Pension Schemes Bill [HL]

Lord Freud Excerpts

Tuesday 8th November 2016 Lords Chamber

Moved by

[Lord Freud]

That it be an instruction to the Committee of the Whole House to which the Pension Schemes Bill [HL] has been committed that they consider the bill in the following order:

Clauses 1 to 31, Schedule 1, Clauses 32 to 36, Schedule 2, Clause 37, Schedule 3, Clauses 38 to 44, Title.

Motion agreed.

Work Capability Assessments

Lord Freud Excerpts

Tuesday 8th November 2016 Lords Chamber

[Baroness Rawlings]

To ask Her Majesty’s Government how they intend to consult British businesses on the proposals for work capability assessments contained in the work, health and disability Green Paper, Improving Lives.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

We are developing our consultation plan to ensure that we engage properly with British business on the proposals for reform, given the key role that it has to play in improving health and work outcomes. We are working with local enterprise partnership networks to reach a range of employers and employer organisations. A particular focus will be on listening to small and medium-sized employers to understand the support they need to better promote the health of their employees.

[Baroness Rawlings (Con)]

My Lords, I thank the Minister for his reply. Last Monday we had two Statements following each other, one on capability assessment and the other on Nissan. The Minister said,

“We need to harness that positive power of business to promote disability awareness”.—[Official Report, 31/10/16; col. 482.]

The Green Paper asks, “How can we encourage employers to recruit disabled people?”. As we know, Nissan is a hugely important employer, employing 35,000 people. Was capability assessment one of the topics on the agenda of the Nissan talks and, if not, do the Government intend to raise it in future?

--- Later in debate ---

[Lord Freud]

We relaunched Disability Confident last week and have had a very strong early response to it, with 2,500 employers signing up. Nissan is clearly a major employer in the north-east, and is making a significant investment that represents 7,000 jobs directly and many more in the supply chain. We will be talking to Nissan at the appropriate time on Disability Confident but it was not one of the topics that was discussed between the company and the Business Secretary.

[Baroness Thomas of Winchester (LD)]

In the very welcome Green Paper, the number of extra staff who will be needed to carry through its laudable aims is striking. How will the Minister’s department ensure that there are enough trained work coaches, disability employment advisers, occupational health and Jobcentre Plus work psychologists and others to roll out this programme?

[Lord Freud]

We do not yet have a formalised programme. We are in the middle of a consultation, as the noble Baroness knows. We will take the results of the consultation very seriously, come to the appropriate conclusions and develop the policies and the means of implementation.

[Lord McKenzie of Luton (Lab)]

My Lords, is any part of the consultation to consider the appropriateness of maintaining cuts to the employment and support allowance, which, as the Minister will know, is denying some £30 a week to thousands of the most vulnerable households in the country?

[Lord Freud]

We announced earlier this year that there would be no more welfare savings but we would go through with those that had already been announced. The job of the Government is to implement what has been announced, but there will be no more. This Green Paper looks at how we can have a better system of managing health issues with getting people into work. We have got half a million more disabled people into work in the last three years, and we need to keep that trajectory going.

[Lord Wigley (PC)]

My Lords—

[Lord Brookman (Lab)]

My Lords, many of us do not speak very often, so maybe I could get in for once. I heard the noble Lord speak yesterday, several times. Nissan has been mentioned. I am interested in the Government’s view on directing steel manufacturers in the UK to produce steel for the Nissan cars in Sunderland. Is that discussion taking place?

[Lord Freud]

It is a delight to hear from the noble Lord. We do not have a managed economy of the kind that he may be suggesting. We had talks with Nissan with a very good outcome: Nissan took the decision to go on investing. Clearly, a lot of discussion is going on with the steel industry in this country, given that until recently, steel in the western world was under severe pressure.

[The Countess of Mar (CB)]

My Lords, does the Minister agree that if the scheme is to be a success, work capability assessments must accurately reflect people’s ability to work? In many cases of people I deal with who have fluctuating conditions, assessments do not reflect the ability to work. What are the Minister and the Government doing to improve the situation?

[Lord Freud]

We inherited the work capability assessment, and we have now put it through five independent reviews and developed it considerably. The point at issue in the Green Paper is whether we should combine the assessment of financial need with that of the support that the person needs. That is the main focus of the Green Paper.

[Lord Wigley]

My Lords, I declare my interest as vice-president of Mencap. Will the Minister confirm that the needs of those with learning difficulties will be given as much attention as those with health problems or other forms of disability?

[Lord Freud]

Yes. My colleague Penny Mordaunt and I had a conversation on this issue just yesterday. We have slightly more than 1 million people with learning difficulties, with a very low proportion in work— I think the figure is 6%. If we are to start closing the disability employment gap, we have to do something in this area.

Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations 2016

Lord Freud Excerpts

Tuesday 8th November 2016 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, this has been an interesting debate, and I am grateful to the noble Lord, Lord Kirkwood, for his introduction to it and to all noble Lords who have contributed.

First, the good news. I am certainly glad to welcome the good bit of the regulations. As one of a number of concessions won by hard work in this House across the Benches, the regulations exempt from the benefit cap people claiming guardian’s allowance, carer’s allowance and the carer’s element of universal credit.

I have a couple of practical questions for the Minister before I move on. I understand that, because the regulations took effect yesterday, anyone in receipt of one of those benefits will be automatically exempted from the cap. That means that any such person who is already capped will have it automatically lifted, and their next payment will reflect that fact. Similarly, anyone whose case is flagged up as otherwise being caught by the new lower cap but who is in receipt of, or entitled to, one of those benefits will automatically be exempt. Can the Minister confirm that that automatic exemption is the case, and that the claimant will not have to do anything to ensure that they are exempted when they should be? Will he also confirm that his department has communicated with those claimants to let them know what is happening, so that they will understand the change in their circumstances?

On to the bad news. I will not rehearse the arguments made eloquently by many noble Lords about the impact on housing and homelessness—points made very well by the noble Lords, Lord Best and Lord Shipley—and on children, a point made by my noble friend Lady Lister and the right reverend Prelate the Bishop of Leeds. His predecessor the Bishop of Ripon and Leeds and I made an attempt right at the beginning to exempt child benefit from the cap. Sadly, we were unsuccessful, but I am glad to see the right reverend Prelate keeping up a fine tradition of speaking up for the children of Leeds; I hope that one day, he will not have to. If his sermons are as commendable, pointed and brief as his speeches here, may people flock to his cathedral in time to come.

As has been pointed out, the cap will change significantly. We heard about the large number of people who have been brought into it, but there is also the size of the losses. Households already capped could lose another £3,000 a year in London, or £6,000 elsewhere. The Government estimate that newly capped households will lose an average of £2,000 a year. The profile will change dramatically. No longer can Ministers pretend that the problem is people living in Mayfair or having 17 children; the problem will now be right across the country, a point made by the noble Lord, Lord Kirkwood. That was never really the issue, but in future, just 22% of affected households will be in London, whereas the figure had been 42%.

For me, the telling point is that in the north-east, where I live, the number of households affected will jump from 600 to 4,000. There are not that many very expensive properties in the north-east—certainly not that benefits pay for. This is now being spread right across the country. Nor can the Minister complain that it is just about large families. Under the new cap, a single mum with two young children sharing a room will be capped if she is living, not in Mayfair, but in 19% of areas in the country, including Basingstoke or Reading. If those two children are in different rooms, we are talking about a third of the areas in England. This is becoming really significant.

What is it about? Is it about saving money? Points were made by a number of noble Lords. I have been through the impact assessment again, and it is now clear that the savings from these regulations will be £540 million in total over five years. Over that period the Government will spend £870 million in discretionary housing payments. Clearly, not all of that will go on the benefit cap. It also has to cover the impact of the bedroom tax, LHA cuts and the general misery caused by the Government’s social security policy. In the current year, more than a quarter of DHP money went on the benefit cap victims, and we know that the number will go up significantly—more than threefold. Can the Minister tell us how much the Government expect to save from these regulations after deducting an appropriate proportion of the costs of discretionary housing payment money?

We have heard that the options for somebody who is capped are to accept the cut, move somewhere cheaper or get a job for at least 16 hours a week. Let me run through those very briefly. These are cash cuts and they come in overnight. If a family faces an annual benefit cut of £6,000 a year, can the Minister say whether that means it is possible that someone’s housing benefit could be cut by £115 a week from one housing benefit payment to the next? If that is the case, how could anyone absorb that kind of cut?

Another option is to move somewhere cheaper. But where can they move to? The cap spreads right across the country, so what will happen? There are no cheaper places to move to, and the only reason for the handful of places that are cheaper is that they are the kind of areas where there are no jobs and there is no transport to get there even if there were jobs. What is the point of sending people to live there?

The third option is to get a job. The Secretary of State for Work and Pensions, Damian Green, has said that the benefit cap is a real success. Based on the fact that the IFS found only 5% of people in the past who had got a job, the Minister may have to work on defining his terms. Let us look at what happens now. The Government think that if they cut it far enough, eventually people will get a job, but let us see who is being affected. I am particularly concerned about the effect on parents with young children. The benefit cap has already particularly affected single parents with very young kids. Most of those capped have a child aged nought to four. DWP statistics show that 11% of households affected by the current cap are single parents with a child under one. I want to look at that a bit more.

Let us imagine a single mother with young twins who are six months old, living in Basingstoke on basic out-of-work benefits. Let us call her Susan. Susan will be hit by this new cap. If she cannot find a cheaper flat—and she will not, because the housing benefit limits have been pushed down so far that she is already at rock bottom—the only way to escape the cap is to work 16 hours a week. The Government have been getting tougher and tougher on conditionality on single parents, but even they do not require parents of babies to work If you have children of that age you would not be required by the DWP to work.

Even if Susan wanted to leave the babies and go out to work, she would have to find a suitable job. She is not eligible for any of the job search programmes because she is not required to work. I understand that government guidelines to local authorities on the implementation of the benefit cap is that someone who is already capped and will be hit again by the lower cap will be entitled to 40 minutes in total with a work coach to help them to find a job. Can the Minister tell me if that is correct? What help will be provided to a single parent being capped for the first time?

