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The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the noble Baroness, Lady Hollis, indicated that she simply wished for clarification of the statement I made to the House at the beginning of Report stage on 16th May. At that point I announced that, in the light of our review of the project, we had decided that the implementation of JSA should be deferred until October 1996. Perhaps I may try to answer the questions that she put, which, if my recollection is correct, related to the second paragraph of my statement and the position regarding unemployment benefit.

There is a common misconception that entitlement to unemployment benefit automatically lasts for up to a year. In fact, unemployment benefit is awarded on a daily basis for each day on which the claimant meets the necessary conditions—one of which is that the claimant has not already received the benefit for 312 days in the period of interruption of his employment. Unemployment benefit will continue to be awarded on this basis, subject to its normal rules and conditions, until JSA is introduced.

When the Jobseekers Bill comes into effect in October 1996, the relevant parts of the contributions and benefits Act will be repealed. Furthermore, existing awards of unemployment benefit and income support will be terminated under powers in Clause 40(2) of the Bill. Thus unemployment benefit will cease to exist and nobody will have any entitlement to it. Instead, all eligible claimants will be able to claim JSA in accordance with the conditions set out in this Bill, including those in Clause 5(1) which limit entitlement to contribution-based benefit to a total of 182 days.

However, Clause 40(2) (b) of the Bill provides powers for those on benefit at the point of change to be subject to transitional provisions which will themselves be set out in regulations. We intend to use these powers, and those in Clause 40(2) (g) and (h), to provide that days of unemployment prior to October 1996 should count towards the 182 days' maximum entitlement to contribution-based jobseeker's allowance.

The noble Baroness will no doubt accuse the Government of cutting unemployment benefit—

Baroness Hollis of Heigham: That is exactly right.

Lord Mackay of Ardbrecknish: There is nothing new in the Government's proposals. We have always made clear that contribution-based benefit would be limited to six months for people who claimed from April 1996. Therefore, those people will not be any worse off

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than they would have been if JSA had been implemented as originally planned. They will continue to be eligible for benefit at rates equivalent to unemployment benefit, including adult dependency increases, provided that they have not exceeded the 312-day maximum period without requalifying. We also intend that the current unemployment benefit earnings rules should continue to apply to all those who make their claims before JSA is introduced.

I should emphasise that the duration of benefit for those who claim before April will not be affected. Regulations will also provide that where a person's period of unemployment began before April 1996, he may still qualify for up to 12 months' contributory entitlement. That transitional protection will end in April 1997.

Perhaps I may answer the questions that the noble Baroness indicated that she had given me, which might illustrate what will happen. She asked me first when the clock would start to run for the 182 days. The answer is that it will start to run when JSA starts on 7th October. However, days of unemployment from 8th April will count towards the 182-day entitlement after 7th October.

The noble Baroness asked about the position of under-25s and the position of dependants. Those changes will not come in until October with JSA implementation. She also asked me about what she called the "carrots"—the NICs holiday and the housing benefit run-on. Both are still planned for April. We also still intend, as she rightly said, to start the in-work benefit pilot from October and the back-to-work bonus from October, as was always the intention.

Perhaps I may deal with someone who becomes unemployed on 1st October this year. He will have 12 months' unemployment benefit. Somebody becoming unemployed on 1st February 1996 will have eight months' unemployment benefit followed by, from October, four months of contributory based JSA. It will be transitional. I think it was the noble Baroness who asked me about 1st April. On 1st April it will be six months and six months. In fact, the key date is 8th April. So somebody first of all becoming unemployed on 7th April will have six months and six months. That will not change. But somebody becoming unemployed on 8th April will have, as we always intended, only six months' unemployment benefit. Thereafter, for example, on 31st July, he will have two months' unemployment benefit and then four months on the contribution based JSA. So nothing will be different from what we had originally intended so far as unemployment benefit is concerned.

I have tried to answer the questions asked by the noble Baroness. It may not satisfy her that the Government's policy is right but I hope that it at least explains what will actually happen to people who register on those four or five dates about which she specifically asked me. I am happy to make clear what we intend to do. We shall not be making any changes to legal entitlement prior to October 1996. We shall be laying the regulations that I mentioned before April 1996, so that everybody will be clear, although, as I said, the position will not change until October 1996 so far as concerns the points that I have made.

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I hope that that will satisfy the noble Baroness, at least as an explanation. I realise that she still does not approve of the policy. If she decides to put it to the test, I hope that my noble friends will support me.

Baroness Hollis of Heigham: My Lords, I regret very much that we are at Third Reading. Were we in Committee or at Report stage, I should very much have liked to press the Minister on the implications of some of the details of his answers to me, had the Chamber given me consent. Given that the questions are quite elaborate and the Minister's reply requires some detailed attention, particularly as we both misquoted dates at various stages in our replies, it is not entirely clear what are all the intentions.

What I gather to be the effect is that nonetheless somebody on unemployment benefit will from 7th or 8th April be eligible for only six months' contributory benefit before going on to means tested benefit. So when JSA comes into effect as of October, he will be immediately onto means tested benefit. However, I also understand from the Minister that the situation of dependent spouses will continue as under the unemployment rules between April and October. The under-25s will also continue under unemployment benefit between April and October. The Minister nods his head to confirm that that is the case. So it is in the record.

Nevertheless, perhaps I may first comment on the helpful intervention of the noble Lord, Lord Campbell of Alloway. I apologise to the House if I was not clear when introducing the amendment. What he said was indeed the case. The thrust of the amendment is that if the Government are to delay the introduction of the jobseeker's allowance to October, there should be a clean, clear and transparent introduction of that benefit at once, as a package. It is the very package that the Minister, through Second Reading, and Committee and Report stages, has told us that JSA was supposed to produce. It was tougher on benefits but at the same time, so the Minister believes, the jobseeker's agreement and other associated aspects of JSA nonetheless will actively help people back into work. It was a package.

We disagree with the JSA and the principles of it. But my amendment seeks to ensure that if JSA is introduced, it should be introduced cleanly, clearly, comprehensively and comprehensibly to claimants and staff together as an integrated package—that is what the Minister has always led us to believe—as at October. It means therefore that unemployment benefit on the one hand and income support would remain as they are until October. We should not have a splintered package with overlapping benefits, transitional arrangements, some income support, some UB, some under-25s, some over-25s and some dependent spouses—all that utter confusion.

The Minister and those of us on these Benches who have been dealing with the Bill for two months now are still confused and trying to understand it. If we are confused, what do the Government expect the people out there to be? What hope do they have of understanding the intentions? Is it fair? The

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Government, for their convenience—not as a result of our amendment—have delayed by six months the introduction of the jobseeker's allowance. That is not because we asked for it, although we should have liked it, but because it suited the Government so to do.

It seems only fair that if the Government are to delay the introduction until October, they should delay the entire package until October, so that everyone knows where they stand. Unemployment benefit and income support should run through to October and thereafter the new benefit would start cleanly, crisply and clearly for all concerned. We should not have the confusion that exists even today between two overlapping benefits and transitional arrangements.

In all fairness to the claimants, and because the Government at the very last moment have changed their policy in this respect, I ask the House to support us in clearing up the mess and confusion that will otherwise follow. I seek the opinion of the House.

3.28 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 112; Not-Contents, 152.

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