Session 2010-12
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Welfare Reform Bill

Welfare Reform Bill


The Committee consisted of the following Members:

Chairs: Mr James Gray  , Mr Mike Weir 

Baldwin, Harriett (West Worcestershire) (Con) 

Bebb, Guto (Aberconwy) (Con) 

Buck, Ms Karen (Westminster North) (Lab) 

Curran, Margaret (Glasgow East) (Lab) 

Elliott, Julie (Sunderland Central) (Lab) 

Ellison, Jane (Battersea) (Con) 

Elphicke, Charlie (Dover) (Con) 

Fovargue, Yvonne (Makerfield) (Lab) 

Gilmore, Sheila (Edinburgh East) (Lab) 

Glen, John (Salisbury) (Con) 

Grayling, Chris (Minister of State, Department for Work and Pensions)  

Green, Kate (Stretford and Urmston) (Lab) 

Greenwood, Lilian (Nottingham South) (Lab) 

Hollingbery, George (Meon Valley) (Con) 

McVey, Esther (Wirral West) (Con) 

Miller, Maria (Parliamentary Under-Secretary of State for Work and Pensions)  

Newton, Sarah (Truro and Falmouth) (Con) 

Paisley, Ian (North Antrim) (DUP) 

Patel, Priti (Witham) (Con) 

Pearce, Teresa (Erith and Thamesmead) (Lab) 

Sarwar, Anas (Glasgow Central) (Lab) 

Smith, Miss Chloe (Norwich North) (Con) 

Swales, Ian (Redcar) (LD) 

Timms, Stephen (East Ham) (Lab) 

Uppal, Paul (Wolverhampton South West) (Con) 

Willott, Jenny (Cardiff Central) (LD) 

James Rhys, Committee Clerk

† attended the Committee

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Public Bill Committee 

Tuesday 26 April 2011  

(Morning)  

[Mr James Gray in the Chair] 

Welfare Reform Bill

Written evidence to be reported to the House 

WR 42 Carers UK 

WR 43 The Riverside Group Ltd 

WR 44 Oxfam GB 

WR 45 Turning Point 

WR 46 CLIC Sargent 

WR 47 Irene Carey 

WR 48 Martin Lee 

WR 49 Denise Porter 

10.30 am 

The Minister of State, Department for Work and Pensions (Chris Grayling):  On a point of order, Mr Gray. Out of courtesy, I draw the Committee’s attention to the written statement issued by the Secretary of State for Work and Pensions this morning on additional investment in the development of IT for universal credit. As the Committee has already agreed to the clauses on universal credit, there is clearly support on both sides of the House for what we are doing. 

The Chair:  Although the Committee is no doubt grateful for all such information, the Minister knows that that is not a point of order. None the less, we are grateful to him for that information. 

It may be convenient if I advise the Committee that amendments to be considered next Tuesday, 3 May, must be tabled by the rise of the House today. 

Clause 26 

Higher-level sanctions 

Amendment proposed (5 April): 39, in clause 26, page 12, line 12, at end insert— 

‘(1A) The Secretary of State shall, before exercising their powers under subsection (1) above, advise the Claimant of their right of appeal in relation to any decision to impose a sanction under section 26 or section 27.’.—(Anas Sarwar.)

Question again proposed, That the amendment be made. 

The Chair:  I remind the Committee that with this we are discussing the following: amendment 40, in clause 26, page 13, line 8, at end insert— 

‘(9) Regulations may provide for the appeal process which will apply when a Claimant has been informed that they will face sanctions in the event of a failure by the Claimant which is sanctionable under this section or section 27.’.

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Amendment 80, in clause 26, page 13, line 8, at end insert— 

‘(9) Where a claimant is sanctioned under this section, the claimant must be provided with a written explanation of the terms of the reduction, the reasons the reduction has been made and the claimant’s right to appeal.’.

Amendment 55, in clause 26, page 13, line 8, at end insert— 

‘(9) Regulations will provide for an appeal mechanism.’.

Amendment 56, in clause 27, page 14, line 4, at end insert— 

‘(10) Regulations will provide for an appeal mechanism.’.

Amendment 83, in clause 27, page 14, line 4, at end insert— 

‘(10) Where a claimant is sanctioned under this section, the claimant must be provided with a written explanation of the terms of the reduction, the reasons the reduction has been made and the claimant’s right to appeal.’.

Anas Sarwar (Glasgow Central) (Lab):  I hope that you had an enjoyable recess, Mr Gray, and I hope that the rest of the Committee did so, too. 

I know that, because of a commitment during our previous sitting, the Minister wants to address some of the points in more detail later. I have a further point on the amendment, but it is also relevant to the next amendment, so I will raise it then. 

I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Anas Sarwar:  I beg to move amendment 41, in clause 26, page 12, line 12, at end insert— 

‘(1A) It is not a failure sanctionable under this section if a Claimant falling within section 22 does not have guaranteed and predictable access to high quality, flexible and affordable child care acceptable to the parent and child or children.’.

Many of these issues have already been clarified by the Minister, but I want to raise a child care issue that is specific to Scotland. I want the Government specifically to ensure that the welfare reforms take into account the lack of high-quality, flexible and affordable child care in Scotland. 

In Scotland, local authorities do not have a statutory duty to provide the child care required by working parents, which has consequences for Scottish lone parents in terms of conditionality. That child care gap was recognised by Tony McNulty, the then Minister responsible for employment and welfare reform, on the Second Reading of the previous welfare reform legislation: 

“I take on board what many of my Scottish friends have said about the paucity of child care provision in some areas of Scotland, not least Glasgow.”—[Official Report, 27 January 2009; Vol. 487, c. 268.] 

The statutory frameworks in England and Wales are different from Scotland, so different levels of child care may be available. There is no UK-wide equivalent of the Childcare Act 2006, which places a duty on local authorities in England and Wales to secure, as far as is practicable, sufficient child care to meet the needs of working parents. 

Do the Government acknowledge that the statutory frameworks in England and Wales are different from those in Scotland and, therefore, that differing levels of child care are available to claimants in Scotland? What additional support will there be for claimants to take account of such regional differences? 

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Kate Green (Stretford and Urmston) (Lab):  I wish to speak to amendment 41, which would ensure that suitable and affordable child care is in place before a parent is required to comply with requirements in their claimant commitment. The amendment states that such child care should be 

“acceptable to the parent and child or children.” 

I have repeatedly argued that the well-being of children must be a paramount consideration in determining appropriate child care arrangements, rather than simply the convenience of enabling parents to go out to work. 

We are all committed to the provision of excellent child care, particularly to the most disadvantaged children, who would especially benefit from good-quality child care settings. We all welcome the Government’s ongoing commitment to ensure that such child care is in place, but child care is something that different children respond to differently in terms of their social and emotional development, their family experiences and what is going on in the home. Even if affordable child care was available at the right time so that the parent could work, it would seem quite wrong to put a child into child care if it was not in their social, emotional and educational interests. I have long argued that the person who is best able to make that assessment is the parent of that child. They spend their time with the child. They are responsible for that child’s emotional development and well-being. 

It is crucially important, especially for younger children, that the parent’s understanding of the appropriateness of the child care setting is taken into account. It may seem that, if that acknowledgment is made, parents will be reluctant to place their children into child care, but that is not my experience. In most cases, parents welcome access to good-quality child care. They want their children to attend good-quality child care, and difficulties arise largely when the credibility of the provision is not very high. It is important that parents have a say in determining whether child care is acceptable. It would be good to see that important recognition of parents’ rights in relation to the best interests of their children reflected in welfare reform provisions. 

Older children will want to have a say in child care arrangements. They will probably take exception to the term “child care” for a start. It is important that they can confirm that the nature of the out-of-school provision adequately meets their needs, in a setting in which they feel comfortable. They may have concerns, for example, about bullying and personal safety. Those need to be listened to and taken into account. 

We should recognise that such an experience is very important for children and child development and not simply a route, important though that is, to enable parents to get into work. There is a long-standing tension about what child care is for, and I am very clear that the interests and well-being of children are vital aspects. I particularly support the element of amendment 41 that would enable both the child and the parent to have a say in whether those best interests are being met. 

Chris Grayling:  I hope that the Committee has had an enjoyable break, as we return to our toils for a few more weeks. Let me start by setting the record straight on child care. The Committee should believe me when I say that this is a matter of concern to all hon. Members, particularly those of us who are parents and understand the challenges and pressures of child care, including

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those that come from the children themselves. I want to talk about the safeguards in the system for claimants with child care responsibilities. I hope in doing so to allay the concerns of the hon. Member for Glasgow Central who has rightly highlighted the situation in Scotland. 

First, it is important to make it clear that lone parents or nominated carers in couples with a child under the age of five will not be subject to the requirements sanctionable under clause 26. Until their child is at school, parents have no job search requirements that could lead to a sanction under the clause. Where a child is under the age of five, we only ask parents to attend work-focused interviews. A couple with a child or children under five will be able to nominate one parent who will be treated in the way that I have just described. Children can perfectly well go along with their parents to the work-focused interview; anyone who visits a jobcentre will see pushchairs alongside the desk, as the child sits there while the parent goes through what is at that stage in life a relatively infrequent process of simply keeping in contact with the system. Once the child is at school, the parent will be expected to consider opportunities to get back into the workplace. 

Secondly, work-related requirements are drawn up by an adviser as part of a dialogue with the claimant, which includes a discussion of any child care commitments and their impact on the claimant’s ability to fulfil work-related requirements. Any action that a claimant is required to undertake must always be reasonable, including those requirements that could lead to a higher-level sanction if they are not met. Advisers must take all relevant matters, including child care, into account when setting the action. Those matters include an individual’s personal circumstances, capability and child care needs. For example, where a lone parent or nominated carer has a child above five years old but under the age of 13, the claimant can restrict their availability for work to jobs that operate around school hours. We do not expect lone parents with primary school kids to work night shifts, and the system and definition of what is reasonable are designed to work around the needs of those children. The claimant could not be subject to a sanction for refusing a job in such circumstances. 

The amendment stresses that child care must be acceptable to the parent and the child, which is a principle that we agree with. However, where an adviser is of the view that appropriate child care is available, a requirement can still be imposed. A failure to meet that requirement—for example, to take up a job offer—may result in a reference to a decision maker to consider a sanction. 

Ms Karen Buck (Westminster North) (Lab):  May I ask two quick questions? No doubt, we will discuss this later, but for the record, will the Minister confirm that he is talking only about the capacity to obtain formal child care? He is not talking about a requirement by Jobcentre Plus staff for informal child care to be used in such circumstances, is he? 

Chris Grayling:  By definition, one could not do that, because Jobcentre Plus cannot instruct a grandparent to look after a child. We recognise the importance of informal child care—in many family situations, it may be the best option available—but Jobcentre Plus cannot

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require a third-party adult to provide unpaid, informal child care. The issue is purely about the availability of conventional child care through a nursery or a child minder. 

We think that the balance is right. If plenty of local, affordable nurseries are available, but a parent says, “Well, I don’t like any of them,” there must be a point at which someone in the system says, “No, I’m afraid that’s not good enough.” Broadly speaking, we are sensitive to the needs of parents and the child. We have very consciously sought to offer discretion to front-line advisers, and any sanction is subject to an independent reference internally to a decision maker. I stress, however, that there are no circumstances in which the state will oblige a parent to place a child with a particular child minder. 

Kate Green:  I am grateful to the Minister for his explanation. Will he inform the Committee to what degree adequate and suitable training will be provided for Jobcentre Plus decision makers in assessing suitable child care, particularly in relation to the points about child well-being that I raised a moment ago? 

Chris Grayling:  Our decision makers receive extensive training on the issues that they should consider in relation to sanction decisions, but this is also a question of professional common sense. They will have a pretty clear idea of when someone is being reasonable and when they are not. There will always be a degree of discretion in such matters, but decision makers are given comprehensive training about the different issues that they are likely to address in their jobs, in an attempt to ensure that they make the best possible decisions. 

Where a claimant fails to meet a requirement sanctionable under clause 26, a sanction will be imposed only if the claimant does not have good reason for failure. In considering whether there is good reason, we have to consider any relevant matter, which can include the availability of suitable child care, raised by the claimant. I will give an example to illustrate how that might work in practice. If the child care costs that result from taking up a new job amount to an unreasonably high proportion of a claimant’s pay, they can cite good reason for not accepting or applying for a job. If the claimant were found to have good reason, the sanction would not be imposed. 

