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The evaluation of pathways to work shows that the scheme has markedly improved employment outcomes. It incorporates the individually focused approach that Liberal Democrats have long advocated, and we welcome its success. However, unless the roll-out of the scheme is properly funded and coherently planned, I have grave concerns about whether it can fulfil all the expectations. The Government have allocated £360 million, as the Secretary of State said, to rolling out pathways to work. However, we still do not know exactly how much of the figure will be spent on doing that. Will the Minister give us more detail today? Will he tell us how much money will be spent on the
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new computer system needed to administer the new employment and support allowance benefit?

Even if all the £360 million were spent on rolling out pathways to work, our calculations, based on the amounts that have been spent in the pilot areas, suggest that the figure is more than £250 million short simply for dealing with the needs of new claimants. If the objective were to support all eligible claimants, the welfare black hole would be even greater. Given the cuts at Jobcentre Plus, it is also unclear whether there will be sufficient well-trained personal advisers, let alone extra resources from the Treasury, to deliver the scheme.

Although the Secretary of State did not mention the matter, the newspapers report that the Government have tacitly admitted that the funds are inadequate by suggesting that the support through pathways to work should be targeted at those with children. Will the Minister confirm whether that is the Government’s intention?

The Government have made it clear that they want to target pathways resources in other ways. For example, the city strategy is a welcome attempt to tackle concentrations of incapacity benefit claims by joining up resources in specific cities. However, there is a worrying neglect of the challenging issue of helping claimants in rural and remote areas back to work, not to mention the pockets of deprivation found in rural towns and villages. I hope that the Minister can deal with that point, which was also made in an earlier intervention.

It is worth pointing out that the success of pathways to work has not been even for all groups. The Department-funded evaluation, which the Institute for Fiscal Studies carried out, found no statistically significant improvement for people with mental ill health as the primary reason for their claim. Age Concern said that the scheme had been much less successful for the over-50s. Better support for both groups is vital if welfare reform is to be a success.

The voluntary and private sectors can be highly successful in getting people back to work. In some ways and some places, they have been more successful than Jobcentre Plus. I highlight the work of the SHIRLIE project in Inverness, in my constituency. It helps especially those with learning disabilities back to work. The working neighbourhoods project in Parkhead in Glasgow has received several visits from politicians, but has also been successful in targeting not only those on incapacity benefit but a range of disadvantaged groups, through one joined-up project.

However, it is important to ask how the experience of the voluntary sector will be used throughout the country. The current plan is a bit of a dog’s breakfast, with Jobcentre Plus delivering 40 per cent. of provision and the voluntary and private sectors being used for the remaining 60 per cent. If the voluntary sector is as effective as the Government say it is—we agree about that—why will their expertise not be on offer throughout the country?

Work-related activity must reflect the nature of a person’s impairment. Specialist as well as more local providers should therefore be contracted to help specific client groups. There should not simply be big contracts with big providers.

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In dealing with the needs of people with mental health problems, we need to ensure that there are enough trained therapists throughout the UK, as Lord Layard, for example, proposed. Given the five-year training for many of those roles, what plans have the Government to train people to fill the roles that will be needed if welfare-to-work support is to be properly available for people whose first reason for claiming benefit is mental ill health?

In proposing the new employment and support allowance, the Government have missed an opportunity to simplify our enormously complex benefits system. They have also missed an opportunity to tackle the poverty and low income traps that remain far too prevalent in the benefit system, not least in the tapers for housing benefit, council tax benefit and income disregards. There is an opportunity to unify the system. The income disregard is currently a great deal smaller than that for incapacity benefit. That means that although the income disregard for incapacity benefit may encourage people to try out work for a few hours a week, they then get caught in the housing benefit trap, which leads to their losing benefit and acts as a strong disincentive to taking work.

Will those who receive the income-related employment and support allowance, who would previously probably have been entitled to income support, also be entitled to passported benefits—for example, free NHS prescriptions and dental treatment, free school meals, funeral expenses and so on? That is important for many claimants. Unless the Minister can clarify the matter, there may cases of the new benefit leaving people worse off.

Will the Minister also explain why employment and support allowance, once decided, is not to be backdated to the start of the claim? Not doing that will cause serious problems for some people, especially those who leave work or statutory sick pay, or younger claimants who will be penalised through the reduced rate that applies in the early phase of the benefit.

I want to consider the proposed medical assessment process. The incapacity benefit medical assessment desperately needs reform. It is subject to persistent concerns about unfairness and poor decision making, especially about mental health. Some 50 per cent. of appeals are granted. A working group is considering improving the assessment, and I welcome the Secretary of State’s commitment to ensuring that more detail is available before the Committee discusses the matter. It is vital for the Government to get it right. The Royal College of Psychiatrists want rigorous testing and evaluation of the new assessment system for those with mental health conditions. In a written answer, the Minister suggested that some sort of testing, but not a formal piloting process, will take place. Will he explain exactly how the new assessment will be tested?

