Examination of Witnesses (Questions 280
- 299)
MONDAY 6 MARCH 2006
RT HON
JOHN HUTTON
MP
Q280 Justine Greening: Thank you
for that. So it sounds like Employment and Support Allowance is
probably at best certainly a medium-term strategy for the Government.
What will happen to those people on existing benefits? Is the
aim and the vision to translate them on to the Employment and
Support Allowance at some point?
Mr Hutton: No, we are not going
to do that. We are not going to compel people to move on to Employment
and Support Allowance, no.
Q281 Justine Greening: Then you will
end up with two groups of people on different benefits. Going
back to talking about the fact that this may be a two-tier system,
you can debate whether the tiers are higher or lower than one
another but you have to accept that there will be more complexity
by the fact that at the moment there is one system, and going
forward in the medium term there will be two.
Mr Hutton: Yes, but that is the
same approach that previous Conservative governments took to welfare
reform. For example, when Incapacity Benefit was introduced in
the 1980s, Invalidity Benefit was left where it was, and we still
have people on Invalidity Benefit now. I do not think it is true
to say that it will be more complex because, by definition, from,
in this case, April 2008 there will not be any new claims for
incapacity benefits; they will be an historic legacy. Significant
numbers, of course, I hope significantly lower than today, but
the system is designed, and has been, to manage incapacity benefits.
There is a perfectly coherent system of managing the existing
claimants who are on incapacity benefits. We need to put in place
a similarly efficient system for managing the new Employment and
Support Allowance. We can do that, but you have a simple choice
when you make these changes. You either move everyone on to the
new benefit, but then you have potentially real losers and that
has never been done before, and I do not advocate that approach
now because I do not think you should set about these sorts of
reforms, as it were, by tearing up people's entitlement to benefits.
Absolutely not. You have to treat people fairly and reasonably,
and people on incapacity benefits, let us be absolutely frank,
are not rich; their standard of living is low. I do not think
it should be part of our agenda to retrospectively change benefit
entitlement, and certainly not to reduce it, so I rejected that
approach entirely. It is a perfectly sensible way to manage change
in a benefit system; it has been done before; it does not in itself
represent a two-tier benefit system; clearly it represents two
different benefit rates but, as I said earlier, what I think will
be common between Incapacity Benefit and Employment and Support
Allowance will be a wider and more extensive portfolio of help
and support packages designed to get these people back into work.
What is also undeniably true is that clearly, the longer one stays
on benefit, the harder it is to reconnect with the labour market;
we know that. That is the one shining story that sings out from
our previous, our current experience with incapacity benefits,
and it is likely to be the case in two or three years' time that
the claimants who will be the hardest to reach and to place in
the labour market will be people on old incapacity benefits, not
people coming into new Employment and Support Allowance. But,
again, I cannot see any alternative way of managing this process
of change other than the way we have set out in the Green Paper.
If people have an alternative, if you have an alternative, let
us hear it.
Q282 Chairman: Not today!
Mr Hutton: Maybe not today but
at some point in the consultation.
Q283 Justine Greening: Your answer
immediately leads us into the next series of questions about this
broader package of choices that people can use via Pathways to
Work to help them get back into work. One of the fundamental aspects
of the Green Paper is the roll-out of Pathways to Work, which
up until now has been carried out as a pilot study. Some of the
evidence we have had so far particularly focuses on successful
aspects of it in terms of the Condition Management Programme and
also the Return to Work Credit. The Condition Management Programme
is quite a specialist form of assistance given to people, and
a number of mental health organisations we talked to praised this
cognitive behavioural therapy. Do you think we have enough capacity
of those sorts of therapists in this country to be able to roll
out Pathways to Work nationally and provide a Condition Management
Programme nationwide, and not just in the pilot areas?
Mr Hutton: There are undoubtedly
capacity shortages in CBT; there is no doubt about that. I am
sure that is the view of everyone who has given evidence to the
Committee, and I concur with it as well.
Q284 Justine Greening: Do you know
what the average waiting time is for somebody on the NHS waiting
for behavioural therapy?
Mr Hutton: I personally do not
but I suspect it would be fairly long. It would not be covered
by the six-month waiting time guarantee because CBT therapists
are not consultants in the way that waiting time figures are configured.