I should emphasis the key point, however, that when the child is at school, the parent is only expected to do a job that fits around school hours. There are many safeguards in the system. In policy terms, we have not really made changes to the way that this operated under the previous Government. It is a matter for common sense, and we have taken the same view as the previous Government; we want lone parents to have the earliest sensible opportunity to get back into the workplace. 

At the same time, however, the system has to treat them reasonably. They cannot be expected to take on roles that are totally incompatible with being a parent of a child at school. Equally, there has to be a balance the other way. They cannot be able to unreasonably refuse to take an offer, as and when there is one, if it is reasonably consistent with the life of a lone parent in school. I hope that that provides the reassurance that the hon. Member for Glasgow Central requires: in his

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constituency and in other parts of Scotland, because there is no obligation to accept a job when one has a child under school age, or one that is inconsistent with school hours, the availability of affordable good child care is clearly an issue. We as an administration and he as a local MP and others will continue to push this issue forward, because it is to the advantage of us all that good, high-quality child care is available and that the safeguards exist to ensure that his constituents do not suffer from the situation that he described locally. On that basis, I hope that he will feel free to withdraw the amendment. 

Anas Sarwar:  I thank the Minister for that detailed reply. Many child care circumstances will be relevant to the Scottish Government, and certain representations will have to be made to them and to local authorities. I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

10.45 am 

Stephen Timms (East Ham) (Lab):  I beg to move amendment 79, in clause 26, page 12, line 12, at end insert— 

‘(1A) Any reduction under this section must affect only the standard allowance component of an award of universal credit.’.

The Chair:  With this it will be convenient to discuss the following: 

Amendment 46, in clause 26, page 13, line 8, at end insert— 

‘(9) No regulations made under this section shall allow for the amount of universal credit received in respect of a child or qualifying young person to be reduced.’

Amendment 82, in clause 27, page 13, line 12, at end insert— 

‘(1A) Any reduction under this Clause must affect only the standard allowance component of an award of universal credit.’

Amendment 47, in clause 27, page 14, line 4, at end insert— 

‘(10) No regulations made under this section shall allow for the amount of universal credit received in respect of a child or qualifying young person to be reduced.’

Stephen Timms:  I offer you a warm welcome back to the Committee after the Easter break, Mr Gray, and also extend warm wishes to the Committee. 

It is worth reminding ourselves that, in clause 26, we are dealing with potentially far-reaching sanctions on people’s benefit that can last up to three years. I was struck by a note that appeared in a newspaper article, which we will discuss later on, about the effects of sanctions on an individual. It is worth reading an extract to the Committee from the case study of John Robson, aged 53, from South Shields. He says: 

“It never seems to go away. Every day you’re thinking: “I haven’t got a letter today, so obviously there isn’t a sanction going against me. Another day there’s a brown envelope from the DWP and you think, “What’s this for?” There’s always that cloud hanging over you.” 

Mr Robson was made redundant from his job as a delivery driver 13 months ago. He says: 

“I was 17 when I started work so I’ve been working for 35 years. I’m not Jack the lad who’s never been in a job and is trying to con the Government. I want to work, I just can’t get a job. You try your best, and the minute you do something wrong, they’re on you like a ton of bricks.” 

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Mr Robson has been sanctioned three times. First, he was ill and missed a jobcentre appointment; he was sanctioned for that. Next, he was sanctioned for not applying for one job. He says: 

“I was sure I had applied for it, but I couldn’t find evidence that I had. If you apply for job after job after job, and you get nowhere with it, you can lose track.” 

Mr Robson turned to Citizens Advice for help and won the appeal, but his financial situation remains precarious. He said, 

“It reached the point where I’d visit my mother and sit there for hours just to get warm, use her shower and cooker, because I couldn’t afford the gas and electricity. … So many things go wrong when you’re unemployed, and you just get so disheartened. It’s actually quite frightening being out there. And nobody seems to care. It’s like a lot of things in life—things are set in place by people who don’t actually experience it themselves.” 

That is a graphic account from one person’s point of view of the impact of sanctions. As we go through the amendments to the clause, including those in this group, we need to be aware that we are talking about things which to many people can seem very unfair. 

I tabled amendments 79 and 82 to raise an important point. The White Paper on universal credit stated: 

“as now, sanctions will not apply to…Housing Benefit.” 

I hope that the Minister will confirm that that is indeed the Government’s intention, because the Bill does not say that—it does not exclude sanctions on the housing part of universal credit, which as I understand it, and certainly according to the White Paper, was the Government’s intention. 

The amendments are intended to ensure that sanctions can be taken only from the standard allowance component of universal credit, thus in particular protecting support for housing costs, as well as additional allowances such as support for children. My hon. Friends have tabled amendments that refer specifically to such support, which have been grouped with amendments 79 and 82. I hope that the Minister will confirm that it is the Government’s intention that the sanctions, which can lead, as clause 26 makes clear, to loss of benefit for three full years, will be taken only from the standard allowance and not from the other elements of an individual’s universal credit. 

I draw the Committee’s attention to the comments of the Child Poverty Action Group about the whole framework of sanctions: 

“Universal Credit as currently proposed will create an unprecedented increase in conditionality. At present neither tax credits nor housing benefit are subject to any conditionality at all. The conditionality regime envisioned in the Bill imposes work related requirements on virtually all adult claimants, is within a more dictatorial structure and has much stiffer penalties.” 

It is important that the Committee recognises that the proposals represent a significant increase in the conditionality to which benefit recipients are subject. There may be good reasons for that, but the Committee should not overlook the scale of the changes. The Child Poverty Action Group makes the point that the 

“DWP does have research evidence to suggest that the most vulnerable claimants are the most likely to be sanctioned. We are therefore concerned that there is no provision in the bill to protect the wellbeing of vulnerable claimants and their children from financial sanctions.” 

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I hope that the Minister will be able to provide an element of reassurance that these pretty draconian sanctions, which may apply for up to three years, will be taken only from the standard allowance component of universal credit. The note on regulation-making powers that the Department for Work and Pensions has sent us offers some encouragement that that is the Government’s intention. The note on clause 26 regulation states that 

“Universal Credit may continue to be paid during a period of a sanction, but at a reduced rate because the claimant’s full award amount will be reduced by an amount broadly equivalent to the JSA personal amount.” 

That implies that only a standard element equivalent to the current JSA personal amount can be sanctioned, rather than the benefit as a whole, but the Bill does not actually state that. If the Minister confirms that that is the Government’s intention, that will provide at least an element of reassurance to those who are considering the effects of these pretty far-reaching changes. 

Kate Green:  I rise to speak in support of amendment 79 and the amendments grouped with it. My right hon. Friend has already mentioned that we are especially concerned about the sanctioning of the element of universal credit that is received in respect of children. I hope that the Minister will assure us this morning that that element of universal credit will not be subject to sanction. 

The difficulty arises because universal credit, in integrating payments that are currently made from different pots and by different agencies into a single credit, means that the existing arrangements, which leave some of the payments for children completely outside the current Jobcentre Plus sanctioning regime, will be affected. In particular, I refer to child tax credit, which is now paid by Her Majesty’s Revenue and Customs and is therefore not a sanctionable benefit under the span of authority of Jobcentre Plus. The child tax credit will be folded into universal credit as a payment in relation to children, which is a new element, and it seems particularly important that that payment is not subject to sanction. It is not now, because it is paid by HMRC, and I would welcome an assurance from the Minister that the current position will be read across into universal credit. As on the housing element, as my right hon. Friend the Member for East Ham has pointed out, the Bill is not clear. 

Let me outline what will happen if payments in relation to children are sanctionable and what that could mean for child well-being and the way that money is spent on children in a household. There is already international evidence that where parents are subject to financial sanctions, the impact on children’s health and well-being can be quite significant. In the US, for example, it has been shown that children growing up in households where parents experience financial sanctions are more likely to be admitted to accident and emergency care. Clearly, there are concerns about whether parents will have adequate income to be able to afford some of the essentials for their children such as a healthy diet, the opportunity to participate fully in their education and development and so on. 

I want clarity from the Minister about how, if more than simply the standard element were to be sanctioned, the claimant would understand what was being sanctioned, in what proportion and why. If the intention is that any element of universal credit could be subject to a sanction,

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will claimants know, for example, to what degree the financial support that they receive for rent might attract a sanction? If that is the case, it is essential that they understand that, because that will obviously inform any discussions that they then have to have with the landlord of the property that they occupy. 

We already know from considerable research evidence that claimants are often quite confused about sanctions. In many cases, they do not understand that they have been sanctioned; they simply think that their benefit has gone down a bit in a particular week and they do not make the connection that that is the result of a sanction. Where different elements are bound together within universal credit, it is all the more important that there is absolutely transparency and clarity for claimants about which elements of their benefit are being sanctioned and why. That is because the purpose of sanctions should be to effect a change in behaviour. If the sanction appears to be completely disconnected from the behaviour that is being questioned or punished, it will clearly have a less motivating effect than if it were well targeted on bringing about the desired change in behaviour. 

If elements of the benefit other than the standard allowance will be subject to sanction, it is important that we have a running order in which such sanctions would be applied. The Opposition certainly do not advocate that: we are of the view that the standard element only should be subject to sanction, but if that is not the case we need to understand the approach that will be taken to sanctioning different elements of universal credit and the order in which benefits might attract a sanction. 

There is real concern about where Ministers are going with the proposals; the amendments are designed to elicit assurances to allay that concern. We hope to hear an assurance this morning that only the standard element of universal credit will be subject to sanction. That would be analogous to the present position, where the adult benefits administered by Jobcentre Plus can be sanctioned, but the other benefits paid for children, housing and so on, are left outside the sanction provision. 

11 am 

Sheila Gilmore (Edinburgh East) (Lab):  If the Minister intends this sanctions regime to apply only to the equivalent of the standard jobseeker’s allowance, I hope that it could be put on the face of the Bill in the way that we suggest. It would greatly reassure claimants and their families that what is said in words will be carried out in deed. The difficulty in dealing with many people in a system that uses sanctions—whether they are long or short-term unemployed—is what we do about children, and how we ensure that their welfare is provided for. 

It is very easy to make statements—they are sometimes made in the media, by constituents and politicians—that in some sense it is wrong that people do not work, or that certain types of claimant should not receive benefits, for example people with drug or alcohol problems. The problem always arises when it comes to children. When I have that discussion with people one to one and we start to unwrap that kind of statement, I find that virtually everyone agrees that whatever line is taken with the adult—whatever use is made of carrots, sticks

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or both, to try to get people into work or to try work, particularly those who have not worked for a long time—the needs of the children must still be looked after. They do not go away, and we have to look to those children’s futures. 

I think that that is well and widely accepted, even among those who perhaps have fairly strong views about how a sanctions regime should operate. In that context, I hope that the Minister will not merely give us reassurance, but actually agree that it is right that this be clearly stated. As ever, our difficulty is that at this stage we have not seen the regulations that might be proposed. 

Chris Grayling:  I hope that I can reassure hon. Members about our intentions. Indeed, the shadow Minister referred to the notes that have been circulated to Committee members. It is not our intention to change the position significantly for those who are currently out of work and might face conditionality relating to their job search, but of course the nature of universal credit makes it a little more complicated. 

I shall start by setting out the position for the maximum amount for somebody who has applied for universal credit, is receiving the standard amount and amounts for children and housing. To be clear, in almost all circumstances, though there is one exception to which I will return in a moment, it is not our intention to use the sanctions system to reduce the entitlement to universal credit to a level below that of the housing and child-related elements. That very much mirrors the current situation, whereby the amounts paid in housing benefit and child tax credits are not sanctionable in the same way as other out-of-work benefits. So in that respect we do not intend to change the current situation. 

However, I must make two qualifications. The first relates to the introduction of the capital element. If there is a situation whereby somebody’s overall entitlement to universal credit—which might include the standard amount, and amounts for housing and children—is reduced because they have savings and an income from them, it is theoretically possible that a sanction could reduce the amount that they receive to below the combined cost of housing and children. However, at the same time, they will, of course, receive a matching income from those savings. That is a technical circumstance in which an award of the housing and child elements together could be reduced to below those combined levels as a result of a sanction, but only if the recipients have money in the bank and are receiving an investment income from that money according to the rules we discussed for the capital provisions that exist in relation to universal credit. 

