Welfare Reform Bill

Lord Knight of Weymouth Excerpts

Tuesday 13th September 2011 Lords Chamber

[Lord Knight of Weymouth]

My Lords, I start by paying tribute to the ambition of the Minister and his Bill. I know that the Minister is motivated by the very best of intentions in trying to tackle a system that is complex and needs continual reform. Certainly, the principles of the Bill are difficult to argue with, although it feels as if they have been ranked. He listed the three principles. I would rank them in the order of affordability, because he has to answer to the Treasury, followed by dealing with dependency, which is important. I am afraid that fairness appears to come third.

My worry for him and for the reform is that, to coin a phrase, it is too far too fast. As a department, as well as focusing on welfare reform, the Minister should focus on employment and work. The clue is in the title. We have an unemployment problem and if we really want to bring down the benefit bill, tackling unemployment is something that we need to take seriously. He should look, for example, at what the noble Lord, Lord Hall, has published in terms of the evaluation of the Future Jobs Fund in London with the Culture Quarter Programme, which had a 73 per cent success rate in getting people into permanent employment or full-time training. I substantially agree with the noble Lord, Lord Sheikh, and with the excellent maiden speech of the noble Lord, Lord Feldman of Elstree—I pay tribute to him—who said that work works. I think that the noble Lord, Lord Bilimoria, said the same. The Minister also needs to concentrate on the work programme. A lot of other things must be done alongside this important reform.

When we were in Government, we were committed to a single working age benefit. That should be the staging post for a more prudent and pragmatic way of going forward—tackling all those things that I described and then trying to simplify the benefit system before then taking something that is assessed on the basis of households and merging it with a taxation system that is based on personal assessment, which complicates things unduly. I will come to that.

I hope that the universal credit works. The noble Lord, Lord Skelmersdale, paid tribute to its simplicity. In many ways, the Minister is trying to design a swan—something that looks beautiful in its simplicity, but we all know underneath will be working frantically in a complicated way to move forward. Other noble Lords have spoken about those who will potentially lose out as a result of this reform if what looks like an ugly duckling grows up to be a duck rather than a swan. I hope it becomes a swan.

Rather than repeat some of the points that have been made—I thank all those who have corresponded with me principally by e-mail—I want to focus on the risks that need to be addressed in the context of delivery. There are two. The first relates to merging household and personal assessment, which particularly relates to IT. The Government have produced some excellent briefing and I thank them for that. I remember that in his first emergency Budget the Chancellor announced huge savings by cutting consultancies and big IT projects. I genuinely hope that, with this enormous IT project, on which this whole set of reforms is dependent, he is employing some good consultants. I hope that he is ignoring Francis Maude and getting some good capacity in. Much as I believe that in Joe Harley, the CIO at DWP, he has a really good guy who can help the Minister to oversee this from the department's point of view, he will need all the help he can get to make this work.

The briefing that the department has given me talks about agile development for the IT system. Certainly, I do not have a problem with developing the IT and business solutions together so that you can get the IT designed as you go along. Then you can do the things that you know will happen right from the outset rather than waiting for the whole thing to be designed, producing a specification and having a long delay. I certainly agree with digital by default, although it has to answer some questions around inclusion and ensuring that there are still people who can deal face-to-face with those who have complex needs and those who are struggling to do things digitally.

Other questions remain. The system that is being developed in respect of benefits has to bolt in with HMRC’s real-time information system which, I gather, is on track to be up and running for October 2012. We all know that Governments have had some problems with IT in the past—the NHS is the best possible example. However, the tax credits system is another one. It is a great system, at the root of this reform, to make work pay, but we have problems with it. In the end, as an MP, I knew more about the problems than I knew about the successes, even though there were many great things that we got out of tax credits.

Once you bolt together HMRC and DWP, you create vulnerabilities in terms of risk. Then you add into that the other system that is being developed which is for self-employed people so that they can self-declare income. That will be the fallback IT system if the HMRC system does not work. We can ask questions about whether self-declaration of employment in real time will work and whether it will deal with possible fraud and error, but the integration of those three IT systems against a very tight timetable needs close scrutiny. I hope that the Minister will look at the report from the Public Accounts Committee in the other place, which was published today. I hope that he is learning lessons from the NHS IT programme and from the problems that we had with that and with tax credits. I hope that, ultimately, he will produce and publish for us to scrutinise an analysis of the risks that are attached to the IT programme. The Permanent Secretary in his evidence to the Public Accounts Committee had a bit of a Rumsfeld moment when he talked about the unknown unknowns in respect of risk when you are doing something in a way that Whitehall has not done before. If that risk register can be published, if the project milestones and the target dates attached to those milestones can be published and there is a report to Parliament on the progress, I am sure that this House will be very grateful to the Minister for giving us some confidence about how this crucial part of the process goes.

I shall quickly touch on one other subject, which is the centralisation of housing benefit as part of these reforms. Yes, I worry about those staff working in local authority offices who are doing benefit assessment, but I understand that there may be a significant saving that has already been scored with the Treasury through centralisation. My worry is that individuals will have crucial documents to prove their identity and their income, which they will have to send off to a DWP processing centre with the potential for those to be lost. We know from casework and from our interaction with the real world that that happens. I worry that there will be a duplication of some of the information that local councils will have to gather in respect of council tax benefit, which is now being localised, thanks to Eric Pickles. I worry about the complex cases of some individuals, where a default to online with support from telephony might not be sufficient to understand their needs. I also worry about some loss of local expertise.

I ask the Minister to consider whether individuals could go to council offices with their key documents, as we do when we take our documents to the post office to submit an application for a passport, to get them checked for their council tax benefit applications. That information can be collected electronically and put into the wonderful IT system which I think I have already said I hope will be a success. You would have a halfway house between some sensitivity around local processing and a central system. When the individuals in local council offices who are doing the interviews spot someone who has complex issues attached to their case, they could set up an appointment there and then with someone locally from the DWP, or perhaps from Jobcentre Plus, who can come and do a one-to-one interview to make sure that we get it right first time. We all know that in difficult cases, if we get it right first time it makes things a hell of a lot easier than trying to fix it after we have got it wrong.

With those comments, I will sit down. I wish the Minister well in his reforms and wish the House well in amending the Bill and the reforms so that, to some extent, we slow it down to get it right.

Jobseeker’s Allowance (Mandatory Work Activity Scheme) Regulations 2011

Lord Knight of Weymouth Excerpts

Tuesday 10th May 2011 Lords Chamber

I would like to see these regulations taken away and returned to us as a complete picture, rather than a sketch, but of course that depends upon the flexibility of the Minister. I regret that he has ignored the advice of the SSAC and the Merits Committee. I beg to move.

[Lord Knight of Weymouth]

My Lords, it is a pleasure to follow the noble Countess and I am very supportive of what she has said and of her Motion, but I am now speaking to the Motions standing in my name on the Order Paper. In that context, it is probably as well for me to explain to your Lordships why I thought it necessary to add to her Motion by tabling two of my own.

