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The Disability Rights Commission’s code of practice on employment mentions reasonable adjustments that employers should consider to retain disabled staff. However, this code is not legally binding, and it has been argued that employers should be legally obliged to implement better employment retention policies and practices in order to retain disabled staff. The Minister may have heard of proposals made by the voluntary sector, trades unions and others to tackle this problem through the concept of disability or rehabilitation leave. Indeed, a Bill was introduced in another place during the last Session of Parliament designed to create just such a system to enable those who become disabled while at work to undergo a period of retraining or rehabilitation without losing their job. I was pleased that his party, in the Warwick agreement, committed the Government to take action in this area during this Parliament, and that the Labour Party's 2004 party conference report from its National Policy Forum stated that the party would go further to promote full civil rights for all disabled people, including:
“Taking action to ensure that employers fulfil the requirement already on them to make reasonable adjustments for disabled workers including where appropriate granting leave in respect of their disability and permission to phase a return to work without fear of losing their employment or livelihood”.
I hope that the Minister will be able to respond positively on this point and indicate the measures that the Government are considering to meet this commitment and ensure that people who become disabled, or who develop a health condition while in work, are given the support they need for rehabilitation and retraining to remain in work. After all, as the Minister reminded us, someone who has been out of work for a year has only a one in five chance of being in work after five years, and those who are out of work for two years are unlikely ever to find work again. I am sure the Minister would agree that it is far preferable to enable a disabled person to stay in work than it is to have them leave their job, claim incapacity benefit and have to make their way back towards the labour market.
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There is one other issue that I would like to raise on Clause 15, and that is the nature of the employment-related support that will be provided by contractors to disabled people on the work-related activity component of employment and support allowance and to those from the support group who choose to volunteer to underatke work-related activity. The evidence of the Pathways pilots is that people with mental health and muscular skeletal problems have been the main focus of support activity, with their combined numbers representing around 1.4 million of the 2.7 million current claimants of incapacity benefit or severe disablement allowance.
It is important, however, that we do not concentrate on those very large groups to the exclusion of other, smaller groups of disabled people who face significant challenges in finding and retaining work. I particularly have in mind visually impaired people, who, as I mentioned earlier, experience a rate of unemployment much beyond that of the average for disabled people. My concern is that, in looking at the large numbers who can be helped, we do not forget those smaller groups of disabled people who may be further away from the open labour market, and who may need long-term and well tailored support to move towards work.
I hope that, in awarding the contracts for delivering employment support, the Minister and his colleagues will consider carefully whether bids adequately set out how they will meet the needs of smaller groups of disabled people and those with high support needs. It would be a great pity if these reforms led to employment support providers helping only those disabled people nearest the labour market to the detriment of disabled people with greater needs, who will require more help and support to enable them to move towards work.
6.31 pm
Baroness Hollis of Heigham: My Lords, back in 1997, those of us campaigning for the poor usually did so by campaigning for higher benefits, until one calculated that if one raised every benefit by about £10 a week—which would have bought a couple of yoghurts a day and a cinema ticket at the end of the week—that would have equated to the entire spending then on the hospital service, and people would still be poor. They would still passively receive the dole, generation after generation. Since 1997, a dozen or so social security Bills later, we have instead been building up an active concept of welfare that is focused on work, to address not just income poverty but, as has been movingly said by other contributors today, the poverty of self-esteem of those on, and who regard themselves as being on, the edges of our society.
We have come a long way since 1997. Under a remarkable Chancellor, we have seen a steady and expanding economy, with another 2.5 million jobs. We have seen those jobs pay, through a minimum wage, tax credits and childcare support. We also know, though, that labour market policies are essential as well. We know that if youngsters leaving school at 16 have not had a job by 21, they will have become virtually unemployable, and that someone on disability benefit spends their first 12 months anxious to get back to
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Those labour market policies are the subject of the Bill. For those who have been active—the problem now for all of us is inactivity, not unemployment—the labour market seems full of risk. It is about those risks that I want to talk tonight. Some have already been mentioned. Pressed to enter, many economically inactive people will become reluctant conscripts, engaging, I fear, with reluctant employers.
