Benefit Claimants Sanctions (Required Assessment) Bill
Damian Hinds ExcerptsFriday 2nd December 2016
(7 years, 5 months ago)
Commons ChamberRead Full debate Benefit Claimants Sanctions (Required Assessment) Bill 2016-17 View all Benefit Claimants Sanctions (Required Assessment) Bill 2016-17 Debates Read Hansard Text Read Debate Ministerial Extracts
The Minister for Employment (Damian Hinds)
This is an important debate today. I am very grateful to the hon. Member for Paisley and Renfrewshire South (Mhairi Black) for bringing these matters to the Floor of the House for further discussion. I do have very comprehensive responses to the individual line items of the Bill, and it is important that they get an airing, but, because of the way that the debate has gone, there will not be time today to go through them all. I thank my hon. Friends who pulled off the Speaker’s list in order to allow a small amount of time for a Government contribution to this debate. I look forward to speaking to those points when the hon. Lady brings her Bill back to the Floor of the House in due course.
The hon. Lady set the pace today with a very comprehensive and passionate one-hour-and-15 minute speech in which she covered a great deal of the aspect of this debate. As I have said, these are important matters, and it was important that they were brought here today.
We also heard from the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) who speaks for the Opposition. I was not entirely clear, at the end of her speech, where we stood on Labour party policy as regards sanctions, but doubtless we will hear more on that in due course.
We heard from the hon. Member for Angus (Mike Weir), who I believe is a member of the SNP Whips Office, but nevertheless spoke for 15 minutes on a day when his colleague had a private Member’s Bill to introduce. We also heard from the hon. Member for Glasgow North East (Anne McLaughlin) at some length.
I thank my hon. Friends on the Government Benches for their contributions to the debate, including my hon. Friends the Members for Mid Dorset and North Poole (Michael Tomlinson), for Louth and Horncastle (Victoria Atkins) and for Torbay (Kevin Foster). We also heard speeches from my hon. Friend the Member for Bournemouth West (Conor Burns), who reminded us of the centrality of the taxpayer in this equation. My hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer) talked about the benefits of work, and reminded us that sanctions should be used as a last resort. My hon. Friend the Member for Faversham and Mid Kent (Helen Whately) talked about the importance not only of getting people into work, but of getting people closer to the labour market. She thanked the jobcentre staff in Maidstone and Sittingbourne. My hon. Friend the Member for Eastleigh (Mims Davies) not only thanked her local jobcentre staff, but reminded us of the important work done by all our caseworkers and, in fact, of the importance of casework itself in informing these debates. That is a particular strength of our parliamentary system.
There is much in the Bill that has logic to it and that would, all else being equal, be attractive from a public policy perspective, but I hope to reassure her today that much of what she is calling for is, in practice, already done, while other aspects are achieved in different ways.
Damian Hinds
The hon. Lady will have to forgive me. She spoke for one hour and 15 minutes, and I have very little time. I am obviously not going to be able to get through all the contents of her Bill in the time available, but I hope she will allow me to begin.
Successive Governments have recognised the key role that sanctions have in the benefits system to encourage people to comply with conditions that will help them move into or closer to work. Much work has been undertaken to ensure all those claiming are clear about their responsibilities when claiming benefits and about the potential impact on their benefits if they fail without good reason to complete a requirement they have agreed to undertake.
Imposing a sanction is not done lightly. We invite those facing a sanction to explain exactly why they failed to meet the requirement, and we take all the circumstances into account to determine whether the requirement was reasonable for that individual and whether they had good reason for not meeting it. We do this in each case, and the proposals in the Bill present nothing new in that regard. Indeed, we have removed references in legislation to what constitutes good cause or good reason precisely to ensure that those making decisions can consider every aspect of an individual’s circumstances, not just those prescribed in a list. It would be a step back to return to having that in legislation.
We are confident that the training and guidance available to decision makers give them the tools to make fair and robust decisions. We have a well-established system of hardship provision for claimants—provision that can be accessed by those who are sanctioned. Where a claimant demonstrates they cannot meet their immediate and most essential needs, they can apply for a hardship payment. We tell claimants regularly about the availability of hardship payments, and we have worked hard to ensure that payments are paid within three days. Work coaches identify claimants they feel would be considered vulnerable for hardship purposes and, where a sanction is imposed, they contact them to instigate the hardship process straightaway.
Not only is our approach to sanctioning claimants considered and fair, but it is a key factor in improving the employment rate and curtailing unemployment. The Department invests significant resource to help people move quickly into employment. As a result, employment, as the hon. Member for Paisley and Renfrewshire South will know, is up by 2.75 million since 2010, with the number of workless households at a record low.
Evidence shows that sanctions can have a positive effect on behaviour. In “The Jobcentre Plus Offer: Final evaluation report”, published in November 2013, it was noted that 70% of JSA, and over 60% of ESA, claimants say that sanctions make it more likely they will follow the rules. The recent “Universal Credit at Work” evaluation, from December last year, found that 76% of claimants felt that the potential for universal credit to be stopped or reduced encouraged them to meet their conditions. The same report demonstrates that 72% of claimants agreed that the potential for sanctions meant they were more likely to look for, or take steps to prepare for, work.
In addition, qualitative research found that people perceived the claimant commitment as critical to the upkeep of their claim. They were generally very clear about the time they were required to spend on job-search activity and the need for them to evidence this, and about the fact not fulfilling their requirements could result in a sanction.
If I may, I will start to go through the elements of the Bill. The Bill seeks to amend sections of the Welfare Reform Act 2012 concerning the claimant commitment and sanctions, to introduce measures to check a claimant’s circumstances prior to a sanction being considered. A significant proportion of the measures proposed in the Bill are measures the Department already undertakes through guidance. For example, the Department ensures that health issues, caring responsibilities and homelessness are noted and taken into account when dealing with claimants. We ensure work-related requirements are fully explained when they are set, as well as the action the claimant should take if they fail to complete the requirement, and the potential impact on their benefit if they do not. The fact that the claimant’s circumstances and any information provided by them are considered before a sanction is imposed should also be acknowledged.
A huge amount of work has been undertaken following recommendations from the Work and Pensions Committee and, as has been referenced by a number of my hon. Friends, from Matthew Oakley’s review of benefit sanctions, to ensure that our staff, when setting requirements for benefit claimants, do so reasonably. That is especially true, of course, of claimants who are identified as having complex needs or who require additional support to enable them to access DWP benefits and to use DWP services.
In addition, we ensure that claimants are advised about their conditionality requirements and about the associated consequences if they fail to meet them. At the point of the claim, staff clearly explain to claimants what they have to do and what will happen if they fail to do it. This is followed up in writing with the claimant commitment documentation. We ensure all appointment notifications and notifications to participate in mandatory programmes also include these requirements clearly in writing.
Turning to the contents of the Bill, clause 1—
Oral Answers to Questions
Damian Hinds Excerpts(7 years, 5 months ago)
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Bridget Phillipson (Houghton and Sunderland South) (Lab)
The Minister for Employment (Damian Hinds)
Many people aspire to be their own boss. Although the bulk of the growth in employment in recent years has been in employment, there are now 4.7 million self-employed people in the UK labour market, accounting for approximately 15% of everyone in work.
Bridget Phillipson
I am grateful to the Minister for his answer, but notwithstanding what he has said there is a growing issue of bogus self-employment. Trade unions such as the GMB have been at the forefront of exposing such practices, so will he commit to working with trade unions as part of the ongoing Taylor review?
Damian Hinds
Of course, what the hon. Lady refers to does not apply to the great majority of people in self-employment, but some concerns have been expressed. The growth of atypical employment was behind the Prime Minister quite rightly saying that there would be a proper review under Matthew Taylor. That review will look at a whole range of things, as its terms of reference are quite broad: rights, responsibilities, representation, training, representation of under-represented groups and so on.
John Howell (Henley) (Con)
Damian Hinds
My hon. Friend makes a very good point. We are launching a test—face-to-face and on a voluntary basis, from Jobcentre Plus work coaches—for self-employed people currently in receipt of tax credits. A range of support material is also available at gov.uk.