It is waiting time to see a consultant that is measured in the
NHS, not waiting time to see a therapist, so I do not know. I
am not sure what the data is. But in my own experience when I
have met people on the Pathways to Work schemes—I do not
know whether the Committee were in Derbyshire but you probably
heard what I heard—people coming into the Pathways were
told that it might be up to a year before they could see a cognitive
behavioural therapist. That is completely hopeless and if the
whole purpose is to get people back into work quickly, that is
not a starter. So they have used their Pathways money to employ
CBT expertise from the private sector. Bring it on; that is exactly
what they should do. I think there a possibility—and I would
not put it higher than that; we have to tackle this problem, I
agree, as a Government—that if there is additional resource
for this particular strand of the Condition Management Programme,
it will encourage people in the private and voluntary sector to
provide that service to us, and I would be delighted if one of
the consequences that comes out of the roll-out to Pathways is
that there is more of a market capacity to provide this type of
service. We will obviously have to track this very carefully indeed
but using the private sector has been one way of fast-tracking
access to this type of help, and I think that is entirely the
right thing to do.
Q285 Justine Greening: One thing
that would be helpful to the Committee in preparing our report
is if there is any analysis within the DWP about what the current
shortage might be with respect to rolling out Pathways to Work,
and the current potential for supply and what the gap is between
the two, that would be helpful, and if there is any proposal to
close this gap, as you say, it may be that more people will enter
the private market. It would be helpful to see any work already
happened in the Department around understanding this risk, because,
as you say, it clearly is one of the issues that you could run
up against in successfully rolling out Pathways to Work. The second
question is around the Return to Work Credit, which I think people
felt cushioned them in terms of income levels when they went back
into the work place and gave them some confidence, if you like,
about their earning capability. You drop off that after 52 weeks.
How can we ensure that claimants after that year, when they have
stopped getting the Return to Work Credit, do not just go back
on to benefits? Can anything be done to prevent that?
Mr Hutton: I am not sure that
anything can be done legally in the sense of the construction
within the benefit system; I think not. The Return to Work Credit
has been a very important component of the Pathways scheme and
it is frequently cited by many people who have been through Pathways
as being the one thing that made a big difference. It made it
possible for them to make this leap from benefits to work, and
so it is a very important part of it and I am very committed to
it. Fifty-two weeks is what we have set out in the original Pathways
scheme and it seems to be working; it seems to be a significant
part of the success story of Pathways. I think that the rationale,
at least part of it, in relation to the time limiting—because
there would have to be reasonably some limit on the extent of
help that we can provide through this Return to Work credit route—is
that it is important to ask them to get a foothold in the work
place, and it is related to income. If that person coming in at,
presumably, an entry level job, because that is where they would
qualify for Return to Work Credit, is able, hopefully together
with the Return to Work Credit but also the in-work support, to
make a progression in that new employment above entry level, then
that is ultimately what we have to try and aim for, because there
is always going to be a limit to how much ongoing financial support
the DWP itself can provide people with. But the evidence so far
is that 52 weeks is a reasonable limit, and it seems to be working.
I am not aware; maybe somebody has approached the DWP and said
that it should be longer—having said that, somebody is bound
now to do that—but I am not aware of any pressure from outside
to extend the Return to Work Credit period, but we would need
to look very carefully at that if those arguments were put to
us.
Q286 Justine Greening: Finally from
me, in the initial pilots—and obviously a report was done
by your Department to look at that first pilot cohort that came
through—of the 148,000 starts in Pathways areas, there were
19,500 job entries. That is an incapacity benefits off-flow rate
of 48% compared to an average normally of 40%. Do you feel that
that 8% improvement is enough to justify the resources pumped
into Pathways to Work?
Mr Hutton: I think I had better
say "Yes" to that.
Q287 Justine Greening: You do not
have to. We would like the honest answer, obviously.
Mr Hutton: I say yes, absolutely.
The break-even point would have been about four percentage points.
We have doubled that. That is the score so far. So it is definitely
a cost-effective intervention from the taxpayers' point of view,
and we are right now to proceed with a national roll-out. What
I would say about the national roll-out is this: that we are going
to do this second, very significant roll-out through the private
and voluntary sector. That is the principal focus, and I think
we should clearly learn from the roll-out of Pathways through
Jobcentre Plus in the first phase in the last couple of years
to see if we cannot make the roll-out more cost-efficient and
cost-effective as well, and that is part of the discipline. I
personally think it is important to see how we can make sure there
is flexibility in the range of services on offer to people locally,
because there is not one part of the country that is identical
to another part. There are different labour markets and so on,
so I think we should have flexibility. But I am absolutely convinced—and
it is not just my view but the view of the OECD and many others—that
the Pathways to Work is the leading international model for how
we can provide more effective interventions for disabled people,
and I think we are perfectly entitled to draw on that evidence
and to say now is the time to extend the benefits of it to a wider
cohort of people. That is the right thing to do, in equity and
social justice.
Q288 Justine Greening: On the break-even
point and how that is calculated, is it purely the cost of Pathways
versus benefits saved or is it something more complex and, if
so, is it possible to get the details to the Committee?
