of the right hon. Member for East Ham and that there is support for it on both sides of the Committee.

[Stephen Timms (East Ham) (Lab)]

The Government have got themselves into a terrible mess. As we heard, they ignored the advice of the Social Security Advisory Committee—that appears to be a significant part of what went wrong—but I welcome the amendment, because a straightforward reading of the Bill might, and indeed does, suggest that if one is hit, perhaps in particular by one of those stockpiled sanctions, that will be it.

I am grateful to the Minister and the Secretary of State for tabling the amendment, which helpfully clarifies—puts in the Bill—the fact that normal opportunities for reconsideration and appeal apply, but I want to ask the Minister about two points. I would be grateful for his comments on them during his winding-up speech for what I imagine will be a brief debate.

Some of the stockpiled sanctions, which we read about in the impact assessment, relate to events of quite a long time ago—up to eight months, which could be the beginning of August. I would like to know, because it is not entirely clear to us, whether all the 63,000 people affected by stockpiled sanctions already know that they have a sanction on the way. If, for example, they enter work straight after receiving a sanction that is in the stockpile, and so receive little benefit after the sanction is imposed, presumably the amount to be reclaimed from them will be very small. I ask for clarity. Is the intention, in taking the sanction out of the stockpile and applying it, that people’s benefits will be stopped for the appropriate period, or is it— [Interruption.]

[The Temporary Chair (Mr Jim Hood)]

Order. I hear ringing. It has now stopped. Carry on, Mr Timms.

[Stephen Timms]

Is it the Government’s intention to reclaim cash? Clearly, we are in a rather different situation from the one that obtains when somebody is sanctioned in the normal course of events, because the events to which the stockpile sanctions relate could have taken place a considerable time ago. How will the Department explain to those affected what is happening and what the effects will be in cases where a lengthy period has elapsed between the events that gave rise to the sanction and the application of the sanction, following the enactment of the Bill?

Will the Minister give us a little more explanation about one of the points raised on Second Reading, for example by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams)? The advice that we all received from the Child Poverty Action Group made this point:

“Contrary to Government claims, it is not obvious that DWP would have to repay sanctioned benefits to all claimants, so the £130 million potential loss stated is inaccurate: the Government already has anti-test case law rules which would prevent it having to repay anything for sanctions served prior to 6 August 2012.”

Will the Minister clarify the advice that he has received, which I have no doubt is different? If that view had been taken, the Bill would not be necessary.

I can well understand why the Child Poverty Action Group has reached its view. Section 27(3) of the Social Security Act 1998 relates to court decisions like the one reached in the case that gave rise to the Bill, and it reads as follows:

“In so far as the decision relates to a person’s entitlement to a benefit in respect of a period before the date of the relevant determination”—

in this case, the Appeal Court’s determination—

“it shall be made as if the adjudicating authority’s decision had been found by the Commissioner or court not to have been erroneous in point of law.”

A natural and straightforward reading of that paragraph could well lead to the conclusion reached by the Child Poverty Action Group, which is that anti-test case law rules prevent the Department from having to repay anything for sanctions scored before the court determination. I presume, as I said, that the Minister has received contrary advice on that measure, and it would be helpful if he explained what the advice was and therefore why the Bill is before the House.

[Mr David Anderson (Blaydon) (Lab)]

If the CPAG advice is correct, does my right hon. Friend have any idea by how much the £130 million could be reduced?

[Stephen Timms]

My hon. Friend asks a good question, and the answer is in the impact assessment that the Government have produced, which distinguishes between the amount that would be incurred because of people who were sanctioned before 6 August 2012 and the amount incurred in respect of people sanctioned since the court case, because those sanctions have been stockpiled.

The part of the impact assessment that contains those figures says that, by the look of it—to take the upper valuation—£24 million out of £130 million relates to sanctions that have been stockpiled. The CPAG view would be that of the £130 million, £106 million or £107 million would not apply, because of the Social Security Act 1998, whereas £24 million—the stockpiled sanctions—would. As I said, I am sure that the Department’s advice is different from the advice given to us by the CPAG, but it would be helpful if the Minister provided clarification so that we know the basis on which the measure has been introduced.

I would say again to the Minister that this is a helpful amendment. I do not think that it changes the position substantively, but it helps to clarify it, and to make it clear that anyone who will be presented with a stockpiled sanction will, as usual, have the opportunity to ask for a reconsideration and perhaps subsequently to appeal. That is a welcome clarification, and I am grateful to the Minister for providing it, but I would be grateful, too, if he commented on the two specific matters that I have raised.

[Mr Hoban]

The right hon. Gentleman has made a couple of points. In respect of payments where decisions have been stockpiled, when we received the High Court judgment, we did not proceed to make any further sanctions decisions, but claimants who were subject to a stockpiled decision are aware of that: we made it clear at the time, so they know what to expect. However, he asked whether we would recover sanctions from those who are in work now. The answer is no, we would not. That is a policy that we adopt elsewhere. We want to encourage people to do the right thing, and doing the right thing in this case is getting back into work.

The right hon. Gentleman then raised the note circulated to Members of Parliament by the CPAG. I touched on that point in opening the debate. Section 27 of the Social Security Act 1998 applies only when a challenge is brought by way of an appeal to a court or tribunal. The Wilson/Reilly case began with an application for judicial review, and on that basis, section 27 does not apply. With that, I hope that the Committee will approve the amendment.

Amendment 1 agreed to.

Clause 1, as amended, ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

New Clause 1

Report

‘(1) The Secretary of State must appoint an independent person to prepare a report on the operation of the provisions relating to the imposition of a penalty during the period of a year beginning with the day on which this Act comes into force, so far as that operation relates to relevant penalties.

(2) The person must complete the preparation of the report and send it to the Secretary of State as soon as reasonably practicable after the end of the period mentioned in subsection (1).

(3) On receiving the report, the Secretary of State must lay a copy of it before Parliament.

(4) In this section—

“penalty” means a penalty that may be imposed for—

(a) failing to participate in a scheme within section 17A(1) of the Jobseekers Act 1995, or

(b) failing to comply with regulations under section 17 A of that Act;

“relevant penalty” means a penalty that, but for section 1 of this Act, would not be or would not have been lawfully imposed on a person.'.—(Mr Hoban.)

Brought up, and read the First time.

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[Mr Hoban]

The new clause provides for a report on the operation of benefit sanctions affected by the provisions of the Bill. Again, I thank the right hon. Members for East Ham (Stephen Timms) and for Birmingham, Hodge Hill (Mr Byrne) for their constructive approach to the Bill. We discussed this topic with them as we drew up the Bill. After our discussions, we decided to bring forward the new clause to satisfy the concerns of the right hon. Member for East Ham to provide for an independent report on the operation of benefit sanctions subject to the provisions in the Bill.

The new clause requires the Secretary of State to appoint an independent person to prepare a report on the operation of the provisions relating to benefit sanctions during the first year after the Bill has come into force. The report must be prepared as soon as reasonably practicable after the end of that period.

Subsection (3) requires the Secretary of State to lay a copy of the resulting report before Parliament, which meets the right hon. Gentleman’s requests. It is important to say that as a Department, we keep the functioning of sanctions under review. A number of comments on that were made on Second Reading. It is important to ensure that sanctions are applied fairly and consistently across Jobcentre Plus. It is an important part of the regime, so the sanction should be credible, and something that we keep under review.

Let me pre-empt the arguments made by the right hon. Member for Wythenshawe and Sale East (Paul Goggins). I understand the purpose of his two amendments. He is keen to ensure that the review is expedited, and we will try to complete it as quickly as possible. The time period for someone to launch an appeal against the sanction is 13 months. By imposing a six-month deadline, we might miss appeals that are made at a later point. He then requires a report to be laid within three months of the end of the six-month period, so that is nine months. There is a risk that we will miss out on three months’ worth of appeals, so we would not necessarily get a full view of how the sanctions under the Bill have operated. Although I understand his arguments for haste, may I suggest, as a counter argument, that we take things at a slightly more leisurely pace, which will ensure that we get a full year? None the less, I share his view that once we get to the end of that year, we should be moving as quickly as possible to complete the review and to lay the report before Parliament. It is not in any of our interests unduly to delay a measure such as this. I commend new clause 1 to the Committee.

[Stephen Timms]

I warmly welcome the new clause which, as the Minister has said, was proposed and suggested in the discussions between him and the Secretary of State for Work and Pensions, and me and my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne). It is something genuinely valuable to emerge from this debacle, which has been entirely of the Government’s own making. We do need to know what is going on with sanctions. The independent review, which is required by the new clause to be conducted over the coming year—I will comment in a moment on the further amendments proposed by my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins)—could be crucial in getting to the bottom of what is going on. From the standpoint of anyone who is concerned about what is going on in our social security system, as very many people are, this is a valuable initiative.

The scale of the sanctions that are being imposed at the moment is extraordinary. My hon. Friend the Member for Hayes and Harlington (John McDonnell) made that point in the earlier debate. He correctly suggested to the House that the number of sanctions being issued trebled in the two years between the period just before the general election and subsequently to more than half a million per year, and that number is still going up. The impact assessment tells us that the number of sanctions that has been issued under the defective—as we now know them to be—employment, skills and enterprise regulations is “between 221,000 and 259,000”; that those sanctions involved between 136,000 and 159,000 people and that their cumulative value is between £80 million and £99 million.

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[Bob Stewart (Beckenham) (Con)]

I am slightly confused. The right hon. Gentleman said that when people get sanctioned, they have no idea why, but I would have thought the first thing they would do, if they did not get a letter or a warning about this, would be to go straight to Jobcentre Plus and ask, “Why is this happening to me?” Why does that not happen?

[Stephen Timms]

The hon. Gentleman raises an interesting and telling point. Why, indeed, do people not go to jobcentres to get an explanation? The reason is that it is very difficult for them to get through on the telephone, and if they do go and speak to somebody, they probably do not get a clear explanation.

The Minister said in one of our recent statutory instrument Committees that Jobcentre Plus will now inform people in writing of the reason for their sanction. When the Minister responds, he will, perhaps, give us a little more information. I am not sure whether that has already started or whether it is still due to happen, but it will certainly be a welcome step. The hon. Member for Beckenham (Bob Stewart) will be very familiar with the experience that I have often come across, however, which is that people do receive a letter from Jobcentre Plus, but, frankly, making sense of it is very difficult. I hope that the written explanations people receive will make more sense than some of the other communications they bring to our surgeries, sent to them by jobcentres and the Department.

I want to set out 10 questions that I think the independent review should answer. Other Members may have other questions, of course, but I consider these 10 to be important, and putting them on the record will serve to give some terms of reference from the House for the independent reviewer.

First, we need to know the precise figures. It is not good enough for us to be told that the Department has issued between 221,000 and 259,000 sanctions. We need to know precisely how many have been imposed. We also need to know what exactly they are for. Is it that people are failing to turn up to appointments, or that they are failing to do the work-related activity they are required to do? We need to be given some clear categories of the grounds for sanction, and then to be told how many of the sanctions imposed fall into each of those categories. How tough are those sanctions? How many maximum three-year sanctions for the basic element of jobseeker’s allowance have been imposed so far? In the recent debate on JSA regulations, a colleague rightly reaffirmed our opposition to the three-year sanction introduced by the Government. It would be useful to know how many people have so far been denied benefit for a full three years, which the Government’s legislative change now makes possible.

Secondly, we need to know how many people on whom the sanctions are imposed request reconsiderations —the kind of people who, as the hon. Member for Beckenham suggests, might go along to the jobcentre and ask what the sanction arises from. How many people have asked for reconsideration, and when it has been refused, how many subsequently appealed? What are the outcomes when reconsiderations are requested and appeals made?

Thirdly, we need the independent reviewer’s opinion on whether the reconsideration and appeal process is working correctly and properly. When people have a sanction imposed on them, do they know that they can apply for reconsideration and, if they are not happy with the outcome, submit an appeal? Is that whole process working correctly?

Fourthly, how many of those being sanctioned are on employment and support allowance—and perhaps other benefits as well—rather than JSA? Ministers have given commitments during debates in this House and the other place that they will not normally issue sanctions to somebody on ESA—somebody who is out of work on health grounds, for example—other than after a face-to-face discussion with the applicant and, if necessary, a home visit. We need to know from the independent reviewer whether those assurances are being honoured in practice. It does not require much imagination on the part of Members to realise that it may well be wholly inappropriate to impose a sanction on someone who is on ESA as a result of a serious mental health problem or a fluctuating health problem of the kind we have often debated in the past couple of years, thereby removing their benefit for the potentially very long periods that are now permissible, unless they have had a proper face-to-face discussion with an appropriate Jobcentre Plus official. It would be helpful if the independent reviewer answered that question.

Fifthly, it would be useful to know how many of the large number of sanctions being imposed are being initiated by a Work programme provider rather than Jobcentre Plus. As I understand it, the initial step can be taken by either, or by another kind of provider on one of the other schemes. It would be useful to know what the split is.