I am only too aware that it is exceptional for your Lordships to agree an annulment. In this case, I am not opposed in principle to the subject of the regulations, to mandatory work activity—I was a Minister when we proposed a pilot of something similar, just referred to by the noble Countess. I was therefore very reluctant to seek to annul these regulations. What I was after was a mechanism that required the Government to take back the regulations and return with them, in improved form, with the necessary evidence to support their introduction on a national scale, much as the noble Countess has said she would like. In this, I too was informed by the 27th report from the Merits Committee that she referred to.

As I understand it, the regret Motion in the name of the noble Countess effectively reprimands the Government, but does not prevent the regulations from proceeding. Given the extent of criticism from the Social Security Advisory Committee and then from the Merits Committee, it seems appropriate to offer your Lordships the option of requiring the Government to address the concerns of those committees and come back with sufficient information before the instrument is agreed, but giving an indication orally that if they have such evidence the instrument will of course be passed. I was therefore delighted to discover a 2006 report from a Joint Committee on conventions to your Lordships. On page 63 of the report, at paragraph 232, it says:

“In the absence of a power to amend SIs, the most constructive way for the Lords, as the revising chamber, to reject an SI is by motion (or amendment) incorporating a reason, making it clear both before and after the debate what the issue is”.

I therefore tabled such an amendment in this spirit, incorporating a reason, and it was initially accepted. It was quickly then unaccepted, because such a Motion was without precedent. After further discussion, it was then accepted again before finally being rejected by the Clerks. The Clerks were then very helpful in splitting my Motion into the two we have before us tonight. The first is a traditional annulment and the second regret Motion is the explanation. I am most grateful to them for their assistance, but I have to say to your Lordships that I think the current situation a little odd. The way my two Motions sit on the Order Paper is not in the interests of transparency and has elicited a number of media enquiries as to what I am up to. I am therefore writing to the Procedure Committee to suggest that the recommendation of the 2006 committee be accepted so that we can be clearer in future on the Order Paper.

I turn to the substantial issue. As we have heard, the regulations allow the Secretary of State to introduce mandatory work activity for customers in receipt of jobseeker’s allowance from April of this year—that is, last month. Each placement consists of up to 30 hours’ activity per week and lasts for up to four weeks. Participants will at the same time be expected to be actively seeking work, attend fortnightly interviews and be available for work. If they fail to meet these conditions, they can lose 13 weeks’ benefit for the first offence and 26 weeks’ benefit subsequently.

While there is an appeal process for the sanction, there is no appeal for being mandated on to the scheme. There will be around 10,000 places per year and customers will not be able to volunteer to take up these places. An enthusiast would therefore have to persuade their adviser to make them go on the scheme. The DWP does not plan on issuing detailed guidance, as we have heard, but wants to give flexibility to Jobcentre Plus in how it uses this new weapon in its armoury. I was an early evangelist for local flexibility but I worry that this is all left a little too vague, given the seriousness of the sanctions that I have set out.

As I have said, I am not against the general principle; when in government, we legislated for a pilot to mandate Work for your Benefit. However, I am concerned about proceeding with a national scheme without evidence. If this Government had proceeded with the pilot for Work for your Benefit, they would have that evidence on whether this will work.

As the Social Security Advisory Committee has said in paragraph 4.2 of its report,

“published evidence is at best ambivalent about the chances of ‘workfare’ type activity improving outcomes for people who are out of work. The Department’s research indicates that ‘there is little evidence that workfare increases the likelihood of finding work’ unless conditions are as close to work as possible. The evidence suggests that the mandatory work activity must be carefully tailored to an individual’s specific needs and carefully timed to be of maximum effectiveness”.

In the light of that clear statement from the department’s independent experts, how does this four-week work activity differ from the work done on, say, community punishments? How will advisers be trained to tailor it to the individual’s needs and timed to be most effective?

As the Merits Committee said, the purpose of the mandatory work activity is not clear. Is it, as the Explanatory Memorandum says, to require extra support to help customers refocus their approach to job search? Or is it more, as the department’s memorandum to the Social Security Advisory Committee says, to give jobcentre advisers another intervention to deal with those doing only the bare minimum to comply with the requirement to seek work? The SSAC is concerned about the,

“precedent set by appearing to punish claimants who are satisfying the conditionality rules but who in the view of the Personal Adviser appear to display the ‘wrong attitude’”.

Is the committee not right that this is an extension of the conditionality rules by the back door, by negative instrument, and with no evidence to support it?

Why not delay the regulations and proceed with the pilot to ensure that the 10,000 work experience places are an effective use of taxpayers’ money in helping people into work? How would the Minister respond to those who suggest that this is going to end up just being a way of parking 10,000 customers and generating a few headlines in the Daily Mail, but not actually helping anyone?

Then there are the concerns about certain groups being able to do the activity and fulfil the other conditionality rules. I shall quickly run through those, and if he has time perhaps the Minister could address them too. Rural residents may be sent to work at some distance, at their own transport cost, and potentially a long way from the local office for signing on. Will the requirements be relaxed to allow them to sign on by phone during the period of the placement?

What about participants with children? According to the SSAC report, their childcare has to be funded from their benefits. Can that be right? Does that not put them in a position of choosing to use all their benefit for 30 hours’ childcare leaving nothing to live on, to lose a benefit sanction of three months, or to take risks on the reliability of informal childcare, which might mean that they were unable to get to work? What will that do to their experience of work as a positive activity? Remember, they have no appeal on the mandation. The Minister could assist greatly by being clear now that advisers will put the interests of children first in applying these regulations, and that parents will be mandated on to the scheme only if the childcare arrangements are adequate and affordable.

Housing Benefit

Lord Knight of Weymouth Excerpts

Tuesday 3rd May 2011 Lords Chamber

[Lord Freud]

My Lords, I am really pleased that we will have a lot of review for the amount of money that we have. We will cover no fewer than 19 carefully selected case study areas, which will include three each in Scotland and Wales, and 13 in England. Clearly, there will be a concentration on the key area of London and the south-east but we will cover representative areas right through the country.

[Lord Knight of Weymouth]

My Lords, the Government’s change of heart on cutting housing benefit for the long-term unemployed was most welcome. It reflects the possibility that the Minister is compassionate and listening. In that spirit, will he now listen to my noble friends Lord Kennedy and Lord Best, and to the University of Cambridge research which estimates that within five years almost the whole of inner London will be unaffordable to those in receipt of benefits? Will he even listen to the Mayor of London who described these reforms most colourfully as Kosovo-style ethnic cleansing? If the consortium finds that it is right and that he is wrong, what will he do?

Jobseeker’s Allowance (Work Experience) (Amendment) Regulations 2011

Lord Knight of Weymouth Excerpts

Wednesday 2nd March 2011 Grand Committee

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

My Lords, in moving the Motion, I am satisfied that the instrument is compatible with convention rights.

I am grateful for the opportunity to debate the amendment before the Committee today. As your Lordships know, young people typically face disproportionate difficulties in finding work both during and after periods of recession. However, youth unemployment was stubbornly high even before the recent recession. The Government inherited a major youth unemployment problem, which has left us with some 600,000 young people who have never worked since leaving school or college and some 250,000 children growing up in homes where no one has ever worked. This is why this Government are determined to overhaul the welfare system and support more young people on to the first steps of the career ladder.