Margaret Greenwood (Wirral West) (Lab)
Ordering presents online is now a normal part of Christmas for many people, but there have been disturbing reports recently of delivery drivers who are classed as self-employed working dangerously long hours for less than the national living wage. Those workers make a vital contribution to the functioning of the digital economy. Will the Minister commit to meeting Labour’s five tests for social security for the self-employed?
Damian Hinds
I join the hon. Lady in recognising the necessity of looking at these issues. National living wage enforcement is very important. That is why we have raised the budget for it, as well raising the maximum penalty. As for the exact definition of self-employment, she will know that there are variations in definition for tax purposes and employment law purposes. The Matthew Taylor review is looking at precisely these issues to make sure that the appropriate protections are in place while enabling more and more people to avail themselves of the opportunities in the new economy.
Sir Desmond Swayne (New Forest West) (Con)
What is the Minister doing to help disabled people into self-employment?
Damian Hinds
My right hon. Friend makes a very good point. We know that many more disabled people want to get into work, and one route is through self-employment. I am pleased to be able to say that more than a fifth of the participants in the new enterprise allowance scheme are people with a declared disability, but there is a great deal more we can do.
David Mackintosh (Northampton South) (Con)
Kerry McCarthy (Bristol East) (Lab)
The Minister for Employment (Damian Hinds)
Jobcentre Plus district managers have discretion to work with food banks in their areas where those food banks are willing to work with them. This is part of the wider Jobcentre Plus outreach programme with community organisations.
Kerry McCarthy
In just six months the Trussell Trust has provided more than 2,000 children in Bristol with emergency food parcels, and east Bristol food bank has had to open another outlet in Fishponds. We know that changes to benefits or delays in payments account for nearly half of those cases, so will the Minister agree to the Trussell Trust’s simple request that a Jobcentre Plus hotline for food bank volunteers is provided?
Damian Hinds
First, I should say that 90% of out-of-work benefits are paid on time; of course, we always strive to make that better. On the question of whether the Jobcentre Plus network is willing to work with food banks, as I said, there is discretion locally to do that when it makes sense and if the food bank is happy to do so. There are plenty of examples of that happening around the country in terms of both signposting from Jobcentre Plus and work coaches going to food banks.
Jeff Smith (Manchester, Withington) (Lab)
Alison Thewliss (Glasgow Central) (SNP)
By Wednesday’s autumn statement, it will be 505 days since the Government first announced the two-child policy and the rape clause in the summer Budget 2015. The Resolution Foundation estimates that that policy will put 200,000 children into poverty by 2020. The Government still cannot tell us how it will actually work, and there is a measly 38-day consultation in which the public can respond. When will the Government finally admit that the rape clause and the two-child policy are completely unworkable and scrap the policy?
The Minister for Employment (Damian Hinds)
Difficult decisions had to be made in welfare reform, and the vast majority of families with children have two children or fewer. This is one decision that had to be made, and it applies only to new cases and will not take money away from those already in receipt of help. On the exemptions that the hon. Lady mentions, these are some of the most difficult and sensitive topics. It is right that we have a full consultation and that we work closely with experts within the sector to ensure that we get the process exactly right.
Heidi Allen (South Cambridgeshire) (Con)
Autumn Statement Distributional Analysis, Universal Credit and ESA
Damian Hinds Excerpts(7 years, 5 months ago)
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The Minister for Employment (Damian Hinds)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“notes the role of universal credit in ensuring that work pays; welcomes the £60 million package of additional employment support announced in the Summer Budget 2016 available to new claimants with limited capability for work from April 2017 and set out in the recent Work and Health Green Paper; further welcomes the proposals for employment support for disabled people and those with health conditions set out in that green paper; and notes the comments by the Chancellor of the Exchequer to the Treasury Committee on 19 October 2016 on his intention to publish distributional analysis at the forthcoming Autumn Statement.”
Since 2010, we have been working to get the country’s finances in order while continuing to provide proper financial and practical support to those who need it. We will have to wait until next week to hear the Chancellor’s plans, but we can note today the significant progress on which the autumn statement will build. In 2010, we faced an economy that was barely growing, investment that was low, unemployment that was high, and a deficit at a level not seen since the second world war. In 2009-10, the then Labour Government were borrowing an annually recurring amount of nearly £6,000 for every household in the country—an unsustainable situation.
Since then, Conservative-led Governments have taken the tough decisions needed to reduce the deficit, and it is working. Over the past six years, we have cut the deficit by almost two thirds from its 2009-10 post-war peak of 10.1% of GDP to 4% last year.
Robert Flello
It is funny, because I remember being in the House and being told that the deficit was going to be cut—wiped out, gone—by 2015, and Labour’s plan to halve it by 2015 being dismissed as nonsense. Does the Minister have the same recollection?
Damian Hinds
The hon. Gentleman, who is a man of great memory, will also remember the Opposition Front-Bench spokesman shouting “Too far, too fast” over and over. We embarked on a determined programme to get our nation’s finances back in order, which the Opposition opposed at every turn. They voted against essentially all the substantial measures to get us there.
Robert Flello
I also remember, in the run-up to 2008, Conservative Members saying from the Opposition Benches that the Labour Government needed to spend more on hospitals, spend more on schools—spend more, spend more, spend more. Funny how they have forgotten that.
Damian Hinds
They have not forgotten that, and it is because we are getting our nation’s finances back in order that we can afford to increase our funding for the national health service by £10 billion, in line with what the NHS itself has deemed necessary in the five year forward view, a plan that it would never have been possible to realise had the Labour party been in government.
The Opposition claim that the poorest in our society have borne the brunt of the reductions in the deficit, but that is not the case. It is undeniable that when we face a deficit of almost £6,000 for every family in the country, we have to do some difficult things, but people throughout society have contributed to getting our finances back in order. We have never seen tackling the deficit as just an option. It is a matter of social justice, because when Governments lose control of the public finances, with all that flows from that, it is invariably those who have the least who stand to lose the most.
James Cartlidge (South Suffolk) (Con)
Is it not the case that a distributional analysis cannot capture the impact that things such as capital gains tax cuts have on the wider economy by encouraging entrepreneurs to create jobs and wealth so that we can pay our way in the world, which is what we have to do if we are to afford schools, hospitals and all the rest of it?
Damian Hinds
My hon. Friend is of course right. There is always a dynamic effect of changes in taxation. I will come on to the question of the distributional analysis, because when we look at it we see that it is rather different from what the shadow Chancellor suggested.
John McDonnell
May I remind the Minister of what the Institute for Fiscal Studies said about the Government’s changes? It stated that the long-run effect of tax and benefit changes in last year’s autumn statement, which were translated into the Budget, would be percentage losses around 25 times larger for those in the bottom decile than for those in the top decile.
Damian Hinds
The programme of deficit reduction has always been done in a fair as well as a determined way. At the end of this decade, the best-off fifth of households—the best-off quintile—will be paying a greater proportion of total taxes than in 2010-11; in fact, they will be paying more in tax than the rest of the households put together. That means that those with the broadest shoulders are, quite rightly, paying their fair share towards fiscal consolidation. Meanwhile, the plans the Government have set out lead to a projected distribution of public spending between the income groups that is essentially the same as in 2010. As the distributional analysis published alongside the last Budget showed, the poorest will continue to receive a share of spending on benefits in 2019-20 similar to that in 2010-11. I reassure the House that the Chancellor has committed to publishing a distributional analysis alongside the forthcoming autumn statement.
Government reforms to incentivise work and enable those who are just about managing to keep more of their pay packet include the national living wage, increases to the personal allowance, the doubling of free childcare, action on council tax and freezes to fuel duty. Although we have had to make difficult decisions on welfare spending, we have never lost sight of the fact that the most sustainable route out of poverty and just managing is to get into and progress in work. The introduction of the national living wage means that lower-paid workers are now seeing record increases to their earnings.
Diana Johnson (Kingston upon Hull North) (Lab)
Will the Minister explain to our constituents how the introduction of the “pay to stay” policy will help incentivise people to get into work?
Damian Hinds
I was in the middle of talking about how wages have been rising. If the hon. Lady will forgive me, I thought that she was challenging me on that point, so I will continue to make it. According to recent data on earnings from the Office for National Statistics, the lowest 5% of workers saw their wages grow by more than 6% in 2016, the highest growth for that group since that statistical series began nearly 20 years ago. Based on the Office for Budget Responsibility’s forecast at the Budget, almost 3 million low-wage workers are expected to benefit directly by 2020, with many more benefiting from the ripple effect on income distribution.
