Paul
Rowen: That statement was made in July and we are now in
January, so the Government have had a full six months to address the
issue. The regulations were not published until December last year, so
does the hon. Gentleman agree that they should not be put in place
because the Government have not made those
changes?
Mr.
Harper: The hon. Gentleman is quite right. The then
Minister said that the Government would look at the issue last July and
that it would not be possible to do anything before ESA started in
October, and that may very well have been the case. However, given that
ESA is now in place and Ministers have acknowledged that that is a real
issue, I hope that this Minister, when he responds to the debate, will
tell us whether the Department looked at that, how the arrangements
have worked in practice and whether the Department plans to address the
issue, which is of real concern to
people. This
Minister’s letter to the Committee dated 27 October
stated: “I
recognise that, because of the simpler structure of
ESA”— I
am not sure that everyone here, having looked at the thickness of the
regulations, would necessarily agree that the structure is
simpler— “there
will be a small group of people on contributory ESA who, as a result do
not receive income-related ESA. We estimate the numbers to be
relatively few,
however.” He
left it at that. It would be helpful he could explain what
“few” means in that context and perhaps give a specific
figure. Given that around 20,000 people a month will be flowing on to
ESA, “few” could refer to many thousands of people. It is
important that the Committee understands just how many people will be
disadvantaged by that aspect of ESA and how many will be waiting to see
whether Ministers will address their
concern. Another
issue that arises from that aspect of the regulations is the problem of
permitted work, because there is a difference between income-based and
contribution-based ESA with regard to entitlement to housing benefit
and council tax benefit. The hon. Member
for Rochdale also raised this point. Again, the system favours those who
do not have an employment history, and it seems to me that it is
against the principle of our contributory national insurance system if
those who have paid into the system are, as a result, left worse off
than those who have not. ESA has
failed to eradicate the perverse incentives that discourage people from
doing the right thing and working. Let me cite an example to illustrate
the problem. Say there are two claimants, one receiving income-based
ESA and one receiving contribution-based ESA, who both pay £100
rent and £15 council tax a week and both earn £80 a week
through permitted work. The claimant receiving income-based ESA will
have an effective income of £279.50 a week, while the person on
contributions-based ESA will have an effective income of only
£228.50, because of the impact on housing benefit and council
tax benefit. An individual who has previously worked and made national
insurance contributions will thus be £51 worse off than a
similarly placed individual on the income-based system. It seems to me
that that could have a perverse effect of discouraging people from
working, if they think that they will be penalised in the
future. The
officials who gave evidence to the Work and Pensions Committee last
year said that there was a difference on the contributory side. They
said that there would be a cost for making the adjustment and that they
were looking at it in the context of the housing benefit review that
was announced in the Budget. In our debate last year on the Employment
and Support Allowance (Consequential Provisions) (No. 2) Regulations
2008, the Minister said, with reference to the case that I was
making:
“I
accept that there are differences in the system in terms of the
contribution and the income-related matters as the benefit comes
together...If we take that point in isolation, we can see how he makes
a logical argument with it”.—[Official Report, First
Delegated Legislation Committee , 13 October 2008; c.
24.] Philip
Davies (Shipley) (Con): Is not it extraordinary that
people can, in the tax and benefits system, be made worse off for
working than for not working? Will we make any progress on welfare
reform, and get away from welfare dependency, while that happens? Does
my hon. Friend agree that rather than being worse off for having worked
previously, people should be better off within the benefits and tax
system?
Mr.
Harper: I hugely agree with my hon. Friend. Indeed,
Ministers frequently say that people should be better off for working
and should not be penalised. We strongly agree with that. However, the
relevant aspect of employment and support allowance sets up the wrong
incentives and sends out the wrong messages. Ministers have
acknowledged that that is a problem and they should deal with
it. That
issue relates to housing benefit. The Minister said in his letter to
the Committee that considered the previous
regulations: “We
recognise that the treatment of permitted work within HB remains an
issue for those on contributory ESA. This is being considered as part
of the Housing Benefit Review which is due to report at the end of the
year.” That
would mean the end of 2008. We are now some way into 2009 and the
housing benefit review has failed to be completed and
published. It would be
helpful if the Minister could explain when it is expected to be
complete, and when changes will take place as a result. Housing
benefit is critical to many people who are not working and who are on
incapacity benefit or employment and support allowance. Organisations
that are involved in getting people back to work say that the
interaction of out-of-work benefits and housing benefit is critical. If
people are in a secure housing situation, and moving into work would
put that security at risk, they are understandably reluctant to move
into work. That must be
tackled.
John
Penrose: I put it to my hon. Friend that the
Minister’s response is deficient in two respects. One of those
is timing, because even if the Government publish the housing benefit
review results tomorrow, given the timetable to which this place works
it will be months—it could even take until the last possible
date for the next general election, or after that—before
anything changes, by which time the ESA will have been in place for a
long time. The expectations of people who receive it will have been
firmly set, and it will have acquired the reputation of being something
that fundamentally does not reward work.
It is not
enough to put the onus on housing benefit. The ESA must be just and, as
an individual benefit, must provide a clear incentive to work. We
cannot say that it will work in combination with many other benefits,
as part of a complicated mÃ(c)lange. People must be able to see
clearly, up front, that it works; otherwise any work incentive is stone
dead.
Mr.
Harper: My hon. Friend makes a good point. When we debated
the other regulations in October and highlighted the issue of
contribution-based ESA clients, perhaps it was acceptable to say that
housing benefit was being considered and that the results of that work
would be published by the end of the year. For all we knew, we might
have had a speedy decision about changes to housing benefit regulations
or laws, and there might have been a timetable that would have brought
about changes relatively quickly.