Stephen Timms:  I think I understand the Minister’s point. When we discussed the capital limit on universal credit, it became clear that those with £16,000 in savings would not get any universal credit and £16,000 will not generate anything like enough of an income to make up for child allowance, plus housing benefit, plus other parts of universal credit. Is he simply making the point that those with more than £16,000 in the bank will get no universal credit full stop, or is something slightly more subtle happening? That does not sound to me like a sanction as meant by clause 26. 

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Chris Grayling:  The right hon. Gentleman needs to bear in mind that there is effectively a taper for people who have between £6,000 and £16,000 of capital in the amount of support that they receive. Let us imagine a situation whereby someone receives the basic amount, an amount for children and an amount for housing, and an element of that is reduced because they have £8,000 in the bank. If they were then sanctioned to the equivalent of the standard amount, the amount they received for the other two elements might be slightly lower than the maximum because that capital element is taken into account. That is the only circumstance in which somebody in receipt of the maximum amount would have a reduction in the amount they receive below the child and housing element. That is only because they have and are deemed to have income coming in from the capital that they have in the bank. 

Sheila Gilmore:  One of the problems with that capital rule, which has existed for some time, is that the imputed income from capital is often, particularly in current circumstances where interest rates are low, considerably higher than the actual income. In the scenario that the Minister paints here, people will see a real reduction in those elements, not just one that can be balanced up through an accountancy procedure. 

Chris Grayling:  I am not sure the hon. Lady has totally understood the way in which the capital element works. There is an expectation in the system that existed under Conservative and Labour Governments that people will draw down on their capital until they reach a certain amount. They will use that money to support themselves at least in part until they reach the bottom end threshold, which is £6,000, below which they are not expected to draw on their capital any further, and they will receive the full amount from the state. My point is that, while they continue to do that, in a small number of cases, the overall universal credit they receive, if they face a sanction for the equivalent of the standard amount, may be slightly less than the total they would otherwise have received from housing and child elements until they reach the point when that capital is exhausted. At that point, the maximum amount by which they can be sanctioned would simply reduce them to the housing and child element of the universal credit. I hope that that reassures Opposition Members about the impact on those in receipt of the maximum universal credit payment. 

The situation becomes much more complicated when somebody is in work part of the time, when they may be subject to an in-work sanction for reasons that we will debate elsewhere. At that point, once the universal credit starts to taper away, it becomes much more difficult to work out what the different elements are. It may be possible to quantify the total amount of a sanction in terms of a proportion of universal credit. Someone may receive half the universal credit entitlement that they would have received because they are working part time, have refused to go into full-time work and are subject to a sanction. I cannot give Members a breakdown of what the equivalent elements would be at that point because universal credit has tapered away and people are not receiving the maximum amount. 

Kate Green:  This may be a rather stupid question and perhaps the Minister is ahead of me in his thinking on this: would it not be possible in that scenario at least to

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protect elements of universal credit from sanction and concentrate the sanction only on the element that was effectively the standard allowance, leaving the housing and child components untouched? 

Chris Grayling:  We are continuing to look at the best way to deal with the detail in such a situation. I cannot write rules into primary legislation today, which is what we are talking about. I cannot give the hon. Lady an assurance that in all circumstances the standard amount today—the lower rate of JSA is £67 a week—the proportions of a sanction will relate to the proportions of overall initial universal credit of £67 a week plus the housing element and the child care section. We will taper each of those elements individually. 

I assure the hon. Lady that somebody who is out of work and looking for a job will not be subject to a sanction that reduces the universal credit that they receive to below the child and housing element, except in cases when they have savings in the bank that they are expected to draw down. That is the core point raised by the hon. Lady and her colleagues. It is not possible to set an equivalent amount in primary legislation and to say that those three elements will remain intact, because as the universal credit tapers away, the amounts will change. When sanctioning someone through the universal credit, we do not intend to disadvantage them in terms of the housing and child elements. 

Kate Green:  Will the Minister confirm, for the sake of clarity, that each component of the universal credit will be calculated separately for claimants both in work and out of work? Will it be possible, including for claimants in work, to see how much money is received through universal credit in relation to the low hours they are working and their income below the threshold, and how much of that is for children and how much for housing? Will it be possible at least to identify the way in which the total is made up of those different elements? 

Chris Grayling:  After the initial establishment of a universal credit entitlement, we do not intend to continue to break down the different elements. The universal credit will taper away. People will receive an initial assessment that will contain the three elements that have been discussed, but we do not intend to continue to map out as they go on through employment the different elements of the universal credit. It would be far too complicated to do that. 

Kate Green:  Will the Minister confirm what will happen in that situation if housing costs change? 

Chris Grayling:  If a person’s circumstances change, they may apply to be reassessed for universal credit, as they would now. If someone moves house, for example, they might need to claim housing benefit. It will be the same as happens today. If someone moves to a different location, they have to reapply and be reassessed based on their new circumstances. 

The key point is that we do not intend to remove the housing and child elements of universal credit when someone receives a sanction. The principle of the sanction system applies to people on out-of-work benefits: it applies to those out-of-work benefits, and today it

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applies most particularly to JSA. We do not intend that that situation should materially change when universal credit is introduced. We intend to table draft regulations on the sanctionable amounts by the summer of 2011, but we intend to protect the housing and child elements. 

Ms Buck:  It is important that we get to the bottom of this. I think I am right in saying that at the moment a tenant whose rent increases—a local authority rent, for example—does not have to apply for a complete reassessment of their benefit. Under the new system, would they have to apply for a reassessment, or would a normal rent increase or normal alteration in housing costs simply be factored in without a reapplication? 

  Chris Grayling: We certainly do not intend anyone to reapply if they experience a routine increase. We will not extend it to that. But if somebody moves house or moves into different circumstances, clearly they would have to reapply and be reassessed on the basis of those new circumstances. 

A change in the housing element would result in a change to the maximum amount of universal credit to which a claimant is entitled. That will be calculated and a taper applied to give an amount payable. If somebody’s housing costs increase, we will simply reassess their maximum amount for universal credit—everyone has a maximum amount that depends on whether they are working—and then the amount that they receive tapers away as a result of that. 

Kate Green:  Will that not require the Department to understand the current level of housing costs in order to understand the amount by which they have increased? It will be the case, therefore, that it will always be possible to know the amount of the different components of universal credit, not just at the time of initial payment. 

11.15 am 

Chris Grayling:  The hon. Lady is trying to write into primary legislation a maximum amount that can be sanctionable and a set format for the relationship between the different sanction elements. As I have said to her, with the standard amount for universal credit, which is the amount that each individual will be set at the start when they apply—the maximum that they can receive under universal credit—we do not intend to sanction, unless people have capital, above the amount that is equivalent to the standard amount at the moment. However, we do not intend to taper away sanctions rates as people return to work over a period of time. This may help to clarify: we intend to specify a cash amount for a sanction. We do not intend to taper away sanctions rates if people are working part time. The sanctions rate will remain constant all the way through. We do not intend to reduce the component amount as the overall entitlement to universal credit tapers away. 

Margaret Curran (Glasgow East) (Lab):  I understand the Minister’s argument, and, to follow his logic, I heard him say that there will be no sanctions on the child element or the housing component, but he went on to say that, as entitlement moves on, those elements

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cannot be separated. How, in principle, can the Minister say that some components will not be sanctioned if the components are not identified? 

Chris Grayling:  What we are saying—very straightforwardly—is that the maximum amount that any individual can receive under universal credit, if we take a case where somebody has children and housing needs, includes the standard amount, the housing amount and the child amount. At that point—the maximum entitlement level—we do not intend to set a sanctionable amount that is higher than the standard amount, which is effectively where we stand at the moment with the £67 a week for JSA. However, we do not intend to taper away that sanctionable amount. If a claimant breaks their conditionality and does not do what they have agreed to do, the sanctionable amount will not taper away. That sanctionable amount will remain constant. At the basic level, if a claimant is unemployed, we do not intend to sanction them at a rate that impacts upon their housing and child elements unless they have money in the bank. If the claimant is back in work and if they are some way down the taper, and they face a sanction because they have broken their conditionality, it is still our intention to sanction them at the equivalent of the standard amount. We will not vary the sanctionable amount. 

I hope that that makes where we stand clear to Opposition Members. I certainly cannot accept the principle that we would write the elements that the right hon. Member for East Ham has suggested into primary legislation. I hope that he accepts that. My sense is that this was a probing amendment anyway. It is not our intention to take away housing or child costs from parents or from claimants who are out of work. Once we are into the universal credit system, we intend to sustain the level of sanction at that set amount from the start. 

Lilian Greenwood (Nottingham South) (Lab):  May I clarify that the implication of what the Minister has just said is that if someone is in work, but in receipt of universal benefit, and they are sanctioned, and if that is kept at the same as it would have been when they were out of work, that will inevitably impact on the payments that they receive for the care of children and for housing? Is that correct? 

Chris Grayling:  If someone is sanctioned and if they are receiving a lower level of universal credit, the sanction amount will stay the same. That is our intention. 

Stephen Timms:  The Minister has given us some helpful reassurances, but I am still puzzled. I do not quite understand why he is saying that the components cannot be maintained once they have been calculated. If somebody is in work, and if their universal credit has been worked out on the basis of standard allowance, housing and other elements, there is a well-defined figure that corresponds to the standard allowance as it affects that person’s universal credit. Can that not be protected if someone is then sanctioned? 

Chris Grayling:  The standard amount will be protected. In today’s example—I am not saying that this is the final figure—if we take the current JSA sanction rate of £67 a week, someone sanctioned for a breach of their

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conditionality would be sanctioned to the degree of £67 a week. That would not change, regardless of someone’s position on the universal credit ladder. That means that for someone who is unemployed and breaches their conditionality we do not touch the housing or child elements. 

As people progress through the universal credit system, they may have a part-time job and agree to look for a full-time job, only to turn around and say, “Well, I am not willing to look for a full-time job—I refuse to do so.” If Jobcentre Plus’s request that they look for a full-time job is reasonable, they will continue to be sanctioned to the set amount. Otherwise we would be in a position where the amount of the sanction would drop as universal credit tapered away, and there would be lesser consequences for refusing to do what they had previously agreed. We should bear in mind that these are things that the claimants themselves have agreed to do: “I will do a part-time job for six months, and I will then agree to look for a full-time job.” After six months they are turning around and saying that they will not do it. 

Stephen Timms:  The Minister has given very clear reassurances for people who do not have savings and are not in work. However, the position is worrying for people who are in work and will be sanctioned, perhaps because they are not doing enough to increase their hours. This is, of course, a whole new area of in-work conditionality that we have never had before, but it sounds as if the position of people in work is much more at risk than the position of people who are out of work. The Minister has given clear reassurances for those who are out of work, but can he give some assurance to people who are in work that they will not lose the support that they need to pay their rent, for example? 

Chris Grayling:  Let us be clear about what we are talking about, which is people refusing to do what they have agreed. We are discussing providing support to people who are back in work and, for example, have agreed to do a part-time job for a while before looking for a full-time job, but then refuse to do so. We are simply saying that there is a sanctionable amount that will remain constant and is a consequence of breaking the agreement that someone reaches with Jobcentre Plus. I think that that is a perfectly reasonable approach; it is perfectly reasonable for the state to say to people that if they receive money from the state we expect them to fulfil a number of conditions in return. Those conditions are agreed to, and if people then turn round and break them there is a financial consequence. That principle has always existed within the welfare state, and we intend to continue with it. 

Kate Green:  Am I right therefore to draw the conclusion that people who are in work and suffer that flat rate sanction are disproportionately penalised compared with people who are out of work? An attack is being made—[ Interruption. ]—forgive the language. Inroads are being made into child and housing payments that would not occur for people who are completely out of work. 