Secondly, where will Susan get childcare from to be able to go out to work? A survey just out from the Family and Childcare Trust found a huge problem of insufficient childcare in many local authority areas. Fewer than half of local authorities in Great Britain reported having sufficient childcare for nought to two year-olds. The Minister will probably talk about the Government’s free childcare offer, but let us remember that that is only for three and four year-olds. It is only 15 hours a week which is not enough to enable parents to get the kids to a nursery, get to a job for 16 hours and back again. The much-vaunted extension of that will not come until next April whereas the cap is already in place. Evidence shows that there is not enough childcare provision now, never mind when it is extended.

Parents like Susan, with children under three, have no entitlement to free childcare at all. They could claim help within tax credits or universal credit, but the limit of how much you can get is so small now, as it has not been raised for so long, that it falls way short of actual childcare costs. The Family and Childcare Trust says,

“there are 11 local authorities where the average cost of part-time childcare exceeds”,

the working tax support cap completely,

“leaving the poorest working parents having to pay an average of”,

£81 a week out of their own pocket. Where is Susan going to get that kind of money? Care for babies is especially expensive. Even if she could find somewhere suitable and a suitable job, she may not even be able to afford the deposit on the first month’s nursery fees, which are usually required upfront. Can the Minister at least assure the House that any parent of young children, who has to take a job because they are capped, can claim the full costs of the deposit for childcare from the flexible support fund his department operates? I ask that because Gingerbread has been getting reports that job centres do not want to use this fund, which is meant to remove barriers to work for childcare, even though childcare is a really obvious barrier. Can he reassure us on that point?

However, let us remember that these are parents whom the DWP does not normally require to work. The only reason that that mum is having to go to work—despite the fact she has only two kids, does not live in an expensive area and her only income is basic benefits and tax credits—is because her rent, as the noble Lord, Lord Best, has said, is at a level where she cannot reasonably pay it without help from benefits. There are Susans all over the country.

As the IFS has pointed out:

“It is possible for the benefit cap to quickly affect many more out-of-work families in an area, once its level falls below the sum of the HB cap in that area for the family type in question and the other (nationally-set) benefit entitlements”.

Once it happens, all those families are going to be chasing the handful of cheaper accommodation and none of them will be able to cope. What do the Government think will happen? Where are these families going to live? The point made by the noble Lord, Lord Best, is that this is driven primarily by a housing crisis. Is not the problem that the Government have failed to invest in housing and are therefore simply trying effectively to shift the problem on to the poor, who are the victims of the rent rise which they have not been able to address?

I am sure the Minister does not want to see parents of young children plunged into crisis. He knows that discretionary housing payments cannot be relied upon because they are discretionary and councils have too many demands on them for help. At the very least, will the Minister pledge to look at how his department can protect parents of young children from the impact of the reduction in the cap? I very much back my noble friend Lady Lister who is pressing the Government to address the question of the family test. Perhaps in doing that, the Minister could also guarantee to report back to Parliament on the impact of this change on families with young children. That is the very least we can expect.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, this Government believe that those out of work should not receive more in benefits than many working families are able to earn. We introduced a benefit cap to encourage people to find work and that is exactly what has happened. The new benefit cap levels continue to provide a clear incentive to work, helping to reduce long-term welfare dependency and ensuring fairness for working households.

Since the original benefit cap was introduced in April 2013, 23,500 capped households have found work. Evaluation has found—this is in response to the query of the noble Baroness, Lady Bakewell—that capped households are 41% more likely to go into work than similar uncapped households, and that 38% of those capped said they were doing more to find work. A number of noble Lords have argued that the benefit cap is flawed, but it was a manifesto commitment and was extensively debated in this House and in another House.

One aspect that I would like to point out to noble Lords is that there has been a culture change around the importance of going to work. Whatever particular policy has been driving that is difficult to assess, but the figures are astonishingly dramatic. The number of children in workless households now stands at 1.35 million. That is the lowest ever since these statistics started to be collected in 1996. It compares well with the figure at the height of the boom: it is more than 400,000 lower. It was 1.79 million in 2008. It is much lower—almost 1 million lower than it was in 1997.

So there has been a dramatic change in attitudes. We see it in various statistics, including the number of people in social housing now going back to work, which they never did. So there is a structural change. I do not pin it directly on this policy. But I do say that there seems to have been a real change, and that is one of the aspects of it.

The Motion of the noble Lord, Lord Kirkwood, expresses concern that we have not,

“made additional support available to those individuals affected by the benefit cap to find work”.

Actually, there is quite a lot of evidence that the success that the cap has had in helping people into work is partly a reflection of the strong support offer we have in place in both jobcentres and local authorities, which we continue to improve. We have contacted claimants potentially affected by the cap well in advance, giving them an idea what the impact might be on their household income and offering them support to adjust their circumstances. We have also ensured that jobcentres and local authorities are equipped and funded to provide that support.

--- Later in debate ---

[Baroness Sherlock]

If you introduce this, there will be a change for somebody who is already capped; or they may have previously been told and made a decision not to make an application because they knew of the impact of the cap. I presume the Government have communicated at some point. It was a serious point.

[Lord Freud]

I am sorry. I did not mean not to be serious. My best understanding of this is that where someone has been capped and will no longer be capped then we will inform them of the change. If that is not the case, I will write to the noble Baroness; if it is, I will not. However, I am pretty sure that it is the case.

To pick up on the concern expressed by the noble Lord, Lord Kirkwood, regarding the point made by the Secondary Legislation Scrutiny Committee, the committee wrote to my colleague the Minister for Welfare Delivery to express concern about the equality analysis. I imagine that the noble Lord saw that letter. Ministers fully considered the equality analysis at the same time as the regulations were made but there was simply a delay in publishing it. Perhaps noble Lords can cast their minds back to the peculiar period in our history following the June referendum, when the machinery of government perhaps was not working quite as smooth as it usually—or always—is.

On evaluation and the Ipsos MORI survey that the noble Lord talked about, the numbers came about because it was a longitudinal survey to understand what was happening; a lot of different levels of analysis went on, which looked at different outcomes, some of which were done on a quantitative basis, others on a qualitative basis; that was a qualitative one. We are committed to go on evaluating it and now we are developing the plans to understand behaviours and attitudes. The quarterly benefit cap statistics will continue to be produced, and the May 2017 release will be the first to show the impact of the lower levels.

I hope I have reassured the House that the Government have put in place measures that provide significant additional support to claimants affected by this policy to help them adjust, and wherever possible to move into work.

[Lord Kirkwood of Kirkhope]

My Lords, I am grateful to the Minister and to all colleagues who have contributed to this debate. I think it has been worth while. My difficulty with the Minister’s response—which I will study, as I always do; I have the box set of the Freud responses over 10 years—is that I was looking for “additional”, but I did not get that. It is also too passive. A lot of good work is laid in front of some of these people who are confronting quite catastrophic changes in their financial circumstances. I would have expected a benefit team to have been geared up to deal with that specifically, certainly for six months or so, and that is absent. That is inadequate, because people will suffer as a result of it not being there.

I trust that the Minister has taken the message that although we had important debates about this in 2010 and 2015-16, this is a clear and present danger if it is not got right, and it will continue to be considered in that vein by the department. However, because of the absence of the activity that I was looking for and the additional measures which were not produced, I fear I must test the opinion of the House.

Pensions: Women’s State Pension Age

Lord Freud Excerpts

Wednesday 2nd November 2016 Lords Chamber

[Baroness Bakewell]

To ask Her Majesty’s Government what assessment they have made of the concerns of the Women Against State Pension Inequality about changes to the state pension age for women.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

The Government have no plans to revisit this policy. A substantial concession, worth £1.1 billion, to lessen the impact of increases to women’s state pension age is already in place. No women will experience increases of more than 18 months. In fact, for 81% of women, the increase will not exceed 12 months. Introducing further concessions could not be justified given the imperative to focus public resources on helping those most in need.

[Baroness Bakewell (Lab)]

I thank the Minister for that Answer. He clearly does not acknowledge the scale of the injustice and the growing scale of the protest: 2.5 million women have been affected by the botched plans to align the pension ages and it is bringing increasing hardship to women who are now retired and have no income and no pension. These are women who have paid into their pension plan for decades, often since they were in their teens. This summer, the WASPI women, as they are known, held protests in 131 towns. On 11 October, they presented 200 constituency petitions to the Commons, backed by 80 MPs. This campaign is not going away. When will the Government address its cause?

[Lord Freud]

I can only repeat what the Pensions Minister, Richard Harrington, said, absolutely and explicitly, that,

“no further moves will be made to assist those women, all of whom will benefit in time from the significant increase in the new state pension”.—[Official Report, Commons, 17/10/16; col. 566.]

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I hear what the Minister says, but the Government must assess the impact of the failure to inform people on their planning for the future. If women did not know, and now face hardship as a result, they should be compensated. Will the Government look to set up a hardship fund?

[Lord Freud]

Let me go through the communications: 14 million personalised pension estimates have been sent out since 2000; 16 million unprompted forecasts were sent out with information on the raising of the pension age; 1 million letters were sent out between 2009 and 2011; 5 million letters were sent out between 2012 and 2013; and, in the 2012 survey it was discovered that only 6% of women retiring within 10 years thought that the pension age was still 60.

[Baroness Pidding (Con)]

My Lords, can my noble friend confirm that the new state pension provides a boost to women’s pension income?

[Lord Freud]

Many noble Lords took part in debates on this issue in the House. One issue that we discussed was the Green Paper about the new state pension and how that would affect the women involved. We made the concession. But after that we introduced the new state pension, which has been carefully focused on the poorest women. By 2030, 3 million women will be on the full rate and gaining £550 extra each year.

[Lord Watts (Lab)]

Can the Minister give any examples of where thousands of pounds have been taken from medium-income families in one fell swoop? Can he give an example of any other Government who have ever done that?

