Autism: Personal Independence Payments

Lord Freud Excerpts

Monday 12th September 2011 Lords Chamber

[Lord Touhig]

To ask Her Majesty’s Government what impact the assessment criteria for personal independence payments are anticipated to have on the number of people with autism who will claim the allowance, compared with the number of those who claim disability living allowance.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, it is too early to identify what the impact of the personal independence payment will be, as we are still developing the new assessment criteria. We are determined that the personal independence payment will be fairer than the disability living allowance, taking better account of the impact of mental, cognitive and intellectual impairments. The inclusion of activities around communication, planning and following a journey will help assess the impact of autistic spectrum disorders on individuals’ lives.

[Lord Touhig]

I thank the Minister for his very helpful reply. Is he aware that the way in which the draft assessment criteria for the new personal independence payments are framed, coupled with the 20 per cent cut in spending and a focus on those with the greatest personal care needs, could mean that many people with autism will lose the lifeline currently provided by the existing disability living allowance? Will the Minister say how the Government will ensure that this vulnerable group of people will continue to get the much needed financial support required to give them a good quality of life?

[Lord Freud]

My Lords, first, I must reinforce the point which I know I have made in the Chamber before; when people talk about cuts, they mean cuts on projections. The actual payments are essentially being held flat in real terms. We have looked at the initial assessments and are currently revising them in the light of our experience and after speaking to many groups, including the National Autistic Society, in order to refine the assessment. We will publish that and our findings in the next couple of months.

[Lord Wigley]

My Lords, we will all have received numerous representations in the context of the Welfare Reform Bill, which is coming up, from people who are most concerned about the loss or potential loss of the disability living allowance. Will he give an assurance that when this Bill comes into Committee, the Government will seriously consider accepting amendments in order to try to safeguard some of these most vulnerable people and not steamroller the savings that they intend to get from this Bill at the expense of the most vulnerable in our society?

[Lord Freud]

My Lords, there is no intention of steamrollering people. In fact, one of the things about the personal independence payment is that it is designed to be far more effectively focused at the people who need support, particularly those with learning disabilities and so on. I can absolutely assure noble Lords right around the House that during the process of this Bill I will listen very carefully to people and that good ideas will be gratefully received.

[Lord Addington]

My Lords, can the Minister give us an assurance that when we go through any form of assessment or process, a great effort is made to get the right information about the individual conditional set of problems? Much of the historical problem here is the fact that if a person did not fit the particular slot or the interviewer did not have enough information, they did not have the freedom—or were not encouraged—to go and find out the best answer.

[Lord Freud]

My noble friend makes the very good point that there has been continual disappointment in that area of assessment. We are beginning to learn how to do that better. Professor Harrington, in the context of a different assessment—the WCA—is pointing us in the right direction in getting information and support for people when they are being assessed.

[Lord Rix]

My Lords, what assurance can the Minister give that problems similar to those that have arisen on work capability assessments will not arise on PIP assessments, particularly in the light of people who take these assessments with a learning disability?

--- Later in debate ---

[Lord Freud]

My Lords, clearly this is a different assessment that measures different things. However, we are learning lessons from the WCA, and noble Lords will know that we are making considerable changes to it to make sure that it works as effectively as possible. We also expect to make sure that the personal independence payment is focused on the needs of the individual. The assessment is much more appropriate than the DLA assessment, which is, frankly, subjective and inconsistent and relies much too much on self-assessment.

[Lord Kinnock]

Would the Minister like to give further attention to the first reply he gave to my noble friend Lord Touhig to the effect that the cuts are cuts in projections and spending is flat? Does that take account of the fact that we now live with the reality of a 5 per cent inflation rate?

[Lord Freud]

Yes, my Lords. I made absolutely clear in that response that I was talking in real terms, so it takes account of inflation.

[Lord McKenzie of Luton]

My Lords, the Minister said that he is in listening mode with the Welfare Reform Bill and is eager to learn lessons. Can he tell me what lessons he will learn from today’s IFS report, which states that when the tax and benefit programme of this Government is analysed the poorest 30 per cent of people are bearing the brunt?

[Lord Freud]

My Lords, this is a serious recession, and the IFS emphasised how it will impact. One thing we will discuss as we go through the Welfare Reform Bill is the way in which we direct a lot of resource precisely to the poorest people. On a like-for-like basis, the universal credit injects something over £4 billion extra a year to the poorest people, against the current benefit system.

Retirement Age

Lord Freud Excerpts

Monday 5th September 2011 Lords Chamber

[Lord Sheldon]

To ask Her Majesty’s Government whether they are giving further consideration to extending the state retirement age beyond the present age of 65, and 68 in 2046.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, the noble Lord has, of course, previously suggested that there should be a formal relationship between pension age and life expectancy. We have consulted on a mechanism to ensure that revisions in life expectancy are reflected in the state pension age. The summary of responses was published on 27 July and we will publish our proposals in due course.

[Lord Sheldon]

My Lords, the pension age will be equal for men and women in only seven to eight years’ time, and it will rise from 66 to 68 in 2044. That is very slow. Longevity is rising so rapidly that an assessment has been made that more than 11 million people can expect to live to be more than 100 years old. Should not the pension age be affected by the rapid rise in longevity?

[Lord Freud]

My Lords, the noble Lord is right to pinpoint what is happening to longevity. There needs to be a response to that because we cannot afford to pay for the large number of people who spend upwards of 40 per cent of their adult lives in retirement with a state pension. The process that we are undergoing is to look at how best to move the pension age with either a review or some automatic process, and we will be coming out with our proposals for that in due course.

[Lord German]

My Lords, a woman born this year will have a one in three chance of living to the age of 100, whereas a woman born in 1931 would have had only a one in 20 chance. Given the acceleration of the change in life expectancy and the results of the consultation that the Government have just concluded, is it not right that there should be an accelerating change in the connection between the state age of retirement and life expectancy, which is growing all the time? We cannot expect this to be something that is predicted for 20 or 30 years hence. It has to be predicted on a much more regular basis.

[Lord Freud]

My Lords, clearly that is the issue: life expectancy is growing rapidly. It is hard to set the figures many decades in advance. The responses to the consultation show that most people think that a period of around 10 years seems appropriate, although other countries have used shorter periods. It is right that we should look at a number of factors when we move the retirement age. These include not just longevity but healthy life expectancy and regional and other variations.

[Baroness Hollis of Heigham]

My Lords, it is clearly reasonable that the pension age for men and women should rise alongside longevity. However, it is clearly unreasonable that up to half a million women have recently learnt that they will have to wait up to two years longer than they expected for their state retirement pension. The noble Lord will know that many sectors of the House were deeply unhappy about this. The Pensions Bill is now in the other place. Will he tell the House whether the Government are shifting their position on this so that it is fair to all women and not so deeply unfair to so many women?

[Lord Freud]

My Lords, as the noble Baroness pointed out, we debated this in some depth when we looked at the Bill. Those concerns, expressed around the House, were taken very seriously. The Secretary of State responded at Second Reading in another place by saying that we needed,

“to implement the change fairly and manage the transition smoothly”.—[Official Report, Commons, 20/6/11; col. 50.]

We are looking at how best to do that. Should there be legislative changes, they will of course come to this House to be considered in due course.

[Lord Flight]

My Lords, I urge the Government to accelerate to a retirement age of 70, not just on grounds of longevity and fitness but on fundamental economic grounds. It is entirely natural, if you have an ageing population and wish to keep economic growth up, that the workforce should remain the same through people working longer. Finally, the highest growth in new jobs now is among people over 65, so this is a reality in the workplace.

