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When the Minister winds up, will he confirm my understanding that it will not be possible to roll out the new local housing allowances to people who are in existing tenancies? There are practical and technical reasons for that. There is something of a double standard in not rolling out these arrangements to the social sector, and in particular to local authority tenants, where the landlord would be both the payer of the benefit and the receiver of the rent. From a basic economics point of view, there must inevitably be a reaction by landlords to the creation of greater risk for them in the marketplace. If a landlord who has been used to receiving a rent cheque reliably once a fortnight from a local authority, virtually a gilt-edged payment, is now to be invited to receive the rent from the tenant directly when and as he is able to make that payment, over time a premium will be demanded for taking on such tenants. Again, that will be to the disadvantage of the Exchequer if ultimately a two-tier market is created, and a marketplace that at the moment is regarded as attractive by landlords of housing benefit
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tenants because of the method of payment becomes an unattractive one with premiums and perhaps higher deposits demanded.

We remain deeply sceptical about the housing benefit sanctions for antisocial behaviour. We support entirely the taking of the toughest possible stance with those who are guilty of antisocial behaviour, but we have been here before, and the question is being asked whether this is a real threat or just a headline gimmick. If the threat of eviction has failed to change someone’s behaviour, will the threat of losing their housing benefit make the difference? The suggestion that has been put to me is that it is most unlikely in those circumstances that the policy would be effective. Therefore, I am open-minded, but at this stage I am sceptical.

Mr. Love: Is the hon. Gentleman concerned that families will effectively be put out on the street and that children will be taken into care?

Mr. Hammond: That is one of the principal concerns. The Secretary of State has addressed that point and is well aware of the concern. He is confident that the arrangements will ensure that that does not happen, although, again, it is not clear how that will be guaranteed.

I want the Minister for Employment and Welfare Reform to clarify one final point in his winding-up speech. At last Monday’s Second Reading of the Compensation Bill, the Under-Secretary of State for Constitutional Affairs, the hon. Member for Lewisham, East (Bridget Prentice), suggested that this Bill might be an appropriate place to address issues in respect of asbestos-related diseases that had arisen in the debate on that Bill, which would go beyond what is already in clauses 55 and 56. It would help if the Minister were to tell us whether the Government intend to go further in that area in this Bill or whether the Under-Secretary did not intend to give that hint.

We support the Bill’s key objectives to get 1 million people off incapacity benefit and 300,000 lone parents and 1 million older workers back into the workplace. We recognise that that is an enormously complex area and that the detail of the Bill will need to be scrutinised along with the detail of the supporting programme and the draft regulations, which will be laid in due course.

We believe that the laudable objective of tackling poverty and social exclusion by reintegrating people into the work force through an increase in off-flow will most quickly be achieved by a greater transfer of risk to the private and voluntary sector, thus overcoming the resource constraints, which hon. Members have mentioned, and allowing the benefits to flow as widely and as quickly as possible. Coupled with that, we believe that there needs to be a new focus on early intervention during the statutory sick pay period to try to ensure that people in work stay in the work force, even where their current work is no longer appropriate for them.

I have not addressed many specific concerns which I know that other hon. Members will raise in the debate. We will listen carefully to what is said and genuinely look forward to a constructive experience in
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Committee. We will certainly not oppose the Second Reading of the Bill tonight, so it can go forward in Committee.

Several hon. Members rose—

Madam Deputy Speaker (Sylvia Heal): Order. I remind hon. Members that Mr. Speaker has imposed a 12-minute limit on speeches by Back Benchers.

6.12 pm

Hugh Bayley (City of York) (Lab): Since 1997, Labour’s macro-economic policies, support for flexible labour markets and welfare to work incentives have guaranteed faster growth in this country than across the EU as a whole, created 2.5 million additional jobs and reduced employment to less than 1 million. That success has brought tangible improvements to the welfare of millions of employees and their families, but those improvements have not been shared by sick and disabled people of working age.

In my intervention on the hon. Member for Runnymede and Weybridge (Mr. Hammond), I mentioned that the number of people of working age who were not working and who were claiming ill-health benefits quadrupled when his party was in power. Labour’s achievement has been to stabilise those figures. In our first term, the number of people on incapacity benefit decreased marginally from 2.4 million to 2.263 million. In the second term, the figure rose marginally, but it was still slightly below the level that we inherited when we came to power. However, it is clear that stabilising the figures is not enough. More needs to be done and I therefore welcome the Bill.

I was the Minister responsible for disability benefits when the Welfare Reform and Pensions Act 1999 was before the House. I do not need to remind hon. Members who were in the House at the time that the Bill had a rocky ride.

Justine Greening (Putney) (Con): I apologise for returning to the hon. Gentleman’s earlier point about stabilising the figures, but I have been looking for a statistic. Is he aware that, since 1997, the number of young people under 25 claiming incapacity benefit has risen by 71 per cent. to 170,200? Does he agree that that statistic is particularly concerning?