[Lord Freud]

This measure was introduced in 1995 to equalise state pensions. There were adjustments in 2007 and 2011 and then in the Pensions Act 2014. The move to equalisation was a consensus policy by both the Conservative and Labour Governments during that time.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I regret the Government’s intransigence on this. Like many parliamentarians I have had a lot of letters from women who have been excluded saying things such as:

“I am 63 and have worked for 42 years full time”.

Another says:

“The Government want us to work until we are 66, there are very few jobs for older women”.

Does the Minister not accept that this is a case of unfairness and discrimination against a small group of women who are actually quite numerous?

[Lord Freud]

One of the odd things about this is that we are providing equality between men and women. Men have had to retire at 65 for many decades and we are bringing women’s retirement age to the same level. Women actually have longer in retirement, even after 65, because they still live longer. One of the reasons is that we are being blessed by greater longevity. In the period since 1995, men are living longer by four years and women by three years.

[Lord McKenzie of Luton (Lab)]

My Lords, we know that the Government have a poor record of communicating changes to pension arrangements, despite what the Minister has said, as evidenced of course by the confusion over the introduction of the single state pension. The issue here as touched on by my noble friend is not that there was no communication about state pension age changes, but that there was not effective communication. That is why there is a proper sense of injustice articulated by the WASPI campaign, and why it argues for the promised transitional provisions now to be offered up by the Government. I ask the Minister again, despite what he has said: will the Government reconsider this matter?

[Lord Freud]

I can only repeat that we have made it clear—and the Pensions Minister went as firmly on the record as he could—that there will be no further moves in this area.

[The Earl of Listowel (CB)]

My Lords, can the Minister help me? Would it help if more fathers were encouraged to work part time so that they spent more time with their children, building stronger families and stronger relationships with their children? At least one result would be that fewer women would be disadvantaged, spending less time out of the work market because they would be sharing the care of their children with their partners.

[Lord Freud]

One of the transformations in recent times is that women and, indeed, men are paid for caring responsibilities so that their pensions are not affected by that.

Pension Schemes Bill [HL]

Lord Freud Excerpts

2nd reading (Hansard): House of Lords
Tuesday 1st November 2016 Lords Chamber

Moved by

[Lord Freud]

That the Bill be read a second time.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, over the past 10 years the Government have delivered a number of radical changes to the pensions system that have transformed the way that people can save and access their pension savings.

Among the changes that we have made, we have removed the default retirement age, facilitating fuller working lives, we have made it easier for people to understand their state pension by introducing the new state pension, and by setting the full level at £155.65 and raising the state pension age we have lifted more pensioners out of means testing and put the state pension on a sustainable footing. We have increased private long-term savings by introducing automatic enrolment, and 6.7 million people have already been automatically enrolled into a workplace pension by 257,000 employers. By 2018, we estimate that 10 million workers will be newly saving or saving more into a workplace pension as a result of this change, generating around £17 billion in additional pension saving by 2020. In the summary of its report on automatic enrolment, published in May of this year, the Work and Pensions Select Committee said that so far, automatic enrolment had been a great success and that it had,

“been declared a success by pension providers, employers, trade unions and Government”.

We have also given people greater flexibility in relation to their pensions. The pension freedoms, which came into effect in April 2015, allow over-55 year-olds to access their pension savings more flexibly. HMRC reports that in the first year of pension freedoms, 232,000 individuals accessed a flexible payment. Since April 2016, it has been compulsory for providers to report this information. In the first six months since compulsory reporting was introduced, 243,000 individuals received a flexible payment, with 619,000 payments made in total. The total value of all flexible payments since the introduction of the freedoms is £7.65 billion.

The Bill builds on these changes. Automatic enrolment means that more people are saving into a private pension. The new freedoms mean they have more choice about what they do with their savings than ever before. We need to ensure that the legislative framework is appropriate in the light of these developments. The measures in the Bill will help to protect savers and maintain their confidence in pension savings.

The majority of the Bill focuses on master trust occupational pension schemes, which have become a most popular vehicle into which workers are automatically enrolled, particularly among small and micro-employers. Although these schemes can offer great value for members and employers, we need to act now to make sure they are regulated in the right way.

The schemes are regulated by the Pensions Regulator and occupational pension legislation. However, that legislation was developed mainly with single-employer pension schemes in mind. Master trust schemes have different structures and dynamics, so the Bill introduces a new authorisation regime for them and new powers for the Pensions Regulator to intervene where schemes are at risk of failing.

Master trusts will now have to satisfy the regulator that they meet certain criteria before operating, and schemes must continue to meet the criteria to remain authorised. The criteria respond to specific key risks identified in master trust schemes. They were developed in discussion with the industry and include the kinds of risks that the Financial Conduct Authority regulation addresses in group personal pensions, with which master trust schemes have some similarities.

Trusts will now be required to demonstrate that the persons involved in the scheme are fit and proper, that the scheme is financially sustainable, that the scheme funder meets certain requirements, that the systems and processes relating to the governance and administration of the scheme are sufficient to ensure its effective running, and that the scheme has an adequate continuity strategy.

The Bill covers more detail on each of these criteria, and additional details will be set out in regulations following further consultation with the industry. The authorisation and supervision regime is likely to be commenced in full in 2018. However, the Bill also contains provisions which, on enactment, will have effect back to the day on which this Bill was published, 20 October 2016.

These provisions relate to requirements to notify key events to the Pensions Regulator and constraints on charges levied on, or in respect of, members in circumstances related to key risk events or scheme failure. This is vital for protecting members in the short term and will ensure a backstop is in place until the full regime commences.

We have worked closely with the Pensions Regulator and engaged with the pension industry to see what essential protections are needed, and we believe that the measures in the Bill will provide those protections. The Pensions Regulator, along with many pension providers, has welcomed the introduction of the Bill and these measures, saying that it,

“will drive up standards and give us tough new supervisory powers … ensuring members are better protected and ultimately receive the benefits they expect”.

The Bill will also make a necessary change in relation to the existing legislation on charges. Information gathered by the Financial Conduct Authority and the Pensions Regulator indicates that a significant number of people have pensions in respect of which an early exit charge is applied. Clause 40 will give us the power to override contractual terms which conflict with the regulations. For example, the Government intend to use this, alongside existing powers, to make regulations to introduce a cap that will prevent early exit charges creating a barrier for members of occupational pension schemes wanting to access their pension savings. The FCA is introducing a corresponding cap on early exit charges in personal and stakeholder pension schemes.

The Government also intend to use this power, together with existing legislation, to make regulations preventing commission charges being imposed on members of certain occupational pension schemes where these arise under existing contracts entered into before 6 April 2016. We have already made regulations that prohibit such charges under new contracts agreed after that date. This will fulfil our commitment to ensure that certain pension schemes used for automatic enrolment do not contain member-borne commission payments to advisers. The Government intend to consult on both sets of regulations in the new year.

We are introducing the Bill now because it will, from the day it becomes law, protect consumers by preventing providers winding up an existing master trust while raising charges to cover the costs of doing so.

We are very conscious of the views expressed by this House that the delegated powers in previous Bills have been too wide or there has been a lack of clarity about how the policy will work. I therefore want to explain the approach we have taken to the use of delegated powers in this Bill.

The Bill sets out the key criteria for a master trust to become authorised. It requires that a master trust must satisfy the regulator that it meets these criteria and that it continues to do so on an ongoing basis. It also sets out how the regime itself will operate. However, there are matters more appropriate for secondary legislation that will address the detail of these requirements. We want to make sure that this level of detail caters for different structures and arrangements within existing master trusts, so that the burden of the regime has no disproportionate or unintended effect.

A one-size-fits-all set of requirements could have a disproportionate effect on the market. We believe that the level of detail needed to implement the main requirements, together with the need to make different provision for different cases, is more suitable for secondary legislation. It may be necessary for these detailed requirements to be adapted over time in response to market developments. To that end, we are not seeking a few broad powers; rather, we have woven specific powers into the Bill, targeted on the matters for which they are appropriate, so that it is clear where and for what they will be used.

We have not prepared draft regulations because we intend to consult the industry before making them. The Bill provides sufficient detail to allow your Lordships to scrutinise how the new authorisation and supervision regime will work and for the market to anticipate what the new regime will mean for it. The market has already proved dynamic and we expect that to continue. Therefore, having the appropriate detail in secondary legislation will enable us to adapt to changes and respond to market developments within the constraints of specific regulation-making powers.

The Bill is focused on areas where we believe we need to take immediate action to protect savers, but I know that there is considerable interest and concern about wider pension issues, so I shall touch briefly on why they are not included in the Bill.

I know that some noble Lords had expected to see in the Bill measures relating to guidance bodies. I reassure them that the Government remain committed to ensuring that consumers can access the help they need to make effective financial decisions. The recent consultation on a new delivery model for government-sponsored financial guidance proposed a two-model body, replacing the Money Advice Service with a new, streamlined money guidance body, and bringing together the Pensions Advisory Service and Pension Wise into a new, single pension guidance body. However, several stakeholders questioned, both in formal responses to the consultation and in the wider public debate that the review has provoked, how the two bodies might work together effectively and whether a single delivery body might be more cost effective and provide an improved offer to consumers. After careful consideration, we have agreed to create a single financial guidance body, but we need to do further work to ensure that the right model is delivered, that it works for consumers, and that it has the full support of the financial services, pensions and charity sectors. Reform in this area has not been shelved and we remain committed to restructuring and improving the offer on government-sponsored financial guidance.

A lot of understandable concern has been expressed in many quarters about the impact on employers of defined benefit pension schemes, and the sustainability and security of the defined benefit system. Noble Lords will be aware of high-profile cases in the news, and the ongoing Work and Pensions Select Committee inquiry into the powers of the Pensions Regulator and the Pension Protection Fund to act in cases where schemes are facing difficulty. In addition, the Pensions and Lifetime Savings Association, one of the main industry bodies for pension schemes, has set up its own taskforce looking into the sustainability of the defined benefit pensions system.