Chris Grayling:  If someone is in that position, they have other income coming into the household. The whole point—and it may be a point of division between

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us—is that we are trying to create a clear system, which is a two-way contract between the claimant and the state. We will provide support, and a better system that tapers away, rather than having the cliff edge that we have at the moment, but in return it is not unreasonable to say, “We expect you to continue to work towards getting a full-time job at all stages in the receipt of the benefit,” up to the stage where they effectively move beyond the point where there is the scope to increase their hours, for example. That is what we are talking about. 

There will be things that hold people back—for example lone parents with kids at primary school, where decisions will be entirely thoughtful and sensible with regard to the circumstances that they face. Our goal is very straightforward: to get people who are out of work back into work, into full-time jobs where their need for support from the state is ever-decreasing. At any stage, if those people are subject to conditions but turn around and say, “I’m not having that, I’m not being part of it, I don’t want to do it,” there is a consequence. We are simply saying that that consequence will stay constant in cash terms; it will not taper away as universal credit does. 

Charlie Elphicke (Dover) (Con):  Is not the central point that if we are going to roll back the benefits culture that has grown to excessive amounts over the past 10 years, we have to encourage people to take responsibility for their lives and encourage them back into work by making work pay? 

Chris Grayling:  Absolutely. I hope that this is not a point of difference between us. It is perfectly reasonable to have a sanction which remains constant. As universal credit tapers away, it does so only because people are bringing other income into their household. We are not disproportionately impacting on any individual compared with the situation they would be in when they were at work. 

Kate Green:  r ose 

Chris Grayling:  I will give way in a moment. Let me explain this point to the hon. Lady. If somebody is out of work, they are receiving money for the standard amount; they are receiving money for children and for housing. If they get back into work, once the earnings disregard is taken into account, that support tapers away. However, it does so because they have more money to fill the gap than is actually needed. Their household income is in fact increasing, so we are not disadvantaging anybody proportionately. We are taking away the same standard amount, the same proportion of everyone’s household income—in fact a slightly lower proportion of household income for those who are in work—because of the impact of universal credit. We are saying to those who have said, “I will take a part-time job, then get a full-time job if I can,” only to turn round and say that they are not in fact willing to look for a full-time job, that they will face a sanction. That is how we approach the issue of in-work conditionality. 

Kate Green:  I understand that the Minister’s intention is that people who are in work should be able to produce good reasons for not being required to increase their hours of work. Will he tell us exactly what is

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meant by good reasons in such circumstances? Would it, for example, mean that somebody might want to reduce their working hours because they want to spend more time looking after a child who may be developing behaviour problems at school? Would that kind of thing be treated as a good reason for doing less work? 

Chris Grayling:  There are various reasons for a decision about what happens when somebody’s circumstances, and therefore the requirements that rest on their shoulders, change. It could involve the break-up of a relationship and somebody becoming a lone parent where previously they had not been a lone parent. It might be the illness of a child. There are many reasons, but the point is that we are seeking to give Jobcentre Plus advisers as much discretion as we can against a guideline of being reasonable and making sensible decisions about individuals, to make sure that we do not impose unfair conditionality. We want to impose fair conditionality, and will only sanction people who break that requirement. I hope that that is not a point of difference between us, because it is no different from the principle that has always existed in the management of our welfare state. We are simply seeking to extend that principle into universal credit. 

Stephen Timms:  The Minister is being generous in giving way. I want to ask one more question. Our difficulty is that we do not really know what this in-work conditionality is going to look like. Will the Minister tell us when some description will be published of when people will be expected to work for longer hours? As my hon. Friend the Minister for Stretford and Urmston said, what would count as a good reason for not being willing to work for longer hours? This whole scheme is new. Jobcentres have never done it before. Can the Minister tell us when we will have sight of what the overall scheme will be? 

Chris Grayling:  We will introduce further information on in-work conditionality through the course of this summer, but I can explain the basic principles to the right hon. Gentleman. They are relatively simple. Effectively, there is a requirement for people to increase the number of hours they work and the amounts that they earn, to try and get them beyond the point where they are dependent upon the state. 

A case in point might be somebody who chooses to take the first steps back into the workplace. One of the benefits of universal credit, for example, for somebody with a disability, is that it enables them to do a few hours’ work to get back into the workplace and learn more about what they can do. After a period of time, once they are re-established in the workplace and have the potential to do more, it becomes reasonable to say, “Right, we now want you to try and take a step to the next level.” It is our intention to use in-work conditionality to encourage people in a whole variety of circumstances to take further steps back towards full-time employment. That is the goal. Of course, some people, such as a lone parent with a child at primary school, or a carer where only temporary respite care is available, will never be able to secure full-time employment for health or other reasons. They will never be able to do more than part-time

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work. Our goal should be to help people who are out of work take steps back towards full-time work. Part-time work and mini-jobs, as we have discussed, all provide a useful stepping stone, but they cannot be the end point. Our intention is simply to include in the claimant commitment a ladder or an agreement that people will take steps, where it is reasonably practicable and possible to do so, to move back towards full-time employment. If at any point they refuse to do so without good reason, in-work conditionality will apply. In-work conditionality will operate in a similar way to out-of-work conditionality. 

11.30 am 

Ms Buck:  Does the Minister envisage the possibility of jobcentre advisers encouraging people to take second part-time jobs? That would not be unreasonable in itself, but it would have implications for additional in-work costs, for example. How might that be factored into a general better-off guarantee? 

Chris Grayling:  It is possible. It is difficult to apply one-size-fits-all rules, certainly in legislative terms, to individual situations. If somebody has a part-time job on a Monday and a Tuesday, and they have the ability to work full time, it would not be unreasonable to ask them to apply for a job that required somebody on a Wednesday, Thursday and Friday. There are circumstances in which that could apply, but it is down to the individual adviser, the individual claimant and, where necessary, a decision maker to decide what is reasonable and what is not. 

We will continue to apply the standards of reasonableness that have been applied by Governments of both persuasions over many years. It is not reasonable to expect people to do things that are completely out of kilter with the rest of their lives. It is not reasonable to expect a lone parent to work a night shift. It is not reasonable to expect somebody who has a health problem and can only work a few hours a week to march straight into a full-time job. This is all about helping people on the journey into work. 

I return to the core point of the amendments. Somebody who is out of work, and who is receiving their full universal credit assessment, will be sanctioned only up to the maximum of the standard amount unless they have capital in the bank and, therefore, there is a degree of offsetting income. Where somebody is back in work and is subject to the taper—the rate of support that they receive falls off depending on the number of hours that they work, but the additional income that they receive has pushed their income above the total amount that they received while they were out of work—we do not intend to vary the amount of any sanction. It will stay at the same rate at all levels. I hope that that clarifies the situation. I do not know whether Opposition Members want to accept that or not, but that is the position that we intend to pursue. 

Stephen Timms:  This has been an illuminating debate, and I am grateful to the Minister for the information that he has given us. He has provided reassurances on some important points, specifically on the position of those who are out of work. He has given the reassurance that we were seeking, but he has opened up a whole new

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area of concern about those who are in work. It worries me that we have finished scrutinising that part of the Bill but we do not know what the position will be for people who are in work and find themselves subject to conditionality. Will they have to go down to the jobcentre every couple of weeks—presumably, they will—to report how many hours they are now working and to see whether the jobcentre adviser thinks that that is enough? Clearly there will have to be a requirement, and I understand why this is the case, on people who are in part-time work to seek longer hours. There seems to be a bit of a contradiction if the Government encourages mini-jobs, as we have discussed, but people with mini-jobs are told, “No, that isn’t enough; you should be working part time.” 

Checking up on people who are in work and requiring them to work longer hours is a new area of activity for jobcentres. I hope that the Minister will tell us when he publishes the account that he has referred to—he suggested that that might be in the summer, and I imagine it will be after the debate on the Bill has finished—what the manpower implications are for Jobcentre Plus of doing all this extra work. To return to a question that I asked him before Easter, how will jobcentre advisers know how many hours people are doing, unless he expects people frequently to go back to the jobcentre to report what their hours are? The whole area of in-work conditionality is a worry, not least from the perspective of what sanctions will be used. 

Nevertheless, I do not intend to press the amendment to a vote. The Minister has given clear assurances on the issues that we have raised about those who are out of work, and although a lot of people will be very concerned about what some of the proposals will mean for people who are moving back into work and have started jobs, I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Stephen Timms:  I beg to move amendment 53, in clause 26, page 12, line 12, at end insert— 

‘(2) With respect to claimants who have disabilities, the Secretary of State shall not impose any sanctions without first consulting a Disability Employment Adviser.’.

The Chair:  With this it will be convenient to discuss the following: 

Amendment 54, in clause 27, page 13, line 12, at end insert— 

‘(2) With respect to claimants who have disabilities, the Secretary of State shall not impose any sanctions without first consulting a Disability Employment Adviser.’.

Amendment 142, in clause 46, page 23, line 40, at end insert— 

‘(1A) With respect to claimants who have disabilities, the Secretary of State shall not impose any sanctions without first consulting a Disability Employment Adviser.’.

Amendment 143, in clause 46, page 24, line 38, at end insert— 

‘(1A) With respect to claimants who have disabilities, the Secretary of State shall not impose any sanctions without first consulting a Disability Employment Adviser.’.

Amendment 144, in clause 49, page 32, line 21, at end insert— 

‘(1A) With respect to claimants who have disabilities, the Secretary of State shall not impose any sanctions without first consulting a Disability Employment Adviser.’.

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Amendment 145, in clause 49, page 33, line 19, at end insert— 

‘(1A) With respect to claimants who have disabilities, the Secretary of State shall not impose any sanctions without first consulting a Disability Employment Adviser.’.

Amendment 146, in clause 56, page 42, line 43, at end insert— 

‘(1A) With respect to claimants who have disabilities, the Secretary of State shall not impose any sanctions without first consulting a Disability Employment Adviser.’.

Stephen Timms:  Disability employment advisers in jobcentres receive additional training in disability and in specific impairments. Their future role is a little unclear given the transition to external providers in the work programme, but there is certainly a task in which their expertise could be very valuable. 

The Disability Benefits Consortium, which has written to all members of the Committee, comprises a wide range of organisations representing people with disabilities. It points out that people unfamiliar with autism, for example, might well regard as unreasonable behaviour that somebody who is familiar with the effects of autism would regard as completely unexceptional. Care is needed before imposing a sanction and potentially causing serious hardship, if, in fact, the behaviour that is about to be sanctioned is the result of a disability. I hope that the Minister accepts that getting advice from a disability employment adviser—people whose expertise is well known and who have a well established role in jobcentres—would be a helpful safeguard. 

Specific organisations have put other points to us. Scope told the Work and Pensions Committee that 

“significant numbers of disabled people put onto JSA will cause long-term strategic difficulties in the Jobcentre Plus offices—research shows that beyond Disability Employment Advisors, there is little disability awareness in front-line staff”. 

Scope goes on to point out some of the difficulties to which that currently leads. Where sanctions may be imposed, there is a clear case for calling on the specific expertise of disability employment advisers. The Scottish Association for Mental Health, in its evidence to the Work and Pensions Committee, stated: 

“Decision-makers should have a proper understanding of mental health problems and should not issue sanctions without consulting a Disability Employment Advisor”. 

That is what the amendments would do, and I hope that the Minister recognises that the arrangement we suggest would be helpful. I look forward to his response. 

Chris Grayling:  Broadly speaking, I agree with virtually everything that the shadow Minister has said. I share his concern about ensuring that we have a system that is responsive and thoughtful about people with disabilities, particularly those with mental health problems where, as he rightly says, some problems are difficult to diagnose on a first meeting—a person’s condition may not become apparent until a second or third assessment—or without more detailed knowledge of their case. The only difference between us is that the amendments focus on the wrong individual in the Jobcentre Plus system. The decisions are not taken on the front line by the advisers or by the disability employment advisers, but by the decision makers. I will share with him why we have taken a different tack—a better tack, I think. 

As the right hon. Gentleman is aware, one of my concerns about the work capability assessment, particularly the migration off incapacity benefit, is how we ensure

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that we get decisions right for those with mental health problems and with fluctuating conditions. Along with our work within the Atos network—the introduction of mental health champions, for example—we are putting a lot of effort into the decision-making process within Jobcentre Plus, training our decision makers and introducing a reconsideration process for more significant issues around the migration. The quality of decision making is improving, I think, and my intention is to continue to invest in our decision-maker network to ensure that decision makers are as aware as possible of those issues. 

