Select Committee on Work and Pensions Minutes of Evidence


Examination of Witnesses (Questions 120-138)

WEDNESDAY 12 FEBRUARY 2003

MR IAN CHARLESWORTH, MS JOANNE HINDLE, MR DAVID NICHOLL AND MR AUSTIN HARDIE

  120. So it is the SMEs who are the Marks and Spencer of the future that we should be focusing on?
  (Mr Hardie) Given the amount of people employed in SMEs as opposed to large organisations, I think it is a very good practice and it is about people kicking in and doing the right thing. We have always got the old faithfuls such as Marks and Spencer, and long may they continue with it, but it needs to be much wider than that.

Ms Buck

  121. None of you likes the current system of benefits and tax credits in terms of their efficacy in helping people back into work. What I would like to know a little more about from you is the extent to which you are criticising the back to work system in terms of its risk or in terms of its generosity in making work financially viable, because they seem to me to be very distinct aspects of the system. I just wonder if you could briefly comment on what it is that you consider to be most lacking from within the present benefit system.
  (Ms Hindle) Risk. Certainly our point was not at all about generosity. It was very much about risk. It ties in with something we were saying earlier and I would just like to stress it. It seems as if the entire system, benefits, Jobcentre Plus, etc, is set up on the basis of a binary decision. You are either incapacitated and it is almost a medical/charitable, "Oh, dear, poor you" model, or you are in work, which almost means full time, permanent, proper job, and yet we all know that for most disabled people it is not that at all. It is a step by step process and you will fall back along the way, one step up and two steps back for a while. Somehow the system has got to be flexible enough to recognise that and recognise that each of those steps is a risk and guarantee or safeguard or put a safety net under the persons taking that possibly very small step of half a day's training a week, which may be all they can do. For them that is a huge risk, and not only that but there may be a financial drawback too. No, it was not generosity at all; it was risk.

  122. Just on the risk point, certainly my understanding of the Shaw Trust position is that it is slightly different. Last week's evidence very much confirmed what I think I believe from my own experience, which is that people are very lacking in knowledge about what options are available to them.
  (Ms Hindle) Yes.

  123. The flip side of that is that they are not taking a decision based on an informed understanding of whether security is available to them through either a return to IB or in-work benefits. What could be done to deal with that? Do you think the system is structurally risky, which I think you are implying now, or do you think that part of the risk is a failure to properly lead people into an understanding of what options are available to them to cushion any difficulties they may run into?
  (Ms Hindle) It is definitely both. We know Lorna Reith at the Disability Alliance and I have read through her evidence that she presented to you last week, and certainly we are totally in support of her idea of this back-to-work diary that is a computerised system which says, "Okay, you are getting back to work. Let us take you through every single potential benefit you might have or be entitled to. How will they inter-relate? If you give up IB one week when do you get the tax credits? When did your housing benefit stop? What allowances do you get for transport? Is access to work going to kick in? When do you get your first pay cheque?" You are trying to cope with all of that and with having been out of work for a while as well, so there is the psychological risk, but at least it will enable people to map all of that out and probably along the way discover, "Good grief, I have never heard of that one. I did not know I could have got it", which is your knowledge point, but you are expecting DEAs to recollect all of that and advise properly. Again, could not DWP put in place a computer system that does it, and remove the need for the individual adviser or claimant to understand it all themselves? It is all there, interactive, touch of a button. Surely nowadays computer programming is at a stage where we could provide this.

  124. Can I ask Mr Charlesworth and other colleagues to comment because I think, Mr Charlesworth, your evidence tended rather more towards an addition to the risk element of saying that the in-work benefit system was not generous enough to provide a useful incentive?
  (Mr Charlesworth) That is correct. We use the Benefits Agency better-off calculation system on line where we run job broking and for two-thirds of our clients they are not better off on that first job.

  125. Would you mind itemising for us what you would see as the main reasons why people are not better off?
  (Mr Charlesworth) Housing Benefit.

  Ms Buck: Jolly good.

  Chairman: I think that was the answer she was looking for.

Ms Buck

  126. I was not actually searching for that, although it comes up and hits me on the nose every time I look at it. Housing Benefit is an in-work benefit as well. To an extent it is not a very satisfactory one but it is available to working people.
  (Mr Charlesworth) Tracey Proudlock, who is my expert on benefits, has reminded me that it is based on a bread-line system. The loss of Housing Benefit and the potential threat to the home is a big fear factor for so many people.

  127. Can I clarify this then? Obviously, only a minority of people that you are dealing with, and the general public as well, are tenants. The majority of people, even amongst people with disabilities, will be home owners. Is there a financial disincentive that is based on the risk about losing the mortgage protection and is that significant as well?
  (Mr Charlesworth) Absolutely. Home owners are a minority group in our experience. They are not a significant part of the group that currently come forward but they will be longer term if you reach more people. I would say that the same fear is there for that group as it is for housing tenants.

  128. Perhaps Ms Hindle and Mr Nicholl and Mr Hardie might comment on that because my interpretation would be that of the pool of people that perhaps, Ms Hindle, you are dealing with, people who have perhaps had an injury or an illness in their working life rather than someone who had a long-standing or even permanent disability, are more likely to be in that home owner category.
  (Ms Hindle) Yes, they are far more likely to be home owners than possibly the bulk of the population without private insurance. I recognise entirely that our experience is slightly more segmented than the state as a whole. Of course it is, so yes, you are right.