While we are aware of the many options for change that are being discussed and debated, there is no simple solution on which we are ready to legislate. Despite what noble Lords may read in certain papers, our pensions system is not in imminent danger. None the less, some employers and some schemes are in difficulty, and there are a number of issues on which we want to gather data and consider further. We intend to present a Green Paper on the challenges facing defined benefit pensions in the winter. We should not seek to address those issues ahead of that vital consultation.

Finally, I touch briefly on the changes to the state pension age. While all state pension issues will be outside of the Bill, I know that there is considerable interest and concern about this issue. We have to acknowledge that people are living longer and if we want to carry on having an affordable and sustainable pensions system, it is right that we continue to look at the state pension age. But I reassure noble Lords that we have put arrangements in place. We committed £1 billion to lessen the impact of the state pension changes on those who were affected, so that no one would experience a change of more than 18 months. In fact, 81% of women’s state pension ages will increase by no more than 12 months compared with the previous timetable. Many will benefit from an increase in the new state pension. But let me be quite clear on the Government’s position. Unwinding past decisions would involve younger people having to bear an even greater share of the burden of getting this country back to living within its means. That is not a burden we are prepared to place on them.

The Bill is an important legislative step in ensuring that we provide essential protections for people saving in master trust pension schemes, and in maintaining confidence in pension savings. The market has grown quickly and it is important that we now respond to ensure that this part of the pension market evolves in the right way. We are committed to ensuring that members are protected equally, whatever type of scheme they are in, and the measures proposed in this Bill will provide that protection. I beg to move.

Improving Lives: Green Paper

Lord Freud Excerpts

Monday 31st October 2016 Lords Chamber

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Secretary of State for Work and Pensions in another place.

“This Government are determined to build a country that works for everyone. That means an economy that serves the interests of ordinary working people. It means a society where everyone has an opportunity to go as far as their talents can take them, regardless of their background. As part of that, it means creating a country where a disability does not dictate the path a person is able to take in life.

Under successive Governments, we have made good progress in improving the lives of disabled people. Laws have been changed, old attitudes have been challenged and understanding has improved. More disabled people are in work; 500,000 more than just three years ago. That is encouraging but we need to build on that progress and do more to help disabled people reach their full potential.

It is clear that for many disabled people the barriers to entering work are still too high, and that people in work who get ill too often fall out of work, lose contact, lose confidence and do not return to work. The impact extends far beyond the individual. Families suffer, the health service faces extra strain and employers lose valuable skills. Most of all, it is a human tragedy. Potential is left unfulfilled and lives are lessened. Of course, the health and welfare systems must support those who will never be able to work, too. They should offer the opportunity of work for all those who can, provide help for those who could and care for those who cannot. It is the help for those who could that, through this Green Paper, we will transform.

First, on the welfare system, in 2010 we inherited a broken system with few incentives to move from welfare to work. Too many of our fellow citizens were simply taken off the books and forgotten about. Since then, we have brought control and the right values back to the system. I want to recognise my right honourable friend, the Member for Chingford and Woodford Green, for his passion and conviction over the last six years to make that a reality. We have ensured that work always pays, through reforms such as universal credit, while ensuring a strong safety net for those who cannot work. Spending on disabled people will be higher every year of this Parliament than in 2010, but we need to continue to review and reform the system based on what we know works.

One of those areas is the level of personalised and tailored support someone gets when they fall out of work. In the last 12 months, half of all people who attended a work capability assessment were deemed too ill to work, or even prepare for work, at that time. They then routinely receive no employment support at all. It is not surprising then that each month only 1% of people eligible for employment and support allowance after an assessment leave. This benefit was meant to help people back into work; the statistics show that it is not living up to that original aim.

We will build on the success of universal credit and provide more personalised employment support by consulting on further reform of the work capability assessment. We will also introduce a new personal support package for disabled people, providing better-tailored support, including a new “health and work conversation” between someone on ESA and their work coach, focusing on what they can do, rather than what they cannot. We will recruit around 200 community partners into jobcentres, to bring in expertise from the voluntary sector, and we will give young people with limited capability for work the opportunity to get valuable work experience with employers. These are practical steps and support that the welfare system will provide for disabled people.

Turning to the health sector, this Green Paper marks a new era in joint working between the welfare and health systems, between the Department for Work and Pensions and the Department of Health. This is about recognising that work and meaningful activity can promote good health, so we will work with Health Education England, Public Health England and others to make the benefits of work an ingrained part of the training and health workforce approach. We will also review statutory sick pay and GP fit notes to support workers back into their jobs faster and for longer. It is also about transforming the way services join up. We will be consulting on how best to do this, as well as boosting existing joint services. For example, we are more than doubling the number of employment advisers placed in talking therapies services. It is right that we focus on services such as these, as mental health conditions, together with musculoskeletal conditions, are behind many people falling out of work.

However, this is not a challenge for government alone, so, finally, I want to turn to the role of employers. Employers have so much potential power to bring about change, not just in their recruitment strategies, but in how they support their employees. We need all businesses—small or large, local, national or global—to use that power to deliver change. The fact is that as well as being good for health, it makes good business sense: sick pay for workers who get ill costs business £9 billion a year.

Businesses are leaders in innovation and transformation. We need to harness that positive power of business to promote disability awareness, so we will create a Disability Confident business leaders’ group to increase employer engagement in looking after the health and well-being of their employees and opening up opportunities to them. Now is the moment for every business to take a proper look at the relationship between work and health and what it means for their business and productivity.

Over the coming months, we will be talking with disabled people and those who have health conditions. We will be talking to carers, families, professionals, and a range of organisations that are so important to getting this right, and which, like us, want to see further change. Together, through this Green Paper and building on our work since 2010, we intend to deliver just that: to improve the way the welfare system responds to real people with health conditions; to see employers step up and play their part; to see work as a health outcome; and to see a culture of high ambition and high expectations for the disabled people of this country”.

My Lords, that concludes the Statement.

--- Later in debate ---

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I, too, thank the Minister for repeating the Statement. We on these Benches are pleased to finally see this Green Paper. It has been delayed time and again and many of us were wondering whether it would ever see the light of day.

Reducing the disability employment gap is a worthy aim. There are many people with disabilities whose skills and talents are not utilised. Working with employers to ensure that they recognise the benefits to their businesses of employing disabled people is vital for both the health and well-being of those disabled people who are able to work, and for our economy as a whole.

The move to reform the work capability assessment is an overdue step in the right direction. However, at its heart the structure of the WCA remains fatally flawed. This is in part because of a failure to assess what types of jobs may be available to claimants, and whether they can find such jobs within their skill set and in their local area. I therefore ask the Minister whether, in reforming the system, he will look to create a process that assesses not just whether a claimant is fit to look for a job but whether the jobs available are fit for the claimant.

I also impress upon the Minister the importance of conducting a fundamental overhaul of the system. Tweaking at the edges is unhelpful. Sick and disabled people have little confidence in the WCA, rendering it unworkable. This is particularly important given the incredible mental pressure that the lack of trust in the system puts on claimants, many of whom already suffer from mental ill health. I suggest the Minister seeks to restore confidence as a priority.

On the Government’s plans for helping those disabled people who can work back into work, we welcome the creation of a business leaders group. However, will the Minister look at rewarding the best practice of businesses that are good employers of people with disabilities? For example, Liberal Democrats have proposed that those employers who meet a strengthened version of the two-tick system for mindful employers of employees with mental health conditions are able speedily to access funding, such as Access to Work. It is important that those employers who have a good track record are given a facilitated route to employing more people who may need additional support.

Finally, will the Minister explain why a proper analysis of the failings of personal independence payments is not included in the Green Paper? This has affected people’s ability to lead independent working lives. Will the Government look again at the demands of many in this House, not least my noble friend Lady Thomas of Winchester, on the 50-metre rule and its inappropriateness in assessing mobility? The impact of disability varies greatly between rural and urban areas, and PIP as a supposedly personalised benefit should assess these barriers.

All in all, the Green Paper is welcome, but until the Government address these myriad other problems we will still fall well short of providing the support that people with disabilities should be able to expect.

[Lord Freud]

I thank both noble Lords for their very thoughtful contributions and for their general welcome, with maybe a little complaint in one case about thinness. I take the point.

Both noble Lords made the point, in different ways, about the level of engagement going on now with this Green Paper. We make no apology for that. We need a process that fully brings on board the disabled groups, so that they have full impact. We want to take the time necessary to do that properly. The noble Baroness, Lady Bakewell, looked at the health and work relationship; it is confined to the area that it is because the process is not about PIP at this stage. There will be other times to look at PIP but it is not part of this consultation.

As the noble Lord, Lord McKenzie, pointed out, fundamental here is the Waddell and Burton report of September 2006. It was very valuable for me when I was writing my first piece of work on what to do with the benefits system. It turned on its head the traditional relationship between the benefits system and work when it said that work, particularly good work, is good for people. It is not one of the problems; it is one of the solutions. It has been really hard to move and change a system that is designed to protect people from work, which made sense when there was heavy industry. It now changes at every level.

We all feel that this is taking a long time, but there is a good reason for it. We are transforming a system that put people in a silo of disability and did not let them back into work. Transforming that requires universal credit as a fundamental base where you do not just have those different groupings; you have everyone able to do what they want, with their pay adjusted accordingly. That is the answer to the noble Lord, Lord McKenzie, about universal credit: it makes work pay.

If you make a comparison between what somebody who had been in the system would have got and what universal credit does, you come up with different figures. Once you are in the universal credit system, the reality is that you are incentivised to work. That will have a behavioural effect, which we are already seeing in the way that universal credit operates. It helps and encourages people to work more. While we do not yet have many numbers of those who are disabled in the system, there are some and they are going in. Within universal credit we will build evidence as to how best for them to do so. As noble Lords appreciate, we are building the universal credit system very carefully with a “test and learn”, and it is still one of the areas about which to learn a lot.