[Lord Freud]

Yes, my Lords, it will be extremely expensive if we do nothing. In the past five years we have already seen real expenditure on pensions go up by £20 billion to £81 billion a year. If we do nothing, the projections are that age-related spending will go up to more than 5.5 per cent by the middle of the century. We must do something about it. That is why we have this consultation to look at the best way of moving the pension age upwards to reflect the changes in ageing.

[Baroness Drake]

My Lords, the level, manner and timing of any increase in the state pension age will be controversial, as instanced by the recent debate on women’s state pension age. I hope the Minister will agree that it is important to build a consensus on how to respond to increasing life expectancy, both between political parties and between government and the people. In particular, we must avoid undermining confidence in pension saving, particularly in younger generations, where the problem is so deep. Are the Government considering setting up an independent body to monitor and analyse matters related to increasing life expectancy, including socioeconomic differences in morbidity and mortality? Its published findings could inform government and parliamentary decision-making. Anecdotal, sentimental and emotional debate is not the way to resolve this issue.

[Lord Freud]

My Lords, this is a long-term issue and one needs to address it on a long-term basis. When the Chancellor introduced this topic, he said that he would like to see it addressed on a cross-party basis. That remains the position.

Pensions Act 2007 (Abolition of Contracting-out for Defined Contribution Pension Schemes) (Consequential Amendments) (No. 2) Regulations 2011

Lord Freud Excerpts

Thursday 7th July 2011 Lords Chamber

Moved by

[Lord Freud]

That the draft regulations and order laid before the House on 14 May be approved.

Motions agreed.

Pensions Act 2007 (Abolition of Contracting-out for Defined Contribution Pension Schemes) (Consequential Amendments) (No. 2) Regulations 2011

Lord Freud Excerpts

Monday 27th June 2011 Grand Committee

Moved By

[Lord Freud]

That the Grand Committee do report to the House that it has considered the Pensions Act 2007 (Abolition of Contracting-out for Defined Contribution Pension Schemes) (Consequential Amendments) (No. 2) Regulations 2011.

Relevant Documents: 23rd Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

I shall set out the general context for these draft provisions. Contracting out of the additional state pension was first introduced in 1978. Initially, contracting out was restricted to defined benefit or salary related occupational pension schemes but, in 1988, it was extended to pension schemes contracted out on a defined contribution or money purchase basis. The scheme members and, in the case of occupational pension schemes, their employers, receive a national insurance contributions rebate in place of the state benefits forgone.

At this point I should explain to noble Lords the terms “money purchase” and “defined contribution”. A money purchase scheme is defined in legislation as one where all the benefits that may be provided are money purchase benefits, which in turn are calculated by reference to payments made by the member or by any other person in respect of the member and which are not average salary benefits. The term “defined contribution scheme” is not one defined in legislation but is the term commonly used throughout the pensions industry for money purchase schemes.

In 2005, an independent pensions commission, chaired by the noble Lord, Lord Turner, recommended the abolition of contracting out on a defined contribution basis. The commission’s view was that the contracting-out/contracting-in choice added complexity to the UK pension system and was poorly understood. Its application to personal pensions helped to generate the pensions mis-selling problems of the 1990s. The then Government accepted the commission’s recommendation and the Pensions Act 2007 provided for abolition, with some further consequential changes in the Pensions Act 2008.

During the passage of the legislation, there was widespread support in Parliament for abolition. In March 2010, the then Government announced that abolition would be on 6 April 2012, and that date has been confirmed by the present Government. For the purposes of this debate we are only concerned with contracting out of the additional state pension via a defined contribution pension scheme. We are not proposing changes here to contracting out via salary-related schemes.

In the case of a defined contribution occupational scheme, both the member and the employer pay lower rates of national insurance contributions. The employer pays a minimum payment to the scheme which is equal to the member’s and employer’s reduction in national insurance contributions. In a defined contribution contracted-out personal pension scheme, the full rate of national insurance contributions is paid by the employer and employee, and the rebate is provided by HMRC through an annual payment into the pension scheme at the end of the tax year. These reductions and payments are collectively known as the contracted-out rebate.

Under the current defined contribution contracting out system, special rules are applicable to protected rights, the collective term for the rebate, tax relief and investment return which abolition will remove. These rules include restrictions on the type of scheme in which protected rights can be invested or to which they can be transferred, a requirement to purchase a unisex annuity, and a requirement to make provision for a survivor benefit where the member is married or in a civil partnership at the point of annuitisation.

The affirmative draft order and regulations now before the Committee make consequential changes to the primary legislation by amending or revoking various pieces of legislation that will be redundant following abolition. They amend or repeal, where appropriate, all references to “contracted-out money purchase schemes”, “appropriate personal pension schemes” and “protected rights” in existing legislation. The order and regulations are part of a package of consequential changes and should be read in conjunction with the negative statutory instruments that were laid on 16 June 2011; namely, the Pensions Act 2007 (Abolition of Contracting-out for Defined Contribution Pension Schemes) (Consequential Amendments) Regulations 2011, and the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) Order 2011.

Turning to the affirmative provisions which are the subject of this debate, I do not propose to explain the minor amendments contained within these statutory instruments. I will, however, highlight the main provisions. The Pensions Act 2008 (Abolition of Protected Rights) (Consequenial Amendments) (No. 2) Order 2011 is split into three parts. Part 1 contains commencement provisions. Part 2 introduces a de minimis or minimum payment provision for late rebate payments and recoveries, and a transitional period that is necessary for the administrative tidying-up of late rebates. Part 3 deals with rebate payments made after the transitional period. By way of background to late rebates, rebate payments are made by HMRC to contracted-out DC schemes at the end of each tax year by means of automated payments.

In some instances, HMRC may need to amend an individual’s national insurance record because of the changes notified to them after the end of a tax year— for example, where an employer discovers an error in the amount of earnings paid by an employee in an earlier tax year or where an incorrect date of birth is recorded and has to be revised. These adjustments to the national insurance records can sometimes result in an additional contracted-out rebate payment, or overpayment, becoming due. Analysis shows that the bulk of late rebate payments fall to be paid in the three tax years following the tax year to which the rebate relates. The transitional arrangements in this legislation will ensure that adjustments to rebates for periods prior to April 2012 are paid to individuals’ pension schemes up to April 2015 by an automated process. Following the end of the transitional period of three years, payments will be made from 6 April 2015 to individuals who will be advised to pay the amount into a pension scheme.

The de minimis provision introduced by the order makes provision for a limit below which HMRC will not be required to make a rebate payment. This limit will correspond to the cost of paying the rebate clerically by HMRC—that is, the rebate will not be paid where it costs more to administer the rebate payment than its actual value. The limit is expected to be in the region of £15 where the payment is made clerically. Payments which are made during the transitional period through the automated payment system will, as now, not be subject to a minimum limit.

We have been working closely with the pension industry in developing the abolition legislation, including the transitional period. The legislation was subject to a full consultation and the industry is satisfied generally that it can all be implemented. However, there is one point that I need to draw to the Committee’s attention. Article 3 of the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) Order 2011 makes a minor consequential amendment to the Insolvency Act 1986 but it has recently become apparent to us that it will not be possible for this provision to have practical effect. The article amends provisions which currently provide that any pensions payments which derive from protected rights are not taken into account as income when a court considers making an income payments order for a debtor. The amendment seeks to provide that any pensions payments which give effect to protected rights before the abolition date will continue to be exempt from counting as income for these purposes.

