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Westminster Hall

Tuesday 16 May 2006

[Mr. Bill Olner in the Chair]

Incapacity Benefit (Nottingham)

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Heppell.]

9.30 am

Mr. Graham Allen (Nottingham, North) (Lab): Being officially “incapable” corrodes the confidence and aspirations of the toughest. In Nottingham, 30,000 individuals feel like that every day. We can now do something about it.

Some 18 weeks ago, the Secretary of State for Work and Pensions wrote to me, as he did to many, to let me know that I was one of 100 MPs who have among the highest number of incapacity benefit claimants in their constituencies and what the Government proposed in their Green Paper. I am sure that he wrote also to my hon. Friend the Member for Nottingham, East(Mr. Heppell). My hon. Friend is here today, but his Whip’s duties prevent him from speaking. However, I know that he feels strongly about getting people off incapacity benefit, as does my hon. Friend the Member for Nottingham, South (Alan Simpson).

As the chair of One Nottingham, our revived local strategic partnership, I know that it is keen to seize the opportunities to be offered by the Green Paper. Individual partners in my city have already done some tremendous work. The city council, Jobcentre Plus, the greater Nottingham partnership, the learning and skills council, the voluntary sector and many others have introduced innovative and important projects.

Those partners and others need to build on that work, taking their efforts to the level necessary to meet the magnitude of the challenge to be set by the Government, doing so not from a bureaucratic perspective but from the perspective of the incapacity benefit claimant. We are doing so in close co-operation with the skills board, one of the five theme partnerships that work closely with One Nottingham. With the lowest rate in the United Kingdom of level 2 achievement, and the UK’s worst reading levels atage 11, they know the problems that Nottingham faces. They also know that long-term preventive measures in education and skills are needed to complement the remedial measures necessary to deal with incapacity benefit.

It is One Nottingham’s intention to respond promptly when the Government ask for expressions of interest in creating a city strategy on incapacity benefit. Local partnerships deliver. They have done so in Manchester, where £1.75 million of neighbourhood renewal funds have been used on the highly successful stepping stones project, and in Edinburgh, where the equivalent of the local strategic partnership has led innovation on incapacity benefit.

One Nottingham will allow unique access to all the partners in our city, including organisations dealing with crime, health, education and liveability as well as
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skills. We also intend working closely with our conurbation and county partners. To take matters forward, a consortium will be created that will include key local and national players. It will pool money, create new flexibilities, and push back the boundaries of devolution. Beyond that, it will work out the most effective structures for execution and delivery, which can be monitored and held to account. A lot of planning has already taken place. During the past three months, our local area agreement, our floor target action plan and our community strategy have converged to present an aligned and coherent set of targets, which can be the foundation of our city strategy.

The local area agreement sets a target for the reduction in the number of incapacity benefit clients over three years. The target will move from the current 65 per cent. of people in our city in employment to80 per cent. The target reductions for invalidity benefit claimants in our city have been set at 1,129 this year, 2,258 next year and 3,387 the year after that. That may sound ambitious, but for Nottingham to reach its share of the Government’s target of a 1 million reduction will require 6,425 people to leave our incapacity benefit register. That is another indication of the efforts that will be needed to take us to a different dimension—more even than what has already been done.

Our local area agreement stretch targets already link to specific evidence-based programmes on training, child care and health. That valuable pre-planning will obviously sharpen as our expression of interest is prepared, and if it is successful in June, we shall want our consortium to be up and delivering before the end of the year.

We are delighted that, within days of the launch of the Green Paper, the Secretary of State accepted my invitation to come to Nottingham and give the keynote address at our One Nottingham conference on building a city strategy for incapacity benefit. Ironically—or appropriately—that conference was held in the Aspley ward in my constituency, where one in eight people is on incapacity benefit and 56 per cent. of people have no qualifications whatever. It is the ward with the lowest entry rates into higher education among the 18-20 age group in the whole of the UK. It was appropriate and welcome that the Secretary of State took the message to a heartland area that is so obviously in need of the strategy.