I appreciate that it is not going to be easy for the independent reviewer to find the answer to my sixth question—it relates to the point the hon. Member for Beckenham made a few minutes ago—but we need to know it. To what extent do people understand the reasons for the sanctions being imposed on them? As I mentioned earlier, food banks are reporting that people who turn up, having been sanctioned—who therefore do not have any money and cannot buy food for themselves and their families—commonly do not know why the sanction has been imposed. I hope that the independent reviewer can establish how widespread a problem that is. If it is widespread, as anecdotal evidence suggests it may well be, that is a serious difficulty with the system.

The seventh question concerns the extent to which managers are promoting sanctions. In answering an intervention from my right hon. Friend the Member for Birmingham, Hodge Hill on Second Reading, the Minister gave a very clear assurance that there are no targets for sanctions and that Ministers and managers do not require specific targets to be fulfilled.

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[Mr Hoban]

Absolutely, but the hon. Lady repeated that, and by virtue of the quote I think she was supporting their view. Another hon. Member said that people “may be” sanctioned. I think there is a tension here between clarity and disclosure. The more detail there is in the letter—maybe to comply with what is in the law—the harder it can be for people to understand what is in the letter. It is possible to go into lists, as the right hon. Member for Birmingham, Hodge Hill did—to list a whole set of “good cause” reasons in a letter. One could put in a letter every detail of the graduated sanctions regime. We need to ensure that our communications are very clear and legal; sometimes the two do not go as easily together as we would like them to, but we do need to ensure that there is clarity.

The right hon. Member for East Ham talked about what happens if people are sanctioned, and then immediately answered his question by referring to hardship schemes. He and I have debated the revised sanctions regime and discussed hardship at length, as we did on a previous occasion with the right hon. Member for Stirling (Mrs McGuire). There is a hardship scheme in place for people, and it is right that it is there. We do ask people to look to see whether there are any other ways in which they could find financial resources to live off, and that is very carefully set out in the Bill, but those hardship schemes are available. It would be wrong to give anyone the suggestion that there is no hardship scheme in place, but the rules on access are very tight indeed.

[Stephen Timms]

I take entirely the Minister’s point about the hardship schemes, but I wonder what he thinks has driven the huge increase in the number of people referred to food banks over the past three years—a tenfold increase between the year just before the general election and the current financial year. I wonder whether he can understand why many of us think that the growth of sanctions must have been a big part of the driver.

[Mr Hoban]

The practice of the Government the right hon. Gentleman was a part of when he was a Minister in this Department differed from that of the present Government. When the Labour party was in power, it refused to have any material in jobcentres about food banks, to try to deny their existence. It did not refer people to food banks. We decided, when we came into office, to reverse that policy—to ensure that people were aware that food banks were in place.

People do go to food banks. They go for a variety of reasons. It is right for there to be a hardship regime in place for sanctions. If people do not choose to apply for that hardship regime, that is their choice, but people know it is there.

[Stephen Timms]

The Minister is right about the hardship regime, but he is surely not trying to tell us that the number has gone up from 30,000 to 300,000 because there are some leaflets in jobcentres, is he?

[Mr Hoban]

Well, actually it is not about leaflets. It is about signposting people to food banks. The right hon. Gentleman and his Opposition colleagues forget the way in which they tried to airbrush food banks out of history when they were in government, and to use them now as political pawns is beneath them.

I hope that the Committee will accept new clause 1. As I said in response to amendments (a) and (b) tabled by the right hon. Member for Wythenshawe and Sale East and his colleagues, we want to ensure that the Bill proceeds as quickly as possible; I do not think there is any interest in spinning it out. But we do need to ensure, as the right hon. Member for East Ham said, that it is properly and thoroughly considered. As a consequence of a measure introduced by the previous Government, we have an independent reviewer of work capability assessments. That is a very thorough process and no corners are cut, neither would we want them to be. It is helpful that there is clarity.

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[Stephen Timms]

This Bill has been an extraordinary fiasco. It is here because the Government made basic errors in drafting regulations. The danger was highlighted by their own Social Security Advisory Committee, which Ministers ignored. They were wrong to do so, and the consequence is the necessity for this unseemly piece of legislation. The question facing the House this evening is: what do we do? The alternatives to the Government’s proposals are pretty unappealing.

The danger of having to take £130 million from another part of the Department’s budget is that the cost will fall on people whose income is already very low. I was very grateful for what the Minister said a few moments ago to explain the necessity for the Bill and why the so-called test case rules do not apply in this case. The alternative is unappealing for that reason. In addition, if the correction were not made, there would be quite a fundamental breach of the jobseeking system, which was used so effectively by the previous Government to achieve—before the global crisis—the highest rate of employment in the UK since the 1970s. That is a rate of employment we are still some way short of today. That system involves sanctions. As my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) pointed out, the system has done so since 1911, and it is right that it should continue to do so.

I shall certainly not urge my hon. Friends to oppose the Bill, but we have argued for a fundamentally different approach to supporting people into employment from that taken by the Government—one based on job guarantees—but it requires an effective system, which not passing the Bill would put at risk. We think that the guarantees approach is the right one, and the recent evaluation of the future jobs fund has strengthened our convictions in that respect, but we need a proper system in place to be able to introduce that arrangement quickly. Following a general election, it is our intention very quickly so to do, and for that reason I shall not urge my hon. Friends to oppose Third Reading.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 11th March 2013 Commons Chamber

[Mr Duncan Smith]

Yes, I would be very happy to meet my hon. Friend and any group of people, such as the YMCA, he wishes to bring to me. I simply say this: we have a significant problem, because we inherited a welfare budget approaching £200 billion that had risen out of control under the previous Government. He is fully aware that we have to reform it both to get people back to work and to ensure that we get the cost under control. Those are all areas we have looked at, but in those discussions we decided that, in the round, it was not a priority.

[Stephen Timms (East Ham) (Lab)]

On Friday morning I met a 19-year-old autistic young women whose family home, which is rented from the council, with housing benefit, has been adapted at public expense, but now they are very worried because they are deemed to have one bedroom too many. Surely the bedroom tax should not apply when a council house has been specifically adapted for the occupants at public expense.

[Mr Duncan Smith]

The right hon. Gentleman knows very well that that is the point of discretionary housing payments—[Interruption.] Opposition Members can groan, but we have put more money into discretionary payments to sort these things out than they ever did when they brought these in. The reality is that there is money for them to do just that. I remind him that the National Housing Federation has estimated that in his area of Newham some 3,000 people are under-occupying and some 5,000 are overcrowded. Perhaps he would like to take his own side to task for never doing a thing for those struggling in overcrowded accommodation.

Universal Credit

Stephen Timms Excerpts

Wednesday 6th March 2013 Commons Chamber

[Ms Ritchie]

I thank the Minister for his intervention.

[Stephen Timms (East Ham) (Lab)]

The hon. Lady is absolutely right: the project has been delayed. Ministers told us for a long time after the announcement of universal credit that all new applications for out-of-work benefits would be treated as universal credit applications from October this year. It is now absolutely clear that that date will not be achieved. It might be a year later, or even some time after that, but the project has certainly been delayed.

[Ms Ritchie]

I thank the shadow Minister for his intervention; I absolutely agree with him. The Minister will not be surprised to hear that I disagreed with him, because experience has taught us these things.

I seek clarification and an update from the Minister on the implementation of a computer system for the social security system in Northern Ireland to administer universal credit in line with the flexibilities that will be implemented there, notwithstanding—because of our special circumstances—the other flexibilities that I hope will be introduced. I understand that these are currently subject to negotiation and discussion between the Minister for Social Development and the appropriate DWP Ministers. What feedback will there be and what facility will be employed to use the lessons from the initial pathfinder areas in England to inform subsequent roll-out in Northern Ireland?

Governments do not have a great track record on implementing new IT systems, as seen with the Child Support Agency, the e-Border programme and the health service. The new universal credit system will likely require an even more complex system, incorporating real-time processing from pay-as-you-earn records. The Committee’s report makes it clear that there are significant concerns about the system’s capacity to operate between local and central Government. I fear that this will be even more challenging in the devolved Administrations. How satisfied is the Minister that there will be no more significant delays or cost overruns for the new universal credit payment system? Can he say with certainty that he will not be back before the House a year from now, explaining away delays and expensive setbacks?

Added to that, universal credit is to use digital self-service by default. That might sound good, but I have had little reassurance about the fact that the most vulnerable in society—particularly the elderly—are less likely to have access to computers or to be as proficient with newer technology. Reference has already been made to that issue in this debate, as well as to access to the internet and broadband, so I will not dwell on it further. However, notwithstanding our position on welfare reform and universal credit, I say to the Minister that it is important that the delivery of this benefit does not impact further on the vulnerable and disadvantaged in our community. It is important that the right systems are in place to ensure delivery is enabled, so that the most vulnerable can live a good life with some degree of benefit.

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[Richard Drax (South Dorset) (Con)]

I am grateful to have an opportunity to speak in this debate. From what I have heard, there appears to be a general consensus, with which I agree, that there is room for the universal credit system. Its aims are laudable; our welfare bill is too big and we have to tackle this problem. I think all Members across the House will agree that this bill cannot continue to grow. It is simply unsustainable. My view, which I am sure many share, is that for too long the poor and vulnerable have been trapped in a welfare mire. How often have we heard our constituents say, “There is no point working a bit longer because if I do that I will lose my benefits”? So clearly we have to examine the system and make it fairer, encouraging those in this trap to put in the extra hours as that will be beneficial for them.

I support the universal credit in principle; it will reward effort and will be responsive to changes in circumstances—if it works. Many hon. Members from both sides of the House have highlighted the word “if”, and I hope that my adding to the ifs will not be to the Minister’s chagrin. I have listened at great length to Mr Kevin Hodder, the chief executive of the East Boro Housing Trust; we debated this for a couple of hours. He has been in this business for many years and has shared with me, for some time now, his extensive knowledge and understanding of the benefits system. He has done so for my benefit, so that I can understand my constituents’ concerns. One or two of them—I suspect there will be many more—have come to me with their worries about the introduction of this new system.

The first risk, which has already been highlighted, is the reliance on one computer system. There are 8 million or 8.5 million claimants—we have heard the latter figure cited—so if the system goes wrong, the risks are obvious. There is no room for error or delay because we are talking about the most vulnerable in our society, and if the money does not arrive on the day they expect it, they will face serious problems. As far as I know, no Government national computer system has worked; I remind Members of the armed forces payments system, the NHS single patient record system, the tax credit errors and the collapse of the Child Support Agency—all of us get many constituents complaining about that. The problems were, in the main, the result of computer glitches. The risk of relying on one gigantic system is that failure would be catastrophic. Mr Hodder’s wise suggestion is that universal credit software could be circulated to the local authority housing benefit departments so that consistent rules are applied.

[Stephen Timms]

I am listening with great interest to the important argument the hon. Gentleman is making. Does he agree that the situation is rather worse than he says, because this involves not one great big computer system but two? The parallel real-time information, pay-as-you-earn system in Her Majesty’s Revenue and Customs is also involved, and the two systems have to interlock perfectly for universal credit to work.

[Richard Drax]

I agree with the shadow Minister. When I was a soldier, the great cry was, “Hope for the best and prepare for the worst.” I am a little concerned that, on this policy, the worst has perhaps not been prepared for. Will the Minister, when he sums up, reassure us that there is a system in place that will cope?

In dealing with the inevitable snags, community care grants and crisis loans could be administered by the local departments if this computer system were rolled out to them. The local housing benefit departments in my constituency are already running down their offices, yet their local knowledge could be invaluable in administering universal credit. In the world of IT and computers, how often have our constituents rung a telephone number and got a disembodied voice saying, “If you want flowers, press 1. If you want somebody else, press 2. If you want to go to heaven, press 3. And if you don’t want to bother us at all, press 4.”? At that stage the person wishes they had slammed the phone down and they give up the will to live. Although I welcome IT—I am not a luddite in that sense—I am a great believer in the human touch. Nothing beats eye-to-eye contact with constituents, including, as in this case, the many who need help. If people lose that contact with human beings—leaving aside the distress that will be caused if the computer system goes down—there will be an awful lot of concern, particularly among the elderly, many of whom do not understand the system in any case.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

We have had an interesting debate and I congratulate the Work and Pensions Committee, and its Chair, on the report. I share the Committee’s support in principle for universal credit, as well as its frustration that in responding to the report, Ministers gave so few answers to the telling questions that it raises.

The Committee raised the timetable for implementation, and as the hon. Members for South Dorset (Richard Drax) and for Enfield North (Nick de Bois) pointed out, it was always clear that there would be a problem with the IT. We warned the Secretary of State about that simply on the basis of how long it took the same officials to implement much more straightforward changes under the previous Government. The Secretary of State was good enough to meet me in November 2010, and I wrote to him on 16 November 2010—well over two years ago—and warned of

“a serious risk that it will not be ready for new applicants by 2013”.

He replied on 31 January 2011:

“I am confident that I can offer reassurance on each of the points that you raised.”

On 18 April I wrote back to the Secretary of State:

“I remain deeply sceptical of the feasibility of the current implementation timetable…the Department should recognise that the timescale will slip”,

and he replied on 11 May 2011:

“I recognise that we may not share the same overall assessment of the issues”,

which indeed we did not.