Hugh Bayley: The hon. Lady should not pick among the figures. Any rise is a concern, and any reduction—there have been reductions among other age groups—is a benefit. The demonstrable difference between the Labour party’s time in power and when the Conservative party was in power is that the number of people claiming incapacity benefit quadrupled under the Conservatives. Overall, the Labour Government have stabilised the figures, but we need to change that and get the numbers down. When the Conservative party came to power, 600,000 people were on invalidity benefit, so it must be possible to have fewer than 2.4 million people on incapacity benefit now.

When the 1999 Act was before the House, two points attracted criticism. The first concerned the changes to the contribution conditions for incapacity benefit and the second concerned the reduction in the value of
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incapacity benefit for those claimants who had occupational pensions. The Government responded to those criticisms by amending the legislation, but the controversy drew attention away from the Government strategy to increase benefits for severely disabled people who could not work and to start to provide support for people on incapacity benefit to return to work through the new deal for disabled people.

As many hon. Members have acknowledged, the Government have set an ambitious target to reduce by 1 million the number of people claiming incapacity benefit by enabling those people to get back into work. Having set such an ambitious target, I do not want the Government to make the same mistake now as we did in 1999 by giving the impression of narrowing the eligibility gateway to incapacity benefit instead of enabling people to overcome the limitations imposed by illness or disability in order to remain in work or to return to work.

The Government have demonstrated through the new deal for disabled people and, more recently, through pathways to work that, with appropriate help and support, people on incapacity benefit can return to work and, importantly, cope with work when they get there. Simply enabling people to get a job is not enough, because one must give them support to enable them to make a success of their jobs. Through the new deals, some 75,000 disabled people have come off incapacity benefits and returned to work.

In the UK, we reap the benefits of a flexible labour market so far as overall employment is concerned, but we still have an inflexible labour market when it comes to employment opportunities for sick and disabled people. Compared with other OECD countries, we have an acute shortage of occupational health services. We also have a rigid culture among both employers and employees that either one is well and working or one is limited by illness or disability, and off work temporarily or permanently.

As my hon. Friend the Member for Glasgow, North-West (John Robertson) said, far too many GPs still sign sick notes without recognising the cost or that work, perhaps with reduced hours or changed responsibilities, may aid recovery. We must ensure that welfare forms an important part of GPs’ initial training and postgraduate education. Perhaps we should examine ways to reward GPs who use sick notes wisely in the same way as we reward GPs who prescribe rationally and wisely.

Dr. Ian Gibson (Norwich, North) (Lab): My hon. Friend will know that an important part of the assessment is that a doctor appointed by the Secretary of State will be chosen to help the decision maker to decide whether a person no longer has the capacity to work. How will those doctors be chosen and how will we know that they are doing this with some understanding at different stages of the process?

Hugh Bayley: My hon. Friend raises an important point. When I became the Minister with those responsibilities, there was no specific training in disability assessment for such doctors. The Royal College of Physicians introduced a postgraduate diploma in disability assessment medicine to train them and it was intended to ensure over time that all doctors
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working for the Department for Work and Pensions would be trained in disability management. That is an extremely important part of the package.

There is a shortage of vocational rehabilitation services, including medical and psychological services and practical help with overcoming functional impairments. A study in 14 OECD countries, “Transforming Disability into Ability”, which was published in 2003, compared the number of people who each year go through vocational rehabilitation with the number flowing on to long-term incapacity benefits. In Norway, Denmark and Korea, more people get access to vocational rehabilitation than go on to incapacity benefits. In Germany, Sweden, the Netherlands and the United States, about 50 per cent. of the number who go on to incapacity benefits get access to rehabilitation services. In Switzerland, Australia and Portugal, the figure is some 20 to 30 per cent. In the UK, it is still less than 5 per cent. We are second lowest of the 14 OECD states in the study.

More revealingly, the study calculated that spending on vocational rehabilitation as a percentage of spending on disability benefits varies enormously. In Norway, Germany, Sweden, Switzerland, Portugal, Australia and Belgium, spending on rehabilitation is between 70 and 100 per cent. of spending on incapacity benefits. In Denmark, Korea and the United States, the figure is about 50 per cent. In the UK, along with Poland, Austria and the Netherlands, we spend less than 20 per cent. of the amount spent on benefits for long-term sick and disabled people on rehabilitation. It is therefore not surprising that fewer people are rehabilitated in the UK or that the number of incapacity benefit claimants here is higher than the number of people claiming similar benefits in most other OECD countries. It is important to complement the measures in the Bill by substantially increasing the resources available for vocational rehabilitation. That would gain widespread support from organisations representing disabled people.

Within the national health service, there has been a substantial increase in resources for rehabilitation. However, its priority is to rehabilitate hospital patients to the point at which it is possible to discharge them so that they may return home, and not necessarily to continue the rehabilitation to the point where they can return to work. The NHS needs to earmark more resources for vocational rehabilitation.