Decision makers are free within the Jobcentre Plus system to talk to the disability employment advisers should they believe it appropriate to do so, but I would like them to have access to broader mental health expertise. I see no reason why decision makers should not be able to phone the mental health champions when they are dealing with a decision in the migration process. What I do not want to do is write into primary legislation something that appears to draw focus away from the decision maker’s role and towards the disability employment adviser’s role. The prime purpose of disability employment advisers within Jobcentre Plus is to provide expert guidance and support to disabled people to try to get them into the workplace; that is enormously important and I do not want to take them away from that task. Nor do I want to de-emphasise the importance of ensuring that our decision-maker network has the right expertise to deal with the issues raised by the right hon. Gentleman. 

Essentially, my message to the right hon. Gentleman is that I agree with the principle. I want to ensure that decision makers are as well equipped as possible to deal with a range of issues, but my response is to do more to train those decision makers than simply to reorganise the focus of decision making itself. 

Margaret Curran:  I understand the Minister’s logic, and I am sure there is a strong argument to be made for it, but does he recognise the experience of many disabled people and their organisations who have articulated concerns about their first experience of the process? They often get lost in the process, so that first point of contact is important. Some people never get as far as being properly identified and receiving support. There is perhaps a front-line issue that still needs to be addressed. 

Chris Grayling:  The hon. Lady is correct, but the correct response is to focus on the calibre of decision making. I do not want to create a convoluted process. In Jobcentre Plus, as became very apparent when it came to addressing the problems in the work capability assessment process, many decision makers were simply treating the recommendations of the Atos professionals as gospel and were not taking a more detailed look at the situation. We have changed that; we have gone through a process of retraining decision makers so that they are much more clearly accountable and responsible for taking the decisions themselves. We have introduced the reconsideration process within Jobcentre Plus for more significant decisions, such as the reassessments, because we want to ensure that the decision makers become a team of experienced, highly qualified individuals who perform a degree of investigation themselves before taking a final decision. 

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To me, the focus must be more on increasing the quality and the breadth of knowledge of our decision makers, particularly their understanding of people with mental health conditions, than on trying to carry out the process as described in the amendments. 

Stephen Timms:  The Minister makes a number of helpful points, but does he agree—he said at the outset that he agrees with the points I made—that a check ought to be made somewhere before a sanction is imposed on a disabled person, because of the potentially very damaging consequences if it is done wrong? 

Chris Grayling:  Absolutely. One of the things we have done with the IB reassessment is to ensure that decision makers know that it is their job not simply to rubber-stamp, but to go back to investigate and to check. 

To be frank, I want sanctions for disabled people, certainly people with mental health problems, to be few and far between. We have clearly instructed the Jobcentre Plus network that we expect it to be very careful about people with mental health problems. Generally speaking, people who have mental health problems need support and treatment rather than to be sanctioned—we do not intend the regime to be targeted at such people. In what I hope will be rare cases, where we have to face up to the possibility of sanctioning somebody who has a mental problem, I expect decision makers to go more than the extra mile to ensure that they have understood the challenge and the nature of the problem. In many respects, I want them to go further than the amendment. 

Ian Swales (Redcar) (LD):  Does the Minister recognise the importance of what he has said, given the huge rate of successful appeals against the assessment process? Currently more than 50% of assessments are changed on appeal, so sanctions being applied, in his words, in a rubber-stamp way based on those assessments is clearly inappropriate. There should be a much better system for dealing with people who have disabilities. 

11.45 am 

Chris Grayling:  I agree absolutely. I hope that the situation that the hon. Gentleman has described will change over the next few months. The system that we have inherited was too formulaic: some decision makers believed that their job was simply to rubber-stamp the decisions taken within Atos. That has now clearly changed. Clauses later in the Bill contain elements related to the reconsideration process. At the moment that reconsideration process takes place informally, but we are overturning internally decisions that have been taken by our decision makers. We are looking again at decisions that have been challenged, we are finding that sometimes we got them wrong, and we are changing them, which I think is right. We will not always get everything right, and before we reach the question of appeal I want us to work through some of the most challenging decisions carefully. 

I do not in any way disagree on the need to redouble our efforts to get the system right. That is what we did in implementing all the recommendations of the Harrington review; it is what we are doing in the guidance that we give to Jobcentre Plus; it is what we are doing through the retraining of decision makers; and it is what we are

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doing through the introduction of the reconsideration process. I do not think that writing what the amendment proposes into primary legislation will help that process, because there may be situations in which the decision maker’s experience goes way beyond that of the disability employment adviser. I want our decision makers to be senior, experienced people, who have built considerable expertise in dealing with such problems over the months. 

I do not feel able to accept the amendment, but I assure the right hon. Member for East Ham and the Committee that we understand and agree with the sentiments that he has expressed. We are doing everything that we can to step up the way in which we address such issues, and I am happy to continue to answer questions in the House or directly to the right hon. Gentleman about the progress that we are making. 

Stephen Timms:  The aspirations that the Minister has set out are absolutely correct, and people will be reassured by some of the points that he has made. He is a little too optimistic about what happens in jobcentres when he sets out an aspiration, which has to be translated into the actions of individual officials—we will come in a few minutes to an example where that has clearly gone wrong. He has set out the right aspirations, however, so I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Stephen Timms:  I beg to move amendment 113, in clause 26, page 12, line 29, leave out ‘at any time’ and insert ‘within a prescribed period’. 

Clause 26(4) states that a claimant is sanctionable: 

“if, at any time before making the claim by reference to which the award is made, the claimant…failed to take up an offer of paid work, or…ceased paid work or lost pay”. 

It is absolutely right that people should be prevented from playing the system, for example, by being on benefits, getting a job and leaving that employment after a short time in order to resume their former comfortable life on benefits. The Government are right to take action against that. I am puzzled, however, about why the Government want to penalise somebody for having, for example, left a job long before the sanction was considered. The wording of the clause is: 

“if, at any time before making the claim” 

and “at any time” appears to be completely unconstrained. Amendment 113 would substitute “within a prescribed period” for “at any time”, because we think it more sensible to say that if in some prescribed period before a claim is considered the claimant had left their job, ceased paid work, or lost pay, they could be sanctioned. I cannot understand why the Government would want sanctioning to be possible for an action that took place a long time before. 

I shall give an example. If someone left their job two years ago and had not claimed since because they had done something else—perhaps they had decided to travel abroad for a couple of years—or for family reasons, would it be right to sanction them when they applied for universal credit because of a decision made a couple of years previously? I hope that that would not happen in practice, but the Bill is framed in such a way that would allow that, and I am puzzled about the reason. I suggest that the prescribed period should be for the time between leaving employment and the claim, and that any sanction should end when the person takes

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up employment so that universal credit can be received. It is important to have such safeguards in place when there is growing concern about people being sanctioned inappropriately. 

I hope that the Minister will provide some reassurance. He may accept a limit on the period, looking backwards, that can be taken into consideration before imposing a sanction, instead of having the unlimited ability to look back that the clause implies. 

Chris Grayling:  The amendment would provide that when determining whether a sanction should be applied for failures prior to a universal credit claim, we should take into account a claimant’s actions only in a particular limited period before the claim. To put the matter into context, it might help the Committee if I explain why in certain circumstances it is right to impose sanctions on claimants for actions prior to their claim. 

Hon Members will agree that, as a general rule it is not fair of claimants to choose to rely on public funds if they could be supporting themselves. It is not fair to the taxpayer or to other claimants who are genuinely in need of support, so sanctions for people who voluntarily put themselves in that position have been a feature of the benefit system since the introduction of unemployment insurance in 1911. We need strong and clear sanctions to encourage claimants to do the right thing, and to support themselves rather than rely on universal credit paid from the public purse. If claimants do not do the right thing because they leave a job or lose pay voluntarily or through misconduct, or refuse a job prior to their claim and forgo the opportunity to be self supporting, they should face a higher-level sanction. Individuals who claim universal credit after making the choice not to support themselves simply cannot expect to receive full payment straight away. 

The sanctions seek to deter claimants from taking advantage of the system by making choices that significantly increase their dependency on benefit. They will be applied when there is a clear link between those choices and a subsequent universal credit claim. They are not intended to capture all claimants who have lost any job at any time prior to their universal credit claim. We do not intend to sanction individuals who are not looking to take advantage of the system. 

I understand the intention underlying the amendment. Clearly, the period between leaving a job and making a universal credit claim is a key indicator of whether the claimant was purposely making a choice to forgo the opportunity to be self-supporting and to rely on support from the public purse. The right hon. Gentleman makes a sensible point. The problem is that when specific time periods are set down in primary or secondary legislation, as sure as apples are apples, along will come a case that steps outside those parameters, and we will wonder why we allowed someone to get away with it because we did not anticipate the unusual circumstance when we decided the point at which to set the rules. 

My instinct, especially as we are in the early days of universal credit, is that we should not be too prescriptive in primary legislation. We can set a period in secondary legislation, if we choose to do so. The right hon. Gentleman has made a sensible and thoughtful point this morning. We think that we have regulation-making powers that will provide flexibility if it is needed, but I am happy to look at this issue again to make sure that we have the

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ability to do what he has described and provide safeguards for inappropriate use of the system. If he withdraws this amendment today I will look at the issue again just to make sure that we have that issued covered and I will write to him. 

Stephen Timms:  I am grateful to the Minister. It is not clear to me at the moment which regulation-making power would enable that. The amendment would provide a regulation-making power, and I certainly do not propose that a period should appear in the Bill, but he has made a generous offer. I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Stephen Timms:  I beg to move amendment 76, in clause 26, page 12, line 41, leave out ‘three years’ and insert ‘one year’. 

The Chair:  With this it will be convenient to discuss the following: amendment 42, in clause 26, page 12, line 42, at end insert— 

‘(c) the period after which a reduction made under this section shall be reviewed.’.

Amendment 77, in clause 27, page 13, line 25, leave out ‘26’ and insert ‘13’. 

Amendment 147, in clause 46, page 24, line 19, leave out ‘three years’ and insert ‘one year’. 

Amendment 148, in clause 46, page 25, line 22, leave out ‘26 ’ and insert ‘13’. 

Amendment 149, in clause 49, page 33, line 2, leave out ‘three years’ and insert ‘one year’. 

Amendment 150, in clause 49, page 33, line 34, leave out ‘26 ’ and insert ‘13’. 

Amendment 151, in clause 56, page 43, line 10, leave out ‘26 ’ and insert ‘13’. 

Stephen Timms:  I hope that the Minister can explain what many would consider to be a pretty harsh proposal for the withdrawal of benefit. The current system has been in place for some time. It is perfectly possible for people to lose their benefit for a year, although that is rather unusual. Under the arrangement in the Bill, people could lose all their benefit for three years. As we were discussing earlier, that would not just be part of their benefit but everything. The support that they receive towards the cost of their rent, their standard allowance and other elements of their support could be removed for three years if people are sanctioned three times in one year. 

I read earlier an example about a Mr Robson who had had three sanctionable—if that is the right word—offences. One was because he was ill, one was because he thought he had applied for a job and the jobcentre said that he had not, and there was one for some other reason. Getting up to three is not that difficult. People certainly do not need to flout the rules wilfully to find themselves in that position. In future, they could lose all support for three years. 

I want to draw the Committee’s attention to what some of those who follow our deliberations say about this. Crisis stated: 

“We believe that the proposed maximum sanction periods are too long, particularly the potential three year reduction in benefits… Ministers have stated that they see this largely as a deterrent, and

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that only a tiny number of people will actually be given a sanction of this length. However, if this is the case, we would question why such a measure is necessary at all.” 

I hope that the Minister will tell us that he expects only a tiny number of people to suffer a benefit loss for three full years. But how far can he assure us about that? As we know, once the rules are put in place, the system has a way of operating under its own impetus and, particularly on sanctions, has a bit of a record of going off and doing things that Ministers do not necessarily wish it to do. 

The Government are breaking the link between support for housing costs and actual rent paid, and they are adopting consumer prices index uprating only for people’s housing costs. That means that people will have to make up the shortfall in their rent from their standard allowance. If that is sanctioned for three years, as is envisaged in the clause, with the gap between housing cost support and rent being paid likely to increase over that period, the danger of people getting behind with their rent will be significant. That could lead to eviction and homelessness even though the sanction will, in most circumstances, apply to the standard allowance only, as we have been discussing. The prospect of a three-year sanction is worrying.