In the Welfare Reform Bill Committee, I said to the Minister’s predecessor that

“the system will not be ready by October 2013”––[Official Report, Welfare Reform Public Bill Committee, 28 April 2011; c. 596.]

but the Minister replied that I was “wrong to be pessimistic.” I warned about the problem again in another debate in Committee on 8 June 2011.

Today it is reported that contractors have been told to down tools. The Department has denied it, as has the Minister, but I have no doubt that the reports are accurate. They come from people who have received these instructions, and I have no doubt that before long the position will become clear. The Secretary of State claimed yesterday, and the Minister has repeated today, that

“the implementation of universal credit…is proceeding exactly in accordance with plans”.

The hon. Member for South Down (Ms Ritchie) was right to say that it is certainly not proceeding according to plans. It is genuinely a mystery to me why Ministers deny what is clearly the case.

The Government’s initial timetable for universal credit had all new applications for out-of-work benefits being treated as universal credit applications from October this year. We now know that hardly any new applications will be treated as universal credit applications in October this year and everybody else will be treated as applying for existing benefits. As I understand it—the Minister will correct me if I am wrong—only applications submitted in one jobcentre in each region will be deemed to be universal credit applications, so that is only nine jobcentres. Even then, it will only include people with the most straightforward applications, because the IT will not be ready to handle the rest.

I want to ask the Minister a specific question. For two years, Ministers said that all new out-of-work benefit applications would be handled as universal credit applications from October 2013, and all new in-work benefit applications from April 2014. What is his current estimate of those two crucial dates? Just how far have those milestones slipped? Does he have any dates now that he is confident enough to give the House for when those milestones will be reached?

It is not just I who am worried. The Minister has bigger problems than that. Four times at the regular press conference this morning the Prime Minister’s spokesman was asked to express confidence that universal credit would be delivered on time and on budget. Four times he refused to give that assurance.

It is not just the IT that is in trouble, but the policy too. Ministers have failed to make crucial decisions, as set out in the Committee’s report. The Secretary of State told the Welfare Reform Bill Committee in February 2011 that he would have proposals for entitlement to free school meals before the Bill left the Commons. He did not deliver, and two years later we are still waiting for those proposals. As the Select Committee politely pointed out, the Government

“now needs to make decisions”.

Actually, they should have made decisions a very long time ago, but we certainly need them now. As my hon. Friend the Chair of the Committee pointed out earlier, the pupil premium is also dependent on this, as well as whether universal credit will deliver. The Government’s response assures us that the Department

“has committed to working with other Government departments and Devolved Administrations to ensure that the issue of passported benefits both in the short and long term is approached from a wide perspective and any changes are simple, fair and easy to understand.”

It burbles on in that vein for a page or so, but the Minister must now decide. What is the policy? He cannot keep ducking the issue. It is all supposed to start in October. When will he tell us?

It is not a minor issue. The solution adopted on free school meals will have a fundamental impact on whether universal credit has the intended effect of making it worth people’s while to be in work. If—as is widely suggested—the Minister and his colleagues introduce a crude income threshold for eligibility for free school meals and other passported benefits, they will create the most enormous disincentive for people to get jobs and increase their income—far worse than any of the cliff edges in the current system of which they have been so critical. He really cannot delay these fundamental decisions any longer. He cannot keep putting them off.

The Committee also raises the crucial issue of supporting and funding exempt accommodation. It makes this point:

“DWP must urgently finalise and publish the details of the revised arrangements so that providers have the certainty they need to plan ahead and maintain their service provision.”

I raised this with the Minister in Committee when we debated the regulations on 11 February. I pointed out that Women’s Aid estimates that more than half the domestic violence refuges in the country are not covered by the exemptions in his regulations. The problem is that the regulations use an out-of-date definition. I am absolutely sure that the Minister does want such accommodation to be exempt, but it will not be achieved by his regulations. What is he going to do about that? His response to the Committee does not give an answer. The National Housing Federation makes this point:

“It is vital that the Government ensures the regulations exempt the full range of supported housing by using a definition of supported housing that reflects the set up of refuges, hostels and specialist schemes for disabled people.”

My hon. Friend the Member for Edinburgh East (Sheila Gilmore) was absolutely right to ask the question that was also raised by the Committee: what is going to happen to people who do not have a bank account? How are they going to be paid universal credit? We still do not know. In the pathfinders starting next month in four local authority areas in the north-west, people without a bank account will not be able to claim universal credit. How long will it be before the system is able to cope with people who do not have a bank account? The Committee’s report states:

“The DWP has been unable to present us with any clear plans for how the Universal Credit service will be delivered to those people who cannot make an online claim.”

The response from the Government does not give us that clear plan.

Unison is right to draw attention to a host of basic issues to which we still do not know the answer. The hon. Member for South Dorset (Richard Drax) raised some of those issues, too. How will somebody apply locally for universal credit? The response to the Committee reassures us that

“we will offer claimants the option to claim…in person”.

What does that mean? Where will they apply? Will they go to the town hall, or to the jobcentre? What documents will they need? How does somebody get face-to-face advice if they have a problem? This is all supposed to be up and running from October and we do not know who is going to do this. We do not even know what the online application process will look like in the pathfinders that are supposed to start next month.

One of the Government’s worst errors in the whole project—the Chair of the Select Committee has already drawn attention to it—was leaving council tax benefit out of universal credit and devolving it with a 10% cut. The Committee’s report was right to point out the problems that that will cause. It works against simplification, it undermines work incentives, and it makes it much harder for people to know whether they will be better off in work. It has, as the Committee stated,

“the potential seriously to undermine the objectives of Universal Credit.”

We have heard about a lot of other problems in the debate. Problems relating to digital access were highlighted by my hon. Friend the Member for Bishop Auckland (Helen Goodman). The hon. Member for Leeds North West (Greg Mulholland) was right to draw attention to the problems emerging in the direct payment demonstration projects: the National Housing Federation tells us that rent arrears in the demonstration project areas are up by 60%.

It is, I am afraid, universal chaos: fundamental policy decisions have not been made; obvious gaps have not been plugged; where precise answers are needed we just get vague flim-flam; key milestones have gone back by a year or more; IT contractors are reported to have been told to stop work; and the Minister blithely assures us that it is all proceeding exactly in accordance with plans. It is too late for flim-flam. These crucial decisions cannot be delayed any longer. It is time now for the Minister finally to give us some answers.

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

I commend the Chair of the Select Committee, the hon. Member for Aberdeen South (Dame Anne Begg), for the way in which she opened the debate, and for the balanced way she set out the issues in its report. I thank the Committee, too, for its work. Often, people outside the House underestimate the important role that Select Committees play in scrutinising policy development, but the report is a very good example of the excellent work they do to highlight the issues and to get the balance right.

Balance was what was missing from the speech by the right hon. Member for East Ham (Stephen Timms). I think there was a 10-second acceptance at the start that universal credit was a good idea. He then spent the rest of his speech trying to conjure up reasons why it was not a good idea. [Interruption.] No, that is absolutely true. I will give some examples. He and the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) have been touting for some months now the story that people have been walking off the project and that the project is in chaos. We saw it in today’s Guardian—an article that perhaps should be seen in the context of today’s debate—and the right hon. Member for East Ham said just now that he expected contractors to walk off site. What a load of rubbish we have heard! In a statement today, HP, one of the big contractors, said that it remained committed to supporting the DWP, to the universal credit pathfinders going live in April 2013 and to subsequent releases. It also said that it would continue to work with the DWP and our other suppliers on this major programme of welfare reform.

[Stephen Timms]

rose—

[Mr Hoban]

Perhaps the right hon. Gentleman wishes to apologise for scaremongering.

[Stephen Timms]

I can reassure the Minister that the source of the report came from the companies concerned. But let me ask him this: the initial plan was for all applications for out-of-work benefits to be handled as universal credit applications from October this year. Is there a new date for that milestone, and if so, what is it?

[Mr Hoban]

Yet again, the right hon. Gentleman needs to get some perspective. We have always made clear our plan for a progressive roll-out of universal credit, for exactly the reason that hon. Members have mentioned, which is that previous Governments have launched unsuccessful big-bang IT projects. We have been clear, therefore, that we need a progressive roll-out—pilots, lessons learned, consolidation and then next-stage roll-out.

That is the best way to ensure that universal credit is rolled out correctly and it is a significant change from how previous Governments have handled IT projects, including the disastrous tax credits system when, of course, the right hon. Gentleman was a Treasury Minister. We have made clear our plan for a gradual roll-out for new claimants from October 2013. We have always said that the progressive roll-out of new claims across the country would begin in October 2013. That is a simple restatement of what we have always intended to do. I respect the right hon. Gentleman, but I think he has overreached himself on this argument.

[Stephen Timms]

Will the Minister give way?

[Mr Hoban]

No, I only have a relatively short amount of time in which to respond to quite detailed questions from hon. Members. [Hon. Members: “Give way!”] No, I want to make some progress.

[Stephen Timms]

rose—

[Mr Hoban]

No, all the right hon. Gentleman is doing is scaremongering, which is not the right approach. Someone made the valid point that misinformation undermines claimant confidence in the system. I want to address some of the concerns that people have expressed in this debate and demonstrate how the Government are tackling the issues highlighted in the Select Committee’s report.

[Stephen Timms]

rose—

[Mr Hoban]

I am not going to give way. The more often the right hon. Gentleman seeks to intervene, the less time I have to engage with the substantive discussion.

I will remind the House of the aims of universal credit. It is designed to avoid universally recognised problems in the current flawed system, which traps people on benefits and makes them dependent on the welfare state. It will ensure that work remains the best route out of poverty and benefit dependence for those who can work, and is intended to be radically simpler than the complex web of tax credits and benefits it replaces. We made a deliberate choice here. My hon. Friend the Member for Leeds North West (Greg Mulholland) was right to highlight a previous Committee report on the complexity of the welfare system. Rather than replicating the current system, in all its complexity, we are seeking to design a system that is easier for claimants to understand and creates better incentives.

Crucially, universal credit brings together in-work and out-of-work support into a single monthly payment for those out of work or on low earnings. At present, there are separate systems for out-of-work and in-work benefits administered by different national and local agencies. A move into work therefore entails a recalculation of entitlement, multiple communications and possible delays and gaps in payments. As a result, many people are not prepared to take the risk of moving into work.

This is not just about those who are out of work, however; it is about those who are in work as well. One of the rigidities built into the tax credit system is the 16-hour-a-week rule, which means that people offered work have to ask themselves, “Is it worthwhile my taking on this additional work?” Many people have to go to the jobcentre to make a better-off-in-work calculation. We cannot have barriers in place preventing people from wanting to earn more, take on more hours and look after themselves and their families.

With universal credit, we are aiming above all to achieve a fundamental change in attitudes to work, helping people to see more clearly that they are better off in work and encouraging and supporting people to move into work or to increase their hours.

As I said earlier, too many people are trapped into working 16 hours a week by a system that means there is no point in extending their hours because they would be worse off. I have even heard of people turning down bonuses from their employers because they are concerned about the impact on their benefits. What a tragic situation we are in, when a system of benefits traps people in low incomes. What we need to do—I hope Opposition Members will reflect on this—is find a system that helps people to get back into work. That is one reason why it is important to have in-work conditionality, to help people move up the income scale and find ways to increase their earnings by getting new skills, getting promotions and increasing their hours. In focusing on how we resolve some of the exceptions in the system, Opposition Members are in danger of losing sight of the reason for doing this: to free people from a complex system of benefits that has trapped so many out of work.

[Stephen Timms]

I am most grateful to the Minister for giving way. He was not able to give a date for the earlier milestone; he is now setting out the advantages, as he sees them, of universal credit for people who are in work. To begin with, all new in-work benefit applications were going to be universal credit applications from April 2014. Can he tell us when that new milestone will be reached?

[Mr Hoban]

We have always said that there would be a progressive roll-out of the system. I am not going to give a running commentary on the timetable at this moment. We have been very clear—[Hon. Members: “Ah!”] No, we have been very clear that we would have early implementation in April 2013, and we are going to see that in the Greater Manchester and Cheshire area. That will enable us to test the end-to-end process in advance of the progressive national roll-out of universal credit from October. Once a pathfinder has happened, we will continue to adjust the exact timing and sequence of the migration process in the light of experience, including the operation of the pathfinder service in the Greater Manchester area. That will be done exactly to avoid the problems that previous Governments have faced with big-bang system changes falling over.

I would also point out to hon. Members who continue to question the Department’s ability to deliver significant system changes that we have launched the latest generation of the child maintenance system on time and on budget. We have also successfully launched the universal jobmatch service, which is helping more than 1 million jobseekers find work and get into employment more quickly. That we have been able to do those things demonstrates the Department’s capacity and capability to deliver programmes on time.

--- Later in debate ---

[Mr Hoban]

I have about 15 minutes left and am keen to deal with some of the other points that have been raised.

On advice and support, the advice sector is key to ensuring that we deliver universal credit effectively. We work very closely with the stakeholder organisations to ensure that their expertise is utilised. This is a moving picture and several things have happened since the Government published their response to the Committee’s report. On 11 February, we published the local support services framework, which addresses what support UC claimants need, including those with complex needs, and how we will work with the third sector and local authorities to provide that support in the most effective way.

