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For too long, people with health conditions and disabilities have been denied the right to work, condemned to a lifetime on benefits because the system presumed them incapable. This has culminated in over 2.6 million people becoming dependent on incapacity benefits. When people come on to benefit, eight out of 10 want or expect to return to work. After two years, however, they are more likely to die or retire than fulfil their goal. The current benefit system does not support their aspirations. That is why the Bill seeks to embed those aspirations within the structure of a new benefit.
Part 1 of the Bill makes provision for the new employment and support allowance which will replace incapacity benefit and income support based on incapacity or disability. That will eradicate the concept of incapacity embedded within the current system, and replace it with the concept of capability. For the majority, this will mean the additional responsibility of being actively engaged in preparing for a return to the labour market in return for the additional support. This is achieved by embedding the principles of the successful Pathways to Work pilots within the benefit structure.
We know that Pathways to Work works. It is the most successful initiative of its kind across the world. In pilot areas, the recorded number of job entries for people with health conditions and disabilities has almost doubled since it started. In return for the additional support provided by the national rollout of Pathways to Work, the vast majority of claimants will be required to attend regular interviews and, in time and when resources permit, undertake work-related activity. Those refusing to engage with the help and support offered without good cause could see their benefit reduced progressively in stages, down to the basic level of jobseeker’s allowance rates.
At the heart of our early success with the New Deal and Pathways is the fundamental principle of “something for something”. Simply to introduce a voluntary system of employment support would be to exclude those who have lost the motivation and confidence to volunteer. Our experiences from existing programmes conclusively show the importance of actively engaging people and the difference it can make to their aspirations to return to work. The added incentive to participate embedded within the benefit structure is therefore essential to its success.
Proof of the success of these measures will not come with a large number of cases where benefit sanctions are imposed, but in the number we can get
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The new personal capability assessment (PCA) will make the distinction between these two groups. It is a crucial distinction, on which the Government have rightly consulted extensively. We have been particularly conscious of how important this process is for people with mental health problems and learning difficulties, so we have worked closely with consultative groups on the design of the assessment. Rather than just being focused on benefit entitlement, the new PCA will examine not only what an individual person cannot do but what they can do and what help they need to fulfil their potential. The points system used by the existing PCA to determine entitlement to incapacity benefit through looking at whether people can carry out certain activities will remain. There will be a revised assessment of both physical and mental health, and revised descriptors and point scores will be used.
Following our continued consultation with stakeholders, we intend that regulations will continue to allow the point scores for physical and mental health descriptors to be added together to calculate the final assessment. This decision has been made as a direct result of continued engagement with our stakeholder groups. These regulations will be included in Welfare Reform Bill—Draft Regulations and Supporting Material, which will be available in the Library later this week. Those assessed not to have to undertake work-related conditionality will still have the opportunity to voluntarily access appropriate support. A modern welfare state cannot afford to leave anyone behind. No one will be written off under these reforms.
That is also why existing claimants of incapacity benefits are already able to volunteer for the support available through Pathways; this coverage will be extended as Pathways is rolled out nationwide. Over time, we will migrate existing customers on to the employment and support allowance. I can assure noble Lords that people on incapacity benefits will have their current cash levels of benefit protected. The evaluation of interventions with existing customers in the original seven Pathways to Work pilot districts will help to inform our approach to conditionality for those claimants. As has been the case in Pathways areas since their inception, anyone currently on incapacity benefits will be able to volunteer for any appropriate support on offer. This radical new approach to the treatment of people with health conditions and disabilities will transform not only the lives of the tens of thousands of benefit claimants who will be helped into work but also the lives of their families.
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Part 2 provides for the simplification of the existing housing benefit system to improve work incentives and encourage greater personal responsibility. Housing benefit is complex, does little to promote social responsibility and, at times, can act as a barrier to work. It is also a passive benefit. Most claimants have their benefit paid directly to landlords, which means that many are unaware of how much rent is paid on their behalf. It does nothing to prepare people for work and is completely at odds with the active contract which we are seeking to create with our wider reforms of the welfare state.