We now consider that it will not be possible for schemes post-abolition to be able to identify such protected rights payments as schemes will no longer be required to track protected rights. As such, this part of the amendment will have no practical effect as the courts would not be able to identify pension payments which give effect to protected rights. While we have discovered this issue, we consider that it does no harm. We will therefore press ahead and make these sets of amendments to provide the industry with certainty over the substantive changes to be made to implement the abolition of DC contracting out. We will undertake to amend Article 3 of the order before 6 April 2012—the abolition date—to clarify the intention on that particular point.

To conclude, I am satisfied that the order and the regulations are compatible with the European Convention on Human Rights and I commend them to the Committee.

[Lord German]

My Lords, I welcome these statutory instrument. It is important to note that the so-called amendment instrument No. 1—I will not read the whole title out—have been laid by negative resolution at virtually the same time as these instrument for affirmative resolution. That is good practice for the House because it means that noble Lords will be able to understand and see the whole picture, and be able to work on them together. I commend that action from the Government.

Secondly, concerning the transitional arrangements, clearly this is a commitment made by the last Government being enacted by the present Government and so has a great deal of political support right across the boundaries, as it did when it first came before your Lordships’ House at the time of the Pensions Act in 2008. I wonder, though, what would happen should there be an amendment needed or an error found outwith the three-year period. It might be, for example, that something was discovered beyond the three-year period. Is there any measure by which that can be dealt with?

I am pleased that the Government are introducing this measure because it will of course mean that small amounts of money will not need to be paid where the cost of administration is greater than the amount paid out. I hear what my noble friend says about the online methodology that will not be affected. However, when it comes to mechanical methods by which sums below £15 would be encountered, I dread to think what it will cost to administer a payment of £15: I am sure that it will be considerably more than the cost. Therefore, it is welcome that that area is covered.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I do not propose to detain noble Lords for long with my contribution. I start by thanking the Minister for his introduction to and detailed explanation of the orders. As he indicated, they spring from the Pensions Acts 2007 and 2008, of which one has some fond memories and some other memories as well. He reminded us that they were based on the findings of the commission chaired by the noble Lord, Lord Turner. He will understand if we on this side now refer to the commission as the “Drake, Turner and Hills commission”. But he was right to say that there was a political consensus at the time, as indeed there is now. The date for implementation was identified by the previous Government, and we are grateful for the support of this Government in taking it forward. The noble Lord, Lord German, is in a sense right in his description of what is happening here. People are moving out of a DC scheme into something that is effectively a DB scheme—moving out of a funded scheme into something that is pay-as-you-go. That is the essence of the switch that is going on here.

I have about three questions for the Minister, all of which I hope are pretty straightforward. The first was touched on by the noble Lord, Lord German. The impact assessment talks about actuarial neutrality. It identifies for employers both a short-term and a long-term neutral component to this. For individual employees and for the Government, although there may be actuarial neutrality overall, the cash flow effect for each is different in the sense that the Government will generate cash flow from this in the early years, while of course the payback will be the extra state second pension paid in later years. If we look at the remainder of this CSR period and perhaps the next period, how do the cash flows pan out? What is the extra amount of revenue for the Government over the period, which they will pay for later with increased contributions to S2P? What are the Government planning to do with the headroom they will get from that cash flow? I might suggest that they could help out on dealing with adjustments to the state pension age, but that is probably a debate we ought not to have at this point.

My second query was partly prompted and indeed enhanced by what the noble Lord said about the Insolvency Act and Article 3, and why that will not operate in future because schemes post abolition will not be able to track protected rights. I suppose that my question is this: looking at what is happening here, most of the DC schemes involved are personal pensions and therefore do not have the trustee arrangements that some of the occupational schemes may have as part of their fiduciary duties. What will protect the legacy guaranteed minimum pensions of those who built up these rights in the past? As the noble Lord said in his introduction, at the moment protected rights have restrictions on scheme transfers, on the type of annuity that can be bought—a unisex annuity—on survivor benefits and on joint life annuities. I think that that is one of the requirements. If that is all swept away and we are left to deal with contract-based schemes without the protection of trustee arrangements, what protection will there be for people with legacy rights? Obviously for new entrants and for the future the issue does not arise.

My last point again picks up on a comment made by the noble Lord, Lord German. He said that he liked the direction of travel because it helped us towards the enhanced flat-rate pension. Perhaps the noble Lord can give us an update on that. In particular, will he explain how as a practical matter it will be possible to deal with that while there is still contracting out from DB schemes and whether, as the noble Lord asked, there are any proposals to accelerate the withdrawal of contracting out for DB schemes?

Those are the only questions I have, and I look forward to the Minister’s response. However, obviously we support the regulations.

[Lord Freud]

My Lords, I thank noble Lords for some pointed and excellent questions, which I will be pleased to deal with as best I can. The first, from my noble friend Lord German, on what happens outwith the three-year period, is relatively straightforward. That is rather simple: if there has been an overpayment, HMRC will consider some recovery if it is cost effective; I suspect that it costs rather more than £15, but if it is a reasonable sum it will do it. If there is an underpayment, the additional amount will be paid directly to the individual, obviously subject to de minimis, with the suggestion that they put it in their pension pot, as I said at the beginning. I think that that is more than a suggestion, as well.

My noble friend asked me about the critical issue of communication. When you are in the fourth league of complexity, explaining how you are undoing complexity can be even more complex, taking you down to the fifth league. We are well aware of that. DWP and HMRC are working with industry representatives on a pretty elaborate communication strategy so that the information is targeted at those who need to know. We have developed a number of fact sheets that will be online for members, for schemes, for employers and for trustees. On members, we have made changes in the negative instruments, as part of this package, to require schemes to inform individuals of the key impacts of the abolition.

Both my noble friend and the noble Lord, Lord McKenzie, went on a slight fishing expedition—is that the fairest way to describe it?—about what the implications and interconnections might be with S2P and the state pension, referring to our consultation, A state pension for the 21st century. Again, I have to be slightly boring on that matter because we have now had the responses to it. The closing day was in fact last Friday, 24 June. I think that “We are considering the responses”, is the way that that is expressed. There is clearly a highly interesting and relevant knock-on from this to that, depending on how it comes out.

Both my noble friend Lord German and the noble Lord, Lord McKenzie, asked about actuarial neutrality. The explanatory material makes it clear that there will effectively be an exchange with the uncertainty of the investment markets, where one can clearly get very good returns if one has the right investment strategy and equally appalling returns if one has the wrong strategy. Those risks are exchanged for the certainty of the state pension. I guess that that is what actuarial neutrality means, although it could be described in other ways as well.

--- Later in debate ---

[Lord McKenzie of Luton]

That would be very helpful. I had a look at the impact assessment but could see only aggregate figures rather than year-by-year figures. It would be helpful to have those.

[Lord Freud]

We can do that. Obviously, there are many figures running around in various ways, but we will get the appropriate figures to the noble Lord in a letter. His connected question on the extent to which there will be increased revenue in the short term and where that might be spent is something on which I could not possibly comment—nor, I suspect, would I be expected to.

I turn to more general issues of insolvency. The noble Lord, Lord McKenzie, talked about some of the more general implications for protected rights. Effectively, they mean that an annuity will have to be purchased with similar provisions to the state scheme. Of course, for that reason very few people will get extraordinary returns and we will get back to neutrality. The removal of the rules on protected rights will increase the flexibility for members. The size of the fund will remain the same but they will have choice in the provision of retirement income.

The provisions contained in the statutory instruments will support the delivery of the abolition of defined contribution contracting out. I hope that I have dealt with all the questions satisfactorily. I commend the measures to the Committee and ask for its approval to implement them.

Motion agreed.

Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) Order 2011

Lord Freud Excerpts

Monday 27th June 2011 Grand Committee

Moved By

[Lord Freud]

That the Grand Committee do report to the House that it has considered the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) Order 2011.

Relevant Documents: 23rd Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Social Mobility and Child Poverty Commission

Lord Freud Excerpts

Thursday 23rd June 2011 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, the changes required to establish the new commission are included in the Welfare Reform Bill and we will be able to discuss them during the Lords stages of that Bill. The commission will be established as soon as possible. Until then, the Government’s Independent Reviewer on Social Mobility, Alan Milburn, will incorporate child poverty into his remit. He will then serve as acting chair of the commission until a permanent chair is appointed.

[Baroness Tyler of Enfield]

I thank my noble friend the Minister for his reply. Is he aware of the OECD research published last week that shows that the UK is faring badly in international league tables in terms of pupils from disadvantaged backgrounds succeeding at school against the odds? Will he give an assurance that the commission will look critically at these sorts of issues to see whether the current measures are sufficient to improve the situation?

[Lord Freud]

Yes, my Lords. The OECD report was another useful wake-up call for us in an area in which we have not been doing as well as we should. That is precisely why we have combined our child poverty and social mobility strategies. We need to make sure not just that there are fiscal transfers to address poverty but also that the life chances of children are improved.

[Lord Soley]

Will the commission be able to look at the loss of the child trust fund, or baby bond? It was a serious mistake by the Government to cut that, because it was one of the best ways of enabling children in very poor families to find a way out of poverty in the long term and of encouraging saving. Can we have a guarantee that the commission will be able to look at a replacement for that?

[Lord Freud]

My Lords, the job of the commission will be to hold the Government to account for their strategy. It is the job of the Government to set the strategy and we will look at all the areas in which we need to improve performance.

[Baroness Sherlock]

My Lords, I am sure that noble Lords who saw the recent BBC documentary “Poor Kids” will have been moved by the brutal reality of child poverty in Britain that was portrayed. Will the Minister assure the House that the Government will commit themselves to tackling poverty at the very bottom and not just social mobility? Is he aware of the concerns expressed by charities that the Government’s approach to the commission may undermine its independence and will he meet the End Child Poverty group to discuss this?

[Lord Freud]

My Lords, one of the things that we are doing to expand the measures of accountability is to look precisely at severe poverty, which is a combination of very low incomes and material deprivation. That is an area on which we want to focus. One of the problems with targets is that they encourage Governments to tuck people just above an arbitrary line, which we do not want to do. I am sorry, but I have forgotten the second part of the noble Baroness’s question.

[Baroness Sherlock]

Will the Minister meet the End Child Poverty group to discuss its concerns that the Government may be weakening the commission’s independence?

[Lord Freud]

We are not weakening the commission’s independence in any way; we are strengthening it by requiring the commission to hold the Government to account. The fact that we are not insisting that the commission sets the strategy for the Government means that the Government now have that responsibility and the commission can then hold them to account. I shall of course meet the group at any stage; I am sure that it is in my diary anyway.

[Lord German]

My Lords, the OECD report, which places the UK 28th out of 35, paints a picture of poverty of aspiration for many of our people, particularly our young people. It suggests, however, that peer mentoring and mentoring of all sorts are a way of improving that position. Will my noble friend ensure that mentoring of all types will be part of the work of the commission that is being established?

[Lord Freud]

My Lords, there needs to be a massive programme to improve both poverty and social mobility. It needs to be done right the way from foundation years, through school years and the transition period, and even to adulthood. The particular programmes that we will see will come out of this general approach. I cannot give any assurances on any particular approach at this stage, although I am personally most sympathetic to the concept of mentoring.

[Lord Peston]

Does the Minister recall Scott Fitzgerald’s remark to Ernest Hemingway many years ago? “The rich are different from us”, Fitzgerald said. “Yes”, Hemingway replied, “they’ve got more money”. There is no mystery about child poverty, is there? What children need if they are not to be impoverished is more money, which means that a policy of cutting public expenditure benefits is not the right way of setting about helping them.

[Lord Freud]

My Lords, regrettably, I was not there when that remark was made. However, I absolutely insist that income transfer is not the way to solve poverty; we need a much more comprehensive approach. Recent research tells us that in-kind support is more effective than income transfers for children in poverty. We are making a sustained, long-term attempt to lift people out of not only poverty of income but poverty of aspiration and poverty of outcomes.

[Baroness Royall of Blaisdon]

My Lords, will the commission be charged with looking at the impact of the legislation going through this House now, such as the Welfare Reform Bill and the Bill that affects legal aid? Will it specifically look at the life chances of the thousands of children who, we were told by the Evening Standard last night, are going to have to move out of London, their primary schools and their secure environment because of the cap on welfare benefits?

[Lord Freud]

My Lords, the job of the commission is to hold the Government to account on their strategy on child poverty and social mobility. That is what it will do across the wide range of this Government’s policies.

Disabled People: User-led Organisations

Lord Freud Excerpts

Wednesday 8th June 2011 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I would like to thank the noble Baroness, Lady Wheeler, for the opportunity to discuss disabled people’s user-led organisations and the broader personalisation agenda. I would also like to thank those who have contributed to this short debate this afternoon. It is a crucial area of work and I know that for many noble Lords—many more than are here—it is an area of utmost importance. I also join in the tributes that have been paid to Nasa Begum.

Let me begin by agreeing with everyone who has spoken in support of disabled people’s user-led organisations and of their importance. I will use “the organisations” as shorthand, otherwise I shall use up much more time than I have available. These organisations have a unique insight and are a powerful voice for disabled people, and the Government recognise their important role in shaping future service provision. We want to secure their continued involvement by developing their skills and building on their experience. With the current need to reduce the deficit and rein in public spending, budgets everywhere are tight.

We know that many local authorities have decided to reduce grant funding for these organisations, leaving them to rely on other means of generating income, such as the supply of services. However, with a new emphasis on personalisation and localised delivery of services, there are opportunities for these organisations to develop alternative sources of income and continue to be involved on the ground in support of disabled people.

This Government have to spend wisely. We are not in a position to throw money at these organisations, and the investment we are making in cash and time must be targeted so that a little will go a long way. Working closely with these organisations, we have devised a package of support designed to get the most out of the money we have put in. I will outline the details of the package in a moment, but let me just put this approach into a wider context.

The work that organisations such as these have been doing—bringing people together, volunteering their expertise and influencing policy—is exactly the kind of thing that the Prime Minister means when he talks about the big society, a point made by the noble Baroness, Lady Campbell. For groups such as these, the big society is already a reality. We want to use the limited funding available to build on this good work and develop an even bigger society, acting professionally, delivering services and working alongside local and national government to deliver more for disabled people.

The advantages of working with organisations such as these are clear. They are the experts in their own disabilities; they are organised, knowledgeable and in many cases already provide support and services alongside those provided by the public sector. Often those services are more innovative, work better for their users and cost less to provide than the public sector alternative. Essentially, these organisations already know what works and they have clear ideas about what does not. The Government want to tap into that knowledge.

However, our experience of working with these organisations has also demonstrated that some groups are lacking the professional, business and leadership skills they need to drive their organisations forward and to weather the current economic climate. That is why we have devised a package, working closely with representative organisations, to deliver £3 million of support designed to build capability, communicate best practice and bring in voluntary expertise. In answer to the noble Lord, Lord McKenzie, the £3 million encompasses the full support package. It is doing what the noble Lord, Lord Addington, called for—making sure that we have a way of dragging in the expertise of these organisations to help disabled people.