John Robertson: Does the hon. Gentleman agree that there should be rigorous testing of GPs and the way in which they examine some of their patients to whom they give sick lines so readily?

Danny Alexander: The hon. Gentleman makes an important point, which the Minister should address.
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There is also a problem with appeals. Roughly 50 per cent. of GPs do not reply to requests for information for the first medical assessment. It is only when the appeal phase is reached, and the GP then provides information, that the appeal is successful. There may be a link, which the Government should explore, between those factors.

Mr. Weir: Does the hon. Gentleman accept that one of the problems with the assessment process is that many people who go for an assessment feel that the person conducting it does not have sufficient knowledge of the specific condition from which they suffer? If we are to make changes, it is important to ensure that all those who conduct assessments have sufficient knowledge of the person or condition that they assess.

Danny Alexander: I agree. The hon. Gentleman makes an important point. It is a common complaint that the test takes into account someone’s condition only on that specific day. The new test needs to deal better at dealing with fluctuating conditions and progressive conditions, such as multiple sclerosis.

Mr. Philip Hammond: There seems to be some confusion about whether the new personal capability assessments are to be piloted. When I mentioned the matter earlier the Secretary of State appeared to suggest that they would not, and that there would be testing rather than piloting. According to my Library briefing, the Department’s response to the Select Committee report states, on page 8:

Perhaps the hon. Gentleman would care to comment on that.

Danny Alexander: I have already expressed the view that this proposal should be subject to rigorous piloting. I hope that in the Minister’s response—

The Minister for Employment and Welfare Reform (Mr. Jim Murphy) rose—

Danny Alexander: I shall give way to the Minister, so that he can tell us now.

Mr. Murphy: I am sorry for intervening on the hon. Gentleman, because I know that many hon. Members wish to participate in the debate, but I want to clarify the confusion. It is our intention that once the review has concluded in September, we will run both systems in parallel with each other to ensure that proper testing takes place. Whether we call that a dummy run or piloting, it will be an effective way of ascertaining whether we have got the new system absolutely right. We shall compare it with the current assessment of existing cases.

Danny Alexander: I am grateful to the Minister for clarifying that point— [ Interruption. ] However, my hon. Friend the Member for Somerton and Frome (Mr. Heath) has just suggested from a sedentary
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position that it is possible for both systems to be wrong at the same time. The Minister’s plan is not necessarily a guarantee of success—

John Robertson: They could both be right.

Danny Alexander: They could, but I shall certainly be keen to see a lot more details of the testing that the Government have in mind. Perhaps the Minister will say more about that when he winds up the debate.

It is also important to understand how the new capability assessment relates to the proposed work-related health-focused assessments. If only those on the work-related activity premium are to be subjected to the latter, but the two assessments are supposed to take place at the same time—as it says in the explanatory notes—how will it be decided whether it is appropriate for someone to move on to the work-related health-focused assessment at stage two? Will that decision be taken on the day, or will they be invited back?

It will be disappointing if, as has been hinted, the new assessment is still to be based purely on a medical model of illness and disability. A test that can take account of psycho-social factors and the barriers that disabled people face would give fairer outcomes. The Government recognised in their Green Paper that the term “personal capacity assessment” had negative connotations. However, so does a test for “limited capability”. If the tests are to be taken together, they should be given a different name, such as the labour market disadvantage test. That would signpost a different approach, focused on identifying impairment-related barriers to work. I hope that the Government will consider that suggestion.

I want to turn now to the conditionality arrangements in the Bill. The principle of responsibility is an essential part of liberalism. Provided that comprehensive support is available to help individuals to get back to work, and appropriate safeguards are in place to protect the most vulnerable, the idea that people should take responsibility for engaging with the available support is one that we encourage. Indeed, it must surely be a central objective of policy to reach a position where disabled people are supported to the extent that they can play their role as full and active citizens, with all the rights and responsibilities that that entails.

However, we have some concerns about the conditionality regime as it is proposed in the Bill. Conditionality will apply not only to engaging with support through work-focused interviews, which we support, but to work-focused activity and, according to the Bill, to taking part in additional work-focused health-related assessments—although the Secretary of State suggested in response to my intervention that the Government had now dropped that plan, which sounds quite sensible.

Pathways to work will need much higher investment if the balance between the quality of support and the personal responsibility of the claimant is to be fair. That is particularly important if the receipt of benefit is to be conditional on work-related activity. Nor, in the Government’s proposals, is there any limit to the period for which conditionality will apply. If someone has struggled to enter the labour market for a long time without success, despite benefiting from the full range
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of support on offer, should they really be forced to continue to take part in fruitless activity?