Today’s amendment is an important part of that process. It is just one element in a package of measures that the Government are introducing to help young people to make a smooth transition from education into work. However, it will play a key role in ensuring that we offer young people the opportunity to gain real experience of the world of work and the discipline required to allow them to play a full and responsible part in society.

The rationale underpinning the proposed amendment is really quite straightforward. We wish to reframe the rules around work experience programmes to make them more effective and more valuable for those who need most support. That is why we have built a number of defining characteristics into the new programme, which I will run through briefly.

For example, we aim to target the programme primarily at 18 to 21 year-olds who find it hardest to make the transition into employment. This is important, because the evidence suggests that, even though the headline figures for youth unemployment move up or down in a relatively smooth manner, there is a great deal of volatility underlying the figures. Indeed, some 80 per cent of young people move off jobseeker’s allowance after six months. Rather than paying for people who would move off JSA without the need for a great deal of support, we want to make sure that we target our resources at those who need it most—the 5 per cent or so who are at most risk of becoming long-term unemployed or withdrawing from the labour market altogether.

Another feature of the work experience programme is that we are keen to ensure that those taking part get a real sense of what it is to make the commitment to work. This is why we have made a conscious choice to extend the work experience placements from two weeks all the way up to eight weeks. Just as important, this approach also explains why we have introduced an element of mandation into the scheme. What this means in practice is that a Jobcentre Plus adviser will offer advice to those who are most likely to benefit from a spell of work experience. After that, the jobseeker will have a choice about whether they commit, so that funds are focused on those willing and motivated to attend. Each participant will then have a week-long probation period to find out whether the work is suitable for them. From this point, however, there will be a benefit sanction for those who do not complete their placement. This will give each young person a real sense of what the world of work is about—discipline, professionalism and commitment. Not only that, it also signals to the host business that we value the time and effort that it is putting in, as we will not accept time-wasters getting away scot free.

The last point that I wish to raise in relation to the work experience scheme is that we will still ask those taking part to show that they have made an effort to find work. This is a particularly important point because we know from previous experience that, even when people are doing programmes such as this, they have a better chance of moving off JSA if they stay with their job searches. However, we will also make sure that advisers have the flexibility to adjust the job-search reviews to make sure that they do not disrupt the work experience placements.

We are taking a whole new approach to work experience to make it more relevant and more cost-effective. We have created the framework for giving young people the opportunity to boost their confidence, their employability and their prospects. We have already secured support for the programme from a number of major companies, such as Skanska, Homebase, Hilton Hotels, McDonald’s, ISS facilities management, Chums, De Vere hotels, Carillion, Coyle Personnel and Punch Taverns.

This is a great start in giving young people access to quality work experience and introducing them to the world of work. However, given the sheer scale of the challenge that we have inherited, we know that we have far more to do to effectively tackle youth unemployment. The Government are willing to take on the challenge. That is why we are helping more young people with personalised support at jobcentres to help their transition to work, making access to skills provision a priority across the country and vastly increasing our investment in apprenticeships, where the Government have already committed to increase the budget for 2011-12 to more than £1.4 billion.

We will also help to get Britain working by rolling out work and enterprise clubs across the country, introducing the new enterprise allowance to support the start-up of up to 40,000 new businesses over the next two years and introducing the new work programme this summer to provide tailored solutions on a payment-by-results basis to help those trapped on benefits to start making the journey back to work.

All these measures are part of a wider commitment across government to make sure that we are giving everyone, especially young people, the right support to make the transition into the workplace, no matter which path they choose to get there. This is the only way to help people to work their way out of poverty and to spur the private sector growth that this country needs to drive the recovery and generate the long-term jobs that we need to build a sustainable economy for the future. I beg to move.

[Lord Knight of Weymouth]

My Lords, I am grateful to the Minister for putting flesh on the bones of this statutory instrument. Inevitably, what can be put across is limited by the regulations’ dry form. My reading of them is that they change the jobseeker’s legislation so that you can volunteer to take up a work experience opportunity and then, once you are in, it becomes mandatory with the threat of sanctions. If I was mischievous, I would say that this raises the possibility of compulsory volunteering. I know that it is not quite that. I have had experience of debating with Prime Ministers and others whether or not compulsory volunteering is a credible option, so I will not stray down that road.

We agree with the Minister about the value of work experience. When I was appointed Employment Minister in the previous Government, the Prime Minister told me that, as employment was rising in general and in particular among young people, the challenge was to get it to come down again. He would lend a hand through chairing the National Economic Council. It was implicit that it would be particularly helpful if that were achieved by the spring of last year rather than the summer. We did a range of things: the young person’s guarantee, the six-month offer, the September guarantee of education for young people and expansion of apprenticeships and, crucially, Backing Young Britain, which was in some ways the best example of which I can think of what others might describe as the big society.

It was a considerable effort to persuade employers in this country to offer young people opportunities for work—as work experience, as internships, as apprenticeships, or as whatever else they could offer to give young people a chance and something to put on their CV. We also developed sector routeways. When the Minister listed the names and different sorts of employers who have already expressed an interest in his work experience scheme, it was interesting to note that quite a few of them were in hospitality. I wonder what has happened to those sector routeways in care and in hospitality in particular and the part that they played in creating tens of thousands of opportunities for real work for our young people. We also had the fiscal stimulus, as a result of which we started to see growth come back into the economy and, magically as instructed, unemployment, particularly youth unemployment, fall in the spring. It is unfortunate that it is now going back up.

Work experience was vital to that effort and to all those packages for which I was responsible last year and the latter half of the year before. Therefore, I cannot argue with the Government in their wish to bring forward a work experience scheme. I would also encourage them to develop a form of work experience along the lines of what we would describe as internships. They are not a silver bullet—as, if I were unkind, I would say Ashley Cole might have found out at Chelsea recently—but they can be extremely helpful. In my private office in DWP, for example, we took on an intern who turned out to be an excellent official and who has been taken on permanently by the department. I would be interested to learn whether the Minister is now taking on another intern given that he knows the value of internships in the past.

We have seen the success of more extended schemes such as the Future Jobs Fund, which provided six months’ real work, at proper minimum rates of pay, through work experience, volunteering and the Community Task Force. I commend to your Lordships the work that we did with BTCV, CSV, v and Volunteering England, which provided 50,000 young people with work experience opportunities in the voluntary sector. I would be interested to learn whether any voluntary sector organisations—the Minister did not list any—will be engaged in offering work experience programmes. The outcomes from that scheme—I spoke to the chief executive of BTCV yesterday—were exceptional given the quite limited time during which the work experience opportunities were available.

