Welfare Reform Bill
Lord Freud Excerpts(12 years, 4 months ago)
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Lord McKenzie of Luton
My Lords, this amendment, moved so ably by my noble friend Lady Donaghy, goes to the heart of fairness. It does not challenge the concept of a cap or indeed the level of the cap. As my noble friend clearly said, it does not undermine the stated aims of the Government for its introduction—whether we agree with them or not. We have heard that the industrial injuries scheme is a system of no-fault compensation. As the noble Lord, Lord Wigley, said, to qualify for the benefit, the claimant must have had a personal injury in an industrial accident or he must have a prescribed industrial disease. That must have arisen when the claimant was an employed earner. The amount of the benefit depends on the extent of disablement. An award is made for a period during which the claimant has suffered or may be expected to continue to suffer from the relevant loss of faculty.
On the rationale for the cap the Government alternate between reducing benefit expenditure and changing attitudes. The cost of the industrial benefits scheme, applicable to working-age claimants, as my noble friend said in moving the amendment, is below 0.5 per cent of DWP AME. As for encouraging the benefits of work, claimants would have had to have been in work in the first place to get the benefit. In a sense, they would have had to have been exposed to both the benefits and the risks of work. This raises broader questions about health and safety, but perhaps that is a topic for another day’s debate. The benefit would be payable to those able to return to or stay in work as well as to those whose loss of faculty prevents it. In essence, the Government are saying that the greater the suffering an individual endures from an accident doing what the Government want—being in work—the tighter the cap should bite. That does not have a ring of fairness.
In Committee, the Minister left the door slightly ajar and indicated the possibility of further consideration. It would be good to hear that the door remains open and that he will be able to make appropriate commitments today or at Third Reading.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, before I speak to the specific amendment, I would like to make some general points about the rationale for the household benefit cap. First, there is a principled point that households should not be able to receive more on benefits than the average working family in Great Britain earns in work. Secondly, people on benefits should face the same choices as working families, including about where they can afford to live. Thirdly, someone in work should always be better off than someone on benefits. The proposed cap of £500 a week is equivalent to an annual salary of £35,000 a year before tax. We have set the cap at the median earned income for working families after tax and national insurance. We think this is a reasonable representation of average household earnings.
I ask noble Lords to consider how well these principles are received by the public at large. They will have seen press reports of a YouGov survey that found that 76 per cent of the public are in favour of the benefits cap. The overwhelming majority of people think there should be a limit to the amount of benefit those out of work can receive. We have received many representations that we are pitching the level of the cap far too high. In fact, only 7 per cent of respondents in today’s YouGov survey think that the cap should be higher than £26,000. Another 9 per cent think there should be no cap, so of the people who answered the survey, 69 per cent thought that the cap as we have set it or below that amount is the right figure. Of those who expressed an opinion, the figure is above 80 per cent, or above four-fifths. The truth is that people do not understand why we pay claimants more money when they are out of work than they could reasonably expect to earn from working full time.
I accept that arguments can be made for special treatment for a whole range of groups and benefit payments. Indeed, many such arguments were eloquently expressed previously in Grand Committee, and this amendment moved by the noble Baroness, Lady Donaghy, is an example. However, we must be wary of such arguments clouding the bigger picture of the need to reform a complex benefits system, which is failing those people on benefit who want to work but, equally importantly, is placing a costly burden on the taxpayers in work who pay for it.
We have today published an updated impact assessment with more detailed and robust estimates for the numbers and characteristics of people who may be affected by the cap. The high-level figures are broadly in line with the figures in the previous assessment, but there are some important differences. In particular, we now estimate that in nearly 40 per cent of households the claimant will be subject to JSA conditionality. We also estimate that the proportion of social rented sector households is 44 per cent, which is substantially less than we thought previously. The new figures are derived from the administrative records held by the department on benefit recipients. Thus, they are much more robust than the previous survey-based estimates. They provide a much firmer basis than before for considering transitional measures. Crucially, the methodology here means that we know who is likely to be affected by the cap and can start working with them and local authorities to minimise the problems for individual households when the cap is introduced.
Amendment 58C would require us to disregard payments of industrial injuries disablement benefits when operating the benefit cap. The noble Baroness, Lady Donaghy, has argued that these payments are worthy of special consideration because they take the form of compensation payments in lieu of injury or disability caused at work. I recognise the nature in which these payments are made, but I am afraid that I do not believe that it should override the need for a limit to the amount of welfare payments households should receive. Disregarding payments of IIDB would serve only to undermine that fundamental principle and create a precedent for others to argue for such special treatment.
We have previously been asked to reconsider the position of IIDB recipients in light of the fact that we have announced that we will fully exempt from the cap recipients of disability living allowance, personal independence payment, attendance allowance and constant attendance allowance. I have to say that I do not find these groups analogous. DLA, PIP and equivalent benefits are paid to people to help with the extra costs arising from their disability. Their receipt provides an appropriate means of identifying those disabled people who should be exempted from the cap. Many people receiving industrial injuries benefits will be exempt because they get constant attendance allowance as part of their industrial injuries entitlement or DLA.
I take the point about vaccine damage payments raised by the noble Baroness, Lady Donaghy. These lump-sum payments will be taken into account as capital and not income in assessing means-tested benefits. In other words, vaccine damage payments are not comparable to weekly income payments through IIDB. But, as has been said in debate today, the basic IIDB payments are compensation payments and do not reflect whether the disability or illness necessarily brings extra financial costs. I cannot agree that there is any reason to provide an automatic exemption in these circumstances.
On the disincentive to work, any IIDB recipient in work who is entitled to working tax credit will be exempt from the cap, as will any households in receipt of working tax credit. The cap of course will not apply to pensioners. I therefore ask the noble Baroness to withdraw her amendment.
Baroness Donaghy
I thank the Minister for that reply. I was beginning to think that he had moved straight to the big picture and that my interval was not even going to be considered—that we were all off buying our popcorn and he had started the big picture. At least the last few minutes of his reply tackled the subject that I have raised. As I have said, this amendment is about signals and hard-working people who, through no fault of their own, have been injured at work and, with the support of unions and employers, have been given compensation. I do not suppose that that would have been easy to achieve or that the bureaucracy is particularly easy. Having achieved that compensation those people will now be told that it will not be exempt from the cap.
With all due respect, I think that the Minister is so concerned about undermining the principle of the big picture that these people are being victimised. I do not believe that any precedent whatever would be set as regards the debates that are going to take place later. They would probably be only too happy to go back to work, having spent their lives in work. If only the YouGov survey to which the Minister referred had asked a question about industrial injuries benefits, we might have got a clearer picture of what people really felt.
I am aware from a previous reply that there will be an opportunity to talk about regulations at some stage. In the circumstances, I shall withdraw the amendment, but we will come back to the issue when it comes to discussing regulations.
Lord German
My Lords, I start by making it clear that the concerns that have been expressed from these Benches are not around there being a cap. It is essential that there should be a cap; people find it manifestly unfair that claimants can receive in benefits more than the average working family gets in wages. The concerns expressed within the amendment are about two crucial issues: homelessness and housing; and the vulnerability of children. We are looking for discussion and reassurances from my noble friend the Minister on the issues raised by the cap. Our concern is about how those policies will be ameliorated—how to find a cap that fits.
I remind my noble friend the Minister that in Committee he said:
“The Government are looking at ways of easing the transition for families and providing assistance in hard cases. We recognise that there are households for which it would be inappropriate to restrict the amount of benefit that they can receive”.—[Official Report, 21/11/11; col. GC 346.]
The Government have already announced in another place and here that transition arrangements are to be made. This is the opportunity for my noble friend to express the Government’s views on those two crucial issues contained in the amendment. These details should emerge at this stage because it is appropriate that people know the Government’s direction of travel. It is not simply a question of us accepting that you need flexibility for the future. I understand that the Government’s regulations will follow from these debates, that there will be affirmative resolutions and that the House will have the opportunity to hear and vote on the detail. We need reassurances now in the broadest terms about the issues raised in the amendment.
I appreciate that by DWP standards—the noble Lord, Lord Fowler has said this already—the numbers captured by this policy are small. However, they are small only in respect of the DWP’s overall workload, not in terms of the 67,000 families or the 220,000 children who will be affected. We cannot put aside the fact that there is personal impact.
First, I turn to the issue of homelessness. I understand—we heard it this morning in a broadcast by the Secretary of State, and it has also been referred to in this debate—that the numbers of potential reported homeless households is based not on rooflessness but on the structure of how this is measured by the Department for Communities and Local Government. I wonder what reassurance my noble friend can give that we will not find families out on the street, that we will find homes for people and that they will be accommodated. If the numbers who are classed as homeless are those who are sharing rooms, which I heard from the Secretary of State, what methodologies and transition arrangements are being put in place? After all, if people are entitled to be classed as homeless by virtue of that definition, and are sharing a room, what is to prevent them presenting themselves to a local authority as homeless, thereby generating further cost to the public purse and creating no savings whatever? What transition arrangements will be put in place to ensure—what this House is asking for—that no one should be made roofless as a result of this policy. Any savings if they were to come by having to throw the balance to another department might be illusory. I am seeking reassurance from my noble friend the Minister. We want to hear the outline of the arrangements to be put in place to ensure that we do not sustain expenditure by simply passing costs from one department to another.
We are told that the department now has extensive information on the households that will be affected by the cap. I seek reassurance that there will always be a property available—not necessarily close to the same street in which the people have lived—for the people who will be displaced and that they will always have somewhere to live. Crucially, what help will be provided in the transitional period between now and April 2013 and perhaps, beyond, given the Minister’s comments in Committee. I also ask him to outline the processes to be put in place during this transition period and to provide the reassurances needed to demonstrate that rooflessness and overcrowding are not options that the Government are considering.
A second issue, which we will come back to in another debate, is that of children. This issue is mentioned in this amendment and has been raised before. It is indeed a powerful statement that children are not responsible for the decisions of their parents, but in workless households the worst disincentive is not to aspire to work. Those of us with experience representing the poorest areas—in my case, the poorest area—within our country know that it is a dreadful stigma which we place upon our young people. I wonder whether the Minister can provide some reassurance and tell us what arrangements he is making. What support will be given to the longer term aspirations towards work for our younger people? Alongside this is the impact of a parent becoming unemployed without suitable transition arrangements.
Perhaps all these issues need to be outlined in principle now, so that my noble friends on these Benches and noble colleagues around this Chamber can decide whether the Government are keen to ensure that the impacts are going to be ameliorated by this cap.
Lord Freud
My Lords, the noble Lord, Lord McKenzie, closed his remarks on Amendment 58D by saying that it is designed to prevent a slide into poverty, particularly for those who are young. The benefit cap is about changing psychology. It is about trying to get a change of circumstances in those families. Let me remind noble Lords—I know that they do not need any reminder—that the worst thing for youngsters is to be in a workless household. We need to change behaviours, and this benefit cap is designed to do that.
We need to move towards the cap in a highly organised way, and we will have a year to work with those families that are going to be affected. As my noble friend Lord Fowler pointed out, this affects around 1 per cent of the population that we deal with and we know exactly who they are. In the new impact assessments, we were working on the particular families. We can spend a year with those families making sure that they respond in advance to what the cap implies for them. It is a very simple answer for the bulk of them: we need to get you into work.
The Countess of Mar
My Lords, I gather that there are now more than 3 million people unemployed. Something like 72 people apply for every job in some areas. How are the Government going to get these people into work?
Lord Freud
My Lords, I will deal with that straightaway because it is a point that has been raised more generally. Two things are confused here. Levels of employment are, regrettably, too high. We as a Government regret that, and we are throwing enormous resources at ameliorating that position, but this is a different issue. This is about people and families who are, and have been, excluded from the workforce entirely. They have been inactive. We need to put in place arrangements to get them able to move back into the workforce. It may take a bit of time for them to get in, but that is a completely different order of issue from helping people who are unemployed and are waiting to get a job. We must not confuse snapshot numbers of vacancies available with flows. The problem is that the flow of people going into work is, on a monthly basis, slightly less than those who are moving out. That is the problem. However, there are still large numbers of people going into work every month and finding jobs. We just need to make sure that the excluded communities become part of that process. This is one of the ways to do it.
We need to make sure that that transition is organised. We need to put jobcentre staff and caseworkers on it to help those families. That is by far the most important thing we can do to make sure that this benefit cap has the effect that it needs to have. Clearly, we need assistance in hard cases, which we plan to have, but that is a second-order issue in terms of trying to work with families to get them back into work. In the Bill, we have all the powers that we need to get into the detailed design of the cap and to make sure that those circumstances are picked up and dealt with.
Let me pick up on the point made by the noble Lord, Lord Best, about benefit ghettos. The reality is that 67,000 families could not create a benefit ghetto in this country. That would be 1 per cent of working-age recipients. We are not talking about massive numbers on any standards.
Lord Ashdown of Norton-sub-Hamdon
I have listened to the Minister very carefully. I take it from his answer earlier on—he will forgive me for interrupting at this point; I just wanted to wait and see whether anything else was forthcoming—that the Government are not going to say anything more about transitional mechanisms at this stage. Is that correct? If it is, can he tell us when those details will be made available?
Lord Freud
My Lords, I was going to come on to what we were proposing with regard to temporary accommodation. That is currently out for consultation and is the particular area which this amendment looks at. We are going through the process and will come up with proposals in due course—I am not sure that I can measure the months too precisely. The general regulations will need to be in the April to May period. That is the time by which we are looking to get our arrangements for temporary accommodation sorted out so that those affected do not find themselves being double hit by going into very expensive temporary accommodation.
We are looking at the very high rental costs associated with temporary accommodation. We are looking at tackling those levels while ensuring that providers’ reasonable costs are met. Temporary accommodation rates, as your Lordships will know, are very often well above the market rate and the LHA rate due to the higher management costs. We are looking at stripping those management costs out of the temporary accommodation rates so that they do not impact within the cap. We have carried out an informal consultation with key stakeholders—local authorities, housing associations, government departments and some homelessness organisations—and their input will feed into the design of those temporary accommodation arrangements.
Perhaps I may pick up on one or two of the extra points that were made. The noble Lord, Lord Wigley, said that 200,000 people would have to move. I do not know where that figure comes from. The total number of households affected is only 67,000 and we do not expect that every household affected by the cap will need to move at all. We are aiming to get all these other options into shape.
Lord Lester of Herne Hill
I am sorry that the Minister thinks that this is a wrecking amendment. I thought that it was an amendment to make it easier to pass the Bill. Can he deal with the two issues raised on behalf of the Joint Committee on Human Rights as a means of alleviating the adverse impact on children?
Lord Freud
We have looked at the human rights issues, putting particular emphasis on households with children and making sure that the arrangements are effective. I shall speak later about payments for children being earmarked. The structure of the universal credit means that it is an overall payment and that there are not different segments going for different purposes. That will simply not be practicable in the universal credit world whereas it is practicable in today’s benefit world. I ask the noble Lord to withdraw his amendment.
Lord McKenzie of Luton
My Lords, I should like to thank everyone who has participated in this very extensive debate. Given the time, I will not seek to answer each of the points raised but I will try to touch on some of them. I start with the noble Lord, Lord Freud, who talked about a change in psychology. A lot was said about the universal credit in the debate. We have made clear our support for the universal credit given that it can help people into the labour market but it is very unclear what extra benefit derives from this cap. If such a benefit exists, can the Minister explain the psychology that 54 per cent of the people affected by it are going to be in London and only 3 per cent will be in Wales? What is it about the psychology of those in London and Wales that causes such disparity? Is it possibly something to do with the cost of accommodation and nothing to do with a change in psychology?
The noble Lord, Lord German, asked for an assurance that there would always be a property available for someone who was not able to stay in their current home. I do not believe we heard one. I do not know whether the noble and learned Baroness, Lady Butler-Sloss, or the noble Lord, Lord Ashdown, will be comforted by the transitional arrangements; I certainly was not. I thought they were weak and generalised and have not taken us forward at all. I would say to the noble Lord, Lord Empey, that of course changes in the benefit system are bound to give rise to circumstances where somebody loses out. But the question is not whether you can avoid that; the question is who is losing out, is it fair, and is the construct of the change fair? We challenge whether it is, particularly in relation to homelessness.
The noble Lords, Lord Newton and Lord Fowler, focused on the universal credit. I have made our position clear on that. I was going to ask whether there were any spare badges, but possibly not. Of course, public spending needs to be addressed. We have made our position very clear both on that and on the cap. We support the cap and its level but it must be dealt with in a fair manner. We are perfectly entitled to probe when it is not and to challenge and seek change to its application in relation to homelessness.
The noble Baroness, Lady Hussein-Ece, made a very powerful speech which differentiated between what actually happens on the ground and what affects people’s housing circumstances. The noble Lord, Lord Best, gave us the benefit of his huge experience to say what is happening in the housing market and what these changes can give rise to. The right reverend Prelate the Bishop of Ripon and Leeds reminded us that, quite apart from these changes, homelessness is on the increase. Let us be clear. We are dealing with all those housing benefit changes which we have debated previously. This amendment does not seek to challenge those; it seeks to challenge the consequences of the cap in relation to homelessness.
The points made by the noble Lord, Lord Hamilton, were very effectively addressed by the noble Lord, Lord Winston. The noble Lord, Lord Wigley, questioned how it helps the economy if people move to areas that are cheaper because there are no jobs. Part of the problem is that the Government look at only one side of the equation. They look at what they see as benefit savings forgone, not at the costs generated by the policies they seek to implement. That is the fundamental flaw on this aspect of the cap. I have detained your Lordships long enough. I wish to test the opinion of the House.
Lord Freud
My Lords, the right reverend Prelate the Bishop of Ripon and Leeds made the point that the job of a member of the church is to look after children in need, but one needs to ask the question about children in need at a slightly different level. For instance, if we leave families with rents that they could never afford in work, what does that do for the children? What does it do for the children in those families when there is no working role model in them? We know what happens to those children. What does it mean to leave them in workless families given the much higher level of poverty that we know exists in them? What does it mean for the generational worklessness that we see in those families? The question that, from a religious point of view, you need to come from is much wider—what is the best thing for those families?—rather than looking at it from a narrow financial basis.
Let me supply the figures because they were just slightly misquoted. We estimate that the savings generated by the cap will be £120 million in 2013-14 and £130 million in subsequent years. I think I heard £113 million. Putting those figures to one side for the moment, the reality is that the savings on this measure are not the core point. We are trying to change behaviours. If we do not cut the benefit bill by the amount we have in the estimate, that is a good thing because we will have got people into work and changed their behaviour.
This measure does something different: it cuts the number of families affected by the cap from 67,000 to about 40,000. That is the real cost of this amendment. It takes the pressure away from those 20,000 families that will go on in the same way that they have been going, and we will not have the behavioural change that we want and need from those families.
Lord McKenzie of Luton
The Minister is not dealing with the point. On the latest updated assessment, something like a quarter of the people who will be caught by this cap are on employment and support allowance. Depending on which category they are in, it requires people to move closer to the labour market, but does not require them to work. Why are the Government using this leverage on people in that group? Thirty-eight per cent of them are on income support, which is again a category of people who, for all the reasons we have debated, are not required to work. For people on JSA, you could see this might be an extra spur, but why does this measure cover those people who, under the Government’s assessment and on the basis on which they are going to construct universal credit, are not required to work?
Lord Freud
My Lords, on the figures in that new impact assessment, the majority of people have full or partial conditionality in ESA, given the proportions of ESA. Most people on ESA in the support group will, in practice, be on DLA and therefore will not be affected by this cap, so we can look at the majority looking for work. Even if there is no formal conditionality, the message to families is that work is a solution in this circumstance. I need to remind the House that the coalition Government firmly believe that there has to be a limit on the overall level of benefit it is appropriate for the state to provide for those who are not working. Let me be absolutely clear about the structure because this is a point raised by several noble Lords. The noble Baroness, Lady Corston, made the point most emphatically. The structure of this does not take money out of the carer’s pocket because we are not stopping payments of child benefits. Those families will still continue to obtain their child benefit, and there is an offset in the other benefits to get the cap to work. It will not work through child benefit. I know all money is fungible and households will operate within the same overall money, but there is no need for this concern that the money is taken away from the carer directly.
Baroness Farrington of Ribbleton
My Lords, will the Minister just give a categorical assurance to the House that those affected by this government proposal, who the Government assess as not able to work at that time, will keep their child benefit? Then we can all go home.
Lord Freud
My Lords, I am obviously not going to make that commitment because that is not how this cap is structured. It is based on the premise that payment at unrestricted rates ultimately serves nobody. It does not serve those who are paying the taxes to fund it, and it does not help those who are trapped in dependence by providing little or no incentive to move off the benefit.
Let me answer a point about how it works that was raised by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie. They asked why we need it when we have universal credit. Universal credit is designed to provide an incentive to get people back into work or to reduce the disincentive. The cap does two things. While UC is the carrot, the cap is the stick, but it also provides the message to people much more widely than the families that are affected that a life dependent on benefits is not the way to go. There are other solutions, work being the main one.
It is vital that the benefits system is seen to be fair. We do not believe that households getting out-of-work benefits should receive a greater income from benefits than the average weekly net wage for working households. That is why the cap is set at £26,000 a year net or £35,000 a year gross. Even there, significant amounts of financial assistance will be available from the state.
Like other welfare benefits, child benefit is provided by the state and funded by taxpayers. Therefore, we believe it is right that it is taken into account along with other state benefits when applying the cap. The effect of excluding child benefit would simply be that families on benefit would have an income higher than average earnings. There would be no upper limit to the amount of benefit a household could receive. Clearly, that would depend on the number of children. My noble friend Lord Newton hit on the head the point of why one would want to tell people that that is not a solution to a life on dependency.
We are trying to achieve a simple rule for the level of the cap and a simple set of exemptions. We have already recognised that there are some households for whom it would not be appropriate to restrict the amount of benefit that they can receive; that is, households in receipt of DLA, constant attendance allowance and PIP when it is introduced. We will also exempt war widows and widowers. These households do not need an exemption for child benefit as well.
For other households, work should be the way out of the cap. We have said that we will exempt households entitled to working tax credit and that there will be a similar exemption for working households on universal credit. This will encourage people who could be capped to seek work, reinforcing the improved incentives that will come with universal credit. Excluding child benefit will only dilute our aim that being in work, even part time, must always pay better than relying on benefits alone.
I want to pick up the important issue of kinship carers raised by the noble and learned Baroness, Lady Butler-Sloss. In Committee, I made clear that I am looking at kinship carers in the round. In practice, the numbers affected are pretty small. In dealing with those issues, clearly, we need to get it right in regulations. The most effective point made by kinship carers, at least where I am concerned, is that when you take on a child or children, there is quite a period—a year is suggested—during which a big adjustment factor goes on because many children being taken on are quite troubled by the time they are transferred. I am very conscious of that issue, which needs addressing generally. That is what we propose to do.
When we introduce the cap we intend to use a method which looks at median earned income after tax and national insurance for all working families. We believe that this will strike the right balance between providing support for families, promoting fairness between those out of work on benefits and those in work, and ensuring clear financial incentives to work. In summary, I repeat the fact that this is the kind of figure that the general public see as appropriate.
Lord Freud
My Lords, the effects of Amendments 59A and 61A would be to reduce the level of universal credit awarded in respect of children in larger families who would be subject to the benefit cap. Under this amendment, families who would not be subject to the cap would be able to receive the full amount of the child element of universal credit for their third child and any subsequent children. We recognise that families with more children do require more support and we believe that it is right that this is recognised in universal credit. However, as I have said, we also believe that there should be a limit to the overall amount of financial support that households on out-of-work benefits can expect to receive in welfare payments. That is why we intend introducing the benefit cap. We believe that this is the most appropriate way to address this issue as in future people will have to understand that there is a limit to the amount of benefit the state can afford to pay them.
I move now to Amendments 61ZB, 61ZC and 61ZD. These would require us to replace the national cap based on median earned income earnings with regional caps based on the local average weekly costs of private rented accommodation, the local average weekly cost of childcare and the local average weekly earnings. Given that we will not take childcare payments into account, this part of the amendment is obviously unnecessary. More generally, while the Chancellor may be asking the independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets, we do not have a regionalised benefits system and it would not make sense to regionalise the cap without that. In addition, the approach suggested by the noble Baroness would be extremely expensive to administer, add considerable complexity to the benefits system and would be a recipe for confusion for claimants and staff.
On my noble friend Lady Tyler’s point that the cap disadvantages people living in London, given that many working age households with adults in work cannot afford to live in central London—or, indeed, central-ish London—it is not right for the taxpayer to subsidise households on out-of-work benefits who do so. In answer to the point raised by both my noble friend Lady Tyler and the noble Baroness, Lady Howe, on whether I would see London Councils, I would be happy to see London Councils if it asks to see me—if it wants to see me—although it would probably be best to meet in the context of discussing the regulations that will implement this measure.
Both these sets of amendments are about how we set the maximum amount available to people. We believe our approach is fair and simple. When we introduce the cap, we intend to use a method that, by looking at median earned income after tax and national insurance for all working families, will strike the right balance between providing support for families—promoting fairness between those out of work on benefits and those in work—and ensuring clear financial incentives to work.
Before I ask the noble Baroness to withdraw her amendment, I would like to make it clear that the Government see Amendment 61A as directly consequential on Amendment 59A and Amendments 61ZC and 61ZD as directly consequential on Amendment 61ZB. So, if we divide on Amendment 59A, a further Division would be required should the noble Baroness wish to press Amendments 61ZB, 61ZC or 61ZD to a vote. I ask the noble Baroness to withdraw her amendment.
Baroness Flather
My Lords, I will just say a few words about what has been said about my amendment. I was very surprised to hear the noble Lord, Lord McKenzie of Luton, say that the Pakistanis, Bangladeshis and Indians all have the same aspirations. I am sorry to say that I do not agree with that. I am afraid the aspirations of Indians are very high, but the aspirations of Bangladeshis and Pakistanis do not come up to the same level, as they do not have as much interest in education as in Indian communities. The Indian communities are mostly in work—more in work than any other community except for the Poles. A survey by Channel 4 said that the highest number of taxpayers of the immigrant communities were the Indians and the Poles. I would like there to be a little more consideration of the fact that Pakistani and Bangladeshi communities in Tower Hamlets, in Yorkshire and in Lancashire are not doing well. Whatever way could be found to help them to do well would be a good thing.
Welfare Reform Bill
Lord Freud Excerpts(12 years, 4 months ago)
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Lord McKenzie of Luton
My Lords, Amendment 60A seeks to protect carers from the impact of the benefit cap in cases in which they are not living with the person for whom they care. On the last day on which we debated the Bill, the Minister told us of the value that the Government place on carers and their work. However, the Bill is drafted in such a way that this work will be valued only when the carer lives with the person for whom they care and thus excluded from the benefit cap by virtue of that person’s eligibility for DLA or PIP. Carers who are not part of the DLA claimant’s household, as we have heard, will be subject to the benefit cap. They are therefore likely to lose their carer’s allowance, suggesting that the Government place no value on their care.
As we have heard, the latest impact assessment estimates that 5,000 carers will be affected by the cap—that is the number provided by my noble friend Lady Lister—and yet not only does such care save the taxpayer thousands of pounds but the carer will be almost unable to work—or at least full time—by virtue of their caring. So they may face the choice of ending their care role in order to live. This is not theoretical. One in six carers has made the difficult decision to give up work to care, leading to an average loss of £11,000 a year. Many such families struggle to make ends meet as they cope with both a drop in income and the increased costs of caring—for example, through buying extra support and equipment and travelling to hospital and doctors’ appointments.
The impact of the cap will be to make this struggle significantly more difficult. Carers affected could lose £87 a week. Indeed, it may mean that some carers are faced with a tough choice between giving up caring—imposing significant costs on health and social care services—or taking a significant financial hit.
The Secretary of State for Work and Pensions told the BBC on Friday that people were “not suffering” as a result of his welfare reforms. Perhaps he would like to reconsider whether carers are likely to suffer if the amendment is not passed.
The Secretary of State might also consider the case of some of our service personnel. War widows are excluded—quite rightly—from the benefit cap, but should a mother helping to look after her son, injured in Kabul or Iraq, and claiming carer’s allowance for this, still be subject to the cap? Is that fair? I look forward to the Minister’s response.
Amendment 61, which relates to temporary accommodation, was to a degree dealt with in the first amendment we discussed today. It was a component of that broader amendment. We certainly support the amendment. I took it from what the Minister said in response to that general debate that something was afoot to address this issue but, without having had the chance to read Hansard yet, it was not totally clear what. Perhaps he will take the opportunity of saying it again, expanding, promising to write or whichever of those options he feels appropriate. It sounded as though there was a recognition of the need to address the issue that has been raised by the amendment. I certainly support the fact that there should be a move to address this and I look forward to receiving further information.
We very much support Amendment 60 and a period of grace. We would have been happy to support 52 weeks, but if 26 weeks is what the noble Lord, Lord Best, is pressing for, we would certainly support that should he wish to press the matter.
I say to the noble Lord, Lord Stoneham, that there are two things here. There are issues around transition. I see that the Lib Dem Benches are placing great faith in what might flow from transition and the offers that might come. However, I think that is different from an ongoing period of grace. The purpose of this, as the noble Lord, Lord Best, and my noble friend Lady Drake have enunciated, is to help people who fall out of work and to allow them a period of adjustment or a period of grace before the cap hits. There might be a transitional component to that, but this needs to be something of a permanent feature of the arrangements to make sense.
I suppose that six months corresponds with the contributory JSA period. My noble friend Lady Drake may be more up to date than I am on the data. It used to be 50 per cent back in work in three months and 75 per cent in six months. The data may have moved on. Certainly, given the unemployment figures that are around, I think even the longer period suggested by my noble friend must be somewhat difficult. The arguments in favour of a period of grace seem to be overwhelming. For someone to have to cope with all the traumas of losing their job and at the same time have to face changes in accommodation and moving to a new area, which could be a direct consequence of the cap, would be unforgivable. I hope that the Minister can say something positive on that as well.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, Amendment 60 would require us to provide for a period of 26 weeks during which we could not apply the benefit cap. The period would start from the date that a claimant’s welfare benefits first exceeded the level of the cap. It would therefore not only apply to new claimants, but also to existing claimants who have a change of circumstance that results in the level of the benefits that they receive exceeding that of the cap. We have said all along that we would look at ways of easing the transition for families. We do not want families to be taken by surprise by the cap or to create problems that people can avoid by taking appropriate steps. We want to ensure that people who might be affected by the cap know what to expect and can consider the options open to them.
There has been a lot of speculation in the press about whether a grace period is what the Government have in mind. Clearly, a grace period could be a way of easing transitions, especially for people who have recently been in work and can be expected to return to work within a short period. A grace period would mean that their benefit entitlement would not be affected when they first leave work. This would avoid the risk that they would be prevented from looking for work because of the need to adjust their circumstances because of the cap. That point has been made in the debate.
However, people who have recently enjoyed a high income are better able to deal with temporary shortfall and can and should be expected to have made their own provision if they know that there are limits on benefit entitlement. A grace period also carries the risk that people are likely to stay on benefits for longer than they would otherwise simply because a higher rate of benefit is temporarily available to them, so while the grace period approach is clearly one possible approach, it needs careful consideration. Issues with run-ons and things like that would need to be looked at very carefully. We also need to consider whether other approaches may be just as effective or indeed more effective for some groups. What I can say today, as I said in Grand Committee, is that we are well aware of the issues, we are confident that we have the powers we need to ease transitions and we will consider the case for a grace period along with the other options that might be available.