At the heart of the framework is a partnership approach, which emphasises the need for close working between DWP, local authority managers and service providers such as social landlords and charities to agree on the services that will be needed at a local level. By encouraging close partnership-working between agencies, we will provide a more joined-up, holistic service for claimants with complex needs and a single claimant journey towards greater independence and, wherever appropriate, work readiness for claimants.

The hon. Member for Stretford and Urmston (Kate Green) asked about access. We have not decided yet whether there should be specialist advice line for welfare rights advisers, but we will try to bring together all benefits guidance in one place—I think it is a legitimate criticism to say that it has been fragmented in the past—and provide a much more simplified resource for relevant information. I hope that will make life easier for advisers in the third sector. I take on board the hon. Lady’s helpful point.

A number of hon. Members raised the issue of monthly payments, including the Chair of the Committee and my hon. Friend the Member for Amber Valley (Nigel Mills). Universal credit is designed to reflect a world where 75% of employees are paid monthly. Paying universal credit monthly will not only reflect patterns that people who fall out of work are used to, but help smooth the transition into work and encourage claimants to take personal responsibility for their finances. For the first time, we will be able to identify those claimants who struggle to manage on a monthly salary, and will provide support to help them develop the necessary money management skills to remove barriers that prevent some of them from moving into work.

We recognise that a move to a single monthly household payment is a significant change to the way in which many benefits are currently paid and that some claimants will require support to help them manage that change. Money advice will be offered to all claimants when they make a claim, and given to those who have a clear need for it. There will be different levels and types of money advice, based on need. Some claimants will be signposted toward an online service, some might be offered a single session over the phone, and others might be offered an intensive face-to-face session with follow-up calls. We also recognise that some clients might need money advice for only a short period, while others will need it for longer. We are trying to create a service that can be tailored to the needs of individuals, rather than a one-size-fits-all service.

On 11 February, we published guidance giving details of the factors that advisers should consider when discussing alternative payments with claimants. Those factors include drug and alcohol dependency. For most claimants, alternative payment arrangements will be time limited, and offered alongside further budgeting support and help to move towards managing a standard monthly payment. I mentioned that drug and alcohol issues were one of the factors that should be borne in mind. Others include learning difficulties, mental health conditions, those in temporary or supported accommodation, perhaps including people who are homeless, those who have severe debt problems and those who are the victims of domestic violence. So a range of factors will be taken into account to determine whether a monthly payment should be made, or whether an alternative, more frequent payment would be in the claimant’s interest.

My hon. Friend the Member for Enfield North (Nick de Bois) made the point that this is all about boosting aspiration. It is about enabling people to manage their finances and to get into work, and we need to ensure that we have a system that meets mainstream needs but also supports the needs of more complex cases, rather than a scheme that is designed entirely around the needs of the exceptions. It is important to get the balance right.

[Stephen Timms]

Will the Minister give way?

[Mr Hoban]

I just want to say something about basic bank accounts. We have set aside £145 million to stimulate new financial products for universal credit claimants, and we are working closely with financial providers across the private, social and third sectors. We are continuing to consult those providers and other stakeholders about the arrangements for those products, and we will announce our detailed approach and requirements in due course.

The hon. Member for Edinburgh East (Sheila Gilmore) referred to the fact that we had discussed basic bank accounts when I was in my previous role. There is a real challenge involved. One of the final pieces of research produced by the financial inclusion taskforce identified that many of the people who did not have a bank account were those who claimed benefit, and that many people who had had bank accounts had ceased to use them. It is important to ensure that we put the right financial products in place, but we must also give people the support they need to manage their money so that they can remain banked, rather than dropping out and becoming unbanked.

[Stephen Timms]

The Minister mentioned people in supported accommodation. Does he have a response to the concern that I raised about women’s refuges and other supported accommodation, given that the definition in the regulations does not seem to be quite right? Can he give me any reassurance about continued support for people living in such accommodation?

[Mr Hoban]

The definition in the regulations will be the one that is in the existing regulations, and it has worked well so far. We are talking to women’s refuges and others to try to understand what has changed, and why the existing definition no longer gives the desired results. That is a matter that we want to continue to discuss.

We need to be careful when we talk about the direct payment of rent, because the vast majority of people have no problem paying their rent or their mortgage. My hon. Friend the Member for South Dorset (Richard Drax) has raised this matter. In one of the pilots, 92% of people paid their rent on time. Among the other 8%, some were underpayments and some were mis-payments, but not all were wilful non-payments. We have an obligation to try to move that 8% so that they can pay their rent on time and meet their obligations. Also, this change will encourage social landlords to think about the broader needs of their tenants—how they can find the necessary skills to get work, and get the necessary financial and budgeting support to manage their money more effectively—rather than just thinking about collecting the rent.

We need to ensure that the new system does not remove personal responsibility from everyone, while recognising that we will need to do something for those who are facing the greatest problems. We are working on that, and the pathfinders will help us to gain that knowledge. We want to make sure that the risks are managed and that landlords can request that the housing element is paid to them when the rent arrears trigger has been reached. These arrangements will be in place for some high-risk claimants from the outset until there is improved financial capability. In effect, we will start the shift to direct payments for claimants with the easier cases and then progress to the more difficult cases. The approach that runs through the roll-out of universal credit is to pilot things and understand the lessons to be learned to ensure we avoid mistakes in the future.

I am sure that I have already spoken for far longer than I should have done, but I think our debate has been important. I end by echoing the words of my hon. Friends who have contributed. We are talking about a change in culture. It is not just a benefit replacement exercise; it is about helping people back into work—making sure that they know that it is better to work than not to work, that it is better to work longer to earn more than to work fewer hours and earn less. We need to tackle some of the barriers to getting people into work, not just in respect of the complexities of the benefit system, but by enabling people to manage their money and to take responsibility for their finances and for their future.

Universal credit is a huge step forward in encouraging self-reliance, but we recognise that a number of people—not the vast majority of people—will need more support. The measures we have set out today and the way in which we have developed them, even from when we submitted our response to the Select Committee’s report, demonstrates this Government’s serious commitment to get universal credit right. It is by getting it right that we will have the best chance of getting people out of poverty.

Romanians and Bulgarians (Benefits)

Stephen Timms Excerpts

Tuesday 5th March 2013 Commons Chamber

[Mr Duncan Smith]

I will, and I am at the moment. Since last year, we have been talking to colleagues in various countries, including Germany, about the need to deal with the Commission’s view. In a sense, the Commission is using free movement to enter the realm, I think, of social security, which has never been within its remit, and we have to challenge that. Up until now, Germany has been a little more ambivalent, but interestingly in the past two or three weeks it has suddenly begun to change its tune, and other countries, such as Spain, are coming into the group too. We have asked for urgent meetings immediately with that group—in the next two weeks—and I will raise this matter with it.

[Stephen Timms (East Ham) (Lab)]

I, too, welcome the urgent question from my right hon. Friend the Member for Birkenhead (Mr Field), but I am sorry that the Secretary of State answered it in such partisan terms.

The benefits system needs to be fair, and to be seen to be fair. Over many decades, people have come to the UK and made a huge contribution to our economy and our society. The Government now need to look at the benefits and services to be provided, given the prospect of future European migration. We need a sensible and serious debate about credible changes, but the Secretary of State seems only to be floating some rather vague ideas without any sense of whether they can be delivered.

The Secretary of State plans to introduce universal credit from October, but roll-out has already been drastically delayed and fundamental questions are now being asked about the deliverability of the IT. If, as he suggested a moment ago, the Government are to change the rules in the system ahead of implementation, they risk making the delivery of universal credit even more chaotic than it is already set to be. Will he explain how the changes he now envisages will fit in with what is supposed to be being introduced already?

Over the weekend, we were tantalised with hints from Ministers that they wanted the system to be more contributory, but the changes they have made so far, as my right hon. Friend pointed out, are making it less contributory. Has the Secretary of State had a change of heart in favour of a more contributory approach? One other suggestion floated is for the introduction of ID cards. Are these the same ID cards that Ministers announced were scrapped straight after the election? Furthermore, will he and his colleagues do a much better job of enforcing the minimum wage? There have been no prosecutions for minimum wage infringements over the past two years, which has been part of the problem. Will he now put that right?

[Mr Duncan Smith]

The changes are long overdue, and I would like to know why the right hon. Gentleman did not explain why the last Government did nothing about resolving the issue. He says that we should not be partisan, but he just has made a very partisan statement when an apology was all he needed to make. He needed only to say that he was sorry for the mess Labour left us in.

What we are talking about will have no practical effect on the implementation of universal credit, which, by the way, is proceeding exactly in accordance with plans. On the contributory principle—this is the point I wanted to make to the right hon. Member for Birkenhead—there is no magic wand. Let us bear it in mind that if it was a blanket contributory principle, we would end up paying a lot of benefits, such as winter fuel payments—an issue that, as the right hon. Member for East Ham (Stephen Timms) knows, was not resolved by his Government—to lots of people who had long since departed Britain. We are considering the matter, and universal credit will give us an ideal opportunity to embrace tax credits and, through this requirement, to start the process of change so that we can resist the pressure of paying tax credits—because they would no longer exist—to people who come to the UK for the first time and claim to be self-employed. That is the area I am looking at.

We need no lectures from the right hon. Gentleman about prosecutions for minimum wage infringements. The last Government’s record on this was so bad I wonder why the Opposition bother mentioning it at the Dispatch Box. We are trying to change it, and will change it, whereas the last Government gave way on every single issue in Europe from the moment they arrived.

Pensions and Social Security

Stephen Timms Excerpts

Wednesday 13th February 2013 Commons Chamber

[Steve Webb]

I am grateful to my hon. Friend for pointing that out. He will know that we have set a minimum increase of 2.5%, which is what we are having this year. Under that policy, it would now be impossible for us ever to go back to the days of 75p increases.

[Stephen Timms (East Ham) (Lab)]

Will the Minister confirm that the order contains a real-terms cut in the amount of the basic state pension?

[Steve Webb]

The right hon. Gentleman is well aware that the Government increase benefits in line with inflation in the year to September, as did his Government. He will know that inflation under the consumer prices index in the year to September was 2.2%, and we have increased not in line with inflation, but by more than inflation, at 2.5%.

[Stephen Timms]

rose—

[Steve Webb]

I have obviously dealt with the point, but I am happy to give way again.

[Stephen Timms]

The Minister will have heard today’s announcement that CPI is currently at 2.7%. Last year he claimed that he was introducing a substantial real-terms increase in the level of the basic state pension. On precisely the same terms he used last year, this order has a real-terms cut. Will he confirm that the order contains a real-terms cut in the level of the basic state pension?

[Steve Webb]

I well remember our exchanges last year, and I seem to recall that the right hon. Gentleman rejected that way of measuring things.

Our above-inflation increase will be £2.70 a week, taking the new level of the basic state pension to £110.15 a week. That means that from April 2013 the basic pension is forecast to be around 18% of average earnings. My right hon. and hon. Friends might be pleased to know that that is a higher share of average earnings than at any time in the past 20 years. Our triple-lock commitment means that the average person reaching state pension age in 2012 with a full basic pension can expect to receive an additional £12,000 in basic state pension over the course of their retirement.

Let me turn to additional state pensions, often referred to as state earnings-related pension schemes. This year SERPS pensions will rise by 2.2%, which means that the total state pension increase for someone with a full basic pension and average additional pension will be around £3.33 a week, or £175 a year. Unlike the Labour party, which froze SERPS in 2010, the coalition Government will, for the third year in a row, uprate SERPS by the full value of CPI.

Let me turn to pension credit. As I announced in my statement on 6 December, we have taken steps to ensure that the poorest pensioners will benefit from the effects of our triple lock. Each year the standard minimum guarantee must be increased by law at least in line with earnings. That means that the minimum increase this year would be 1.6%. However, we decided to increase the value of the standard minimum guarantee credit by 1.9% so that single people will receive the full increase of £2.70 a week, which is equal to the increase in the basic state pension, while couples will receive £4.15 a week. Consistent with our approach last year, the resources needed to pay that above-earnings increase to the standard minimum guarantee have been found by increasing the savings credit threshold, which means that those with higher levels of income will see less of an increase.

--- Later in debate ---

[Steve Webb]

Yes. My hon. Friend is right. The specific benefits for the extra costs of disability are all rising by the full 2.2%.

[Stephen Timms]

Will the Minister tell the House by how much the benefit paid to people in the ESA support group will go up overall under the order?

[Steve Webb]

As the right hon. Gentleman knows, the main rate of ESA will rise by 1%, which is just over 70p a week, and the addition that people in the support group receive will go up by 2.2%.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

I thank the Minister for his explanation of the measures, albeit that it was brief. He reminded us, correctly, that this is the third year since the announcement of the triple lock for the basic state pension. There is absolutely no doubt that the triple lock has been a great success as a rhetorical device. The term has entered the lexicon, and I note that the Minister’s right hon. Friend the Secretary of State for Culture, Media and Sport has gone one better and announced a quadruple lock for the Bill that she recently placed before the House.

While in rhetorical terms the triple lock has undoubtedly been successful, I am afraid that the reality has been rather different, because once again the increase in the state pension is less this year than it would have been if the uprating method previously used was still in place. In retail prices index terms, for the second year this is a real-terms cut in the value of the basic state pension, as well as—I made this point earlier—a real-terms cut in today’s consumer prices index rate.