The principle behind the proposals is therefore fine, although I have a few questions for the Minister in addition to those that I have already asked—he knows that I like to ask a few questions. Why the mandation? When we introduced our work experience schemes, which proved successful, as I have said, we did not need to change regulations in this way to require mandation. Might not a potential unintended consequence be that people will say, “Well, I’ve still got to fulfil the jobseeker regime in terms of being available for work and actively seeking work, which I’ve got to demonstrate to the adviser at Jobcentre Plus, so why put at threat my benefit by signing up to a scheme where, as a sanction, I could lose it? Why not just go and volunteer, and build up a CV by volunteering and doing work experience in other forms rather than joining the Minister’s scheme, where I do not get any extra money but where I might lose it?”

The Minister said that this was part of a wider package for young people. Of course, whatever the Government feel they can do to help young people is welcome, because we are extremely concerned about the rising numbers of young people who are unemployed, particularly the huge number of graduates who are now in unemployment. Are there any guarantees attached to his package? We had a guarantee that you would get some useful activity at least, even if it meant the Community Task Force as the back-stop provision, if you like. That meant that we could require them to do something and that doing nothing was not an option. Is doing nothing an option under the Minister’s scheme? How will he procure this provision? Will it be in the normal way, or will he just encourage people to offer work experience opportunities but not actually procure work experience opportunities, as I recall we did by, for example, using Reed in Partnership?

In summary, there is nothing that I can oppose in considering this statutory instrument in Committee today, but I still need a bit of convincing that it is needed. I would be grateful for answers to my questions, particularly as to whether there will be unintended consequences, with people not wanting to engage because of the threat of sanctions.

Unemployment

Lord Knight of Weymouth Excerpts

Wednesday 26th January 2011 Lords Chamber

[Lord Freud]

Yes, an effective strategy has to be built around employers, and we are doing quite a few things. The most important one was the introduction earlier this month of work experience. The idea is to give eight weeks’ work experience to young people aged between 18 and 21 who are not in university, while they continue to collect benefit. We are also looking to introduce later this year the academy programme, which combines work experience with elements of training to introduce people to work.

[Lord Knight of Weymouth]

My Lords, as a Minister, I introduced something very similar to those new work experience programmes. We should note that between 1997 and the beginning of the recession claimant youth unemployment fell by 40 per cent. We have heard from the noble Lord, Lord Young, that unemployment for 18 to 24 year-olds increased from 17.7 per cent to 18.1 per cent in the last quarter. Is this because of the cuts to the Future Jobs Fund, the ending of the young person’s guarantee, the cuts to the education maintenance allowance and the raising of the cost of going to university; or is it because of bad weather?

[Lord Freud]

My Lords, I think that it is important that we do not get cheap on the movements: this is, as always, a very complicated set of movements. During the last month, for instance, the claimant count went down a little for the youngsters. It went up by 30,000 or so, but has been broadly flat since 2009. There will be reasons for the figure being up a bit, but I do not think that is the point. The point is that we have a serious underlying structural problem. We have about 600,000 youngsters who have not managed to get sustained employment after education. Within that figure, I do not have the exact number about whom we should be seriously worried. Of the 16 to 17 year-olds, it is about 50,000. These are youngsters who may never make the transition into proper economic activity. It is vital that we have structures to help them make that transition.

Housing Benefit (Amendment) Regulations 2010

Lord Knight of Weymouth Excerpts

Monday 24th January 2011 Lords Chamber

Moved By

[Lord Knight of Weymouth]

That an humble Address be presented to Her Majesty praying that the regulations, laid before the House on 30 November, be annulled.

Relevant Document: 15th Report from the Merits Committee.

[Lord Knight of Weymouth]

My Lords, the two Motions standing in my name on the Order Paper relate to two instruments to change housing benefit regulations. The instruments seek to cut the housing benefit bill by around £1 billion per year by 2015 by cutting what can be awarded under the local housing allowance arrangements from April through: first, the removal of the five-bedroom local housing allowance rate so that the maximum level is for four-bedroom properties; secondly, the introduction of absolute caps so that local housing allowance weekly rates cannot exceed £250 for a one-bedroom property, £290 for a two-bedroom property, £340 for a three-bedroom property and £400 for a four-bedroom property; and, thirdly, the removal of the £15 weekly housing benefit excess that some customers can receive under the local housing allowance arrangements. Fourthly, there is an additional measure, which we welcome, relating to an extra bedroom for those with care needs. However, the final—and, I argue, most damaging—measure on which I shall focus is the setting of local housing allowance rates at the 30th percentile of rents in each broad rental market area rather than at the median. The Government are increasing discretionary housing payment funding to local authorities by £130 million over four years to enable councils to try to mitigate some of the effects of these measures.

These instruments amount to little more than an attack on the poorer people of this country—those who have no choice but to rent and who are either low earners or on out-of-work benefits. Since the publication of the Government’s impact assessment last summer, many organisations with expertise in housing, homelessness and poverty, such as Shelter, Crisis and the Residential Landlords Association, have raised serious concerns, shared by the Opposition, about these amendments to the housing benefit regulations.

The Government’s changes to housing benefit were expertly summarised by the noble Lord, Lord Best, in his speech to this House on 2 December last year, when he said that,

“the intention is to reduce the housing benefit bill by some £2.25 billion per annum by the end of this Parliament. That is £2.25 billion a year that will not be paid through housing benefit to landlords. There are only two parties from whom this money can come; one is the landlord by accepting a lower rent, and the other is the tenants finding the balance from their own resources, including other benefits—since most are on benefits of different sorts, or pensions. Which of these two parties is most likely to take this very substantial £2-and-a-bit billion hit?”.—[Official Report, 2/12/10; col. 1656.]

That is a good question, and half of that sum is to be found from the changes that we are debating today. The answer to the noble Lord’s question comes in part from the Residential Landlords Association, the representative body of more than 9,200 private landlords. Its briefing on these regulations is clear. Its landlords panel survey found that 71 per cent of respondents would not lower rents. In fact, in light of the proposed changes, 46 per cent of landlords surveyed indicated that they would look to re-let properties away from local housing allowance tenants, reducing the level of private rental stock available to claimants and potentially forcing households into homelessness. Not only have the Government offered no evidence to support their assertion that rents will be lowered to meet lower housing benefit levels, but they cannot counter the evidence that points the other way. It is clear that the bulk of the savings from these measures will come from the pockets of the tenants.

The measures have serious implications for hundreds of thousands of honest, hard-working and vulnerable people. We should bear in mind the fact that 4.7 million people receive housing benefit in this country. Of those, 2 million are pensioners on pension credit guarantee, 500,000 are people on jobseeker’s allowance and 700,000 are people in work in low-paying jobs. The Government’s own impact assessment of the regulations as a whole predicted that almost 1 million families would be affected, with an average weekly income loss of £12 nationally, rising to £22 in London.

The intention of course, as Homeless Link points out, is to make life in receipt of benefit “uncomfortable”, as a way of driving the jobless back into work. The popular rhetoric from the Government has been around the assertion that those claiming housing benefit are accessing accommodation that their working neighbours cannot. However, researchers at the University of Birmingham have found that this claim is out of step with reality. Housing benefit claimants receive a rent set at median market rates and so cannot live just anywhere. Furthermore, their findings suggest that, despite infrequent, extreme anomalies, 40 per cent of lower-income working families pay more in rent than they would receive in housing benefit.