Given that
the review has already slipped, and that it is now 2009 and it has not
been published, my hon. Friend is right. It is not just about the
review being published; it is about the decisions being taken about how
to move that forward. There will have to be consultation, and if
changes to primary or secondary legislation are required, as they will
be, they will have to be made in the House. At the best of times, even
with impressive ministerial commitment, things do not move as fast as
they should. As there have already been delays, I do not have a great
deal of confidence in that process.
My hon.
Friend is also right that it will not be acceptable for the Minister
simply to say that this will be dealt with in the housing benefit
review. The Minister must consider the impact that this issue has had
on the regulations and fix the problem now. For those who are affected,
it will not be acceptable to say that the matter will be dealt with at
some
point. The
final specific part of the regulations—the more restrictive
rules for disabled students—that I want to address was touched
on by the hon. Member for Rochdale. Currently, individuals on income
support may study
full time if their award includes a disability premium, if they have
been incapable of work for 28 weeks, if they are registered as blind or
if they get disabled students allowance because they are deaf, as he
said. With income-based ESA, only those who get DLA can study full
time, although the Government have previously given assurances that
that would not be the case. That rule is a disincentive to disabled
students acquiring new skills, and it stifles their
aspirations. When the
former Minister gave evidence to the Select Committee on Work and
Pensions in a famous sitting last July, he
said: “I
think there has been further reflection in the
Department”. He
then acknowledged that there had been concerns,
“the conclusion
of which is that DLA is the right
criterion.” In
the current Minister’s follow-up letter to me, of 13
November, he said
that “receipt
of DLA is the correct way to identify income-related ESA customers who
should have access to education as it identifies the impact of sickness
or disability on an individual’s
life.” But
that is not what was said when the Welfare Reform Bill was going
through the House, and it is not what Lord McKenzie said in the other
place. Ministers have clearly broken that promise, and saying that they
have thought about it again and broken it does not make things any
better. Again,
we come back to housing benefit. In his letter of 13 November, the
Minister
said: “The
Housing Benefit regulations will in the future be amended to remove
that restriction so that people may be able to take certain full-time
courses without losing entitlement to HB, irrespective of how long they
have been claiming
IB.” That
is another acceptance that there is a problem with the interaction
between the regulations and housing benefit, but the letter says that
that will be corrected at an unspecified date in the future. However,
students will be losing out today because of the regulations. Given
that we are talking about courses that last for one, two or three
years, debate at some indeterminate point in the future is no good to
those
students. The
hon. Member for Rochdale mentioned the complexity of the regulations.
That is brought about partly by their thickness, as well as the
complexity when one goes through the detail. In his letter to the
Committee, the Minister said that hon. Members were concerned about the
complexity of the regulations. He
stated: “We
believe that with its unified contributory and income-related structure
that ESA will be a simpler and easier benefit to
claim.” Considering
the debate that we have had, I am not sure that many people would think
the contributory and income-related structure terribly unified, as we
have highlighted a number of important differences.
Leaving that
aside for a moment, the Minister also said that
“the regulations
have to deal with the lives of our customers which are becoming ever
more complex and therefore the legislation must deal with all the
possibilities which may
arise.” The
benefit was introduced as a simpler, more straightforward benefit, but
I do not know how the people who have to claim it, or those who have to
implement the regulations in Jobcentre Plus and in the Department, are
supposed to have any grasp of its complexity. It is no good Ministers
saying that people’s
lives are more complicated, so we have to make more complicated
regulations to deal with them. One of the challenges for Ministers and
officials is how to implement benefit systems that are relatively
simple and straightforward and that the man in the street has some
chance of understanding. The incentives and help that are given to get
someone back to work must be clear, simple and straightforward, and the
message must be that we want people to work, that help and support is
available, and that they will be better off if they do. That should be
a clear, simple message and not bound up with incredible amounts of
complexity. In
conclusion, I hope that the Minister can give the Committee better
answers than he provided in the debate on the other regulations in
October and in his letter to the Committee. Since then, he faces an
extra challenge because the housing benefit review has been delayed,
and the regulations are even more critical because of the economic
situation that the country faces. If my colleagues are not satisfied
with his answers, I am afraid that we will be forced to divide the
Committee and oppose the implementation of the
regulations.
9.51
am
The
Parliamentary Under-Secretary of State for Work and Pensions (Jonathan
Shaw): It is a pleasure to serve under your chairmanship,
Mr. Chope, to debate the regulations. The hon. Member for
Forest of Dean always presents his arguments in a very reasonable way.
He said that he welcomed the fact that the Government have copied
Conservative proposals. What he missed out, however, is the fact that
the Opposition took the Freud report—which we
commissioned—and gleaned all their ideas from that before
publishing them as their ideas. We have set the agenda for welfare
reform over the years, while they have trailed behind playing catch-up
as they do today. It is not really surprising if one considers that,
when the Opposition had their chance, their actions were in stark
contrast to what we have been doing.
The hon.
Gentleman talked about incapacity benefit. We remember very
well—there will be members of the Committee whose communities
had no choice other than incapacity benefit. People signed on, the
state signed off and nothing happened. The dependency culture that
emerged still scars communities and causes people difficulty in making
the transformation from an inactive life to an active
one.
Mr.
Harper: Can I pick the Minister up on
that?
Jonathan
Shaw: I would be
delighted.
Mr.
Harper: The Minister keeps forgetting that his Government
have been in power for 12 years. There has been a period of economic
growth when millions of jobs have been created, yet when the last set
of figures was published, the number of working-age incapacity benefit
claimants was 70,000 more than in 1997. Over that period, the
Government have made no progress on getting those people back into
work. The Minister is right to say that the numbers went up when we
were in power, but this Government have been in power for
12 years and have made no progress in dealing with them. He
must remember that before he gets too carried away with his own
rhetoric.
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