What are those risks, and to what extent does the Bill seek to address them? The first cluster of risks are the benefit traps. I shall touch on some of them. We know that the best predictor of whether, for example, a lone parent has a job this year is whether last year they had a mini-job. Yet, if she takes a mini-job, we punish her for it. Every hour she works after three hours, until she hits 16 hours, she loses her benefit 100 per cent, pound for pound. Surely that is not sensible. It is an invitation to build fraud into the system.
We need dials, not dichotomies. We need a properly tapered earnings disregard—in the same way, I suggest, we also need a review of the permitted earnings rule for disabled people—if we are to coax the inactive back into the labour market so that their confidence grows step by step. Even worse, when people find work, they face a steep withdrawal of housing benefit and a tax of 60p in the pound on top of all their other taxes, and then if the job folds it will take them weeks to get back on to housing benefit, so that to the financial risk of losing a job and means-testing is added the potential risk of homelessness.
The four-week rollover helps, but it is still not enough. I hope that the Bill’s new housing allowance offers the possibility not only of shopping around—although I remain somewhat sceptical of that, given that something like 40 per cent of those on housing benefit have to use their benefit to top up an incomplete and inadequate housing benefit because of the recalcitrance in many areas of rent officers—but maybe of housing choice. More importantly, as my noble friend said in his opening speech, it will allow predictability, speed and simplicity.
We have also, with the best of intentions, built another risk into disability benefits. Incapacity benefit increases in value the longer you are on it. There are perfectly good reasons for that: over time you need to replace white goods, carpets and so on, which a person on JSA—80 per cent come off it within six months—would never normally need to do. However, that seems to produce a reward for not coming off the benefit. More importantly, it produces a high perceived risk that, if you come off the benefit and then your health or your job collapses, you go down the snake of benefit reduction and have to start all over again at the lowest rate.
That is why over recent years we have extended the linking periods—up to two years now, I believe—to
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The second set of risks I want to suggest tonight are around the work-focused interviews. Many benefit recipients have become economically inactive for good reasons—poor physical and mental health, functional illiteracy, weak language skills or exhausting caring responsibilities—and may end up without a qualification, a skill, a driving licence or a reference to their name. Work they might have attempted in the past—the classic job was always that of lift attendant—has been increasingly squeezed out of the economy. Many are a long way away from today’s world of work. We could invest many pounds and many hours, and they would still not find work. Under any value-for-money scenario that is going to be troublesome, but try we must.
If the funding for outsourced contracts rewards outcome-based results, however, how much work will go into supporting and sustaining such people when other clients are easier and quicker to place? Can we hope that my noble friend will be able to assure us that more generous support funding will be put in place? Even if, with all this additional work, someone is not helped back into the labour market, they may none the less in the process have been able to become a better parent and a better member of society, able perhaps to do part-time work or volunteer.
New Deals have been transforming here. I am delighted that Pathways to Work will be rolled out nationwide over the next 18 months or so. The IFS has shown that it is beneficial for the older worker, that the New Deal for the over-50s has supported something like 160,000 people back into work since 2000, and that of those on incapacity benefit nearly 10 per cent more are in work nearly 12 months after Pathways—a significant finding.
We are right to concentrate on those entering IB before they have become dependent on their benefits and while they are still attached to the labour market. If there is one thing I have learnt about disability benefits, it is that early intervention is vital. But, as another noble Lord has said tonight, our record on occupational rehabilitation is among the poorest in Europe, and that has to be improved. It is much easier to hold someone in work than to bring them back into work a year or two down the line.
That brings me to the next risk, which has also already been mentioned. I refer to conditionality, compulsory work-focused interviews, the sanctioning of benefits, and the like. Unlike other noble Lords, including the noble Baroness, Lady Thomas, I think it is essential. In the early New Deals we quickly found that what was not mandatory was too often ignored.
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Each time the Government introduced sanctions in social security, worries were rightly expressed about the quality of staff and their decision-making. The fear was that too many people would be sanctioned. Would staff understand the effects of cancer treatment, dyslexia, of having a sick child or of agoraphobia? As evidence that staff do not understand, it has often been said, and it has been repeated tonight, that half of all IB refusals were overturned on appeal. That fear was expressed tonight by the noble Lord, Lord Oakeshott. I believe this to be a misunderstanding.