In truth, the Government’s posturing over extravagant benefits sends a clear message: that the rationale behind these ill conceived reforms is founded on the excesses of a relative few. Their application would be tantamount to collective punishment—penalising the many vulnerable people for the excesses of the very few. From data compiled by the Cambridge Centre for Housing and Planning Research at the University of Cambridge, it is estimated that these cuts will force many more claimants into severe poverty, with the weekly income of 84,000 households dropping below £100 per couple after housing costs. Incidentally, these households are home to more than 54,000 children.

On the local housing allowance cuts as a whole, the Social Security Advisory Committee, in its withering verdict on these regulations, stated that,

“these measures must impact disproportionately on those low-income households with the least financial resilience and the fewest options for managing their lives and their finances”.

Critics unanimously agree that the change to a 30th percentile in LHA calculations, along with the caps on housing benefit, will result in a significant drop in income for hundreds of thousands of households. Of these, an estimated 269,000 will fall into what Shelter calls “serious difficulty”. Unable to negotiate a reduction in rent, they will have just three options: hoping their landlord will forgo a proportion of the rent; moving into cheaper and probably overcrowded accommodation; or becoming homeless.

The removal of the five-bedroom rate will act as a disincentive for families to come together. Why would two single-parent families with, say, three children each come together when they would be better off apart? Many tenants will run up arrears, making them “at fault” for their eviction and perhaps not entitled to emergency accommodation. It is expected that half of those households in serious difficulty will have to move or become homeless. Some 72,000 of that number are families, equating to 129,000 children potentially made homeless.

These changes will affect households in rural as well as urban areas and particularly those with high rents, such as Oxford, Edinburgh and Brighton, but they will be felt most acutely in London. Here, house prices are more than double the average for England and Wales, and private rents carry a 50 per cent premium, leaving only the worst-maintained and overcrowded accommodation available to housing benefit claimants under these proposals. The same research from the University of Cambridge estimates that, within five years, almost the whole of inner London will be unaffordable to those in receipt of benefits. Poorer residents will move to more affordable housing at the periphery of the city. With demand for private rental stock so high here, there is little incentive for landlords to reduce the cost of renting, so LHA claimants currently living in boroughs such as Hammersmith and Fulham, Westminster, Islington or Camden, where it is expected that no affordable stock will exist, will be forced into moving or into homelessness.

--- Later in debate ---

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

My Lords, this has been an important and interesting debate. I commend particularly the noble Lords, Lord Knight of Weymouth and Lord Best, on bringing forward these Motions and securing this debate. I shall try to answer as many as possible of the points raised, but, since there was an awful lot of them, I may not cover absolutely everything.

Perhaps I may first put the debate into context and explain why the statutory instruments are essential to advance the changes that we have planned. Housing benefit increases have been quite startling, as a number of noble Lords have pointed out. During the last 10 years, housing benefit expenditure as a whole has nearly doubled in cash terms from £11 billion to £21.5 billion in the current year. Only £2 billion of this increase is due to caseload. About £5 billion is due to general price inflation, but, most importantly, £4 billion is due to growth in private and social rents over and above general inflation. Private rents for benefit recipients have risen in real terms 10 per cent more rapidly than rents in the general market. These are exactly the sort of increases that we are seeking to contain. Without any reform, expenditure is forecast to be £24 billion by 2014-15.

It was imperative that we acted swiftly to stop the runaway costs of housing benefit, those costs having been allowed to rise without restriction year after year. As we made clear in the June Budget last year, welfare reform savings play an important role in reducing the overall budget deficit. The changes introduced by the statutory instruments alone add up to £1 billion by 2013-14.

We must be fair to the taxpayer. It is not right that families who work hard to pay their own rent have to pay even more so that those on housing benefit can live in homes that they could not think of affording. Some of the rates are extreme. I know that not a lot of people are taking £2,000 a week for a five-bedroom property in central London, but there are some and the current system allows it. Further down the scale, £500 a week is being paid for two-bedroom properties and £370 a week for one-bedroom properties at this year’s rates. The Government’s measures are designed to take this under some control.

One of the measures that we have announced, and which has been widely welcomed tonight, is providing for an additional bedroom for disabled people living in the private rented sector who need a non-resident, overnight carer.

Noble Lords have gone through the other changes, but I shall summarise them. They include applying an overall cap to local housing allowance rates and setting the maximum rate at four bedrooms. Those rates are £250 for one bedroom, £290 for two bedrooms, £340 for three bedrooms and £400 for four bedrooms. That is a little over £20,000 as the top rate. We are also removing the £15 weekly excess, which the previous Administration would have liked to do but did not. I do not think that anyone argues that it is appropriate that we pay people more than they pay in rent. It was introduced to encourage a process of negotiation between those who are renting and landlords, but it does not seem to have had that effect, so there does not seem to be much point in paying those figures.

The final element that we have been discussing tonight is the adjustment of the local housing rate from the median to the 30th percentile. Overall, there has been a lot of scaremongering generally, and a little of that tonight—and some false reporting about the measures, although there has not been that tonight. Some estimates of the number of people who will be made homeless are, quite frankly, ridiculous. It is simply irresponsible to suggest that thousands on thousands of people will be made homeless and will have to leave the capital in droves, as some have said. I welcome the opportunity to put the record straight and to respond to the concerns raised today.

First, I shall address what is essentially a London issue, surrounding the maximum weekly rates of local housing allowance that we will apply from April. They are still extremely generous rates. It is still far more than the vast majority of people pay out—at the rate of four bedrooms and £400 and more than £20,000 a year, a typical family would need to earn £80,000 a year to be able to afford that kind of rent.

These reforms are not about excluding benefit recipients from the nicest areas, as some have argued. We are simply ensuring a fair deal for the taxpayer. The simple truth is that individuals who claim housing benefit according to local housing allowance rules should face similar choices to those people in low-paid work. There is simply no reason why we should see people moving vast distances, and no mass moves out of the south of the country. In all but three of the most central areas of London, at least 30 per cent of properties will be affordable within local housing allowance rates. I shall just explain that figure, because there has been quite a lot of misunderstanding about it. The survey is based on the properties that are not in large occupied by recipients of housing benefit—so it is 30 per cent at least, except in those three areas, plus whatever elements of the housing stock currently occupied by housing benefit recipients that will go on being affordable. So it is a large proportion, although it is impossible to put an exact number on it, because clearly we are expecting prices to move and more properties to come into that category. But a large proportion of houses will remain affordable.

A small number of people in the most expensive places will, of course, have to move, but they will not have to move far, and we will work with local authorities to give those people the support that they need. In central London, 2.5 million jobs are accessible within 45 minutes of travel. Bus fares, although they went up this month, are no more than £1.30 for a single journey so they can go long distances on a bus. Low-income working households mostly pay a rent slightly lower than the appropriate local housing allowance rate. This group living in private rented accommodation is mobile; 40 per cent of them have been in that accommodation for less than a year. It is not unusual for families to move. Indeed, over a quarter of a million people moved out of or between inner London boroughs in 2008-09, which is a point that the noble Lord, Lord German, made.