At the same time, universal credit is transforming the welfare system to ensure that it always pays to work more and to earn more. That is in stark contrast with the pre-2010 system, in which in-work poverty increased by 20% between 1998 and 2010, despite welfare spending on people in work increasing by £28 billion. Evidence is already showing that people move into work faster under universal credit; for every 100 people who found work under the old jobseeker’s allowance system, 113 universal credit claimants have moved into a job. We estimate that universal credit will generate around £7 billion in economic benefit every year and boost employment by up to 300,000 once fully rolled out.
Most important of all, universal credit will drive progression, delivering sustainable outcomes for low-income families. Unlike tax credits, with the 16-hour cliff edge, it supports part-time and flexible working—as well as full-time working—adjusting on a month-by-month basis according to household income. The work allowances are just one element of a much wider system of support and incentives. The personalised work coach support, the smooth taper rate and the reimbursement of 85% of childcare costs as soon as someone starts working, even for a small number of hours, are all key to making work pay for universal credit recipients.
In this morning’s employment figures, we saw that the employment of disabled people is up by 590,000 in the past three years. The disability employment rate has gone up by 4.9% in that time, and the gap has been narrowed by two percentage points. We were talking about this earlier, and it is welcome news, but there is much, much more to be done, as only half of people with disabilities are in work, compared with 80% of the non-disabled population.
Stephen Timms
I am glad that the Minister has raised the question of the disability employment gap. Former Ministers—two of them, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) and the hon. Member for North Swindon (Justin Tomlinson), are in their places this afternoon—promised that a quid pro quo for the cuts in employment and support allowance would be halving the disability employment gap by 2020. That was in his party’s manifesto, and the former Prime Minister, David Cameron, committed to halving the gap by 2020. Why has that promise now shamefully been abandoned?
Damian Hinds
We are committed to working towards halving the disability employment gap. The right hon. Gentleman is reading somewhat more into things than he can or should. We are absolutely committed to doing that, but there is a long way to go, and he will know better than most how hard it will be. But the figures we have announced this morning show that the employment rate for people with disabilities is up by almost 5%. That is welcome news that I had hoped would receive a more positive response from the Opposition.
Stephen Timms
I am not reading any more into the promise that was made than what was set out very clearly. In the election campaign David Cameron made it clear that the commitment was to halve the disability employment gap by 2020. There was a press release in the name of former Minister for Disabled People, the hon. Member for North Swindon, saying that it would be by 2020. Why has that promise now been so shamefully abandoned?
Damian Hinds
We are working hard on this. When my colleague the Minister for Disabled People, Health and Work sums up at the end of the debate, she will no doubt elaborate on that more. To be able to do everything we can as a Government, we need employers to do more as well, as the right hon. Gentleman will recognise. A whole-society approach is required to address this great challenge. Progress is being made but more is needed. He should have no doubt about the Government’s commitment to doing everything possible to achieve that.
One reason why so much more needs to be done is that we still have that yawning gap despite all the progress that has been made—despite the regulatory reform, the medical advances, the advances in assistive and adaptive technology, and, critically, the fact that we know that so many people with disabilities want to move into work and that so much talent is not currently being fully utilised. We know that being in work can have wider benefits for the individual, beyond the purely financial. There is clear evidence that work is linked to better physical and mental health, and to improved wellbeing. That is a key theme in our recently published Green Paper “Improving Lives”, and a driver behind the changes to the employment and support allowance and universal credit that were announced in last summer’s Budget.
ESA was originally introduced—I am happy to acknowledge the bipartisan parts of this debate—in 2008 by the then Labour Government. The expectation at that time was that the Atos-run assessment process would place the clear majority of claimants into the work-related activity group, leaving a relatively smaller number in the support group. Over time it became clear that that was not the case, with around three times as many people in the support group as in the work-related activity group. At the same time, fewer than 1% of people were leaving that benefit for work each month.
That is why we are introducing changes to encourage and support claimants to take steps back to work and to fulfil their full potential. From next April we will no longer include the work-related activity component for new ESA claims, or the equivalent element for people on universal credit with a health condition or disability. I stress that that is for new claims after April next year; there will be no cash losers among those already in receipt of ESA or its universal credit equivalent, and there will be further safeguards meaning that they will not lose the extra payments even if reassessed after April and placed in the work-related activity group.
Mr David Burrowes (Enfield, Southgate) (Con)
I very much welcome the Green Paper, which many of us have been looking forward to for some time. It sets the direction of travel, providing a much more joined-up approach for this group of very vulnerable people. On the notional cash loss for new WRAG claimants, could there be support from the financial support grant in the Green Paper—
Mr Burrowes
Yes, the flexible support fund, which could provide some flexibility and relief for those particular needy groups.
Damian Hinds
I am grateful to my hon. Friend, and to the former Secretary of State for Work and Pensions, to whom I pay tribute for bringing forward the universal credit system and so much else that goes with it. The flexible support fund is part of the package of support there is, through the Jobcentre Plus network and other means, to help people into work. It is the case—I will come on to this in a moment—that more money will go into those support packages to help people into work, or, as some people have very significant barriers and some distance to go, to get closer towards work. About 47% of people in the work-related activity group also receive the personal independence payment, which is, of course, exempt from the benefit freeze, and there will be no change to the support group supplement. In the Green Paper consultation, we are consulting on whether we should decouple the support group rates from the type of support people can receive, so that those in the support group can seek help that goes towards their getting work without worrying about their benefit entitlement being at risk.
The amount we are spending on disability benefits, at £50 billion, is not going down: it is going up. In real terms, it will be higher at the end of this decade than it was at the beginning. We believe that the change in the work-related activity group, working in tandem with the new employment support package announced in the Green Paper, will help to provide the right incentives and support to assist new claimants who have limited capability for work. We believe that this package—representing £60 million of funding in 2017-18, rising to £100 million a year in 2020-21 and developed with external stakeholders, including groups and charities expert in addressing the barriers that can come with disability—can have a much bigger and lasting effect on people’s prospects and their livelihoods than the work-related activity component itself. In addition to the funding package, we are introducing £15 million for the Jobcentre Plus flexible support fund in 2017-18 and 2018-19 to help claimants with limited capability for work. From next April, we are also removing the 52-week permitted work limit that exists in ESA, to allow claimants to continue to undertake up to 16 hours’ part-time paid work and, currently, earn up to £115.50 per week.
I trust that hon. Members will recognise the value in our approach. Today’s employment figures show unemployment at 4.8%—a decade low. Average wages are rising at 2.4%, which in real terms is 1.7%. Since 2010, we have seen a 2.8 million rise in the number of people in a job, 865,000 fewer workless households and 62,000 fewer households where no one has ever worked. Income inequality has fallen and average incomes are the highest on record. There are 300,000 fewer people and 100,000 fewer children in relative low income. This morning’s figures show that the rate of young people who have left full-time education and are not in work is at a new low, and the biggest drop in unemployment was among the long-term unemployed.
We introduced the national living wage—a £900 a year pay rise already for a full-time person on the previous minimum wage, with more to come. We have taken millions out of income tax. We have extended free childcare to disadvantaged two-year-olds and we are upping childcare spend by £1 billion a year. We are being ambitious on skills through school reforms and a dramatic increase in apprenticeships, so that more people can share in the opportunities of the new world economy. We are transforming social security through universal credit. We are stabilising the nation’s finances, and ensuring that low-income families and those with health conditions and disabilities have the support they need to enter and progress in work as we build an economy and a society that works for everyone.
Employment, Social Policy, Health and Consumer Affairs Council
Damian Hinds Excerpts(7 years, 6 months ago)
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The Minister for Employment (Damian Hinds)
The Employment, Social Policy, Health and Consumer Affairs Council met on 13 October 2016 in Luxembourg. Damian Hinds MP, Minister of State for Employment at the Department for Work and Pensions, represented the UK.
The Council reached a general approach on the proposal to amend the carcinogens and mutagens directive, which protects workers from the risk of exposure to carcinogens and mutagens in the work place. The UK, along with all member states and the Commission, supported the proposal.