This is a new era, of joint working. I said it, as did the noble Lord, Lord McKenzie. It is joint working not just between the two departments, which is pretty tough, but also with employers. Getting all that to work well is one of the reasons why we are taking time over our consultation. Clearly we are looking at building on the three types. We now have three tiers of employers in the new two-tick system that was relaunched in July, with the top tier being the leaders. In response to the question from the noble Baroness, Lady Bakewell, about whether there will be the demonstration employer—and we all know individual employers who really have put huge effort into supporting people—I can say that we are setting that up with tiers where the leaders will support others.

On the question from the noble Lord, Lord McKenzie, on statutory sick pay and the fit note, that is clearly at the heart of getting the relationship between health and work and the employment system in the DWP to work better. That is why consultation in this area is so important. One of the most important things is to get the health system seeing employment as one of the therapeutic outcomes for which it is looking. We have already taken that step, and it takes us a long way. I cannot at this stage tell the noble Lord what the allocation of the community partners will be, but we will work on that.

With that, I think that I have dealt with the first level of questions and would enjoy some more.

[Lord Low of Dalston (CB)]

I too thank the Minister for repeating the Statement and would like to add my word of welcome for this Green Paper. The objective of halving the disability employment gap is commendable, and a lot of work and thinking have been going on in the department about how to achieve it. I commend the Minister and the department on that, and I look forward to studying the product of that activity in the Green Paper more carefully than I have had the opportunity to do so far.

Can I just make a plea for the Minister to revisit the reduction that was made to employment and support allowance going to those in the WRAG in the most recent session of Parliament? As the Minister knows, we had long discussions about this and there would be widespread agreement, even if the Minister did not share it, that although those asking the Government to revisit that cut lost the vote, they won the argument on this one. If the Government do not revisit this cut with a view to cancelling or at least ameliorating it, they will find that they have shot themselves in the foot and prevented themselves even getting to first base in the matter of halving the disability employment gap.

This cut to employment support allowance will hinder people’s ability to look for work by undermining their ability to pay for well-being activities that help recovery and enable them to consider paid work; will make people more worried and stressed, thus impacting their mental health; will have an impact on work-related activity such as travel to appointments or volunteering opportunities; and will make it harder to attend training courses and work-focused interviews if people are already struggling to meet basic needs. That is a substantial argument, which was developed in detail by the charities that produced the report on the impact of the cut to ESA. The case was well made and the deleterious impact of the cut was demonstrated beyond any doubt. Again, I ask the Minister to revisit this if he wants to attain his objectives.

[Lord Freud]

I very much regret having to say that we are not in a position to look again at that measure. The WRAG was not doing what it was designed to do. What we are now looking at in the Green Paper is how to separate the financial aspects of the benefit from the support that people require.

[Lord Fink (Con)]

My Lords, what is my noble friend the Minister doing to help employers take on disabled people?

[Lord Freud]

It is clear that many people who happen to have a disability have immense talents and valuable skills, which employers should want to tap; they will miss out if they do not. We already offer some support—for instance, Access to Work—and we are increasing that spending. The consultation will ask employers what they need from government to help them recruit and train disabled people.

[Lord Blunkett (Lab)]

My Lords, it would be unfair to use the old joke, “This is déjà vu all over again”, because this is a welcome initiative. I have just two quick points to make. The Minister knows a great deal about this. Perhaps he will accept that trashing the past rather than learning from it is not helpful. This is not an entirely new era. In 2005, as he well knows, the Department of Health and the Department for Work and Pensions jointly appointed Professor Carol Black. All the things that came out in the report he has mentioned flowed from that initiative. While it takes a great deal of time to implement good policy, as we are all painfully aware, there has been a great deal of it; for instance, the Employers Network for Equality & Inclusion has 2,500 employers already engaged. A new business leaders’ group is not required. What is required is to build on what is there, to build on the experience of the pathways and the talking therapies, and to ensure that what we all say—and we do all say it—about joined-up policy is put into practice.

[Lord Freud]

My right honourable friend in the other place, the Secretary of State, took some pleasure in quoting James Purnell from 2008 about the objectives here, illustrating that they are the same. We must acknowledge the continuity there has been in this difficult area and, in particular, give thanks to Dame Carol Black, who I have worked with now for many years and who has done an extraordinary job in trying to get these two networks together. We are building on many years of work but, like everyone else, I acknowledge that it is hard pounding—it takes a long time to get this right.

[Baroness Thomas of Winchester (LD)]

My Lords, I welcome the Statement and I completely understand that PIP is not part of this Green Paper, but the Minister’s department will have to work hard to restore people’s faith in the DWP’s consultation process because it comprehensively ignored the PIP mobility consultation, when more than 1,000 people said that we should not have what was subsequently put into law. I hope the Minister will agree to listen to the voices in the consultation process before there is legislation in this area.

[Lord Freud]

I know that the noble Baroness has very strong feelings about this. At her urging, I did make significant changes to the mobility measure. We did not have a clean measure before. We now have a precise measure with the 20 metres but we have it on the basis defined—safely, securely and regularly—which is something that she wanted, and have made it a much more measurable part of the PIP process. More people are receiving the top rate of PIP than receiving it were under DLA.

[Baroness Browning (Con)]

I have great respect for what my noble friend is trying to do, particularly in getting people with autism into work. Will he bear in mind a couple of things? First, we have seen many schemes over a long time that are badged as work prep, with all sorts of names attached to them to get people ready for work. They are important but where they have failed in the past is in going that step further and finding the appropriate job and getting a person into that job. That applies particularly to those people on the autistic spectrum with learning disabilities or chronic mental health problems. When my noble friend is engaging with employers, I ask him to make sure that it is not just the prep they think about but the advice people with those conditions need for interviews and on how to adjust in the workplace.

Secondly, I filled in a work capability assessment form on behalf of a relative. It is not always doctors who can interpret how a particular medical condition affects somebody’s everyday life or how it will affect them in the workplace. Very often physiotherapists, social workers or support workers are better placed than the local GP to know just how an individual is impacted and how they need to be supported in a much wider range of ways than just giving a diagnosis and saying, “This is how it affects them”.

[Lord Freud]

The noble Baroness is right. One of the areas of greatest concern is people who have learning difficulties and people with autism. The figures are not good. There are more than 1 million people with learning disabilities and only 6% have work. I think we are going to see a report on autism this evening showing that only 16% of people with autism are in work. Clearly, in this period of consultation we need a particular focus on people in this group to help them into the workplace.

[Baroness Masham of Ilton (CB)]

My Lords, how is the Minister going to see that the various departments work together and not in silos so that disabled people get the help they need? For instance, there are some brilliant people in the spinal injury field but they may need help to get up in the morning and go out to work.

[Lord Freud]

That is exactly the kind of focus that pulling the two systems together should start to address. As the noble Baroness says, if somebody needs a bit of help at a regular time every day to get to work, just putting that little bit of resource in is transformative for that person. That is something that the system has never really been able to do until now and one of the things that we can start to look at as we bring work and health together.

[Baroness Manzoor (Con)]

My Lords, I very much welcome the Green Paper, which is definitely the right direction for us to go in, as is having wide consultation. Has my noble friend the Minister thought about new technologies to support people with disabilities, both in the home and in the workplace as well, as part of the consultation and working with employers?

[Lord Freud]

Yes, some of the technologies that one sees are remarkable. The noble Lord, Lord Low, who is not in his place at the moment, demonstrates that for the blind every time he stands up—I cannot imagine how he can do it—as did one of the members of my private office, who was also blind. There are amazing technologies to help support in that case; I know that it is also true elsewhere. We want to adopt and take on new technologies. One of the interesting and heartening things with Access to Work, where we have been a little concerned about the take-up, is that we have just introduced a digital offer there and we are encouraged by the response to it. There will be other areas where we can get a lot of benefit from going with new technologies.

[Lord Farmer (Con)]

My Lords, as we have heard, this Green Paper is to be recommended. It will obviously need some broad support to get it through. Can my noble friend tell us what he is doing to garner broad support for these changes?

[Lord Freud]

We have deliberately designed this Green Paper to ask for responses from a lot of key areas. Noble Lords may remember that when we started off on this process, it was by looking down a direct White Paper route. We have pulled back and gone for the Green Paper route, with a lot of areas for consulting. We plan to hear from and work with disabled people and people with long-term health conditions. We want to hear from employers, health and care professionals, the voluntary and community sectors and the devolved Administrations. We really want to build a consensus on what we can do and get the widest support that we possibly can for any changes.

[Baroness Jolly (LD)]

My Lords, can I ask the Minister not to forget education, because the transition for young people from schools into work at 18 is really important? If they start working from 18, it is much more likely that they will remain in work during their lives.

--- Later in debate ---

[Lord Freud]

The noble Baroness is absolutely right that these transitions need to be managed carefully. It is clearly not a health issue for the majority, but it is for some. Just getting into the habit of living independently is tough for youngsters. We are looking at how we can help them. However, it will be separate from this Green Paper exercise.

[Lord Pearson of Rannoch (UKIP)]

My Lords, thinking of young people with learning disabilities, how easy will it be under the new arrangements for them to move from one council or area of the country to another? Does the Minister agree that this has been considerably restricted over recent years, and something that they perhaps deserve under the new arrangements?

[Lord Freud]

Youngsters are able to go to other areas to work. I think that the noble Lord must be referring to the restriction on 18 to 21 year-olds getting housing benefit. One of the exclusions that we have been debating with people—we announced that we would look at that strategy—was to make sure that those youngsters who move between areas for work could be exempt from that particular restriction.

[Lord Sterling of Plaistow (Con)]

My Lords, I have just come from next door, where there has been a gathering on autism. I have two interests. One is through Motability; the other is because I have a young grandson who is right at the bottom end of autism, so this is very personal. One very key factor on autism is that 60% of people said that they did not know where to go for support or advice about employing an autistic person. I see people nervous of how they should support and handle people whom they have never quite understood. Also, if I may, another factor that we have found over the years—I have had the pleasure of discussing this with noble Baronesses opposite—is that this can also deal with loneliness. If you are disabled and at home, and do not have a job, you might be left on your own for hours or days. I very much greet this Green Paper because it is the start of the right dialogue. How can one achieve on the former factor and make certain that we can help to educate workforces, before somebody comes to them, as to how to handle what they would consider a problem and we would consider a challenge?