On the estimates of homelessness that various bodies have put out, it is important not to rely on those estimates if they are based on what landlords say they will do or on early experience. We must look at the shortfalls. After the reforms, 32 per cent will see no change in shortfall, 450,000 households will have a shortfall of less than £10 a week and 35,000 will have a shortfall of more than £20 a week. Not all of those will have to move, let alone become homeless.

One difficulty in writing an impact assessment when there are behavioural and market-based effects is that it is not easy to quantify those impacts, because they involve a complex interplay of behavioural decisions by individual landlords and individual tenants. We are talking about market forces here. Although economic theory would suggest that if a purchaser of up to 40 per cent of a market reduces the amount that they are willing to spend, it will cause rents to fall, it is only in the end through observation that we will be able to obtain absolutely conclusive evidence.

We have had similar concerns raised about our decision to cap local housing allowance levels at the four-bedroom rate but that reflects the kind of housing choices that are made by larger families who are not on benefit. It builds on the restriction introduced by the now Opposition in April 2009 to cap at the five-bedroom rates. Let us be clear: most families not on benefit cannot afford to live in properties with five or more bedrooms. We are reflecting here the choices made by families everywhere.

These measures have been closely scrutinised. We have made available more data on impacts than has ever been the case. Clearly, some people will receive less benefit as a result of the changes but that does not necessarily mean that all of those people will be drastically worse off. The gap between the 30th percentile and 50th percentile can be quite narrow. On average, it is currently £15 a week for one-bedroom properties and £26 per week for two-bed properties in London. In the outer south-east area, the difference can be as little as £8 a week for two-bedroom properties. Clearly, one effect that will happen is that the 30th percentile and the median can start moving together if we do not get the downward pressure that we are trying to impose on the rates. That would actually be bad news for the Government, because we would not lose some of the gains but see a market response as those medians move together, rather than the wholesale disruption that some people have been forecasting. In practice, setting the local housing allowance rates at the 30th percentile merely reflects the choices of low-income households; we know that from the research that we undertook last year.

The noble Lord, Lord Best, told us about the attitude of landlords. Rather than accept his concerns wholesale—although he is clearly a great authority in this area—I would point out that, in the last 18 months, more than 400,000 private rented sector tenants have been claiming, which shows that landlords are certainly prepared to rent to tenants claiming housing benefit. I repeat my point that, at 40 per cent of the market in not all, but many areas, landlords will have no choice but to reduce their rents and give back some of the excess gain that we seem to have seen in this part of the market. We are also giving landlords an incentive by widening local authority discretion to pay housing benefit direct to the landlord, a point raised by the noble Baroness, Lady Thomas. We are not giving this discretion away for nothing and the complex language here was to make sure that we get something for something: that if we are translating a payment stream from, let us say, a triple-B-rated level to a triple-A sovereign income stream, we get something for our money. That is why that is written so carefully.

Because I do not want to run out of time, I will jump to the key thing and I will come back to whatever I can fit in after that. I want to turn to the important issue of the monitoring and evaluation of these changes. I am very grateful to the noble Lord, Lord Best, for his timely Motion. I am very happy to agree to his proposal for an independent review. I make a firm commitment to the House that we intend to commission independent, external research to help us evaluate the impact of the reforms. This review will cover all the areas that the noble Lord outlined in his Motion. I can assure the House that it will be comprehensive and thorough and, of course, I readily agree that the outcome of the evaluation should be presented to both Houses, together with a written ministerial statement. Among the issues that it would cover—these were points raised by noble Lords—will be homelessness and moves; the shared room rate and houses in multiple occupation; what is happening in Greater London; what is happening in rural communities; what is happening in black and minority ethnic households; large families; older people; people with disabilities and working claimants. That is what this review will cover.

[Lord Knight of Weymouth]

The Minister has been very helpful in directly addressing the Motion of the noble Lord, Lord Best. I am sure that the whole House will be grateful if he gives us assurance on the one outstanding feature, that this will be an annual review reporting to both Houses of Parliament.

[Lord Freud]

I thank the noble Lord for his intervention. Very elegantly, I have an answer for him on my next page—although, of course, I am not reading, I am keeping carefully to my text in this important area. The noble Lord, Lord Best, suggested that the review should be published after a year and we considered that point very carefully, but given the implementation timescales for these changes, particularly the transitional protection arrangements that we have introduced, I think that one year is too soon for a meaningful piece of evaluation research. Many housing benefit recipients will not be affected by the changes until well into 2012. We will therefore make the findings available in early 2013, with initial findings available in the spring of 2012 and an interim report in the summer of 2012.

[Lord Freud]

I thank the noble Baroness for that. If I have one minute when I finish my prepared speech, I will try to touch on the CPI.

With regard to further reporting after what I have just described, I am not convinced that it would be appropriate to commit to an annual report on these reforms when so many other welfare changes will be made, as the noble Baroness has pointed out—not least, the introduction of the universal credit. I suggest that we ask the authors of the independent review to recommend whether they think that a follow-up evaluation will be necessary. As I said, I am happy to commit to the independent review that I have described.

Before I close on the CPI, I should point out that it is designed to bear down and we are locked into it for the years 2013-14 and 2014-15. Thereafter it is up to the Government to decide whether rates using that methodology go out of kilter.

These changes are important. We have put in a lot of transitional support along with a comprehensive programme of practical support to help local authorities implement these measures so that we can finally reform housing benefit and make it fit for purpose. There is no doubt that these statutory instruments are sensible and proportionate. They must go ahead and I commend them to the House.

[Lord Knight of Weymouth]

My Lords, I do not want to delay the House for very long. I thank noble Lords on all sides for what was an excellent debate and a demonstration of this House at its best. As the Minister said, it was an important and significant debate.

If Members of your Lordships’ House who were not present for the whole debate find themselves scratching around for something to do late at night, perhaps later on in the week, they would do well to read it in Hansard, although I fear that if they were members of the coalition they might find it slightly depressing, given that it certainly gives the lie to the notion that we are all in this together. The noble Lord, Lord Best, was so persuasive that everyone agreed with the case that he made for an independent review—even, I think, the Minister.

We heard about the human cost from the right reverend Prelate the Bishop of Hereford and the noble Baronesses, Lady Sherlock, Lady Wilkins and Lady Turner; we had the passion of the noble Lord, Lord Adebowale, and the noble Baroness, Lady Dean; we had the forensic analysis of the noble Baroness, Lady Hollis, making a strong case that the housing benefit levels do not shape the market but landlords do; and we heard specific worries on child protection from the noble Earl, Lord Listowel. The only comfort for the Minister and for those reading Hansard afterwards might come from the noble Lord, Lord German, and the noble Baroness, Lady Thomas of Winchester, but they would be minute crumbs of comfort given the balance of the speeches, where the noble Lords had more in common with their noble friend Lord Kirkwood, who summed up the cross-party opposition very well before my noble friend Lord McKenzie completed the argument.

I thank all those who briefed us before this debate, particularly the Social Security Advisory Committee for its excellent report, and the officials at the Department for Work and Pensions for a devastating impact assessment on the Minister’s proposals.