Amendment 60A seeks to exclude carers from the benefit cap. For carers the benefit system is designed to provide financial support where caring responsibilities prevent carers working full time and, as such, carer’s allowance should be treated in the same way for the purposes of the cap alongside other income maintenance benefits. However, households which include a member who is in receipt of DLA, PIP on its introduction, attendance allowance or constant attendance allowance, will be exempt from the impact of the benefits cap. Households where a member receives carer’s allowance but no members receive DLA, attendance allowance or constant attendance allowance, will not be so exempt. As the noble Baroness, Lady Lister, who is a fast reader, pointed out, the revised impact assessment states that 5,000 claimants fall into this group. One of the reasons that the number is rather less than one might have expected—or that I suspect the noble Baroness, Lady Hollins, expected—is because we are looking at two benefit units, so the disabled person retains all their disability benefits and the rest of the benefits are received by the other householder. That is one of the reasons why the figures net down to rather a small number.
Baroness Hollis of Heigham
Can I ask the Minister whether “before too long” would be before Third Reading? We have had lots of debates in Committee on the words “too long”, “too soon”, “soon”, and “very soon”. Could the Minister help us? What sort of timescale does he have in mind on that?
Lord Freud
No, that will be beyond the Bill becoming an Act, so we are looking at how we do this in regulations.
Baroness Hollis of Heigham
Given that we are expecting a localism Bill next year—I guess—would it be incorporated in that, so the House would have a chance to amend? The trouble with regulations is that you cannot amend, whereas with primary legislation you can.
Lord Freud
My Lords, we are going to spend a lot of time on getting this right. It is not something we want frozen in primary legislation. In fact, it would be very uncomfortable to freeze these items in primary legislation. Regulation is the right place to do these things. We have a consultation paper out on how we may move forward with temporary accommodation. There are some very obvious solutions within that—I touched on them earlier this evening—comprising separating out service charges and housing costs rather than bundling them up; that is where the temporary accommodation becomes so expensive. We need to get a solution to this so that we do not have a ludicrous go-round of people moving into expensive temporary accommodation which they can no longer pay for because of the cap. We are absolutely aware of this and have measures in train to get a solution in the round to that issue. However, it is not a simple set of issues.
Lord Greaves
On the same point, the Localism Act 2011, which we recently passed, means that in many cases local authorities will carry out their duty to find accommodation for homeless families by putting them into privately rented accommodation, where they will have to pay the rent. How will that tie in with a benefit cap that might apply to the accommodation, to which the local authority directs them in order to fulfil its homelessness duty? Will the local authority be under some obligation to top up the rent, or something like that?
Lord Freud
My Lords, one can very easily see circumstances in which a local authority considers that to be a very sensible use of the discretionary housing payments. That is one reason why we have ramped up that amount. I am not saying that it will be every time, but that might be a solution. We are looking to redesign the process of finding temporary accommodation, which is the immediate problem that local authorities are faced with, so that we do not get caught in some Catch-22, which would obviously not be smart at all. That is where we are with that; we are very conscious of those issues and very comfortable that we have the legislative powers to develop effective solutions.
I pick up the important point from my noble friend Lady Thomas on the DLA and how the cap interacts with it. The DLA is there for those in receipt of DLA. That is how we have worded the illustrative regulations. A person whose DLA award is pending and who is serving what is now, and will remain, a three-month qualifying period, would not be covered by the exemption. That is the point in the question raised by my noble friend. It shows why this issue and other similar issues need to be dealt with in secondary legislation, so that we do not have the inflexibility that we would have if it was in primary legislation.
We are conscious of the concerns around the introduction of the cap. I can assure noble Lords that we are listening. We have said all along that we will introduce measures to ease the transition for families and provide assistance in hard cases. We are still considering our plans, and it is essential that we get them right. The clause has been drafted so that we have all the powers that we need to ensure through regulations that we provide the appropriate protections. I hope that that gives the noble Lord, Lord Best, a measure of reassurance.
Before I ask the noble Lord to withdraw the amendment, I would like to make it clear that the Government do not consider Amendments 60A and 61 to be directly consequential on Amendment 60. Further Divisions would be required should noble Lords wish to push those other two amendments in the group to a vote. I apologise for spelling that out, but we had a small frisson the other week. I ask the noble Lord to withdraw the amendment.
Lord Best
My Lords, I am sure talk of further Divisions will be unnecessary at this late hour. I am very grateful to many noble Lords, including the noble Baroness, Lady Drake, for supporting my amendment on the 26-week period of grace. She made the point that we cannot possibly require behavioural change from people who are already desperately seeking work, which is what we want them to do. I was also grateful for the support of the noble Lord, Lord Stoneham of Droxford, in backing this amendment. People with no history of benefit dependency should surely be given a period of grace to find work.
The noble Lord, Lord McKenzie of Luton, made the point that perhaps 52 weeks would be better than 26 as a period to allow people to get back into work, especially given the statistics we heard—that 50 per cent of people who go on to jobseeker’s allowance find a job within six months, but if we want to get 90 per cent back into work it may take a year in the current job market.
This remains a very important ingredient in the use of the cap. The Minister has promised that finding a solution is a priority and that a period of grace to ease the transition is one way of handling this, but there may be an even cleverer way. The Minister says that the issue still needs to be looked at very carefully but is confident that a way will be found. I must take this on trust, but with the expectation that there will indeed be measures that handle this transition and satisfy the House when the regulations, although those cannot be amended, are brought before us.
I am also grateful for noble Lords’ support on the amendment to make sure that temporary accommodation does not become a Catch-22 situation whereby homeless people are sent somewhere by the council, only to find when they get there that they are not able to pay the rent because the benefit cap has kicked in. That would be a calamity for them. I was grateful to the noble Baroness, Lady Hollis of Heigham, for weighing in on that one and to the noble Lord, Lord McKenzie, for asking for further clarification.
The Minister explained that we need to find a way, and he is confident we shall find one, of handling this exemption or exclusion, or in some way treating temporary accommodation differently and in a satisfactory way. I trust him to be as good as his word and I have pleasure in withdrawing these amendments.
Lord Freud
My Lords, I ought to pick up the initial remark by the noble Baroness, Lady Hayter, that this amendment was to protect another unappreciated group. I emphasise that, from my perspective, this is a most appreciated group. This is an amendment that I listened to with great interest.
It would require us to exempt all family and friends carers from the benefit cap where they have assumed care for a child in the circumstances set out in Amendment 60B. There are two main groups: those formally approved as a foster carer and those providing care on a more informal basis. As noble Lords will remember, in Grand Committee I discussed and recognised the valuable role that kinship carers fulfil. I have had some very useful and valuable meetings with organisations that represent kinship carers to try to get a handle on their priorities. As I said earlier, one of the main issues they are concerned about is that crucial initial period when a child joins a household. In many cases the carer needs to take time off to help the child settle into their new circumstances.
Lord Freud
My Lords, as always, I am incredibly grateful to the noble Baroness for her suggestion. I am thinking of offering her a job. However, let us not redesign the benefits system on the Floor of the House, although we have gone into it on many occasions. Let me ask the noble Baroness, Lady Drake, to withdraw her amendment.
Baroness Drake
My Lords, I thank noble Lords for their support and the noble Baroness, Lady Tyler, who also argued the case for family and friends carers in Committee. I accept that the noble Lord has shown a commitment to looking at the needs of this group and I think the charities would accept that.
My anxiety and that of the charities that articulate the interests of family and friends carers is that the Bill is going through the House without one having achieved clarity over the kind of protection that this community will get under the legislation. The Minister said that this community would be supported in the most appropriate way, and that it was necessary to get it right in regulation. It would be helpful if he confirmed that there will be regulatory provision to protect this group, notwithstanding what the precise solution may be, rather than leave the protection to discretion. It would be helpful if the regulatory route was being taken. I thank my noble friend Lady Hollis, as ever, for coming up with an excellent suggestion.
Lord Freud
Perhaps I may answer that straight on. I hope I made myself clear that when we get the regulations on handling the transitions and the options around it that we discussed earlier, we do it in a way that looks after this group. I am not committing here to specific exemptions for this group, but I am saying that we are looking at how to do it so that we meet its requirements, of which I am very conscious.
Baroness Drake
I thank the noble Lord for that response. In the earlier stages of the debate on this community, my particular concern was that the protection necessary for it is not dealt with solely as a matter of discretion and that there is clear guidance—whether or not as a consequence of dealing with the matter as part of a wider resolution—that it is not left solely to the individual discretion of advisers. I take the response of the Minister as meaning that it will not be left in that way. He is nodding.
Lord Freud
Hansard needs more than a nod. Without elaborating on a lot of transitional arrangements, I am not quite sure how this will work. I am not sure that I can give absolute assurance either way, although I would lean towards setting these things out formally without discretion; but I am not in a position to give any kind of assurance either way. There might be elements of discretion in any set of protections that we develop.
Baroness Drake
Obviously it would have been preferable if the Minister had said unequivocally that this matter will not be left to local discretion, but it is clear that I am not going to get that reassurance. However, the noble Lord has said quite a lot on record that he is committed to trying to resolve the needs of this particular group. Perhaps I may borrow a phrase from the noble Lord, Lord Newton, in a previous debate: I will hold the Minister’s feet to the fire on this issue. On that basis, I agree to withdraw the amendment.
Baroness Hayter of Kentish Town
My Lords, I am looking forward to the Minister’s reply, otherwise we will worry about the sleeping patterns of the noble Lord. These amendments, as has been clearly set out, seek to mitigate the risk of paying the entirety of universal credit to one person and, in particular, to provide protection for women who are more likely to be the main carer in a couple and less likely to have the power in the relationship to determine how money is managed.
The Government’s proposals suggest that universal credit payments would not, other than exceptionally, be split between a couple. Instead, they would be paid, as we have heard, entirely into one bank account. The DWP briefing note states that,
“the Government wishes to place responsibility for household budgeting with the household. It is not Government’s role to dictate how a household spends their money”.
However, these amendments are not about how households spend their money but how they receive it. They are about allowing households to decide to whom the money should be paid. This principle is long established in social security policy. Households receiving child benefit can nominate a main carer and those receiving working tax credit can receive child tax credit in the bank account of the main carer and working tax credit in the bank account of the other partner.
Concerns about the shift in policy from this have been voiced by a wide range of organisations, all of which have presented strong arguments in favour of ensuring that the part of universal credit intended for children is paid to the person who has the main care of them. As has already been spelt out, we know that benefits labelled as intended for children are more likely to be used for that purpose. This amendment would enable the Government to identify the parts of the credit intended to help with the costs of children.
Research for HMRC shows that child tax credit is commonly identified as money for children and more often spent accordingly. Again, as has been said, we know that money within the household is frequently unequally distributed, particularly in low-income families. An Oxfam study of black and minority ethnic women in low-income couples revealed cases where,
“women had so little access to money that their husbands were effectively in control of key aspects of their lives”.
Benefits for children are sometimes the sole source of independent income for vulnerable women.
As the Women’s Budget Group points out,
“putting benefits together is key to the design of UC; paying it into one account is not”.
There can already be exceptions. Sometimes, for example, there will be rent for certain categories of recipients. Support for mortgage interest may be paid to lenders and, as the Women’s Budget Group states,
“a sanctioned claimant could lose their UC, and the remainder … paid to their partner”.
The DWP briefing acknowledges:
“There may, however, be exceptional cases that require alternative arrangements: to ensure safeguards. The Government intends to retain powers to split payments between members of a couple in joint claim cases”.
I think that the noble Lord, Lord Kirkwood, will be able to sleep easy in his bed because it seems clear to me that the technology will exist to enable the Minister, if he so desires, to accept either or both of these amendments; that is, either paying the child elements of universal credit to the main carer or, in line with the Government’s assertion that they wish to enable choice, allowing families to choose to split their payments.
Resistance to these amendments would suggest that administrative simplicity is seen as more important than either ensuring that women have an independent income or encouraging money which is intended for children to reach them. I hope that the Minister will feel able to accept the argument for these changes.
Lord Freud
My Lords, under universal credit, couples will make a joint claim for benefit payment. We have been clear that claimants will receive universal credit as a single payment, which will ensure that claimants can clearly see the effect of their decisions about work on total household income. The House debated this issue extensively in Committee. We also discussed direct monthly payments in another context when the House accepted the principle of a single payment. Couples will be able to choose which bank account the total universal credit award should go into. Once universal credit has been paid into that account, claimants will have the freedom to manage their money how they wish. They will have the opportunity to transfer some of that money into another account, or they may choose to have the universal credit paid into a joint account in the first place.
Giving people these choices to manage their money is in line with evidence that suggests that, in today’s world, the majority of couples pool their resources—
Baroness Meacher
I apologise for interrupting the Minister. How does he feel that that will work if the partner into whose bank account the money is paid is an alcoholic and likes to spend most of the money, on a Friday or whenever it is, on alcohol, or a gambler, or somebody with mental health problems who is controlling and dominant and therefore gets the money paid into their account?
Lord Freud
I was going to say that 7 per cent of cohabiting couples and 2 per cent of married couples manage their finances completely. However, we recognise that there are cases—the noble Baroness mentioned some of them—which will require alternative arrangements. The Government intend to retain powers to split payments to couples as a safeguard. We are looking at the precise circumstances of where and how that split will be made and we will produce further detail as we develop the regulations. The obvious example, as the noble Baroness has said, is where there is proven abuse of the money by one partner or where children are considered to be at risk. But there will be other circumstances as well. That general point is accepted. Where an intervention by the state is required, we will make it to ensure that money goes to the right people or is split in the right way.
However, in circumstances where a universal credit award is split, neither party will receive specific elements such as that for child care. They will receive a proportion of the total award and be responsible for their own budgeting. Therefore, in practice, the amendment tabled by the noble Baroness, Lady Lister, Amendment 61C, is much closer to how we will manage such situations.
Universal credit is replacing a benefits system which in practice undermines personal responsibility by separating a person’s income into different streams for different circumstances. This does not reflect the world of work or encourage financial responsibility. We must trust that people know what is best for them and for their families, with the exception of those individuals and families who cannot handle that responsibility. In respect of those who can, it is not for government to dictate how a family manages its money. However, we are committed to ensuring that people can access support to manage their payments and help them budget effectively.
We are looking at a wide range of support. As noble Lords may remember, I think that one of the most exciting opportunities offered by universal credit is to enlarge the scope for financial inclusion which has been so lacking for many benefit recipients. We are looking at access to nationally available advice and guidance and at locally delivered, targeted support. We are talking to local authorities, housing associations and other stakeholders about how best to deliver this support. We are talking to the financial services sector about widening access to basic, including joint, bank accounts and developing improved budgeting accounts to help benefit recipients manage their money. We are looking to create valuable support mechanisms for a part of our community that simply has not had them. My aim is to have some quite specific new products that slot right under universal credit and give families much more flexibility to manage their money. I look forward to sharing more detailed proposals with your Lordships in due course.
With regard to my noble friend’s sleeping patterns, I think I can allow him to sleep at night. If we find that we need to make more splits than anticipated, the computer system will allow us to do that. We are designing that in. If he is right and I am wrong we will be able to make those changes, albeit more in the pattern of Amendment 61C than Amendment 61B. I can also assure him of a commitment to conduct intensive research on how universal credit works. We will make sure that what we are doing optimises the position for families. I hope with that second commitment my noble friend will not only sleep but sleep like a baby. With these explanations, I urge the noble Baroness to withdraw the amendment.
Baroness Meacher
I thank those who have contributed to this debate and thank the Minister for his reply. I am interested in his suggestion that we are dealing here with normal families who are perfectly capable and reasonable about the allocation of their money. When I ran the Child Poverty Action Group campaign for the introduction of child benefit 40 years ago, I received 2,000 letters, most of them from normal families. The letters were from the wives of all sorts of people—vicars, doctors and members of the Army—whom I would have considered very normal. However, they wrote to say that they depended on family allowance, which was only some ridiculous amount like 90p for the first child, and would often have to survive on it for a week because their doctor husband or their vicar husband gave them nothing, having drank their money away or whatever else they were doing with it. There are too many “normal families” that one might see walking up and down the street who do not treat their other half in a normal and acceptable way, so I am very relieved to hear from the Minister that there will be a computer system that will enable more splits and more complexity and sensitivity in this system. I am absolutely sure that it will be necessary, not only for a handful but for vast numbers of people across this country.
I am also relieved that the Minister will look closely at not only how universal credit in general will work but how it will work in this particular regard. I think I understood him to say that, and I very much hope he will pay great attention to this issue. I am absolutely certain it is terribly important for an awful lot of families. After my experience of 40 years ago—and I do not think human nature changes in 40 years—I really believe that is the case. I very much respect his new products and I think they will be splendid, but they will not deal with the sort of issue we are throwing up in this debate. I am sad to withdraw this amendment, but I am pleased to have had some assurances that this issue will not be lost.
Lord Freud
My Lords, it is a shame that the noble Lord is not here to move the amendment. I thank the noble Baroness, Lady Meacher, for moving it so ably. The noble Lord, Lord Ramsbotham, was pretty surprised and somewhat impressed as he heard the developments that we are making in this area. He has been a long-term campaigner in this area. I think he was worried about the bits that we had not yet caught. I was not able to have a meeting with him on this matter, but he met with my officials, as did his colleagues from Unlock, and we were able to provide a lot of reassurance about positive intent to keep going in this area. There are some differences, which is the reason why we cannot support the entirety of this new clause. That is not because we are in any way against helping in the rehabilitation of prisoners and other detainees but because we are moving along with our own programme. We think that that will prove more beneficial in the long run than introducing this structure, which we think would be expensive and resource, intensive in prison assessments.
Lord Kirkwood of Kirkhope
Perhaps I could concur with the point made by the noble Lord, Lord McKenzie. I support these amendments. As I said in Grand Committee, the key thing—I am a non-executive director of the Wise Group and we run one of these projects very successfully—is that the people who do the work are ex-cons themselves. My suggestion is that more Jobcentre Plus staff should be recruited from ex-convicts in future so that these programmes can be run positively. That is a facetious way of putting it, but this is a serious point.
Lord Freud
My Lords, it is a real point because we know that virtually all addiction treatment centres are manned by people who have gone through the experience of addiction. That is one of the reasons why they are able to help people. There is probably a very similar argument for convicts. Given the way in which we have incentivised the work programme, I would expect that that fairly basic knowledge will be picked up. I am in no position to instruct any work programme to do anything, but I hope that the way in which this has been structured financially will drive that logic.
Baroness Meacher
The Minister was talking about being unable to accept this amendment in full and referred to alternative arrangements. The whole point of this amendment tabled by my noble friend was to have clarity on the Floor of the House about acceptance of it. As I understand it, it seeks to ensure that the processing of claims goes on while prisoners are in custody so that when they come out the benefits can be paid very quickly. The idea is to avoid such people running straight off to recommit crimes. There is tremendous power behind this—logic, sense, cost-saving and so on—in terms of criminal justice costs. Perhaps the Minister could spell out what in the amendment the Government cannot accept and what the Government would put in instead. That would be very helpful.
Lord Freud
Last week, I think, we had a regulation on this. Time does not fly for the noble Lord, Lord McKenzie, as he thought it was weeks ago. We have already announced that we are processing all JSA claimants in prison. It is hard to process everything. Clearly, housing cost is one element that is not there. I know the noble Lord is concerned about what we do with ESA claimants. The issue becomes real because as we move from universal credit, it is not just a question of not having JSA claimants but having universal credit claimants; we also have to look at how we will do that. We have to do that anyway. However, at the moment we have done JSA claimants and we have the issue of housing. We have support at the prison gate. When we discussed it in Committee, the noble Lord seemed almost shocked that we were doing that. We are moving very fast now. For the record, we will continue to work with the Prison Service, the Ministry of Justice and the other agencies to ensure that prisoners have all the necessary information about claiming benefits on release, and that benefit payments are made as quickly as possible on release. With these assurances, I urge the noble Baroness to withdraw this amendment.
Baroness Meacher
I would like to thank the noble Lord, Lord Kirkwood, but also the Minister for that very helpful reply. It seems that the Government are doing everything they can to resolve what has been a ridiculous situation of prisoners coming out of prison and having virtually nothing to live on for some time. With that, I am happy to withdraw the amendment.
Lord McKenzie of Luton
My Lords, for the sake of brevity, I can say that I also concur with my noble friend and with the noble Lord, Lord Kirkwood. My noble friend is simply seeking to have the issue on the record.
Lord Freud
My Lords, I shall speak to Amendments 62ZA and 62B. I could almost do so like my noble friend Lord Kirkwood, but I will speak at slightly greater length.
I would like to assure noble Lords that we are in agreement on the need to ensure that a claimant’s childcare responsibilities are taken into account when setting work-related requirements and when determining whether a claimant has good reason for failing to meet a requirement. For the record, let me set out how we intend to do this.
The legislation will provide clear safeguards. When a child is under one, support will be unconditional. When a claimant’s child is under five, we will ask the claimant only to attend work-focused interviews. If claimants fail to meet this requirement for no good reason, they will be subject to the lowest level sanction; the sanctionable amount for these claimants will be limited to 40 per cent of the sanctionable amount for other claimants.
Secondly, advisers will take childcare responsibilities into account when setting work-related requirements, and we intend to set out some specific safeguards on this issue in regulations. Regulations will prescribe that claimants with a child under 13 will be able to limit their work search to jobs that fit around their children’s school hours. This is key. The best way to prevent the inappropriate application of sanctions is to ensure that requirements are reasonable in the first instance.
Amendment 62B seeks to introduce a blanket exemption from conditionality sanctions for claimants who can demonstrate that they did not have guaranteed and predictable access to suitable childcare. We do not think such a legislative exemption is needed. As I have previously explained, when a claimant fails to meet a requirement, a sanction will be imposed only if the claimant does not demonstrate that there was a good reason. In considering whether there is good reason, we will consider all relevant matters raised by the claimant, which could include the availability and cost of suitable childcare. This flexible, case-by-case approach is the right one, but to be absolutely clear, when a claimant demonstrates that a lack suitable childcare meant that the claimant was unable to meet a work-related requirement, a decision-maker should determine that the claimant has good reason and a sanction will not be applied.
Noble Lords have previously raised concerns about where the responsibilities lie in relation to the provision of good reason. I would like to take this opportunity to clarify the position. We have a responsibility to ensure that claimants understand the decision-making process and that they have an opportunity to explain the reason for a failure to meet a requirement. The onus is then on the claimant to tell us the reasons and provide supporting evidence where necessary. The department must then determine whether the reasons raised are relevant and whether any of those reasons constitute a good reason. The current practice of visiting ESA claimants with a mental health condition or learning disability before the application of a sanction is a good example of the proactive process required to collect evidence of good reason in some cases. I can assure noble Lords that we will review our approach to collecting evidence of good reason for all claimants to ensure that we get this process right.
The final safeguard is the appeals system. Any decision to reduce an award as a result of a sanction can be appealed to the First-tier Tribunal. Amendment 62ZA seeks to require the tribunal to consider whether the claimant had guaranteed and predictable access to childcare. We do not want to go down the route of prescribing specific matters to be taken into account by an independent body; the existing legislation is clear and sufficient. The First-tier Tribunal must consider any issue or circumstance raised by the claimant that is relevant to a valid appeal, so in an appeal against a decision to reduce an award of benefit because of a sanction where a claimant cites lack of suitable childcare as a good reason for failure, this should be considered by the tribunal because it is plainly relevant to whether the award ought to have been reduced.
Given the safeguards we have in place and the commitment I have made to reviewing our processes for collecting evidence for good reasons, I hope I have provided the assurances on the record that were required by the noble Baroness and I urge her to withdraw this amendment.
Baroness Lister of Burtersett
My Lords, I am very grateful to the Minister for his full response, given the lateness of the hour. I should have thanked One Parent Families Scotland for its help with this amendment. As this organisation has written to the Minister, if there is anything that it wishes to follow up, I wonder whether he would be willing to meet representatives of this and other organisations that have written to him just to go through in more detail what he has so kindly said to the House. I beg leave to withdraw the amendment.
Welfare Reform Bill
Lord Freud Excerpts(12 years, 4 months ago)
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Lord McKenzie of Luton
My Lords, we have strong sympathy with these amendments, spoken to so effectively by the noble Baronesses, Lady Meacher and Lady Finlay. We had a bit of a canter around this issue in Committee, focusing particularly on 16 to 24 year-olds. I took from that debate, and the Minister may take the opportunity to confirm or deny it, that there is potentially scope within the Bill for a regulation not to require 16 year-olds inevitably to move towards PIP. If that is not the case, it is important that we clarify it, because it impacts on how we approach the amendment.
A number of questions have been posed which I should like to emphasise. The first is whether the Minister contends that the PIP assessment as currently constructed is fit. Does he believe that it would be appropriate for most 16 year-olds? The assertion is that it is not. Another issue is the extent to which there is alignment of ages for a range of things—the UN convention certainly, but care generally and education and training. Would it not be better if that alignment were brought into effect also for the purposes of the PIP and the DLA cut-off?
When somebody aged 15 is about to become 16, that is the point at which things change on the DLA journey and we move into a somewhat different regime. If somebody reaches that once PIP is up and running, do they inevitably have to apply and go through the PIP process at that point, or is there an opportunity for them to remain within DLA or perhaps migrate at a subsequent point? Otherwise, there is a real risk that these young people will the first to test the new PIP arrangements. What is the technical position there? Does somebody who wishes to make their first claim after the age of 16 have the route only to PIP and not to DLA? Would somebody currently claiming DLA necessarily be denied the opportunity to continue with that until, perhaps, the migration plan has run its course? I thought part of the noble Lord’s response to our Committee debates was that you could deal with this in part by the way people in the DLA system migrated towards PIP. One way of dealing with some of the issues that have been very validly raised in this amendment would be to use that flexibility, if it exists. If not, it seems doubly important to lock into the 18 year-old cut-off point, which is being pressed.
Lord Freud
My Lords, I welcome these amendments tabled by the noble Baroness, Lady Meacher, and the noble Lord, Lord Patel. They allow me just to go through how the Government intend to introduce PIP successfully for young disabled people from the age of 16. Clearly, the central question is whether 16 or 18 is the right age. In one sense, all ages are a little arbitrary here. Adulthood is defined at different ages in different contexts. The key to the decision to start PIP at 16 was based around the assessment criteria and at what stage people fit in with those, in terms of the activities that they can undergo and how we can look at them. When we looked at it with a range of experts, we concluded that you would normally expect individuals without disabilities to be able to carry out these activities independently from the age of 16. For example, you would expect a 16 year-old to be able to wash and dress themselves, to communicate with others, to plan, and to follow and make a journey. It is the age at which, currently, you expect individuals to be able to be employed full-time. There is a general expectation that they have the capabilities of adults.
The group looked at whether you would expect even younger people—I had better use that word now, rather than adults or children—to fit this assessment. They concluded that children go through several developmental stages under the age of 16, and they do that at uneven speeds. So, there was a cut-off in developmental terms between the two stages, for the purposes of this test, at 16. The other way of looking at this is that it is about trying to move people into adulthood and independence. A lot of these youngsters are living in their households but need to move to independence. Having their own independent help and their own funding in PIP at that age matches their aspirations to move into adulthood, and allows them to make their own decisions about aspects of their lives.
This is an area where, as we described in our policy document, we have set out our intentions and outlined the key principles that we have debated and agreed with stakeholders. We have set up a subgroup of the PIP implementation development group specifically to help and inform the design and testing of the new system in relation to disabled young adults. Together with the focus group work and the interviews that we have held with disabled young people, their appointees and representatives, this is the process that we have under way to get the system right. One of the most important areas where we are using the development group is around the question of how we look at the process of moving people into the 16 category and how we signpost, communicate and get awareness of the changes and then join up the support for disabled young adults and their families.
Clearly, this is not the only testing that disabled youngsters undergo in this phase of their lives. There are a number of assessments as they move from childhood to adulthood. We will ensure that all young people claiming PIP or moving on to it at age 16 have the appropriate support to allow them fully to express their needs. We know it is important that they have a parent, an advocate or a friend to accompany them to that face-to-face consultation. We are not changing anything in terms of DLA in this area. We are changing a lot of things by moving DLA to PIP, and we will be discussing some of them, but in this area we are sticking with the same age as the existing DLA arrangements.
There was an anomaly that the noble Baroness, Lady Meacher, tried to pin me down on and defied me to find a good explanation for. I have been challenged and I shall do my best. On the point about the difference between the universal credit at 18 and PIP at 16, the blunt answer is that these are different benefits for different purposes. It is important that we do not think of PIP as an income supplement; that is not what it is, and nor is it for someone who is out of work. PIP is a payment to people who are disabled who will always need extra money to live because their costs of living are higher, and we will pay it regardless of whether people are in work or out of work. That is why it is a different argument. By giving PIP earlier, we are giving youngsters their independent funding to run their own lives from that point—not from the point when they are meant to be in the workforce and fully independent—when, if they do not have a job, they will need an income supplement. That is the difference. I hope that I have risen to the challenge; I am sure that the noble Baroness will say that I have not, but I have done my best.
We are working closely with the Department for Education to explore evidence gathered so that we can have a single assessment for an education, health and care plan that can be used to support a personal independence payment claim. We are trying to get rid of all the multiple assessments.
Baroness Meacher
Does the Minister accept that there are a lot of people who are very worried about this shift? The reality is that many of them who might have been entitled to DLA will not be entitled to PIP and will therefore lose out. They will also lose out on the disability additions. There is quite a big financial consequence here.
Lord Freud
I accept that there are concerns but one has to stand back. We are spending £12 billion on PIP in real terms, which is the same as the spending in 2009-10. The talk about a big cut refers to a big cut of a projection—the 20 per cent. I want to reinforce that point. In this House we should not get carried away with the simplicity of the big cut. It is not a big cut. With PIP we are trying to direct scarce resources, at a very difficult time, to the people who need them most. That is the purpose of it.
One of the other things that is happening—and is probably the biggest difference in emphasis between DLA and PIP—is that PIP is trying to take account of people with mental health problems in a way that DLA finds much harder. That is why the assessments and activities that are looked at are very different. Therefore, PIP is different and there are changes. Some people will lose out but they are the people who need the money less. That is the point of making the adjustment. However, the overall sum remains that £12 billion.
To pick up the point of the noble Lord, Lord McKenzie, we have the power and flexibility to treat 16 year-olds differently. This includes different assessment processes during the migration period. We are working actively now with children’s groups to make sure that we have the right migration strategy for youngsters and to finalise it. We will publish that approach. It is not a settled matter, which was, I think, the noble Lord’s real question. We are working very hard to get it right.
Let me deal with some of the amendments. Amendments 57, 58, 50ZGA and 56ZC would prevent our abolishing DLA for those aged 18, and potentially limit our flexibility by imposing statutory duties that would be less able to respond to change, especially as we refine and improve processes as a result of feedback and our experiences. It is very important that we have that flexibility. One of the things that we will discuss later this evening is feedback and the amount of research that we will carry out on a continuous basis. Clearly we want to incorporate that into how we apply PIP, particularly for youngsters.