The money will fund a national lead role shared by a civil servant and a disabled people’s representative, and link government and disabled people’s organisations at a high level. This will create a central, national focus for these organisations and cement their national presence. Beneath the national lead there will be a network of around 12 ambassadors, broadly spread out geographically. This will be complemented by a range of expert volunteers matched to organisations in their area that need their skills. All too often these organisations have told us that they lack the specific skills needed to run a successful organisation—skills ranging from accountancy and financial management to human resources support and business planning.

Finally, there will be a facilitation fund providing small grants for these organisations to address specific needs. This cash-limited fund will be managed by the national lead and a group of ambassadors, and be used to pay for things that support the sustainability of these organisations. Recruitment for these posts closed last week and we have received a great deal of interest, with around 10 applications for the lead role and 81 applications for the ambassador positions. The package will formally be launched next month, when we will announce who has been appointed. It will help these organisations to develop their skills and expertise.

Let me pick up on some of the points raised. The noble Baronesses, Lady Wheeler and Lady Wilkins, both asked how we will encourage local authorities to commission through these organisations. We are looking to the ambassadors to work with local authorities and to help local authority commissioners understand the added value that can be gained from working with these organisations. That support will allow the organisations to compete more effectively. We will emphasise through the ambassador network the added value that they can bring above and beyond what more commercial entities can offer.

The noble Baroness, Lady Campbell, asked what plans the Government had to crank up the delivery of the personalisation agenda. Our figures show that in September last year 248,000 people were receiving a personal budget. That is a good increase of 100,000 on the previous April, but it is still pretty patchy and we are determined to boost what is happening on that front.

In response to the noble Lord, Lord McKenzie, and the noble Baroness, Lady Wilkins, I can confirm that we want disabled people to have access to a good, strong organisation in their area. The noble Baroness, Lady Campbell, asked what local authorities might do to compensate for the extra costs. I shall write to the Minister at the department with that question.

The noble Lord, Lord Ramsbotham, made an interesting point about mental health. This is an enormous and very complicated area. I am extremely conscious that we have not got this right, particularly in prisons. We are talking to the MoJ. I take very seriously mental health issues in this area, but I find it very hard to find a coherent set of solutions. However, I am conscious that this is something that we need to get on with in the months and years to come. I take the noble Lord’s point.

I know that many noble Lords are champions of disabled people’s user-led organisations. I leave the Committee with the simple message that so are this Government. This is an area that we want to champion. We will continue to support and encourage those organisations’ involvement and help them develop into the professional operations that we know they can be.

Employment and Support Allowance (Work-Related Activity) Regulations 2011

Lord Freud Excerpts

Thursday 19th May 2011 Lords Chamber

Moved By

[Lord Freud]

That the draft regulations laid before the House on 28 February be approved.

Relevant Documents: 17th Report from the Joint Committee on Statutory Instruments, 24th Report from the Merits Committee.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, these regulations establish a new requirement for some employment and support allowance customers—those who are able to prepare for a return to work—to undertake activity that will help them move closer to employment. The regulations amend current rules to allow people assessed as being able to prepare for work to engage in activities such as training, CV writing or researching local employment opportunities.

The regulations are about extending a hand of support and giving a nudge of encouragement to people who have been out of work as a result of a health condition or disability, but who may be able to return to the workplace with the right level of tailored back-to-work support, primarily under the umbrella of the Work Programme. The regulations are deliberately non-prescriptive to allow this support to be adapted to the individual and to ensure that it is flexible enough to deal with fluctuating conditions.

The regulations apply only to those in what is referred to as the work-related activity group—people who can reasonably be expected to prepare for a return to work. We remain committed to providing unconditional support for severely disabled people who cannot work, but we have also made a commitment to support people with a disability or health condition who have the potential to work in future. We are convinced that work-related activity should form part of that support.

Some noble Lords here for today’s debate met officials from the Department for Work and Pensions and me to look through some of the detail of these regulations. It was a very useful meeting and I hope that the forensic investigation has already gone some way towards allaying concerns.

For our purposes, I will take a few moments to set out for the House the history of the regulations. The powers that we wish to enact today are evolutionary, building on the work of the previous Government. They were taken by the previous Government in May 2007 but never brought into force. We believe that it is crucial to enact them as originally envisaged for new customers, but also to extend them to existing customers, providing the same level of support for all.

The notion that disabled people or those with health conditions should be able to access support to help them move closer to the labour market was in the Conservative Party Green Paper, Responsibility Agenda, published in January 2008. This paper set out, for the first time, that help should be extended to the existing stock—as it is vulgarly called—of benefit claimants, namely people written off on incapacity benefits, many of whom had received little or no support. The previous Government set about implementing this idea with the introduction of the employment and support allowance in October 2008. This included the intention to provide mandatory work-focused interviews and some work-related support for new customers, but no plan to extend the support to existing customers—the “stock”. In December 2008, Professor Paul Gregg published a report recommending extending and improving support for all customers and the Government of the day accepted his recommendations.

Convinced of the importance of providing back-to-work support for all customers by the summer of 2014, all current incapacity benefit claimants will have been assessed for ESA. Those customers placed in the work-related activity group will, if these regulations pass, be able to access this improved package of support. These regulations make participation in work-related activity part of the mandatory package. Quite simply, the evidence of the beneficial impact of work, even for those with a health condition or disability, is too strong to ignore. The regulations before the House today seek to ensure that, for those who can, taking part in activities designed to help them return to work becomes a normal part of the ESA regime.

I stress that these regulations do not apply to all ESA customers. The group we are particularly concerned with are those customers who make up the work-related activity group, who we can realistically expect to return to work at some future point. Once we have recognised that someone is capable of work-related activity, it is vital that we provide opportunities to engage with the labour market and offer support to identify achievable and sustainable work-related goals. These regulations provide for that support to be delivered, empowering individuals so they are able to take real, active steps to improve their chances of securing employment once their health or condition improves and they are ready for a return to work.

The regulations do not specify the type of activity that we expect this group to engage in. Indeed, the definition of work-related activity is deliberately broad, covering any activity which makes it more likely that the person will obtain or remain in work. However, there are some absolutes. We will not require customers to undertake medical treatment nor to seek, apply for or take up work. Beyond that, we do not want to be overly prescriptive. The emphasis is on the relationship between advisers and individual customers working together to tailor a plan of action that will always be reasonable, realistic and relevant.

Customers who do not participate in work-related activity will be sanctioned, and I know noble Lords have some concerns in this area. In response, let me just say this: there are safeguards in place to ensure that sanctions are not improperly applied. Sanctions will apply only to the work-related activity component of the benefit and will be applied only by trained Jobcentre Plus decision-makers, who will have the freedom and expertise to exercise their discretion. The decision-makers receive comprehensive training to enable them to seek out and assess all available evidence to ensure customers are given a fair hearing. In addition, Jobcentre Plus has a robust appeals process for anybody who is unhappy with a sanction they receive. I set out the full complement of available protections in the letter I sent to Peers earlier this week.

The main question that the Merits Committee, which looked at this, was concerned about was adviser training and capacity. JCP will set the standard for employment-related personal adviser services in the UK, and Edexcel has endorsed the learning route ways for personal advisers and assistant advisers. We must avoid the mistakes inherent in previous employment programmes that sought to compartmentalise customers and offered only a narrow range of support options based on predetermined assumptions. Flexibility is the key, and the support provided through the Work Programme will be tailored to individual circumstances, including taking into account any ongoing health issues.

We will guarantee the quality of the support provided through the Work Programme by implementing a demanding payment-by-results structure without dictating to providers how those results should be achieved. This will give providers from the private, voluntary and public sectors the freedom to innovate and find out what works best for different customers, enabling them to deliver a truly tailored approach.