That is why the powers in Clause 29 will facilitate the rollout of the local housing allowance to all tenants of the deregulated private sector. Local housing allowance bases housing support payments on a system of standard maximum allowances that are calculated according to both the size of household and the location of the property. As with the Pathways programme for those on incapacity benefits, this policy has been tried and tested and has proved successful not only in simplifying the benefit but in promoting fairness and personal responsibility.
Under the local housing allowance pathfinder areas, wherever possible, payments are made to tenants themselves rather than to landlords. This not only promotes financial inclusion and gives people more freedom over their housing choices, it prepares people to move out of benefit dependency and for the responsibility of paying their full rent. The appropriate safeguards are in place for when tenants have difficulty in managing their affairs. However, evidence from the pathfinders has shown that the proportion of payments being made to tenants as opposed to landlords has risen from 40 per cent to 85 per cent. There has been no rise in landlords reporting payments in arrears, which shows that people are taking on the responsibility of managing their housing costs.
Clause 30 seeks to test out a further mechanism for embedding social responsibility into the benefit system through taking the powers to sanction housing benefit from people who are evicted as a result of anti-social behaviour and who then refuse to take up rehabilitation when offered to them.
People have the right to support but they also have a duty to act in a socially responsible manner which does not damage the community in which they live. We have to make a stand to ensure that people realise that there is a line that they cannot cross if they want to continue to expect state support. That is right and fair. We intend to pilot this scheme in 10 local authority areas over a two-year period, with the appropriate safeguards in place for vulnerable children and adults.
Let me be clear: the proposal is not a punishment; it is a measure of last resort to encourage people who have already been evicted to take up the rehabilitative support that we offer them. If we really believe in the principle of rights and responsibilities, there must be clear limits to the behaviour that we will tolerate.
At this point, I acknowledge the debate that has taken place on the single-room rent and the desire of some to see it abolished. I reiterate that the consequences
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Part 3 takes forward several measures to improve the administration of social security. It includes powers to improve information-sharing between my department and local authorities. This will help us to work towards our goal of improving the take-up and delivery of benefits—in particular, pension credit, council tax benefit and housing benefit. Common information would need to be given only once to one agency, and that would reap both efficiency gains and improvements in customer service.
Although fraud in income support and jobseeker’s allowance almost halved between 1998 and 2005, there is still a long way to go. For a suspected fraud involving both housing benefit and jobseeker’s allowance, the local authority can only investigate and prosecute fraud against housing benefit. That could mean either that the offence involving jobseeker’s allowance was not investigated or that a duplicate investigation could be carried out by a DWP investigator. Clauses 45 to 47 remove the need for that duplication, both allowing local authorities to conduct investigations and freeing up time and resources for other investigations.
Clause 48 extends the period covered by the “two strikes” rule from three years to five. That means that, if a person commits a benefit offence within five years of a previous benefit fraud conviction, benefit may be withdrawn or reduced for 13 weeks. Extending “two strikes” builds on the positive deterrent effect already shown by the current regime and is a central part of our strategy to reduce fraud in the benefits system.
Part 4 comprises a series of smaller measures correcting some of the anomalies in the benefit system. These include measures to ensure that disability living allowance recipients at the age of 16 do not lose out on three months’ benefit entitlement, as well as amendments to simplify the budgeting loan scheme, which provides support to the most vulnerable in society.
The broad consensus that the Bill has received in its passage so far reflects the fact that it is founded on shared values: values of opportunity for all; the contract between the citizen and the state; and the fundamental importance of work. It extends the opportunities that participation in the labour market can offer to people who had previously been denied that chance. It enshrines rights and responsibilities within the structure of the benefit system, and it provides the legal framework through which a real difference can be made to people’s lives.
