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Jobseekers Bill

5.14 p.m.

Reports received.

Clause 1 [The jobseeker's allowance]:

Earl Russell moved Amendment No. 1:

Page 1, line 9, at end insert ("and a jobseeker's allowance shall not be suspended, or terminated, by an employment officer, or an adjudication officer, if that officer has a financial interest in that decision.").

The noble Earl said: My Lords, I had spent some time trying to produce a draft of the basic principle behind the amendment when I found that it had been done very much more felicitiously than I could have done it in the words of the committee chaired by the noble and learned Lord, Lord Nolan. The first of his principles is that holders of public office should take decisions solely in terms of public interest. They should not do so in order to gain financial or other material benefits for themselves, their family or their friends. I would wish to add to that also for their service, for any dedicated public servant the better financing of one's service means as much, or, indeed, more, than the better financing of oneself. It has the effect of enabling one to do all sorts of things one could not otherwise have done. It is as intoxicating as the transition from opposition to government, which is well known to be something which has attractions for large numbers among us.

There is a considerable problem about this already. If we look at the CAB report entitled In search of work, about which I have already corresponded with the noble Lord, Lord Inglewood, we have cases which might cause some concern. Paragraph 2.22 refers to the leader of a Restart course saying to someone on the course, "I am not supposed to know they get a bonus for signing you off". Paragraph 2.10 refers to a claimant who made her own arrangements to go to the Job Club instead of it having arranged through the employment officer. The employment officer said, "Why didn't you wait for me to suggest that to you? I'm on a bonus scheme". She was then told that no one could stay on the course above a certain time and was taken off it.

We know well, for the Minister confirmed it when we were in Committee, that for the Employment Service a benefit penalty is counted as a positive outcome. We know well also, for he confirmed this also in Committee, that the service has a target for referrals to the adjudication officer. The Minister made great play of the fact that referrals to an adjudication officer is not the same thing as disentitlement. It is referral for consideration. I will ask the Minister, first, why does he think that it is a better service if more people are referred to the adjudication officer? That is not self evident to me.

I understand of course that we are not dealing with the equivalent of a conviction; we are dealing with the equivalent of a police decision to prosecute. But suppose that, when those of your Lordships who drive leave the House by car, the police have a performance target to prosecute a certain percentage of us, either for speeding or for driving with excess alcohol. I think that some noble Lords would protest volubly, indeed, on occasion,

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too volubly. I think that there would be a strong feeling that it was an abuse of the police process to give them such a performance target. Indeed there is a tradition—many centuries old—that the police do not choose to prosecute on every occasion. There is often sense in that. Anyone who thinks otherwise should look seriously at the character of Angelo in Measure for Measure.

The criterion, as the Minister put it to us in Committee, is that there is a reference to the adjudication officer in any case where there is an arguable case that the person is not meeting the conditions of entitlement. I wonder why he did not agree to have the criterion used by the CPS—where there is more than a 50 per cent. chance of success. That is a much more reasonable criterion and one which need not have given the officer any particular incentive to try to find rules for the advancement of his service.

In such a case we want decisions to be taken on the merits. A decision taken for the advantage of the employment officer or of his service appears to many of us to be a corrupt practice. I am well aware that there are many among us honourable men who disagree profoundly with that view. We have in our society a considerable amount of disagreement about what is corrupt. Therefore, the real question before us is what the law should do when there is a difference about what is corrupt and what is not. For reasons of legitimacy, I argue that it is better to take the more stringent stand. A sense of corruption has a profound delegitimising effect, much like that of taking power as the result of a contested election result. It is not good for one's standing.

The Minister may wish to argue that the amendment is unnecessary. If so, long may it remain unnecessary. But if it is on the statute book, it is likely to remain unnecessary in a way that it might not otherwise. I beg to move.

Lord McCarthy: My Lords, it is difficult to see why the Government should object to the amendment. The noble Lord, Lord Mackay, said:

    "There is no link between the performance targets of the Employment Service and the adjudication officers' decisions".—[Official Report, 20/4/95; col. 608.]

The noble Lord, Lord Inglewood, said:

    "There is not, and will not be, any correlation between the conditions of benefit for a jobseeker and an employment officer's pay".—[Official Report, 25/4/95; col. 825.]

The problem is that there were reasonable grounds for believing that, nevertheless, that may be the case at the moment. In order to clarify the situation beyond any doubt, we argue that the Government should agree to the amendment.

Since 1991 the Employment Service has published no fewer than five operational plans. I am grateful to the noble Lord, Lord Inglewood, for allowing me to see all of those plans. I argue that, if one reads the plans, it makes sense to assume that there is some such link or correlation. If there is no link or correlation I should like either one of the Ministers to explain the targets in the operational plans; in particular, three targets.