Mr Hutton: I do not have the details
of that cost benefit analysis but I am happy to share it with
the Committee.
Q289 Greg Mulholland: Carrying on
talking about evaluation, obviously the roll-out is 2008, and
although the Department has said that the evaluation will be done
by then, I believe the full evaluation will not be able to have
taken place till after that time, so does it make sense to do
the roll-out while there has not been a full evaluation?
Mr Hutton: I may be wrong but
I think the full evaluation will be done next summer, so we will
have that before the full nationwide roll-out of Pathways. I do
not want to repeat everything I have just said. I think the evidence
is clear that Pathways is a successful intervention; that is not
just my view but the view of others. It has been the most successful
approach we have developed in the United Kingdom and it is producing
significant results. Of course, we could choose to delay the national
roll-out but that is essentially the choice we have to make if
we wanted to wait until the full extensive evaluation, and my
view is that if we were to delay the roll-out, we would be delaying
the benefits of Pathways to literally hundreds of thousands of
disabled people who, by and large, and their organisations, have
been saying to us: "Move on, do the national roll-out as
quickly as possible", and that is what we have tried to do
and what we have set out in the Green Paper. I think it is a perfectly
sensible response, yes. We are not just sticking our finger in
the air, hoping; it is based absolutely on firm, bankable results
that have come in from the Pathways pilots.
Q290 Greg Mulholland: Are you confident
there will be enough meaningful evaluation by the time of the
roll-outs?
Mr Hutton: Yes. The fact we have
committed ourselves to the national roll-out I will not allow
in any way to restrict the opportunity in the evaluation to say
all the different things that need to be said. Clearly, we are
gathering and learning experiences all the way along with the
roll-out to Pathways. It is a learning process for us and I am
quite sure it will evolve and there will be more flexibility built
into the system, but I am equally sure that those who will be
doing the evaluation will know from me that they are at large
and free to say whatever they think, and whatever their evidence
points to is the conclusion that we should all be aware of in
relation to Pathways. So there will be no burying of unwelcome
information; absolutely not.
Q291 Greg Mulholland: Moving on to
what we all agree is probably the crux, which is the money involved,
government figures estimate that the pilots works out about £400
per claimant in terms of the cost and that totals £220 million
a year. As we all know, the Government has currently allocated
£360 million to the new scheme, so by the Government's own
figures that is an £80 million shortfall, so you can perhaps
see why some people have termed the Green Paper proposals as "Pathways
Light". Do you therefore deny the charge that that is underfunding
and that services will be watered down, which I think is the main
concern? If that is the case, people will think it will not work.
Mr Hutton: If that were the case,
then that would be a matter of genuine concern. The first roll-out
to Pathways to a third of the country cost us £150 million,
incurred by the Department in rolling out Pathways to Work for
a third of the country. We are now spending, providing an extra
£360 million over and above, if you like, the initial costs
of roll-out to a third for the remaining two-thirds of the country.
I do not think anyone can fairly say we are not fully funding
the roll-out of Pathways. The total annual cost will be over £500
million, £150 million in the first third, £360 million
in the remaining two-thirds. I do not think it could be fairly
claimed we are underfunding the roll-out to Pathways. I do not
accept that.
Q292 Greg Mulholland: You must be
aware that people are saying that, fairly or unfairly? The TUC,
Child Poverty Action Group, and Disability Alliance have pointed
out that pilots often work when roll-outs do not because of the
intensive nature of the schemes of the people involved. If the
services are not to be watered down, then, with the figures I
gave you, where are the savings going to come from?
Mr Hutton: I am not entirely sure
that the figures you have quoted me point to this £80 million
deficit. It is not my view or the Department's view of the roll-out
of the Pathways. It is going to be fully funded and, particularly
in relation to the key areas where we know it has made a significant
difference, namely the Condition Management Programme, we are
not going to cut any corners with the funding available for those
sorts of elements of Pathways. They are absolutely fundamental.
Once Pathways ceases to be a pilot, the £40 a week Return
to Work Credit becomes part of the Department's annually managed
expenditure and not part of its Department expenditure limit,
and at the moment with the Pathways it is currently scored against
my departmental expenditure limit. Maybe that is the reason why
somebody has discovered this illusory gap in funding, but there
is not going to be a gap in funding. This is not doing anything
on the cheap—absolutely not. We are going to roll-out Pathways
and the key elements of Pathways in exactly the same way, and
I have tried to make that repeatedly clear, not just today but
in other settings as well. This is not "Pathways Light".
Q293 Greg Mulholland: But are you
saying the amount per claimant in the roll-out will be equivalent
to the other areas, pilot areas, or significantly less?