I firmly believe that, if we are to meet the challenges ahead, break down the remaining barriers to work and successfully tackle poverty and social exclusion, this Bill is the right way forward. I commend it to the House.
Moved, That the Bill be now read a second time.—(Lord McKenzie of Luton.)
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5.19 pm
Lord Skelmersdale: My Lords, I am grateful, as indeed the House should be, to the Minister for introducing the Welfare Reform Bill. It is inevitable that, in a 17-minute speech, he has been able only to scratch the surface of this very complicated Bill. It will create, if only temporarily, no fewer than six levels of benefit under which claimants may fall. Is that really necessary? It will make the social security system even more complex and difficult to administer than it is now. However, I say straightaway that we on this side of the House agree with the policy that the Government are enacting. To that extent, there will be the same consensus here that was widely commented on in another place.
First, we agree on the figures: some 2.7 million people are claiming invalidity benefit, 1 million of whom say they would like to be in some form of employment. It is therefore perfectly rational that the Government should seize on this as an objective. The way they have chosen to do so is to propose a new benefit which turns, as the Minister almost said, traditional social security logic on its head. Rather than concentrate on incapacity for work, this Bill is all about capacity for work. To my mind, that is the right approach. Your Lordships will know that I am a long-term believer in the proposition that the objective of social security is to help people to help themselves.
I therefore have no hesitation in repeating my mantra that disabled people are people first and disabled second. It follows that many disabled people are capable of some work-related activity, which will include unremunerated work as well as salaried employment. We also know that many disabled people want to work. To achieve that ambition it is vital that they have practical support to find suitable jobs and then to remain in employment. It is the intention of this Bill to make that happen.
So far, so good. However, to advance the proposition that 1 million people on existing benefits are to be weaned off them over 10 years causes consternation among current claimants. Two of the recent letters I have received about the Bill are pertinent here. The most recent is the most trenchant. It starts:
I hope that the Minister will kill this proposition stone dead and tell us that there is absolutely no intention of harassment of people with mental illness, cancer or any other affliction, not least because, if this idea is generally held, the Government will be suffering from their own spin.
The other letter, which I received just as the Bill was published in another place, is more complicated. That correspondent refers to himself as the full-time sole carer of a sufferer of a chronic mental illness. She receives both incapacity benefit and disability living allowance, though at what rates I do not know. The carer, for his part, receives carer’s allowance and, due to his wife’s chronic schizophrenia, is “unable to work”. He further comments that,
- “being a full-time carer is hard enough as it is, without having the constant fear of possibly very harsh reform policy being implemented”.
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Clearly, he lives in fear of benefit withdrawal. I replied that I saw no likelihood of that happening, but that I would write to him again if the situation changed. I ask the Minister: was I right in my response? I certainly hope so.
It is noteworthy that both these letters concern mental illness, an affliction that will be referred to many times during the subsequent stages of the Bill. It is easy, in social security terms, to cope with long-term illnesses, whether mental or physical. It is much harder to support those with fluctuating illnesses, or those whose treatment is temporarily debilitating. The obvious example here would be the radiotherapy or chemotherapy of cancer patients, who suffer sometimes quite long periods of tiredness and inability to concentrate once their treatment is completed. The treatment, too, may on occasion need to be repeated, and before Third Reading we will need to be assured that the regulations and administration surrounding the Bill will cover the situation of such patients.
There is a lot in this Bill that we will have to tease out of the Government. My honourable friends were grateful that the Government saw fit to produce many of the regulations flowing from the Bill in draft form during the proceedings in another place. However, some regulations have not yet seen the light of day. I note that the Minister said that two of them would soon appear before the public gaze. I mention in particular those in Clauses 8, 10, 12 and 15. I hope that the Minister will be able to do a little better than produce just two of the four I have mentioned. Three would be excellent; four and I would let him off.