That was followed up on 31 March by a broad-based series of workshops involving officials from the Department for Work and Pensions and many local partners, which began thinking through what shape our strategy should take. That work continued and last Tuesday—9 May—a delegation of partners from One Nottingham was able to play a full part in the DWP’s stakeholder event on incapacity benefit in London. We were pleased to welcome the new Minister; it was probably his first official engagement after the reshuffle. He made a telling contribution at that event, and I am sure that he will do so today, too. The Secretary of State said:

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One Nottingham, with its partners, is ready to submit that expression of interest. It is a big task, but we have proved that such big tasks can be done; an example is unemployment. In Nottingham, unemployment has fallen by 2,700 to 11,300—that is according to the International Labour Organisation measure—since 1997. That is not just a statistic; it means that 2,700 individuals and their families now have self-respect and a better quality of life, and are now contributing to society, rather than feeling that they are being a drain or burden on it.

However, we must do more, especially to address that forgotten group of those trapped on incapacity benefit. There are 17,600 IB claimants in Nottingham, more than half—53 per cent.—of whom have been on IB for more than five years. The excellent district manager of Jobcentre Plus told me that a person who has been on incapacity benefit for two years or more is more likely to die or retire than find work. That is a damning conclusion from a local expert professional. We will do something about that. Some 7,700 of that number have mental problems, and I will address those difficulties later. In addition, there are 6,820 lone parents and 10,200 older workers on related benefits. Reaching and helping those groups will be the mission of our city strategy.

On top of the human price that we pay there is also financial waste. Around £5.6 million is paid in incapacity benefit in Nottingham alone each month. Add to that housing and council tax benefit and forgone income tax revenue from people who are not working, and the bill mounts up massively. We are interested to explore the incentives for recyclingany savings made into more incapacity benefit programmes. I am pleased that the Government floated that as a possibility; we need to explore that carefully.

The savings in incapacity benefit spending need to be retained locally—not nationally or even regionally—so that local partners can see something for their effort and investment of energy. The money needs to be reinvested locally to expand the city strategy even further, so that we can get the next tranche of people nearer to work. It needs to be retained locally because it needs to flex and we need to be sensitive to the local context and initiatives, rather than imposing a top-down model.

The average IB beneficiary receives the king’s ransom of £83.86 a week. For those who say that the higher levels of benefit paid to long-term IB recipients have encouraged people to stay on IB, let me point out that in Nottingham 42 per cent. of all IB claimants are not getting the higher rates. They did not have sufficient national insurance and so have to depend on income support. That group has been increasing while the number of IB recipients has been decreasing. More people in Nottingham—7,300—have to claim income support because they did not have sufficient national insurance than are receiving the long-termIB rate. There are 7,200 such people.

In households in which no one goes to work, both money and self-esteem can be in short supply. A lack of positive role models can result in generation after generation getting stuck in the benefits trap. Getting people on to IB and its predecessors—invalidity benefit
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and sickness benefit—was sometimes seen as a way to mask soaring unemployment levels. People in Nottingham—in the constituency of my hon. Friend the Member for Nottingham, East, in my own and in Nottingham, South—have paid a heavy price for that policy failure over many years. We are delighted that that is now being seriously addressed by the Government.

One Nottingham, which was created to help in deprived areas, sees the clear link between benefit dependence and hardship. It was shown in the figures that I received from the Department for Work and Pensions all those months ago that half of the most severe pockets of deprivation in Britain are in the 100 constituencies with the largest number of IB claimants. If we tackle incapacity benefit, we tackle poverty. People in my city do not accept a system that perpetuates hardship and denies people the opportunity to better their lives by accessing the world of work, and we want to do something about it. The vast majority of people who start receiving IB want to go back into work. That has been proven in survey after survey as well as by anecdotal experience, which I am sure hon. Members on both sides of the House share. Our city strategy will provide those people with tailor-made, local help to go back into work.