The Minister himself made a brave attempt to persuade us that everything will be okay. In his speech, the noble Lord, Lord German, suggested that there was as much certainty as backing a Grand National winner in trying to predict the outcome of these regulations. My money is on my noble friend Lady Hollis’s analysis over the Minister’s. I am disappointed that we have not had a commitment to an annual report. It will be up to the noble Lord, Lord Best, to decide whether to divide the House, but for now I beg leave to withdraw the Motion.

Motion withdrawn.

Housing Benefit

Lord Knight of Weymouth Excerpts

Monday 6th December 2010 Lords Chamber

[Baroness Morgan of Drefelin]

To ask Her Majesty’s Government what assessment they have made of the impact of their proposed housing benefit changes on the number of homeless children.

[Lord Knight of Weymouth]

My Lords, on behalf of my noble friend Lady Morgan of Drefelin, and at her request, I beg leave to ask the Question standing in her name on the Order Paper.

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

My Lords, we have carried out an impact assessment on the changes to housing benefit. This was published on 30 November 2010. It does not contain an estimate of the impact on homelessness as we cannot anticipate the behaviour of tenants or their landlords. To reduce the risk of households becoming homeless we have a substantial package of financial and practical support in place, and we are giving households up to nine months’ transitional protection so that they can look for alternative accommodation if they need to.

[Lord Knight of Weymouth]

My Lords, the Government’s impact assessment that the Minister referred to estimates that 450,000 children will be affected by these benefit changes. Shelter estimates that 129,000 children will be forced to move home and that 54,000 live in families whose income, after housing costs, will now be pushed below £100 a week. Given that the Government say that they intend to take forward further analysis of the child poverty effect, should they not suspend these controversial orders until that important work is complete?

[Lord Freud]

My Lords, there are some extraordinary claims being made around these measures. There are some heroic assumptions in the Shelter figures. For instance, they are based on an average shortfall of £18 a week, which is well above what the shortfall will be. I should point out that 40 per cent of people in the private rental sector move every year and 70 per cent move within three years.

Welfare Reform

Lord Knight of Weymouth Excerpts

Tuesday 16th November 2010 Lords Chamber

[Lord Freud]

I thank my noble friend for that question. As noble Lords will be aware, Convention 29 was originally designed with colonialism in mind and was then applied more generally. We do not think that the programmes that we are looking at apply in any way to ILO Convention 29 or, indeed, ILO Convention 105. Likewise, the Joint Committee on Human Rights looked at the European Convention on Human Rights in this context and found that these programmes do not apply.

[Lord Knight of Weymouth]

My Lords, my noble friend Lord Christopher has raised one of a number of interesting questions about the Government’s welfare proposals. Another relates to what the Minister said last Thursday on hardship payments. In response to my noble friend Lord McKenzie, he said:

“Hardship payments will be available, and the exact levels will have to be determined”.—[Official Report, 11/11/10; col. 330.]

However, in a move that the Child Poverty Action Groups says will be a retrograde step, the White Paper published on the same day says:

“We are considering replacing the current system of hardship payments with loans”.

Does the Minister regret that he was not more forthcoming on this controversial policy? I cannot believe that such a capable Minister would forget what was in his White Paper.

[Lord Freud]

My Lords, if I have forgotten what is in the White Paper, I stand reprimanded. In practice, we are looking to take elements of the hardship payments and the Social Fund generally and to localise them, including some of the loans. We are also looking at putting other elements into the universal credit. No hard decisions have yet been taken in this area. We are looking to finalise the restructuring of the Social Fund as we go into the next few weeks and introduce the Bill.

European Social Fund (EUC Report)

Lord Knight of Weymouth Excerpts

Wednesday 3rd November 2010 Lords Chamber

[Lord Knight of Weymouth]

My Lords, it is a real pleasure to be able to speak in this debate about this useful and interesting report from your Lordships’ European Union Committee on the excellent work done by the European Social Fund. I join others in paying tribute to the work of the members of the sub-committee, led so ably by the noble Baroness, Lady Howarth of Breckland, who summarised her report so well earlier in the debate.

I confess to your Lordships that I find myself yet again in a slightly odd position in leading for the Opposition on a report that scrutinises my work when in government; indeed, I was the Minister who gave evidence to the committee back in February and approved the evidence given to the committee by the Government. In the circumstances, it is tempting to oppose by adopting what some would unkindly term the Liberal Democrat principle, by which I mean a graceful three-point turn under the excuse that the outcome of the election has changed everything. However, I have reread the evidence that I gave in the light of the committee’s conclusions, and was pleased to find that not only does it appear that at the time I might have understood these issues but I mostly agree with what I said back in February.

For the interest of the noble Baroness, Lady Young of Hornsey, I say that the area where I am most likely to reassess my position is around soft outcomes. As I have reflected back on my time as Schools Minister, I have also been taking more interest in assessment—what it is possible to assess and measure. I am now more persuaded that it is possible to assess some of these soft outcomes in a more objective way and show the progression that people are taking to get closer to the labour market, which is clearly an area of additionality that the European Social Fund is addressing. I also find myself in agreement with the Government’s response to the committee’s report. I am pleased that the transfer of functions from the Learning and Skills Council to the Skills Funding Agency, which was one of my main worries, seems to be working well.

On that basis, I could just sit down and leave it all to the Minister, but reading it all through again raised a series of questions about how the European Social Fund will operate alongside the changes that the Government are taking through. I gave the Minister advance sight of my speech this morning to give him time to assemble some pithy answers to my questions. These fall broadly into three areas: additionality under the work programme; how regional priorities will be set; and the integration of employment and skills programmes.

As the Minister knows, I support the principle behind the work programme. I hope that some of the work that I did as a Minister is helping him as he tries to implement it against a very tight timeframe in a difficult labour market, but I will not dwell on those concerns now. I would be fascinated, though, to hear his response to the worries of the noble Lord, Lord Cotter, around delays to the work programme. If he could clarify for the sake of all those who are concerned about the programme whether there is a delay, that would be exceptionally helpful.

What is relevant to this debate is that the European Social Fund funds must be additional to government spending plans. How will that work under the work programme? As I understand it, the work programme will be a single programme for all who can work. It will be designed so that contractors have significant incentives not to park customers who are particularly difficult or cream off profit by just focusing on those who are easier to help into work—the committee used the word “cherrypick”. If that were to happen, the programme would not be a success.

Those are the very issues that the committee asked me about in the context of ESF. Is my understanding of the work programme correct? If so, how will the Minister achieve additionality with the continuation of ESF under the work programme? If the work programme is to be for every sort of claimant, be they on jobseeker’s allowance or employment support allowance, and the contractor is paid on outcomes not inputs, how can the ESF work be additional? How does the Minister respond to the committee concerns around soft skills in the context of black box contracting?

I also noted the ending of the working neighbourhoods fund in the comprehensive spending review. As the Minister’s noble friend Lord Shipley said in Monday’s debate, this was not an easy cut to spot. He went on to say:

“The fund has been used across the country to tackle worklessness by investing in voluntary sector partnerships, thus securing additional leverage and ERDF matched funding. It has helped to address community health and community safety issues. It has tackled economic deprivation and has targeted resources to those young people not in education, employment or training. The fund, worth £0.5 billion, has vanished”.—[Official Report, 1/11/10; col. 1541.]