We know that some customers on the Work Programme will be much closer to the labour market than others. To ensure that providers do not simply focus their efforts on the easiest to help, we have designed the payment structure to give providers greater rewards for supporting those with the greatest barriers to sustainable employment, including some of those claiming ESA. To put it simply, we will pay more to providers who work effectively with the hardest to help. That sum is considerable and can be nearly £14,000 in some cases.

Earlier this week, I sent out a schedule of that payment structure for ESA customers. I shall touch on some of those figures. As a reference point, for the jobseeker’s allowance customer group between the ages of 18 and 24, who we know should find work reasonably quickly, the maximum payment will be £3,800 as the contracts start. Within the model, there are now three categories of ESA customers. They are divided between those who are new recipients of ESA and those who have previously received incapacity benefits.

For those new ESA work-related activity group customers who have a short prognosis and are required to participate in the programme, we will pay up to £6,500 per person at the beginning of the contract. One can see the step up from the basic £3,800 being paid to the young JSA customers. For the ESA work-related activity group customers who volunteer for the programme—those receiving contributions-based ESA or with a long prognosis—we will pay up to £3,700 at the early part of the contract. We pay those customers less because, as they have volunteered for early access to the Work Programme, they are likely to be more receptive to support and therefore easier for providers to help than customers who are required to participate in the programme. There is also a financial structure behind this around how the DEL-AME switch works.

The final group are those who come off incapacity benefit on to ESA, and they will be paid up to £13,700 at the early stage of the contract. Our evidence suggests that these customers will be the hardest to help. Many of them will have spent many years receiving incapacity benefits before they move to ESA. The payments for the groups will change as the contracts develop, during which time we will introduce an incentive structure for some groups where a £1,000 incentive will kick in when the providers start to really perform.

The Work Programme is bigger than any previous employment programmes. It will serve a much wider range of customers, including those claiming ESA. Those customers who are self-employed or who have a contract of employment will be supported by Jobcentre Plus. All others will have the option of volunteering to participate in the Work Programme at any point after their work capability assessment. One of the key changes that these regulations would allow is to make participation in the Work Programme compulsory for those in the work-related activity group who have a short prognosis.

I am not going to address the work capability assessment at this stage. Perhaps noble Lords will want to raise it, although it has been debated in great depth recently. I suspect that the subject may have been aired well enough already.

We believe that, with the right support and encouragement, many more people can and should benefit from the opportunities presented by active engagement with the world of work. Undertaking carefully considered appropriate activity to improve job prospects represents a positive, realistic approach to avoiding long-term benefit dependence. I beg to move.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his clear explanation of the regulations, and also for the helpful meeting that he convened last week, the input of officials and the follow-up information. That is a productive way to deal with the issues that emanate from regulations such as these. If there is a downside to that approach, having lots more information just gives scope for further inquiry and questions. I shall try to be brief on that front.

It will come as no surprise that we support the underlying philosophy reflected in these regulations. As the Minister said, they derive from legislation of the previous Government—the 2007 and 2009 Welfare Reform Acts. I believe that we have a consensus on the importance of work and the obligations of government to help those who can work get into work and those who are not yet ready for work to get closer to the labour market. There should be an obligation on individuals to engage with the support available and, with appropriate safeguards, sanctions for those who unreasonably refuse. That consensus also acknowledges that there are some for whom it is not reasonable to expect engagement.

As ever, the devil is in the detail, as the noble Lord, Lord German, said. As we have heard, this is the first time that the Government have activated provisions that can require ESA customers to undertake specific work-related activity. For this to work, clearly it is important that the correct judgments emanate from the work capability assessment. As several noble Lords have recognised already, that has recently been the subject of considerable debate in your Lordships’ House. The appropriateness of the descriptors and the capacity of Atos remain issues. As with other noble Lords, such as the noble Lord, Lord German, and the noble Baroness, Lady Thomas, we await further developments on Professor Harrington’s work.

What is now required from the WCA is not only to advise on whether an individual is capable of work and therefore directed to JSA, or has limited capability for work-related activity and enters the support group, or has limited capability for work, but also, in the latter case, to make some judgment about how long it will be before the individual can be expected to be fit for work. Is this correct? In a sense, this is a new development. It is important because, as we have heard, those expected to be fit for work within six months will be required to access the support provided by the Work Programme rather than be able to volunteer for it or, presumably, potentially be subject to mandated work-related activity by JCP advisers. Is not the emphasis on the timescales adding another dimension to the challenges of the WCA, especially for those with mental health conditions, fluctuating conditions, autism et cetera?

Can the Minister say how the health professional at the WCA stage will be able to make an authoritative assessment of when an individual to be assigned to the work-related activity group will be fit for work in the absence, possibly, of knowledge of the sorts of work-related activity which are available to the individual? Can the Minister confirm—I think that this came from our meeting—that anyone assessed as being on ESA but with a prognosis of being fit for work in, say, six months will have to be reassessed through the WCA before the designation is changed?

Does not the designation of when someone is likely to be fit for work have a significant implication for providers? Someone going on the Work Programme from an ESA flow deemed likely to be fit for work within three months attracts a potential fee which is nearly double that of someone in broadly similar circumstances but who might be deemed fit for work in, say, six months. Is this right? The argument that the Minister advanced is that the difference is that somebody volunteers. But the judgment that seems to be made is that if somebody from an ESA flow is on a work-related activity group and likely to be fit for work within three months, that attracts something like double the fee to the provider of somebody who is broadly in the same circumstances but who will not be fit for work for a longer period, simply on the basis that they have volunteered for the programme. That second category of person could be argued to be a harder to reach person, yet attracts a smaller fee for the provider.

Obviously, someone deemed fit for work would move to the JSA regime and be subject to wider conditionality—for example, jobsearch. But for the purposes of the payment arrangements under the Work Programme, do they keep the status that they had when first referred to the programme? If so, the WCA assessment would have a particular significance for providers.

Incidentally I note that ESA self-employed customers—presumably, previously self employed—will not have access to the Work Programme. Why is this? The details of payment arrangements provided by the Minister under the Work Programme certainly demonstrate strong financial incentives for some groups, but could we be told the projected annual numbers for the first three years for the following ESA groups—on the ESA flow, those likely to be fit for work within three months, and the ex-IB likely to be fit for work within three months?

As the noble Baroness, Lady Thomas, and the noble Lord, Lord German, have said, the Merits Committee raised concerns over the capacity and training, which I share. The Minister touched on that in his presentation of these regulations. It is clearly of very great significance. The existence and application of sanctions has been the subject of considerable debate both during the passage of the legislation and since. We support the necessity of sanction arrangements as a means of ensuring compliance, provided they have due regard to good cause for non-compliance and are sensitive to the circumstances of vulnerable people. We support the Government in concluding that it will be JCP decision-makers who will make decisions about sanctions, not providers. But perhaps the Minister can clarify for us the policy in relation to vulnerable customers and where responsibility lies.

My understanding is that before any sanction could be levied on customers with a mental health condition, a learning disability or a condition affecting communication and cognitive skills, some personal contact should be made, if necessary a home visit. I detect some weakening of this, certainly in the response given by the Minister of State in the other place when these regulations were debated. What is the current policy? Where will responsibility fall between the provider and Jobcentre Plus? What contact will be made by the provider before referral for a sanction and what contact after but before a determination? Is there clarity on this in the contractual arrangements? What monitoring arrangements will be in place? Can the Minister take the opportunity categorically to confirm that there are no targets operated by Jobcentre Plus relating to numbers to be sanctioned, whether for ESA, JSA or any other benefit?