This is very technical but I need to make it clear that the Government consider Amendment 56ZC to be consequential on Amendment 50ZGA; and, separately, Amendment 58 to be directly consequential on Amendment 57. I do not want any misunderstandings later, although the noble Baroness, Lady Hollis, is not in her seat at the moment to give me a piece of her mind. Given the reassurances that I have given the noble Baroness, and the technical limitations that the amendments of the noble Baroness, Lady Finlay, would impose, I hope she will withdraw her amendment.
Baroness Finlay of Llandaff
If the amendments which the noble Lord, Lord Patel, and I have tabled would be more restrictive, does the Minister now have more powers to make regulations to exercise discretion in relation to people of different ages? Does this discretion remain wider by not including our amendments where an age group is highlighted?
Lord Freud
This is a framework Bill. There is a lot of potential flexibility as we set up the regulations, particularly in this migration period, as we move into them. This flexibility would be denied by these amendments.
Lord Brooke of Sutton Mandeville
My Lords, I hesitate to intervene, but are things said subsequent to the Minister sitting down clarifications of what had been said before? If not, are they in order?
Lord Freud
My Lords, I start by picking up the point that the lower rate is being thrown out so everyone on the lower rate will no longer get DLA or PIP. That is absolutely not the structure of what is happening. We are looking at the needs of people from the ground up and designing a support mechanism in PIP to look after people who have disability needs. Clearly, anyone who needs support, on the grounds of a rigorous and consistent assessment, will get it. Many of those people will get more. In fact, we think that the proportion of people who will be in the group with the greatest need, in the highest group, will rise under PIP compared to those in the standard group.
The difference between PIP and DLA is that we are trying to strip out the complexity of all the different rates and boil it back down to eight rates—by the time you take the two components on the two different rate levels. The amendment replicates the complexity of the structure of DLA and moves it back up from eight to 11 components, making it more difficult to administer coherently.
I pick up the specific point made by the noble Baroness, Lady Grey-Thompson, on the Dilnot review, and reassure her that the DLA reform proposals published in April 2011 were shared with Andrew Dilnot’s review of long-term care funding, which was published a couple of months later in July. Andrew Dilnot said that universal disability benefits should continue, based on need and not on means. We are doing PIP exactly on those grounds—it is not means-tested but based on needs. He did not say that that benefit should go on unreformed.
We have designed the PIP assessment criteria to take broader account of the impact of disabilities than simply care and mobility, which are still of course very important factors. In our most recent draft of the assessment criteria—I remind noble Lords that we are still consulting on this process; this is work in progress and we are still listening very hard to the responses that we are getting—care and support needs feature very strongly. If someone needs attention with things such as washing, bathing, going to the toilet, dealing with medication, cooking food and eating, that is taken into account. We have amended the draft assessment criteria so that they now include supervision, whereas before they just considered whether someone needed assistance and prompting.
Baroness Browning
I am sorry to interrupt my noble friend. On the point about scarce resources, I think we all understand the financial situation and the imperative to reduce the deficit. However, if people who are currently on the lower rate of DLA lose it—a point made earlier in the debate—they will not just carry on with life as it is. If we accept that these people do not claim DLA without a need for it, then we accept that they have a genuine disability and that the lower rate of DLA is factored into their weekly budget. If it is then decided that their case is not as important as someone else’s and that that person might need the DLA, that is going to have an impact. Earlier, the point was made that if you take away the lower rate of DLA from a lot of people with a wide range of disabilities, there will be consequences for their health and well-being, which will translate into a financial cost on the public sector. Will my noble friend consider undertaking a cost-benefit analysis of that consequence?
Lord Freud
My Lords, I have two answers to that question. The first is that people who need the support because of a disability may happen to be on the lower rate of DLA today but that does not mean that they will not be entitled to the standard rate in the future. My noble friend gave an example of people who are really dependent on that funding. I would expect in those circumstances that it would continue. Indeed, I would regard PIP to be a failure if it did not do that. Secondly, we will be monitoring that really closely. As I have discussed, later this evening I will present an amendment to make sure that we properly monitor what happens in this area and make sure that PIP does what it should be doing, which is to stop people ending up in the situation that my noble friend is so concerned about.
I must point out that if we move to a three-tier system on the daily living component, the implications are that the caseload would be larger—possibly larger than that under DLA—and spending would increase rather than decrease against the original and revised forecast under the personal independence payment. We cannot possibly quantify such expenditure implications, mainly because we have not yet set the rates at which benefit is paid, but the implications are there. I want the House to be under no illusions that they would be anything but significant.
Before I ask the noble Baroness to withdraw her amendments, I would like to confirm that the Government see Amendments 50ZGH and 50ZJA as directly consequential upon Amendment 50ZGB. On that note, I beg the noble Baroness to withdraw the amendment.
Baroness Grey-Thompson
My Lords, I thank the Minister for his response. I have to say that I am disappointed. I am also concerned and gravely worried for a huge number of disabled people. The tiny spark I take out of his comment is that he says he is listening. That is positive. However, there are lots of ways in which spending will increase if we push disabled people into poverty or do not give them the right support they need. We will be making massive, long-term mistakes for the rest of those disabled people’s lives. It is not a small number of people. It could be up to 500,000 disabled people—half a million disabled people could be affected by this.
I am keen to keep pressing the Minister to ensure that the outcomes of disabled people losing the lower rate of care will be monitored throughout the rollout of the PIP assessment because, whatever way you look at the maths, there will be people who lose out. It is a big mistake to see this as a deadweight expenditure. You only have to look at our postboxes or e-mail inboxes —in the past two days, I have had nearly 600 emails from different disabled people saying they are terrified of the changes that are going to happen.
It is really important that the assessment process properly records whether losing DLA has a negative impact on the health of disabled people or their ability to work. We have a long way to go on this. Very reluctantly, I beg leave to withdraw the amendment.
Baroness Howe of Idlicote
My Lords, I shall speak briefly on this amendment. The comments of the noble Baroness, Lady Browning, about her personal experience of the whole range of autism reminded me just how this range has developed over the years. When I first got involved with the autistic movement many years ago, it really was just one thing; but since then, many different branches and forms of behaviour have been identified. The fact that all these extra aspects have to be borne in mind re-emphasises the whole question of whether the clause is fit for purpose. In particular, the Asperger’s syndrome comment was very apt. I hope the Minister will be able to persuade us that there will be a thorough method of assessment by people who understand the range of problems that we are talking about as well as—as my noble friend Lady Mar said—the detailed and different ways in which extra help is used and needed for such people to have a basic ability to lead a normal life.
Lord Freud
My Lords, let me start by referring to the moving speech made by my noble friend Lady Browning. I confess to a real concern about autism generally and I am very proud that my maiden speech was on the Autism Bill. I have undertaken a number of initiatives in the autism area because we do not look after people with autism and Asperger’s properly. I also strongly believe that it would not take a huge effort to make sure that we look after those people much better. As my noble friend knows, there is currently a major initiative to try to ramp up the number of such people who have and keep jobs. Currently only around 15 per cent have jobs, which is ludicrous, and I am determined to double that figure.
As part of that concern for this particular group, we wish to make sure that this assessment takes people with autism and with Asperger’s properly into account. I am hopeful that PIP will do a better job than DLA, and, furthermore, that we will make sure that we have the right processes in place to look after this group. As we refine processes during the next consultation period, which we are running until the end of April, one of the things that I want to make absolutely sure of is that we have the right measures in place for autism. I know that everyone in this Chamber feels similarly on this issue, and feels very strongly that we should get this right for that particular group.
I shall now turn to the more technical aspects of this issue—that is, looking at what we are doing with the PIP and its assessment. Is it a medical assessment, as the noble Baroness suggested? It absolutely is not. In fact, as I said in Committee, our approach is—and this is rather a mouthful—akin to the biopsychosocial model. I shall try to draw this out a bit—I do not mean in time: I shall try to draw the themes out. A medical assessment would be something like the industrial injuries disablement benefit, where there is a direct correlation between the injury sustained and its severity and the amount of benefit or compensation received. Nor will the PIP assessment focus on the functional limitations of the individual in the way that the work capability assessment does. Instead, it will assess how the individual’s health condition or impairment impacts on his or her everyday life by looking at their ability to carry out a series of key and holistic activities, all of which are essential for participation and independent living. In such an approach, the type of condition or impairment an individual has is of limited relevance.
It is not, however, a full social model assessment. I accept that. That is something that many noble Lords and disability organisations would like, but I have to point out that it was not our intention to develop it in this way. As a department, we do support the social model. As the noble Baroness, Lady Wilkins, said, we are on record as supporting it. While we want to ensure that the PIP assessment better reflects it than previous assessments, that does not mean that the full social model is relevant for assessment, although it is relevant for some things. I sent round a rather interesting piece of analysis to many noble Lords in the Committee, called Models of Sickness and Disability, which showed the differences between the models, explaining the medical model, the reaction of the social model against the pure medical model and the synthesis of the biopsychosocial model. The summary of the biopsychosocial model in the analysis is that:
“Sickness and disability are best overcome by an appropriate combination of healthcare, rehabilitation, personal effort and social/work adjustments”.
There is a coherent theory behind this assessment.
Baroness Browning
Will my noble friend confirm whether, when people on the autistic spectrum are assessed, there will be somebody present as part of that assessment who is expert in cognitive specialisms?
Lord Freud
People will be able to bring anyone with them to the assessment, whether it is a parent, adviser or anyone else. For the WCA, the person doing the assessment can call in that support where they need it. We are now entering the consultation phase on the PIP assessment. Wrapping in that support will be one of the elements that we will look at. I accept that the assessor needs to understand how those factors reduce the ability of the person in front of them to run their lives.
Baroness Browning
It has been suggested—I hope that this is an opportunity for my noble friend to put this straight—that the assessor will be able to call somebody on the telephone in making the cognitive assessment. I hope that he is able to assure me tonight that that is not the case.
Lord Freud
Clearly, the system will be elaborated and developed, and we are at an early stage. Although the WCA is a very different test from the PIP assessment, one of the useful lessons that we have drawn from Professor Harrington’s recommendations for it is that mental health champions are available on site for assessors. That is the way in which that test has developed, and there are some valuable lessons there for when we look at how we elaborate the PIP assessment.
If we were to go with the full social model assessment along the lines suggested by Scope, looking at the full range of factors that potentially cause barriers and cost, it would require a very long, intrusive and costly assessment, putting significant cost burdens on the state and, more importantly, very large burdens on the individuals involved. They would also inevitably require much more regular assessment, as the social factors that would be taken into consideration would change more regularly than the impact of a health condition or impairment. You might, for instance, get to the ludicrous position where every time a local bus service changed, you would have to do a reassessment on that model. In meeting after meeting with noble Lords, I have been left under no illusion that having too many reassessments is one of the things that they dislike the most. We will try to provide later on some reassurance that there will be decent gaps wherever possible between reassessments.
The situation could go very dramatically the other way and lead inevitably to inconsistency, with factors considered varying from person to person and affected by local factors or service provision. With PIP, we are looking at something that is universal and where entitlement is based on the same criteria wherever individuals are and whatever their circumstances. This discussion carries echoes of our ring-fencing debate earlier today in relation to the Social Fund. If we move to a kind of local needs-testing, which is what the amendment implies, it would be at odds with how we deliver a national benefit. Clearly, we could do something else. We could localise it as a benefit, but then it would be a very different benefit. I suspect that many noble Lords would be very concerned about moving in that direction.
Most importantly, we think that a social-model approach would be more subjective. Benefit entitlement needs to be based on clearly defined and transparent criteria which we need to be able to set down in legislation and apply to individuals consistently, whatever their circumstances and wherever they are in the country. If you cannot do that there would be a level of unfairness and uncertainty, high levels of appeals and a system in disrepute. Under the type of assessment proposed, it would be harder to define the criteria that individuals would be assessed against and less clear whether they had met the thresholds for entitlement.
Finally, we do not think that an assessment along these lines would allow us to control expenditure and keep that benefit spend sustainable, making sure that it goes where it is needed most. I do not think that I can really reach a figure on how much it might cost, but our estimate is that it would be very substantial.
Although the social model approach is superficially attractive—and I emphasise that we support it in many ways—we have decided that it is not the right way to go with this assessment. We have not gone for the medical model; we have gone for the biopsychosocial model. That model has now garnered very significant academic support, as those noble Lords to whom I sent that very interesting piece of research will recognise. It recognises the diverse range of biological, psychological and social factors that impact upon an individual and cause variation in need. We think that approach—of looking at activities and outcomes—matches the requirement.
The Countess of Mar
My Lords, I wonder whether the Minister can answer a question for me. I made a particular point about people having very special needs such as extra heating and incontinence pads, for example. If they are leading a fairly normal life but would be restricted to their homes because they cannot pay for things, will this be taken into account in the PIP assessment? I could not see it anywhere when I read the details. How are these facts going to be elicited when the person is being assessed? People do not fit into boxes—everyone is an individual. It seems that the noble Lord is trying to make people fit into boxes when they do not.
Lord Freud
We are very much trying not to make people fit into boxes. We are not saying, “Because you have that condition, that’s your relevant position”. We are trying to look at people as individuals. Clearly, you go through all these criteria very carefully and reach a judgment. It is almost impossible for me to say whether a particular person would hit the assessment criteria or not. You just have to go through it and see. However, we clearly expect someone to get a payment who has genuine needs for coping with life because of their disability. That is what it is designed for. I cannot answer the specific question, but I can tell the noble Baroness the principle—where that person needs that support as a result of their disability, they should get it.
When we develop an assessment for PIP, we have to balance a range of factors. A complete model should include all the perspectives and important interactions between an individual, their health and the environment. That is what the biopsychosocial model does. There are limitations in considering only a single perspective, and this is a much more holistic approach.
I do not accept the criticism that our proposals do not truly reflect the extra costs faced by disabled people. As I have tried to explain, it would not be feasible to assess the actual costs without something hugely intrusive to disabled people and very complicated. We therefore have to assess other factors as a proxy for these costs. We are using “care” and “mobility” in DLA, which we do not think are broad enough. So, in our draft assessment criteria we have a range of everyday activities for PIP that we believe are a good proxy for the impact of impairments, the overall level of disabled people’s needs and the extra disability-related costs. We will go on refining those; we will not just stop when we finish the consultation in April.
The proposals have taken into account many of the key drivers of cost that Scope and others are obviously concerned about. For example, individuals who have difficulty getting out are likely to have higher utility bills, while those who need support planning a journey and moving about are likely to have higher transport costs. The proxies and associated criteria should therefore allow us to prioritise spend on those who face the greatest challenge and expense. In answer to my noble friend Lady Thomas’s point on the tick-box assessment, the proposals, which have been around since May, are very much not a tick-box approach; they are trying to look at people’s functional capability.
We have changed the assessment very considerably as a result of the enormous amount of engagement that we have with disabled people and their organisations. We will go on doing that. However, if we had fundamentally to revisit our approach in the way in which the amendment would require, we would have to go back to the drawing broad, spend more time developing and testing, and have greater consultation. It would push back the start of PIP by at least a year and reduce savings over the reassessment period by £1.4 billion. This is, I think, the priciest amendment yet.
Lord Freud
This is about doing the right thing for people and focusing money on them; it is not about playing silly games—by which I mean that we are not playing silly games here and we are determined to get this right. We are consulting widely and know that we have the right approach with the model that we are using. I understand the noble Baroness’s position, but we do not think that the Bill should specify that the assessment should consider social and environmental factors. That approach would be inappropriate and unworkable, because we need the assessment to be straightforward, objective and consistent. We would lose £1.4 billion of savings. For that combination of reasons, these amendments are not acceptable to the Government. Just for the avoidance of any doubt whatever, I confirm that the Government see Amendments 50ZJ to 50ZQ and Amendments 51A and 52A as directly consequential upon Amendment 50ZH. On that basis, I urge the noble Baroness to withdraw her amendment.
Baroness Grey-Thompson
I thank the Minister for his response. It is nice to know that, even for a short time, I might hold a record in your Lordships’ Chamber for tabling the priciest amendments. I also thank the noble Baronesses who have brought much personal and moving experience to this debate.
I apologise to your Lordships; in introducing the amendment, I did not declare that I am a recipient of DLA, although I am fairly unlikely to be on PIP. I realise that to many the social model turns into a philosophical debate but I felt that it was important to raise it again, as—
Lord Freud
My Lords, I feel that I should interrupt. I think that when the noble Baroness looks at the PIP assessment, she will find that she is on PIP—without doing an assessment myself.
Baroness Grey-Thompson
I thank the Minister and accept that I did not just go through an assessment process.
I feel that it is important to raise this issue again as a gentle reminder that the social model is written by disabled people using their experience. The noble Countess, Lady Mar, made the important point that you cannot fit disabled people into boxes. I tend to think that we are a little more like Venn diagrams. It is obvious to me that if the Minister were truly committed to helping disabled people, the full social model would be used. I recognise that there is a balance between costs and how far we want to go to help disabled people.
I share the Minister’s view on autism but I would like to widen the issue and hope that we will take all disabled people’s experiences into account. I look forward to seeing the refined process that he mentioned.
There is one point on which I agree with the Minister: the biopsycho model is interesting. However, that is as far as I can go. If we looked at the definition of “interesting”, he and I would probably differ considerably. Perhaps we could save that exciting debate for another time. I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town
My Lords, these amendments would improve the assessment process for the new PIP and allay the fears of many people with disabilities that the poor experience of the ESA assessments, where around 40 per cent have been successfully appealed, is not replicated under the new benefits system.
Amendment 50B relates to the training of those undertaking face-to-face assessments to ensure that they have knowledge of mental, intellectual and cognitive disorders, clear guidance about when to access more specialist advice, and a guarantee that such advice will be available. In Committee, we received some encouragement from the Minister who stated:
“Assessors will be required to have a broad training in disability analysis as well as training on specific impairments … we intend to ensure that they have sufficient training in mental, intellectual and cognitive impairments … and will stipulate this in our contracts”.—[Official Report, 16/11/11; col. GC 263.]
Perhaps the Minister could let us know what budget has been set aside for such training.
Amendments 50C and 50D would exempt certain people from a face-to-face assessment where sufficient evidence is available via other means. This would actually save money for the Government. I hope that the Treasury is listening. Implementing face-to-face assessments was to have cost about £675 million. The amendments would reduce the costs by removing from the process claimants for whom a face-to-face assessment is clearly unnecessary. This would help those with lifelong or degenerative conditions, for whom a face-to-face assessment could be stressful. For example, about half those with MS or Parkinson’s are receiving the highest level of DLA. Putting them through an expensive and stressful face-to-face test seems unnecessary.
Again, we received some assurance in Committee. The Minister stated that,
“where there is already sufficient evidence on which to make a decision … we completely agree … a face-to-face consultation should not be required”.
I hope that the flexibility would be there for that. However, he also argued that other than for those with a terminal illness,
“we do not agree that there should be different rules or processes for different groups of people … on the basis of impairment type”.—[Official Report, 16/11/11; col. GC 261.]
Yet, if the Minister is prepared to accept that those with a terminal illness should not be subject to unnecessary assessment, surely the same argument could be applied to those with degenerative conditions where there is no hope of improvement. We look forward to any assurances the Minister can give that unnecessary face-to-face assessments will not be necessary.
If he is not persuaded by me, perhaps he will be persuaded by someone of his own political background—the Mayor of London, Boris Johnson. I have never quoted from one of his speeches before. He writes:
“Evidence from the individuals GP and/or a consultant will provide an accurate assessment of need. It would be difficult for a healthcare professional in a one-off meeting to elicit a comprehensive response about the daily reality for each claimant. Face-to-face meetings … could prove … inappropriate for an individual who may have difficulty with social contacts, such as those with autism, or for those with an intellectual or mental health disability”.
This brings me to the first amendment in this group which would ensure that the assessment process always takes account of evidence from the claimant’s old healthcare professional. It builds on the experience of the work capability assessment for ESA and is to help the Government to avoid history repeating itself. Unfortunately, in this case, it would be as tragedy not farce. The problem with the current proposals is that they put the onus on the claimant to collect the medical evidence and also to have the knowledge that would be helpful to provide this. As we have seen with ESA assessments, it is exactly this that often leads to unnecessary duplication as a case is assessed and then reassessed in the light of the evidence from the GP or professional. The initial failure to consider such evidence has contributed to the very high and expensive success rates.
In Committee the Minister argued that while medical evidence could be of use, he felt that it was not necessary to gather evidence in every case. He said:
“In some cases what the claimant has already told us … will be sufficient. In other cases, information … might be likely to add only limited value”.—[Official Report, 16/11/11; col. GC 261.]
Surely it would be better to err on the side of caution, given the widespread inaccuracy of the ESA assessments and the need to ensure that the personal independence payments do not follow the same route. Medical evidence is bound to assist the decision-maker in far more cases than those in which it proves unnecessary.
This is a modest amendment. It seeks to ensure that the introduction of personal independence payments proceeds smoothly and more importantly to ensure that the right benefit is paid to the right people. I hope the Minister will accept this. Certainly it would have our full support.
Lord Freud
My Lords, I could summarise my speech in about three sentences. I am in agreement with virtually everything said in the Chamber. I hope that after my three sentences I will be able to provide assurances. My only point of real disagreement is that I do not want it to be mandatory—in primary legislation. This is in regard to the point made by my noble friend Lord Kirkwood that it reduces flexibility and we are much better off setting it up in regulations and guides and in the contracts. That is our proposed approach but fundamentally we are absorbing all the valuable points made on this group. I will try now with some speed to go through those assurances. I ask noble Lords to stop me with the precise assurance they want if I am not making the assurance well enough.
Amendment 50A was semi-withdrawn by the noble Lord, Lord Touhig, but I will try to deal with it because it is a building block. People being assessed can bring in someone with them—a relation, a friend or a professional—to help them. That is really important in the group we spent a lot of time on this afternoon relating to autism and Asperger’s. When people are over-bright their relation can make the point about the reality and the over-anxiety of the person being assessed. That would be an active role in the process.
I turn now to Amendment 50B. Clearly, we need to make sure that assessors have all the appropriate training to interpret the evidence that they are provided with. I have to make the point that it is not a medical assessment PIP. It does not ask the assessor to diagnose a condition or to recommend treatment options. It is different. It looks at how the conditions or impairments affect individuals’ everyday lives. That is a different skill set from that involved in treatment. There is not quite the same level of need for specialist skills but it is our intention that assessors will have a broad training in disability analysis as well as training in mental, intellectual and cognitive impairments. That level of training will be stipulated in our contracts with any providers and we will be responsible for signing off the training syllabuses. There will be occasions when assessors need more specialist support in the course of making these assessments. We will ensure that they have access to and support from individuals who have the in-depth knowledge that the noble Baroness, Lady Meacher, mentioned with regard to mental health conditions.
Baroness Browning
I am sorry to interrupt again. Can my noble friend give us any hope that when an assessment is called there will be any publication of the qualifications and background of the assessors so that the people being assessed at least have some view of what their expertise actually is?
Lord Freud
It is a nice idea. I do not think I will make an utter commitment to it here and now but it is a cute idea and maybe we should put it in the contract. I will take it away and think about it.
We do not think that we should prescribe this in the Bill or even in regulations because it is important that assessors have an understanding of the limits of their knowledge so they know when to bring in the expert advice. I think the noble Baroness, Lady Healy, got that absolutely right.
I will now go on to Amendments 50C, 50D and 50ZR. We know that individuals can have a wealth of material, knowledge and evidence that will help in the assessment process and we need to get the right material and evidence from them at the right time and we need to encourage that evidence to come forward. We will not create a two-tier system where the poorest and the most vulnerable have less chance of receiving benefit because they cannot afford to pay for the evidence. We are going to make sure that does not happen.
I want to pick up the very valuable point raised by the noble Countess, Lady Mar. If we have a mandatory process to involve the individual’s health professionals it may very well be an entirely nugatory and expensive process in the many situations where the GP is not up to date with what is happening. That is the inflexibility of having something in the Bill which adds nothing except cost. If someone who has a learning disability has not visited a health professional for many years, why go through the expense of getting evidence? It would be unnecessary; it would slow the process down; and there may be someone else whom we would not have thought of including in the Bill who is much better placed to provide information and evidence for the assessor. We need to pull out the cumbersome implications of the mandatory process—the point made so precisely by my noble friend Lord Kirkwood.
We have made it clear that face-to-face consultation should form part of the claim process for most—but absolutely not for all—claimants. Ultimately, consultation will play a key role in creating a fairer and more objective assessment. It needs to be done sensitively and proportionately, but where sufficient evidence is available, we are in absolute agreement that there does not have to be face-to-face consultation. There will be many examples where that is unnecessary.
We are talking about something very close to, if not exactly, the tiered process recommended by the National Autistic Society. That is what we are planning to adopt. We have flexibility in the Bill to do that.
The Countess of Mar
My Lords, I should have said this when I was making my initial speech. About 60,000 people with ME are either bedbound or housebound. To go to a face-to-face interview would cause enormous stress and probably exacerbate their symptoms. Will that be taken into account? They cannot provide medical evidence because there is no treatment; yet they cannot come out of their homes. How will the Minister deal with that?
Lord Freud
My Lords, one thing I was trying to get over about trying not to have a two-tier process so that the rich can get their evidence and the poor cannot, is that we turn the burden on to the assessors, so that when someone cannot come out, that requires a house visit if we cannot use paper evidence. There will be examples where paper evidence will do the job; where it cannot, the onus is on the assessor to do the checking, rather than the other way round. That is how we will provide that protection.
I hope I have gone through all the specific issues and given assurances on all those important matters. We are planning to meet the concerns expressed around the House. All I am asking for is that we have the flexibility to go on running the system as things change, as they inevitably do, and that we do not lock it up in primary legislation so that if we need to make changes it takes years. That is really what we are talking about.
Baroness Meacher
I apologise for interrupting the Minister. I just wanted to make a point about ME patients, who have the most awful time. I have direct personal experience of that—not myself but through people close to me. Does the Minister accept that Amendment 50ZR would enable someone bedridden with ME who has not seen a doctor for years to call their GP and have a proper assessment? They are bedridden; they cannot go to assessments. That would avoid getting into a benefit assessment straight off. That is the whole point of the amendment. There has been support around the House because of the many situations where tremendous distress can be avoided by an appropriate person—perhaps a nurse, perhaps a doctor—doing a full and careful assessment, rather than getting into the benefits system.
Lord Freud
My Lords, I hope that I have made it absolutely clear that if we write into the Bill that it must be the GP, who may not be the right person, we are stuck. If you give us the flexibility, we are not stuck and in those circumstances we will go to the person’s home to do the assessment, or take someone else's piece of paper on the tiered approach.
What we are planning will be better for people suffering from ME and other illnesses because we will be able to respond. I think that the market will change. My noble friend Lord Kirkwood said that there is not an adequate market in this area. Occupational health and support for people of working age is a Cinderella service. We will be building that. As things change, we can move the assessment. If you tie it up, we will be locked in to 1948 as the years go by. The only difference between us on this, I think, is how mandatory and prescriptive we want to be, and it would be most unusual to put it in the Bill.
Let me cover the technicalities. The Government consider that Amendment 50D is directly consequential on Amendment 50C; the others are separate, so I ask noble Lords not to press them to a vote and the noble Baroness to withdraw the amendment.
Baroness Grey-Thompson
My Lords, I thank the Minister and everyone else who has taken part in the debate this afternoon. On a point of clarification to the noble Countess, Lady Mar, although the wording of the amendment was “relevant healthcare professionals”, in her speech she mentioned doctors; it is much wider than that.
The amendment is a fundamental cornerstone of what is necessary in the move to PIP. I recognise that the Minister has moved a long way. I am still not comfortable with some part of his statement on the broad training for professionals. You do not know what you do not know. It is very difficult to instil that knowledge in people. I would like to know an awful lot more about the detail of how that training and education will take place.
There has been broad support around the House for my amendment, and I am grateful to noble Lords for that, but considering that the Minister has moved further than perhaps I expected, there is an awful lot to think about in what he has said. I beg leave to withdraw the amendment.
Baroness Gardner of Parkes
My Lords, I support the amendment. I have raised this issue with the Minister in private in the past. Many people on the existing benefit have used the money to increase their possibility of living normally by putting it towards aids or adaptations, and it would be very wrong if they were disadvantaged because of that.
Lord Freud
My Lords, a fundamental principle of PIP is that support should be targeted at those who are most affected. I reassure my noble friend Lady Thomas that we will not be penalising people who use aids and appliances.
We know that many disabled people have a greater level of participation because of the help provided by aids, appliances and adaptations. If we were to disregard entirely the use of such aids, we would penalise individuals whose health condition or impairment could not be helped through their use. In those circumstances, the needs of those individuals would seem less of a priority, even though their levels of participation might be lower. Therefore, there is a balance to be struck here. I would be the first to admit that the use of aids, appliances and adaptations do not of themselves eliminate needs, barriers or costs. We accept and understand that, and that is why we are applying points in the assessment when such aids are in use. The number of points will vary depending on the aids in question and the levels of need.
With regard to the daily living component, the entitlement thresholds have been set at such a level that an individual who requires aids to carry out a number of activities may receive the component at the standard rate. I am pleased to reconfirm to the noble Baroness, Lady Grey-Thompson, that with the mobility component, individuals who use aids and appliances to move short distances can receive the standard rate, while someone who needs to use a wheelchair to do so—whether it is a manual or an electric one—will receive the enhanced rate. In that sense, it is a different assessment and it does things differently from the WCA for ESA. The valuable point has been made tonight that people do not understand that, so clearly we need to put across information about it.
As I informed noble Lords in Committee, the approach that we wish to adopt for PIP is the same in this area as that currently used within DLA. We take into account aids that are currently used by individuals as well as those which might reasonably be expected to be used. Let me be precise—I mean those that are easily and cheaply available. We will not, for example, say that an individual’s needs would not be present if they simply bought themselves a wheelchair, a stairlift, or a walk-in shower. That would not be reasonable, and we will have guidance available to make sure that claimants are treated consistently.
I will, however, be delighted to host a meeting with my noble friend, and any group she wishes to bring. Clearly, there is a big consultation exercise going on in precisely this area. I know this is an area in which she has great interest, and I will be very pleased to host that meeting. I urge her to withdraw her amendment.
Baroness Thomas of Winchester
My Lords, I am very grateful to the Minister for agreeing to such a meeting, and for clarifying that there is a great difference between the assessment for the work capability assessment and PIP. With that, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
It is clear that the Government are going to have to do some of this anyway, but in terms of an overall time period it is clearly a matter of some months rather than weeks, but not a matter of years. It depends on the determination and effort that the Government bring to bear. They have the levers and the resources to cause this to happen quite quickly, I would suggest, but there has to be full engagement with disabled people for it to be meaningful. This does not mean endless delay in the introduction but it does mean a real level of reassurance before we embark upon this very significant change.
Lord Freud
I will come to my conclusion first. Basically, we are doing a lot of trialling in this process and the way that this particular amendment is drawn would delay us very significantly. At the end of my speech, I will give the noble Lord the actual cost that we estimate the delays will represent.
I will spend a bit of time highlighting our approach to developing, testing and refining the assessment criteria that we already have. We have been developing those in collaboration with a group of independent experts, including disabled people and disability organisations. We had initial proposals on which we then carried out 16 weeks of consultation. We met 60 disability organisations; had 170 written responses; and carried out testing involving sample assessments of around 900 volunteers selected from current or recent DLA claimants. Both the testing and the consultation were very effective and allowed us to review, revise and improve the draft assessment criteria from that published in May. We provided a second draft in November in advance of discussing the PIP clauses in Grand Committee. Since publication, we sought the initial views of disabled people and the organisations that represent them in an informal way to listen to their thoughts. Yesterday, as promised, we published a further document detailing our initial thinking on entitlement thresholds for the rates and components of PIP. We have now commenced a formal consultation on the entire assessment criteria, including the weightings and entitlement thresholds which will last for 15 weeks.