[Mr Reid]

Will the right hon. Gentleman clarify what his party’s current policy is on uprating? Should it be CPI or RPI?

[Stephen Timms]

We have made it plain, in all the three uprating debates since the election, that in our view there would have been a case for a temporary move from RPI to CPI uprating, as a contribution to reducing the deficit. Unfortunately, the Government decided that this should not be a temporary move, but a permanent move—or so we thought. Now it turns out that they are not even uprating in line with CPI for a large part of the benefits, but the position is the one that I have set out.

[Richard Graham (Gloucester) (Con)]

Will the right hon. Gentleman confirm whether the change from RPI to CPI, for the pension indexation of Labour party agents, is temporary or permanent?

[Stephen Timms]

I think the hon. Gentleman is asking me a question about the administration of the Labour party on which, I am afraid, I am unable to assist him.

It is worth reflecting on the history of the triple lock. In its first year, it was announced but not actually implemented. If it had been implemented, it would have produced, from the Government’s point of view, an embarrassingly small pension increase. The Minister, sensibly, chose to override it and instead apply a larger increase that in that year was in line with RPI. At its first outing, therefore, it failed. In its second year—last year—it was actually implemented, and delivered an increase in line with CPI, along with working-age benefits. This year it is being applied again, and for the first time it is delivering something better than CPI uprating—a point made by the Minister.

The increase in CPI, as measured last September, was 2.2%, and the uprating amount in line with the triple lock is 2.5%. So that is it: in comparison with the CPI uprating, which until recently was the Government’s policy for working-age benefits, the triple lock has delivered a higher pension by a paltry 0.3%. Of course, if it had been applied in the first year, it would have been less than the CPI uprating. The triple lock has delivered a higher pension of 0.3% over three years—a rather derisory achievement. It is clear that the triple lock has been something of a damp squib. Of course, if it was something other than a damp squib, the Chancellor would have vetoed it long ago.

[Stephen Lloyd]

I have a lot of respect for the right hon. Gentleman’s honesty generally, and in particular in this area. Will he therefore agree with me that it is unfortunate that the Government in which he served as a Minister did not have a triple lock, otherwise pensioners all those years ago would not have received an uprate of only 75p?

[Stephen Timms]

Had the previous uprating RPI mechanism been in place, there would have been a larger pension increase this year and last year than has been delivered. I am grateful for the hon. Gentleman’s comments about my honesty, so let me pay a tribute to him. As a man who is also frank, he will recognise that the last Government did an enormous amount, particularly through the introduction of pension credits, to reduce the extent of pensioner poverty. In the past, pensioners were always more likely to be poor than the population as a whole, but that ceased to be the case under the policies of the last Government. Indeed, pensioner poverty was halved, as my hon. Friends have said.

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

The right hon. Gentleman highlights the pension credit, but if he truly believes that all pensioners should receive that extra money, why does he not support the Government’s idea to move towards a higher pension rate for all?

[Stephen Timms]

I am sure we will have an interesting debate on the Government’s proposals when the time comes, but there is no doubt that pension credits made enormous inroads—thankfully—into pensioner poverty in Britain.

[Mr Winnick]

Shortly after we were elected in 1997, did we not introduce both the non-means-tested winter fuel allowance, which the previous Tory Government had refused to do, and the free television licence for pensioners, which I had tried to introduce in a private Member’s Bill on Friday 16 January 1987, when the Tories opposed it with a three-line Whip?

--- Later in debate ---

[Stephen Timms]

I congratulate my hon. Friend on his foresight in pushing for that change. I am delighted that, partly thanks to his work, the previous Government were able to deliver it. It is greatly appreciated by pensioners.

In my view, the triple lock has been a triumph of rhetoric, but a damp squib in reality. One can only hope that the quadruple lock delivers rather more for those following the Marriage (Same Sex Couples) Bill than the triple lock has done, but perhaps we should be a bit kinder to the triple lock. Perhaps we should credit it at least with saving pensioners from the fate of strivers. The order locks in the strivers tax to working-age benefits for the coming years. Strivers are being hammered.

It is worth looking back at what the Minister said last year about working-age benefits. It is hard to believe now, but last year he announced a 5.2% increase in working-age benefits:

“These increases will ensure that the most vulnerable people in society are protected and that those looking for work get the support they need to move into the labour market.”—[Official Report, 23 February 2012; Vol. 540, c. 1046.]

How different is the picture today! After another 12 months of failed economic policy in which the economy has hardly grown and the Government’s forecasts for unemployment and borrowing have risen sharply, the most vulnerable are no longer being protected; they are being hammered and are paying the price for the failure of the Government’s economic policy and the Chancellor’s inability to deliver the steady growth and falling unemployment that he promised.

Let me remind the Minister of something else he said last year. He said that

“there were siren voices from some quarters suggesting that we could not afford, or that we should not go for, this inflation figure. He is absolutely right that the coalition parties decided that it was a priority. That is something that I am proud to be associated with.”—[Official Report, 23 February 2012; Vol. 540, c. 1045.]

I think we can safely assume that he is not proud to be associated with the shabby treatment of working-age people in the social security system. This year, the siren voices have won. This year, the coalition parties have decided that safeguarding strivers is not a priority. This year, and for the next two years, the most vulnerable are being kicked in the teeth. The measures will come into effect at the beginning of April, on the same day as the introduction of the tax cut for everyone earning over £150,000 a year.

[Steve Webb]

The right hon. Gentleman will have noticed that I did not use the word “strivers”. Will he clarify who he means by “strivers” and who he is excluding from that definition?

[Stephen Timms]

The term “strivers” refers to those who are working, who are often struggling to make ends meet and who are going to find things a good deal harder because tax credits are being uprated by only 1%. That is being done on exactly the same day as every one of the 8,000 people earning over £1 million a year will get a tax cut averaging over £2,000 a week. Let me remind the Minister that that will happen on the same day as the employment and support allowance paid to a single person aged over 25 goes up by 70p a week. The hon. Member for Eastbourne (Stephen Lloyd) reminded the House a few minutes ago about the 75p a week pension rise some time ago. This order will give the people I have just described a 70p a week increase, and that is a disgrace.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

Will my right hon. Friend confirm that, although strivers are the very people the Prime Minister has said he wants to protect, he will ultimately be damaging them as a result of the new regulations?

[Stephen Timms]

That is undoubtedly the case. The rhetoric and the reality are quite different.

[Dame Anne Begg (Aberdeen South) (Lab)]

Does my right hon. Friend acknowledge that the bedroom tax will also come into effect on 1 April? That means that a large group of people whose income has not gone up by very much will have to subsidise their housing costs to a far greater extent than they are doing at the moment.

[Stephen Timms]

My hon. Friend is absolutely right. It is fair to say that the bedroom tax is increasingly being seen as a hated tax across the country, as its impact becomes clearer and the date on which it will be applied approaches. It will make life a great deal harder for those people who have no option to move into a smaller place because there are no smaller places available in the council or housing association stock.

I commend to the Minister the speech made by the Bishop of Leicester in the other place in the Second Reading debate on the Welfare Benefits Up-rating Bill on Monday. He said of the Bill:

“It will depress hard-working families even further, remove much needed support for the vulnerable and unable to work, and potentially take us in the wrong direction for a generation, condemning countless children to poverty. It is a proposal that I cannot support.”—[Official Report, House of Lords, 11 February 2013; Vol. 743, c. 471.]

He was speaking for Britain. The Resolution Foundation has pointed out that the measure is a strivers tax, and that well over half the savings from uprating working-age benefits by just 1% over three years will be taken from people in work, because tax credits are being cut in real terms.

My hon. Friend the Member for Stretford and Urmston (Kate Green) has pointed out that the provisions will hit women particularly hard. The House of Commons Library has calculated that two thirds of those hit will be women. The real-terms cut of £180 to statutory maternity pay has already been dubbed the “mummy tax”. Taking into account all the cuts that will affect a woman during pregnancy and the first year of her baby’s life, including maternity pay, pregnancy support, tax credits and child benefit, the loss adds up to an average of £1,700. So, on the day when the highest paid are getting a massive tax cut and the rich are getting a £3 billion tax giveaway, people who are striving will be hammered.

[Steve Webb]

The right hon. Gentleman’s words in Hansard will show that he is very concerned about all this. Will he therefore tell the House whether it is his intention to reverse any of these measures?

--- Later in debate ---

[Stephen Timms]

The hon. Gentleman knows that we have demanded not only an inflation-level rise this year but a similar rise for both the two years covered by the Welfare Benefits Up-rating Bill. As to our policies for beyond the next election, he will have to await our manifesto, just as the whole country is eagerly awaiting it. It will tell him how we will put these problems right.

[Ian Murray (Edinburgh South) (Lab)]

Is my right hon. Friend as surprised as I am—I asked the Secretary of State for Scotland this question this morning—that it is a Liberal Democrat Minister who is about to give the biggest tax cut to millionaires the country has ever seen, while at the same time ensuring that people trying to do the right thing are worse off?

[Stephen Timms]

My hon. Friend is absolutely right. That does surprise me very much because in opposition the Minister’s party used to champion reducing child poverty. In government, however, it has surrendered and is cutting in real terms the incomes of the poorest in what is frankly a craven surrender to the Tory party at its worst. It is implementing policies that even Mrs Thatcher did not dare propose.

[Kate Green]

My right hon. Friend is right. This order will simply make poor people poorer. Is it not absolutely cynical that, rather than face up to the fact that more children will be in poverty as a result of these miserable measures, the Government decide instead to change the definition of child poverty?

[Stephen Timms]

That appears to be what they are going to do, and it was striking that the impact assessment for the Welfare Benefits Up-rating Bill did not tell us what the impact on child poverty would be. After the election, the Minister and his colleagues started well and said, “Yes, we are serious about tackling child poverty; here are the figures.” They have stopped that now and it is difficult to get an answer out of them even with a parliamentary question. My hon. Friend is absolutely right—they apparently want to change the definition of child poverty, but they will not get away with it because we will be able to tell what is going on.

[Mr Winnick]

My right hon. Friend is being very generous with his time. Is he aware that, as someone who from time to time did not always agree with every aspect of the Labour Government during their 13 years—although I certainly did in the vast majority of cases—one of the things that most pleased me were the measures that lifted so many families out of poverty? Both Tony Blair and his successor as Prime Minister can be proud of that.

[Stephen Timms]

My hon. Friend is right. There was dramatic progress on reducing child poverty but, as I shall explain in a moment, all that ground will sadly be lost under the current Government’s policies. Those policies are hitting the disabled because, as the Minister said, although disability living allowance is being raised in line with the consumer prices index, employment and support allowance is not. On Second Reading of the Welfare Benefits Up-rating Bill the Secretary of State said that he was protecting people in the ESA support group. In fact he is not and, as the Minister confirmed, their benefit will be uprated by less than inflation—I know the hon. Member for Eastbourne has taken a close interest in that matter. Those people will see their income rise by less than inflation; they will have a real-terms cut.

As we have discussed, child poverty will rocket. The Institute for Fiscal Studies, where the Minister once had the task of compiling the statistics on child poverty, was already predicting on the basis of Government policies an increase in child poverty of 400,000 by 2015 and 800,000 by 2020.

[Stephen Lloyd]

I appreciate the right hon. Gentleman’s generosity in giving way. He mentioned the Institute for Fiscal Studies. Does he agree with its director, Paul Johnson, who said that

“the 1% uprating of welfare would start to put benefits back in line with earnings after welfare has grown twice as much as wages in recent years.”?

[Stephen Timms]

It would be particularly interesting to see a revised child poverty forecast from the Institute of Fiscal Studies, which I expect to appear before the Budget. We now know—as I say, these figures had to be dragged out of reluctant Ministers—that this order plus the Welfare Benefits Up-rating Bill will increase the number of children growing up below the poverty line by 200,000, including 100,000 in working families.

[Kate Green]

I am grateful to my right hon. Friend for allowing a further intervention. When Government Members say that the uprating of benefits is in line with the uprating of wages, including in the public sector, are we not talking about the exactly the same people who are facing a double whammy? Those receiving the 1% benefits uprating are the same as those receiving the 1% pay uprating.

[Stephen Timms]

My hon. Friend is absolutely right, and we are talking about a large group of people. Indeed, the hon. Member for Eastbourne and I were on the radio together when somebody rang in whose total income was £71 a week. She was going to get an increase of 70p a week as a result of this order and she asked, “How am I supposed to manage?” To their credit, the hon. Gentleman and his friend from the Conservative party, the hon. Member for Camborne and Redruth (George Eustice), could not give her an answer.

[Stephen Lloyd]

I recollect that radio programme. I am sure the right hon. Gentleman will accept that the point was that surviving on £70 a week is a challenge for anyone in any circumstances, with or without a benefit uprate.

[Stephen Timms]

The hon. Gentleman is absolutely right, but what was clear from that contributor was the despair at the prospect of a rise of only 70p a week. At a time when inflation is running at more than 2% and is likely to increase, according to the Bank of England inflation report published today, that is a very alarming prospect indeed.