It is noted that the right of lone parents to restrict availability for work-related activity when there are children between the ages of 13 and 16 is to be considered on a case-by-case basis; again, the noble Lord, Lord German, touched upon this point. This consideration is to take account of the individual needs of the child and, among other things, their ability to remain unsupervised. What on earth sort of guidance is to be given to help with this consideration?

We have touched on the Work Programme a little in so far as it is relevant to ESA and work-related activity. I hope that we will have the opportunity for a fuller debate because it is an ambitious project that we want to see succeed. The flexibility of the black box approach and individually tailored support are to be welcomed. Strong financial incentives for helping the hardest hit to get to the labour market is obviously the right approach. Before we have this debate, though, perhaps the Minister can explain why the ex-IB work-related activity group who are unlikely to be fit for work within three months should have treble the potential reward for the providers than ESA customers who are further from the labour market. Will the Minister say a little more about why the Work Programme negates the need for the work-focused health-related assessment?

I look forward to the Minister’s reply on this and other matters, but these regulations are an important step forward and they have our support.

[Lord Freud]

My Lords, I thank all noble Lords who have taken part for the support for the general principle of what we are trying to do here. This is a component of a very large change, with quite a few moving parts. I note the accusation of the noble Baroness, Lady Thomas, that the only person who has all the moving parts in their head is me. We are slowly getting it out, and this is one element of that process. As I said at the start, those people who are disabled and cannot work will get unconditional support, but we have an obligation to support large numbers of people who could get into the labour market. Many disabled people are in the labour market—not enough, but I think that the figure is around 40 per cent of those who are disabled.

The noble Lord, Lord McKenzie, is very fond of quoting my work, which always makes me blush with embarrassed pride. I also said in the report to which he referred that if the Government do not engage with these people, it is a dereliction of duty. One of the things that we are trying to tackle here is to stop that dereliction and help these people get back to work. I emphasise that what we are talking about is not getting people to work and sanctioning them for not working; this is about work-related activity. We are talking not about the intensive requirements of taking a job but about preparing for that process.

I shall try to deal with the enormous number of questions. I am not sure that I will be able to answer all of them, just because of time and volume. One of the issues that noble Lords have raised is training. The training that we offer will provide much greater emphasis on the need for personalisation and flexibility, which my noble friends Lord German and Lady Thomas were concerned about. There are new demands on staff to do with flexibility. We will provide the products and tools to support the front line in diagnosing customer need precisely. As to decision-maker expertise and who takes these decisions, staff receive extensive training so that they are able to make decisions. They have access to comprehensive, up-to-date, clear procedures and guidance for ESA decision-making, which includes how to handle difficult situations and provide customer care. The delivery of that learning is supported by Atos Healthcare.

--- Later in debate ---

[Lord McKenzie of Luton]

I understand what the noble Lord has said about the category in which you end up. I accept that the evidence base is being built, but to a certain extent it is determined by clear objective factors such as whether you have been on IB or are on ESA, but also by the prognosis that the health professional has made at the WCA, which is much more subjective. A lot could hang on that decision—for example, whether the relevant period is three months or a bit longer. What is our experience of the ability of healthcare professionals to make those fine judgments?

[Lord Freud]

The noble Lord makes a very interesting and valid point. We have spent a lot of time on this. Health professionals find it very difficult to make accurate prognoses for periods lasting many months. One of the reasons why we have the three and six-month periods is because the prognosis in those cases is much better and much more reliable. Rather than handing everyone in the work-related activity group over to the providers we thought that we would de-risk the situation by having three and six-month periods. We spent a lot of time wrestling with that point as we devised the groups that were going to go into the Work Programme.

I will write to the noble Lord on his question about the flows as I do not have the relevant figures to hand. My noble friend Lady Thomas asked about the closure of some JCP offices. We are planning to offer all affected staff relocation. Many questions were asked but I hope that I have covered all the key ones. If I find that I have not, I will write to noble Lords.

Let me close by saying I am convinced that this is the right way forward. I mirror what my noble friend Lady Thomas said: get this right and there is a huge prize here. I think, genuinely, that we will do this right—and we will watch it. I was asked about assessment and evaluation by the noble Lord, Lord German. We have a pretty elaborate evaluation program running. We will get that evaluation in two waves, the first this autumn and the second in early 2012. We will look at seeing exactly how this customer experience works in some detail, so we will get some flavour of that pretty soon. I have no doubt that we will be debating it at that stage, which will be quite interesting. I commend these regulations to the House.

Motion agreed.

Social Security (Electronic Communications) Order 2011

Lord Freud Excerpts

Thursday 19th May 2011 Lords Chamber

Moved By

[Lord Freud]

That the draft order laid before the House on 14 March be approved.

Relevant documents: 19th Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, if passed, this order would allow jobseeker’s allowance to be claimed, administered and maintained online and would open the door for some online administration of other benefits. This change would maximise efficiency and improve customer service. In addition, it would reduce the use of paper and develop a platform for electronic claims for other benefits, including the new universal credit. I confirm that the provisions of the draft order are compatible with the European Convention on Human Rights.

First, I shall say a few words on the department’s current position in relation to the Merits Committee. I take the duty to provide sufficient information to Parliament to enable proper scrutiny of this department’s legislation seriously. Senior officials from the department have recently had a constructive discussion with Merits Committee staff with a view to improving how we handle our secondary legislation. I assure your Lordships that I will do everything within my power to make sure that we meet the proper and reasonable demands of this important committee. In this instance, I know we were able to provide the additional information that the Merits Committee requested. I hope that additional information will assist this House during the course of this debate.

The Department for Work and Pensions is improving its customer service delivery by increasing access to its services through self-serve online channels. As part of this, the department would like to introduce a secure, automated online service. Customers will still be able to contact the department by writing or by using the telephone and face-to-face appointments will still be available. The current situation is that, at times, legislation requires the use of paper-based documents or signatures, or at least may be interpreted as requiring this. For example, currently a jobseeker’s agreement must be in writing and must be signed by the customer. This order, which is made under the provisions of the Electronic Communications Act 2000, amends social security legislation to allow electronic communication and storage. The order will also develop the department’s use of electronic signatures.

I shall take a few moments to run through the different possible formats of electronic signatures. I know that they are used in a lot of different ways and, if your Lordships will excuse me for being a little bit techie on this, I think that will help our debate. An electronic signature is something associated with an electronic document which performs a similar function to a traditional signature. It can be used to confirm the authenticity of an electronic communication—in other words, that it comes from a particular person. Another use of electronic signatures is to establish that the document has not been tampered with. Industry use is based on codes and ciphers, which essentially make the signature unique. For example, text can be encrypted and turned into letters or numbers, which can be deciphered only by someone who has the correct password or key. For the vast majority of services a combination of source data from the computer, or some other device and passwords, picture and word combinations, and other means of authentication form the basis of electronic signatures.

--- Later in debate ---

[Lord Freud]

My Lords, I thank noble Lords for joining in this debate. I particularly agree with the point made by my noble friend Lord German about how nice electronic voting would be in this House, particularly given the business of the road outside. As contributors to the debate have pointed out, the provisions are really about getting the department into the 21st century, whether with iPods, iPads or Android devices.

My noble friend asked a question about take-up. As I said, our aspiration is to get to 80 per cent. At the moment, 67 per cent of people have access to a PC. Noble Lords may not be surprised to know that we have done quite a lot of research on this. I might share some of those early findings, because they are rather interesting. Well over half of people in the JSA group are now in a position to take this up. The two categories at the top—“Ready, willing and able” and “Able and persuadable”—take us well over half. Then we go through “Nudgeable”, “Unconfident” and so forth, and end up with a small group—below 20 per cent—made up of what we call “Intensive support required” and “Multiple barriers”.