That gives disabled people and disability representative groups the opportunity to tell us what they think the criteria will mean to them and their members and what amendments might be needed before we finalise the regulations. I can assure my noble friend Lord Newton that those regulations, which we will lay later this year, will be subject to the full affirmative procedure of both Houses. We are confident that we will be able to test the impact of these using the data we gathered during our earlier exercise. If for any reason this is insufficient, we will carry out additional testing to support our analysis. In response to a specific request from my noble friend Lady Browning, I will personally look at the impact of this on our autism obligations and I will make sure that that is done as a key part of this process.
There have been, and there remain, significant opportunities for involvement from disabled people and their organisations, and significant opportunities to influence our proposals to ensure we get them right. That, however, is not all. In terms of the delivery and operation of PIP, we intend to continue to develop a number of our operational processes in conjunction with disabled people and their representative groups through our implementation development group, which I talked about a little earlier this evening. This group has already played such an important role that it is our intention to retain its services after April 2013 in order to work with it to help evaluate the new delivery arrangements.
We have also created a number of customer research panels, made up of groups of disabled people who share similar characteristics, in order to understand, and gain an insight on, how the process impacts upon them. We will also test our operational processes in a model office environment, allowing us to see how they work without affecting individuals’ benefit entitlement. The trouble with a formal trial, of course, is that it would change what people actually get even though we are trialling. Here, by doing it in a model office, we can do it in a way that does not actually affect what they receive, but we know exactly how it will work.
We want similar arrangements to be in place with regard to the processes of the eventual supplier of the assessments of the benefit. We will be making it clear to bidding organisations that we expect them to work with disability organisations on the design of their processes, to improve the customer experience. This will be before, during and post-implementation. This will be a clear requirement in the contracts.
As well as getting the whole development process right, I recognise the value in moving away from a big-bang approach to implementation which would see both new claims and reassessments beginning in April 2013. Since the Committee stage, a significant amount of work has been undertaken to investigate the options for ensuring a sensible implementation which allows us to learn from early experience. Therefore, I can inform the House that, in addition to the pre-implementation testing work that I have already mentioned, we will limit the number of new claims for personal independence payment to a few thousand per month for the first few months of implementation. This will allow us fully to trial all the processes in a truly live environment. We are still developing the details on how we can meet our claimant target over the first few months.
Once we are satisfied that the new processes are working as intended with this reduced number, we will allow all new claims for personal independence payment to enter into the process. We will continue monitoring and reviewing the processes to ensure they are working effectively and appropriately and to see how claimants are finding the experience. We will begin to reassess existing DLA claimants in a co-ordinated way six months after the initial implementation. Again, we will stagger this process. We expect the first stage of reassessment to start in the autumn of 2013, beginning with individuals on a DLA fixed award who will need to renew their claim and those claimants who report a change of circumstances on their existing DLA claims.
At the same time, we intend to conduct a pathfinder trial reassessing individuals who would not, in the ordinary course of events, come up for reassessment. We expect the pathfinder to run for around three months to ensure the processes for identifying and contacting people and taking them through the claim processes are working satisfactorily. Allowing a small number of existing DLA claimants to advance through the reassessment process ahead of full national implementation will enable us to be sure that our approach to engaging these customers into the claims process is working effectively ahead of widening the selection. Also very relevant here is the independent review and report on the assessment that we are legislating for in Clause 87.
During Committee, the noble Lord, Lord Rix, laid an amendment seeking to increase the number of independent reviews carried out. Noble Lords will remember that I promised to take this matter away and consider it further, and I have done that. Our revised proposal is that we legislate for two biennial independent reviews within the first four years of the implementation of PIP. The first would report within two years, beginning with the date on which the first assessment regulations come into force, and the second within four years of that date. Although it is only two reviews formally in legislation, we commit to undertake a third if the second review demonstrates ongoing issues with the operation of the assessment which need to be addressed in this manner. That is a firm commitment from me and my ministerial colleagues.
In reality, in the way that we are structuring this, we are trialling it in any real sense; we are doing it on a gradual basis. If we do it in this way, we will get the assessment and wider benefit processes right; we will involve disabled people and we will learn from the earlier delivery of the benefit. We do not think, therefore, that the formal trial proposal in this amendment is necessary. However, if we do it that way, the House should know that it would push back the implementation of the benefit. Our estimate is that the loss will be £1.4 billion of savings over the reassessment window. Clearly, that has to be found somewhere else. I know that noble Lords opposite think that is funny.
Lord McKenzie of Luton
Could the noble Lord give us a bit more detail of that estimate? The figure of £1.4 billion seems to trip off the tongue as the cost of any amendment that we pursue.
Lord Freud
That is an assessment based on the delays that we anticipate from this amendment, which is actually similar to the previous amendment where I used the same figure. It would have the same effect of delaying the whole process. That is the Government’s position, having worked through the implications of the amendment.
I remind the House of where the Opposition have got to with their amendments. We estimate that as a result of the votes on amendments so far, over five years they have imposed £3.8 billion-worth of extra costs, and this amendment will take that figure to £5.2 billion.
Baroness Hollis of Heigham
I am sorry to see a Minister, whose integrity and respect for evidence has been apparent to the whole House, going back to the box-ticking, false assumption that there are no political choices available to this House. There are plenty of political choices if the Minister wishes to use them—for example, freezing council tax, increasing council tax bands, looking at some of the things that go on in pensions tax relief and so on. It is not clear to me that the economic growth of this country depends on taking away DLA from some of the most disabled people in the country.
Lord Freud
My Lords, I do not want to debate where alternative cuts would be found by the Opposition if they were in government and needing to balance the budget. All I can tell you is that the effect of the amendments that the Opposition have supported comes to that figure. It is amazing how, given an amendment here and an amendment there, pretty soon you are talking serious billions. I am afraid that this is another amendment which involves a serious amount of money and, for that reason, it is not acceptable to the Government. I urge the noble Baroness to withdraw her amendment.
Baroness Grey-Thompson
I thank the Minister for some of the reassurances that he has offered tonight. He has, once again, moved further than I expected, although it would have been wonderful to have heard some of it a little earlier. I thank the noble Lord, Lord Newton of Braintree, for his consistent honesty and for what he has done for DLA. Unfortunately, I am genuinely sorry that I do not agree with him tonight because we have to get this right.
The noble Lord, Lord Low, talked about confidence and, even with what the Minister has said today, there is such a lack of confidence among disabled people about where we are going with this that I am really concerned.
The Minister referred to costs, which are important, and huge financial sums are involved here. I would like to talk about cost—the social cost of what we are doing to the lives of disabled people. A number of disability organisations—I shall not go into how many—have contacted me and are telling me that we are not in the right place; disabled people are telling me that we are not in the right place; and my personal belief and conscience tell me that we are not in the right place. I wish to test the opinion of the House.
Welfare Reform Bill
Lord Freud Excerpts(12 years, 4 months ago)
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Baroness Thomas of Winchester
My Lords, never have I minded less about changing my original speech so extensively, because the Government have conceded on the qualifying period for PIP being brought back to three months from six months. I am grateful to the Minister for listening to the concerns expressed by many disabled people and the organisations that support them about the hardship that such a long qualifying period could cause. The reasons for changing the time back to three months are compelling, particularly in relation to those who have sudden onset conditions or a serious accident, and there is now no need to rehearse the arguments yet again. I beg to move.
Lord McKenzie of Luton
My Lords, I, too, shall be brief because, as the noble Baroness, Lady Thomas, has said, the Minister has flagged his acceptance of the amendments in this group.
The debate in Committee led by the noble Baroness, Lady Thomas, centred in particular on the importance of keeping a qualifying period for PIP at three months, but obviously the concept of increasing the prospective period from six to nine months to align PIP with the definition of “long-term disability” in the Equality Act has been helpful to the process. However, the arguments for a three-month qualifying period are strong, and it is commendable that the Government have accepted the case. We have not heard them today but those arguments concerned conditions of a long-term nature having a sudden onset, conditions which are not diagnosable immediately after the onset of symptoms, and conditions which have an immediate devastating impact.
I have just one question for the Minister on the required period condition. This has been touched on before but is not the subject of an amendment today. On the basis of what is before us as an amendment, to be eligible for PIP it has to be determined whether, as respects every time in the previous three months,
“it is likely that if the relevant ability had been assessed at that time that ability would have been determined to be limited or … severely limited by the person’s physical or mental condition”.
The issue is how this requirement is to be interpreted for those with fluctuating conditions. At a recent meeting to consider how things should work for those on the autistic spectrum, we were assured that, although the wording was a bit clumsy, it covered the situation. It would be helpful if the Minister could confirm that or, as we are at one on this issue, commit to tidying it up at Third Reading.
However, all in all, the Government are to be commended for doing the right thing on this, as indeed is the noble Baroness, Lady Thomas, for having led the charge and continued to press the matter.
Lord Freud
My Lords, I tried to rise to speak earlier because my name is added to this group of amendments tabled by my noble friend Lady Thomas, and I am very pleased that I have been able to support them. We have had a lot of responses from people whom we respect and whose advice we find very useful, including Macmillan and CLIC Sargent, and I thank them for the time that they have given.
When we looked at this issue in Committee, I think it was generally agreed that an overall 12-month required period condition was right, but there was a lot of concern that the six-month period in question here was too long. Bluntly, we were trying to balance two factors: payments being made sooner against the potential for more assessments to ensure that ongoing payments were correct. That is why we ended up with periods of six months plus six months. However, we have been listening to the arguments and have been persuaded that the balance should shift. There was a clear consensus that a three-month qualifying period and a nine-month prospective test offered the fairest solution, and that is why we are able to support the amendments.
On the point raise by the noble Lord, Lord McKenzie, I think it is easier if I write to him, as this is a fairly technical matter. On that basis I am very happy to support the amendment tabled by my noble friend.
Lord McKenzie of Luton
My Lords, I will speak briefly in support of the amendment. The case has been very clearly made. The amendment is seeking the assurance of something written in primary legislation rather than the comfort that was given that this could be dealt with in regulations.
Perhaps I may take the opportunity to clarify a part of the debate we had in Committee. The Minister said:
“Turning to the current rules, broadly speaking, current DLA provisions have a one-year linking rule. This allows individuals over 65 to renew an award within one year of their previous award without losing DLA entitlement. Similarly, we intend to allow a linking period for PIP. This will support those individuals who reach the upper age limit and have a break in their claim through temporary improvement, provided the individual makes a claim within a defined period and continues to fulfil the eligibility criteria for PIP”.
I understand all of that. The next sentence says:
“As with DLA, there will be restrictions on new and existing claims for those over the age of 65”.—[Official Report, 16/11/11; col. GC 305.]
Can the Minister expand on what particular restrictions on existing claims for those over the age of 65 he is intending to implement?
Lord Freud
My Lords, I should like to take the opportunity to set out our position in relation to people who are approaching 65 and over the age of 65 and, I hope, give a degree of reassurance as to what we are aiming to do and, if people could accept our firm stated intention, explain why that would be a better and more flexible way of proceeding. I hope that some of the things I said in Grand Committee and what was in our policy briefing document in May will have reassured the noble Baroness, Lady Wilkins, at least to some extent, although I am not absolutely confident of that, given the slightly questioning tenor of her remarks.
People in receipt of DLA who are aged 65 or over when PIP is introduced will not be reassessed for the new benefit from 2013. These reforms will initially be focused on people of working age. This will enable us to ensure that learning from the reassessment of working-age recipients is properly considered before any further changes are developed and implemented.
I understand that the purpose of this amendment is to ensure that financial support continues into pension age for individuals who may have had less opportunity to work and save during their working life due to their condition. I can reassure noble Lords that this is also our objective and can be achieved without amendment to the Bill, but instead through regulations, much as the detail for DLA pensioners is provided for in regulations. We intend to make regulations for the personal independence payment that will allow people who have reached the upper age limit to continue to receive it for as long as they continue to meet the entitlement conditions. Our priority is to support those individuals with established, long-term health conditions or impairments that would put them at a financial disadvantage over a long period. As we indicated in our entitlement thresholds and consultation document, we expect to consult formally on a range of issues to help inform the regulations. This is such an area and we expect to begin consultation in the spring.
It is also our intention that the rules for people over the age of 65 should be broadly similar to those that currently apply to DLA. For example, DLA provisions allow a one-year linking rule which lets those aged 65 or over renew an award within one year of their previous award expiring without losing DLA entitlement or having to satisfy a qualifying period. This provision is intended to allow for those on a fixed-term award to renew their award on a new claim or to reclaim where their condition previously improved and subsequently deteriorated.
I turn to the link question raised by the noble Lord, Lord McKenzie. Under DLA, claimants over the age of 65 cannot move up or down the mobility component rates or move to the lowest rate care component. In the main, these rules match up with attendance allowance and that is an example of the kind of restrictions currently in DLA, which we will look to and consult on maintaining in PIP. Our commitment is to maintain support for those individuals who have relied on DLA or PIP for their working lives into retirement. People who develop care needs during retirement as part of the natural ageing process, for example, and who are not receiving PIP, will be able to claim attendance allowance.
The effects of this amendment are important. It could allow an individual aged over 65 who had previously, at any point in the past, received PIP to make a new claim for the benefit. This could have the effect of allowing people over 65 to receive PIP if they have previously been awarded it, even if there was a very long break in the claim—a break of decades. We would not want that to be the case.
Under the powers we have in Clause 82, we can ensure that the regulations can be flexible to respond to future changes. The changes in the social care system were raised as an example by the noble Baroness, Lady Wilkins. Clearly, if there is a rebuild of the entire support system, that is one thing that we might want to take account of. It could, of course, go both ways: it might affect pensioners.
In terms of developing the rules and how we implement them, I would like to assure the House that we will continue to work closely with the PIP implementation development group to ensure that policy design and delivery in respect of people aged 65 and over are informed by disabled people and their representatives. We intend to consult fully on our proposals during the spring as part of that commitment to involve disabled people. Given these assurances on our approach, I urge the noble Lord to withdraw the amendment.
Lord Low of Dalston
My Lords, I declared my interest as a DLA recipient when I first entered the debate on PIP before dinner. However, in view of the particular relevance of this amendment to my own situation, I ought to have made it clear, like the noble Baroness, Lady Wilkins, that I have received DLA from its inception and continue to receive it now that I am past pension age.
Obviously, at this time of night, I am not going to press the amendment and will seek leave to withdraw it. However, I have to confess that I am not entirely convinced by the Minister’s answer. The strongest point he made was that, in the way it is drafted, the amendment could override linking rules and enable somebody who had received DLA a considerable length of time before he reached pension age successfully to resuscitate a claim to PIP after he reached pension age. That would not be our intention and, as I said in moving the amendment, if we could resolve that and any other matters of mis-wording to which the Minister could draw my attention by Third Reading, I would be very happy to have discussions with him and his officials.
Lord Freud
Perhaps I may make the position clear. The difference between us is that we would not want this in the Bill but the substance of what we are trying to do matches what the noble Lord is looking for. I am not in a position to offer anything further for Third Reading. I am, however, very willing to see him personally—and any groups he wants as well—to discuss this matter when we move into the spring period to make sure that we get it absolutely right. We are anyway having full consultation, but I am absolutely prepared to commit to looking at this so that the detailed regulations are acceptable.
Baroness Hayter of Kentish Town
My Lords, my name is also on this amendment and it is clear that we support it. The amendments are, I hope, welcomed by the Minister as an opportunity to firm up what, as the noble Baroness, Lady Hollins, has said, he said before Christmas: that carers of claimants of both rates of the daily living component will retain eligibility for the carer’s allowance, and to make that undertaking concrete by placing it in primary legislation.
The Minister and the House know well that the changes to disability benefits are causing considerable concern to disabled people and to their carers. This amendment is about providing some clarity. It cannot provide full reassurance because carers do not yet know how they will be affected by the 20 per cent proposed cuts or the exact way that the new thresholds will work. We know that half a million people will lose benefit, but we do not know how many of that half a million qualify for carer’s allowance at present. I am afraid we must assume that there will be a large number of current recipients who will no longer qualify for support.
There has not yet been any impact assessment—it is not simply that the noble Baroness, Lady Hollins, cannot find it. We hope—indeed, we expect—that there will be as part of the response to the consultation announced yesterday. However, for today, we would simply ask the noble Lord to solidify his commitment to those who qualify under the new assessment process that their carers will be able to receive carer’s allowance. At the moment, the Bill does not repeat what is there for DLA. It does not even appear to do it in regulations.
A move from warm words to an undertaking in the Bill to maintain the status of carers’ rights would be very welcome. It would be a sign that the Minister is listening to disabled people and understands their need for clarity. In Committee the Minister spoke very warmly of our 6 million carers. Along with those warm words, can we have something in legislation?
Lord Freud
My Lords, I welcome the opportunity to place on record the value that this Government place on carers and their work. Although times are difficult, I have managed to redesign the universal credit so that we are ameliorating the £100 cliff edge, as carers do some earning, that they dislike so much. I hope that that is a token, even in these difficult times, of how much we value carers.
The second thing I would like to mention is more than a token. I was really pleased to be able to announce before Report that both elements of PIP will be a gateway for the receipt of carer’s allowance. I am grateful for the very detailed and knowledgeable debate that we had on this matter. We have had a lot of very thoughtful and clever representations from groups such as Carers UK, which we have taken very seriously indeed. I know that our announcement has been very warmly welcomed by various groups.
There is some concern about how the decision is to be enacted. That is clearly what is driving the amendments from the noble Baroness, Lady Hollins. I want to give an absolute assurance on this. We will use the powers under Clause 90 of the Bill to make the necessary change. We will bring forward, in due course, the appropriate secondary legislation to amend Section 70 of the Social Security Contributions and Benefits Act 1992 and put the position beyond doubt by making clear that people will be able to access carer’s allowance from both rates of the daily living component of the PIP. That is how we are planning to lock that position down, and it is a commitment that I make here and now to carers in this country. We have listened to the concerns from Peers and the carers’ lobby.
The noble Baroness asked how many carers would be affected. We expect to undertake an impact analysis as we get to regulations. The noble Baroness, Lady Hayter, spoke about large numbers being affected. That is a slightly brusque assumption given that carers currently on the lowest rate would not anyway be passported. We are talking about the top two rates. The assumption of a 20 per cent cut in that budget does not marry up. It is not a cut on where we are today; it is a cut on where we would be at the end of this Parliament. We have to await the impact analysis before we can know the real figures.
On the basis of the reassurances that I have provided, I hope that the noble Baroness will not press her amendments.
Baroness Hollins
My Lords, I am indeed reassured to hear the Minister’s response, in particular that an impact analysis will be done as the regulations are prepared. I accept the Minister’s assurance that the passporting arrangements will be locked down. I beg leave to withdraw the amendment.
Lord Freud
Lord Freud
My Lords, I am happy finally to place in the Bill the Government’s intention to continue to enable disabled people who live in care homes to be mobile. I am equally pleased to have the noble Lord, Lord McKenzie, joining me on this amendment.
The amendments in this group put our position beyond doubt by removing from the Bill the power to make regulations to stop payment of the mobility component of PIP to people who live in residential care homes and whose costs are borne from public funds.
As noble Lords will know, we examined the evidence base, sought contributions to the debate from many disabled people and disability groups, and considered in detail the excellent report produced by the noble Lord, Lord Low, which was published in November. We established, as did the noble Lord, Lord Low, that while there was some duplication, the overall picture meant that in order to access mobility provisions within a care home environment, which we have steadfastly said we are committed to protect, the fairest outcome was to retain payability of the mobility component in those settings.
I am pleased to be able today to act upon these findings and to introduce a new, separate clause for people undergoing treatment in hospitals or similar institutions. I hope that noble Lords will feel that this reflects the fact that we do listen—sometimes, especially when people shout very loud—and that we try to get things right in this area.
I can go through each provision in turn, but I hope that noble Lords will trust my assurance that the overall effect of the amendments is that the mobility component of PIP for people in care homes will remain on the same basis as it currently is for DLA, including for those in residential schools and colleges. I commend the amendments to the House and urge noble Lords not to press theirs.
Lord McKenzie of Luton
My Lords, as the Minister said, we have an amendment in this group that I do not propose to move as I accept it has been superseded by the Government’s formulation—this listening Government that we have on this issue.
It is to be welcomed that the Government have accepted the arguments that have been put forward over many months and from many quarters. As the Minister indicated, we should be particularly thankful to the noble Lord, Lord Low, for his leading on the independent—I would stress the importance of independent—review of personal mobility in state-funded residential care. The report does not just focus on the narrow issue of the availability of the mobility component of DLA—soon to be PIP—but on wider issues of the mobility needs of disabled people, the role of local authorities and care home providers, and the importance of mobility to disabled people’s rights. The clear conclusion in that review found no significant evidence of overlap in the support offered by the mobility complement of DLA and that offered by local authorities and providers. If the rights of disabled people are to be preserved, it is vital that DLA mobility and its successor under PIP are retained for people living in residential care. The report offered a very clear analysis, which I would suggest the Government, frankly, had no option but to accept. Perhaps we should leave unanswered the question of what the position today might have been if the initiative by Mencap and Leonard Cheshire had not been undertaken and the noble Lord, Lord Low, had not assembled such a knowledgeable team to produce this report.
We always give voice to the proposition that disabled people are the experts in their own affairs. It is just a pity that it took so long for their voices to be heard on this occasion, but we should welcome the fact that that has now happened.
Lord Low of Dalston
My Lords, I promised the Minister earlier on that if he just waited long enough, sweetness and light would break out. The fact that the noble Lord, Lord McKenzie, and I have our names on another amendment in this group enables me to tell him that we have now reached that point.
There is more joy in heaven over one sinner that repenteth than over 99 just persons who need no repentance. For that reason, I greatly welcome the Government’s decision to drop their proposal to withdraw the mobility component from those living in residential care. I have been given some credit for bringing this about with the review that I was asked to lead by Leonard Cheshire Disability and Mencap, but I think, in all honesty, I must disclaim this. Half of that is because I had a very good team working with me, supported by an extremely able and hard-working secretariat from both organisations; and half because I think Ministers, to their considerable credit, largely came to their decision of their own accord. Perhaps I may have provided a little cover for a U-turn—if so, I am glad to have been of service.
It would be tedious if I were to start recycling all the water that has now flowed under the bridge by rehearsing the considerations that led both the Government and my review to come to the conclusion that it would not be appropriate to withdraw the mobility component from those living in residential care. Probably the most significant of them, as has been mentioned, was that we could not detect any evidence of the double funding that was thought to exist and the Government could not either.
The Government can be proud of the fact that on this occasion, when faced with the evidence that did not support their initial conclusion, they had the grace to acknowledge the fact and reverse that initial conclusion. This is very much to be welcomed and a matter for congratulation.
Lord Freud
My Lords, I should take the opportunity to say thank you. It is lovely to have some sweetness and light after a few days where there has not been very much.
Baroness Hollis of Heigham
Has the Minister learnt from this that the best way to encourage more sweetness and light is to agree with the amendments from all around the House?
Lord Freud
There are some other constraints that I do not think I need to spell out. On the point made by the noble Lord, Lord Rix, we are picking up the same arrangements for DLA including those for residential schools and colleges. On that basis, I beg to move.
Lord Freud
Lord Freud
Lord Freud
“Hospital in-patients
(1) Regulations may provide as mentioned in either or both of the following paragraphs—
(a) that no amount in respect of personal independence payment which is attributable to entitlement to the daily living component is payable in respect of a person for a period when the person meets the condition in subsection (2); and(b) that no amount in respect of personal independence payment which is attributable to entitlement to the mobility component is payable in respect of a person for a period when the person meets the condition in subsection (2).(2) The condition is that the person is undergoing medical or other treatment as an in-patient at a hospital or similar institution in circumstances in which any of the costs of the treatment, accommodation and any related services provided for the person are borne out of public funds.
(3) For the purposes of subsection (2) the question of whether any of the costs of medical or other treatment, accommodation and related services provided for a person are borne out of public funds is to be determined in accordance with the regulations.”
Lord McKenzie of Luton
My Lords, I simply say that some compelling and moving personal circumstances have been advanced in support of the amendment and I hope that the noble Lord will feel able to accept it, or a version of it.
Lord Freud
My Lords, I first want to put absolutely on the record that we are not talking about the constant assessment of everyone. That is simply not how it is going to work. To the extent that there is concern about people being dragged in to face assessors every year, that is simply not how it is going to work.
When we talk about having another assessment for some people who have deteriorating conditions, noble Lords have to remember that they might have started on the lower rate of PIP and that in practice the assessment will move them to the higher rate at that time. DLA is an understudied phenomenon. It was studied by the previous Government in 2004-05 and it was found that £630 million was overpaid. That was not as a result of fraud; it was just that people no longer fitted the rather easier criteria of DLA that were in place when they applied, although we do not know where they fitted when they did apply. Just as worrying was the finding in that year that £190 million was underpaid. We want to make sure that the money goes to people in the right way in both ways.
Baroness Hollis of Heigham
My Lords, I was the Minister responsible for those reports at that time, and I have to say to him that they did not apply to people with lifetime conditions. People with lifetime conditions should get lifetime awards. Clearly, if someone deteriorates, they or their carer may apply further, but the information on DLA that the Minister referred to was either about people with fluctuating conditions or about people who had become better but had not realised that they might no longer qualify as a result, and so on. We had no argument with the need to continue to review DLA for people whose conditions may change quite rapidly over a period of time, particularly if they have been recovering from an accident, and so on. We are talking here about lifetime conditions in which it is therefore decent to give lifetime awards. I can assure the noble Lord that the statistics to which he referred do not refer to that group.
Lord Freud
As I understand the statistics, they refer to the whole group and we clearly need a system that we can apply to everyone, within which there will be groups with lifetime conditions. Let me come back to my main point, which was my concern about the underpayments. People with lifetime conditions deteriorate, and they need to be caught at the point of deterioration in order to be paid the extra funds they need to cope with the higher level of disability or higher inability to do things.
Lord Rix
I apologise for interrupting yet again. The point is that if, as I said, the annual health checks are taken for these people it can be reported medically. Certainly the carers can report on this. There is no question that if your son or daughter or your friend is obviously not receiving the amount they should be, it is up to you to get hold of the necessary officials and to inform them. Equally, the annual health checks should certainly—for people with a learning disability anyway, although I do not know about other disabilities —take care of any deterioration in condition.
Lord Freud
My Lords, let me go through the approach we are planning to take in PIP. It will involve a personalised approach and, in some cases, awards will be fixed for a short period—maybe one or two years—but in others they will be much longer and we are looking at awards that could be five or 10 years. That will depend on the circumstances of the individual, the impact of their health condition or their impairment and the extent to which they are able to live independently and participate in society. In many circumstances, this can change for better or for worse during someone’s lifetime and that will be different for different people. Therefore flexibility in award durations is key and will allow decision-makers to tailor awards appropriately. Again, we will be working with disability organisations and disabled people to develop the necessary guidance to support these decisions over the next 12 months. There will be many chances to get this absolutely right in the months to come.
I must quote the noble Lord, Lord Touhig—who is not in his place—who quoted Lorna Wing, one of the founders of the National Autistic Society, who said, “When you have seen one person with autism, you have seen one person with autism”, which is a phrase that will remain with quite a few of us in the years to come. Our flexible approach should allow us to provide the support to meet the variable needs people have. We also recognise that the system needs to deal with fluctuating conditions and that is one of the things we need to really lock down in consultation in the next 12 months.
Even where awards of PIP are made for a fixed term and periodic reassessment is required, it will be proportionate. Some assessments may only involve scrutiny of paper evidence and will not require face-to-face consultation. That will particularly be the case where there is considerable supporting evidence on which to base decisions. Conditions or impairments that are lifelong or degenerative will have such supporting evidence. Clearly, we are going to provide guidance on the duration of an award, including when an ongoing award would be appropriate and with what frequency that award would be reviewed. That will be evidence-based and we are committed to coproducing it with the appropriate experts in the field. I assure noble Lords that we are keen to involve disabled people and their representatives in this process. We are determined to get it right.
I have to make the point that lifetime awards were abolished in 2001 and only in very rare circumstances would they be reviewed. At the moment in DLA, we have indefinite awards that can be reviewed at any time. On the other point raised by the noble Baroness, Lady Hollis, on the national benefit review, the only group excluded from that is the awards made to the terminally ill.
I hope that I have reassured noble Lords on the issue. There is still a lot of work to be done in this area. We will look to organisations that help us, including those with which the noble Lord, Lord Rix, is associated. However, before I ask him to withdraw his amendment, I must make clear the technicality that the Government do not consider that Amendment 56 is directly consequential on Amendment 55, so they are separate matters. I ask the noble Lord to withdraw his amendment.
Lord Freud
I can certainly write to the noble Lord on this matter and see what we can do with the paperwork.
Lord Freud
(a) within 2 years beginning with the date on which the first regulations under that section come into force; and(b) within 4 years beginning with that date.”
Lord Freud
My Lords, the government amendments are intended to support our plans for a sensible, achievable and measured approach to the introduction of PIP and to report on the effectiveness of the assessment. I went into detail on what we are planning earlier this evening, so I do not need to dwell on it too long.
The first amendment will allow us to test the processes in a truly live environment and gives us the ability to control where those early new claims will come from. We are looking at which sites to use and developing the detail.
The second is designed to support our programme of examining how PIP works against the assessment. In summary, as I said, I propose to put into the Bill a statutory duty to publish two reports to Parliament—the first within two years from the time that PIP starts, the second within four years of that date. I also made the commitment earlier this evening, which I repeat, that if there is a need for a third review and report because of ongoing issues identified in the second review, we undertake to do that. That is a commitment to ensure that the assessment and its processes are working. We have slightly adapted the idea of doing that annually, which is what happens under WCA, because that has led to a slightly piecemeal approach. We think that two-year reviews will be better and we have learnt from that.
These are sensible and practical amendments. They are of course inspired by noble Lords in Committee, whose arguments convinced me. I have already put it on record that I think that Committee Members did a fantastic job and went through the Bill in an organised, diligent manner with astonishing energy. I have tried to take all the good ideas possible—some of them are not, but I am really pleased to be able to take this one.
The Government consider Amendment 56ZB to be directly consequential on Amendment 56ZA, but do not consider Amendment 70 in this group to be directly consequential on Amendment 56ZA. Despite that, I beg to move.
Lord Rix
My Lords, the Minister gave the shortest reply in Committee, interrupting my amendments, and I sat down within about three seconds of standing up. The noble Baroness, Lady Hollis—I have the name right this time—said that if the rest of the amendments could be taken at that speed, we would have got through the Committee stage much faster. I am absolutely delighted that the amendments have been modified but certainly accepted by the Government. I am very grateful.
Lord Freud
Lord Freud
Lord Freud
Lord Freud
Jobseeker’s Allowance (Jobseeking and Work for Your Benefit) (Amendment and Revocation) Regulations 2012
Lord Freud Excerpts(12 years, 4 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Freud
That the Grand Committee do report to the House that it has considered the Jobseeker’s Allowance (Jobseeking and Work for Your Benefit) (Amendment and Revocation) Regulations 2012.