The Council also reached political agreement on the directive to implement the social partner agreement on the ILO Work in Fishing Convention. The UK supported the proposal but also submitted a minute statement which outlined reservations on its application to the self-employed and competence.
There was a policy debate on the Commission’s New Skills agenda proposal and an endorsement of the Employment Committee (EMCO) opinion on it. The UK intervention set out the UK’s skills plan and apprenticeship reforms, emphasising the importance of putting employers at the heart of the system. The UK welcomed the EMCO opinion, including recognition that many of these issues were member state competence.
The Council endorsed the Social Protection Committee (SPC) and the EMCO reports on the European semester. The Commission noted and endorsed the streamlining of the European semester process.
There was an exchange of views, followed by a lunch time discussion, on youth employment. The Commission highlighted the tools and funding the Commission has made available to fight youth unemployment. There was then an exchange of views on long-term unemployment.
The presidency outlined the agenda for the Tripartite Social summit on 19 October.
The Council adopted Council conclusions on the Court of Auditors report on Roma integration. Introducing the item, the presidency noted that 6 million Roma living in the EU still faced discrimination and disadvantage. It would bring a second, broader, set of conclusions to Council in December.
The Council generally endorsed the joint EMCO/SPC opinion on the social pillar. The presidency and the Commission confirmed this would not pre-empt member state Government responses to the on-going Commission consultation.
Under any other business, the presidency provided information on the revision of the Blue Card directive, the action plan on integration of third country nationals, and the collaborative economy. The Greek delegation provided an update on labour market reforms in Greece.
[HCWS212]
Oral Answers to Questions
Damian Hinds Excerpts(7 years, 6 months ago)
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Suella Fernandes (Fareham) (Con)
The Minister for Employment (Damian Hinds)
We are committed to battling financial exclusion. Under universal credit, through universal support, we are working with partners to help claimants manage their finances and avoid debt.
Suella Fernandes
Sixteen million adults have less than £100 in savings, with younger adults, larger families and single parents most at risk of struggling with their personal finances. The all-party group on financial education for young people, which I chair, has, supported by Young Enterprise, concluded that people need better money management skills in life. What steps is my hon. Friend taking to increase financial education and money management skills for young people and those in receipt of benefits?
Damian Hinds
I commend my hon. Friend for her work with the all-party group, which has been particularly effective. In jobcentres, the first work search interview provides the opportunity to identify barriers, including financial capability. Under universal credit, personal budgeting support can be offered in partnership with jobcentres, local authorities and other local service providers.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I thank the hon. Member for Fareham (Suella Fernandes) for asking that very important question. The new Money and Mental Health Policy Institute, of which I am a member, highlighted that it is so much harder to recover from mental illness if one is in debt. Adults with mental health conditions are three times more likely to be in debt than adults without mental health conditions. What specifically is the Minister doing to ensure that people with a mental condition who are in receipt of benefits and in debt are supported appropriately?
Damian Hinds
The most important thing we do is work in partnership at a local level with mental health organisations such as Mind to increase understanding of jobcentre operations on these issues, as well as to extend help to individual claimants. It is very important to understand the full range of barriers and challenges that somebody may face.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)
The Minister for Employment (Damian Hinds)
I welcome both those pieces of news, and the employment that will be brought to my hon. Friend’s constituency. What she has said about the opening of the hotel reflects a national trend. We know from surveys that the demand for staff in the hospitality industry continues to be strong, and it is one of the factors that are helping us to achieve a record level of employment.
Alex Cunningham (Stockton North) (Lab)
According to the International Monetary Fund, a series of forecasts has shown that the vote to leave the European Union will lead to low global growth and rock-bottom interest rates for years to come, and that as a result, despite the saving of trillions of pounds, workers who are due to retire in the next few years will not even have their basic needs met. Today, as the deputy Governor of the Bank of England defends the Bank’s approach to the economy to Members of Parliament and outlines his concerns about pensions, will the Secretary of State tell us what the Government are going to do to shore up the pensions of people who have done the right thing and earned their retirement?
Caroline Flint (Don Valley) (Lab)
It has been brought to the attention of the Public Accounts Committee that universal credit is paid per calendar month, which, as has been pointed out by the Union of Shop, Distributive and Allied Workers, affects those receiving four-weekly pay very badly. I know that, since our evidence inquiry, the Minister’s officials have met representatives of the union to discuss their concerns. May I ask the appropriate Minister to follow the matter up? It is an anomaly that affects a great many retail workers who are ending up without their universal credit being paid.
Damian Hinds
The right hon. Lady identifies the issue around four-weekly versus two-weekly versus monthly cycles of pay. As she mentions, it came up at the Select Committee. I know that Lord Freud is considering what the implications are and is continuing his discussions.
Jo Churchill (Bury St Edmunds) (Con)
Damian Hinds
Indeed, I welcome the news of the record levels of female employment. My hon. Friend is right that enhancements in childcare are an important part of this. Within that, the extension in universal credit support from 70% to 85% of costs is important, coupled with the fact that it applies at lower levels of hours, which will enable some mums to get back into the workplace sooner than might otherwise be the case.
Andrew Selous (South West Bedfordshire) (Con)
I hope that Ministers were as concerned as I was that not one of the offenders leaving prison earlier this month who were mentioned in the chief inspector of probation report found work? Will Ministers commit to raise that issue with all employers they meet, not least in the public sector, where our record is still not good enough, so that we can all be safer?
Damian Hinds
My hon. Friend is right to identify the importance of helping ex-offenders into work. We know that, if they get into work, they are much less likely to reoffend. The See Potential campaign is important in that regard. Many employers have signed up to that and I commend them for doing so. I and the Under-Secretary of State for Justice, my hon. Friend the Member for East Surrey (Mr Gyimah), the Minister with responsibility for prisons, are in regular contact about how we can further improve our offer for ex-offenders and we will continue to work on that.
Corri Wilson (Ayr, Carrick and Cumnock) (SNP)
Emma Reynolds (Wolverhampton North East) (Lab)
Youth unemployment in Wolverhampton remains stubbornly high despite recent progress. City of Wolverhampton Council is running an excellent project to help young people back into work, which is part-funded by the European Union. The Secretary of State and I campaigned to remain in the EU. Can he guarantee that such projects will be funded by the Government once we leave?
Damian Hinds
As the hon. Lady knows, a statement has been made about the European social fund and what happens to projects at different stages. I commend what is happening in her constituency and welcome the fact that in Wolverhampton North East youth unemployment has fallen by 54% since 2010.
Mr Peter Bone (Wellingborough) (Con)
I do not know whether it is just in my area, but at every weekly surgery I will have one person who has been refused PIP who is clearly entitled to it. I had a lady this week with multiple sclerosis; she is clearly entitled to it and will get it when she goes to the independent tribunal, but why do such people have to wait until then? Surely this can be corrected at an earlier stage.
Social Security
Damian Hinds Excerpts(7 years, 8 months ago)
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The Minister for Employment (Damian Hinds)
I beg to move,
That the draft Welfare Reform and Work (Northern Ireland) Order 2016, which was laid before this House on 6 July, be approved.
The order will ensure that the welfare reforms enabled by the Welfare Reform and Work Act 2016 in Great Britain are delivered in Northern Ireland while also ensuring that the Northern Ireland Executive have a workable budget. This order is an important part of delivering the “Fresh Start” agreement and will enable the Northern Ireland Executive to provide for supplementary welfare payments from within their own budget. Before the “Fresh Start” agreement, the impasse on agreeing the implementation of welfare reform meant that the Northern Ireland Executive had been operating on an unworkable budget. This had created significant political instability and it risked collapsing the devolution settlement.
This order today brings changes that will help to ensure that the budget of the Northern Ireland Executive is placed on a stable footing. We want to work with the Executive to support a Northern Ireland where politics works—a Northern Ireland with a stronger economy and a stronger, secure and united society. It is in the light of these goals that the Government have agreed to legislate on behalf of the Executive to enable the welfare reform changes in the Welfare Reform Act 2012 and the Welfare Reform and Work Act 2016 to be implemented. Those changes include the introduction of universal credit, personal independence payments and the benefit cap. This formed an integral part of the “Fresh Start” agreement in November last year.