By leaving the details entirely to secondary legislation, the Government are allowing the possibility that a less compassionate Government—or, indeed, the present Government in one of their less compassionate moods—could increase the sanctions and reduce the support.

Mr. David Ruffley (Bury St. Edmunds) (Con): Yes, Labour.

Danny Alexander: I hear a “yes” from the Conservative Front Bench. Perhaps the hon. Gentleman is anticipating an occasion on which he could do exactly that. This is why we need to be careful about what is in the Bill and what is to be introduced through regulations. We remain to be convinced that the safeguards in the system for vulnerable people are sufficient, and a robust system of appeals must also be put in place.

As the hon. Member for City of York rightly said, preparing disabled people for work is not enough if there are no employers ready and willing to take them on. On this point, the Bill and the Green Paper are both lamentably silent. Much more could and should be done to work with employers. For example, the access to work scheme is one of the Government’s best kept secrets. According to their own figures, for every person helped through the scheme, there is a £1,400 net benefit to the Exchequer and a £3,000 net benefit to the economy. Yet still the Government fail to promote the scheme adequately, and about 80 per cent. of small employers are unaware of it.

The Government should use the Bill as an opportunity to invest in the promotion of the access to work scheme, particularly to small businesses, and to make changes to the way in which access to work decisions are made, so that people will know their access to work entitlements before they approach an employer. Also, I hope that the Minister will review the decision to remove the access to work scheme from central Government Departments. The DWP’s poor performance in employing disabled people sets a bad example.

The Employers Forum on Disability has pioneered the auditing of disability standards for employers. The Government should consult on a duty for larger employers to carry out such audits because, as the forum makes clear, this should not be seen as a burden. After all, disabled people are customers, employees, stakeholders, partners and competitors, and 82 per cent. of customers with disabilities surveyed recently have taken their business to a more disability-confident business competitor in the past 12 months. Each year, 25,000 people leave work due to injury and ill health, but this drain of talent is unnecessary. Forty-three per cent. of European workers say that they could work if employers made adjustments.

I hope that the Minister will also take the opportunity that the Bill provides to pick up the idea proposed in a 10-minute Bill by the hon. Member for Glasgow, North-West (John Robertson). I am sure that the hon. Gentleman will say much more about that in his speech, and I do not wish to steal his thunder.
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However, his proposal for rehabilitation leave is a significant one, and it could make a real difference.

I now turn to the Bill’s proposals on housing benefit reform. The proposed local housing allowance has some positive features, but the evaluation has shown that although some benefits have emerged, there have been fewer than had been hoped. The Bill provides welcome simplification of the process of obtaining extended payments when a claimant enters work or has a significant rise in income. The Liberal Democrats welcome the steps to encourage greater financial responsibility. I am pleased that the worries about increases in rent arrears—which the hon. Member for Runnymede and Weybridge (Mr. Hammond) mentioned—and about evictions have so far not been realised in the pilots.

The evidence from the pilots also suggests, however, that the objective of simplifying the administration and reducing administration costs has been undermined because the new vulnerability assessment—which I welcome—is needed to help people who cannot manage direct payments. So the savings that will be made by administering the new benefit will have to be balanced against the increase in administration needed to make the vulnerability assessment work properly.

There has been a welcome fall in the number of people facing a shortfall in their rents in the pilot areas. However, this depends on how the local housing allowance rates are set. They are set according to broad rental market areas, and are based on the local market rent. Different outcomes can therefore be found in different areas. In Conwy, for example, Shelter found that only 10 per cent. of property was affordable for local housing allowance recipients, whereas the figure was 55 per cent. in Edinburgh. Perhaps rent officers should be guided by the statutory minimum proportion of affordable property in each broad rental market area when establishing those areas. Given the housing and benefit provision duties of councils, it would be reasonable to require the rent service to consult them on the setting of broad rental market area boundaries.

The pathfinder areas were given significant extra financial resources to provide financial advice and help to those who had not received direct payments of housing benefit before. I hope that the Minister will make it clear that that will continue as the new system is rolled out across all the local authorities, because in many areas, help such as that provided by Citizens Advice was crucial in preventing the short-term drop-off in payments and subsequent rise in arrears and evictions that the hon. Member for Runnymede and Weybridge mentioned.

The Liberal Democrats have always opposed the single room rent, as did the present Secretary of State, and the Prime Minister, when the Conservative party introduced it. It will continue under this Bill, however, in a slightly different form—the shared room rate. While the shared room rate is slightly more generous, the basic unfairness and large rent shortfalls will continue. We will introduce amendments to scrap it, which we hope will have the support of all those who voted against the single room rent when it was introduced in 1996.

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