In evidence to the Work and Pensions Committee, the Northern Ireland Welfare Reform Group stated: 

“The financial sanctions outlined range from cessation of payment of benefit from one week to three years depending on the severity of the apparent breach. We do not support the introduction of these sanctions as such developments are shown to harm claimants’ opportunity to enter employment.” 

Crisis made similar points: 

“We do not want to see people facing unnecessary hardship or getting into arrears and debt as a result of this approach.” 

There are many worrying implications in the arrangements in the Bill. Three years is too long, and I am keen to hear the Minister’s explanation for why what seems like a pretty draconian arrangement is the appropriate one for the Committee to agree to. 

12 pm 

Kate Green:  I want to speak in support of my right hon. Friend’s comments. I have concerns about a proposal that would include the potential for benefits to be sanctioned for up to three years. That is an extremely long and draconian period of time for people who will be on very low incomes. I fear that the measure is more about being able to communicate to the public that the Government are talking tough rather than re-engaging such people with the labour market, which must surely be the objective. 

There is considerable evidence, particularly from US states that have adopted particularly hard-line approaches to benefits withdrawal, that when people start to fall out of the benefits ambit for the long term, we lose all contact with them. We have no idea what happens to those people or their families over time. They do not re-engage with the public employment service where that exists. They do not re-engage with the benefits system. They may be in paid employment, but it is almost certainly in the informal economy, stop and go, and likely to be in particularly poor conditions in relation to the quality of work, safety at work and so on. There is also a particularly damaging effect on any children in such households. Even proponents of hard-line

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US welfare reform have expressed some concern about what happens to children in households in such circumstances. 

It is difficult to expect people faced with a three-year benefit sanction to feel that the system has anything to say to them. That period will be unimaginably long to the probably vulnerable and often chaotic kinds of people who are faced with such a sanction. They are people who, as my right hon. Friend pointed out, are quite likely to find themselves in the position of incurring such a sanction, because of the nature of and instability that may exist in their lives. A long benefit sanction is likely to lead those people to give up entirely all form of engagement with the employment system. It is unlikely to re-engage them. They will simply feel that the system no longer wants to have anything to do with them, and they will not be able to think that, over that period time, there is any sense in re-engaging. 

The other point I wish to make about such a long period of financial penalty for what is admittedly a small group of individuals, is that those people will suffer severe hardship. It is not only losing money that puts people into hardship, but the fact that the loss of adequate income will persist and be sustained over a period of time. Hon. Members from all parties will agree that persistent poverty is particularly invidious and nasty, yet the Bill seeks to institutionalise that persistent hardship in a way that can only damage a range of other health and well-being outcomes for people in that position.

The Minister will say that those people put themselves in such a position by refusing to engage with the system, and that in a small minority of cases the system will have to impose such penalties. However, I cannot see how that strikes the right balance to ensure the proper protection of people who are likely to be vulnerable and less well attuned to requirements that the system may impose on them. The balance is between re-engaging with those people and compelling them to face up to their responsibilities, and ensuring that their fundamental well-being is protected. I feel that a three-year sanction has been included simply for dramatic effect and to show that the system will get tough on offenders. It is not an effective, fair or sensible penalty and I hope it will be reconsidered. 

Anas Sarwar:  The amendment aims to make the Government confirm whether the decision to impose sanctions on a claimant will be reviewed. All three proposed sanction periods are fairly lengthy, especially the last one, as my hon. Friend the Member for Stretford and Urmston said, and the Government need to put appropriate review periods in place to take account of changes to people’s circumstances, such as the birth of a child or moving away from a partner. The need for a review period is even more important given that the Government have so far not provided any details about an appeals process. Current sanctions for jobseeker’s allowance run to a maximum of six months, with an average length of 18 weeks. Although no review period is in place, a review is automatically triggered once the claimant launches an appeal against the decision or applies for a hardship loan. 

I have several questions for the Minister, and I hope he will provide clarity on these matters. Will a review period be put in place for each of the three sanction

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lengths, including an indefinite period? If so, what will that review period be? Will the reviews be worked into the appeals system, as is currently the case? Will sanctions from an old claim for universal credit be carried over to a new claim? Will claimants be made aware of the review periods? What criteria will be applied before sanctions are lifted from the claimant? How many times can sanctions be reviewed? What is the proposed frequency of sanction reviews? Finally, as my hon. Friend said, this proposal will cause hardship for several families. What support will be made available to those families under such circumstances? 

Sheila Gilmore:  Many of those who might find themselves sanctioned in this way are likely to be among the most chaotic and vulnerable people. They will not necessarily be those who have come to a conscious decision to avoid work at all costs. Sadly, those who fall into that category may well continue to work the system to their advantage, because they are capable of working out what it all means. 

There are, however, some long-term vulnerable people. Last week I visited the Grassmarket Project in my constituency. It works with people who have multiple issues, of which not working is only one. Such people tend to have other problems, perhaps due to mental health issues or because they have recently come out of prison or have problems with addiction. They find it difficult to get their lives together in any meaningful sense. 

Some of the people to whom I was speaking last week have spent time in bed-and-breakfast accommodation, which is a transient situation. One man, who had been in bed-and-breakfast accommodation for eight months, had been in six different places during that period. There is no doubt that he was making really great efforts to get on with his life. The project, which has the facilities to train people in a number of skills, does fantastic work, but this man is in a transient position and if correspondence does not reach him, he might well find himself repeatedly sanctioned. He is probably one of the most capable people that this particular project deals with. 

We are not talking about a group of people who, out of some badness, do not want to work, but about those who are not necessarily large in number, but are difficult to deal with. We must find a way in which we can help them back into work, and that is exactly what this kind of project does. People who work in this field are telling me that their clients, if they are sanctioned for a long period such as this, will disappear under the radar. Those people will be out of the system because they think that it has nothing for them. This is why I support the amendment. 

Chris Grayling:  We must consider the amendments and the debate in the context of what we are actually doing. We are introducing the universal credit system so that work always pays. That is an important change. No one should sit down and take a rational decision not to look for work. I emphasise the word “rational”. I fully restate the point about people with mental health problems. It is not our intention to include in the sanctions process people who have mental health problems that preclude them from making rational decisions. We will give clear guidance and training to Jobcentre Plus and

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to decision makers. We will also have the appeal process to fall back on. I say to the hon. Member for Glasgow Central that all such decisions, like today’s sanction decisions, have a statutory right of appeal. 

The other point is that we are talking about a fixed amount, equivalent to the standard allowance in universal credit. We are not talking about the removal of support for children or for housing. None the less, the welfare state has to be a two-way contract. There has got to be a point at which the state simply steps back and says, “I’m sorry, that’s it. No more.” If we do not have that, we are effectively giving people a blank cheque. They may get short sanctions here and there, but effectively they can carry on indefinitely and that is simply not acceptable. There has to be a backstop. We are talking here about people who are capable of taking a decision and not those who, for mental health reasons, are not capable of doing so. There has to be a point at which the welfare state says, “Enough is enough. We can go no further.” 

We are not talking about sanctioning for three years someone who has failed to turn up to three work-focused interviews or someone who has committed some minor misdemeanour. We are talking about people who have committed the most significant offence: those who refuse to apply for jobs that they are suited to do; those who wilfully turn down job offers and job opportunities, and those who are referred to an activity as part of their job search but systematically refuse to turn up—again and again and again. There must be a point at which we turn round and say, “No. That is not good enough.” So we have put together a sanctions regime that has two levels. 

Low level sanctions are designed to deal with a significant breach, such as failure to turn up to a work-focused interview. That is not among the highest level sanctions. If there is a major hiccup in someone’s life, the system should always be responsive—if someone is taken ill, it is reasonable not to turn up. However, it is normal practice to phone the jobcentre and explain, or to get somebody else to do it. People cannot just not appear. 

12.15 pm 

Teresa Pearce (Erith and Thamesmead) (Lab):  I agree with what the Minister says—it is perfectly reasonable for somebody to phone up. However, will he look at the 0845 numbers, which make it difficult for people to phone if they have pay-as-you-go mobiles? 

Chris Grayling:  I am grateful to the hon. Lady. That is a serious point and I will write to her about it. 

None the less, I do not think that there is any excuse. None of us would get away with failing to turn up to work week in, week out, or day in, day out. If one of your staff did not turn up for work and did not tell you, Mr Gray, you would not be best pleased. I do not see why it is different for somebody turning up for a work-focused interview. 

However, people in that situation are not subject to high level sanctions. They are subject to short-term sanctions of the kind that they face today. There is a duty on people out of work to look for work and to try to find the right opportunity. This part of the Bill states

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that there has to be a backstop. It would be easy to say, “We disqualify you for life. If you’re not prepared to engage, no more welfare.” There are aspects of the US system that take people out for life. We have not gone down that road. However, we have said that if people wilfully refuse to engage with the system, there has to come a point at which they disqualify themselves from receiving benefits for an extended period of time. I think that that is reasonable. 

It is my sincere hope that this particular sanction is never used. It is designed to send a clear message. I do not always buy the argument that those on benefits are not in a position to understand that clear message. I think that it will ring loud and clear: there is a point beyond which people cannot go, and, if they do, they effectively disqualify themselves—not for life, because I think that that would be wrong, but certainly for a lengthy period that makes people realise that it is not a good idea. 

As long as we always have the caveat about mental health—which I emphasise again is extremely important—I think this is the right thing to do. It is a message that says, “Thus far and no further”. 

Stephen Timms:  The notes on the regulations say that people who commit three sanctionable acts in the course of a year could be liable. The Minister is talking about people who have refused to engage with the system. There is a big gap between what he says and what the Bill states. Could he illuminate that for us? 

Chris Grayling:  Perhaps the right hon. Gentleman and I have a different idea of engagement with the system. However, if somebody receives jobseeker’s allowance, or is out of work and receives universal credit with job search conditionality, there is an obligation to look and apply for jobs. If somebody is offered a job, there is an obligation to take it. If people are systematically refusing to do either of those things, it is entirely reasonable for the system to say, “Enough is enough.” That is what this part of the Bill seeks to do. It simply says, “We expect you to be active and proactive in looking for work, in return for the support we provide. We are changing the system so that you are better off in work, so that there can be no more excuses that you are better off on benefits. You need to sit down each week and go through jobs that you can apply for. Turning up two weeks later and saying, ‘Oh, I didn’t bother’ is not acceptable and will be punishable by extended sanctions. Ultimately, if you keep doing it, it will be punishable by an extended sanction of this kind.” 

We are stepping up the support that we give people who are out of work. We are introducing a variety of different measures to try to help people in their job search. It is not unreasonable for us to seek in return their active co-operation. If we get wilful refusal to co-operate, from people who are mentally capable of co-operating, that is the point at which we must say, “Enough is enough; we are not tolerating it.” 

The hon. Member for Glasgow Central mentioned review periods, and there is scope in exceptional circumstances to make variations. In general, there will not be. That is not meant to create a situation whereby if someone gets a three-year sanction, they say, “Oh well, I will get a job for a week, then that all disappears.”

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It does not. If people will not engage and do what they have agreed to do, they will disqualify themselves for an extended period. They will still have the right to appeal and to a reconsideration, but it is a point of principle on which we should stand. 

Kate Green:  The Minister said earlier that we are talking about sanctioning the standard element of universal credit only for this three-year period. What processes will be put in place to ensure that people continue to apply to Jobcentre Plus for the child element, to which they will remain entitled? Surely that is key to protecting child well-being in those circumstances. 

Chris Grayling:  In the case of someone who receives universal credit, the only element that will be sanctioned is the standard amount, and of course they will need to continue to engage with the Jobcentre Plus system periodically to receive the other elements of housing and child support. That support is available and we will remain in contact with them. They cannot disappear in the way that the hon. Lady described and continue to receive child care and housing support, but it is reasonable to say that people cannot expect to receive the standard element—the amount payable for their out-of-work status—indefinitely, while continuing to ignore the requirements of the system. 