The Welfare Reform (Northern Ireland) Order passed in December last year has enabled the making of more than 30 sets of regulations replicating in Northern Ireland the welfare reforms in the 2012 Act. The order before the House today is the next step in that process. It has been drafted with the full consent and collaboration of the Northern Ireland Executive to bring social security in Northern Ireland back to a position of parity, thereby helping to rebalance and strengthen the finances of the Executive.
Across the UK, our welfare reforms have focused on supporting people to find and keep work. They have focused on employment, fairness and affordability while supporting the vulnerable. Over the past six years, we have stuck to our economic plan, delivered welfare reform and seen great progress, with employment up 2.7 million. Broadening life chances is a central part of this Government’s plans. In Northern Ireland, the raising of tax thresholds will take 110,000 of the lowest paid people out of income tax altogether, and 700,000 people will benefit from reduced taxes. Also, 100,000 people in Northern Ireland are projected to benefit from the national living wage by 2020. The Government’s support for working people goes hand in hand with the welfare reform programme to encourage people into work.
We have also invested in Northern Ireland. The Stormont House and “Fresh Start” agreements included financial packages of £2.5 billion to support investment and reform. This includes £350 million of additional capital borrowing explicitly for economic development projects. By working together, the Government and the Executive have achieved significant successes, including bringing £60 million of additional finance to Northern Ireland businesses, providing additional borrowing for shared education projects and boosting green investment by £70 million.
In Northern Ireland, 55,000 more people are in employment than in 2010, but there is much more still to be done. The most recent Northern Ireland unemployment rate of 5.6% is above the overall UK average of 4.9%. The percentage of unemployed people who have been out of work for more than a year is 47.8%—markedly higher than the UK average of 27%. Some 22% of working-age households in Northern Ireland are workless compared with 15% in the UK as a whole.
The Welfare Reform and Work Act 2016 built on the 2012 reforms, and this order provides the legislative framework to replicate some of its most important aspects, including changes such as improving fairness in the welfare system by changing the level of the benefit the cap. The order will ensure parity by bringing the cap that exists in Great Britain to Northern Ireland. Changes also include providing new funding for additional support to help employment and support allowance and universal credit claimants with health conditions and disabilities into work and removing the ESA work-related activity component, so that the right support and incentives are in place for those who are able to take steps back to work. The unsustainable rise in benefit levels compared with earnings will be corrected by freezing most working-age benefits. Importantly, the changes will help to ensure that the budget of the Northern Ireland Executive is placed on a stable footing.
It was agreed in the “Fresh Start” agreement that the Executive could supplement benefits from within their own budget. The agreement allocated up to £585 million of the Executive’s block grant over four years to provide for supplementary welfare payments in Northern Ireland, and that will be reviewed in three years. Under the 2015 order, the Assembly has already passed some regulations for supplementary welfare payments relating to the 2012 reforms. The provisions of this order will give the Assembly the ability to design and pass further such regulations, including supplementary payments to those affected by the removal of the spare room subsidy. These time-limited payments follow the recommendations of the Evason report, which flowed from a commitment in the “Fresh Start” agreement.
The order is about delivering the “Fresh Start” agreement and returning Northern Ireland to a position of legislative parity and financial stability, and I commend it to the House.
Damian Hinds
Let me emphasise that this order fulfils a vital commitment made as part of the “Fresh Start” agreement. We have had a robust debate on some of the historical aspects of how we got to this point. In the interests of time, I think it best that I do not reflect further on that. Suffice it to say that the two largest parties in the Assembly signed up to the “Fresh Start” agreement of which this legislation was a crucial part. Moreover, the Assembly passed a legislative consent motion supporting the legislation to be dealt with here in Westminster. As the right hon. Member for Belfast North (Mr Dodds) said, Northern Ireland has long kept to parity on social security, as set out in section 87 of the Northern Ireland Act 1998. Restoring that parity is a crucial part of keeping the Executive’s finances stable. The provisions on the welfare supplementary payments will be put forward in full detail by the Executive and the Assembly.
In response to the question about taxation from the hon. Member for South Down (Ms Ritchie), supplementary payments to non-taxable benefits will be non-taxable, and supplementary payments to taxable benefits will be taxable, so the tax treatment will be the same as in the current system.
This order is a crucial part of delivering the “Fresh Start” agreement. It will help to build a politically and financially stable Northern Ireland. I commend it to the House.
Question put and agreed to.
Resolved,
That the draft Welfare Reform and Work (Northern Ireland) Order 2016, which was laid before this House on 6 July, be approved.
Universal Basic Income
Damian Hinds Excerpts(7 years, 8 months ago)
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The Minister for Employment (Damian Hinds)
It is a great pleasure to serve under your chairmanship, as always, Mr Davies. I would like to join the congratulations to the hon. Member for Inverclyde (Ronnie Cowan) on securing this important debate. I thank everybody from all parts of the House who contributed to it. I was particularly interested in the speech of the hon. Member for Oldham West and Saddleworth—
Damian Hinds
I am so sorry.
I think she confirmed that the official Opposition are considering a universal basic income. We already knew that the Scottish National party will look into it further after their conference, and we now know that the official Opposition also see some benefits in it.
Debbie Abrahams
I think the Minister is running away with himself. I said it would be useful to explore it. That is not how he characterised it.
Damian Hinds
I am grateful for the clarification.
A universal basic income or similar systems that guarantee a minimum income to all have been debated and discussed at some length across the world. This debate has been stimulating and important, and discussing UBI and similar concepts, such as the negative income tax, which was a popular subject for academic debate before UBI, is an engaging activity. Any system that promises protection and, to quote the recent report from the Joseph Rowntree Foundation and Compass,
“freedom of choice for individuals between work and leisure”
is bound to sound appealing. It is difficult to argue with a utopian system that enables individuals to choose whether to work or to engage in leisure activities, alongside all the other valuable things that people do, such as voluntary work and caring.
However, as the Compass report suggested, the big issue with UBI is not whether it is desirable but whether it feasible. Would it be affordable, and could it be introduced in a way that prevented losses among the poorest sections in society? The hon. Member for Inverclyde said we should not turn our back on laudable aims. I could not agree more, but laudable aims are not enough. When Jack Kennedy said he wanted to put a man on the moon, he knew that just willing it would not make it happen. It had to be technically feasible.
The Citizen’s Income Trust, which the hon. Gentleman cited, and the RSA claim to have developed cost-neutral models for a scheme, but less highlighted is the fact that they could do so only by collecting huge amounts of additional tax. I can confirm that that is not everybody’s definition of cost-neutral. As the JRF and Compass report found, the additional tax revenue required to deliver a sustainable UBI would be as much as £160 billion. Such a system is clearly unaffordable, even if we assume that the introduction of a UBI would not affect individual behaviour in the labour market and that nobody would give up paid work as a result of its introduction. That assumption, of course, goes against common sense. It goes against trials that have happened in other countries, which have been referred to, and the principles of this Government and all recent Governments that I know of.
Caroline Lucas
I have got the Compass figures in front of me. The report says that the net cost of the hybrid model that Compass proposes would be about £8 billion a year. That is a significant sum, to be sure, but it is not impossible if we are talking about a revolution in the way that work is organised. The problem with many of the contributions this afternoon is that it has been assumed that we go on as we are now and suddenly graft a citizens’ income on top of it. I think the way work is going to look in the future will be very different; therefore we need to look at bolder ideas.
Damian Hinds
I think the hon. Lady has the relevant page in front of her; I do not, but I have it nearby. From memory, if she casts her eye about three lines further up above the £8.2 billion figure, she will find another figure for what the impact on income tax will be. That is where the total effect, which is so much greater, is laid out.
Damian Hinds
I am spoilt for choice. I give way to the hon. Member for Oldham East and Saddleworth.
Debbie Abrahams
I am interested that the Minister is picking on one model. We need to be clear that there is a range of different models. He needs to clarify that in his remarks.
Damian Hinds
I am more than happy to clarify that the report looks at five models. There are three different proposals that might be called pure UBI models, which would deliver different levels of universal income; then there are two hybrid or adjusted models. The one that the hon. Member for Brighton, Pavilion (Caroline Lucas) referred to was, I believe, model No. 5, so it was the second of the adjusted models. The other ones are more expensive. The pure UBI models are more expensive than that one.