[Mr Reid]

The right hon. Gentleman is being generous in taking interventions. I have been sitting listening and wondering what the Labour party’s policy is. If my memory is correct, he said earlier that CPI was currently 2.7%. Will he tell the House by how much all these benefits would have been increased if a Labour Government were in power?

[Stephen Timms]

I answered that point earlier. I was hoping the hon. Gentleman was going to tell us why, after he attacked us a few moments ago for the 75p pension rise of many years ago, he is this evening supporting a 70p increase for people such as those who are dependent on employment and support allowance in the work-related activity group. If he explained the conflict between the two positions he has taken, I would be very grateful to him.

[Mr Reid]

I am sure the right hon. Gentleman will recall that I spoke in debate in support of an amendment to the Welfare Benefits Up-rating Bill to increase benefits in line with average earnings, and that is still my view. As he knows, the order is not amendable, so either we vote for the whole thing, including the triple lock for pensioners, or we vote against it, but my views are on the record.

[Stephen Timms]

I am grateful to the hon. Gentleman for clarifying that he opposes what the Government are doing in this order.

I was talking about the impact on child poverty. We are expecting the revised projections from the Institute for Fiscal Studies ahead of the Budget. On the basis of the numbers that Ministers have reluctantly given us for the impact of this measure on child poverty, we will see a projected increase in child poverty of more than 500,000 by the expected date of the next election and 1 million by 2010. That is a shameful record indeed, undoing so many years of progress made in reducing child poverty by the previous Government, as my hon. Friend the Member for Walsall North (Mr Winnick) pointed out.

[Mr Reid]

I have put my views on the record, but the right hon. Gentleman has not answered the question I asked in my second intervention. What percentage increase does he think should be in the order this evening?

[Stephen Timms]

I will give the hon. Gentleman the answer I gave a few moments ago. We think there would have been a reasonable case for the Government to make a temporary change to the uprating methodology, from RPI—the previous methodology—to CPI, but unfortunately they did not do that. They came up with a proposal for a permanent change to the methodology, using CPI only, but now they are not even sticking to that and have reduced the figure further to 1%.

What if inflation rises sharply in the next few years? The Governor-designate of the Bank of England has suggested that there should be greater flexibility in the inflation target used by the Monetary Policy Committee. If inflation rises sharply, the consequences for working families—for strivers, struggling to get by at the moment and lumbered with a 1% rise hard-wired into law for next year and the following two years—do not bear thinking about. The Bank of England inflation report published today places a probability of 39% on inflation being over 3% before the end of this year. The fan chart shows possible figures of 5%. What would the consequences be for people who will see a 1% rise in their incomes for the next three years if inflation rose in that way?

Why are the Government doing this? Why have the siren voices won this year? It is because the Government’s economic policy has failed. Let us look at the three years covered by this order and the Welfare Benefits Up-rating Bill. Compare the spending on unemployment benefits over those three years, which was predicted in the Budget last year, with the spending predicted in the autumn statement, just a few months later. The forecast spending on unemployment benefits over those three years went up, just between the Budget and the autumn statement, by the same amount that this order and the Bill will save over those three years. That is what is happening—the Government are clawing back the increase in unemployment benefits resulting from the failure of their policies from those who receive those benefits.

[Stephen Lloyd]

The right hon. Gentleman talks about the failure of the Government’s economic policies. Does he accept two absolute facts—that this is the worst economic recession since the great depression, and that since the general election the coalition Government have generated 1 million extra private sector jobs?

[Stephen Timms]

The hon. Gentleman is undoubtedly right that this is a very serious financial crisis, although I do not remember Government Members making that point before the election. I ask him to justify to the House why, on the very day that these measures will take effect, millionaires will all get a tax cut averaging more than £2,000 a week.

[Stephen Lloyd]

Under the coalition Government, people on higher incomes will pay more tax than they did during the entire 13 years—except for 30 days—of the Labour Government, during one of the strongest and most powerful booms we had had for 40 years. Can the right hon. Gentleman defend that record?

[Stephen Timms]

What would the hon. Gentleman say to the woman we spoke to on the radio, who will get a 70p per week rise as a result of this order? How would he defend to her the fact that the Government whom he supports will give a tax cut of £2,000 a week to everybody who earns more than £1 million a year? For me, that is completely indefensible, although he may have a defence—

[Stephen Lloyd]

Does the right hon. Gentleman accept that the IFS and other bodies have said that under the coalition’s tax policies the wealthier will actually pay more tax than they did before?

[Stephen Timms]

It is the people at the bottom who are being clobbered by this measure, and that is clear from the analysis. The hon. Gentleman has not defended the tax cut—I do not blame him as I do not think it can be defended that millionaires should get this enormous tax cut on the very day that people such as the woman on the phone to us on Radio 5 Live will get a 70p per week rise.

[Ian Murray]

I think what the hon. Member for Eastbourne (Stephen Lloyd) is trying to say is that the 50p tax rate created £7 billion of tax avoidance, so rather than going after the tax avoidance the Government have reduced the rate.

[Stephen Timms]

My hon. Friend is right: if it is an avoidance problem, the Treasury should address that.

Strivers will pay the price for the Government’s economic failure. The most vulnerable are being hammered and the rich are getting a tax cut. The solution is to get Britain back to work. That is why we have argued for our compulsory jobs guarantee. It will cost about £1 billion a year. We will pay for it by restricting the tax relief on pensions saving for those earning over £150,000 per year. We will guarantee anyone over 25 who has been in receipt of jobseeker’s allowance for two years the offer of a choice of jobs or a training position, and after that the payment of jobseeker’s allowance will cease.

The case for our compulsory jobs guarantee received a welcome boost from the Minister’s Department when it published an evaluation of the last Government’s future jobs fund. I am grateful to both Ministers who are in their places on the Front Bench for the publication of this helpful and informative evaluation. The evaluation pointed out just how successful the future jobs fund was in getting young people back to work. It estimated that the net benefit to society as a whole was £7,500 for every participant in the future jobs fund, and that is after taking account of all the costs of the initiative. Of the gross cost of some £750 million for the future jobs fund, over half was recouped by the Treasury in additional tax payments and reduced benefit payments. Our compulsory jobs guarantee will repeat that success for the over-25s. We will get Britain back to work; we will end this punishing spiral of increasing struggle for strivers and for the most vulnerable in order to fund, as the Government find they have to do, the price of ever-increasing unemployment.

The proposals in this order for working-age benefits are a disgrace, although the Minister made a perfectly fair point in his speech earlier—that an increase is better than no increase at all. The proposals for pensions uprating are worth having—I put it no more strongly than that—but the proposals for working-age benefits are shameful and quite contrary to everything the Minister’s party argued for when in opposition. I hope that in the course of this evening’s debate we will be able fully to expose that.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 28th January 2013 Commons Chamber

[Mr Hoban]

The hon. Gentleman makes an important point. I was born and brought up in his constituency, so I well understand the challenges that Easington faces. We do want to encourage more people to invest in the area, and that is why I am keen to commend the work that has been done with the East Durham area partnership to encourage more people into work in Easington. We will look at how we can recommence publication of vacancy statistics shortly.

[Stephen Timms (East Ham) (Lab)]

Ministers often say that they have stopped people on Government schemes appearing in the labour market statistics as “in employment”. But recent analysis shows that of the claimed 500,000 increase in employment over the past 12 months, 214,000 people are in fact on Government schemes and mostly still claiming JSA. What is going on?

[Mr Speaker]

The question is exclusively on Easington, but the right hon. Gentleman has made his own point with delphic confidence.

Welfare Benefits Up-rating Bill

Stephen Timms Excerpts

Monday 21st January 2013 Commons Chamber

[The First Deputy Chairman of Ways and Means (Mr Nigel Evans)]

Before I call the first group of amendments I must tell the Committee that the amendments to the schedule have been marshalled in error before the new clauses. The Committee will deal with the new clauses before it considers the schedule. I invite Members who wish to speak to clause 1 as a whole to do so in this debate, as I do not anticipate that there will be a separate debate on clause 1 stand part.

Clause 1

Up-rating of certain social security benefits for tax years 2014-15 and 2015-16

[Stephen Timms (East Ham) (Lab)]

I beg to move amendment 12, page 1, line 4, leave out ‘by 1%’.

[The First Deputy Chairman]

With this it will be convenient to discuss the following:

Amendment 7, page 1, line 4, leave out ‘1%’ and insert

‘the Retail Prices Index measure of inflation.’.

Amendment 10, page 1, line 4, leave out ‘1%’ and insert

‘the percentage by which the general level of earnings is greater at the end of the period under review in that tax year under section 150(1) of the Social Security Administration Act 1992 than it was at the beginning of that period’.

Amendment 20, page 1, line 22, leave out subsection (5).

Clause stand part.

[Stephen Timms]

In this Bill the Government are punishing people who are already hard up for the failure of their economic policy. We were promised that the policy would lead to steady growth and falling unemployment, but it has failed. We have had a double-dip recession, and some predict that this week we will learn we are in a triple dip. Unemployment is now officially forecast to go up next year, so spending on unemployment benefits will go up, and borrowing will go up too.

The Chancellor’s policy has failed and the Government have decided to respond by forcing down the incomes of those whose incomes are already the lowest of all. Roughly speaking, the saving over the two years to which the Bill refers will be about the same as the increase in welfare spending resulting from the rise in unemployment forecast just between the Budget last year and the autumn statement.

The Government want to cut the incomes of the least well-off in real terms, not just for the coming year but, through this Bill, for the year after and the year after that. At the same time, in April they will give a tax cut to everybody earning more than £150,000 per year. That combination of policies will force up poverty in every part of the country, and it is a disgrace that Ministers are forcing this Committee stage into a single day.

This Bill is a bitter blow to large numbers of families—in work and out of work—who are on low incomes at the moment and struggling to make ends meet. Three new food banks open every week; last year a quarter of a million people received help from a food bank because they could not afford enough to eat, and this Bill will make matters significantly worse. It means that for three years, low-income families will get below-inflation increases. The number of people visiting a food bank will be higher this year and, because of this Bill, it will be higher still next year and higher again the year after that.

As Citizens Advice points out:

“The cumulative impact of capping the uprating of most benefits to no more than 1%”,

for the next three years, will lead to an exponential increase in net losses each year. Child Poverty Action Group stated that

“the poorer you are, the greater your loss.”

[Mr John Redwood (Wokingham) (Con)]

Do the Opposition want to make it more worth while to be in work than out of work, and if so, how would they do it?

[Stephen Timms]

We certainly want it to be more worth while for people to be in work, but forcing down the incomes of those who are out of work is not the way to do it.

Clause 1 affects mainly out-of-work benefits, but people struggling to make ends meet in work are hit as well. Schedule 1(b) means that the personal allowance used in the calculation of housing benefit for people in work will go up by only 1%, irrespective of what happens to rent levels.

[Charlie Elphicke (Dover) (Con)]

Is it therefore the right hon. Gentleman’s and the Opposition’s policy that uprating should be not by 1%, but by inflation? Is that a commitment?

[Stephen Timms]

Uprating should indeed be in line with inflation, as it always was in the past.

[James Duddridge (Rochford and Southend East) (Con)]

Will the right hon. Gentleman give way?

[Stephen Timms]

I will make a little more progress, and then gladly give way again. As I was saying, schedule 1(b) means that housing benefit for people in work will be cut in real terms as well. We will return to that when we speak to amendment 17.

The change in the personal tax allowance, which we have heard a good deal about, will not do very much to help people who are in work on low incomes. Citizens Advice points out that

“any rise in net earnings leads to a reduction in housing benefit and council tax benefit.”

In addition, of course, the change will do nothing at all for people who are out of work.

[Neil Carmichael (Stroud) (Con)]

I listened carefully to the right hon. Gentleman’s observation, but note that about 3,800 people in my constituency who are in work have been lifted out of tax altogether. Does he not believe that that is a step in the right direction?

[Stephen Timms]

Those people will lose council tax benefit, and if they are paying rent, they will lose housing benefit. Citizens Advice is right that the effect of the change in the threshold on people in low-income work is very low indeed.

[Helen Goodman (Bishop Auckland) (Lab)]

Thirteen pence a week.

[Stephen Timms]

My hon. Friend says that the change is 13p week, which is a derisory amount.

[George Freeman (Mid Norfolk) (Con)]

Will the right hon. Gentleman give way?

[Stephen Timms]

No—I will make progress before I give way again.

The Bill was designed by the Chancellor to promote his party’s narrow interest. Like a number of the Chancellor’s efforts of that kind, it has not worked out as he hoped, but let us be clear that the Government have restricted uprating to 1% for the coming year without a Bill and did not need a Bill to restrict uprating for future years. The Chancellor thought he could boost his party’s standing if he introduced a Bill, so we have one. Coalition Ministers are here to help advance the Chancellor’s cause.

In particular, it is ridiculous to announce now—before we know anything about the future course of inflation—by how much benefits will be uprated in more than two years’ time, which is well after the general election. The Opposition therefore reject the proposal to restrict the uprating of social security benefits and tax credits to 1%. As I have said, in our view, uprating should be in line with inflation and assessed, as it always has been, at the end of the preceding year.