Ms Buck:  Will the Minister give the Committee an idea of how many people he would have expected to be subject to this level of sanction had it applied this year? 

Chris Grayling:  If we take the current fault rate, it is a few hundred, but my hope is that the answer will be zero. There are two things that we must achieve. First, we need to ensure that the decision makers who run the reconsideration and appeals process identify whether we have made any mistakes about people with mental health problems, but secondly, I hope that, for the rest, it is a place where they will simply not go. This is not a sanction I ever want to be introduced formally. I do not want to see it used; I want a zero return on this one. It is meant to be a backstop that gives people a point beyond which they will not go, that is the intention. 

If people are minded to refuse to engage with the system to the point at which they get themselves disqualified from the receipt of out-of-work benefits for this period of time, and they are mentally capable of getting themselves into that position, it raises big questions about why they are there in the first place. 

This is a point of principle founded on the belief that the welfare state has to be a two-way contract. We are creating a system to make work pay. 

George Hollingbery (Meon Valley) (Con):  I welcome the Minister’s commitment to consider mental health issues in this context, but I am slightly puzzled about how that will work. Is it something that will be prescribed—in other words, will there be a committee that sits, examines people, and says, “This person should be treated in a certain way”? Or will it be post facto, in that a breach will have occurred, and then that person’s mental capability will be assessed? 

Chris Grayling:  At that point, we would have reached the third breach. In the case of somebody with mental health problems I would expect that to have been dealt

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with at a much earlier breach, because clearly this is a third offence, not a first offence. We will ensure that our more experienced decision makers are responsible for taking decisions about more serious sanctions. Where there is a danger that somebody could get themselves into this position, I will expect our decision makers to look at the cases with immense care. Bear in mind that, where there is a particular concern about an individual case, we have provision for home visits by decision makers and Jobcentre Plus staff to make sure that we really understand the nature of any medical problems that the person might have. 

However, most fundamentally, if we have exhausted the inquiries and are convinced that mental health problems are not the cause of the situation, then we revert to the position that this is a two-way contract. If somebody is not willing to engage to the point where they could face a sanction of this kind, then in my view they, not we, have questions to answer. We are providing a situation where work will always pay. We are providing much better back-to-work support through the Work programme. We are providing enhanced support in some areas through Jobcentre Plus. My wish and goal is to help people into work, and no one who is looking for work and is doing the right thing has anything remotely to fear from the sanctions regime. Anyone who is working with us to try to find the right opportunities and turning up to things has absolutely nothing to fear, and will not be involved in the sanctions regime. Only those who refuse to engage will be involved. There must be a point at which the state says that refusal to engage is not acceptable, and will invoke consequences, and that if it continues a line will be crossed beyond which support cannot be expected to continue. This element of the Bill is no less and no more than that. We intend to continue with the provision as drafted, and not to accept the amendment. 

Stephen Timms:  If the Minister wants a zero return, he should take it out of the Bill. That is the only way to get a zero return. He will not get it by leaving the provision in the Bill as he clearly wishes to do. 

What we have heard shows that the Minister lacks understanding of the reality of what happens in jobcentres. In a moment, we will hear what has been going on in jobcentres. The Minister says that he wants the provision to apply only to people who are not willing to engage, and that they have it coming to them, but the fact is that many people will fit the test in the clause. There are people like Mr Robson whom I spoke about earlier who had one breach because he was ill, another because he thought he had applied but the jobcentre said that he had not, and a third because by that time he was so demoralised that he had given up. I do not believe that the Minister would suggest that Mr Robson was not willing to engage with the system, but he certainly fits the criteria in the Bill. 

Chris Grayling:  Failure to turn up for a work-focused interview due to illness does not bring a higher-level sanction or put someone on a journey towards the penalty that we are discussing. 

Stephen Timms:  Mr Robson was sanctioned for that very reason, and there was then another sanction and a third. My understanding is that someone with three sanctions is in the frame for this draconian penalty. 

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Chris Grayling:  The right hon. Gentleman is confusing lower-level sanctions. I have described two levels of sanctions. Failure to turn up for a work-focused interview will invoke a short-term sanction, as it does at the moment. A higher-level sanction will apply only to more severe breaches, such as refusal to apply for a job or to accept a job offer. 

Stephen Timms:  Where in the regulations or the Bill is that said? My understanding is that the higher-level sanction applies not to a different sort of offence but when there have been three during the course of a year. That is what takes someone to a higher-level sanction. If the Minister is saying that a different category of offence puts someone in the frame for higher-level sanctions, that is different from my understanding of the Bill. 

Chris Grayling:  I simply ask the right hon. Gentleman to read subsection (2), which sets out four areas that are covered by the higher-level sanctions regime. They are failure to 

“undertake a work placement of a prescribed description…to apply for a particular vacancy for paid work” 

to take 

“up an offer of paid work” 

and 

“by reason of misconduct, or voluntarily and for no good reason” 

ceasing paid work or losing pay.” 

Stephen Timms:  Indeed, but those are precisely the circumstances that Mr Robson was caught out on. No one rang him up to ask why he did not do something, and whether it was because he was ill. He was simply sanctioned. That is one of the failures in subsection (2), and it was his first. I have mentioned the second and third. Under the subsection, Mr Robson would certainly be in the frame for a higher-level sanction and for losing his benefit for three years. That is the reality of what the Minister is legislating for. 

Charlie Elphicke:  I put it to the right hon. Gentleman that the conditionality builds on part 8 of the Employment and Support Allowance Regulations 2008 that he laid before Parliament and passed. The Bill is building on the previous Government’s policy. The difference is that instead of sanctions being merely hand-wringing as they were then, they will be serious. I am prepared to bet £100 that if such sanctions had been in place, Mr Robson would have been down at the jobcentre making sure that he was not sanctioned and was not at any risk of being sanctioned. That is the key point here. People will make a much greater effort. 

12.30 pm 

Stephen Timms:  I am afraid that the hon. Gentleman misunderstands the position of people like Mr Robson. He had been working for 35 years, was made redundant from his driving job and, yes, was very badly demoralised by the experience that he then went through. But it was not because he was not sufficiently frightened that he did not comply; on one occasion he was sick, and on the second there was some confusion about whether he had applied for a job. That is the messy reality of the position that people find themselves in, and under clause 26 people like that can lose their benefit for three years. 

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Chris Grayling:  I refer the right hon. Gentleman to clause 27(2) and the lower-level sanctions that would apply to somebody who failed to turn up to a work-focused interview because they were ill and did not tell anyone. The situation that he describes has nothing to do with clause 26. 

Stephen Timms:  Clause 26(2)(b) refers to a claimant who 

“fails for no good reason to comply with a requirement imposed by the Secretary of State under a work search requirement to apply for a particular vacancy for paid work”. 

That is what I said Mr Robson did. There was a disagreement between him and the Jobcentre about whether he had applied. That is the reality of what the Bill does. Government Members need to recognise the reality of what we are getting into here. 

Yvonne Fovargue (Makerfield) (Lab):  Is my right hon. Friend aware that in the period April to December 2010, inquiries to the CAB about JSA went down by 3% but inquiries about sanctioning rose by 30%? Although the sanctions regime has always been in place, its application has made the difference, which we will go into later. 

Stephen Timms:  We will. My hon. Friend is right. We are seeing a big increase in the number of sanctions at the moment and I am afraid that will lead to significantly more people than the Minister wants being affected. He says that he wants the figure to be zero, but I am afraid that under this clause significant numbers of people will lose all of their benefit for three years. I hope that the Committee will vote in favour of the amendment and object to that provision. 

Question put, That the amendment be made. 

The Committee divided: Ayes 10, Noes 14. 

Division No. 3 ]  

AYES

Buck, Ms Karen   

Curran, Margaret   

Elliott, Julie   

Fovargue, Yvonne   

Gilmore, Sheila   

Green, Kate   

Greenwood, Lilian   

Pearce, Teresa   

Sarwar, Anas   

Timms, rh Stephen   

NOES

Baldwin, Harriett   

Bebb, Guto   

Ellison, Jane   

Elphicke, Charlie   

Glen, John   

Grayling, rh Chris   

Hollingbery, George   

McVey, Esther   

Newton, Sarah   

Patel, Priti   

Smith, Miss Chloe   

Swales, Ian   

Uppal, Paul   

Willott, Jenny   

Question accordingly negatived.  

Stephen Timms:  I beg to move amendment 111, in clause 26, page 13, line 8, at end add— 

‘(9) Under no circumstances shall the Secretary of State allow any targets to be set which would increase the number or value of sanctions issued under this section.’.

The Chair:  With this it will be convenient to discuss amendment 112, in clause 27, page 14, line 4, at end add— 

‘(10) Under no circumstances shall the Secretary of State allow any targets to be set which would increase the number or value of sanctions issued under this section.’.

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Stephen Timms:  The amendments provide the opportunity to look more closely at what happens in jobcentres about sanctions, and they are prompted by a revealing article that appeared in The Guardian on the Friday before the House adjourned for Easter. The headlines were, “Jobcentres ‘tricking’ people out of benefits to cut costs, says whistleblower” and “Soaring number of sanctions against unemployed amid claims that DWP staff are being told to trip people up with paperwork”. The article quoted my hon. Friend the Member for Makerfield, who intervened a few moments ago. The article’s central charge is that staff and offices are being compared by Jobcentre Plus management, on the basis of how many sanctions they have issued against jobseekers—the more they have issued, the better. The whistleblower is quoted as having said: 

“‘[Now] your office can shine through one of two targets. You can either shine through getting people into work, but that's really difficult. Or you can stop their money, and that's really easy.”’ 

Incentives are apparently in place to encourage jobcentres, or individuals in jobcentres, to behave in that way. The article suggests that staff at the whistleblower’s jobcentre, at least, were given 

“targets of three people a week to refer for sanctions, where benefits are removed for up to six months. He said it was part of a ‘culture change’ since last summer that had led to competition between advisers, teams and regional offices.” 

It is important for the Committee to understand what is actually going on in jobcentres, because the provision in clause 26 that we have just endorsed opens up the opportunity for exactly that kind of thing to continue. 

Charlie Elphicke:  The right hon. Gentleman seems to cite an unnamed source in a newspaper that, some would say, has an axe to grind—perhaps various axes to grind. It is not notably friendly to the current Government, so does the right hon. Gentleman have any statistics or facts to substantiate what seems to be an extraordinarily serious charge? 

Stephen Timms:  Fortunately, yes I do. The article quotes statistics from the Department for Work and Pensions that show that the total number of cases in which people have lost their benefits has soared since the beginning of 2010 to 75,000 in October, the latest month available. The figures also reveal that the number of claimants with registered disabilities who are being cut off has more than doubled to almost 20,000 over the same period. There is, therefore, clear statistical evidence confirming what the article claims. If I remember rightly, the increase in the overall number of sanctions represents about a 40% rise, so there is a significant statistical increase. 

The article goes on to tell us that Citizens Advice has reported a significant rise in clients who have had their benefits cut. It says: 

“Andy Robertson, a caseworker in South Tyneside… has a huge pile of paperwork for appeals, and says his casework has more than doubled in the last year. ‘What's happening at the moment is possibly the worst thing I've ever seen with regard to practice from the DWP. Clients seem to be getting sanctioned for next to nothing,’ he said. Robertson worked for eight years as an adviser and financial assessor at jobcentres. He has also seen the changes affect many vulnerable clients, such as those with dyslexia or mental health problems. … “Advisers were previously exercising their discretion… now the client-adviser balance doesn't seem to exist any more.’” 

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George Hollingbery:  Is the right hon. Gentleman suggesting that the rules set down by the previous Government are being broken by the advisers? Are they deliberately assessing things incorrectly to up targets, or are they actually assessing things correctly as they should have been before, but were not? 

Stephen Timms:  The allegation in the article is that jobcentres are being given incentives and being compared with one another, and the more sanctions that are imposed the better a jobcentre is deemed to have performed, because the public purse is spared. 

George Hollingbery:  With all due respect, I do not think that answered my question. Was the implication in the article that jobcentre staff are not conforming with regulations as they stand, but are sanctioning people who are not technically in breach? Perhaps the right hon. Gentleman has done subsequent investigations. 