The detail of the Bill rather than the policy concerns us; for example, is the 13-week assessment period too long for some disabled people? Will there be a system for fast-tracking those with terminal conditions?
There are also issues surrounding the assessments; for example, will specialist medical practitioners be involved in the medical rather than the capacity tests? The Explanatory Notes state that there will be a two-part assessment, the first part concerning evidence provided by the claimant and supported by his GP and the second concerning advice to the decision-maker, presumably a lay man, from a doctor or other healthcare professional approved by the Secretary of State. We will have to probe how specific such advice will be or whether it will be of a general nature. We also need to consider the third interview regarding the sort of work or work-related activity it would be appropriate for the claimant to do. One fact about the assessment process that concerns me is that with some conditions, especially in mental health, the claimant does not understand, or even hear, the questions posed by the interviewer. There should therefore be an arrangement like the one that exists now, to an extent, so that the potential claimant can bring an intermediary with him when appropriate.
The Minister referred briefly to migration. I understand that on day one of the new benefit—which I assume will be at the beginning of April, but that is yet to be confirmed—only new cases will be admitted to the new employment and support allowance and no new
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We know, because the Green Paper tells us, that around two-thirds of the 2.7 million people on incapacity benefits have been on them for over two years, and the Minister and his predecessor told us that they are more likely to reach retirement age or die than to gain employment. Those are deplorable statistics. One of the reasons for them is the lack of reassessment or, to put it more fairly, the irregular nature of reassessment. It seems only reasonable that if the state is providing income support for disabled people, it should monitor them, sensitively, of course, but none the less periodically. This is especially relevant for people with fluctuating conditions.
We will discuss these issues and many more in Committee. However, one point is fundamental to the success of the Government’s policy: the attitude of employers. Many employers are reluctant to take on people with disabilities and, in some cases, to keep them on their staff. What will the Government do to encourage them to change their attitude? Are they relying on contractors to do that for them, or does the Minister agree that a concerted campaign by the Government is sorely needed? We need to see a huge increase in flexible employment patterns, and we will want to know how the Government intend to achieve that.
So far, I have commented only on the employment and support allowance. However, the Bill contains rather more than that proposal; there are 40 more clauses. I do not intend to go through all the provisions now, but I shall highlight the first of them, which is housing benefit. At the moment it is paid according to an assessment made by the local authority rent officer of whether the rent charged is appropriate to the area, the individual property and the claimant’s needs. The Bill simplifies that, essentially, as I understand it, by establishing area rent tables for different sizes of dwelling and then setting standard maximum allowances, varying according to the size of the household. At the moment, in many cases the benefit is paid directly to the landlord, and the claimant never sees it. The Minister said that that happens in about 20 per cent of cases. The Government are right that that limits social responsibility, and they wish rent to be paid directly to the claimant’s bank account for onward transmission by standing order, but there are problems. The reason the benefit goes directly to the landlord is that experience has shown that often the claimant does not pay over the money.
If there is to be a bar—and I am not entirely sure whether there will be—on the landlord’s direct receipt, it is inevitable that the private rented sector will stop providing accommodation for people on benefits. Already one sees advertisements for houses
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Two things strike me about that sentence. First, “most” can refer to any number over 50 per cent; and, secondly, “a bank account” does not necessarily mean the claimant’s own bank account, even a joint one. We will need much more precise information before we can agree to that policy.
As the Minister said, the Government are also taking powers to deprive people of housing benefit following eviction for anti-social behaviour. Here, too, I need to be given a lot of reassurance that that is the right course of action.
Since local authorities administer the passported benefits of housing and council tax benefit, I agree with information-sharing between local authorities and the department, so long as the information is relevant to the inquiries pursued; for example, in suspected fraud cases. I am surprised that such a power does not exist already in social security law. However, I am not enamoured of the Secretary of State’s view that the computer networks of the Government and local government should be linked. What business is it of a general practitioner, for example, to have access to the police national computer?
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