The Secretary of State claimed in his speech on Second Reading that, as part of employment and support allowance, the support group is protected, but it is not. The Secretary of State said that people who are not in the support group will find that they are affected. That is true, but people in the support group will be hit as well. Citizens Advice has worked out that a lone parent with three children who is in the support group will lose £600 in 2015-16 because of the exponential way in which the Bill will grind down the incomes of people who are already hard-up. We will come back to that.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

Is my right hon. Friend aware of the coalition of 60 Scottish charities that says that the Bill contradicts the principle that everyone should have a reasonable income in order to live a dignified life, and that many people in Scotland will be adversely affected by the Bill?

[Stephen Timms]

My hon. Friend is absolutely right, as are the organisations to which she refers. Indeed, as I shall say, there has been a widespread call along those lines pointing out the damage that the Bill will do. Disability Rights UK states:

“The Government has suggested that all disabled people are protected from the lower 1% increase in benefits. This is not the case.”

In fact, as the impact assessment tells us, disabled households are more likely than others to be hit by the changes in the Bill.

[James Duddridge]

The right hon. Gentleman has twice from the Dispatch Box repeated the commitment to uprate benefits by inflation. Is that the retail prices index or the consumer prices index, or has that yet to be decided?

[Stephen Timms]

That is a matter to be announced at the appropriate time. At the end of this year, we will set out how benefits should be uprated for the following year, as it always has been done, and at the end of next year for the year after that.

[Several hon. Members]

rose—

[Stephen Timms]

I will make a little more progress and then I will gladly give way again.

In moving amendment 12, I wish to focus on the effect of clause 1, as it stands, on child poverty. Previously—reflecting the commitment in the coalition agreement to eradicate child poverty by 2020—the Government have published the effect of Budgets, spending reviews and autumn statements on child poverty. We know from the Institute for Fiscal Studies that, taking account of everything that the Government announced before the autumn statement, child poverty is set to go up by 400,000 by 2015 and 800,000 by 2020. In this autumn statement, they did not mention child poverty at all. There was no mention in the impact statement, where it should have been. I tabled a question and the Minister told me that he would reply as soon as possible: I am still waiting.

Despite the Government’s best efforts, the answer did slip out in an answer from a different Minister. In that, we read that the three years of uprating will increase child poverty by an additional 200,000 on top of the increase that is already due. That means that we are on track for 1 million more children below the poverty line by 2020. That is a devastating blow and will undo all the progress of the last 15 years.

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

The powerful figures that the right hon. Gentleman cites show that this is a cruel and callous Bill. Given that that is the case, does he not think that Labour supporters might be disappointed that he will not commit now to re-link the upratings with RPI? Nor has Labour said that if it were to form a Government next time, they would reverse the Bill. Is not there a danger that people will think that it is all rhetoric and no action from the Opposition?

[Stephen Timms]

The time to announce how benefits would be uprated for next year is later this year in the normal way. The time for the following year is the end of next year. We reject the Bill, which is the Chancellor’s partisan and unprecedented device to set out the trajectory for two years’ time, before we know anything about the future course of inflation.

Ministers still say that they are committed to eradicating child poverty. It says so in the coalition agreement. That commitment is clearly now fictitious. The Bill is simply incompatible with that commitment. Ministers should stop pretending. They have given up on reducing child poverty. They have not just given up on publishing the numbers as they used to do: they have given up on delivering the goal as well. Now they are implementing policies that will force child poverty up.

[George Freeman]

Given that the last Government spent £150 billion on tax credits and achieved a 6% reduction in child poverty, does the right hon. Gentleman think that lifting 350,000 out of child poverty for a £2 billion investment in universal credit represents good value for money?

[Stephen Timms]

The policies of the previous Government reduced the number of children below the poverty line by 1.1 million. The policies of this Government are set to increase it by 1 million by 2020. That is a shameful record.

What we will have from April is a toxic combination of policies that will cut the highest rate of income tax and real-terms cuts in benefits and tax credits. Some 8,000 people who earn over £1 million a year will get a tax cut in April averaging more than £2,000 a week. Someone receiving the adult rate of jobseeker’s allowance will receive 71p a week. People are getting angry at what the Government are doing.

[Martin Horwood (Cheltenham) (LD)]

The right hon. Gentleman may or may not think that the Bill is a partisan device by the Chancellor—and he may or may not be right—but in refusing to support either the amendment tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas) or the various amendments tabled by Liberal Democrat Members, is not the Labour party being absolutely pathetic? It has the opportunity to do something about this and it is not taking it.

[Stephen Timms]

We will announce uprating policy in the normal way on the normal timetable, not on a date chosen by the Chancellor for his own partisan purposes.

I think the Minister knows that I have been looking back at his speech in the Child Poverty Bill Second Reading debate in July 2009—fewer than four years ago. It was an autobiographical speech, as he said at the time. He explained that his first job was with the Institute for Fiscal Studies, where he had the task in the 1980s of compiling its poverty statistics. He said that

“year after year the level of child poverty would remorselessly grow. A majority of people would do relatively well, enjoying tax cuts, and the people at the top would do exceptionally well, but year after year more and more children would find themselves in poverty.”

He said that he decided to become a politician because he

“was appalled at what was happening in our country to the most vulnerable people”—[Official Report, 20 July 2009; Vol. 496, c. 625.]

Now here he is, three and a half years later, arguing in this Committee for exactly the same combination of policies he condemned at the time: tax cuts for the highest paid and benefit cuts for the most vulnerable. Exactly as in the 1980s, as he knows better than anybody, the result is certain: child poverty rocketing. With the extra rise as a result of the Bill, if current policies are maintained it will go up by 1 million by 2020—right back up to the level he was logging at the IFS in the 1980s.

[Margot James (Stourbridge) (Con)]

Does the right hon. Gentleman accept that the most recent data demonstrate a reduction in child poverty last year of 300,000? If he disputes that, does he have any comment on the way the previous Government measured child poverty, and whether that measure should be changed?

[Stephen Timms]

Absolutely right—the policies of the previous Government have continued to have beneficial impacts, but as soon as this Government change the policy the numbers will rocket back up again. According to the IFS, child poverty will rise by 400,000 by 2015 and by 800,000 by 2020. On top of that, there will be an additional rise of 200,000 as a result of the Bill. That is what the Government’s policies are doing.

[Kate Green (Stretford and Urmston) (Lab)]

Of course, that is the figure the Government have been prepared to acknowledge in relation to relative income poverty, but they have said nothing about the impact on absolute poverty, material deprivation or persistent poverty—all measures they are signed up to in the Child Poverty Act 2010. Does my right hon. Friend agree with me that they should publish the impact on those measures of poverty as well?

[Stephen Timms]

Absolutely. That is what they have done in previous Budgets and autumn statements; in this one there was silence. I agree with my hon. Friend that the Government should absolutely return to the practice they adopted after the election.

Like the Minister in the 1980s, anybody who cares about poverty and who is looking at what is set to happen to the most vulnerable in the next few years, will be appalled. Child poverty will be growing remorselessly once again—back to the policies of the 1980s and back to their consequences, too. There is enormous public concern about the effects of clause 1 and the Bill as a whole. My hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) referred to the coalition of organisations in Scotland who have written about their concern. The Child Poverty Action Group has said:

“The Bill is a cause of great concern.”

Barnardo’s has stated:

“This policy will punish children the most by trapping them in poverty and impacting on their lives, leading to poor health, poor qualifications and unemployment.”

Citizens Advice said:

“It is imperative, particularly whilst increases to earnings from work are restricted, that support for low earners received through the welfare system is not disconnected from inflationary measures to the cost of living.”

The Children’s Society said:

“Groups which are meant to be protected (such as households with somebody with a disability) are more likely to be affected than households without protection.”

In an open letter this morning, the chief executives of Catholic charities in Liverpool, Manchester and London warned of the threat the Bill

“poses to the fundamental well-being of disabled, unemployed and low paid people, as well as their families who are already buckling under the weight of recent changes to the welfare system.”

[Sarah Newton (Truro and Falmouth) (Con)]

I ask the right hon. Gentleman to look at the facts, rather than scaremongering. The fact is that the child element of tax credit has gone up by 16% under this Government—£470. He really should look at the facts.

[Stephen Timms]

I simply ask the hon. Lady to look at all the other things the Government have done and at the Institute for Fiscal Studies assessment of the consequences for child poverty. As I have said, its assessment is that the number of children living below the poverty line will increase by 400,000 by 2015 and by 800,000 by 2020 and that there will be an additional rise of 200,000 as a direct result of the Bill.

The general secretary of USDAW, the shop workers’ union, has spoken of

“a kick in the teeth for working people that will fill many households with despair.”

Disability Rights UK has said:

“We are fearful that the Welfare Benefits UP-rating Bill will… impoverish thousands more disabled people.”

Homeless Link has said that

“the proposals contained in the Bill are grossly unfair, hitting the poorest in society the hardest.”

[Mr Redwood]

I just wonder how the right hon. Gentleman can forecast with such certainty this abrupt turnaround and deterioration until 2020. Does his forecast assume that there will be a Conservative Government for that second period?

[Stephen Timms]

The right hon. Gentleman should ask the Institute for Fiscal Studies, where the Minister served with considerable distinction in the 1980s. It has been a reliable guide in the past and will be in the future. The assumption is that the existing policies will continue.

This is a terrible Bill that is being rushed through in a disgraceful manner. It will hit very hard those people who are already struggling to make ends meet. It will hit women disproportionately hard. It will hit disabled people, including everyone in the support group for employment and support allowance. It will hit children, pushing 200,000 below the poverty line.

At a time when the coalition Government are—

[The Minister of State, Department for Work and Pensions (Steve Webb)]

What the right hon. Gentleman is saying sounds like a peroration, so I think that he might have accidentally dropped the page on which he was going to say where, if not from these measures, he would find the £3.5 billion. Where would he find the money?

--- Later in debate ---

[Stephen Timms]

Of course, the background to this policy is the failure of the Government’s policy. If we look at the unemployment forecast set out at last year’s Budget and compare it with the forecast set out at the autumn statement, we will see that it will cost an extra £3 billion in additional benefits. What the Minister and the Chancellor should be doing is putting in place policies that will reduce unemployment, not see it continue to rise.

At a time when the coalition Government are handing the richest people a tax cut of £2,000 a week each, they have decided that people on jobseeker’s allowance can have only 71p each, 72p the year after, and 73p the year after that. To quote the Minister’s 2009 speech, it is “appalling”. I urge the Committee to support our amendment and vote against clause stand part.

[Charlie Elphicke]

I will speak briefly. I think that it is important that all of us who represent communities with a lot of deprivation, such as my constituency of Dover and Deal, make sure that the Government, or any Government, have policies that make work pay. About 5 million people in this country could work but do not. We need more of an incentive for people to realise their potential and do well in life. Part of that needs to be an economic incentive. Let me pray in aid the words of the Chancellor of the Exchequer:

“We have to acknowledge that over the last five years, those on out-of-work benefits have seen their incomes rise twice as fast as those in work. With pay restraint in businesses and Government, average earnings have risen by about 10% since 2007. Out-of-work benefits have gone up by about 20%. That is not fair to working people who pay the taxes that fund them.”—[Official Report, 5 December 2012; Vol. 554, c. 879.]

--- Later in debate ---

[Mr Redwood]

I have already expressed the view that I did not come to Parliament to impose such restrictions on people with very little income, that that is a difficult thing to have to do but that I quite understand why Front Benchers are in that position.

Yes, I will trust Ministers’ judgment today but I am also saying to them that there are those two important conditions. They have to watch the situation because if inflation starts to rise too far, things will be too tough, and it would be wrong not to recognise that. If there is not a sustained increase in the number of jobs, that, too, will make the policy difficult to sustain. I am hoping that the economic policy can kick in with lower price rises and more jobs, which would make the measure a little less unpalatable. However, surely nobody can say that they want to do this—it is not very pleasant—but what else can we do?

[Stephen Timms]

The right hon. Gentleman is making an interesting speech. However, is not a clear consequence of his argument that it is a serious mistake to be setting now the levels of benefits in two years’ time, when we just do not know what inflation will be in the meantime?

[Mr Redwood]

The Government are fighting for credibility with their general finances. They have a series of difficult decisions to make and have decided to make this decision. The Opposition cannot always come here and say that they must get the deficit down but never support anything that makes a contribution towards that. That is where they have great difficulties.

The Opposition have great difficulties today because they are coming here and saying that they do not like the measure, but will not support amendments that would mean that we were definitely going to pay a lot more. They have sufficient maturity to understand that the benefits bill is extremely large and difficult to manage.

I have one final thought to put to Ministers. The British public, who wish to see the benefit bill controlled and brought down, are keen for us to check up on eligibility, which causes more issues than anything else. Most of us feel extremely generous when it comes to eligibility for disabled people and we want the Government to do the best they possibly can, which might not be generous enough.

What we are worried about is extending eligibility too far—through the European Union rules, for example. I hope that that kind of thing will be pursued. I hear that the Prime Minister is now looking at the matter, but I do not think it is right that a large number of people should be able to come into the country and immediately start claiming benefits that other people, who have been settled here for a long time and are working hard, have had to pay into and make contributions towards. I hope that we will get better news and that there will be some kind of contributory principle or settlement before people can get those benefits, so that somebody who has been living here clearly becomes our responsibility after a sensible period.