Ronnie Cowan
As we have heard here and in the main Chamber on a number of occasions, when the money is required, it is found, whether it is to renovate this place or Buckingham palace, or to spend on the vanity project that is High Speed 2 or on Trident nuclear missiles. The money is there; it is just a question of which box we want to put it into.
Damian Hinds
I do not know where to go with that. I am not sure that it is true that the money is there; in fact, I am confident that it is not. In this country, the only way in which we raise money for public expenditure is through taxation on individuals, companies and other activities.
Dr Paul Monaghan
Everyone watching the debate will be interested if the Minister can tell us which of those initiatives that my hon. Friend the Member for Inverclyde (Ronnie Cowan) cited cannot be afforded by the UK Government?
Damian Hinds
One of the main things that I am in the Chamber to say is that a universal basic income has a number of drawbacks, one of which is the great cost attached. If I may, I will now continue through my remarks.
The Government’s approach to welfare has been about recognising the value and importance of work, making work pay and supporting people into work, while protecting the most vulnerable. A universal basic income goes against every aspect of that approach. Indeed, it would put at risk the huge progress that we have made over the past six years in transforming lives through the power of work. Employment is at a record high. As we announced this morning, there are now 31.77 million people in work.
Kate Green
I hope that the Minister, in his analysis of the Government’s track record in relation to paid work, will also address the rise of in-work poverty under this and the previous coalition Government?
Damian Hinds
If the hon. Lady will bear with me, the claimant count is close to its lowest for 40 years, unemployment is at the lowest rate for 10 years and pay is rising. Our reforms are working. Why would we put all that at risk by implementing a blunt policy of financial handouts that does not treat people as individual human beings, with their own different ambitions and aspirations? UBI would also make no allowance for those with additional needs—a pure UBI system has no additional payments for those with disabilities or variations in housing costs, as the hon. Member for Banff and Buchan (Dr Whiteford) highlighted. Our reforms are about supporting people to reach their full potential, treating them as individual human beings and giving them the opportunity to get on.
Universal credit lies at the heart of the Government’s commitment to reform the welfare state, as the Opposition spokesperson, the hon. Member for Oldham East and Saddleworth, rightly identified. We want a welfare state that is fairer and more affordable, tackling poverty and welfare dependency, while supporting the most vulnerable households. The Government believe that work is the best route out of poverty, which universal credit supports by supporting people into work and by making work, and more work, pay. Together with the rise in the personal tax allowance, investment in childcare and the national living wage, our reforms are ensuring that support goes to those who need it most. There is additional help to cope with essential living costs, such as housing and childcare, and we will ensure that being in work will always pay.
Universal credit is already changing people’s lives for the better. Claimants are moving into work more quickly and staying in work longer than under the legacy system. For every 100 people who would have found employment under the old jobseeker’s allowance system, 113 universal credit claimants will have moved into a job.
Debbie Abrahams
There is so much in that sentence, and the preceding ones, that I do not know what to pick on first. The increase in wages is slowing down, according to today’s figures. Also, will the Minister explain why millions of people will be affected by the cuts in work allowances for UC under the Welfare Reform and Work Act 2016? In effect, they will get a £2,000-plus a year cut.
Damian Hinds
According to this morning’s figures, we still have good wage growth in this country, and at a time when we have low levels of inflation, so real wage growth is also close to 2%. The hon. Lady mentioned universal credit, which is a massive reform to the welfare and social security system, with the smooth taper rate taking away the cliff-edge points at 16, 24 and 30 hours a week. Those are important developments in supporting people into work and up the hour scale.
Some of the extra things we are doing include childcare, with the 30 hours for three and four-year-olds, the tax-free childcare and the increase under universal credit relative to tax credits from 70% to 85% of eligible childcare costs. Those are all critical things that the Government have been doing to reform welfare, and to help people into work and to develop in work.
Our high employment rate shows that an active welfare system that helps people into work, rather than only handing out money to everyone in the same way, is the right approach. Compare that to a system of universal basic income. I have already mentioned the report from Compass and the JRF, which shows that UBI would be prohibitively expensive. The report also shows that UBI would create too many losers among the poorest families and dramatically increase the number of children living in poverty—a point confirmed through modelling even by the Citizen’s Income Trust. UBI would dramatically increase inequality, because it does not account for individual needs and circumstances.
Some, such as the RSA, in what was a reasonable line to develop, suggest introducing adjustments—some such points have been made in the debate—and maintaining additional means-tested benefits alongside a UBI to fix that inherent flaw. The problem, however, is that the more we adjust to counteract the inequalities inherent in a UBI system, the closer we come to something that begins to resemble universal credit.
Universal credit is far more than simply a system of giving out money. It incentivises claimants to move off benefits and it provides tailored support to help people find work and increase their earnings. In contrast to UC, a UBI allows for no work-based conditions on payment to encourage that or to increase incentivisation, and for no complementing support to help people make the most of their potential.
Even the most modest of UBI systems would necessitate higher taxes, as I was discussing just now with the hon. Member for Brighton, Pavilion. Those increased taxes would be combined with the erosion of the tax-free allowance. At the same time, it would cause a significant decrease in the motivation to work among citizens, with unforeseen consequences for the national economy.
Trials of UBI have been mentioned in the report and in the debate today, such as those in the 1970s in the USA and Canada. The results showed that 5% of primary earners moved out of work, and an even greater number among secondary earners. The recent report that we have been discussing highlighted those results, but called that a small drop. From the perspective of a Government who have had to work hard with business—to have the entire economy working hard—to increase the employment rate by 4.3% over the past six years, that does not sound like a small drop to me.
Whereas at first sight a UBI seems attractive, as more scrutiny is given to the idea, the less attractive it becomes. As recently as June of this year, the concept of a universal income was formally rejected by Switzerland, as hon. Members know, with nearly 77% of people opposing the plan in a referendum.
I will briefly address some of the particular points made by hon. Members during the course of the debate. The hon. Member for Inverclyde suggested that our existing system has been driving up inequality, but 300,000 fewer households than in 2010 are now in relative low income. The evidence is clear about the role of work in helping families, and children living in those families, out of poverty. The evidence is strongest about where it is possible to move into work—[Interruption.]
Geraint Davies (in the Chair)
Order. There has been some sedentary commentary, but we have until 17.38, so if people want to ask to make an intervention, please do—obviously, it is for the Minister to allow.
Debbie Abrahams
Three out of four people in low-paid work are still in low-paid work 10 years on. How is the system helping them?
Damian Hinds
Helping people on relatively low incomes to increase their incomes by moving up the hours scale or the earnings scale is of course an objective that the hon. Lady and I share. That is why we have made the childcare reforms that I alluded to and brought in the national living wage, which will affect people who were previously on the national minimum wage but will also have a ripple effect on pay grades immediately above that. The critical thing, which we come back to time and again, is that universal credit will reform the system, in which there are certain cut-off points on the hours scale, to ensure that there is as smooth as possible a transition through work.
The hon. Member for Brighton, Pavilion talked about less secure employment. It is certainly true that today’s labour market differs in several ways from the labour market of the 1960s and 1970s. Several factors are at play, including the long-term shift to the service sector and the fact that people are living longer. Yes, it is also true that people are much less likely to stay in a job or work for one employer or even in one sector for their entire careers, but it is important to note that three-quarters of the increase in employment since 2010 has been in full-time work. Only around 14% of people in part-time work would prefer to be working full time, although obviously we want to increase the opportunities for them.
Relatively few people in the economy rely on zero-hours contracts, which give people on average around 25 hours of work per week. We know from surveys that most people on zero-hours contracts are not seeking to increase their hours. Although those types of contracts clearly are not even close to being suitable for everyone, there are some people for whom they work. A lot of people on zero-hours contracts are students or people coming back into the labour market, and such contracts can be a good way in. It is absolutely right for the Government to have banned exclusivity clauses that prevent people from taking up other work.
Damian Hinds
Will the hon. Gentleman forgive me if I press on? The extremely important point of technological change was raised, and that needs to be debated in the House and elsewhere. Some proponents of a universal basic income cite the inevitable changes in the world of work, driven by technological advance and artificial intelligence, which they believe will make many jobs obsolete and increase unemployment. That argument has a long pedigree, which goes back beyond the spinning jenny, and I do not at all belittle the importance of that discussion or the implications of structural change. We must of course be sensitive to such possibilities, but time and again over the decades, as technological change has removed the need for one type of work, it has created another.