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First, there is a target in the operational plan that 10 per cent. of claims will not be pursued. How do officers know that 10 per cent. of claims are not worth pursuing? Secondly, there is a target in the operational plan that, depending on the year, between 5 per cent. and 8 per cent. of claims—the number has risen from 45,000 to 185,000—shall be submitted to adjudication officers on the grounds that the applicant is not available or actively seeking work. How do they know that in advance? Thirdly, there is a target in the operational plan that between 2.5 per cent. and 3.5 per cent. of claimants shall be found to be processing fraudulent claims. How do they know? Why do they fix such targets unless they want those targets to be achieved? How are those targets to be achieved unless the Employment Service officers, including the adjudication officers, ensure that those targets are achieved?

Why is there a tendency for those targets to rise and at very worrying rates? As regards the plan for 1995, if one adds together the fraud rate and the rate for references to adjudication officers which appear every year, one might construct what I call a "skiving index". It is the assumed rate of skiving. In 1994-95, 205,000, or 70.4 per cent., of the registered unemployed were targeted as skivers. In 1995-96, despite the fact that registered unemployment has fallen, 267,000 unemployed people are skiving. Therefore, 11.1 per cent. are skivers, which is a rise of some 50 per cent. I must tell the House that at that rate by the year 2000 all jobseekers will be skivers.

It does not matter if they are not because there is a similar rise in the disqualification rate. One cannot believe that the skiving rate and the disqualification rate are unconnected. In 1993-94, from April to December, there were 76,000 disqualifications. In 1994-95, from April to December, there were 113,000 disqualifications. That is 48.6 per cent., so it will take a little longer; if by the year 2000 all jobseekers are not skivers, by the year 2005 they will all be disqualified anyway.

How can it be that such targets do not influence the performance of the officers concerned? Year after year—I could quote if I wanted to waste the time of the House—the operational plan has spelt out the link between the pay of those officers and the targets, aims and objectives of the service. In 1992-93 the plan stated:

    "The aim has been to relate rewards to the individual's contribution to the business objectives".

Of course, the targets are part of the business objectives. In 1995-96 it stated:

    "The aim is to ensure that each person"—

that is each adjudication officer, for example—

    "has a performance and development agreement closely related to their office or section's operational or business plans".

The targets are part of the plan.

I find it impossible to believe that there is not a connection. If one looks, for example, at the Civil Service pay agreement, which has existed since 1989, one finds that all those officers have four or five alternative box ratings in which they can be placed. They are placed in those box ratings according to their annual report markings. Could an adjudication officer be given an "outstanding" rating—a Box 1—unless he

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or she had met and surpassed the target for disallowances? Could he or she possibly reach an "acceptable and effective" rate—a Box 3—unless the target had been hit? Would not he or she be given a Box 4 or a Box 5—that is not an acceptable target—unless they had found the necessary percentage of fraud? What is the point of those targets unless they are built into the objectives of the individuals concerned?

I do not suggest that those officers' targets are concerned only with disqualifications and the finding of fraud. Of course they are not; many other targets are built into their performance-related pay; for instance, whether they can get the target proportion of long-term unemployed people into employment and whether they can pay the benefits speedily within the prescribed time. Of course, there are other items in the necessary report objectives and markings of those officers. However, it is implausible and unbelievable that those targets have nothing to do with what they achieve in their performance-related pay.

Therefore, I have four questions for the Minister. What are the targets for if they do not affect individual performance? Where do the targets come from; how do they get there in the first place; why is it assumed that some claims are not worth pursuing, that some will be fraudulent and that some will be disallowed? Thirdly, why is it that after four years of depression and unemployment we find that those figures are galloping upwards and upwards until, if they gallop for long enough, everybody will be disallowed? Fourthly and finally, how can the Government, if they have any decency or sense, oppose the amendment?

5.30 p.m.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the discussion in Committee revealed a great deal of confusion about the Employment Service's targets and what they mean for individuals. From what I have heard, I believe that the confusion remains, because some of those misconceptions have been repeated this afternoon. Therefore, I should like to set out clearly what I believe to be the essential role of the Employment Service in administering unemployment benefits and the function of targets in its work, for I believe that there is nothing inconsistent or improper in our approach. I start by making clear that there is no question of any annual performance agreement target interfering with the independence of adjudication officers. I hope that that sets to rest at least one of the hares which the noble Lord, Lord McCarthy, set running. The adjudication officers are charged with ensuring that the law is applied correctly in an individual's case. They receive guidance on applying the law from the Chief Adjudication Officer. There is no question of AOs being rewarded for allowing or disallowing cases. Like all ES staff—for AOs who make these decisions are all ES staff—they work to individual performance objectives. They are not set, and will not be set, objectives that relate to the nature of their decisions. Their objectives refer to the volume of the cases that they are handling and the speed with which they make their decisions. The quality of decisions, in terms of the evidence quoted and the legal

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basis on which the AO made the decision, is monitored by the Central Adjudication Service, which is a body statutorily independent of Ministers.