  129. Housing costs we have identified. Is there anything else?
  (Mr Charlesworth) A lot of it is to do with a fear that is not necessarily genuine. A good example of that is that we now have an adviser who came to us as a client originally. He will tell you that he did not even tell his wife for three months that he had been to see us as a client originally because of the fear that he would lose a range of benefits of which housing was the key one. Tax credits are not available to those on £13,000 and above. A lot of the people we deal with who are mental health clients are professionals wanting to get back into the labour market, expecting to earn, if they do so, more than that sum, and that flexibility is not there. Similarly with part-time work, it is excluded unless it is 16 hours-plus. The people who might want to go in on permitted earnings are forced to limit what they can do and try out again because of the fear of losing benefits.

  130. Forgive me. I am going to press you a little bit on this point because your evidence states, "If we are to make real inroads into reducing the number of claimants we must address the significant financial disincentives to work".
  (Mr Charlesworth) Quite.

  131. But what you have just said to me is that a lot of these disincentives are in people's heads.
  (Mr Charlesworth) A lot of them are, but the reality is that for two-thirds of the people they would be worse off using the Benefits Agency calculation.

  132. Because of housing costs?
  (Mr Charlesworth) Partly because of that, or the other way you can look at it is that the working tax credit is not high enough to compensate for any loss of benefits, including housing benefit. There are two ways of approaching that, are there not? You do something about the housing benefit system or you do something about the working tax credit.

  133. Mr Nicholl and Mr Hardie might want to comment on that. What is the answer? More money into the existing system, fundamental structural change, much better coaching and counselling?
  (Mr Nicholl) There are a number of things that need doing. There needs to be a proper transition stage between being on Incapacity Benefit and being in full employment and it has to be a properly structured transition stage. There does have to be something done about Housing Benefit and its impact on people who take up entry level jobs. The other thing that is really critical is that during the transition period people have to be persuaded that they need to think beyond their entry level job because often the first job is the lowest paid job they are going to have. If you are somebody who is making that immediate calculation and saying, "I am going to be £5 a week worse off. Why should I do it?"—and people do worry about £5 a week—one of the things you have to do is persuade them that if they get a job they might temporarily be worse off but they have got to look beyond that and see where they are going to be in four or five years. If they remain on Incapacity Benefit their income level is going to be the same. If they go on to a job their income level may well be higher. It is not just about getting people jobs. It is about moving them up the ladder of prosperity so that they start to get better jobs over time.

Miss Begg

  134. When you get people into work, are you always getting them into paid jobs as employees or do you ever suggest that they should become self-employed?
  (Mr Nicholl) Paid jobs.
  (Mr Charlesworth) Both.

  135. Can you give me examples of some of the self-employed things that you encourage?
  (Mr Charlesworth) We set up self-employed people within construction, within service industries, computer systems and so on, as well as financial advisers. We have had a range.

  136. Are you the only job broker that does that?
  (Mr Charlesworth) No. Job Broker Cymru and West Country Training would also be into that.

Chairman

  137. You have got three minutes left. What is the way forward? You have given us a lot to think about and we are grateful for that, but just in the dying seconds of the meeting, and let me start with Mr Nicholl, what would be the single most significant change if you only had one change to make that would make your role in assisting this process easier?
  (Mr Nicholl) Differentiating between the different groups within Incapacity Benefit.

  138. Is that mainly mental illness versus the physical, to put it crudely, or is that still too crude?
  (Mr Nicholl) That is still slightly too crude. There is the distance that people are from the open labour market that needs to be differentiated. We also have to acknowledge that there are very substantial numbers of people, who frankly there is nothing wrong with, who are on Incapacity Benefit. Unfortunately, we tend to talk about this as an incapacity and disability issue and it hides these very substantial numbers of folk who really are not affected by disability issues because there is nothing wrong with them.
  (Ms Hindle) For me probably the biggest thing that sounds simple is to change the terminology and hence change the mind set. Let us stop talking about incapacity; let us stop talking about what people cannot do and doctors just signing people off sick and not recognising the effect that might have. Look at what they can do. Can they still do their job? What are they capable of, not what are they incapable of? Over time that change of name will change mind set. It will even get to changing employers and discrimination because why would you discriminate against somebody who is capable of things?
  (Mr Charlesworth) Support the programmes that do work. We have not mentioned Access to Work, Work Preparation, all good schemes which work well, as does NDDP when properly delivered, but make it a proper programme, redress the imbalance in the spending to get the kind of result that hopefully we all want. The demand from people with disability to get back into the labour market is undoubtedly there. One and a half million people would love to have a job tomorrow. It is not about people who are defrauding the system. There are people who want to work but the support is not there. That needs a commitment starting at the political level which there has never been in our opinion over the last 50 years.

  Chairman: Thank you. Can I apologise to you again for keeping you waiting while we all went to vote. I hope you have not felt that that was too much of a canter through your evidence. It has been a very stimulating session for the Committee. Thank you for appearing, thank you for your written evidence and thank you also for doing what you do in your own respects. We understand that it is valuable work.





 
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