In conclusion, although a universal basic income may appear to be desirable at first glance, any practical implementation would, I am afraid, be unaffordable. Because UBI does not properly take into account individual needs, it would markedly increase inequality. Universal credit is the right system for the United Kingdom. This responsible Government are implementing a system that encourages work, supports the most vulnerable and is affordable.
Geraint Davies (in the Chair)
I invite Ronnie Cowan to wind up the debate, for a couple of minutes.
Employment, Social Policy, Health and Consumer Affairs Councils
Damian Hinds Excerpts(7 years, 9 months ago)
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The Minister for Employment (Damian Hinds)
The Employment, Social Policy, Health and Consumer Affairs Council met on 16 June 2016 in Luxembourg where Lord Freud, the Minister of State, Department for Work and Pensions, represented the UK.
Ministers approved this year’s country specific recommendations (CSRs) under the European semester and endorsed the joint Social Protection Committee and Employment Committee opinion. In discussion all member states welcomed the better focus of the CSRs and argued that fewer but more specific CSRs were helpful. The UK welcomed the more focused approach, the importance given to employment polices as well as the recognition that unemployment can be a structural rather than cyclical problem.
Ministers noted progress reports on amending the carcinogens and mutagens directive and the revision of the posting of workers directive. The Commission (Thyssen) confirmed its intention to respond to the yellow card on the posting of workers directive during July.
Ministers adopted Council conclusions on “Combating Poverty and Social Inclusion: An Integrated Approach”, and on “A New Start for a Strong Social Dialogue” without discussion. Ministers also adopted a package of Council conclusions on gender and LGBTI equality. While there was some disappointment that the text was not stronger from a number of member states, the Council’s adoption of LGBTI conclusions for the first time was particularly welcomed by the UK among others.
The European Commission presented its new skills agenda followed by updates on the outcomes of this year’s UN Commission on the status of women meeting, and on international meetings related to the international dimension of social and employment policies.
The incoming Slovak presidency gave an outline of its work programme. Progress reports on the anti-discrimination directive; the European Accessibility Act; and the social partner agreement on the ILO work in fishing convention were all noted without discussion. Italy also introduced its proposal for a migration compact. Over lunch Ministers discussed social protection for the self-employed.
The informal Employment, Social Policy, Health and Consumer Affairs Council then met on 14-15 July in Bratislava. Lindsay Fullarton, Deputy Head of EU and International Affairs at the Department for Work and Pensions, represented the UK on the first day. Baroness Neville-Rolfe, Minister of State at the Department for Business, Energy and Industrial Strategy, represented the UK on the second day.
The Slovak presidency used the meeting to discuss the social and technological challenges in the future world of work.
The first day involved a plenary session on ageing of populations and the challenges this creates for labour markets and social security systems. The focus of most member state interventions was on migration, demographics and the scope of social protection systems. There was a strong consensus on the need for life-long learning, flexibility in labour markets and recognition of new patterns of work. There were differing views on whether highly skilled migrants were needed and how new ways of working would be covered by labour law, health and safety and social protection.
The second day involved a plenary session on how to address the impact of technological development on the quality of jobs and future skill needs. The UK intervened to highlight the importance of improving digital skills at all levels and the need for policies to address the difficulties of those left behind in society. Baroness Neville Rolfe explained that the UK’s flexible labour market aimed to not exclude these people and ensure their rights regardless of hours worked. Baroness Neville Rolfe’s intervention was echoed and supported by many Ministers who also noted that more needed to be done to ensure that new ways of working had full social, health and safety and labour law protection.
[HCWS97]
Welfare Reform and Work Bill (Sixth sitting)
Damian Hinds Excerpts(8 years, 7 months ago)
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Neil Coyle
Amendment 95 and 96 are in my name. In the interests of time, I will be as brief as possible. I hope there will be an opportunity to come back to these issues on Report if my questions are not answered. Fundamentally, this comes back to the same issue. Disabled people are directly affected by this measure—in particular, by ESA. This is about the full component, not just the £30 support group component. The full ESA payment needs to be taken into consideration, and we have concerns about those who are directly affected. The real question is about the Conservative manifesto commitment. Page 28 of the manifesto states:
“We will freeze working age benefits for two years from April 2016, with exemptions for disability and pensioner benefits”.
The amendments would help to ensure that that manifesto commitment is delivered. I hope to come back to this issue on Report if it is not dealt with sooner.
The Exchequer Secretary to the Treasury (Damian Hinds)
Things have accelerated, Mr Owen.
It is a pleasure to respond to this concatenated set of amendments. As these are probably the last words that will be said in this Committee before we break for the party conferences, I want to pay tribute to the hon. Member for Stretford and Urmston and the right hon. Member for East Ham, who is my cloakroom neighbour. They are both impassioned campaigners whose dedication and intentions can never be doubted. They will be very much missed from this Committee. Of course, we warmly welcome the hon. Member for Islington South and Finsbury to her new position.
This has been a full debate on a range of important issues. In responding to the amendments, I will reiterate the rationale behind our proposed changes and set out why we are not persuaded that the amendments should be accepted. However, before I do so, I want to recap the purpose of the Bill and in particular clauses 9 and 10.
The Bill seeks to move this country from a low-wage, high-tax and high-welfare society, to a higher-wage, lower-tax and less welfare-reliant one. That means ensuring that work always pays and focusing support on those on the very lowest incomes. Crucially, it means ensuring that the system is fair to those who pay for it, as well as those who benefit from it. Combined with the national living wage and the changes to the income tax personal allowance, the summer Budget ensured that a typical family working full time on the national living wage will be better off by the end of the Parliament, with eight out of 10 working households better off by 2017-18.
The Bill builds on this Government’s achievements in delivering for working people, whether that is the 1,000 jobs created every day—2 million since 2010—the 2.9% growth in wages this year, a 9% increase in total hours worked since 2010, or the fact that, according to the OBR, living standards are projected to be higher in 2015 than in any previous year. These clauses, which freeze the main rates of working-age benefits, child benefit and the majority of tax credits, are a central element of the Bill and are key to this Government’s ambition of putting welfare on a fairer and more sustainable footing. The exemptions for benefits, which help with the additional costs of disability, ensure that we continue to protect the most vulnerable.
Neil Coyle
I have one quick point about those who contribute. Some of the benefits that we are discussing, employment support allowance in particular, are paid to those who contributed to the system when they have been able to work. It is deeply unfair and unjust to suggest that this is somehow about protecting those who work and do the right thing when the very people that we seek to support have contributed and have then developed health conditions.
Damian Hinds
The hon. Gentleman is absolutely right that people in receipt of a number of benefits will have contributed to the system. It remains the case that we fund benefits out of current contributions. It remains the case that we have a budget deficit of 5% of national income. It remains the case that we need to get that down to start paying down the national debt. In order to do that, we need to find £12 billion of welfare savings.
The freeze has been extended to four years due to the current low-inflationary environment to ensure that it makes a significant contribution to the £12 billion reduction that I just mentioned. When originally announced as a two-year freeze, it was forecast to save £3 billion and to lead to a real-terms reduction in benefit rates of 4%. Due to the current environment, it would now save less than £1 billion. The Government have therefore extended the freeze to ensure that it generates at least the same level of savings, and more, than announced last autumn.
Emily Thornberry
Just to be clear, the Minister is not attempting to put forward a moral case. It is simply about saving money. It is about saving money from the poorest.
Damian Hinds
I am not quite sure how the hon. Lady managed to infer what she just said from what I just said. I was explaining—
Damian Hinds
I will be delighted to. I was explaining why what was originally a two-year freeze has been extended to a four-year freeze because of the current low-inflationary environment and the need to make the savings that form a substantial part of the £12 billion that we have been discussing.