My noble friend Lord Elton made the point that some people will always find this difficult. Some blind people are able to use electronic things, or telephones that translate information; but clearly we are not talking about first-order processing at the moment. For those groups, we are staying with other methods. The noble Lord, Lord McKenzie, made a point about capacity. By freeing up the capacity of Jobcentre Plus from looking after people who can essentially look after themselves, we can concentrate that time and energy into the people who really need the help.

My noble friend Lord German asked about action plans. They are not the first things that will go on, but in time they will. Clearly, the whole structure of the universal credit is to put it all online; enormous activity is going on in the department at the moment to structure that electronic relationship.

My noble friend asked about the security of PINs: he was cynical about whether the PIN would be enough. The answer is that security is changing all the time. I could give you an answer today, but the department is looking all the time—as are banks and anyone with sensitive online access systems—to change and develop. A war is going on between cybercriminals and those who maintain the systems, and security levels change. I am convinced that whatever we have today in the way of PINs and other security, we will be watching all the time to make sure that we do not get caught out.

We aim to give a lot of information and instruction to people who are not using their own, more secure computer, but a more public computer, that they should log off. We are looking at systems that will make sure that once a file is closed, one cannot get back into it. We are looking at very active systems. That is one of our biggest relative insecurities when compared, for example, to banking products: people may be using not their own computer but a more public one. We are looking at that in great detail.

The noble Lord, Lord McKenzie, asked rather fewer questions than usual. However, the difficulty and quality of those questions was absolutely up there with his normal track record. He asked about system failure. Clearly we will look to include that under “good cause”. It would be unreasonable to penalise someone who was unable to access our system because it had broken down. I think that I answered his point about training and releasing people to do more face-to-face interviews. Of course, sensitive records will be very tightly controlled as part of our security. On the question of safeguards, we are looking to make sure that when people who are less confident with the system are helped into it, they will be helped in a comprehensive way and we will not do anything that will leave them more vulnerable. That will be part of the process.

This will not be the last time that we discuss technology: I suspect that we will discuss it much more than we have done, in this and many other contexts. I thank noble Lords for their contributions and commend the order to the House.

Motion agreed.

Child Poverty

Lord Freud Excerpts

Tuesday 17th May 2011 Lords Chamber

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what steps they will take to build on the reduction in child poverty in 2009–10 reported in Households Below Average Income, published on 12 May.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I welcome the reduction in child poverty from 2.8 million to 2.6 million children, but despite £150 billion spent on tax credits since 2003-04, largely aimed at families, that figure is a long way off the previous Government’s aim of halving child poverty by 2010. Noble Lords will be aware that the Government published their child poverty strategy on 5 April, showing how our radical reform programme will help to transform people’s lives and break cycles of disadvantage.

[Baroness Lister of Burtersett]

My Lords, I thank the Minister and I welcome the Government’s commitment to the eradication of child poverty. However, given that improved financial support for children played a key role in the previous Government’s achievement in reducing child poverty to its lowest level since 1985, will he comment on the Institute for Fiscal Studies’ prediction that cuts in such support could contribute to an increase in child poverty? Will he also explain why the child poverty strategy contains no specific, quantified targets for the period that it covers?

[Lord Freud]

My Lords, that is a complicated question. As noble Lords know, fundamentally, child poverty has been stuck at the same level since around 2004-05. We have seen a statistically significant reduction this year, but it is very much the same figure as it was five years ago. The IFS, as the noble Baroness pointed out, predicts an increase of 200,000 in the number of children in poverty in two or three years’ time. That may or may not be true, but our fundamental reforms, particularly of the universal credit, will start to drive that figure down. We are predicting, as has already been announced, 350,000 fewer children in poverty as a result of the universal credit when it is introduced and 300,000 fewer workless families.

[Baroness Walmsley]

Does the Minister agree that the nutrition of children in poverty is a very important element? Now that the School Food Trust is a charity and has moved out of the department as an agency of government, do the Government intend to ensure that it has the wherewithal to do the research into the nutrition of children in poverty that is necessary to inform government policy?

[Lord Freud]

My Lords, we have made quite a substantial change in approach to tackling child poverty. With our proposal to change the Child Poverty Commission into the Social Mobility and Child Poverty Commission, which went into Committee in the other place today, we are reinforcing some other measures beyond just income changes. We are using a series of other indicators to look at life chances as well as poverty in order to make sure that children have a better start and greater well-being.

[Lord Martin of Springburn]

My Lords, talking of a better start, the Minister will know that, unfortunately, where there is alcohol and drug abuse in a home, children often go hungry. I know that it is difficult, but can Her Majesty's Government take steps to ensure that every child, or as many children as possible, is able to get a breakfast before they go to their school in the morning?

[Lord Freud]

My Lords, that is micromanagement on some scale. We are trying with our welfare reforms to treat families as responsible units and for them to take the decisions that they need to take. However, we acknowledge that there are groups of families who cannot handle that responsibility. In moving the whole system to transfer responsibility to most families who can take responsibility, we are concerned about the people who cannot and what are the right ways of helping them. That is something to which we are paying active attention.

[Baroness Sherlock]

My Lords, returning to the matter of targets, even if the Government are correct, as the Minister said, and 350,000 children are lifted out of poverty by the welfare reforms, the IFS has said that that will be wiped out by the numbers falling into poverty before reforms even take place. I am sure that everyone in the House wants to build on the achievements in raising children out of poverty. Would targets not be the best way to do that?

[Lord Freud]

My Lords, it is important to look at what the figures have shown us. Last year we put an enormous amount of money into tax credits and the benefits system. The amount increased by 6.7 per cent and is the sole reason that we had income growth in this country in that year. It is not sustainable to do this by income transfers. Our aim is to try to transform the lives of people, and that must mean a renewed emphasis on getting people back into work, making them independent and leading their own lives. That is our strategy and that is how we have reformulated our poverty policy.

[Baroness Wheatcroft]

My Lords, any reduction in child poverty is to be applauded but, on the day those statistics were released, it was also revealed that the difference between the rich and the poor in this country had remained at the record levels of last year that it reached under the previous Administration. Does the Minister share my concern about the dangers that are inherent in that?

[Lord Freud]

Yes, my Lords. One of the peculiar things about what happened under the previous Government was that the Gini coefficient went up to an all-time record. It has moved slightly in the past year but not in any meaningful way. It is important that we address that as part of the context of looking at our poverty approaches but, as noble Lords opposite will know, this is not an easy thing to do.

[Lord McKenzie of Luton]

My Lords, the Minister referred to the importance of getting people back into work and I agree with that. Will he cast his mind back three or four years to a document that he wrote when the previous Government were in office? He wrote:

“The Government”—

that is a Labour Government—

“has made strong, and in some respects remarkable, progress over the last ten years … The New Deals have been enormously successful—helping over 1.7 million people into work since 1998. The creation of Jobcentre Plus in 2002 extended the rights and responsibilities regime for people on all benefits … and is widely seen as having been a model for effective public service delivery”.

Does the Minister still hold to that view?

[Lord Freud]

I used the expression “in some respects” and I stand by that. In some respects there was a great deal of success. Under the previous Government we discovered that active labour market policies worked, and when they were introduced—they were actually introduced by the previous Government—and pushed in they had a one-off effect. However, we are left with a huge problem of people on inactive benefits which the previous Government did nothing to solve. We are now trying to do that.