[Lord Freud]

One of the problems with autism is, clearly, that many—too many—of those people are not in the workforce. That essentially acts to exclude them from the normal economic life of the country, which in itself leads to isolation. If we want to get the volumes that we are talking about and halve the disability gap, we need some concrete policies to come out of this Green Paper and address this issue. We now have dialogue between the health systems, the DWP and employers. It should not be beyond our capability as a society to solve this problem.

[Baroness Scott of Bybrook (Con)]

My Lords, I welcome this Green Paper not just for myself but for my daughter, Sarah. My daughter has worked for many years since she left college but has been out of work for the last four months. The majority of disabled people really want to work. It is demoralising and lonely not to be working for any length of time. They do not want to be on benefits; they want to be, like all the rest of us, self-sufficient and a member of their society.

I particularly welcome two things in the Green Paper. Having listened to other noble Lords, I suggest that disability is just a word but it means a huge and wide range of issues that people in our communities have. Tailored support is therefore very important because you cannot lump everybody into the same type of support. There should be specific support—I am sorry that the noble Lord, Lord Blunkett, is not here—but that is not in here at the moment, so I urge the Minister to make sure that, while we go through the whole process with the Green Paper and White Paper et cetera, what should be delivered now is being delivered. That is really important; my daughter does not want to wait for a Bill to go through.

It is particularly important that we talk to employers earlier rather than later. When employers have disabled people working for them—when they go over that barrier—they find it a very positive experience for their businesses and for the rest of their employees, but they need a little help to understand and to be able to manage. Sarah has been for numerous jobs and every time, as soon as they know she is in a wheelchair, they do not come back to her. That is a nonsense. It only needs a little help to understand that a wheelchair is not a barrier to somebody working in a business. I urge the Minister not to stop with what is being offered now but to get on with this, because it is extremely important, not only for disabled people but for the economy as a whole.

[Lord Freud]

I thank my noble friend. We will get on with it. We have the Access to Work Programme to help her daughter, Sarah. I hope she will find work. We are putting more resource into the programme right now. I can only hope that Sarah is successful, and I trust that my noble friend will keep me up to date with her progress.

Unemployment: Disabled People

Lord Freud Excerpts

Thursday 20th October 2016 Lords Chamber

[Baroness Deech]

To ask Her Majesty’s Government what progress they have made towards creating the conditions necessary to halve the unemployment rate of disabled people.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

Our ambition is to halve the disability employment gap—the difference between the employment rates of disabled people and those of people who are not. We will publish a Green Paper setting out our vision and options for longer-term reform. There are nearly half a million more disabled people in work than there were three years ago, but the gap remains too large.

[Baroness Deech (CB)]

I fear—and I wonder whether the Minister agrees with me—that these schemes are destined to fail because the Government have not removed the barriers between disabled people and jobs. There is a lack of transport and an unwelcoming workplace. What disabled people need—and I hope that this will be favourable to the Minister—is that all buses should be accessible with audiovisual information and all the taxi provisions of the Equality Act should be brought into force. Tribunal fees, which deter discrimination claims, should be removed or lowered. Employers should be helped to understand what reasonable adjustments they should make. Will the Minister work across departments to promote those recommendations of the Select Committee on the Equality Act 2010 and Disability, which I had the privilege of chairing earlier this year?

[Lord Freud]

We made a comprehensive response to that interesting report from the Select Committee—but on the fundamental point that the noble Baroness makes, we all have to acknowledge that this is not easy to achieve. Getting more people with disabilities into work is a complicated thing to do, and through the Green Paper we are looking to combine very big and complicated organisations in the shape of the health and welfare systems and employers. You have to do it across all three to have a hope of bridging this gap.

[Baroness Thomas of Winchester (LD)]

Up to 600 disabled people a week are losing their Motability cars because of the harsh PIP reassessment test. Does the Minister not agree that, as many of them are of working age, this will not contribute to halving the disability employment gap?

[Lord Freud]

I want to make it absolutely clear: PIP is a better benefit than the DLA it replaces. More people are receiving the top rates of PIP than they are of DLA: 24% in PIP and 15% in DLA. We have other ways of supporting people who are in work and who have some element of disability but are not eligible for PIP, and we are looking very hard at building up the Access to Work system, and to increasing the numbers who can take advantage of it.

[Baroness Smith of Basildon (Lab)]

My Lords, can the Minister confirm that “disability” also includes those with a learning disability? Secondly, funding for the new work and health programme appears to be just a third of what was available for previous programmes. Can the Minister explain to your Lordships’ House how this funding will be allocated and why the Government consider it adequate?

[Lord Freud]

We are moving the emphasis away from more general support programmes such as the Work Programme towards the work and health programme because many of the people who need support have disability barriers. It is right for the new emphasis to be there. I absolutely accept the noble Baroness’s point about people with learning disabilities. There are some shocking figures on this and it is a key issue. There are some 1.1 million people with learning disabilities and only around 6% of those are getting into work. Clearly, if we want to halve the gap, that is a central group for us to pay attention to.

[Lord Low of Dalston (CB)]

My Lords, there was a lot of disappointment on the part of disabled people at the Government’s response to my noble friend Lady Deech’s Select Committee. Is the Minister willing to consider coming up with a plan of action for implementing the Select Committee’s recommendations, or establishing a task force with disabled people and their organisations to come up with a plan?

--- Later in debate ---

[Lord Freud]

The way we are now addressing this will effectively encompass what the noble Lord is asking for. We are preparing to launch a work and health Green Paper and there will be a lot of work following it. We will need to work with the sector, the health system and employers to make sure that we have something that really starts to achieve our aims.

[Baroness Stroud (Con)]

My Lords, one in six people who develop a disability while they are in work lose their employment within a year. Can the Minister explain to the House the structural changes he is making to universal credit in order to keep disabled people close to the workplace, particularly disabled people with fluctuating conditions, and to support employers?

[Lord Freud]

The fundamental change in the new benefit structure—a single benefit in the form of universal credit—allows people to stay in their benefit while they have varying amounts of work. Some of the main beneficiaries will be disabled people, many of whom do have fluctuating conditions. Today, they are frightened of going into work if they are having a few good months, because they could lose their entire package. At the moment, there are silo packages and a person can be labelled and told, “You are in this disability package; you cannot go into work”. Under UC, you can move up and down the taper depending on how you are doing, which is one reason why I was able to relax the permitted work rules when we went through the Welfare Reform and Work Bill. With universal credit, we no longer have to patrol so tightly the legacy system.

[Lord Morris of Handsworth (Lab)]

My Lords, the Minister will be aware that, with help and support, some disabled people are able to work from home. What help, support and assistance are given to people who can take advantage of those opportunities in order to become self-sufficient and independent?

[Lord Freud]

I had not thought about that point, and I will do so. Access to Work works with employers, and there is a system there. To be absolutely honest, I am not sure how or whether it would work with homeworkers. I will check that out and write to the noble Lord. I thank him for raising the point.

Fit for Work Scheme

Lord Freud Excerpts

Wednesday 19th October 2016 Lords Chamber

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, I too thank the noble Lord, Lord Luce, for introducing this debate. I have spent a lot of time trying to get the service in, and it is absolutely vital that we have this kind of support for people, to stop the inflow at a time you can do it. That is what this service is designed to do. I also acknowledge the noble Lord’s concerns about employees who are facing long-term sickness absence. We debated it quite some time ago now, I think when the independent review of sickness absence report, led by Dame Carol Black, came out. I hope I will be able to answer the bulk of the many questions that noble Lords have asked me.

I start by giving a picture of how the workforce in Great Britain has been affected by long-term sickness absence, a set of figures that has been touched on. In 2015, 139 million days were lost to sickness absence, and the independent review in 2011 on this came out with a total cost figure of £9 billion in sick pay and associated costs, with the whole cost to the economy running at £15 billion. Many noble Lords here today will remember that a significant proportion of sickness absences result from musculoskeletal conditions such as back or knee pain. The other big factor is mental health conditions, such as stress, depression and anxiety. Clearly, the fact that we have an ageing workforce adds to the necessity of having really good services in place to help those affected by health conditions to go back to work or to remain in work. As people are now living longer and healthier lives, it is vital that occupational health services are accessible for such workers so that they can continue to live at a better, healthier standard. The noble Baroness, Lady Thomas, asked me how many occupational health practitioners we really need in this country. That is a difficult question for me to answer. I think the answer is probably more than we have, but I cannot help her much more than that.

I do not want everyone to think that we focus only on services to help older workers to stay in work; age and health are not necessarily related. Many businesses already understand the benefits of providing occupational health support to employees but, as several noble Lords have pointed out today, one of the major issues is with the SMEs that do not have access to such support or have very limited access to it. That was one of the key findings from Dame Carol Black in her review, where she pointed out that it was the lack of access here that was preventing employees from returning to work. That led us to the establishment of the Fit for Work service.

As the noble Lord, Lord McKenzie, pointed out, we started with a gradual rollout in December 2014. We have now rolled out nationwide, and we offer occupational health assessments for those suffering from long-term sickness absence. We also provide an advice service for employers, GPs and employees that is free to use for all. That means that whenever an employee is absent from work due to illness for four weeks or more, they can be referred to Fit for Work by either their GP or their employer. It is interesting that the figures for employers have been moving ahead of those for GPs. Those who are referred are allocated their own experienced case manager who will conduct an assessment with them that will take into account all the issues—health, work and social issues—that may be preventing the member of staff from returning to work. The employee will receive a return to work plan detailing the steps that he or she, their employer or their GP can take to help them to return to work sooner. Then, provided that the employee consents, the plan is also sent directly to their employer or GP.