Relevant document: 34th report from the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I must start with the formalities: it is a requirement that I confirm for the Grand Committee that I consider that these provisions are compatible with the European Convention on Human Rights, and I am happy so to confirm.
The Department for Work and Pensions is fully committed to supporting the Government’s commitments to the rehabilitation of prison leavers. Our main aim in the cross-government work to reduce reoffending is to increase employment outcomes for ex-offenders and prison leavers. We will do this by using the work programme—the biggest single payment-by-results welfare-to-work programme that this country has ever seen—as the primary vehicle for help and support.
We recognise that offenders face significant barriers to employment. The Government believe that there is a strong social and economic case to provide additional employment support at the earliest point to individuals who leave prison without employment. Most prison leavers have much greater difficulty in finding and retaining work than unemployed people with no criminal conviction. This can be due to a number of factors, including: employer prejudice against people with a criminal conviction; problems with accommodation; high prevalence of health conditions—especially mental health; motivation; and low educational and skills achievements. These factors all contribute to high rates of unemployment among prison leavers, which in turn increases social exclusion and has a detrimental effect on other issues, including reoffending levels and long-term benefit dependency.
That is why the Deputy Prime Minister announced on 16 August last year the Government’s intention to bring forward the work programme entry point for prison leavers to immediately on release from custody for those claiming jobseeker’s allowance. Currently, offenders are mandated on to the work programme after nine or 12 months on jobseeker’s allowance, depending on their age, although they are able to volunteer for the programme early—after three months. From March, all prison leavers who make a claim for jobseeker’s allowance can be mandated on to the work programme immediately on release from prison.
The regulation changes will provide the legal framework to allow prison leavers to be mandated on to the work programme immediately on release. This will give them the appropriate support at the point that they need it most, by taking those referred to the work programme out of the coverage of the “treated as available and actively seeking employment” provisions in the Jobseeker’s Allowance Regulations 1996. The “treated as” provisions excuse the prison leaver from having to be available for or actively seeking work for the first seven days without this impacting on the prison leaver’s eligibility for jobseeker’s allowance.
Under current legislation, the earliest that prison leavers can be mandated to participate in the work programme is the eighth day after leaving custody. During the first seven days, when the prison leaver is treated as available and actively seeking work, the prison leaver cannot be attached to the work programme. Regulation 2 removes this seven-day period for those who have been given notice to participate in the work programme. The Jobseeker’s Allowance (Employment, Skills and Enterprise Scheme) Regulations 2011 provide the legislative framework necessary to mandate JSA claimants to participate in the work programme. Those who have not been given notice to participate in the work programme will still be provided with a seven-day period under the Jobseeker’s Allowance Regulations 1996. As an example, those prison leavers who are aged 16 and 17 and claim jobseeker’s allowance under special circumstances will not be mandated on to the work programme immediately on release.
To ensure that prison leavers who are attached to the work programme will still benefit from the seven-day period, where they are treated as being available and actively seeking employment, Regulation 3 of these draft regulations amends Regulation 5A of the Jobseeker’s Allowance (Employment, Skills and Enterprise Scheme) Regulations 2011. This means that prison leavers will benefit from the support provided by the work programme provided immediately on release, but will still be excused from having to be available for or actively seeking work for the first seven days from release without this affecting their eligibility for jobseeker’s allowance. We fully recognise that prison leavers will need to settle back into the community and re-establish their basic needs, including accommodation.
I would expect that during the first week after leaving prison, the primary focus of the work programme provider will be to support those activities that will provide a secure base from which later work preparation and job search activities can ensue. This would not, however, stop the work programme provider and the prison leaver working directly on employment issues straightaway if they both thought it appropriate.
I am happy to say that, in order to facilitate this change and mandate prison leavers on to the work programme, we are proposing that the Jobcentre Plus adviser would take the claim for jobseeker’s allowance in prison to start entitlement immediately on release, allowing mandatory referral to the work programme. Jobcentre Plus will only discuss claims for jobseeker’s allowance with prisoners on a voluntary basis, as at present. There will be no mandatory interviews with prisoners.
Where a prisoner opts not to make a jobseeker’s allowance claim while in prison and subsequently turns up at the job centre office within 13 weeks of leaving prison, then they will be mandated to the work programme from their date of claim. This change will essentially bring forward the activity that Jobcentre Plus currently conducts at the new jobseeker’s interview following release. The claim will be put in hand to be triggered immediately on release. This will help to contribute to putting prison leavers on to a sounder financial footing, enabling them to resettle more quickly, concentrate on finding a job and reduce their chances of reoffending.
In introducing this additional support for prison leavers through the work programme, we are working closely with other government departments, in particular the Ministry of Justice and its executive agency, the National Offender Management Service. We also have the support of the Scottish Prison Service. The support and co-operation of these partner organisations will be crucial in our efforts to implement this help and support our Jobcentre staff working in prisons.
To this end, we currently have around 140 Jobcentre Plus advisers in all prisons that require their service. Their work focuses on prisoners’ needs, both upon induction and in pre-release from prison. Jobcentre Plus advisers work alongside the Prison Service and other organisations providing support to offenders in prison. Taking jobseeker’s allowance claims from prison leavers who voluntarily opt to obtain the benefit will be an extension of their current work in the prison.
I would like to cover briefly the other element of these regulatory changes. The previous administration introduced the Jobseeker’s Allowance (Work for Your Benefit Pilot Scheme) Regulations 2010 to provide a legal framework for a pilot in certain Jobcentre Plus districts. These regulations allowed the Secretary of State to select claimants in specified pilot areas for participation in the work-for-your-benefit scheme if they met certain conditions. They also provided for the loss or reduction of benefit if persons selected failed to participate without good cause. The regulations came into force on 22 November 2010 and are due to lapse on 21 November 2013. The Minister for Employment’s Statement to the Commons on 19 November 2010, which I laid before this House on 22 November 2010, confirmed that this scheme would not go ahead. As a result of this decision, no jobseeker’s allowance claimants were selected for participation in the scheme. The Minister for Employment had previously made it clear that the work-for-your-benefit pilot scheme would not proceed and that the regulations for the scheme would be revoked when the opportunity arose. Regulation 4 revokes the Jobseeker’s Allowance (Work for Your Benefit Pilot Scheme) Regulations 2010. I beg to move.
Lord McKenzie of Luton
My Lords, I thank the Minister for his explanation of this order, which has our support. Enabling prison leavers to be referred to the work programme immediately upon release, rather than at the earliest after seven days, is to be welcomed. As the Explanatory Memorandum recites, those in employment are much less likely to reoffend, and the importance of this first week is acknowledged even though, as the Minister said, the focus will be on reintegration and securing a base rather than work preparation and job search. From the Explanatory Memorandum, it also appears that the JSA claim process will be conducted in prison so that entitlement can begin on release. Again, the Minister covered that. It is proposed to make use of the provisions of what I think is now Clause 96(2)(1) of the Welfare Reform Bill. What will the position be in the interim before the Clause 96 provisions can be brought into effect? What payment will be due to individuals between release and the otherwise first payment date?
The Minister might be relieved to know that I do not propose to reiterate the detailed inquiry about the work programme which was taken up in the other place. However, when is it expected that the Government will be releasing comprehensive data on its operation, about referral levels, categories, outcomes, cost et cetera? It would be helpful if the Minister would say a little more about the process of these additional referral opportunities. Will this become the main approach for those leaving prison? I note from the Explanatory Memorandum and the Minister’s confirmation that 16 and 17 year-olds will not be referred by this process. Will he say a little more about why? How many prison leavers have been referred to the work programme at day eight to date—from what the Minister said, it may be that the answer is nil—and certainly within 13 weeks of their claim? We understand that there is going to be a new category in the work programme. I am not sure whether it is just for those day one referrals rather than perhaps day eight referrals, week 13 referrals or any others.
In particular, will the Minister confirm that this will not be an automatic process that will squeeze out other programmes? I am sure that, if he were in his place, the noble Lord, Lord Ramsbotham, would talk about some of the programmes of which he is aware. I certainly remember sessions where we had presentations—I think that the Forestry Commission was engaged in employing people even before release from prison. These were imaginative programmes that really made a difference to people, and I would not wish to see these opportunities trump them and squeeze them out.
Subject to any points arising from those questions, we support the order and wish the Government well with this initiative.
Lord Freud
Well my Lords, it is very nice to have that support, and I am looking forward to lots more of it. There were a range of questions and I will try to deal with as many as I can. Where I cannot, I will of course write.
Picking up points from the noble Lord, Lord McKenzie, I think that he catches me, as he always does, on a technicality around Clause 96. We were looking to use Clause 96 in this way but, having looked at it again in legal terms, we have concluded that it is not necessary to rely on that particular amendment and that this regulation is adequate. Therefore, we do not have the timetabling issues that he was concerned about.
I have to disappoint on the numbers. We simply do not have the information on how many prisoners have been referred to the work programme to date. We will start to collect that information, clearly, when this programme comes into effect.
On the question of when more general data on the work programme are coming out, we are planning now to provide a level of information on the attachments and referrals to the work programme next month, although because of the back-ended way that payments are made, the figures on actual job outcomes will probably not come out until the autumn.
The reason that 16 and 17 year-olds are not referred is that the work programme is available to those from age 18 and over—that is just how it is structured. One of the things that the noble Lord, Lord Kirkwood, was urging was to look at ways of using this in an expanded way, as it is only for JSA whereas there is also ESA for youngsters. Clearly, if this starts to work I will certainly be looking very closely at the other areas where we can expand it.
On the question of squeezing out other programmes, we would expect the work programme providers to work with other local initiatives, especially when they have established a track record. The noble Lord, Lord Kirkwood, talked about the experience of the Wise Group, which would clearly be very valuable. The Ministry of Justice has a range of pilots going on at the moment, experimenting in this area using social impact bonds—in Peterborough there is a rehabilitation payment and in Doncaster there is a justice reinvestment pilot. There are also community pilots. There is an enormous level of activity going on in this area, for the obvious reason that it is one where we need to make a lot of improvements.
I can confirm that the programme is entirely voluntary and that those who want to claim—both those who claim in prison and those who claim up to 13 weeks after release—are all in that same group of payment by results. This is a new category and we are looking to negotiate the terms and to get that new category with the work programme providers. The total amount of earnings that providers can make for a successful placement is £5,600 for an extended period. We all understand the structure of the work programme.
I think that I have covered all of the questions—
Lord McKenzie of Luton
Indeed, the Minister has, and that has been very helpful, but I want to clarify a couple of points. I think he said that the programme is voluntary. Is it voluntary whether or not somebody claims JSA? It would be voluntary because if there are other programmes associated with prisons going on, such as the one that the noble Lord, Lord Kirkwood, instanced, the referrals or the route to go via the work programme would not preclude those continuing. Where does the decision-making lie in respect of that? Is it for the individual as to which programme they attach themselves to or seek to get the benefit of, or is it the decision-makers at Jobcentre Plus—the providers? How does that all work? Although this clearly has great potential, it would be a pity if it squeezed out those good examples that already exist.
Lord Freud
My Lords, to be blunt, it is voluntary to make the claim for JSA in prison, then once you do that as a prisoner there is immediate mandation. To the extent that voluntary charitable endeavours have been doing this with their own funding, this will displace some of that. However, I think that those who are experienced at this work will find a way to continue and to start earning money. This is stopping being a charitable endeavour now and becoming something that the state is willing to pay for, so I expect some readjustment of who does what. Clearly, there always will be that, but I would expect people who are experienced and have a track record in this area to be very well placed to continue to do it.
The transition from prison to the community is a key transition point in the journey from crime to resettlement. We have a much too large benefits bill in this country and prison leavers are significantly more likely than the average person to claim those benefits, so it is essential to put in the work and support required to get them back into the workplace so that they can start to pay their own way in society. The figures suggest that those individuals who are in employment are between one-third and one-half less likely to reoffend, so we could make a real difference by providing help not just to those individuals but also to society as a whole.
Lord McKenzie of Luton
I started off wholeheartedly supporting this but now my support is slightly qualified, as, I expect, is the support of the noble Lord, Lord Kirkwood, in relation to the Minister's response on the issue of mandation. I can see that it is voluntary whether someone claims JSA or not, but if you have no other source of income, that is not a particularly helpful designation. Once you do, you have the inevitable route in the work programme and there may be a chance of existing providers being wrapped up in that but there is no certainty. That seems to be a great pity if it risks destroying the experience of good programmes that are out there. I accept that that is not universal and I accept that they may be driven in large measure by charitable organisations but there is real work involved. I enter my qualification without necessarily withdrawing support for the regulations.
Lord Freud
There is a genuine dilemma when you go from a cottage industry, where there are individual examples of really excellent work, to trying to provide a universal, lock-down service to everyone in the category. I do not want to sugar-coat this—it is very easy to over-sugar-coat—as I think there are going to be changes in the provision here, and there may be some groups that have been in very good individual work that does not translate into the universal service that we are aiming for. I think there is every opportunity and every incentive for those who have been affected to remain in this part of the provision. Rather than worrying about individual groups and their position, it is much more important to deal with what is a running sore and a long-term tragedy of not looking after these people properly. That is what this is doing and I hope that most of the good provision is wrapped in, but clearly that cannot be guaranteed. I think this is vital and I hope that it is the smallest of cavils from the noble Lord, Lord McKenzie, but you cannot change things without changing things—tautology is very useful sometimes.
With those words, I commend the regulations to the Committee.
Welfare Reform Bill
Lord Freud Excerpts(12 years, 4 months ago)
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Lord Freud
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I speak in support of the amendments tabled by the Government in relation to Clauses 51 and 52—namely Amendments 33, 34, 37, 39, 40, 41, 43, and Amendments 63 to 67.
The important issue of the impact of time limiting on those with deteriorating conditions was raised in Grand Committee. I outlined in debate the existing safeguards which would protect people in these circumstances. However, when we looked again at the safeguarding provisions, it was clear that a person would be able to requalify only in very limited circumstances. In light of that helpful debate, we have decided that further clarification should be provided on the face of the Bill and are therefore moving these amendments.
The government amendments will enable people whose contributory ESA, while in the WRAG, has ceased as a result of time limiting, to requalify for an award of ESA if, after their award ends, they continue to have, or are treated as having, limited capability for work, and—I stress this point—at any time thereafter they develop and continue to have limited capability for work-related activity and would become eligible for the support group. The substance of this new category of entitlement is found in Amendment 43, which provides for claimants to have further entitlement after time limiting has been applied to an award of contributory ESA. I note with pleasure that the noble Lord, Lord McKenzie, and the noble Baronesses, Lady Morgan and Lady Meacher, have added their names in support of Amendment 43.
Without wishing to anticipate or foreshadow the debate on Amendment 42, tabled by the noble Lords, Lord Patel and Lord McKenzie, I trust that the noble Lord, Lord McKenzie, having lent his support to Amendment 43, may feel able not to proceed with Amendment 42. I shall endeavour to explain why shortly.
I turn to the remainder of the government amendments in this group. In previous versions of the Bill, the time-limiting provisions for ESA youth appeared in Clause 52. As a result of the amendments, we have moved to provide for new entitlement to contributory ESA through deterioration, and it has been necessary to amend how the time limiting of ESA youth awards will work to provide for the new deterioration category. This is because we wish the category of further entitlement to ESA after deterioration to cover both claimants who deteriorate after their time-limited contributory ESA awards end and claimants who deteriorate after their time-limited ESA youth awards end. We have therefore moved amendments to provide for Clause 51 to deal with the time limiting of ESA youth awards where a claimant is in the work-related activity group. To be clear, the clauses as revised by the government amendments still have the effect that claimants awarded ESA on grounds of limited capability for work developed during youth will have their awards time limited, if the claimant is not in the support group.
Amendment 42 is similar in a number of respects to Amendment 43, and I think I can probably say was the inspiration in an earlier form for that amendment. However, the point is that Amendment 42 is less favourable than Amendment 43 in one important respect, as it states that a claimant must be assessed as having limited capability for work-related activity within five years of the termination of the first ESA award. The approach taken by the government amendments would not seek to put this time limit on the new form of entitlement to ESA for claimants whose condition deteriorates. We would allow a claimant to return to a contributory ESA award at any time after their time-limited award has ended, as long as they develop limited capability for work-related activity or fall to be treated as having it, and as long as they have continued to have or be treated as having limited capability for work throughout the period after their time-limited award ended.
On this basis, I trust noble Lords will agree that Amendment 43 and the supporting government amendments provide a more generous approach than would be provided by Amendment 42. I beg to move.
Lord Patel
My Lords, I speak to Amendment 42, to which the Minister has just referred. Before I start, perhaps I might wish him a happy new year and, in doing so, thank him enormously for his Amendment 43. It may be claimed that it was in response to my amendment in Grand Committee; if so, I am very grateful for it. I thank him and I do not need to go any further.
Lord McKenzie of Luton
My Lords, I start by also thanking the Minister for Amendment 43 and wishing him a happy new year. I am sure it will become happier when we get into February. That is the case for several of us. Perhaps I can comment first on some of the other amendments to which the noble Lord referred. I understand that Amendments 33 and 34 are consequential. The fact that they include references to provisions that cover 365 days or the clock for counting those days already being under way does not imply our acceptance of them. They are the subject of subsequent amendments that we are about to come to. Similarly, as we have heard, Amendments 37, 39, 40 and 41 are the formulation to confirm the intention that the limit should apply to contributory claims under the youth condition. Again, as will be clear, we do not support the 365-day limit or the future denial of claims under the third condition, and we will address this by amendments in the next group. Therefore, our not challenging these amendments should not be taken as accepting this as the final position; likewise in relation to Amendments 63, 64, 65, 66 and 67.
Amendment 43, tabled by the Minister, obviates the need for Amendment 42. It covers the same point and, as he said, goes further in that there is no time limit. This is to be welcomed. This enables someone to reconnect with contributory ESA after time-limiting should their condition deteriorate and they become eligible for the support group. It would appear that this applies equally to those with an existing youth condition claim and those accessing contributory ESA via the first and second national insurance contributions. Perhaps the Minister would just confirm that. It would appear that there is no time-limiting factor—I think that he confirmed this—so the gap between the time limiting of the contributory allowance and arrival in the support group could be five or 10 years or, in theory, even longer. I touch on this particularly because I am bound to say that this is not something to which the Minister warmed in Committee. On 8 November, at col. 33 of Hansard, he stated in relation to Amendment 71P:
“However, this could mean benefits being reinstated 10 or more years after the claimant last worked, which is not reasonable”. —[Official Report, 8/11/11; col. GC 33.]
Further, he stated that,
“people in the WRAG who have gone through their time-limited period do not then have a right to go into the support group on a contributory basis”.—[Official Report, 8/11/11; col. GC 36.]
I do not wish to be churlish about this but that is why we included the five-year limitation in Amendment 42, which sought to meet the Government at least part way. However, the Government are to be congratulated on Amendment 43, which deals with the disconnect from the national insurance contributions and also addresses the concerns powerfully expressed in Committee about people with deteriorating conditions who are initially placed in the WRAG. My noble friend Lady Morgan of Drefelin spoke about people with Parkinson’s disease, motor neurone disease and some forms of cancer. The Government will fulfil their stated intent that the time limiting of contributory ESA will not affect those in the support group.
However, as ever, I have a couple of questions. Amendment 43 states that the employment and support allowance entitlement,
“is to be regarded as a contributory allowance for the purposes of this Part”.
Why is “regarded as” used rather than “is”? Is it or is it not a contributory allowance? The requirement is that the person remains assessed as having limited capability for work. How is this to work in practice in circumstances where entitlement to the contributory allowance has lapsed and income or capital levels preclude entitlement to income-related ESA? Does it require the individual to be subject to the crediting-only arrangements? Would a claimant commitment still have to be in place? If somebody’s prognosis of limited capability for work has lapsed but there has been no reassessment because nothing is due, how does this affect the position in practice? Where someone’s reassessment has initially led to a fit-for-work designation but this has been overturned on a reconsideration or appeal, will the claimant be treated as being continuously in the WRAG and remain entitled to the benefit conferred by the government amendment? The noble Lord’s letter of 8 January, which I received yesterday, suggests that around 4,000 people will benefit from this measure by 2016-17. This may be only a small proportion of those damaged by the general time limiting. Nevertheless, I stress that it is welcome.
Amendment 42A, spoken to by the noble Baroness, Lady Meacher, and supported by my noble friend Lady Morgan and the noble Baroness, Lady Finlay, raises an extremely important point about individuals with life-threatening diseases where there is evidence that their diseases are uncontrollable or uncontrolled by a recognised therapeutic procedure. It requires them to be treated as being in the support group to obtain the benefit of the easements in the Government’s legislation. I would be interested to know how often such individuals would not be assessed as being in that group anyway. I think that we heard some examples from the noble Baroness, Lady Meacher. I await the noble Lord’s reply but I hope that he can give her a sympathetic response to this important issue.
Lord Freud
My Lords, picking up the point of the noble Lord, Lord McKenzie, about the discrepancy between Amendments 42 and 43, sometimes when a powerful argument is made in Committee, it succeeds even more than do the proponents of that argument. In this case we went back, thought about the measure and said, “If we are going to do it, let us do it properly”. That is why the measure is indefinite and not for five years. The noble Lord asked whether Section 1B on further entitlement after time-limiting covered contributory ESA under the first and second contribution conditions and the ESA youth awards. The answer is yes
Let me turn to Amendment 42A. I very much understand noble Lords’ concerns on this, but the amendment would not achieve the stated aims of placing in the support group individuals with conditions that reduce life expectancy to two or three years. Substantial provision is already available to ensure that individuals with life-limiting diseases are provided with appropriate support. The amendment seeks to ensure that individuals with uncontrollable diseases who do not meet the support group criteria of the WCA, set out in regulations, are treated as having limited capability for work-related activity. Under the current system, individuals who meet this provision and are treated only as having limited capability for work will have a condition that does not significantly limit their functional ability such that it would be reasonable to expect them to undertake work-related activity. However, anyone who has an uncontrollable condition may still meet the current support group criteria if, as a result of their condition, there would be a substantial risk to their health if they were held to be capable of work-related activity. A large number of protections are therefore built in.
Perhaps I may provide an example of how that might work—and does work. Consider an individual with extremely severe uncontrolled hypertension, who has little or no symptoms or functional impairment. This individual will not meet the test of limited capability for work-related activity necessary to go into the support group, or even the test of limited capability for work to go into the WRAG. As a result of their condition, work-related activity is likely to pose a substantial risk to their health.
Baroness Meacher
I apologise for interrupting the Minister. The point that I was trying to get across was in the example of the woman to whom I referred. It may be that today she could do a little bit of work—although probably not. The difficulty is that the assessors do not take into account the likelihood over a number of weeks that this person simply will not be able to maintain an employment pattern. No employer in their right mind would therefore take them on. The issue that I am trying to raise is that the assessment processes, as I understand them, absolutely do not go anywhere near that level of sophistication. I agree that we are not talking about large numbers of people, but each and every case is a tragedy in its own right. There will be people who, for reasons that we can understand, will be assessed as not qualifying for the support group at this moment, yet for whom employment is completely unrealistic. I hope that the Minister can get the sense of what I am trying to say.
Lord Freud
I am sympathetic to this issue—one has to be. Clearly, we are continuing the whole time with improvements to the WCA process. We are getting a lot of improvements. We are beginning to sense that. Although the figures do not show it, the anecdotal feedback is becoming much more encouraging. This is an area in which we can make the assessments with the kind of detail that is necessary as we work through the process. Indeed, that is where it should be done. As the noble Baroness, Lady Finlay, said, in these situations it is extraordinarily difficult to come up with a six-month or a year’s prognosis. We all know that. The position, on the balance of probabilities, is that if the prognosis is six months, people go straight into the support group. That has happened since 2008 and for about 10,000 people.
The data are extraordinarily imprecise. There is great variability among clinicians. It is very hard to pin down anything that we could use with any consistency stretching out to two or three years. Medicine is advancing with great rapidity, so whatever we decide on today may be radically different in two years’ time. A longer prognosis could mean that a condition could be very well controlled for a period and then deteriorate dramatically towards the end. The amendment concerns only conditions that are uncontrolled and uncontrollable. Clearly, that may not be the case for many life-limiting diseases. I think there is consensus around the House that in many circumstances work is beneficial and important for those with life-limiting conditions. Some will want to continue to work, and it is important that we have a system that does not write people off but allows for that.
Lord Freud
“( ) section 1B(1) (as inserted by section (Further entitlement after time-limiting) of this Act;”
Lord Freud
My Lords, I start with government Amendment 45A, on which the noble Lord, Lord McKenzie, ended his remarks. We have already discussed government amendments to provide for further entitlement to ESA after a contributory award has been time limited. As I mentioned in the previous debate, it has been necessary to amend how the time limiting of ESA youth awards will operate as a result of providing for that new category of entitlement. We have introduced the amendments so that the deterioration category will be open to both claimants with a time-limited contributory ESA award and claimants with a time-limited ESA income-related award. In practice that means that the substance of the ESA youth time-limiting measure has been placed in Clause 51 instead of Clause 52. The government amendment preserves the intended policy for preventing new claims to ESA youth from being made in the future. The amendment to Clause 52 seeks to remove the substance of ESA youth time limiting, which will now feature in Clause 51, but to retain the measure that prevents new ESA youth claims being made.
Our proposed changes to the condition relating to entitlement to ESA on grounds of limited capability during youth are part of, basically, a set of principles around the form, where we are trying to focus our support for the poorest people. We are seeking to avoid duplication and to redefine the contract between the state and individuals as we move towards introducing the universal credit, which is clearly a far more efficient way of directing our resources to the poorest people.
As we go through some of the specific areas, I should remind the House that the universal credit, when it is introduced, is designed to focus each year an extra £4 billion into the pockets of the poorest people. On the other side, we do not think it is right in principle that, for example, a claimant who under the existing youth provision has qualified for contributory ESA as of right and then comes into a large amount of money—for instance, an inheritance from a parent—should then be in a position to continue to receive the scarce resources of the state in terms of contributory ESA without having paid any contributions. The figures available show that there is support for these youngsters in income-related ESA and that, indeed, 90 per cent of existing recipients will go from contributory to income related.
Baroness Meacher
My understanding is that many of these people may receive some income-related benefit but not at the same level of the contributory benefit that they would receive under the amendment. My second point is that the Minister has frequently referred to the £4 billion addition in the Welfare Reform Bill: is that a monetary addition rather than a real-terms addition because surely in real terms there will be a considerable drop in the overall welfare reform cost under the Bill?
Lord Freud
To be absolutely honest, unwinding the effects of the first full year, which will be in 2017, is quite hard to do in simplistic terms when compared to an SR. The simple answer is that the £4 billion is a real £4 billion, not an eroded £4 billion. The impact assessment makes it clear that it is made up of roughly half and half efficiency; it is a much more efficient system. We have taken the efficiencies that we have gained and put them back into the pockets of people, plus an extra amount of £2 billion. That is where the money is coming from. The bulk of it is going into the lowest two quintiles in a rather efficient way; I forget whether it is 80 per cent or 90 per cent, but the bulk of that money is directed very efficiently.
I turn to Amendment 45 in the names of the noble Lord, Lord Patel, and the noble Baronesses, Lady Lister and Lady Finlay. Clearly, the design of that amendment removes Clause 52 altogether. As I have just mentioned in my remarks on Amendment 45A, we have a principled approach to reform, in which we are trying to modernise and simplify the current welfare system and remove duplicate provision when our resources are limited.
As we move towards universal credit, on which I have just spent a bit of time, there are other areas of rebalancing the relationship between the state and individuals. I remind noble Lords again that the small number of youngsters who do not qualify for income-related ESA are in this position only because they have alternative resources available to them. All those in the ESA support group will continue to receive unlimited support. We will also, of course, provide support to ESA youth claimants whose awards end, and they later become vulnerable through their conditions deteriorating so they develop limited capability for work-related activity.
Baroness Lister of Burtersett
Does the Minister accept that there may be resources available to that group but that they are not resources over which they would have control, as they do not provide those young people with any form of independence, as does the contributory ESA?
Lord Freud
My Lords, where they have other resources, as they move into young adulthood, clearly they have to be resources of their households at that stage and their own capital and household income. The reality is that very many of this small group of youngsters are inheriting very substantial sums of money; that is why they are in the position that they are in. That is a decision in principle over whether we should support people who have very adequate resources of their own. We will continue to support those who have deteriorating conditions even when they have a high income. They just go back into the support group.
Let me just go into the rather complicated position with European law and the specific judgment here, which I am looking at. I do not know whether the noble Lord, Lord McKenzie, will regard it as recent enough—this is the Lucy Stewart case on 21 July last year. It is within half a year, so I think that is recent. We have a code for soon and sooner or whatever; recent is within half a year. That judgment made it clear that we cannot use the past/present test to deny access to a benefit if a claimant demonstrates a genuine link to the UK in other ways, which may include consideration of the relationship of a claimant and the social security system of the competent member state or claimants’ family circumstances. The past/present test requires that a claimant must be present in Great Britain for 26 weeks out of the last 52 preceding a claim for employment and support allowance. We still lost the case, even though we had lots of powers on residence. Clearly, the view of this Government is that it should be a matter for the Government of this country to decide how people qualify for benefits. The effect of this judgment is that young people can qualify for a benefit even when they have not lived in this country for many years.
I cannot be absolutely hard and fast on the European benefit-shopping issue; I can tell your Lordships only that this is causing us enormous concern at a number of levels and we are currently challenging Commission lawyers on it. The issue, at the simplest level, is that if you can call something social support it is much less likely to be abused and taken abroad than if it is a contributory right. That is where the battleground is and your Lordships can clearly see what we are doing here. When we are asked for a concession and whether we can get round the European law, what we are looking at is a system that basically provides the support for the vast bulk of the youngsters whom we want to support without opening our doors wide to current and future dangers of this kind of benefit exportability. That is the approach that we have adopted to try to get round this problem.
Baroness Hollis of Heigham
It is a dilemma. I think that the entire House sympathises with the noble Lord. Many of us have been faced with this dilemma in the past. You are eligible for benefits in the UK if you are ordinarily resident. Much of the protection has been about whether you are allowed to go away for extended periods of holiday and still continue to claim. That is secure, but the problem of contributory benefits is that which flows out of the free movement of labour and, as a result of that free movement, generates you a right to a contributory benefit whichever state you may subsequently live in.
We understand the Minister’s dilemma very well, but I would have thought that there is a route out, which is of course to recategorise this as a special non-contributory benefit. That has a long pedigree in social security and European Union co-ordination of benefits and would therefore take it out of the label “contributory”. It would take it out of the labour market eligibility, because these young people have never been in the labour market. We are trying to apply a label to them that is not appropriate. By relabelling this, perhaps along the lines suggested by the noble Baroness, Lady Meacher, we should in my view be secure.
Lord Freud
My Lords, I do not think that we ought to spend a huge amount of time on this—it is really difficult and moving very fast. The principle is that it is the automatic entitlement that makes us vulnerable. If it is for income supplement and social support, it protects us. Your Lordships can see that the change that we have made here is to cover the vast bulk of the youngsters with support, but it is not automatic. That is precisely the safety that we are going into with this European legislation. I do not think that the precise workaround from the noble Baroness, Lady Hollis, works or that we should sit round this Chamber and work something out. All I can tell your Lordships, for your consideration, is that this is the way that we have found to get round it while, as I say, covering 90 per cent of those youngsters.