The Government have made great progress since 1997, reducing the number of new claimants by one third and turning round the massive rise that took place when numbers trebled between 1979 and 1997. The Government have also put the pathways to work programme into every core city in the country, and those programmes have piloted a new approach that offers increased support to IB claimants in return for an increased responsibility to do what they can to return to work. By 2008, IB claimants in Nottingham will, for the first time, be able to benefit from the pathways to work programme, which is being rolled out nationally. It was pioneered successfully in our nearest city, Derby.

One Nottingham obviously has an interest in the impact that IB claimants can have on regeneration—for example, in mentoring youngsters, teaching literacy or helping to reduce antisocial behaviour. If just one in 10 IB claimants gets back to some form of activity in our city, there will be 3,000 extra brains and pairs of hands helping to regenerate our city. We want to build on the work of the voluntary and community sector, Enable and the local learning and skills council to create volunteering experience as a route to work. Volunteering is a safe place in which to build up confidence, self-esteem, experience, skills, the work habit and discipline. It is, in effect, work experience, which looks good on a CV, and the volunteers realise that if they can work for free, they can work for money. Most areas in the country have a volunteer centre accredited by the national body, Volunteering England, which operates like an old-style job centre and which the consortium would look to develop in our city.

Although the new deal for disabled people has shown increased success, with job starts for incapacity benefit claimants in Nottingham increasing from 120 in 2002 to 390 in 2005, and 52 per cent. of all those registering for the new deal for disabled people in Nottingham starting work in 2005—a very good record indeed—the scale of the activity is not large enough to
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do more than scratch the surface. Our consortium will need to examine how we can use outside providers, such as the Shaw Trust, Working Links, Work Directions and many others, to work alongside local providers to liberate the talent and potential in the disabled people of Nottingham. One Nottingham and our partners will never advocate forcing people with physical and mental difficulties back into work. That is not appropriate. However, we will not shrink from using our city strategy to challenge the fatalistic culture of storing people on incapacity benefit without offering them ways forward.

When we receive documentation relating to an expression of interest we will need to think seriously about governance and how to take the consortium forward. How the consortium works and how it is structured will be key. None of the local partners will have dealt with central government on a task of such size and scope. Passive representation will not do. Each consortium member must bring revenues to the pool and take responsibility for specific targeted and measurable activity. A small full-time core team is likely to be needed, under its own chief executive, to measure achievement and provide a forum for day-to-day learning and interaction of the many providers that we will need if we are to make an impact on the problem.

One of the key early decisions of the consortium will be how to franchise and commission our 6,000 share of the 1 million national target. That represents more than 700 incapacity benefit claimants whom we wish to get off the register in each of Nottingham’s nine area committees, should our consortium choose to break the task down at that level, so that it lies alongside the new developments taking place on neighbourhood management. Even that work will need to be further sub-divided into target groups, such as single parents, older workers and those with mental health issues. All the low-hanging fruit has been picked, so long-term relationships in each locality have to be built between providers and commissioners around workable and realistic delivery plans.

I hope that I will not disappoint the Minister in saying that I do not want a big blast of figures next year that make him feel good about how well the programme has been implemented early. I want a steady growth in those figures, rather than a quick fix that peters out, and I am sure that he feels the same.

We have been incredibly excited by the idea of taking control of the incapacity benefit challenge locally. We must now enter the uncomfortable phase of reality checking, being honest about local capacity and allocating responsibilities and accountabilities that will stay the course. Our consortium will tackle a number of key issues, the first of which is the incapacity benefit routine.

It is difficult to leave the security of incapacity benefit payments for regular work payments. A bad back, depression or stress can often recur. Members of a Jobcentre Plus focus group recently mentioned their suspicion that Jobcentre Plus wants only to talk to them to take away their benefit. They fear the transition to work and the impact on, for example, tax credits, housing benefit and final incapacity benefit payments. If the employment does not work out, they have the reverse situation. One suggestion that came
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out of the consultation in Nottingham is that we should look to retain stability by, for example, keeping housing benefit and free prescriptions for a transitional period. We need to reward people financially for working by making the incentive great enough to overcome their fear of moving from incapacity benefit and reassuring them that we will take every possible step to ensure that the transition is easy and smooth and not something to fear.