I now move on to the position of front-line ES advisory staff. Their first duty in this matter is to ensure that only those who are entitled to benefit receive it. The taxpayer has a right to expect that benefits should not be paid to people who fail to meet the conditions of JSA, which are set out clearly for all jobseekers at the beginning of their claim and in their jobseeker's agreement. The alternative would be overpayments to thousands of people which would be practically impossible to recover. That would not be responsible management of taypayers' money. ES staff also have a duty to ensure that benefit payments to claimants are not unnecessarily suspended. If they have a doubt about the claimant's entitlement they must be able to substantiate that doubt with clear and accurate information for the adjudication officer to make a decision. Both these facts are important and should be reflected in how ES staff are guided in their work.

The targets set for the Employment Service in its annual performance agreement with the Secretary of State for Employment are carefully balanced. The noble Lord, Lord McCarthy, asked me what they were for. They focus on the effectiveness of the Employment Service in getting unemployed people, especially disabled people and the long-term unemployed, into jobs; the speed and accuracy of benefit payments; ensuring that benefit is paid correctly to those entitled to it; and the quality and cost effectiveness of its service. The ES and its staff must strive to meet all those targets. I cannot believe that noble Lords would object to such targets as that to place 1.9 million unemployed people and the targets in relation to long-term claimants, unemployed placings in inner cities and disabled people. I cannot believe that any noble Lord would object to those targets being part and parcel of the Employment Service targets.

There is no question of one of the many targets achieving priority at the expense of others. Just as targets are now encouraging the Employment Service into its best ever performance in helping people back to work, so it is right that targets should improve its work in its duty towards the taxpayer and the claimant in its accuracy of referrals to adjudication. Those targets are set on the basis of experience over previous years in the work of the Employment Service. Those data are collected year on year and it is on that basis that new targets are set.

The annual performance agreement was referred to by the noble Earl. I believe that that is what concerned noble Lords in Committee. The APA for 1995-96 sets a target of 185,000 submissions to independent adjudication:

    "where there is an arguable case for supporting information to show that the claimant is not available for, actively seeking or willing to accept work".

That is 185,000 submissions out of some 4 million odd claims per year. This target is reinforced by a requirement on the face of the APA for monitoring of the quality of referrals and of the numbers that are returned as inadequate. It is not, therefore, a target for

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disallowance, termination or suspension of benefit. It is a requirement for ES staff to meet high quality standards in the identification of doubt over a claimant's availability or job search.

I fear that this may still have been rather misunderstood by some noble Lords in our discussions in Committee. The quality of submissions is an essential element, with those that are defective being carefully monitored. The point here is again one of balance. The individual employment officer should refer cases where he has a real doubt about entitlement. But he should not refer where he cannot substantiate his doubt with clear evidence. In short, he must do his job as well as he can, and he will be assessed according to how well he succeeds in all aspects of that. One consequence, I am pleased to say, is that in recent years the quality of referrals has gone up sharply. There are fewer and fewer examples of adjudication officers being given inadequate information on which to base a decision—something which the Chief Adjudication Officer has in the past had cause to criticise in his monitoring of the work of ES adjudication.

Much is made of how those performance indicators are brought together to deal with the agreed standard of people in the Employment Service. Overall performance assessments are made on a range of boxes A to D: Box A means that the objectives have been exceeded; Box B means that the objectives have been met; Box C means that some objectives have been met; and Box D that few or no objectives have been met. Every year the service negotiates the distribution of the available performance pay budget and the ratio of allocated performance shares with the Employment Service unions. That often results in annual increments as people move up the incremental scale. It may determine how they move within grades. People are promoted, move up the scales and are paid extra in relation to how well they perform. I cannot at least believe that my noble friends think that that is a foolish way to try to run the Employment Service.

To sum up, the checks and balances contained in the targets which are set for the ES as a whole, and which are contained in public documents in the specific target for referrals to adjudication and in the way that those are managed in individual cases, enable me to assert unequivocally that the system does not lead staff for their own gain to suspend claimants from benefit. I am myself certain of that. However, I recognise that there has been concern in this House. If your Lordships would welcome further assurance about this matter, I will give a commitment to write to the Chief Executive of the Employment Service to remind him of the sensitivity of the target. ES staff must be absolutely clear that their performance management will relate only to doing their job properly. In the particular case of this target—

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