I ought to hurry along, but let me move to giving your Lordships the figures on Amendment 45. The reduction in the cumulative benefits savings by 2016-17, over five years, would be around £70 million, which we would need to find elsewhere. A little bit here and a little bit there—it is a very hard thing finding bits of money.
Baroness Lister of Burtersett
I am sorry to interrupt again but in Grand Committee the cumulative saving during that period was £10 million. Now, suddenly, it is £70 million. Where has the other £60 million been accumulated?
Lord Freud
The figure that is closest to the one in Grand Committee is the one relating to Amendment 46, which I will come to, which is closer to £17 million. This one is £70 million.
Amendment 36A, moved by the noble Earl, Lord Listowel, and the noble Baroness, Lady Meacher, and Amendment 46 would allow new claims to ESA to be made by those claimants who at the end of the assessment phase would be placed in the support group. We understand the purpose of Amendment 36A to be to provide support for Amendment 46. I have already listed the rationale for rejecting Amendment 45, which would remove Clause 52, and that rationale applies to Amendments 36A and 46 as well. In addition, Amendment 46 would have accepted considerable unwanted—
Lord May of Oxford
At the risk of exposing my lack of full comprehension of this, I have been listening to the debate and I resonate with the concern that the Minister has expressed about the abuse of this system, but at the same time I have not heard clearly that his resolution of one problem has not created a different and arguably more severe problem that has been emphasised by people who really understand this.
Lord Freud
My Lords, we have had a pretty good Socratic debate on the welfare Bill for some time. I hope that I can get over to noble Lords that the move from an automatic payment system, which is what we have for these youngsters, to one based on their income needs will pay them effectively the same amount depending on the position of their disability, will cover 90 per cent of the same people and will leave out the last 10 per cent who have their own means of one kind or another. That is the solution that works best in terms of the European legislation.
Lord McKenzie of Luton
Before the Minister sits down, is the ruling in question a concern only in relation to the youth condition that we are discussing today, or does it have a wider implication? If the latter, how are the Government proposing to address that?
Lord Freud
My Lords, I am being dragged a long way away from my brief. This is a widespread concern that runs to benefit tourism. We are currently challenging the Commission in the Court on one of its findings and trying to build a constituency with other European countries that are also enormously concerned at the implications of this. As I say, though, the principles are that these automatic payments leave us far more vulnerable than income support in this area.
I know that noble Lords are listening very hard to this, because it is an important concern that we all have. I hope that I have been as clear as I possibly could have been on this issue. It is a moving target and changing all the time. It is not settled at all, so I cannot lay it out absolutely—I can talk only about the risks involved.
Lord McKenzie of Luton
I think that we all understand that, but the Minister is praying this EU ruling in aid of his desire to stop the youth condition continuing in future. He has already said that that ruling has much wider implications, and that there will be a wider need to look at how it can be fully addressed. In those circumstances, is it not unfair of him simply to target this particular benefit and say, “This can be dealt with by stopping it”, rather than addressing a wider solution in due course?
Lord Freud
My Lords, not really. This is a prime area in which we have automaticity without any payment system. This is one of the areas where we are very vulnerable so it makes enormous sense to look at it now and as it comes up. Therefore, I would not agree with that point. Shall I rattle along?
Amendment 46 would create considerable and unwanted uncertainty for claimants and operational difficulties for the department. A claimant would need to claim ESA and go through the assessment phase without any entitlement to ESA at all until the question of limited capability for work-related activity was determined at their WCA. This is because, under Amendment 46, only claimants who were found to have limited capability for work-related activity at the end of the assessment phase would be entitled to ESA on the grounds of youth. As I have already said, the amendment would save rather less—£17 million until 2016-17. The discrepancy is in the SAR, which is covered by a very similar amendment, to pick up the point of the noble Baroness, Lady Lister.
I confirm that the Government see Amendment 46 as linked to Amendment 36A, but none of the amendments in this group is consequential on any other. We would expect the House to make a decision on each individually. In due course I will move the amendment in my name, Amendment 45A, and I urge noble Lords not to press theirs.
Baroness Meacher
I thank the Minister very much for his reply to the various amendments, and many Members of the House for their contributions. What we have here is an attempt to protect the dignity of a very vulnerable group of severely disabled people at a cost of £10 million, which is absolutely paltry. I refer to Amendment 46.
I feel that we are being somewhat sidetracked by the intervention on the European Union. Contributory benefits of all sorts are vulnerable to this situation. I think that the whole House has made it very clear that we are behind the Government’s fight to make sure that benefits tourism is stopped. We do not want to see it happen.
Lord Freud
My Lords, can I make it absolutely clear that contributory benefits per se are not vulnerable because they are paid? The vulnerability is in assumed contributory benefits, where they have not been paid.
Baroness Meacher
If I may say so, that brings me back to the point that I made earlier. We need to find a way of making it clear that this is a non-contributory benefit for people who, sadly, will never be able to contribute towards a contributory benefit. This is a social benefit for very disadvantaged and disabled people—a very small group of such young people, who will never have a chance, almost certainly in the rest of their lives, of any sense of independence or dignity, unless we give it to them today at a cost of £10 million to the entire tax-paying population of this country. On that basis, I do need to test the opinion of the House. However, I respect the Minister’s position and hope we can have further discussions about how we can prevent benefits tourism, which is completely unacceptable.
Lord Freud
Lord Strasburger
My Lords, I fully support the Government’s efforts to address the huge deficit which they inherited. However, my noble friend the Minister needs to explain why I should support this attempt to penalise some of the most vulnerable and disadvantaged people in our society for the greed of the financial services industry and the incompetence of the regulators. Do these sick and disabled people have the broadest shoulders, which we keep hearing about, to carry the burden of the cuts?
Lord Freud
My Lords, before we consider this group of amendments, it is important to remember the context within which they are proposed. I remind noble Lords that our proposal to time-limit ESA applies only to contributory ESA claimants in the work-related activity group, or WRAG. Those in the support group and those claiming income-related ESA are unaffected by the proposals.
We will always provide a safety net for those who have limited income, and people will still be able to claim income-related ESA subject to meeting the conditions of entitlement, including an assessment of means. In addition, other benefits such as housing benefit and council tax benefit will be available. However, it is only right that those claimants in the work-related activity group who are above the income threshold for income-related ESA should have their contributory benefit time-limited in a similar way to contributory JSA.
Amendment 38, tabled by the noble Lords, Lord Patel, Lord McKenzie and Lord Low, and the noble Baroness, Lady Hollins, requires the time limit for claimants receiving contributory ESA in the WRAG to be a minimum of 730 days and to be prescribed in regulations. Amendment 39A, tabled by the noble Lords, Lord Patel and Lord McKenzie, is designed to have the same effect for claimants whose ESA youth awards are time-limited.
We understand noble Lords’ concern about the proposal to introduce a time limit of 365 days for these claimants and the reasoning behind their request for the limit to be a minimum of 730 days. However, as I said in Grand Committee, the 365-day time limit is not an arbitrary one. It is similar to the limits applied in several countries overseas and around the world, including France, Ireland and Spain, and strikes a reasonable balance between the needs of sick and disabled people claiming benefit and those who have to contribute towards the cost. We strongly believe that a time limit of one year is the correct approach for a number of reasons. It strikes the right balance between restricting access to contributory benefits and allowing those with longer-term illnesses to adjust to their health condition and surrounding circumstances, and it is double the length of time allowed for contributory JSA in recognition of that fact.
There is also a very strong financial argument. As requested, I shall give my noble friend the figures on the costs. The total costs in this SR period are £1.1 billion —next year it is £270 million, then £420 million, and then another £420 million—and then £360 million, and then £140 million in 2016-17. Over the full five years it will be £1.6 billion, including £1.1 billion in this SR. It is a very large sum.
The noble Lord, Lord McKenzie, said that Governments have to justify reductions, and clearly reductions are difficult. However, when he proposes reducing our cuts by £1.6 billion over five years, he should consider that he also supported the move late last year on the social sector size criteria, which will cost £700 million in the SR period and £1.5 billion over five years. He is already up, over five years, to above £3 billion in reductions in cuts. The opposition Benches have also voted for or supported universal credit changes in excess of £600 million a year on an annualised basis once the system is introduced. These are huge figures which we will have to find elsewhere. Before one starts making such reductions, one has to ask: where are the alternatives? Where will we find these sums? That is why it has been such a difficult process for the Government to find ways of reducing the deficit while causing the minimum difficulties possible. Clearly, one makes the cuts where there is the most expenditure, but the expenditure has been provided to those who are the most deserving. That is the natural structure of it. That is why it is so difficult to do this.
The effect of Amendment 38A would be that no time limit is applied to contributory ESA for those claimants receiving treatment for cancer or where they are receiving benefit because of a diagnosis of cancer. Another effect of the amendment would be to extend the 12-month time limit for claimants in the WRAG if they are either having cancer treatment or their limited capability for work is caused by the effects of their cancer. I understand noble Lords’ concerns in tabling the amendment and can confirm that at present around two-thirds of those with a primary diagnosis of cancer who complete their WCA are placed in a support group. This means that they would not be affected by time-limiting.
We want to make sure that the system is as accurate as possible and that is why we asked Professor Harrington to carry out his review.
Baroness Morgan of Drefelin
The Minister referred to the position of two-thirds of cancer patients. Is that before or after the changes coming from the Harrington review with regard to intravenous chemotherapy versus oral chemotherapy and the automatic move of patients into the support group?
Lord Freud
The figure that I quoted is the existing one. I shall come straight on to the cancer issue because it is clearly of great importance. On the basis of the Harrington recommendations, the figure is expected to go up by about 10 per cent on the existing figure on our modelling basis.
There is a great deal of misinformation about the position and I shall try to pull out some of the main issues on cancer. First, the Guardian printed a letter from Professor Harrington in which he said:
“I believe the government’s proposals would significantly improve on the current system and would be of considerable benefit to those who face the real personal challenge of a cancer diagnosis and subsequent treatment”.
He went on to say:
“The government’s proposals have been developed as a result of evidence submitted to me by Macmillan and discussions with cancer specialists. The proposals would considerably increase the number of people who receive unconditional support in the benefits system. They would also reduce, not increase, the number of face-to-face assessments that individuals suffering from cancer would undergo. The proposals are underpinned by a presumption that people undergoing cancer treatment will be entitled to the benefit if they have the necessary supporting evidence. They widen the scope of the people this applies to, while also allowing people who want to work to do so. This will mean better provision all round. Delays in these proposals may ultimately affect individuals and their quality of life”.
We have now published the Macmillan evidence, which I hope is available and of great interest to noble Lords. What is interesting about the evidence is how many professional oncologists support this approach. I have a few quotes here which I would like to share with the House. The first states:
“Not all patients will experience toxicity related to treatment … Not all patients should be exempt”.
The next states that,
“some people on long-term maintenance treatments may have little or no upset and be quite able to work”,
and so on. That evidence is available to noble Lords.
As to where we are on the important issue of cancer, we are now carrying out a consultation with the industry. That will be ready in March, when we will pick up the responses and apply them. The noble Lord, Lord Patel, may take some comfort from the fact that there is now a major process going on as we consider this issue, and he would be right to take such comfort.
On the point raised by my noble friend Lady Thomas on the WCA, we are absolutely committed to making it as effective as possible. It is beginning to move quite quickly now in the right direction. We have taken forward all of Harrington’s recommendations from year one, which means that decision-makers are better supported and have received new training, and all the ATOS reports now have a justification. Professor Harrington has praised the improvements that he has seen so far.
The other point raised by the noble Lord, Lord Patel, was—
Baroness Finlay of Llandaff
Before the Minister moves on, I wonder if I could ask for some clarification. When he talked about the evidence from oncology, he implied that patients would have to be not working for two years. I do not see anything in any of the proposed amendments that stops people going back to work as soon as they want to go back to work. Indeed, one hopes that many people will get back to work, perhaps on a part-time basis or whatever, within months of having their treatment, but the purpose of the amendments is not to force those who are so debilitated post-treatment or during treatment, particularly with fatigue that can go on for weeks or months before it improves, and not to make them subject to a guillotine coming down at the end of the year. Can the Minister clarify that there is nothing in the amendments that stops people going back to work as quickly as they want to?
Lord Freud
Clearly, there is nothing in any amendment or proposal to stop people going back to work should they wish to go back to work, but we are talking about the expectations that there are between the citizen and the state. That is a really important psychological relationship between the two, and that is what we are talking about rather than anything else.
I pick up the point made by the noble Lord, Lord Patel, when he quoted Citizens Advice. We were disappointed by what it said, not because it said stuff that we did not like to read but because it was based on the evidence of 37 work capability assessments when there were more than 600,000 completed in the year to May 2011. That report also relied solely on Citizens Advice’s own interpretation of the healthcare professional’s report and did not allow the HCP the opportunity to explain the reasoning.
Our view and policy is that the right way to address cancer diagnosis and treatment is by ensuring that the WCA provides an accurate and effective dividing line between the support group and the work-related activity group. We want the WCA to consider and assess fully the effects on an individual from both their cancer and the treatment they are receiving for that cancer. As I said, sufferers will be entitled to any income-related ESA.
I pick up the point raised by the noble Lord, Lord Wigley, on the burden on those who can least afford it, because some quite simplistic numbers are flying around here. We have said that income-related ESA will be available to those with the lowest incomes. I accept that if an ESA claimant’s partner has earnings of £152.70 a week, no income-related ESA will be available, but that does not mean that the couple will be £94.25 a week worse off when the contributory ESA is withdrawn. I give an example of why that is not the case. A couple with a rent of £100 a week and council tax of £25 a week, one with the earnings of £152-odd and the other with a contributory ESA of £94, will have a total income of £291 before ESA is withdrawn and £277 afterwards. The main reason is that housing benefit and council tax rise substantially. So there is less income but there are not these very dramatic changes when you go through the actual sums—
Lord Strasburger
Do the same figures apply to a couple who own their own property?
Lord Freud
My Lords, as noble Lords know, we have two systems of housing support. We have housing benefit for those who rent their property and support for mortgage interest for those who need support with their mortgage payments. Currently mortgage payments are running rather lower than benefit, but that is only because mortgage rates are lower and that can change. We are looking at the whole system of support for mortgage interest, but there is a system in place to support people whether they are home owners or payers of rent.
On the basis of what I have said, I hope that the noble Lord will feel able to withdraw his amendment. Before I ask that he do so, I confirm that the Government see Amendment 39A as linked to Amendment 38, but that none in this group is consequential on another, and we would expect the House to make a decision on each individually.
Lord Patel
I thank the noble Lord for his response. I could pick up on each of the points that have been made and answer them, but the time does not allow that. I have to say to the noble Lord, Lord Blencathra, that we are talking here about the level of savings from welfare reform. We are not talking about the Government finding extra expenditure; it is the reduction in savings that we are talking about. The total reduction in saving of the whole welfare reform package will be in the region of £18 billion. We are talking here about not taking money away over five years even to the level of £1.3 billion from the most vulnerable in society. As I pointed out, they are those on the lowest third centile of income, to whom, as the noble Lord, Lord Wigley, said, it is £94 a week. If we are going to rob the poor to pay the rich, we are entering into a different form of morality. The noble Lord asked the question whether it is moral. I say that it is moral to look after those that are sick, vulnerable and poor. If that is immoral, what is moral is to pay the rich—and we are on a different planet altogether.
I come to the figures quoted. The figures are based on the assumption that no one goes back to work until they reach 24 hours. If you speak to cancer patients, you find out that their greatest desire is to go back to work, because it is part of therapy. Noble Lords should read the powerful article written by a very bold and courageous lady called Jenni Russell, which says:
“Not skiving, minister, just suffering cancer”.
She describes what it felt like to have treatment for breast cancer. If you speak to patients on chemotherapy—and my noble friend Lady Finlay sees them every day—they feel good after four days of misery following chemotherapy. By the time they feel better it is time for another period of misery. The effect is cumulative to the point that after a few courses they cannot get out of bed and they wonder whether death might not be better than the disease. It is those people that we are talking about. They are not skivers or benefit cheats. They are the last people who cheat. Are we going to make savings there? I was honest in accepting that what I proposed was costly, but I am not going to be dishonest and say that therefore we should let those people suffer. I ask the House to determine who should be supported.
Lord Freud
“(2A) The period for which a person is entitled to a contributory allowance by virtue of the third condition set out in Part 1 of Schedule 1 (youth) shall not exceed 365 days.”
Welfare Reform Bill
Lord Freud Excerpts(12 years, 4 months ago)
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Lord Freud
Baroness Lister of Burtersett
My Lords, in Grand Committee the question of the assessment period got a bit lost because there were so many issues that the Minister had to deal with. I asked the Minister why the assessment period was not included but never got an answer.
We talk about the time limit kicking in after a year but it is a year minus 13 weeks because for those first 13 weeks people affected will be paid at JSA rate, which is lower. Quite a number of us were confused, but the upshot was that the Minister said:
“I have to admit that I am not particularly happy about the assessment phase of ESA and how it is working … I would like to look at it. It is difficult to have a set of principles around something that one is somewhat unhappy about”.—[Official Report, 8/11/11; col. GC 46.]
I hope that the Minister has looked at it in the interim and has perhaps realised that there is no principled reason for the clause as it now stands and there is every principled reason for supporting the amendment. I hope that the Minister will see reason and it will not be necessary to test the opinion of the House in the way that the noble Lord, Lord Kirkwood of Kirkhope, was suggesting.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I shall leap straight in on the issue raised by the noble Baroness, Lady Lister, on the assessment phase. What I was really alluding to was the upcoming sickness absence review, which is an important review of how we treat sickness absence. One of the things it has looked at is the interrelationship between sickness absence periods and the ESA regime. Basically the review sees no real reason for the assessment phase. As we look at this we must ask: are we structuring ESA and sickness absence so that it is a vulnerable or difficult process? I am sympathetic to my noble friend when he says that there might be a way through this. I want noble Lords to be aware that huge weaknesses have been found. We are pushing people through a process that puts them in limbo for a long period of 92 days or more. The sickness absence review states that that is deeply unsatisfactory, and I suspect that a lot of noble Lords in this Chamber who understand the system also believe that. In that area, I am not sure that this is genuinely the direction in which I want to go because I am not sure that it is something we want to maintain.
Moving on from that, let me set out some of the technicalities of the assessment phase. It usually ends after 13 weeks unless by that point there has not yet been a WCA determination. If a WCA has not been carried out by the 14th week, the assessment phase ends when a determination about limited capability for work has been made. So if the claimant’s assessment phase lasts longer than 13 weeks and they are found to have limited capability for work or work-related activity, the payment of additional components is then backdated. That is the existing system, which I am not that happy with. The effect would be to exclude it in terms of counting to the 365 days, or at least the 730 days depending on where we are, but in practice it does not always happen within 13 weeks and we have a lot of disparity of treatment. Even if we were to stay with the regime, it would be a pretty messy system.
I know that noble Lords hate me when I go through figures, but let me give some—I shall do my best because these figures have been running around. Purely on this basis, there is a cost of an extra £430 million cumulative to 2016-17 over the five-year period. I shall try to make a quick off-the-cuff assessment of how much extra it is when we look at it on top of the two years, and it is not actually a hugely different sum. It is £200 million on the SR period and £400 million on the total period of five years. I know that noble Lords feel that hundreds of millions are easily obtainable, but it is not an insignificant amount of money.
Moving on to Amendment 40B, the effect of this amendment would be that for existing ESA claimants, the one-year time limit would be calculated from the date the clause is commenced, and none of the time already spent on ESA would count towards the 365-day total entitlement. I want to have a word about retrospection. The noble Lord, Lord McKenzie, used the word slightly freely and in fact slightly aggressively. I was upset but not ashamed. I can understand that noble Lords are unhappy that we are taking account of days before the clause is brought into account, but this is about the question of whether noble Lords feel that this is the right approach; it is not about retrospection. Retrospection involves interfering with a claimant’s past entitlement and we are not doing that with this measure.
It is worth explaining what retrospection of time limiting would involve if we were to do it, which we will not. It would involve interfering with past entitlement to ESA. An example would be: at the date we commence the time-limiting provisions, if a claimant who had been receiving contributory ESA in the WRAG for 18 months, it would be retrospective if we demanded repayment of the extra six months of benefit he had already received because that would interfere with the claimant’s past entitlement. We absolutely are not doing anything which is retrospective in that sense. We are redefining the terms on which claimants are entitled to ESA in the future.
Baroness Thomas of Winchester
My Lords, perhaps I may make a small point. Were claimants who were receiving ESA last April told by the benefits office or whoever pays their benefit that it might be subject to this one-year cut-off? I ask this because the Government had already announced it in their comprehensive spending review. Were claimants warned then? I know that they were sent a letter in September saying that their claim was likely to end this April if it had started in the previous April. However, were they warned in April 2011?
Lord Freud
My Lords, it was a reasonably well publicised announcement by the Chancellor. There was no formal process of warning afterwards. That process began, as my noble friend points out, in September. How much warning people had is an issue, but the essential fact is that we are redefining the terms for entitlement to ESA. That happens quite a lot. Examples of future changes to entitlement include, among others, changing the descriptors to the work capability assessment.
I understand noble Lords having concerns about the fairness of the measure. Again, fairness is a matter of achieving a balance in our policy, so that as many claimants as possible who are in the WRAG are entitled to ESA for the same period.
The noble Lord, Lord McKenzie, asked for figures. We expect that, by April 2012, around 100,000 people will have been receiving contributory ESA and been members of the WRAG for more than 12 months. If the amendment were accepted, we would have another substantial decrease in our savings forecast and a real problem.
Amendment 41A would enable claimants to start a fresh 365-day period if they moved from the support group back to the WRAG—I am not sure whether we are now talking about 365 days or 730 days, so let us leave that on one side for a minute. In practice, for those claimants moving between the two groups regularly—it is funny how, when things are encouraged financially, regularity seems to increase—the amendment would be likely to mean that they would be able to remain on contributory ESA indefinitely.
We have always made it clear that, when addressing claimants in the WRAG, our aim is for as many people as possible to receive contributory ESA for the same period. This will be a period of 365 days on our original formulation and at least 730 days on the basis of the amendment that passed. Restarting that period each time a claimant moved from the support group to the WRAG would lead to inconsistent periods on benefit for claimants.
I accept the amendment that has just gone through, but, on the basis of the period—whether one year or at least 730 days—we do not think that we need to make any of these additional changes, particularly given their high cost in the current fiscal climate. I urge noble Lords not to press these three amendments. We do not consider them consequential upon each other.
Lord McKenzie of Luton
I thank the Minister for that reply and all noble Lords who have contributed to this short and rather interesting debate.
I suppose that whether something is retrospective depends on what one’s definition is, but if somebody’s entitlement was put in place at a certain time and under a certain set of rules, to have that entitlement restricted by subsequent legislation and to have the clock running from that earlier date would be, in most common parlance, retrospective. We can argue about the semantics all night and not change anything, but the way in which the Government have gone about this is particularly unfortunate.
I acknowledge the contribution and concerns of the noble Lord, Lord Kirkwood, and my noble friend Lady Lister over the assessment phase. My noble friend instanced the concern that the Minister expressed about this in Committee; I think that he has gone a little further today. As I understood it, he said that the assessment phase, when put in the context of a sickness absence policy, perhaps did not make a lot of sense. If that is the case, I presume that these issues will have to be addressed at some stage and some adjustment made to the process.
Rather than put us in a position where we would wish to test this issue by a vote—there is clearly a degree of support behind me on this and a strong degree of support on the Liberal Democrat Benches—can the Minister offer some comfort that there will be a chance to review this before we sign off the Bill? The consensus of those who have participated is that things are not satisfactory as they stand. Quite what would have to change in the light of any sickness absence policy which is developed would depend on where that policy is heading.
Certainly on issues of fairness, by taking account of the assessment period you are docking three months of someone’s employment and support allowance. Most people would see that as being the period when you get the addition because you are in one of the two ESA categories and therefore the Government are restricting it to only nine months.
Lord Freud
Let me clarify that—I hoped I had. Clearly you may not know what category of ESA you are in but you receive the money for the full 12-month period once it is decided. So there is not a problem like that. It is not nine months; it is a full 12 months.
On the question of what is to happen to the assessment phase, I will not be in a position by Third Reading, which is not far away, to give an answer. I am sure the noble Lord will have read the sickness absence review. It is an interesting piece of work which severely criticises the assessment phase. If we need to change it, we will give our response later this year. It is a substantial piece of work and it will take time to work through. It seems that it will become an area for regulations and if one is going to tie a lot of weight on this particular formulation it would probably be easier for the noble Lord to add another three months to his 24 months, if that is what he is trying to do. If it is a formulation of protection to add on another three months, it is not one that anyone would want to rely on for that reason.
Lord McKenzie of Luton
Tagging on three months is not the purpose of the amendment or of anyone who has spoken to this. There is concern about unfairness. The Minister said that you get the money from day one, but the point is that you get the money only at the basic JSA rate for the first 13 weeks. You do not get the enhanced funding that comes with the employment and support allowance when you are in either the not-fit-for-work group or not-fit-for work-related activity group. Those premiums do not kick in until after week 13. The Minister is frowning. Someone will correct me if that is wrong but I am getting support from the Liberal Democrat Benches.
I realise that we are not going to get definitive answers on any potentially significant policy development and change in the sickness absence report between now and Third Reading. However, rather than cause us to press this to a vote tonight, could not the Minister at least agree that we can have some further engagement between now and Third Reading to understand a little better the parameters of what is happening on sickness absence and how it might affect the assessment phase?
Seeking to press an issue that, given the hour and whose troops are available, we may or may not win would not be particularly constructive. People are trying to end up in the same place on this issue, which is very much the thrust of what the noble Lord, Lord Kirkwood, is saying, so could the Minister at least assure us of further engagement so that we can understand where this may be heading and the parameters within which it will be considered? Otherwise we move to Third Reading stuck with an assessment phase that we do not think is particularly fair and, in the Minister’s own words, not particularly sustainable. That does not seem a very sensible position to be in.
I do not propose to press the amendments tonight on the other two issues, retrospection and not accumulating the time spent in the work-related activity group, but I am seriously minded to press the issue of the assessment period, because we could have further engagement on that that might be of benefit to noble Lords, some of whom may be more supportive of these measures than others. We are genuinely trying to help the Government, and if they do not want to be helped we might have to look at the alternative. Perhaps the Minister can help us.
Lord Freud
My Lords, I am in a difficult position here. My view on the assessment phase is not going to have developed much further in the next two weeks. All I can say is that—well, let me just say what I would say in two or three weeks. I do not think that the assessment phase adds any value to the process; it puts people in limbo. It was meant to be a period in which people adjusted and settled down, and then they had their assessment. It does not seem to be working in that way at all, so we have had the very firm advice that we should get rid of the sickness absence review. If you want to be on ESA you apply for ESA, and if you pass the WCA you are on it, but you do not have all this messing around. That is what our firm advice was from an extraordinarily interesting and important piece of work, and that is where we will end up. If we start sticking other things on to a very shaky process that we want to get rid of, it does not seem a very useful thing to do at all.
Lord McKenzie of Luton
The Minister has advised us of an extremely helpful point. Would it follow that if the assessment phase disappeared, once the assessment had taken place and someone was assessed as being appropriate for putting into the WRAG or support group, the levels of funding under the ESA would kick in from day one? If they would, and that is the implication of what the Minister says, and the assessment phase went, that would be the difference between what we are facing at the moment and what might be the future. It would mean in effect that there would be no assessment phase and no period when people were paid at a lower rate than the work-related activity group component rate or the support group rate. If that is the case, we will not have quite the beef that we have at the moment with including the assessment phase.
The noble Lord has been helpful. We are just trying to see here and now how that formulation and prospect features in the Bill before us. At the very least, I ask that we agree to have another look at this, given what the Minister has said and that he is not going to be able to say anything much further between now and Third Reading, rather than having to take a decision on something tonight on which we would have only three-quarters of the information that we need. The Minister has been genuinely helpful, and we have to see how that translates into what we are considering.
Lord Freud
My Lords, I do not want to reopen this matter at Third Reading on the basis of things that I will have no further information on at all. That does not make much sense. The noble Lord is absolutely right that if we were to get rid of the assessment phase—and clearly that is something on which, as those who know how government works will know, we would have to do some work—it would be a big change. It would tie in with a lot of other changes, with work that we are going to be doing this year. We are utterly committed to this sickness absence review, which has been a very important document for us. My noble friend said that there was some value in using this assessment phase in this way in the future. I am trying to say that I do not think there is, because I would not want to put any weight on it. There might be other things that we can do to get out of a hole—if we are in a hole—but I honestly do not think that this is a promising line. I do not want to have this debate again at Third Reading. I have said everything I can on it, but I hope that I have said enough.
Baroness Lister of Burtersett
I apologise, but I wonder whether the Minister could say one more thing now so that we do not have to come back to it at Third Reading. If the assessment phase is done away with, clearly there is no issue. Given that the Minister himself is clearly suggesting that he would like to see that, would it be possible for him then to say whether, in the event that the assessment phase is not abolished, he would accept the spirit of this amendment now?
Lord Freud
I am clearly not in a position, and it would take more than a couple of weeks to get into a position, to make that kind of assurance. I know how skilfully your Lordships ask me these questions, and I deeply appreciate it, but I cannot do that. All I can tell the noble Baroness is that we have had a very powerful report on sickness absence, which I am personally very closely associated with and have sponsored. It made this recommendation, and most people in this Chamber who understand these matters would say that that is the way to go—as I would. Noble Lords must take their conclusions from that, but I cannot go much further or make promises on hypotheticals, because that is not how the system works.
Lord McKenzie of Luton
I understand the noble Lord’s dilemma; he is creating a bit of a dilemma for us. Can we at least agree that if we do not press the amendment tonight we preserve the right to bring back the issue at Third Reading, while accepting that the Minister might not be able to say anything further? It would at least give those of us who are not as close as the Minister is to the detail of the sickness absence stuff and where that might be heading a chance to reflect on what that might mean for this; and in particular if there were to be a change—as the Minister seems to want—and the assessment phase went, how that would be accomplished within the framework of the legislation.
Lord Freud
My Lords, I do not think that I can do that. We need to take a view now on this. All I can say is that Third Reading is probably not the time anyway for some of this stuff to come to a head. It is not the point at which my noble friend is thinking about it coming to a head. This kind of thing will probably come to a head when we have the debate between the Commons and the Lords. That is when some of these issues need to be looked at, so it is not helpful or productive to think of it happening at Third Reading. This kind of thing may become more relevant at a later stage, but not at Third Reading.
Baroness Hollis of Heigham
Does the Bill contain power by regulation, or would the Minister welcome an amendment to introduce it so that at some point down the line, possibly after further consultation and so on, he can make the changes which at the moment he is minded to make but is not yet in a position to introduce?
Lord Freud
Without having those in my ever helpful Box right behind me to respond to that—I hope that they are writing—my strong impression would be that I would have powers in regulation. No, my strong impression is the opposite. I am on my own.
Lord McKenzie of Luton
That was an extremely pertinent question. If in essence we can deal with this in due course when further analysis has been undertaken though regulation, that is fine; we would be happy to rest our case there. If the Minister is saying that primary legislation would be needed to deal with this —if that is the message coming from the Box—we are unlikely to have that opportunity for some little while.
Lord Freud
We are looking at the sickness absence review process, which is what this is about, and that is a substantial change that will need primary legislation. So I think my reply is to presume primary legislation.