Like him, I too must declare that I am a vice-president of the Local Government Association. Given that the fund has “vanished”, how will the Minister deal with the likelihood that the ESF will be used to fund the same sort of work that was funded by the working neighbourhood fund? Will he not be highly vulnerable to the charge that the Government have cut this spending knowing that they can backfill with ESF programmes? Is that not counter to the additionality rules?

The second issue is about regional priority-setting. As the Minister knows, ESF is currently subject to regional priorities set in England by regional committees made up of the Skills Funding Agency, the regional development agencies, trade unions, government departments, local authorities and third sector representatives, and chaired by the government office of the region. As I made clear in my evidence to the committee, I think that this could be rationalised by merging it with the regional employment and skills boards, if the Commission were to agree that this met its audit requirements, which it may not. What I had not envisaged was a rationalisation as a result of the abolition of the RDAs, subject to the Public Bodies Bill going through—a dreadful piece of legislation that we will be debating fairly soon in this House—and the abolition of the government offices themselves. How, therefore, does the Minister see the regional priorities being set in the future? Who will sit on the regional committees? Does he agree with the LGA in its briefing for this debate when, as my noble friend Lord Liddle, mentioned, it says:

“Councils, groups of councils or Local Enterprise Partnerships should set ESF’s strategic direction to ensure it delivers outcomes relevant to local need”.

In its recent report, EU Funds and Place-based Budgets, the LGA argues that, first, the delivery of the main EU funds—the ESF, the European Regional Development Fund and the Rural Development Programme for England—should be joined up into a set of single programmes at the subnational level; and, secondly, within this framework, we should offer local partners the opportunity to manage local packages of EU funds, should they want to. Does the Minister agree? If so, again, how will it be additional to the previous working neighbourhood fund work carried out by local authorities but now cancelled? My argument for a long-term future without the ESF—which was trashed by the committee—centred on regional structures being in place. It is necessary to be close enough to the ground to identify pockets of need, but with enough of an aerial view to join up programmes strategically.

In the new Government’s response to the committee, they say:

“Over time, wealthier Member States should be phased out of the Structural Funds and funding focused on the poorest, enabling them to catch up with the average”.

We note the opposition to that position of the committee and everyone else who has spoken in this debate. In the absence of regional policy from the government office and the RDA, I cannot see how this renewal of the policy that I had to justify to the committee works. What are the Minister’s justifications for this long-term policy?

I want to ask about employment and skills integration. The Minister cannot be criticised for a lack of ambition or a drive to join things up. If he manages to pull off the work programme and the universal credit, it will be as a result of the most monumental effort and ambition. Is employment and skills integration also on his radar? Of course, the ESF does both. Can he see a way of commissioning them together from contractors in this programme and more widely as part of the work programme? Is that not vital in giving the contractors the tools that they really need to do the job?

This was a useful and authoritative report by the committee. It has allowed us to focus on the European Social Fund, which has done much to help those in our country who most need help from an active Government. The debate has also allowed us to ask the Government questions about its future, and I look forward to the Minister's considered response.

Welfare Reform

Lord Knight of Weymouth Excerpts

Monday 11th October 2010 Lords Chamber

[Lord Knight of Weymouth]

My Lords, I am grateful for this Statement—although, given that Parliament was sitting last week and given the contents of paragraph 9.1 of the Ministerial Code and paragraph 6.35 of the Companion, it would have been much better to have had the Statement last week. I disagree with the Minister’s characterisation of the macroeconomy, but we can debate that some other time. Suffice it to say, given that the UK has one of the lowest debt-to-income ratios in the G7, the pace of reform is a choice and not an inevitability.

As my right honourable friend the new shadow Secretary of State said today in the other place, we are not against reform and much of the reform is a continuation of what we did in office. But there are of course a number of questions. On the migration of incapacity benefit claimants through the work capability assessment, rolling this out nationally is, as I am sure the Minister would agree, a huge undertaking. What is he doing to increase capacity in the market for providers of those assessments? Furthermore, given the bleak projections by the Chartered Institute of Personnel and Development and others of rises in unemployment due to the speed of public spending cuts, what proportion of providers’ income will be paid by results on the basis of job outcomes? What is the Minister’s prediction of the unemployment rate when the work programme starts next summer? Given that the bidders of the programme are, with their financial backers, having to make predictions on successfully getting people back to work, I do not think that he can any longer hide behind the mantra that I used that Ministers are not in the business of making predictions.

What is being done to encourage employers to take on those who have been long-term sick when, with the claimant count now rising, they could take the recently unemployed, recent graduates or highly motivated EU migrants instead? Finally on this point, what will be done differently by providers in this programme from that done by those who deliver the old Pathways to Work programme with such mixed success, where the private sector did not outperform the public sector?

I shall move on to the proposed benefit cap of £500 per family per week. To some, that may sound reasonable, but it will cover not just the main income replacement benefits such as jobseeker’s allowance, not just child benefit and child tax credit, and other benefits such as carer’s allowance, but crucially it will also include council tax benefit and housing benefit. In many of our urban areas and in the south-east, the high cost of rented housing and council tax means that, if you lose your job and have a larger family, it will not be long before you lose your home as well, as you will not be able to afford the rent. Does the Minister think that that is fair and will really help those families back into work?

As regards child benefit, has the Minister seen the report in Thursday’s Guardian where the right honourable Secretary of State for Work and Pensions said that child benefit will be rolled into the new universal credit from 2017 and will therefore be means-tested? Can he confirm that the Chancellor’s new wheeze for clawing back child benefit from higher rate taxpayers is only temporary? What discussions took place between Ministers in the Department for Work and Pensions, especially those responsible for child poverty, and Ministers in the Treasury before the announcement was briefed last weekend? In the other place today, the Secretary of State claimed that the unfairness of the child benefit changes was due to the unfairness of the taxation system. Has the Minister seen the comments of the Institute for Fiscal Studies, which stated:

“Using the means-test in tax credits could be considered fairer to single-earner couples, and would not distort incentives so dramatically”?

Is it just not-invented-here syndrome that prevents the Government from using the tax credits system to do this?

Finally, the Chancellor repeated in the media last week that his proposed changes would affect those paying the higher rate of tax—about 1.2 million families. That was also repeated by the Secretary of State in the other place. What is the Minister’s latest estimate of the number of higher rate taxpayers who will lose out due to the child benefit changes, given the reduction in the threshold for higher rate taxpayers announced in the Budget? Surely, if the higher tax threshold is lowered as part of moving to meet the Liberal Democrat ambition of a starting tax threshold of £10,000, there will be many more than 1.2 million people affected by this measure.

The announcements of welfare reform are in large part welcome in principle, because they follow from what my party, and I, pursued in government. The announcements about child benefit last week were frankly a shambles. I hope that this Minister, whom I know to be a good and noble Minister, will clarify things for the benefit of Parliament.