--- Later in debate ---

[Steve Webb]

The hon. Lady will know perfectly well that the Labour Government never forecast poverty rates. She was a Work and Pensions Minister with—if I remember rightly—responsibility for child poverty, and never once forecast poverty rates, but in opposition she suddenly believes that this Government should do so. We will publish the annual figures that show the effects of all our policies and the state of the economy. That is what the public want to see.

Another question that resonates with my hon. Friends in the Liberal Democrats is why we are taking money off poor people and giving it to rich people. That is a summary of what was said. I worked for the IFS for nine years and have the highest regard for it, but, to be clear, when the IFS does its numbers, it does not count almost all the taxes on the rich we have introduced—it cannot, because it uses household surveys, to which the rich do not, on the whole, reply at all, partly because they are too busy salting their money away in Swiss bank accounts. [Interruption.] Not any more—we have tackled Swiss bank accounts to the tune of several billion pounds. We have increased the main rate of capital gains tax to 28%, which is a substantial increase.

The Labour party focuses on the wages of millionaires as if millionaires are those who earn a £1 million wage. However, millionaires on the whole are folk who have capital gains and properties. They pay stamp duty. They try to avoid paying tax, but we have been cracking down on that, and there is a further clampdown on pension tax relief. The vast majority of those gains for the Government are not counted in the IFS figures. The overall impact is that we are taking far more from the rich than Labour ever would have done. I can therefore assure my right hon. and hon. Friends that this is not a question of taking money from the poor when we could take it from the rich. Even the Budget that reduced the higher rate of tax from 50% to 45% raised many times more in other measures. As we have heard during the course of the debate, the 45p rate, which Opposition Members tell us they find morally repugnant, is 5% more than the Labour Government levied in 13 years.

Amendment 12 would create a vacuum instead of a policy. It would give us no credibility in the financial markets and drive up interest rates when we want to keep them low. Amendment 7 would reinstate the RPI, which even the official statistician says is not up to international standards, and cost £2.5 billion a year compared with the Government’s plans. I have no doubt that amendment 10, in the name of my hon. Friend the Member for St Ives, is well-intended, but unfortunately it would tie the Government in to an above-inflation increase in 2015-16. The Liberal Democrats would not choose that as a priority, but I can assure him that the Bill, on top of the decisions the Government have made to prioritise the poor, will mean that benefits will rise in line with earnings over the period since the financial crisis. My hon. Friend wants that through his amendment, and that is what we will deliver through the Bill.

I therefore urge the Committee to reject the amendments and support the Bill.

[Stephen Timms]

We have had an interesting debate. The right hon. Member for Ross, Skye and Lochaber (Mr Kennedy), the former leader of the Minister’s party—the Liberal Democrats—described the Bill as a device dreamed up by the Chancellor, which was recognised on both sides of the Committee during the debate. The Government are bearing down on the incomes of the least well-off people because of the failure of their policies. I urge the Committee to support amendment 12 and to reject clause 1.

Question put, That the amendment be made.

The Committee proceeded to a Division.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

Will the Serjeant at Arms investigate the Aye Lobby? We seem to have a hold-up or a blockage of some kind.

Atos Work Capability Assessments

Stephen Timms Excerpts

Thursday 17th January 2013 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

We have a heard a large number—26, I believe—of extraordinarily powerful speeches in the debate. There is no doubt that the current WCA arrangements are causing immense problems and anxiety for people for whom all hon. Members want anxiety to be minimised.

In opening the debate, my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) mentioned the distress, indignation, fear and anger that have been caused. His assertion was amply supported by contributions from both sides of the House. We should not allow the system to continue. It needs fast and fundamental reform. I put it to the Minister—this struck me as I am sure it did him—that calls for such reform have come from both sides of the House, which does not often happen. It certainly happened today.

Part of the background to the debate is that a very small proportion of people who are placed by the WCA in the work-related activity group of ESA are getting into work. The invitation to tender for the Work programme said that the minimum performance standard would be that 5.5% of new applicants for ESA get into sustained job outcomes within one year, but the data published in November show that the proportion was 1%. The Work programme has performed terribly for the group of people we have spoken about in this debate.

What has gone wrong? The structure of the employment and support allowance is right. In the 1980s—my hon. Friend the Member for Edinburgh East (Sheila Gilmore) was absolutely right to remind the hon. Member for Harrow East (Bob Blackman) of this—thousands of people were encouraged to move from unemployment benefit to invalidity benefit in order to reduce headline unemployment. People who worked in benefit offices at that time have explained to me how staff were given incentives to encourage people to make that shift. Once they had gone on to invalidity benefit, later incapacity benefit, that was it—they were abandoned. No further support beyond the cash benefit was provided. It was only in 1997 that that began to change. It was recognised that the vast majority of people in receipt of incapacity benefit would prefer to be in employment, if they could be. Starting with the new deal for disabled people and later with pathways to work, new ideas were developed. Nothing previously had been done to practically support people with serious health impairments into work. The approach can be summarised as: work for those who were in a position to work, and support for those who were not.

Out of that experience was drawn the design of the employment and support allowance. From that, the work capability assessment was designed to allocate people into the three groups: fit for work, work-related activity group, and support group. That is the right structure and architecture for the benefit, but it is the assessment—the topic of this debate—that is now in doubt. The key problem is that very soon after the election, the Government announced that they would reassess the entire incapacity benefit case load on a very fast timetable. At that time, the WCA had been introduced less than two years previously. Problems were still being ironed out and the organisation had not properly bedded down, yet on to this still developing system was placed the enormous burden of reassessment. Atos tells us it carried out 1 million work capability assessments last year. The load has just been too much, resulting in the problems that we have heard about, and which have been expressed so impressively in this debate.

The Minister will be aware of a good deal of concern among disability rights organisations about the Employment and Support Allowance (Amendment) Regulations 2012. They were laid before Parliament just before Christmas on 17 December, and come into force on 28 January. They include the changes that will allow people recovering from cancer to go more frequently into the support group—a welcome change that was referred to by the hon. Member for Aberconwy (Guto Bebb). He said that the changes had already happened, but in fact they will take place on 28 January. A lot of people are worried that the regulations appear to give Atos permission to take account of non-existent, imaginary adaptations or medication in the assessment, and introduce a false distinction between physical and mental impairments. There is a lot of concern and I am sure the Minister is aware of it. Will he be able to say anything to address it?

The Government have recognised that the WCA needs modification. However, as we have heard from a number of speakers, they have gone about the task in an extraordinarily leisurely way, which has been described as “glacial” by a number of Members. I hope that the Minister can encourage us and tell us that the Department will now get a move on. I want to put to him a number of specific points. When will the changes to the descriptors for fluctuating conditions and mental health conditions, which were recommended months ago by the disability organisations, be implemented? He answered a question that I tabled last week on this, and there still seems to be a terrible, lackadaisical approach. He said:

“The Evidence Based Review (EBR) remains a priority for the Department and work is continuing at pace. The final report is due in 2013.”—[Official Report, 7 January 2013; Vol. 556, c. 180W.]

That was the first alarm signal, because his predecessor, in an answer on 25 June 2012, had told me that the final report would be due in spring 2013. Now the Minister is saying it will be in 2013. My hon. Friend the Member for Edinburgh East suggested that it will not be until autumn 2013. If that is right, that is another six-month delay. We really need to get a move on.

In his reply to me last week, the Minister said:

“We have undertaken extensive work with these charities throughout the summer”—

that was an answer last week, and the summer was the season before last. What happened in autumn?—

“to ensure that the ‘alternative’ WCA assessment combines recommendations from both the mental functioning and fluctuating conditions groups, and that the descriptors are suitable for testing.”—[Official Report, 7 January 2013; Vol. 556, c. 181-82W.]

The mental health descriptors were signed off by the charities in March last year. I really hope that the Minister will get the Department to get a move on and not just try these things out, which is what the evidence-based review—when it finally happens—will do, but introduce the changes that are clearly so urgently needed.

On progressive conditions, does it make sense to push everybody with a progressive condition, such as Parkinson’s disease, through regular reassessments when we all know that those conditions are only going to move in one direction and get worse. My hon. Friend the Member for Llanelli (Nia Griffith) made that point in an intervention. The Minister answered a question from me recently about this. He said:

“Around 360 people with Parkinson’s disease in the Work Related Activity Group have undergone a repeat assessment following their initial assessment…Of these, around 20 people…were found Fit for Work at their first repeat assessment.”—[Official Report, 15 January 2013; Vol. 556, c. 725W.]

No doubt some of them will have appealed and had their appeals upheld. Is it really worth putting 360 people with Parkinson’s disease through reassessments in order to find that perhaps 20 should be fit for work—although, as I say, a number of those would no doubt have been overturned? I also asked how much the reassessments were costing. As a number of Members pointed out, the Minister simply will not answer any questions about cost, on the grounds of commercial confidentiality. This is public money, and we need to know where this money is going and how it is being spent.

We need to make better provision for people to be able to supply their own supporting medical information in their assessment—a point made by my right hon. Friend the Member for Oldham West and Royton in opening the debate, and by the hon. Member for Stafford (Jeremy Lefroy) and my hon. Friend the Member for Bridgend (Mrs Moon). The application form should be amended to invite people’s own supporting medical information, and Atos assessors need to be more open to being informed by that information.

Atos assessors should be told why previous assessments were overturned on appeal—a point raised with me by Atos itself some months ago. We have heard how often people have won their appeal, gone back to Atos and immediately been found fit for work again. Part of the problem is that Atos was never told why a person’s appeal was upheld. I believe that changes are in hand or perhaps have been introduced to assess that problem. My hon. Friend the Member for Airdrie and Shotts (Pamela Nash), however, was among those who referred to the seriousness of this revolving door problem. It needs to be addressed. I was also troubled by what she said about the difficulties people had getting their assessments recorded. That was supposed to have been sorted out, but her comments, and those of others, suggest otherwise.

[Sheila Gilmore]

Is my right hon. Friend aware that although tribunal judges are giving brief statements of reasons, these are not enough to help the decision makers or Atos understand?

[Stephen Timms]

My hon. Friend makes a telling point. That information needs to be provided.

The architecture of ESA is sound, but the assessment system is clearly not up to the load it is being asked to bear. That is why we need fundamental and much faster reform, with a much greater sense of urgency than we have seen from Ministers so far.

--- Later in debate ---

[Mr Hoban]

I am going to make some progress, as I have only a few minutes left to speak before the next debate starts.

In March 2011, we also implemented the recommendations of a Department-led review of the work capability assessment, which included the expansion of the support group to cover more people with certain communication problems and severe disability due to mental health conditions.

Hon. Members have suggested that the assessment does not take account of fluctuating conditions, but that is not the case. It gives people with a fluctuating condition the opportunity to explain how their condition varies over time. It is not a tick-box assessment, as some have suggested. There is a discussion between the health care professional and the person making the claim for ESA to determine how their condition varies over time. The questionnaire that customers are sent has been redesigned for that purpose, and people are now asked to give more details about how their fluctuating condition affects them as an individual. If a person cannot carry out a function repeatedly and reliably, they will be treated as unable to carry out that function at all. We all recognise that the capacity of people with a fluctuating condition can change, and it is important that proper regard should be given to that fact.

I want to pick up on a point made by the right hon. Member for East Ham (Stephen Timms). We have committed to a review of the descriptors for fluctuating conditions, and we are working closely with charities on that. We also need to ensure that any new descriptors are as good as, or better than, the existing ones, for the purpose of assessing someone’s condition. That work is going on at the moment.

[Stephen Timms]

rose—

[Mr Hoban]

I know that the right hon. Gentleman is keen to find out when that review will be published, but let me just say this. We want to make changes, if there is evidence to support such changes, and we need to ensure that that evidence is gathered and evaluated. I am as keen as he is to ensure that changes are made as quickly as possible, and that we make the right changes and the best changes to improve the process. I am not in any way seeking to delay the process—we want to ensure that it happens—but we have had to work quite hard to get the right descriptors that will provide the evidence on functional ability, and we are now assessing them.

[Stephen Timms]

rose—

[Mr Hoban]

I will not give way. I have only three or four minutes left and there is a bit more to say.

Some criticism has been made of Atos, with suggestions that—

--- Later in debate ---

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

rose—

[Stephen Timms]

rose—

[Mr Hoban]

I have only four minutes left and I want to address some more questions.

Let me deal with the issue of Atos’s capability. Atos deals with 100,000 cases every month and it consistency meets the quality thresholds. Only 3.6% of assessments are below standard compared with a threshold of 5%. It receives complaints about only 0.6% of assessments. DWP decision makers return to Atos assessments that are inadequate for reaching a decision in only 0.2% of cases.

The hon. Member for North East Derbyshire (Natascha Engel) asked about the appeal rates. Let me be clear about the rate of successful appeals. Of all the fit-for-work decisions taken by the Department, only 15% are overturned on appeal. Only 15% of all the decisions we take, then, are overturned on appeal, which I think demonstrates that while we need to ensure that there is a proper appeals process, we should not be bandying around figures that misrepresent the level of successful appeals.