Lord McKenzie of Luton
The Minister has not made this easy. I have been trying as best I can to avoid having a vote on this today.
Lord Freud
Lord Freud
“Further entitlement after time-limiting
(1) After section 1A of the Welfare Reform Act 2007 (as inserted by section 51 above) there is inserted—
“1B Further entitlement after time-limiting
(1) Where a person’s entitlement to a contributory allowance has ceased as a result of section 1A(1) or (2A) but—
(a) the person has not at any subsequent time ceased to have (or to be treated as having) limited capability for work,(b) the person satisfies the basic conditions, and(c) the person has (or is treated as having) limited capability for work-related activity,the claimant is entitled to an employment and support allowance by virtue of this section.(2) An employment and support allowance entitlement to which is based on this section is to be regarded as a contributory allowance for the purposes of this Part.”
(2) In section 1 of that Act (employment and support allowance), in the definition of “contributory allowance” in subsection (7), after “subsection (2)(a)” there is inserted “(and see section 1B(2))”.”
Lord Freud
“Condition relating to youth
In section 1 of the Welfare Reform Act 2007 (employment and support allowance), after subsection (3) there is inserted—
“(3A) After the coming into force of this subsection no claim may be made for an employment and support allowance by virtue of the third condition set out in Part 1 of Schedule 1 (youth).””
Lord McKenzie of Luton
This amendment was in the same group as the amendment on which the Government were defeated but runs contrary to the decision that the House made previously. The assumption is that this matter will not be pressed. Otherwise, the Government give us no alternative but to force a vote on it.
Baroness Hollis of Heigham
My Lords, I was the person who drafted Amendment 36A. The noble Baroness, Lady Meacher, clearly introduced it as the paving amendment to Amendment 46. So the Government cannot do as they are now suggesting.
Lord Freud
My Lords, let me read out what I said in my speech. I said that I confirm that the Government see Amendment 46 as linked to Amendment 36A, but separate Divisions will be required on all amendments in this group.
Lord McKenzie of Luton
My Lords, the noble Lord does not make that happen just by asserting it. One amendment is consequential on the other. We have had a very clear and substantial vote on this, and it is quite disgraceful that the Government are seeking to undermine that.
Baroness Hollis of Heigham
I am sure that the noble Lord, Lord Freud, does not wish to appear to be subverting the view of the entire House, which was expressed in the full knowledge that the amendment which we voted on was devised—I devised it—as a paving amendment to a substantive one, so that we could debate it in good time. Most of the population of the House has gone home, believing in good faith that the previous vote has established the principle—as it has. However, the noble Lord is trying to renege on that by forcing a vote despite the late-night keeping of the roster. That would be quite improper and quite unprecedented, and I strongly suggest that he think again.
Lord Freud
My Lords, I cannot understand this. I was extremely clear, and have been really clear all the way through, about which amendments relate to which, and which have to be taken separately. I read out what I said. I said it quite loudly and all noble Lords heard it. I cannot feel that it is right to accuse me of anything but absolute clarity in the House.
Lord Bassam of Brighton
My Lords, this is somewhat unprecedented, and I am trying to be helpful here. The House is in danger of getting into a considerable muddle. I respectfully suggest to your Lordships that we should perhaps adjourn to try to sort this out, or perhaps come back to it when the House is in fuller session. I do not think that anyone on our side wants to accuse the Government of sharp practice, but that is certainly how it feels at the moment. That is not right or good for the reputation of the House. I ask the Minister to reconsider the course upon which he is currently embarked. Perhaps I may continue with a few more words, and perhaps the Minister will be enabled with a response that can help. I do not want the House to lose the respect that it has, and it should not be frustrated in the way in which the Minister is currently suggesting. My noble friend Lady Hollis made a very reasonable point earlier in addressing this issue. It would serve the Government better if they withdrew for a moment and paused to think about where they are going, so that we can better reflect and try to sort this out in the way that is usually in the House’s best tradition.
Lord Freud
My Lords, I have thought more deeply and accept that the amendment is consequential.
Lord Bassam of Brighton
I thank the noble Lord for that moment’s reflection, which does great service to your Lordships' House. I am very grateful to him.
Universal Credit
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Lord Touhig
To ask Her Majesty’s Government what conclusions the review body considering major government information technology projects came to following its review of progress on the universal credit programme.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
Following the recent review of the universal credit programme, the Major Projects Authority made a number of recommendations, which are being taken forward, with a further review to take place in spring 2012.
The Major Projects Authority will publish information on the progress of the Government’s high-risk and high-value projects, referred to collectively as the government major projects portfolio, alongside the first annual report at the end of this financial year.
Lord Touhig
After a conversation I had with the Minister yesterday, I thought he might be painting a much rosier picture. Can the Minister confirm that work on the IT project for universal credit is so far behind schedule that it will not be possible to use it when the credits are piloted in April, and that an interim solution will have to be used that will put a burden on business and industry? How much will that cost companies the length and breadth of Britain?
Lord Freud
My Lords, I am pleased to confirm that the project is on time and on budget. The second paragraph of the MPRG letter states:
“Let me congratulate you on the significant progress that has been made”.
I think that the noble Lord is referring to a particular aspect of the RTI HMRC project where we have gone with what we call an interim solution to providing information on people's earnings per month in a way that will allow companies to have a stepping stone into what we call the strategic solution, which we plan to introduce in 2016. The gains to companies of that process are estimated at £300 million a year.
Lord Maclennan of Rogart
Can my noble friend indicate what up-to-date information the Government have received on the feasibility of full implementation by their target date of October 2013, when all employers are expected by the Government to be on the real-time information system, coinciding with the start of universal credit?
Lord Freud
Yes, my Lords, simplifying the process, the RTI pilots will start in April next year with a group of 300 volunteer software developers, employers and pension providers. In the autumn of next year, we will have integration testing, with a view to having the full migration of everyone from April 2013 to October 2013.
Lord McFall of Alcluith
My Lords, can I bring to the Minister’s attention the Cabinet Office document, Major Project Approval and Assurance Guidance? Paragraph C.15 says that the assessors designate projects as either “noteworthy and positive” or “noteworthy and cause for concern”. Under which category does universal credit come? Can the Minister place copies of these designations in the House of Lords Library so that we can trace these issues and save the taxpayer many billions of pounds, as we could have done in the case of HMRC over the past few days?
Lord Freud
My Lords, basically our categorisation in the latest plan is that urgent actions are still required. We are tending towards the problems appearing to be manageable with the actions in hand. That is the position that we are in, which will probably be no surprise at this stage in the project.
Lord McKenzie of Luton
My Lords, can the Minister confirm that the major projects review to which he has referred encompasses not only the universal credit component but the HMRC RTI component, which is a vital part, as the noble Lord has explained? What further assurances can he give us that continuing HMRC job cuts will not deflect progress, especially given this week’s news from the Public Accounts Committee about the need to deploy resources for urgent action to resolve uncollected tax of £25 billion from large companies?
Lord Freud
My Lords, there are two processes: the assurance of the RTI programme and that of the universal credit programme. The RTI programme went through its latest assurance rather earlier than the UC assurance process, which was reviewed between 9 and 11 November. The review said that the engagement between the DWP and HMRC represented an exemplar of how these things should be done. I am looking through this project very closely, as noble Lords can imagine, and one area that I am pretty confident about is that the relationship between these two departments is right and working well.
Lord Knight of Weymouth
My Lords, for the universal credit system to work, the tax and benefit systems need to be successfully merged, as do the IT systems at the DWP and HMRC. The Minister talks about a good relationship, and he is very happy with his relationship with HMRC. However, can he really give us confidence that HMRC, as an unaccountable ministerial body capable of writing off £25 billion of taxpayers’ money, is going to be able to produce a real-time information system that talks seamlessly to the DWP IT system so that universal credit can work?
Lord Freud
My Lords, an extremely thorough process of review and assurance is taking place on a rolling six-month basis, and it is clearly a process that we rely on to monitor from the outside whether we are doing the right things. Currently, as I said, both these programmes are on time and on budget. You cannot predict the future but that is a very good, solid base on which to look into the matter.
Energy: Winter Fuel Payment
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Lord Oakeshott of Seagrove Bay
To ask Her Majesty’s Government whether they will make the winter fuel payment subject to basic and higher rate tax and limited to United Kingdom residents.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the winter fuel payment is a simple to administer payment that ensures that older people can turn up their heating in the winter months without worrying about the cost. We have no plans to tax the payment. We are obliged under European law to continue paying the winter fuel payment to people who qualify for a payment in Great Britain and then move to another European Economic Area country or Switzerland.
Lord Oakeshott of Seagrove Bay
I thank the noble Lord for that reply. I am rather nervous about this Question because 674 noble Lords are entitled to receive the winter fuel payment. That is 81 per cent of us. Would I be right in guessing that the Minister, who is 61, is, like me, one of the half a million top-rate taxpayers who benefit from this farcical tax-free bung? Why cannot winter fuel payments at least be taxed like the old age pension? That would raise £220 million a year to help people in real need in our country.
Lord Freud
Yes, my Lords, like the other 81 per cent in the Chamber I have to declare an interest in this matter, although I shall keep my tax arrangements between me and HMRC. One of the issues around taxation is that it is not straightforward to tax the winter fuel payment as it stands because it is a household payment whereas tax is done on an individual basis. It could be done but it is rather complicated.
Lord Faulkner of Worcester
Can the Minister confirm that there is nothing whatever to stop the noble Lord, Lord Oakeshott, giving away the money if he does not want it?
Lord Freud
My Lords, as the noble Lord knows, all money is fungible. This is a matter of psychology rather than funding. If people find it convenient to look at money as being in separate packets and give money in a particular packet to a particular charity, that is a very excellent thing to happen, particularly if it encourages charitable giving more generally.
Lord Palmer
My Lords, is it fair that this tax will be the same whether you live on the south coast of England or the north coast of Scotland?
Lord Freud
My Lords, I think it depends on what side of the country you live. I understand that the Mull of Kintyre is rather warmer than East Anglia, so I think that what the noble Lord suggests would be a pretty complicated thing to do.
Baroness Hayman
Would the noble Lord be kind enough to clarify his original Answer on overseas payments? Am I to believe that my Trinidadian born neighbour, who complained to me recently that a family member of hers who had returned to the West Indies was in receipt of the winter fuel payment, was incorrect?
Lord Freud
Yes, you can keep your winter fuel payment only if you go to another European country, so if it is being obtained by someone in Trinidad, the noble Baroness might make a call to Crimestoppers or someone.
Lord Stoneham of Droxford
Does not my noble friend agree that it would be fairer to tax the winter fuel allowance and use the money to ease the burden of his housing benefit reforms?
Lord Freud
My Lords, clearly, one can look at how one treats this, but essentially it is a simple payment. It is one of the universal payments to pensioners along with the state pension, additional pension and passported benefits such as NHS prescriptions. That is how it is designed. It would be rather complicated and expensive to tax it.
Lord Kinnock
My Lords, the Minister appears to be very sympathetic to the idea of changing the system, and I am not taking into account the season of the year. Will he reconsider the possibility of a levy on higher-rate taxpayers? After all, what is good for King Wenceslas should be good enough for 81 per cent of us.
Lord Freud
My Lords, I am grateful to be told where my sympathies are but the reality is that about 500,000 people would be affected and the saving would be about £40 million a year. It would be expensive and difficult to do and, therefore, on its own, it would not be a good idea. That does not suggest where my sympathies are at all.
Lord Campbell-Savours
Would not this proposal actually penalise low-income group, basic-rate taxpayers?
Lord Freud
I am sorry—I missed the point of that question. Will the noble Lord repeat it?
Lord Campbell-Savours
Would not the proposal penalise low-income group, basic-rate, elderly taxpayers?
Lord Freud
No, I do not think so. This is just a universal benefit that is paid on a simple basis to households that need it. Older people above 80 receive rather more than those below that age.
Lord McKenzie of Luton
My Lords, for the winter fuel allowance to be put to good effect, you have to have a home to heat. Sadly, we know that homelessness is on the increase in our country. The Minister is always keen to look at funding within fixed envelopes, but on what does he base his philosophy for supporting the retention of tax-free winter fuel allowances for higher-rate taxpayers, rather than providing more support for the homeless?
Lord Freud
My Lords, I hope that I have made it quite clear that when you have a universal benefit you pay it out on a simplified basis. Because it is a household payment, it would be enormously complicated to change that. Clearly, it could be done. There has been a small increase in homelessness but it remains at historically low levels. We are watching the figures very closely and it is a priority for this Government that we do not see an excessive rise in homelessness.
Welfare Reform Bill
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Lord German
My Lords, I have two groups of people to whom I want to refer. My noble friend Lady Thomas referred to them in Committee, and I referred to one of them. What does the Minister anticipate doing for foster carers? We have already been told that we have a shortage of foster caring in this country, and foster carers need to keep a bedroom to be able to host and look after children in foster care. It is very important indeed—and I think that the Minister acknowledged this in his response in Committee—that something needs to be done to accommodate the needs of that group of people.
The second group of people are those who have had adaptations to their properties. Those adaptations probably cost the public purse quite substantial sums of money, so it does not make sense, for example, to require people to move from one property that has a stair lift to another where a stair lift has to be put in place. Can my noble friend tell us what he anticipates doing for both those groups?
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I need to thank noble Lords to start with for a thoughtful and insightful debate.
The introduction of size criteria into the social rented sector from April 2013 is essential to reduce housing benefit expenditure, which without reform would reach £25 billion in cash terms by 2014-15. With savings from this measure estimated to be around £500 million per annum, it will play a key role in our efforts to control housing benefit expenditure and to tackle the budget deficit. In these difficult economic times, we cannot avoid having to make these choices. I assure noble Lords that these decisions have not been taken lightly.
In case there is any doubt, let me remind noble Lords that the size criteria measure will affect only working-age housing benefit claimants living in the social rented sector who are underoccupying their accommodation. For a family of four, with two adults and a teenage boy and girl, we are proposing that they will be entitled to housing benefit for a three-bedroom property with a living room, kitchen, bathroom and possibly even other rooms, such as an extra bathroom and study. This is the same as we allow for people living in the private rented sector. Those in a property that has more bedrooms than the size criteria allow will receive a percentage reduction in their eligible rent, meaning, on average, a shortfall of around £14 per week.
It is only fair that everyone plays their part, but we will, of course, ensure that we maintain safeguards for those in the most vulnerable circumstances. However, even with the reforms that we have started making to housing benefit, we are still expecting to spend nearly £23 billion on housing benefit this year. By the end of the spending review, we expect to achieve £2 billion in annual savings from the package of housing benefit reform. That is £2 billion off the £25 billion that I referred to. The Government believe that it is right that those living in oversized properties in the social rented sector contribute to those savings. Claimants in this sector make up over two-thirds of all housing benefit claimants, although most of the £2 billion in annual savings will still come from claimants living in private rented accommodation.
In England, approximately 420,000 households in the social rented sector underoccupy their accommodation by two bedrooms or more, while over a quarter of million households are overcrowded. What is more, 1.8 million households are currently on the housing waiting list in England. Over 700,000 of these households belong to reasonable preference groups, which means that they are treated as having a higher priority on the waiting list. This includes the homeless, people living in insanitary or overcrowded housing, and those needing to move because of a medical condition.
This measure is necessary to control spending. It is necessary because spending was allowed to spiral out of control under the previous Government, but we also believe that it will encourage greater mobility among households living in the social rented sector. It will help local authorities and other social housing providers to make the best use of their existing housing stock. It runs alongside and in support of measures introduced as part of the Localism Act, such as increased flexibility for local authorities to manage their housing waiting lists and the development of the national home swap scheme.
We have discussed this measure in detail and I have listened to and thought at length about the important issues that have been raised. We have various amendments to get through, but it might be helpful if I first set out what conclusions the Government have arrived at and what we intend to do. Noble Lords will understand that there is limited scope for manoeuvre within such a tight fiscal context, but I am pleased to announce today an additional £30 million that we will add to the discretionary housing payment budget from 2013-14, in support of the introduction of the size criteria into the social rented sector from April 2013. We believe that the amount made available is reasonable, based on what we know about the numbers likely to be affected by the measure. We think that £30 million could assist around 40,000 cases. It could help even more if local authorities choose to use DHPs to make up some, but not all, of a claimant's shortfall.
My noble friend Lord German asked what that funding is for. It is specifically aimed at two groups. The first group is disabled people who live in significantly adapted accommodation, and the funding is to enable them to remain in their existing homes. I hope that goes some way to satisfying the noble Lord, Lord Wigley, as well on that matter. The second group, which a number of noble Lords mentioned, is that of foster carers. We have carefully assessed the number of foster carers who will need to keep an extra room for when they are in between fostering, and we have an amount for them. I hope that goes some way to satisfying my noble friends Lord German and Lord Kirkwood on that matter, and indeed the right reverend Prelate the Bishop of Ripon and Leeds, who I hope feels that there is some room at the inn for this very vulnerable and important group.
The case for providing some mitigation for these two groups is clear, but we have decided that the way to do it is through the discretionary housing payment route rather than through specific amendments. We need rules in the benefit system that do not increase administrative complexity. We need to be able to make and deliver effective legislation not just within housing benefit but within universal credit. Such exemptions might, for example, include those who would otherwise have met the shortfall themselves, and might miss others who would have had a stronger case for additional support. I am convinced that a more localised, discretionary approach is the best way forward. It means that the limited resources that we have can be efficiently targeted at those who need them most. Of course we would like to do more, but there is simply no more money available.
Discretionary housing payments can be paid only where there is a linked claim to housing or council tax benefit. This is in effect, therefore, ring-fenced funding, although we cannot tell local authorities precisely who they should spend it on or how much they should spend. That is for local authorities to decide. However, we provide further guidance for local authorities through the DHP good practice guide. We have an illustrative draft of that, which I can share with noble Lords this evening, and we look forward to refining that with the input both of noble Lords and key stakeholders.
Lord McKenzie of Luton
Would the Minister clarify whether that £30 million is a one-off figure or an annual figure, and from when does it commence?
Lord Freud
I am pleased to clarify that that is an annual figure that starts in the year 2013-14, when the actual provision comes in.
Next, I would like to clarify the rates of reduction to be applied under this measure. In setting the percentage reduction rates, we have considered the sorts of rent differentials seen in the social rented sector alongside the question of affordability for the taxpayer. We intend to set the percentage reduction rates at 14 per cent for underoccupiers with one additional bedroom, and 25 per cent for underoccupiers with two or more additional bedrooms.
We think that the average cost to affected claimants, in terms of reduced housing benefit entitlement, will be around £14 a week in 2013-14. The majority of claimants affected—just over three-quarters of the total—are underoccupying their accommodation by just one bedroom. For this group, the average reduction will be around £12 a week. For those underoccupying by two or more bedrooms, the average reduction will be around £22 a week.
I would like to assure noble Lords that discussions within the coalition Government in designing this measure were thorough and productive, and these will continue through implementation. My officials are working closely with the Department for Communities and Local Government, the Department for Education, and the devolved Administrations.
It is worth picking up the issue, which my noble friends Lord German and Lord Stoneham raised, of whether we can make the transition easier. It is technically possible to stagger implementation arrangements, based on the anniversary of the claimant’s tenancy, but this move is not cost-neutral, and the planned savings will be reduced, albeit modestly.
I must be clear that, principally, I am more concerned about the ability to deliver the proposal because it might be very difficult to police and monitor. I am concerned that some landlords will offer new tenancy agreements to existing tenants, so that implementation of this change is delayed, and then the costs would spiral very substantially.
We are, however, determined to make maximum use of the time available between now and the measure coming into force to help prepare local authorities and social landlords for the changes, which in turn will benefit those who are affected. I am sorry if I rather loosely used the term “two years”, on which my noble friend picked me up.
Amendments 14 and 49, from the noble Lord, Lord Best, would exempt claimants from the measure where they underoccupy by just one bedroom. Amendment 12 would appear to tie Amendment 14 in with the housing costs calculation for universal credit.
There is a tension here between the bedroom standard, which is a widely used standard which views underoccupation as having two or more extra bedrooms, and the local housing allowance size criteria, which we propose to use for housing benefit purposes and which we already use for the private rented sector.
Our size criteria take a more generous view on the age at which someone is entitled to their own bedroom. Since the deregulation of rents in 1989, we have been using 16 as the adult threshold in size criteria for housing benefit purposes. The bedroom standard, on the other hand, sets the threshold at 21. Against these stricter criteria, however, the English Housing Survey and other similar surveys then consider the household to be underoccupying their accommodation only if they have more than one additional bedroom above the bedroom standard, a point the noble Lord, Lord Best, made. The size criteria that we propose to introduce into the social sector consider any number of spare bedrooms to be underoccupation. Neither approach is right or wrong. In some cases, the bedroom standard plus one will be more generous than the local housing allowance size criteria, in some they will work out the same and in a few cases the LHA size criteria would actually prove to be more generous.
On the point made by the noble Baroness, Lady Hollis, about the person who needs an overnight carer, I need to make it clear to the House that where someone needs an overnight carer we allow an additional bedroom for that non-resident carer, and we have done so from June this year.
Baroness Hollis of Heigham
My Lords, I said that she would “occasionally” need—in other words, the assumption is that she would not normally need an overnight carer but occasionally might. The Minister has not covered that.
Lord Freud
I suspect that we can look at the difference between “occasional” and “regular” in detail outside the House. Maybe we can exchange letters on the matter.
In Grand Committee, the noble Lord, Lord Best, spoke of the experience of owner-occupiers, explaining that 83.9 per cent would fail against our definition of underoccupation. I put it on record, however, that a similar proportion of working-age owner-occupiers, 86.7 per cent, are in work. We are not suggesting that households in the social rented sector should live differently. We all share the aspiration for a home in which our children can thrive, concentrate on their homework or leave to study or find work, but still have the option of returning home sometimes. To realise that, though, must the taxpayer be expected to pay in full for those extra rooms just because those people live in the social housing sector? The Government believe that it is reasonable to ask for a contribution toward the rent where there is, by definition, some degree of underoccupation. It is not a change to the allocation rules; it is a measure for housing benefit purposes only.
The research from the Housing Futures Network explores how those claimants affected by the measure might respond. As well as the 29 per cent who were likely to try to find work or increase their earnings, around 15 per cent thought that they would take in a lodger or ask another family member to move in. Another sizable group, perhaps 20 per cent to 25 per cent, thought that they were likely to seek help to pay the rent from someone within or outside the household—someone they know. Around 25 per cent thought that they were likely to downsize. There were also those, as some noble Lords have pointed out, who feared that they were likely to get into arrears; that figure was around 35 per cent. We will do our utmost between now and the measure coming into force to minimise that risk. This is what we are looking at as part of our work with the implementation group.
That said, we cannot ignore the financial position. I emphasised at the beginning of my response that the introduction of size criteria is fundamentally about savings. Without the inclusion of those who underoccupy by one bedroom, we would not achieve the £500 million savings expected from 2013.
The noble Lord, Lord Best, challenges our savings estimate. As I have set out in the evidence, though, a majority of people will pay the additional amount for the larger property. The cost of renting in the private rented sector may generally be higher but those who choose to move out of the cheaper social housing into private housing because they are underoccupying will by definition free up accommodation in social housing that can be offered to those on the housing waiting list or those living in expensive temporary accommodation. That argument from the noble Lord simply does not stand. If we excluded one-bedroom underoccupiers, we would lose around £300 million of the estimated savings. The fiscal case driving this measure forward must not be underestimated.
Lord McKenzie of Luton
My Lords, we have Amendment 14ZA in this group, which concerns foster carers seeking exemption from the underoccupancy penalties. We know—indeed, we heard a short while ago—that the Government are sympathetic. When we discussed this in Committee, the Minister told us that it was not possible both to disregard foster allowances as income and to include foster children in the assessment of housing need. However, the National Housing Federation has suggested that discussions between fostering organisations and DWP officials have not shed any light on why the trade-off would be inevitable and has suggested that it could be sorted out by legislation.
As we heard earlier, the Minister’s solution to supporting foster carers was the use of discretionary housing payments and the additional funds that have been made available, and it would be churlish not to welcome that. However, it is hard to see how this can adequately address the problem, given the many other calls on these payments that are likely to be made. Of course, these payments are discretionary, so there would be no certainty for those looking to foster a child that their housing benefit would be covered. It is suggested that the Minister cannot possibly see the inclusion of foster carers within the underoccupancy penalties as a cost-saving measure. As the LGA has put it, if these penalties apply, foster carers could be forced to give up this role at a time when there is a national shortage of 10,000 foster families across the UK. I urge the Minister to give due consideration to this matter, but in doing so I welcome the announcement that he made earlier.
My noble friend Lady Turner introduced amendments that covered three issues. The first was about adaptations to properties, which has been fully covered. My noble friend Lady Wilkins made the important point that this is not just about the physical adaptations to properties but about the support that people need in their community.
My noble friend also referred to someone in the work-related activity group being exempt unless there was suitable employment within easy access of alternative accommodation. We need to know that someone in the WRAG would not necessarily need to be in employment but to be working closer to the labour market. Nevertheless, my noble friend makes a valid point.
My noble friend’s third point was about claimants agreeing to any proposed relocation to alternative accommodation. In the debate on the last group of amendments, we debated a little the issue of suitable alternative accommodation for people, what “suitable” might mean and the complexity that might come with that. To the extent that it features in these arrangements, the opportunity for the claimant to be able to agree to what is reasonable is a fairly fundamental point as well, so I support my noble friend’s contention.
Lord Freud
My Lords, Amendment 13—and Amendment 48, which is a repeat of Amendment 13 but relates to Clause 68—tabled by the noble Baroness, Lady Turner, seeks to make a number of changes. I spoke earlier about how I propose to address the noble Baroness’s valid concerns about those living in adapted accommodation, and I hope that that has satisfied that particular position. On the related point raised by my noble friend Lady Thomas, the disabled facilities grants are quite separate from this; they are administered by local authorities to meet those costs. It is a separate pot, if you like, run by local authorities and not by the DWP.
Amendment 13 would create a new Section (3A). Proposed new paragraph (b) deals with the availability of work in an area and seeks to exempt claimants from the underoccupation measure by their not being relocated to an area where there is no suitable employment, or from a reduction if there is no suitable employment near their current home. We are not in the business of dictating to people where they can or cannot live and we have no intention of doing so. We expect that most people will choose to stay where they are and meet the shortfall. This was supported in the research from the housing futures network, which we have already discussed.
Let me put into perspective the numbers of people who are looking to increase their hours of work. We are talking about between two and four hours per week at the national minimum wage to meet these shortfalls. The amendment links an exemption to the availability of suitable employment, which would be hugely complicated to administer. We would need to define suitable employment and easy access, and in our view those are decisions for the tenants themselves to make, just as those people who live in the private rented sector or who are buying their own properties make such decisions. The labour market is constantly evolving. From a practical point of view, the exemption would be unworkable.
Proposed new paragraph (b), which would be inserted by Amendment 13, would appear to ensure that claimants are not forced to downsize against their will. The amendment would achieve that, but in practice it would go even further. It would enable claimants to block relocations by their landlord regardless of the circumstances. It is unusual for a social landlord to relocate a tenant without their consent, but they can do so in some circumstances, such as where they plan to redevelop the area. We do not intend to interfere in the relationship between landlord and tenant, and nothing in our legislation would force a tenant to move against their will.
On the size criteria measure, we are not seeking to force people to move, but we are asking people to consider the affordability of their accommodation where it is larger than they require, and I beg the noble Baroness, Lady Turner, to withdraw her amendment.
On Amendment 14ZA, which was tabled by the noble Lord, Lord McKenzie, I have set out our intention to increase the DHP budget with the specific aim of helping foster carers as well as disabled people in adapted accommodation. We very much value the work done by foster carers who care for and welcome children into their homes. That is why the benefit system already treats them more favourably by not taking those children, and, as a result, any fostering allowances, into account in their assessment. However, we recognise that there might be circumstances in which a reduction in the housing element of their benefit might act as a disincentive to fostering, and in such circumstances a local authority will have additional funds to award a DHP.
I should make the point here that local authorities will have a direct interest in applying those discretionary funds because they will make a saving by keeping the fostering market open. This is not one of the areas where one worries about discretionary funds being used in other ways; this is an incentive for the local authority. Just to reinforce that natural incentive, we are going to make sure that children’s services within local authorities will be made aware of the availability of DHPs and will input locally on their priorities. I know there are many concerns in this area, but I really think that we have closed the circle.
This amendment seems to go further and would not allow any deduction to the housing element, thereby prohibiting deductions for other income or non-dependant deductions. It also does not cover foster carers who are between placements and who therefore have no income from fostering allowances. The flexibility of DHPs will allow for such circumstances, if it is felt necessary.
The noble Baroness, Lady Wilkins, raised a point on the JCHR. We have just received that report and will be considering it very closely.
I consider that we are meeting the needs of this group through the increase to DHPs, and I therefore beg the noble Lord, Lord McKenzie, not to move his amendment.
Baroness Turner of Camden
I thank the Minister for that response. He seems to have made a number of concessions in response to me. He outlined some of the practicalities, which I understand. I intended the amendment to acknowledge that this is a very complex and difficult area. I was seeking to give a certain amount of guidance to the Government about the way in which it should be handled; otherwise a number of people are going to be very badly hurt, and there could be a few human tragedies on the way, which one would not like to have. I accept that the Minister has made a number of concessions this afternoon. This is a very complex area, so I would like to have the opportunity to study it again. It is unlikely that I will come back with this at Third Reading because we have been over the ground fairly comprehensively. In the mean time, I thank the Minister for the concessions that he has made and beg leave to withdraw the amendment.
Amendment 13 withdrawn.
Amendment 14
Lord McKenzie of Luton
My Lords, the amendment deals with mortgage interest relief. When we raised this issue in Committee, the Minister told us that it was actively under review. We have now had a chance to see the results of that review with the publication this month of a call for evidence on support with mortgage interest and we have some concerns about what it contains.
The main proposals outlined include placing a charge on the property of any long-term claimant of mortgage interest support, which, with an additional sum for interest and an administration fee, would be recouped on the sale of that property; paying the support directly to the claimant rather than to the lender as at present; introducing a zero-earnings rule for eligibility for mortgage interest support to prevent in-work claimants on universal credit from qualifying; and extending the current two-year restriction for JSA claimants on claiming support for mortgage interest to those previously entitled to some transitional protection.
The Government’s stated rationale for the changes is, once again, to encourage claimants into work. The document states:
“A core aim of Universal Credit is that working age claimants have strong incentives to take up work in order to maintain their choice of housing tenure”.
However, the proposals to place a charge on the property of MIS recipients at present apply only to those who are not expected to move back into work—those who, in the words of the call for evidence,
“need long-term help with their mortgages because they are disabled or have retired with outstanding mortgage liabilities”,
and whom, the document states, it is not fair for the taxpayer to support indefinitely. Perhaps the Minister in his response could outline the key rationale for these changes. Are they intended to ensure that anyone who wants to remain in their home must move into work? Or are they intended primarily as a cost-saving measure? What are the expected savings from the scheme to put a charge on the property, and how do these compare to the potential added expenditure on housing benefit if people decide that they would rather not pay this charge and move into the private rented sector?