The Government should consider creating financial incentives to reward successful cases of rehabilitation. As the hon. Member for Runnymede and Weybridge said, huge savings accrue to the DWP and the Government when people come off incapacity benefit. Those savings should be recycled to pay for more people to be rehabilitated.

There are lessons to be learned from abroad, although not necessarily from the Netherlands, where, as my hon. Friend the Member for Bradford, North (Mr. Rooney) pointed out, there is an incentive for employers to rehabilitate their staff because they carry the cost of somebody being off work for the first two years of absence. That is not the situation in this country. We could perhaps learn a better lesson from Germany or Switzerland, where, under the Bismarck
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insurance scheme, employers pay into a common fund that gives cover for health, rehabilitation and pensions. The German phrase for such funds is “Rehabilitation vor Rente”—“rehabilitation before pension”. Those insurance funds have an incentive to rehabilitate, because the person then goes back to work and starts paying contributions again. If the scheme fails to rehabilitate, it ends up paying a pension for life.

There have been similar experiments in Sweden, where pilots have merged benefits and health budgets at local level to pass benefits savings on to health care providers when rehabilitation successfully gets people back to work. I should like our Government to adopt a similar approach. Perhaps a simple way to pilot it would be to give a health and vocational rehabilitation purchasing budget to the managers of the pathways into work pilots. If the NHS does not have the incentive to rehabilitate to the point at which people get back to work, we need to create an incentive for the DWP to reap the financial benefits when somebody is successfully rehabilitated and returned to work.

When the Conservatives were in power and unemployment broke the 3 million barrier for the second time, a Conservative Chancellor of the Exchequer said that, sadly, there was no alternative. The record of this Labour Government in their first two terms has shown that there is an alternative. For fit people of working age, unemployment has fallen dramatically to fewer than 1 million. That is something that this Labour Government will be remembered for. The challenge for the third term is to show that there is an alternative for people on long-term sickness and incapacity benefits. The Bill shows the way forward, but it needs to be complemented by greater investment in rehabilitation services.

6.26 pm

Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): It is a great pleasure to follow the hon. Member for City of York (Hugh Bayley). I agree with the stress that he puts on the need for more emphasis on rehabilitation in the training of doctors and a greater sense of awareness, particularly among GPs, of the importance of work and occupational health as a route to dealing with medical conditions. The medical practice in Camden in north London where the idea of having an employment adviser within the practice has been piloted has received visits from all the Front Benchers present, and it is probably getting sick of politicians trooping through the place. The lesson to be learned is that such a measure can have a great deal of success in helping people back to work, as well as reducing medical bills.

This debate has been delayed for far too long. The fact that more than 2.5 million people remain on incapacity benefit is unacceptable, and it is a disgrace that that group has been so long neglected by Governments of both parties.

The Minister will be pleased to hear that we strongly agree with the principles behind this reform—principally, that society should play a much more active role in enabling the sick and disabled to take the opportunities afforded by participation in the labour market. That objective is vital not only for the individuals concerned but for society as a whole. As has
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been said, work is the best route out of poverty, and we all benefit, as a society, from higher levels of economic activity.

While supporting the principle of welfare reform and many of the measures in the Bill, we are concerned because the Government’s proposals are short on detail, because there is a shortage of funding in some respects, and because they rely for delivery on a Department that is under massive pressure. Liberals have long believed that freedom is curtailed by poverty and disadvantage. Today, my right hon. and learned Friend the Member for North-East Fife (Sir Menzies Campbell) again made tackling poverty a top priority for Liberal Democrats. Welfare reform is central to that objective.

Despite the long wait, the Bill gives every impression of being rushed in some respects. Huge chunks of important policy detail are relegated to secondary legislation, and by leaving Second Reading until just before the recess, the Minister gives himself time to work out the detail in many of those areas. The carry-over procedure, which will be the subject of a later motion, was neither designed as a general catch-all to allow Departments to delay legislation nor to apply to Bills that had not been subject to pre-legislative scrutiny. If the carry-over motion is to have all-party support—it was intended that such motions should—the Minister for Employment and Welfare Reform must provide a specific justification for using it in the case that we are considering. I hope that he will do that in his winding-up speech.

I hope that the Minister can also give a clear assurance, linked to my previous point, that sufficient time will be allocated in Committee to allow full scrutiny of the Bill’s important provisions. That will require the Government to publish in draft the key statutory instruments—the Minister undertook to do that in answer to oral questions—but I hope that he will include those that deal with the level of benefit, rules of entitlement to benefit, the capability assessment and the other proposed medical assessments, conditionality, the housing benefit reform and sanctions.

The Bill proposes a framework of additional responsibilities for claimants, but that can be fair only if the state and employers take their share of responsibility. As the Disability Rights Commission said:

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