Mr Hutton: I do not know the answer
to that but I can certainly tell you that it is £150 million
for the first third of the country and £360 for the remaining
two-thirds, and I do not accept on those figures that anyone could
reasonably claim that we are underfunding the national roll-out
of Pathways. We have made significantly extra resources available
to do that.
Q294 Greg Mulholland: Finally, you
mentioned yourself that when the roll-out happened, you will be
looking to make the scheme more cost-effective, which is entirely
sensible. Can you give us an idea of some of the things you will
be doing to make it more cost-effective?
Mr Hutton: I think this is something
that we will have to talk to the voluntary sector providers who
are going to deliver the roll-out Pathways about. It may well
come down to choice of partners, procurement from the private
sector as opposed to the public sector. These things are all possible.
But I think the search for cost-effectiveness, let me just make
this clear, is not going to be confined to the two-thirds where
Pathways are going to be rolled out to, but is going to continue
to be applied to the third of the country that already has Pathways.
I think we have to learn from all of this and make sure the programme
is cost effective. I think it is very likely we will be able to
make efficiency savings and cost-effective savings as we roll
out Pathways, but how that is going to be done very much depends
on the dialogue and the procurement process that now needs to
kick off with the private and voluntary sector.
Q295 Greg Mulholland: And without
watering down services?
Mr Hutton: No, without watering
down services. There would be no point in doing that. We would
be spending money inefficiently and ineffectively if we watered
down the help and support we were providing for people on incapacity
benefits. Why on earth would we want to do that? It runs the risk
that the expenditure itself does not produce the result we want.
We must not in the roll-out of Pathways dilute to any extent the
actual help and support we provide for people on incapacity benefits,
otherwise there would be no point in providing the roll-out. It
would simply not be efficient and effective.
Q296 Jenny Willott: Moving on now
to conditionality and the mention of it in the Green Paper, it
says that the Employment Support Allowance will be conditional
on drawing up a personal action plan for rehabilitation and work-related
activity. Will it only be necessary to draw up the action plan
or will it be necessary to take the actions as well?
Mr Hutton: Going further will
depend on having additional resources available to us in terms
of providing a wider range of help and support services, and what
we have said in the Green Paper is that the conditionality regime,
until we are clear about resources in the next Spending Review
and beyond, cannot go further at this point than requiring people
to do the work-focused interviews and to prepare the action plan.
I want it to be the case later on that there will also be a requirement
to undertake the work-related activity that arises from the action
plan but we will not be there, I think, yet.
Q297 Jenny Willott: You expect there
to be benefit sanctions attached to that in the future?
Mr Hutton: There could be, yes.
Q298 Jenny Willott: What safeguards
are there going to be in place to make sure that claimants are
not required to do activities that are inappropriate for their
condition or disability?
Mr Hutton: I think this has to
be an iterative process. What we are proposing at the moment is
a compulsory work-focused interview regime, which is important
and part of the something-for-something approach that we want
to embed in these reforms, and then the action plan that comes
out of it. We are not proposing at the moment to sanction failing
to take work-related activities; that is not part of the reforms.
It might become so in the future, as I said. What are the safeguards
around the imposition of sanctions in the current regime, the
actual regime? You remember this is happening now in relation
to incapacity benefits claimants, the work-focused interview requirement
and so on. There is a proper process of appeals. In relation to
people, for example, who suffer from mental health complaints
we have further safeguards built into the system in relation to
home visits, advocacy and so on, and the number of cases in the
Pathways areas where sanctions have been imposed since last year
are very few; at most there has been a couple of hundred where
there has been a benefit sanction. There is an appeals process,
it can be challenged, and as soon as someone becomes compliant,
then the sanction is removed from their benefit entitlement. So
I think the system is fair and reasonable. I think it is absolutely
essential that there is follow-through on this and there should
in some appropriate cases be a sanction imposed if people are
not complying with their statutory obligations, but it is perfectly
possible, as I think is the case now, that those sanctions regimes
are imposed sensibly and carefully and as a last resort. I think
that is an important part of the whole process. So it should not
necessarily be the first consequence. There needs to be a process
and a sequence but, at the end of the day, there has to be, in
appropriate cases, the right to sanction if somebody is not complying
their statutory requirements.
Q299 Jenny Willott: So the safeguards
are basically the appeals process?
Mr Hutton: The appeals process
and also the training of the personal advisers as well, judging
when it is appropriate to impose the sanction. As I said, if you
look at the evidence, it is actually applied as a sanction in
fact very infrequently. What is important is, I think, that it
is there as a sanction and people know it is there, and I think
it is a sign ultimately of the success of that approach when you
do not have to impose the benefit sanction because people are
in compliance with their obligations in the system.
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