Stephen Timms:  There is some illumination on that in a follow-up article that appeared on 8 April, in which one personal adviser said: 

“people with poor English skills were often targeted in his office. ‘For example, an African man who had managed to get part-time work and was studying English. His jobsearch was far more adequate than most, but managers specifically spent time going through it and comparing it to his agreement to see where they could trip him up. It was deemed inadequate and he was sanctioned. It’s easy to sanction these people because he didn’t know what was going on.’” 

I suppose that the hon. Gentleman is asking me if that is technically a correct imposition of a sanction, and I have no doubt that, technically, it is, but I think he would agree that targeting on the basis that someone cannot speak English very well is not how jobcentres should be run. That is certainly my view and, I suspect, the view of most of the Committee. 

Kate Green:  Does my right hon. Friend agree that in that context it is particularly concerning that all the research tells us that those who are most likely to be sanctioned are young people, people with disabilities, people from black or minority ethnic backgrounds and people from large families? 

Stephen Timms:  My hon. Friend is right; those people are most likely to be in the frame for sanctions. The article on 8 April goes on: 

“Another jobcentre employee with several years’ experience said: ‘If staff are chasing targets, they will themselves target the easiest [claimants], for example people with learning disabilities, or people with English as a second language. It’s the easiest way to meet those targets under pressure.’” 

The hon. Member for Dover described this as a pretty outrageous allegation made by a questionable source—I think that was his implication. 

Charlie Elphicke:  The allegation that concerns me is the one that the right hon. Gentleman made at the beginning of his remarks that there was some kind of competition among civil servants to see who could

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deliver the most sanctions in some evil pernicious way. That is a serious allegation, because I do not think the civil service behaves in that way. He has not answered the question that my hon. Friend the Member for Meon Valley asked. Will he do so? 

Stephen Timms:  I think that I have answered the question asked by the hon. Member for Meon Valley by giving an example of the kind of things that are happening. I shall come directly to the hon. Member for Dover’s sense that such a dreadful thing should not happen, which is rather how the Secretary of State responded when the allegation was put to him. He went on Sky television the day that the report appeared and described it as “clap-trap”. He said that the story was a conspiracy. I do not know whom he felt was conspiring against him, but clearly someone or some institution had it in for him and wanted to embarrass him and trip him up. 

One would have thought that that would have been an end to the matter, but it was not; a few days later, it was the main substance of the report that appeared on 8 April. The headline was, “Government admits Jobcentres set targets to take away benefits”. The hon. Gentleman describes that behaviour as outrageous—the civil service does not do such things—but it turns out that that is what has been going on. Jobcentres have set targets to take away benefits in precisely the way that The Guardian said that they had. What gave rise to that article was the DWP issuing a statement confirming that the original report was true: 

“A few weeks ago ministers discovered that their message to be clearer about conditionality had been misinterpreted”, 

leading to targets for the number of sanction referrals being set in some jobcentres. The Department is bang to rights. 

The hon. Gentleman has said, understandably, that surely civil servants would not do such a thing, but that is precisely what was happening. In certain jobcentres, targets were set and comparisons were made between jobcentres on the basis of how many sanctions had been imposed, and staff were evaluated on the basis of how many sanctions they had issued. That is the reality that will be shaped by what we have agreed to in clause 26. 

12.45 pm 

It is clear, I am relieved to say, from the Secretary of State’s interview on Sky TV that he does not approve of such measures, and I do not think that a single member of this Committee approves of them either. The DWP’s statement told us, however, that Ministers discovered a few weeks ago that their message to be clearer had been misinterpreted and therefore such things were happening. Presumably, the Minister would have been among those who discovered what was going on, and I should like to ask him to confirm specifically whether he knew that those things were going on in jobcentres. 

Will the Minister tell us whether he informed the Secretary of State when he discovered that those things were happening? Given that the Secretary of State knew, presumably, that such targets had been set in jobcentres, why on earth did he go on television to describe the newspaper report as “clap-trap” and as “a

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conspiracy”, when his Department was forced to concede a couple of days later that, in fact, the report was true? Will we now get an apology from the Secretary of State for misleading the public in what, it is now clear, was an erroneous response to the allegations made in the newspaper article? It certainly appears that whatever virtues the Secretary of State undoubtedly has, having his finger on the pulse is not one of them. 

The Chair:  Order. Technically speaking, the Secretary of State’s behaviour in this matter is not within the terms of the amendments that we are discussing in Committee. Perhaps the right hon. Gentleman can restrict himself to the matter under discussion. 

Stephen Timms:  I am grateful to you, Mr Gray, and of course I will do so. The DWP statement that I referred to states that Ministers would not countenance any target for sanctioning customers. All members of the Committee would endorse that view, and I welcome it. These amendments would simply put that assurance from the DWP’s statement into the Bill, and I hope that the Minister will agree to them on that basis. 

Yvonne Fovargue:  I first took up this matter last year when a neighbouring CAB told me that it was experiencing an incredible increase in the number of people who were approaching it about the sanctions, and I should like to provide some examples of why I did so. Recently, someone attended my surgery who had been sanctioned for not attending a work-focused interview. Fortunately, however, he kept the envelope in which the letter inviting him to the interview had been posted; it was dated the day after the interview. That example made me think, “There is a problem here with the sanctions regime.” 

I spoke to my local CAB, which had also contacted me because of the number of people who had approached it about sanctions. I can give three good examples of people who have been sanctioned, who have mental health problems and various other learning disabilities. First, a homeless client, who has mental health problems, was sanctioned for not providing enough evidence of job search. That client would have got into the higher level of sanctions and would possibly have reached three. However, he had been eating out of bins, because as soon as he got the sanction he thought, “I am not entitled to anything.” He had been eating out of rubbish bins for six weeks—much longer than his sanction—because he had not understood the letter. The CAB appealed; he had been placed in the wrong group. He was in the work group when he should have been in the support group. That appeal was won. 

Chris Grayling:  The hon. Lady highlights a worrying case. Does she accept that the situation that she has just described—of someone being placed in the wrong group—is a consequence of the system that the Labour Government put in place and that we are now changing? 

Yvonne Fovargue:  It is a consequence of the decision maker acting wrongly, not taking into account the client’s mental health issues and applying the sanction too quickly. 

A client with autism came to me. He had been sanctioned because the decision maker—the person who is meant to understand such cases—had sanctioned him for

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behaviour at an interview. The interviewer had said the client had not engaged with the interview. One of the questions asked by the interviewer was, “Can you tell me why you are suitable for this job?” The client replied, “Yes.” To someone with autism, that is a perfectly valid response. He was asked whether he could explain why he was suitable for the job. Yes, he could. He was sanctioned for not engaging with that interview. 

I also know of somebody who was in a secure unit and had received a letter to attend an interview. The letter had been written to a secure unit; the person could not get out to attend an interview. He was sanctioned for not attending that interview. Those are decisions made by decision makers who are supposed to understand the issues. All those cases went to appeal—after going to a CAB or to my surgery and then being passed on—and were then won. That cost the state a phenomenal amount of money. The CAB tells me that it has never had the numbers of such cases before. 

Jane Ellison (Battersea) (Con):  Will the hon. Lady give way? 

Yvonne Fovargue:  I am about to finish. 

I accept that the Minister does not want to see people sanctioned irrationally. He should therefore accept the amendment. 

Kate Green:  Hon. Members will be aware that we are very concerned about this issue. It is a debate about context and tone. No one is suggesting that we have evidence that, at the very top of the Department for Work and Pensions, the Secretary of State, has imposed sanctions on Jobcentre Plus offices or officers. What we are saying is that, somewhere in the process, Jobcentre Plus offices have apparently interpreted the context in which they operate as one where managers wish to impose sanctions and that there is some form of incentive for them to go along that route, which is perhaps simpler than placing people in employment, which is very difficult in the current economic context. However, that has happened in the Jobcentre Plus process—that interpretation has been going on in recent months—as appears has now been accepted by Ministers. 

I have spent enough time examining Jobcentre Plus and how it behaves to understand how such things can happen. It is an institution that is extremely responsive to direction and tone set by the top. That is why it is so important that we are careful both in our language and legislation to ensure that we send the right messages to the public and claimants and to Jobcentre Plus staff. It is a very incentive-driven organisation. Whenever hard or soft targets have been put in place for Jobcentre Plus, it has, in my experience, changed processes, procedures and practices to enable it to meet them. It is greatly to its credit that it is so good at doing that. However, it therefore behoves Ministers to be incredibly cautious about the context in which that Department operates. 

What we have seen in debate this morning and in the evidence from my right hon. and hon. Friends is that that care was not taken until too late in the day—for example, in the cases of the constituents of my hon. Friend the Member for Makerfield. I hope that we will take this opportunity not to engage in a blame culture, but to look at how we can prevent such situations from happening again. 

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Jane Ellison:  I am sure that the hon. Lady would want to make it clear that she does not feel that her comments apply to all jobcentres and all Jobcentre Plus staff and managers across the country. I am sure that it is not the general experience. Does she not agree that the points made by the hon. Member for Makerfield, who spoke just before her, are really about performance management issues? They are not in themselves an argument against any sort of sanctions regime; they are an argument for people to manage performance better and to interpret the regulations correctly. They are not therefore arguments against the regime itself, which is what the hon. Lady seems to suggest. 

Kate Green:  I agree with the hon. Lady on both points. First, it does not appear that every jobcentre has made that slip. We do not have evidence that every jobcentre has set and applied targets in the same way. She is absolutely right about that, but that is an issue in itself, because there should be consistency across the country. We cannot have claimants being subject to a greater likelihood of a sanction because of where they live and which Jobcentre Plus they are engaged with, when compared with claimants in exactly the same circumstances in another part of the country. She is correct. There has been not a blanket instruction from the top, but an interpretation of tone and context, and I am anxious to avoid that inconsistency. 

I will come to the point raised by the hon. Member for Dover in a moment, but I first want to take up the important second point raised by the hon. Member for Battersea on performance management. She is absolutely right, but performance management operates within the context of what people understand to be Ministers’ objectives, values and sense of direction. Somewhere in that process something has gone wrong. 

I can make some assessment of the context in which Jobcentre Plus offices operate. A written answer that I received from the chief executive of Jobcentre Plus in response to a question that I asked of the Secretary of State last December stated that there are no targets for Jobcentre Plus offices, but there is a benchmarking system, in which it is seen as an early warning if a Jobcentre Plus office is not imposing a certain proportion of sanctions. The warning appears on some sort of performance dashboard that is looked at either by Jobcentre Plus management or by Ministers, I am not sure which, and sets up a query, “Why does that Jobcentre Plus office not appear to be sanctioning as many people as the one over there?” 

I am not suggesting that there are sinister reasons for that. Perhaps it is thought that such Jobcentre Plus offices are not, as the hon. Lady suggests, assessing consistently whether someone is in breach of a condition. She is absolutely correct that it is a performance management issue, but the consequence of having the benchmark is that people begin to see it as a target that must be met to avoid the hassle of explaining why it has not been met. To put it crudely, it may be understood as a target—something that has to be attained. 

Charlie Elphicke:  Are we not looking at what lawyers call a policy operational dichotomy? The operations are run by decision makers, and decision makers make errors because they are human. Regrettably, to fail is part of the human condition, which is why we have an

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appeals process. But would it not be a different matter if there was a blanket Government policy? Is not the hon. Lady’s key point that, were the Government to have such a policy, she would condemn the Government for making that policy? 

Kate Green:  I am saying that Ministers must be careful in the way in which they articulate policy, because it may lead to perverse, unwanted or inappropriate behaviours. The difficulty relates to the point that I made when I intervened on my right hon. Friend the Member for East Ham: how are those policies applied in practice? 

We have plenty of evidence that the most vulnerable and disadvantaged, who in a way are the easiest to

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sanction, are the most likely people to receive a sanction. That is why we have such a picture of disproportionate sanctions being applied, for example, to people from minority ethnic backgrounds, with disabilities, and so on. It is a cause of concern that a set of communications filter down to the front line—and are perhaps misinterpreted at the front line—coupled with a set of prejudices and assumptions, deeply rooted but none the less evidenced by outcomes, whereby such situations arise, whatever the intention at the top. 

1 pm 

The Chairman adjourned the Committee without Question put (Standing Order No. 88).  

Adjourned till this day at Four o’clock.