I turn to the question asked by the noble Baroness, Lady Walmsley, and the noble Lord, Lord McKenzie, on the qualifications of the healthcare professionals. They are professionals who have an occupational health qualification or occupational health experience or who are able to demonstrate the experience and skills appropriate to working in an occupational health context. Health professionals must be registered with the relevant regulatory and/or professional body on the appropriate parts of its registers. Fit for Work has an accredited specialist in occupational medicine providing clinical supervision of the service, and provides appropriate supervision from more experienced professionals from whom they can seek advice.

Both the right reverend Prelate the Bishop of Derby and the noble Baroness, Lady Thomas, asked who the health professionals are. They come from a wide range of backgrounds. They will signpost to other services if appropriate. I hope they are creative; they can refer on to hydrotherapy, for example, and the noble Baroness knows that I am a believer in much colder water than she is.

Employees and employers can contact the advice service on any work and health matter, and that includes people who are still in work. Someone—I have forgotten who but I think it may have been the noble Baroness, Lady Walmsley—talked about the stiff upper lip. The service is available for those with a stiff upper lip who are struggling at work. They do not have to be off work in order to take that advice.

The referrals are an iterative process, as said by the noble Lord, Lord McKenzie. An initial assessment will be done and an initial return to work plan issued. Further assessments will take place if required—for example, if an individual does not return to work as expected—and the service will provide support for up to three months if required.

I can give some numbers for the scheme. From the figures from March 2015 until last month, we are just shy of 10,000; some 9,000-odd people have gone through. For commercial reasons I cannot disclose our expectation but I will not disguise that that is a lower level than we had hoped for at this stage, and clearly we are concerned to do something about that. One thing we will do is reflect some of that in the Green Paper that is due between “shortly” and “soon”—we have had many debates about what those two words actually mean.

Some noble Lords mentioned some of the parallel services to Fit for Work. Noble Lords will remember that we introduced a tax exemption of up to £500 a year per employee for medical treatments recommended by Fit for Work with an employer-arranged occupational health service, so that is designed to act as an extra incentive for employers to make use of Fit for Work.

The Access to Work scheme provides practical and financial support with the additional costs faced by individuals whose health or disability affects the way they do their job. The amount of help that an individual may receive from Access to Work will depend on their individual need and personal circumstances, but the figure is now up to a maximum of £41,400 a year of support. The Access to Work programme is delivered by Jobcentre Plus. The awards are usually made for a period of three years and are reviewed annually. In answer to the question from the noble Baroness, Lady Thomas, I can say that Fit for Work will signpost to Access to Work as necessary. This will be recorded on the return to work plan for both the employee and their employer.

We know there is a consensus here. I am always delighted when the noble Lord, Lord McKenzie, and I agree on some of these matters; that was not always the case. This Government are committed to helping more people with mental health conditions to find and retain work, as well as testing how to improve both the well-being and the employment prospects of claimants with mental health conditions. There is investment of an extra £1.25 billion in mental health support and we have pledged over £40 million over the next three years on a range of voluntary pilots to test how best to support people with mental health conditions to gain and retain employment.

The real issue here is that we often simply do not know what works. This money is really important to find some of those answers. I assure noble Lords that no one in the world knows them, so it is very important that we find out how to do it.

Government cannot do this on our own: we need employers and healthcare professionals. We believe that for Fit for Work to be more successful, for more people to go through it, there needs to be a change in culture among GPs and employers, particularly SMEs. There have been marketing campaigns to the medical community and to employers’ representative bodies. Through them, the providers of Fit for Work have been working to increase awareness of the service across Great Britain but clearly—this is a point made by several noble Lords—we have a deal more work to do to get the word out.

The noble Lord, Lord McKenzie, asked about evaluation. An evaluation strategy is in place for Fit for Work. It is being undertaken by an independent research organisation on behalf of the work and health unit. It will include feedback from employee users, GPs and employers. The initial satisfaction data we have received from independent performance monitoring is that the service has been welcomed by GPs, employers and employees.

The noble Baroness, Lady Thomas, asked: should we rename and relaunch? We are looking at this whole area—should we expand, what is its role?—in the Green Paper, so we will be able to return to that topic. On the key question that she asked about sharing information, most people are relaxed about sharing information with their GP or employer. About 30% of people do not want to share the information.

The noble Lord, Lord Luce, asked whether the telephone is the right method. It is speedy, cost-effective and works in many cases. In some cases, it is not appropriate, and we will conduct face-to-face assessments when necessary.

My noble friend asked how well-equipped the NHS is to give support. NHS England commissions specialised care for patients whose pain cannot be successfully controlled or is particularly complex to manage. NICE has published several clinical guidelines and produced a range of best practice guidance on pain management for specialised drugs and treatment, as well as specific conditions, including chronic pain.

Too many individuals are still prevented from participating in the labour market by health issues. We have established the cross-government work and health unit jointly with the Department of Health. That is designed to lead the drive to improve work and health outcomes for people by improving integration across the healthcare and employment services. That combination is the driving factor behind Fit for Work.

We know that many larger companies see the benefit of supporting their workforces through occupational health—around 80% of large companies do that—but that only one in 10 small companies do so. That is where the Fit for Work service is designed to fill the hole. As I said, we will be exploring this area further in the Green Paper.

Let me conclude by again expressing my thanks to the noble Lord, Lord Luce. This is a key programme for us. It has not gone as rapidly as I hoped. I hope that, if we can get it up successfully and get the message out better, the benefits will be compelling: for employers, to reduce sick pay and increase productivity; for the state, as the noble Baroness, Lady Walmsley, said, through reduced long-term worklessness; but, most importantly, for the people involved, it just makes their lives more meaningful.

We are committed to doing everything we can to ensure that Fit for Work plays as full a part as possible in what is an extraordinarily important objective of helping people stay in work.

House adjourned at 8.35 pm.

Housing: Under-occupancy

Lord Freud Excerpts

Monday 17th October 2016 Lords Chamber

[Baroness Quin]

To ask Her Majesty’s Government what recent meetings have taken place between ministers and citizens affected by the under-occupancy charge.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, we met with an extensive group of stakeholders during the development of this policy and continue to do so on all policy areas. However, no recent meetings have taken place on the underoccupancy charge. Citizens and stakeholders are able to keep Ministers informed of their views through correspondence. The overall funding for discretionary housing payments has been increased: £870 million has been provided for the next five years to help those who are vulnerable.

[Baroness Quin (Lab)]

Having recently become involved with a charity in the north-east of England which helps and speaks up for people with learning disabilities, I have been struck by the number of cases in which the bedroom tax has greatly increased the problems that some of these people are facing. Will the Minister agree to meet with me and some of those affected? Also, will the Government look urgently at new ways of helping the people who have been hardest hit by this policy?

[Lord Freud]

The problem that I have in answering the noble Baroness right now is that, as she will be aware, we are currently awaiting a judgment from the Supreme Court on groups of people affected by the spare room subsidy policy. During this time, it is not appropriate for Ministers or officials to meet with particular groups. We had the hearing at the end of February, so we are expecting to hear the outcome of the case quite soon. After that, I will engage with the noble Baroness.

[Lord Naseby (Con)]

Is it not extraordinary that the previous Question was, rightly, about homelessness—indeed parts of the Shelter report addressed major problems—yet in this Chamber we have consistently heard disagreements and challenges to, and non-acceptance of, the very idea of underoccupancy? Would it not be a nice change if people recognised that most of the underoccupancy challenges do not have much validity? The people in those homes should think about downsizing appropriately or, if not, paying the relevant rent for overoccupying them.

[Lord Freud]

The number of those affected by the policy has now come down by 21%. Some have downsized; many others have got jobs. In the last years, the number on waiting lists has now come down very appreciably—by nearly half a million—as councils are able to manage those waiting lists more flexibly.

[Lord Blunkett (Lab)]

My Lords, the problem with the previous question is that the bedroom tax does not apply to the retired. It is actually the retired—well represented in your Lordships’ House—who have more accommodation available than younger people bringing up families, where their home should be their castle. Does the Minister concur that, if we were looking in that area, it would be an incentive to older people to downsize, not younger people with families?

[Lord Freud]

The policy is clearly directed at people who have a spare room. These tend not to be people with families; in many cases, they are empty nesters. They would be a typical group—people who have had a larger place but some of the people living in it have then moved on and they now have spare rooms. There is a point in time at which one should address the issue to get the downsizing. This policy looks to make sure that that time is during working age and not later.

[Lord Stoneham of Droxford (LD)]

My Lords, I declare my interest as chair of Housing & Care 21. As the Minister will be aware, there is a major problem coming down the road on retirement housing, particularly the imposition of a cap on housing benefit, which will impose itself on people in retirement housing where rents and the cost of housing are higher—often higher than the proposed cap on housing benefit. How are the Government going to address, beyond just using discretionary funds, the needs of these retired people who will be disadvantaged and also stop the undermining of future development of retirement housing in this country?

[Lord Freud]

We put out a Ministerial Statement in September outlining our approach to supported housing, including sheltered housing, which looks to divide the support into two, with one element coming out of the housing benefit bill up to the limit of the LHA amount in each area, which is then topped up by local authorities through a fund. This will help them drive the commissioning of the appropriate level of housing, and supported housing, for the people in their area.

[Baroness Hollis of Heigham (Lab)]

My Lords, given the harsher council tax support scheme, it is estimated that one in three of those affected is in arrears and debt. Of the people affected by the bedroom tax, two-thirds are estimated to be in arrears and debt. Of UC claimants for housing allowance, it is estimated that more than three-quarters are in arrears and debt. These debts are manufactured by government policy and will blight lives for some in deep debt for many years to come. We have a new Government and I am sure that neither the Minister nor the Prime Minister wishes this state to continue. What are the Government going to do about it?

[Lord Freud]

There is a lot of complexity around the arrears issue, which we are looking at. The overall figures on arrears are much lower than some of the dramatic specific figures that the noble Baroness mentioned. The overall position is that housing association rent collection is running at 99% on average, and the bulk of housing associations—92% of them—say that they are outperforming their business plans on levels of arrears. There are specific issues, but there are a lot of definitional problems—I have said that to the House before—about what is an arrear and whether, if you are a day late, you go into arrears. We are trying to separate out what one could call book arrears from genuine arrears of the kind about which the noble Baroness is concerned.