The second issue is flexibility. When we first went to see the Prime Minister and the then Secretary of State at No. 10, it was encouraging to hear over and over again that the Department and the Government wanted to be as flexible and open as possible on ideas about extending and changing some of the rules that inhibit those on incapacity benefit in getting back into work. Some excellent flexibilities already exist, and incapacity benefit claimants can earn up to £81 per week for one year, although many do not know that or do not know how to take advantage of the arrangements. A locally based city strategy will, I hope, be much better placed to get that information to claimants and be sensitive to their needs.

Giving us real authority to act locally will mean that our consortium is able to judge how resources can best be applied by sector and by area. The problems in the white working-class estates of outer-city Nottingham that I represent will, of course, differ from those in the inner-city, multi-ethnic areas of mixed housing tenure that are more typical of the constituency represented by my hon. Friend the Member for Nottingham, East. We will need to be sensitive to such problems, and by creating city-based strategies with a lot of flexibility, the Government will allow us to tackle them all at the same time.

I must flag up for the Minister the fact that the move by Jobcentre Plus towards regional contracting has taken away local district managers’ ability to invest in and purchase what they know is needed. The Department for Work and Pensions could demonstrate flexibility by looking again at whether it can let the local Jobcentre Plus manager have more control over his or her budget. I do not expect the Minister to answer that question today, but if he has any thoughts about it and cares to write to me, that will be most welcome.

We need to work out how those with short-term or treatable incapacity spend the period of their rehabilitation on incapacity benefit and then come off it once they are fit again. We need to offer a menu to help reintegrate these people back into work and we need to plan flexibility and discretion in relation to incapacity benefit exit. The individual’s variability of performance over time is also a critical issue, particularly where their mental health is involved and they suffer, for example, from bipolar illness. We need to use reasonable adjustments. We need to make use of volunteering and permitted work, but there should also be also scope for social firms and charities to pioneer alternatives. The Government have offered flexibilities, and the Minister knows that we will test that offer.

The third issue is re-skilling. In the case of longer-term injury, it is easy for claimants to find their skills out of date. A year out of the information technology industry, for example, can be a long time. Even outside fast-moving technology industries, the
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pace of change is increasing year on year. Skills upgrades need to be created by all our partners. We need to break down the artificial barriers and silos from top to bottom, including in central and local institutions.

If we have our own city strategy, there will be nobody to blame. If we cannot get deals done locally, we will not be able to point the finger at a convenient Minister and say, “If only they did this” or, “If only they did that”. If the responsibility is ours, we will need to face up to things locally and strike deals. Where deals cannot be made, we will come to the Minister and ask for the barriers to be removed, but the onus will be very much on us.

The rules must be made crystal clear and ensure, for example, that when an IB claimant follows an agreed training and further education programme they do not lose their benefit. Further education institutions that reach out to claimants who are long out of education should be rewarded and not penalised, for example, by Ofsted, since success rates might be low. I have mentioned that to the Minister in private. Where FE institutions fulfil their educational mission to reach out to those without qualifications, that should be understood in Ofsted’s marking and weighting system. Ofsted should not say that such people should attain at the same level as those who are cherry-picked by the establishments, often against those establishments’ judgment and drive. However, when people are marked down, colleges have to take those unenviable decisions.

Fourthly, there is a need to build bridges to work. I have alluded a little to that. It is difficult for those who have never been on benefits to appreciate how it feels. I have had a brief spell of unemployment, and even though I knew I had a job coming up at some point in the future it was completely debilitating. It knocks a person’s confidence sideways in a way that nothing else can. It destroys self-esteem, it is demoralising and it can often evolve into depression and even clinical depression. It is easy for someone to believe that because they are claiming incapacity benefit, they are generally incapable of any work or any contribution, or of being any use to society or their immediate family. That can happen not just if someone has an ailment or injury but if they have wider mental problems.

Morale and motivation needs to be revived. Effective person-to-person contact has to be ensured and, above all, our Nottingham approach will recognise thatIB claimants should have an important say in their road map to a better future. We will also ensure that our programmes meet their needs rather than just fuelling local or national bureaucracies.

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