While the Government have a clear mandate for the reforms, it is imperative that we protect the most vulnerable. We are protecting pensioners, with pension credit, the pension additions in other benefits, and the basic state pensions—they are all excluded from the freeze. We are also exempting benefits relating to the additional costs of disability, such as attendance allowance, disability living allowance, and personal independence payments. We have exempted the support group component of ESA, the limited capability for work and work-related activity component of universal credit, as well as additions and premiums in JSA, ESA and tax credits related to disability. Statutory payments, including statutory maternity, paternity and adoption pay, statutory shared parental pay and statutory sick pay are also all exempt. Those exemptions ensure that the most vulnerable in society are protected from the benefit freeze.
Let me speak directly for a moment to amendments 95 and 96, which seek to exempt disabled people from the freeze by ensuring that any of the relevant sums of working-age benefits and tax credits are increased in line with inflation, if they are claimed by a person who is disabled. In bringing forward our policy to freeze benefits and tax credits, we have been extremely mindful of the protections that we believe it is right to put in place to support the most vulnerable.
We are exempting all the benefits relating to additional costs of disability, as I just listed. Similarly, we are protecting the disability premiums and additions in working-age benefits, tax credits and pension-age benefits. The support group component in employment and support allowance and the limited capability for work and work-related activity element of universal credit are also protected. Those elements are paid to those with the most severe work-limiting health conditions in recognition of the fact that they are less likely to be able to increase their income by moving into work and may have additional needs as a result. Those are vital protections alongside the very acute need to make savings.
Neil Coyle
The Minister is accepting that the majority of the payment received by disabled people in the employment and support allowance group who are judged unfit to work—full stop—will not be protected. He is making the Prime Minister’s commitment to protect disabled people false. Of the payment of roughly £100 that those people would be expected to receive, £30 or so will be protected, whereas £70 will not. Will the Minister confirm that that is accurate?
Damian Hinds
What we have said is that those in the support group will be exempt, but not those in the work-related activity group. The main rates of working-age benefits are there to provide basic support for claimants who are not in work. Those rates are common across all claimants who receive out-of-work benefits. Introducing new higher rates of payments specifically for disabled people has the potential to discourage claimants from taking steps to get back to work where they can and would introduce significant complication into the system, leading to possible confusion for claimants.
Hannah Bardell
The Minister says he is going to be protecting disabled people. Will he explain why people on the severe disablement allowance will be included in the benefit cap? Surely that will make those most vulnerable people even poorer.
Damian Hinds
The hon. Lady will forgive me, I know, if we do not talk again at length about the benefit cap. We had a big debate about that in the earlier group of amendments that referred to the benefit cap. I repeat all the exemptions that are being made in the freeze—well, I am not going to repeat them all, but she heard them. There are all the exemptions that the Government are making for those specific benefits and elements of benefits that refer to the additional costs of disability.
The Government are committed to ensuring that disabled people are able to participate absolutely fully in society and have set out their ambition to halve the disability employment gap, which I think is something that Members on both sides of the Committee and the House would agree on.
Damian Hinds
Will the hon. Gentleman forgive me if I do not, just in the interests of time?
Most people with disabilities and health conditions want to work and we will support them to prepare them for work and to move closer to the labour market, and when they are ready, to move back into work. We believe that the freeze is a necessary and fair way of putting welfare spending on a more sustainable footing, but that it is vital to offer protection to the most vulnerable. The best way of doing that is by supporting people who can to move closer to the labour market and by continuing to protect those benefits relating to the additional costs of disability.
Neil Coyle
Let me try a different tack. Does the Minister expect this range of cuts to be as successful as the last set of cuts, which were projected to save billions on ESA and DLA but actually resulted in higher spending of £10 billion?
Damian Hinds
We are debating a group of amendments about a four-year freeze to certain benefits. Do I expect that to be successful in delivering the £3.5 billion that it is projected to? Yes, I do, and it is clearly a mathematical point about the rate of inflation and so on. We have the independent forecasts of how the economy is going to grow and of inflation, and I believe that our measure will deliver.
The Scottish National party amendments replace the freeze and the duty to review with the removal of the freeze altogether. That would remove the certainty we have about legislating directly for a freeze, and move us from the position where we have a clear plan reflecting the electoral mandate of the Government to one where the taxpayer could not be sure, year on year, as to the level of benefits.
Certainty for individuals, to help them plan ahead, is a key feature of the Government’s economic policies. It is also why we have introduced a national living wage, and pre-announced the anticipation that it will rise to £9 an hour by 2020 and the ambition to increase the tax-free personal allowance to £12,500 by the end of the decade. Legislating now to freeze for four years, along with those other measures, provides clarity to benefits recipients, giving them fair notice and the opportunity to make positive changes. Anyone supporting the amendments before us would have to spell out how they would instead give the public that certainty about the level of spend and identify where else they would make cuts.
I turn briefly to new clause 2 on the local housing allowance. The measure announced in the summer Budget to freeze local housing allowance rates for four years will contribute savings of £1 billion towards the Government’s commitment to reduce the welfare bill by the £12 billion I mentioned. It is not included in the Bill, as the Secretary of State already has the powers in primary legislation to change the way in which LHA rates are set. Those powers were included in the Welfare Reform Act 2012.
It may help, however, if I clarify how the freezing of LHA rates will work during the four-year period. The rates will still be reviewed each year and rent officers will calculate, as they have been doing previously, a rate calculated by reference to the 30th percentile value from a list of rents for properties of a given size in that area. Each list of rents must include achieved rental values from the distribution and range within each area. In line with the Government’s measure to freeze rates, they will then set the new LHA rates based on the lower of either the April 2015 rate or the 30th percentile of listed rents. The Government recognise that some areas will see particularly high increases in rents, so we have made specific provision for those areas.
Over the Parliament, 30% of the savings generated from this measure will be used to create more targeted affordability funding, building on the £140 million already distributed since 2014. Alongside that, local authorities are able to provide support to the most vulnerable claimants affected by housing benefit reform through an enhanced package of £800 million of discretionary housing payment funding, which is significantly more than was provided over the previous Parliament.
I reassure hon. Members that, alongside the LHA rates, we will continue to publish, as we have previously, the 30th percentile of market rents in each area. We believe that the freeze to the main rates of the majority of working-age benefits, child benefit and tax credits are a necessary and fair way of putting welfare spending on a more sustainable footing. I urge the hon. Member for Islington South and Finsbury to withdraw the amendment.
Hannah Bardell
We will not press our amendments, on the basis that we will be voting against the clause. I would like to make some points on those amendments. The Minister made a point about reducing the deficit. We reject that wholeheartedly. There is a huge amount of academic research that says the austerity agenda is going to fail, and that investing in people and investing in benefits will stimulate the economy. For all those reasons, we categorically reject what he is saying. Our amendments speak to the fact that the benefits system has to keep up with the economic conditions of the country, otherwise we are letting the poorest people down.
The UK Government are proposing to extend the freeze on working-age benefits from two years to four years, which will end in 2020. That would end the link with prices and earnings, effectively cutting the benefits that support those people who are most in need, and ensure that the lowest-income households continue to get poorer over the years between now and 2020. For example, child benefit is projected to lose 28% of its value, according to the Child Poverty Action Group. That will have a devastating impact on child poverty rates in Scotland.
Oral Answers to Questions
Damian Hinds Excerpts(10 years, 1 month ago)
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Esther McVey
I would like to have a word with the young chap you are talking about, because I would like to give him hope and optimism, which is something that you are distinctly not giving—[Interruption.] I apologise, Mr Speaker. I do not mean your good self: I mean the hon. Gentleman. That young chap needs hope and optimism, and he needs to know what is happening in the rest of the country, because other people are getting jobs. Youth unemployment—including long-term unemployment—has gone down, and if the young chap sticks with it and gives it a go, he will get there in the end. That is the best news that I can give him. It is far better under this Government than it was under the Labour Government, when youth unemployment went up by 45%.
Damian Hinds (East Hampshire) (Con)
5. What steps his Department is taking to promote financial inclusion and to help families to budget.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Through universal credit, the Department for Work and Pensions is investing £38 million in expanding credit union services to help more people to access affordable credit. A budgeting support package will be available to all those who need it through universal credit. At the same time, the Government are clamping down on loan sharks and doorstep lenders who have taken advantage of vulnerable people for too long.
Damian Hinds
In this 50th year of credit unions in Britain, may I commend the Secretary of State for what he continues to do to support the sector? Will he update the House on what is being done to tackle the excesses of the payday lenders he mentioned?