Welfare Reform and Work (Northern Ireland) Order 2016

Lord Freud Excerpts

Tuesday 13th September 2016 Lords Chamber

Moved by

[Lord Freud]

That the draft Order laid before the House on 6 July be approved.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, the order will ensure that the welfare reforms enabled by the Welfare Reform and Work Act 2016 in Great Britain are delivered in Northern Ireland, while also ensuring that the Northern Ireland Executive have a workable budget. This order is an important part of delivering the fresh start agreement and enables the Northern Ireland Executive to provide for supplementary welfare payments from within their own budget.

Before I turn to the specifics of the order, I remind the House of why we are implementing welfare reform in Northern Ireland. This order marks an essential step towards bringing Northern Ireland social security back into parity with the rest of the UK, as agreed in the fresh start agreement last year. Before that agreement, the impasse on agreeing the implementation of welfare reform meant that the Northern Ireland Executive had been operating on an unworkable budget. This had created significant political instability, and it risked collapsing the devolution settlement. This order brings changes which will help to ensure that the budget of the Northern Ireland Executive is placed on a stable footing.

This Government’s goals for Northern Ireland are clear. We want to work with the Northern Ireland Executive to support a Northern Ireland where politics works, and a Northern Ireland with a stronger economy and a stronger, secure and united society. It was in the light of these goals that the Government agreed to legislate on behalf of the Northern Ireland Executive to enable the welfare reform changes in the Welfare Reform Act 2012 and the Welfare Reform and Work Act 2016, such as the introduction of universal credit, personal independence payment and the benefit cap. This formed an integral part of the fresh start agreement in November last year.

To make the changes set out in the 2012 and 2016 Acts a reality in Northern Ireland, UK government and Northern Ireland executive officials have worked closely together on the legislation required. The Welfare Reform (Northern Ireland) Order, passed in December last year, has enabled the making of more than 30 sets of regulations, replicating in Northern Ireland welfare reforms from the 2012 Act.

The order before the House today is the next step in that process. It has been drafted with the full consent and collaboration of the Northern Ireland Executive to bring social security in Northern Ireland back to a position of parity, thereby helping to rebalance and strengthen the finances of the Executive.

Allow me to remind the House of why we have been reforming welfare in Great Britain and Northern Ireland since 2010. Our welfare reforms are focused on supporting people to find and keep work, with a focus on employment, fairness and affordability while supporting the vulnerable and making sure people on benefits face the same choices as those who are not on benefits and are in work. We believe that more people should have access to the dignity of a job and all the wider advantages that come with employment.

Over the past six years we have stuck to our economic plan, delivered welfare reform and seen great progress: employment is up by more than 2 million; there are more than 680,000 fewer workless households, a record low; there are 2.3 million more apprenticeships; and the number of people claiming the main out-of-work benefits has fallen by 1 million.

Helping people’s life chances is a central part of this Government’s plans. By raising tax thresholds, we are helping to take the poorest out of income tax. In Northern Ireland, this will mean that 110,000 of the lowest-paid will be taken out of tax altogether and 700,000 people will benefit from reduced taxes. It is projected that, with the new national living wage, 100,000 people in Northern Ireland will be taking home more money by 2020. The new rate of £7.20 will mean a £900 increase in the annual earnings of a full-time worker. The Government’s support to working people goes hand in hand with their welfare reform programme by encouraging people into work. Increases to the minimum wage and the national living wage and changes to income tax mean that people can take home more money.

We have also invested in Northern Ireland. The Stormont House and fresh start agreements include financial packages of £2.5 billion to support investment and reform. This includes £350 million of additional capital borrowing explicitly for economic development projects.

By working together, the Government and the Executive have achieved significant success from the economic pact, including bringing £60 million in additional finance to Northern Ireland businesses, providing additional borrowing for shared education projects and boosting green investment by £70 million.

Alongside strengthening our economy, welfare reform is helping people out of dependency and into work. In Northern Ireland, there have been improvements in the labour market, with 55,000 more people in employment since 2010. The Welfare Reform (Northern Ireland) Order 2015 introduced changes to social security, but there is still much more to be done: the most recent Northern Ireland unemployment rate, at 5.9%, is above the overall UK average rate of 4.9% and is the third-highest rate among the 12 UK regions; the long-term unemployment rate of 48.3% is markedly higher than the UK average of 27.6%; and 22% of working-age households in Northern Ireland are workless, compared to 15% in the UK.

[Lord Kirkwood of Kirkhope (LD)]

The Minister is right to point to the differences that apply in the different jurisdictions throughout the United Kingdom, but would he agree with me that the excellent work that Professor Eileen Evason did in identifying the mitigating factors has helped bring forward this set of proposals, with which I agree? After a four-year period, taking this together with what is happening in other parts of the United Kingdom such as Scotland, it should be possible for the DWP centrally to look at best practice and at whether some of these mitigating measures are having a beneficial effect that could be applied in other parts of the country.

[Lord Freud]

The DWP has embedded a “test and learn” approach, and really does look at things. Clearly, where you have different strategies in the different countries of the United Kingdom, one can look at what differential impact those policies have had. I am sure that the DWP will take the opportunity to assess that.

The Welfare Reform and Work Act built on the 2012 reforms. This order provides the legislative framework to replicate some of the most important aspects, with changes such as improving fairness in the welfare system by changing the benefit cap level. This order will bring the level of the benefit cap in Northern Ireland alongside that in Great Britain, ensuring parity, through changes such as providing new funding for additional support to help ESA and UC claimants with health conditions and disabilities into work, as well as reforming the ESA work-related activity component, so that the right support and the right incentives are in place for those capable of taking steps back to work. Then there are changes such as correcting the unsustainable rise in benefits compared to earnings by freezing most working-age benefits. Importantly, these changes will help to ensure that the budget of the Northern Ireland Executive is placed on a stable footing.

It was agreed in the fresh start agreement that the Executive could supplement benefits from within their own budget. The agreement allocated up to £585 million of the Executive’s block grant over four years to provide supplementary welfare payments in Northern Ireland, which would be reviewed in three years. Under the 2015 order, the Assembly has already passed some regulations for supplementary welfare payments relating to the 2012 reforms. The provisions of this order will give the Assembly the ability to design and pass further such regulations, including a cost-of-work allowance, and supplementary payments to those affected by the removal of the spare room subsidy. These time-limited payments follow the recommendations of the Evason report, which flowed from a commitment in the fresh start agreement.

This order is about delivering the fresh start agreement and returning Northern Ireland to a position of legislative parity and financial stability. It is about supporting hard work and creating the right incentives for people to find work and create a self-sufficient life, supported by but independent from the state. It is about making sure that spending on welfare is sustainable and fair to the taxpayer, while protecting the most vulnerable. Building an economy based on higher pay, lower taxes and lower welfare is right for the UK, and right for Northern Ireland. I beg to move.

[Lord McAvoy (Lab)]

My Lords, first I want to place on record our genuine appreciation of the steps taken by the Minister to inform the Official Opposition of each step as it was taken along the way in implementing the order. He went to great lengths—probably more lengths than was required, but it is always appreciated. The many details that he has given us about welfare reform today and in his letter to my noble friend Lady Sherlock do not entirely resonate with us, but we take the point of view that the overriding priority was and is the political situation in Northern Ireland, and therefore we will not stand in the way of the order.

The point has been made before by a number of people in discussing the legislation, and the whole Northern Ireland situation, that credit must be given to Members of Parliament on all sides of the House of Commons for agreeing to this statutory instrument. They could be open to accusations that they were supporting a better deal for Northern Ireland than their own people were getting. We could argue back and forth about that but, again, the overriding principle that we are pursuing is a duty of care to the whole of Northern Ireland to facilitate agreement and the political situation coming together.

On this 100th anniversary of the Battle of the Somme and other battles in the First World War, where many people from the island of Ireland from both the loyalist and nationalist communities paid with their lives to support their overall country, Britain and the United Kingdom, in the war against the Germans at that time, can we put a price on that? Many parts of the country suffered terrible losses, such as the north-east—I am not going to start naming them all because I will miss out one area that paid a terrible price in Europe fighting for freedom. We owe a duty of care to the people of the island of Ireland as well as Northern Ireland. One of my own family members, my grandmother’s brother, Joseph Martin of the Martin family of Irvinestown in County Fermanagh, is buried in the military graveyard in Arras in France. He fought with the Royal Inniskilling Fusiliers. I well remember the stories that my grandmother told me about her brother.

It has been a rocky and difficult road in Northern Ireland and there is still a long way to go. The solution offered in the fresh start programme and the negotiations were and are justified. It shows that the rest of the UK is anxious to maintain the state of peace in Northern Ireland. I know full well that I and the Labour Party may be criticised for not standing in the way of this order, but we take the bigger picture that the people of Northern Ireland deserve support in their struggles to come to a conclusion so that both communities in Northern Ireland can work better together.

Once again, I thank the Minister, the noble Lord, Lord Freud, for his terrific information and points of view put to us in various correspondence. I indicate that we will not in any way oppose the order.

[Lord Freud]

My Lords, perhaps I may say how much I appreciate what the noble Lord, Lord McAvoy, said. One thing he said that really gets to the heart of this is that the people of Northern Ireland deserve our support. That is felt across the Benches and around the Chamber; we all feel that. We have gone through an unusual procedure, but the fresh start agreement has taken Northern Ireland from a long impasse. I happen to have been deeply involved in the process right from the beginning, years ago, talking to all the different parties in Northern Ireland, and I know exactly how difficult it has been for them.

The statutory instrument has the support of the Northern Ireland Assembly. It does not diminish the devolution settlement. It supports the future financial and political stability of Northern Ireland. The response from the noble Lord, Lord McAvoy, and the mood of the Chamber indicates that we want to give that support to Northern Ireland. Therefore, without more ado, I commend the Motion.

Motion agreed.