On direct payments to lenders, we have had significant representations from landlords who are worried about the impact of direct payments to tenants of housing benefit—we discussed this in Committee on a number of occasions and will discuss it again shortly. The Council of Mortgage lenders seems similarly concerned about these proposals, with its director, Paul Smee, stating that,
“the principle of paying the benefit to claimants rather than lenders is dangerous in terms of potentially reducing its effectiveness in meeting its intended purpose”.
Could the Minister let us know what discussions he has so far had with lenders about these proposals?
The Minister will doubtless say that the proposals in this document are out for consultation—that is, they are just that: proposals—and that he will consider views on them. Perhaps he could therefore let us know the expected timetable for any changes to support with mortgage interest payments. It would be particularly useful to know when he intends to make decisions about eligibility for this support under universal credit, as the level of support provided will make a significant difference to whether work pays for home owners.
We look forward to further detail on these measures, but it would be extremely helpful if the Minister could take a moment to outline the principles behind them and the expected timescale for their introduction. I beg to move.
Lord Freud
My Lords, I thank the noble Lord for this opportunity to debate the way in which we will provide help with mortgage costs alongside, or as part of, universal credit. As I have said previously, housing support is critical to the success of universal credit. It will recognise that people need support across a range of different tenure types whether they live in the private rented sector or the social sector, or whether they are owner-occupiers.
Noble Lords will have seen the illustrative regulations on the universal credit housing element which set out our broad approach to support for housing costs. The regulations will indeed make provision for help towards mortgage interest payments.
I also mentioned in Committee that we would be consulting on possible future reforms of the support for mortgage interest rules. As the noble Lord pointed out, we published not a consultation but a call for evidence on 6 December which contained a number of ideas on simplifying the help provided towards mortgage interest payments for working age and pensioner home owners. One of the reasons that it is a call for evidence and not a consultation is that there are much less backing data in terms of impact assessments around a call for evidence than a consultation. Therefore the noble Lord will forgive me if I do not supply the answers to some of the questions he asked me. That is the difference in the process.
We intend to provide support for owner-occupiers, as the call for evidence makes clear, whether this sits inside or outside of universal credit and pension credit. The call for evidence seeks views to help inform the appropriate way forward in determining how financial support towards mortgage interest costs should be changed in both the shorter term and longer term. We are looking at a different model to deal with the longer-term costs of supporting home owners. Essentially, we are looking for a way in which we can keep people in their homes when it is long term, but not at an exorbitant, open-ended cost to the taxpayer. That is the point of exploring these issues: we want to make sure that it delivers fairness to taxpayers.
For support for mortgage interest, we intend to have a rule that provides that help with mortgage costs will stop once a claimant starts work, as is broadly the case now. We believe that the position of claimants with mortgages is different from that of tenants. Owner-occupier claimants have been in work—clearly lenders would not advance money for house purchase unless the borrower could service that debt through income from work. If owner-occupiers are to be able to service their mortgage debt in the future, then they need to return to full-time work and our proposals, or our evidence call, reflect this reality.
The call for evidence runs for 12 weeks until 27 February 2012 and we will of course consider carefully the responses, whether from the CML or anyone else—noble Lords are welcome to add their views, at which I shall look with great interest—and, based on those responses, we will then develop our detailed policy proposals. I can assure the House that we are continuing to provide help with mortgage interest costs. With that assurance, I hope the noble Lord will withdraw the amendment.
Lord McKenzie of Luton
I am grateful to the Minister for that reply. I certainly do not intend to press the amendment. As he explained, this is very much work in progress. Can he say a little more about the reactions to date—particularly from the Council of Mortgage Lenders—in respect of the direct payment issue.
Lord Freud
To be absolutely honest, I have talked to the CML about this matter but I have not had a direct conversation with it since we issued the call for evidence. One of the reasons we had that as one of the questions is specifically to get a considered view from it as to how that might work.
There are a number of issues. At the moment, we pay a fixed rate for everyone based on the average mortgage. The Council of Mortgage Lenders has said in the past that it prefers the actual amounts. So there are a lot of issues. It is administratively complex. I know I am telling the noble Lord things he already knows because he was in situ while some of this was being developed. There is a nest of complicated issues. We are trying to flesh this out in the next few months.
Lord McKenzie of Luton
I am grateful for that further clarification and beg leave to withdraw the amendment.
Lord McKenzie of Luton
My Lords, I shall be brief, because it is very rarely possible to add to something that my noble friend has said in moving an amendment. However, I will try in two respects.
Amendment 15 deals with a relevant change in circumstances. How would that feed through into changes of circumstances that may impact on transitional relief for universal credit? Would a change in rent level support be a change of circumstance that would have to be taken into account?
As for non-dependant deductions, under existing arrangements there are a range of circumstances whereby people who might be treated as non-dependants are not and where some non-dependants do not generate a deduction under the provisions. For example, in respect of the latter, no deduction is made in respect of any non-dependant who is staying with someone but whose normal home is elsewhere, who is receiving a training allowance in connection with youth training under specific provisions or is a full-time student during his or her period of study or is in hospital for more than 52 weeks. There are those sorts of exemptions. Is it planned that those will be carried forward into the new world of universal credit?
Lord Freud
My Lords, local housing allowance rates are set each year at the anniversary date of the claim. In many cases, they coincide with claimants’ annual rent increases, but as the noble Baroness, Lady Hollis, will recall, during the LHA pathfinder some landlords increased rents mid-year to take advantage of increasing LHA rates. That is why we will operate a common uprating date of 1 April.
I would like to consider this matter further. I do not believe that it is appropriate to provide regulations in the Bill, and we will have an opportunity to debate the regulations in this area. However, I can assure the noble Baroness that we will consider the implications of a common uprating date for this group of claimants as part of the continuing work on the treatment of change of circumstances in universal credit. I am not able to get to a conclusion on what we define as a change of circumstances. Again, it is an interconnected group of things. On the basis that I am working on it, I hope that the noble Baroness will agree to withdraw the amendment.
The next area is on non-dependants. We debated a similar amendment in Committee, and I remember blushing with pride when the noble Baroness said that I made an intelligent response. It is a rare accolade that I get from some members of the opposite Benches, but not all.
Lord Brooke of Sutton Mandeville
The noble Baroness was even more generous. She actually described it as a “very intelligent response”.
Lord Freud
I thought that I would be self-deprecating and leave the “very” out.
The noble Baroness asked me to keep the House briefed on the thinking here and return at Report. The best that I can do now is to say that we have not changed our views. There is a lot of active work, and I know that the noble Baroness, Lady Meacher, also took a great deal of interest in this issue. The universal credit will recognise the general principle that adults who live in the household of people getting help with their housing costs should expect to make a contribution towards those costs. Not to do so would, in effect, mean that taxpayers would subsidise non-dependants through the benefits system. I think that that is common ground around the House.
It is also common ground that a reformed welfare system must make work in comparison to dependency benefits pay and be seen to be paid, and the current treatment of non-dependants can work against employment incentives for both the claimant and non-dependant. As I said, there are various factors that we have to juggle between decisions on non-dependants—the “touch wood” factor, taking in a lodger, and so on. These factors mean that the issue of non-dependants is complex.
I accept that the amendment is a probing one, but it would not work. However, we are considering it in detail, and it is an important area. It really goes to the heart of the simplicity agenda that we have, and I hope that as we flesh out the detail noble Lords will have something to which the expression “very intelligent” remains applicable. On that basis, I ask the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham
I am happy to withdraw my amendment. I absolutely understand that this is a work in progress, but we now have the draft regulations, which we did not have in Committee, which is why we are trying to probe to see where this goes. The problem could be that, were it not for the earlier amendment being passed, a couple in a two-bedroom place with an adult son could be regarded as underoccupied if the adult son was not counted as eligible for the room, whereupon their housing benefit would be cut—but, because he was in the House, he would be expected to cover not just their housing benefit but the cut as well. It is that Catch-22 situation that I am seeking to avoid.
It is not straightforward, and I understand that. I am grateful for the Minister’s response. I look forward to an appropriate, acceptable and welcome solution to these dilemmas. I beg leave to withdraw the amendment.
Lord Freud
Noble Lords will be aware that we propose to limit increasing the local housing allowance in line with the CPI index from April 2013. The aim here is to ensure that we continue to exert downward pressure on rents while looking at rent levels in local markets. The limit will apply only in areas where local market rent increases, at the 30th percentile, exceed the annual rate of CPI inflation. We have said that we are committed to making savings from this measure up to 2014-15. If it then becomes apparent that local allowance rates and rents are out of step, they can be reconsidered.
To prepare for this change, the Minister for Pensions set out in the uprating Statement the arrangements for fixing rates. The first uprating will be in April 2013. We have taken this step to ensure that CPI rating can commence from April 2013, but that nobody will see their ongoing award fall at that point as a result of LHA rates being uprated. As the annual rates will be set well in advance, we will be able to provide clarity and certainty to claimants and landlords. We will continue to monitor the path of market rents until 2015 and the Secretary of State will be able to review the LHA rate, or uprate it by some other method, should the need arise.
As the noble Baroness, Lady Meacher, pointed out, the future is uncertain. Clearly, you can draw any scenario you like; the point is that we need to watch it and we will watch it very closely. In particular, we may need to increase LHA rates if growth in rents and the CPI are so out of sync that there is a critical lack of affordable housing. To pick up on the noble Baroness’s other point on extrapolating out to 2013, clearly we all recognise that over any kind of longer-term run rents tends to move with average earnings, not with average prices. Any extrapolation out that long will have a big gap, but we are not talking about that here. We are talking about a measure which is locked in for that two-year period at a time of great difficulty when we are trying to bear down on prices. Therefore, I do not think it is relevant for me to hypothesise about employment levels. That is not what is happening here.
On the point about data and monitoring and what Parliament can expect from us, we will provide to Parliament on an annual basis from late 2012 the relevant CPI data and the data on the 30th percentile of market rents. In addition, noble Lords should be aware that the Valuation Office Agency currently makes available quarterly data on market rents by local authority.
I should point to the major piece of independent external research that is already underway to evaluate the impact of the reforms to housing benefit announced at the June Budget and the spending review. Indeed, I need to thank the noble Lord, Lord Best, for the way that he shaped that research effort. The research will be comprehensive and will be presented to both Houses and the public alongside a ministerial Statement. The department is currently considering how this research could be extended—subject, of course, to funding—to allow it to look at the impacts of changes to local housing allowance uprating over a longer period.
I hope that I have reassured noble Lords that we are committed to monitoring and evaluating this change really thoroughly. On that basis, I urge the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham
I am grateful to the noble Baroness, Lady Meacher, for her support and her additional probing and questions. I am more than satisfied with the Minister’s reply, apart from one word. I wonder whether I could invite him to change that one word. He said that if the two tests, rent levels and CPI, are out of step, then they “can be reconsidered”. I want “will be reconsidered”. I invite the Minister to strengthen his position on that point. Everything else was lovely.
Lord Freud
On the basis that the noble Baroness is going to be incredibly helpful to me in all the consequent amendments in the Bill, I will change the word from “can” to “will”.
Baroness Hollis of Heigham
I am very grateful and with great pleasure withdraw the amendment, knowing that our policy intent and the Government’s policy intent will now be met. Thank you.
Baroness Hayter of Kentish Town
My Lords, as my noble friend Lady Hollis made clear, this amendment addresses the cases of those who, not having been housing benefit claimants, become in need of this, perhaps through the loss of a job, a change in domestic circumstances, illness or some other unanticipated event. It is aimed at the potential impact on vulnerable young adults: single people between 25 and 35, who rent in the private sector and from January will only be eligible for the single room rate, losing about £40 a week. Crisis—which we all know, particularly at Christmas, of course—an organisation that knows a thing or two about homelessness, believes that most of the 50,000 or more people affected are likely to lose their homes.
The amendment does not say that these people would be excused the shared room rate up to the age of 35, but it gives them a window of a year in which to find a new home or a job, to get well, or in some way to change their circumstances so that they are no longer dependent on housing benefit. It would extend the current 13-week breathing space to 52.
This is not just a matter of the individuals concerned sorting out their lives but of allowing the market to respond to these new rules. Research by the University of York on the impact of extending the shared-room accommodation rate found that there is insufficient shared accommodation available at the moment. Indeed, this would risk making such accommodation even harder to find for those aged under 25 as the supply of relevant accommodation takes time to build up. Furthermore, the York study found that sharing can sometimes be difficult or even dangerous, as we have already heard, and can have a serious negative impact on the health and well-being of vulnerable people.
As we have already heard, there are exemptions to the shared accommodation policy, including those for severely disabled people, care leavers aged under 22, people who have spent more than three months in a homelessness hostel and received resettlement support and those aged over 25 who are considered a risk to others. It does not include those who might themselves be at risk. In Committee the Minister reminded us of the other exemptions, such as those for certain ex-offenders who pose a risk to the public and certain former residents of specialist homeless hostels, which might include those leaving a refuge following domestic violence.
However, we also heard in Committee of a number of situations in which shared accommodation not covered by those exemptions would pose a real problem for people. My noble friend Lady Sherlock raised the question of single pregnant women, who may find such circumstances particularly difficult. The noble Baroness, Lady Campbell of Surbiton, raised the issue of those with obsessive compulsive disorder, who may also find the prospect particularly difficult. My noble friend Lord McAvoy, who is not in his position at the moment and is, in his own words, not a social liberal, talked about the situation of those with a mental illness and how they might gradually be forced out of successively worse forms of shared accommodation.
Many of the people caught by this proposed new ruling will be fathers of young children soon after a split, when it is particularly crucial for their relationship with the children to be maintained. If it is not kept close in that first year of separation it is very hard to re-establish it later. That relationship depends not just on shared hamburgers in McDonald’s but on cooking, eating and even washing up together. For this, a place of one’s own, where young children can feel at home—not a house shared with strangers—will be crucial. The amendment relates to that first 12 months, within which we hope finances, jobs or better accommodation can be sorted out. If it is not sorted out in that 12 months, at least it will be much less threatening for those children visiting their now non-resident parent to get used to a different way of living.
The amendment does not reverse the intention of the policy, which the Minister told us was to ensure that claimants make similar choices to those not on benefits. The flaw in his argument is that the circumstances of many of those on benefits are not the same as those who can support themselves. The benefits system is designed exactly to protect people when their circumstances change. The amendment provides a little extra support of this kind. It would give people sufficient time either to address the circumstances—whether job loss, illness or a change in family arrangements—that meant they had to claim benefit, or, at a later time, to find the shared accommodation that best meets their needs. It is a thoughtful amendment, which the Opposition are happy to support.
Lord Freud
My Lords, Amendment 19 from the noble Baronesses, Lady Hollis and Lady Meacher, deals with a subject that we have debated at considerable length—the shared accommodation rate. In case there is any doubt, let me be clear: the shared accommodation rate is what we pay people to share accommodation, not to share rooms, as some people think. We do not expect people to share one room or a bedroom, but to share accommodation.
Baroness Hollis of Heigham
My Lords, I do not think anyone disputes that, but at the bottom end of the market it will be a room in a shared house, which means sharing a kitchen and bathroom, as we have discussed.
Lord Freud
My Lords, it is rather interesting to look at the actual rates. If you take two people, each with their own shared accommodation rate of housing benefit, that covers or exceeds the two-bedroom rate in 60 per cent of localities. We are not talking about a dramatic cut in much of the country. Indeed, if three or four people choose to share a house, taking their own shared accommodation rates, the amount of money that they get would cover the rate for three or four-bedroom properties in 90 per cent of localities. We are not talking about a hugely draconian cut in that context.
If we look at the amendment itself, it is not altogether obvious what rate of housing costs the noble Baronesses are proposing should be paid during the 52-week period of exemption. Since the amendment applies to new claims only, perhaps it seeks to ensure that new claimants have their full contractual rent met for the first 52 weeks, rather than being paid the local housing allowance. If it is the latter, we covered those points in Committee. We debated whether the current 13-week exemption from rent restrictions for claimants who could afford their rent when they first took on that commitment should be extended to 52 weeks.
I need to make clear that rent can be met in full for up to 13 weeks for those who could afford their rent when they first took on the tenancy and have not been in receipt of housing benefit in the past year. This means that those claimants who experience a short spell of unemployment are not forced to move, and it gives others time to consider their housing options. Around 40 per cent of JSA claimants aged between 25 and 49 have been claiming for less than three months, and around 60 per cent for less than six months. For completeness, I should add that there is a 12-month protection for people who have recently been bereaved.
As I said at the time, most claims for housing benefit are for short periods. The 13-week exemption protects a person’s ability to pay their rent during that time. Half of jobseeker’s allowance claimants aged between 18 and 24 have been claiming for less than 13 weeks and less than 5 per cent have been claiming for more than 52 weeks. We already know that more than a third of those who claim housing benefit choose shared accommodation. These are people who could be in either separate-bedroom accommodation or shared accommodation and choose the shared accommodation rate. Of the people who are not on HB, 40 per cent of 25 to 34 year-olds share. I am excluding students from this. This is not a form of housing that is unusual or imposed on people; it is an absolutely normal form of housing.
I accept that there is real concern about the impact of the shared accommodation rate and particularly about the availability of accommodation. I said in Committee that the market will not remain static and that I believe it will respond in time to the increased demand for this type of accommodation. The feedback that I had from officials following their recent meeting with a Methodist housing association suggests that this is already happening. The association is already converting some of its property into shared accommodation. I am also reassured by meetings that I have had with stakeholders that a number of support organisations are helping to match tenants to shared accommodation.
Lord Best
I support the amendment. We already have up and running, thanks to the good work of the Minister, a really first-class piece of research looking at the impact of the housing benefit changes on families, poverty and a whole range of issues. I strongly congratulate him on taking that suggestion seriously and bringing forward a significant piece of research. It engaged a consortium of the top people at Oxford University, Sheffield Hallam University, Ipsos MORI polling and the IFS. I wondered whether that team might have its work somewhat extended to embrace the research suggested by the noble Baroness. It would not involve quite as much work because it would examine the 150,000 or so households that will now be affected by the underoccupancy arrangements. There is much important research to take place.
Lord Freud
My Lords, I acknowledge and commend the contributions of the noble Baroness and the noble Lord to the debate on policy. Both of them, particularly the noble Lord, Lord Best, played an important role setting up the independent research that the department has already commissioned around the local housing allowance. More recently, as noble Lords are aware, we have announced research looking at direct payments in the social rented sector. However, I must complain bitterly at the improvement to the negotiating position of the consortium that the noble Lord mentioned. When we carry out research, we always have open competition and no one is favoured. We choose the best researchers.
I place real value on independent research. We need robust evaluation on the impact of welfare reform on housing provision. I know that we are taking some steps in housing benefit reform where we need to monitor the risks. I know that there are risks, and we have all discussed them. That is why proper research, considered properly and taken very seriously, is right at the heart of the protections that we are looking at in this area.
I fully support the intention behind this powerful amendment. I want to go on record as saying that. I can tell noble Lords that the department is currently in the process of planning its research programme for 2012-13 onwards, subject, I have to add, to available funding—and I hope that noble Lords do not take that away from me in other ways. I intend to cover the size criteria and underoccupancy in housing benefit. We are considering separately how to evaluate universal credit. Noble Lords will be aware of the constant-piloting clause that we approved in Committee, which provides for a radically new way of looking at this important benefits system.
All research commissioned by the department is published. I am sure that noble Lords will accept that it is not necessary to provide for this research in the Bill. I know that this is a probing amendment and we will look to providing this research at the right time. With those reassurances, I hope that the amendment can be withdrawn.
Baroness Hayter of Kentish Town
My Lords, dinner beckons. Nevertheless, there are seven good reasons for accepting this amendment.
First, it is cost free. The facility to pay rent directly to landlords is there for certain beneficiaries, so it would simply be a case of using this for others.
Secondly, it helps to give financial responsibility and decision-making to claimants, as it would allow them to choose to have the rent paid in this way.
Thirdly, it is what the rest of us do with our mortgages or rent: it goes straight out of our bank accounts, normally the day after payday—in my case, usually the same day—so that we cannot get our hands on it in the mean time. The difference is, of course, that many of these claimants do not have bank accounts, or a joint bank account if they are a couple, and therefore do not have the ability to make such arrangements for direct payments. Furthermore, if they have a basic bank account, such accounts cannot go into the red, and so if there is not money to pay the rent, it simply will not be paid, even with a direct debit mandate, leading to the build-up of arrears.
Fourthly, this amendment is strongly supported, as has been said, by housing associations and by local authorities. Both know that arrears will build up more quickly without this amendment. For housing associations, the interest on borrowing will increase as their assured-rent income will decrease. To give the example of one housing association, 85 per cent of Riverside tenants choose to have their rent paid directly, as many of its tenants do not have bank accounts, and many more fear the bank charges if they go overdrawn. This is an important way for low-income households to manage their finances. If this existing facility is withdrawn, pilot studies show that, as has already been mentioned, rent arrears are likely to rise sharply, putting tenancies at risk. In addition, funders have indicated that they are likely to regard lending to housing associations as higher risk and thus to increase the cost of funding. In the long term, it will mean that social housing providers will simply be able to do less. Income streams to local authorities will similarly be threatened if direct payments, which exist now without any problems, are ended. CoSLA, the association for local authorities in Scotland, estimates that this will cost about £50 million a year in Scotland alone.
Fifthly, many vulnerable families will be at risk. To quote again from CoSLA:
“COSLA is deeply concerned that Housing Benefit paid direct to claimants without sufficient safeguards will result in an increase of rent arrears and evictions, sending households spiralling into debt and facing homelessness”.
We know the families for which the risk of not paying the rent directly will be the greatest: those with debts, where the pressure to pay these off—whether to the gasman or to the loan shark—will be pressing; those with a family member with a drink, drug or gambling habit, where temptation to use the rent money will be high; and those with immediate demands, as the noble Lord, Lord Cormack, has said, for money to feed their children and yet who want to ensure that the roof over those children’s heads, albeit not today’s problem, is equally vital, so want to have that rent assured. While we know some vulnerable groups will have their rent paid directly, we can see no reason to wait until borderline cases get into problems, struggle and get into rent arrears, before we allow them to have the rent paid directly. Why risk that for no good reason?
Sixthly, it will make sure that we do not dissuade private landlords from coming into this sector.
Seventhly, the strongest argument: the noble Lord, Lord Best, who chairs the Local Government Association and has forgotten more about housing associations than most of us will ever learn, tells us it is the right thing to do. We concur.
Lord Freud
My Lords, my intention is to reassure the noble Lord, Lord Best, so that he withdraws his amendment. I start by trying to convince the noble Baroness, Lady Howe, and my noble friend Lord Cormack of the reason why we are doing this. It is not an arbitrary thing. We are not doing it because we want to annoy housing associations or local authorities. We are doing it for a very simple reason. If you are a tenant in social housing whose housing benefit goes straight through to the landlord and you take a job, all your arrangements for paying for your housing have to change. It is a major change in your arrangements and a real block on you taking the job. It is a major thing for you to organise, and you have to learn, when you take that first job and your housing benefit goes down within universal credit—because that is the change—that the money no longer goes through automatically to the landlord.
We have to break that link. It has to be the same arrangement whether you are working or not working. We deliberately excluded pension-age people from this because we are not expecting them to work. We do not need to worry about the people who find it difficult to work. It is working-age people who we want to go into work.
Baroness Meacher
I listen to the Minister’s passion—“We have to do this, we have to do this”—and I find myself thinking that that would be fine if we were in normal circumstances and the benefits were not changing but were pretty much going on as they always have, and people were not going to be facing major drops in their benefit levels or having to adjust to having to move because of all sorts of rules about underoccupancy or because of the tying of benefits to the consumer prices index and so on. There are so many ways in which people on benefits are going to be losing—that is the context—and this is not the time to be determined to bring all these people into line with people in work. Can we not wait until things are stable and then maybe introduce the rather nice idea of bringing these two groups together?
Lord Freud
The answer to that is very simple: the universal credit will, each year, inject an extra £4 billion into the pockets of the poorest people. That is what the universal credit does. It will start coming in in 2013-17, when hopefully the laws of the business cycle will still be working and we can expect an upturn at some stage. As we move into that situation, the concern will be what happens to the universal credit. This measure is for universal credit. It does not stand outside it.
Baroness Meacher
I apologise for interrupting again, but £4 billion is surely a tiny amount relative to the losses in projected benefits. This huge budget would normally go up very extensively each year, would it not? I do not have all the numbers in my head, but £4 billion in a tiny fraction of the actual real losses in benefit that people are going to face.
Lord Freud
Absolutely not; £4 billion is a very substantial figure. Over the course of this SR, we are looking at a loss of £18 billion spread over the four-year period. The noble Baroness can do the sums. The most important thing about universal credit is that the money goes into the pockets of the lowest two quintiles very efficiently. I contend that the noble Baroness’s argument is not a real argument.
Baroness Hayter of Kentish Town
My Lords, if I understand the Minister correctly, he is saying that this is all part of getting people off benefits and into work, which we absolutely support. However, this will also cover those people who are never going to work—those in the support group—as well as people with young children who are not in work for some time. Therefore, we are not talking only about people who are on the cusp; even those people will lose the right to have their rent paid directly.
Lord Freud
No, my Lords. We have made it absolutely clear that we expect those who are vulnerable to continue to have payments made directly to the landlord. Indeed, in the private rented sector, where this process has already been in place and has worked rather well, 80 per cent of people pay their landlord directly, and 20 per cent are regarded as vulnerable and have a payment made directly to the landlord. That is how it works there. At the moment in the social rented sector, 95 per cent have direct payments and 5 per cent pay the landlord themselves. Therefore, there is a real disparity there.
I want to provide some reassurance for noble Lords who think that this is a draconian measure. I need to explain to the noble Baroness, Lady Howe, and the noble Lord, Lord Cormack, that we are doing this for a real reason. It is not arbitrary; it is intended to make sure that there are no artificial barriers for people who would stay in the comfort zone of not working. We need to make it easier for them to make that transition, and that is one thing that we are doing. This will empower people and allow them to manage their finances.
I shall now come to the reassurance factors, which I hope will have noble Lords nodding happily on the Benches. I am determined that, while we introduce this system, the housing sector will remain financially stable. I talk regularly to banks and to rating agencies in particular about what we need to do to make that happen. I am absolutely convinced that we can have our welfare cake—the transformative cake—and financial stability for the housing sector. I shall do nothing that undermines the security of the housing sector in this area. I absolutely understand that this country needs more housing, and it would be madness for us to undermine that ambition.
I completely understand the two imperatives here. We are working closely with local authorities and housing associations in running half a dozen demonstration projects, which are designed to find out exactly how to make direct support payments for housing costs so that they work with universal credit. I have been incredibly pleased that the industry has shown real enthusiasm for taking part in these demonstration projects, with no fewer than 70 different groups looking to join in. During the selection process, we have been delighted at how much choice we have had, and we are finding out what is going to work to get the two things that we need. These demonstration projects will allow us to identify those who are likely to struggle financially. The projects are testing not whether we should introduce direct payments but how to support landlords and tenants ahead of the scheme being introduced. The important part is to get the safeguards operating properly. We need to see when people are not able to handle the system and switch payments to the landlords, and then find out how to recoup the money over the period when landlords do not have it so that their security of income is locked into the system. That is what we are trying to find out here.
The noble Lord, Lord Best, mentioned the London & Quadrant research, and we are aiming to apply that to the demonstration projects. It shows the importance of communications. Clearly, we want to improve the outcome and throw out the doubling of arrears.
Baroness Drake
I speak as someone who is rather preoccupied with financial inclusion. The Minister is describing a process, but if there is a product—a bank account—that works for low-income or unemployed people and the account is in debt, how does one know that the bank will pay the direct debit? Can he be confident that it will pay if there is a deficit in that account?
Lord Freud
That is exactly what we need to ensure and that is exactly what we are discussing with the banking groups. Specific banking support is exactly the issue that we need to get right.
Lord Cormack
My noble friend is trying to be helpful and I appreciate that very much. Is he saying that this amount of money that is earmarked for paying the rent will be used for paying the rent and for nothing else, and that, unless he is assured that he has the product that will deliver that, he will not move in this direction?
Lord Freud
I am saying that we are working really hard with the banks and the banking community to make sure that we have an escrow arrangement of that nature, and we are doing this at several levels. We can have a general agreement, which I shall discuss with the banks as a whole, to provide a generalised protection. However, I am quite interested in getting particular banking products that will provide a simple bank account and elaborating on what could be a new level of support for some of the poorest people in our community. We have a one-off chance with universal credit to ramp up support for the poorer people in our community, and we are putting a lot of energy into achieving that. I have talked about this before. It is one of the hidden gains that we can get out of the introduction of this new system. Rather than people living on drips of money from here and there, we can really start to help them, supporting them in managing their finances and getting true independence. This is a core part of what we are going to be doing with universal credit, and part of that relates to housing. Housing will be a major part of people’s total income stream. We are not doing this for fun or to annoy anyone; this is absolutely part of what we are trying to do with universal credit.
I need to deal with one other point—the issue of safeguards raised by the noble Baroness, Lady Lister. We are concerned about the safety and welfare of claimants and, where we have a concern, we need to put direct payments in place. There are vulnerable groups who are not able to manage the potential freedoms, and for them we will make sure that we go on with existing arrangements for direct payments.
We have commissioned a consortium led by Professor Paul Hickman—I am sorry, but this is a bit of an announcement late at night—from the Centre for Regional Economic and Social Research at Sheffield Hallam University to evaluate the effects of direct payments to claimants in the six demonstration project areas, which I shall announce soon. The other key team members are Dr Kesia Reeve, Peter Kemp of the Oxford Institute of Social Policy, and Stephen Finlay from Ipsos MORI, names that I know that the noble Lord, Lord Best, approves of. That will give us a cumulative understanding of the impacts of direct payments and inform the detail of delivery under universal credit.
Research published by the Joseph Rowntree Foundation in 2007, Paying Housing Benefit to Claimants, on both private and social tenants’ experiences of and their hypothetical attitude toward the management of their own housing benefit confirms that a significant proportion of social tenants have the potential to manage their own housing benefit payments. We will also have an advisory group for the demonstration projects and a wide range of local government, money advice, voluntary sector and other external stakeholders who will be invited to join that group.
We had a slight exchange about what “choice” means and we have been teasing each other about the imbalance of power when you have choice. It concerns us that while there is theoretical choice today, only 5 per cent of people take it. As it stands, tenant choice does not go far enough, which is why I am concerned about it. I hope that the noble Lord, Lord Best, will accept that we are making incredible efforts here to be transformative and not to undermine the housing sector, and on that basis will feel that there is enough going on for him to withdraw this amendment.
Lord Best
My Lords, I am very grateful to all of those who have joined this debate. I am sure that we all feel much reassured by the passion that the Minister brings to this subject and by the genuine efforts that he is making to see that the behavioural change that he wants is triggered and that the disadvantages of going down this route are mitigated. The excellent research that he is announcing tonight—and I thank him very much for it—might show that it is not possible for only 20 per cent of the tenants within the social sector to be regarded as vulnerable and to have their rent paid directly and that there is a rather larger number.
However, I think the Minister is keeping an open mind as to what proportion of the sector will get their rent paid directly, and I greatly welcome him saying how much he is concerned not to undermine the social housing sector, the production of new homes, the sector’s lending and the security of income within that sector. If those discussions with bankers fail and the products do not materialise, we must place our faith in the Minister and hope that he will recognise that the difficulties still exist and that rent direct to the landlord is going to be necessary for a larger proportion of people. On that basis, I am happy to withdraw my amendment.