Although most New Deal programmes deal with thousands of people, the number of sanctions in most of them can be counted on the fingers of a couple of hands. In my experience, staff are almost entirely sensible and decent about missed interviews for health reasons, caring crises and the like. They are not traffic wardens, rewarded for the number of benefits they refuse or sanctions they impose. We should not assume that that is what they are there to do.
The point about conditionality is that people do not know what they do not know. If they do not attend work-focused interviews, they will not know about the possibility of rehab, of job search techniques, practical help with aids and appliances, such as the access to work programmes, and the effect on family finances. After all, one person in six who is on IB has dependent children. Perhaps two-thirds of those coming on to IB will be in the support group, and of the third in the employment group, perhaps a third of those will be screened out to join the support group, but if we can reduce those risks, many of those in the support group may want to try to return to work, even if only on a part-time basis.
As for those going to appeal—often used as evidence that the staff have got it wrong—perhaps 50 per cent to 60 per cent of DLA appeals are overturned, which is about 5 per cent of the total IB caseload. As the president of the appeals tribunal has indicated, appeals are usually overturned on the basis of incomplete evidence, the problems of a fluctuating condition—very difficult for any decision-making—and, sadly, a deteriorating condition. What is key is to get it right as far as humanly possible at the early decision-making stages and to review that decision as new and more complete information becomes available before moving into the tribunal system.
This brings me to my final risk: the attitude of the employer, especially those in small and medium-sized enterprises, mentioned by the noble Lords, Lord Skelmersdale and Lord Oakeshott. Employers, particularly SMEs, understandably want hassle-free, reliable staff. They cannot easily cover unexpected absences—the woman with the disabled child, for example—and they dread entanglement in the tribunal system. Some 38 per cent of employers are unwilling to employ a disabled person and two-thirds are unwilling to employ someone with a mental health problem, yet 40 per cent of those on IB have a mental health problem or a learning disability. What can employers respond to when someone has fluctuating mental health or if they are presented with someone who has Asperger’s syndrome and may have weak social skills? The Richmond community owns
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We know that the best hope of employment for someone with a disability lies with re-employment by the previous employer, who sees beyond the medical record to the person they knew before. I wonder whether we were wise to abandon the employment credit for employers. Can we give greater help to those former employers, as they are the ones most likely to hang on in and make the job sustainable?
We have come a long way: there are 2.5 million more people in work and 1 million fewer on benefits, while 2 million pensioners and 2 million children have been lifted out of poverty. I greatly welcome the Bill and am confident that my noble friend will give us the assurances that we seek. If we can get it right, I believe that it will offer renewed life chances that could be transforming for those too easily written off in the past.
6.46 pm
Lord Kirkwood of Kirkhope: My Lords, it is a great privilege and pleasure to follow the noble Baroness, Lady Hollis. Her experience in the department has stood her in good stead; she is an expert in these matters, and her penetrating and skilful analysis, particularly of the risks involved in this piece of policy-making, is essential to its success and will repay careful study.
I should like to detain the House for a moment on the politics of the measure. I absolutely agree that active labour markets and the policy of having work for those who can and security for those who cannot were perfectly reasonable, sensible and beneficial policy changes that came in after 1997. Call me old-fashioned, but I imbibed with my mother’s milk the idea of the social insurance principle. People paid in and, during periods of adversity throughout their life, they got help from the state.
After 1997, the Labour Government moved subtly away from that. There may have been good reasons, but it was done quietly, and I do not think that there was enough debate. I was perfectly happy to make the best of “work for those who can and support for those who cannot”, but there is some evidence that the ground is shifting yet again, and we should be careful about that. Only a few days ago, Mr Murphy, the Minister of State at the department, made an important speech—important enough to go on the departmental website—which moved away from the adage of “work for those who can, support for those who cannot” to “work first, benefits second”. I am not a conspiracy theorist, but that makes me deeply suspicious. If he is setting out a change in the thrust behind these policy measures, we may be moving into territory where people have to go on to a programme or a job or undertake some sort of training before they get any benefit at all.
I will be pleased to be told by the Minister or somebody that I am overthinking this, but, if that kind of philosophy is adopted, when the Bill—
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As has been said by other people—indeed, it is the only thing about which I disagreed with the noble Baroness, Lady Hollis—conditionality is deeply worrying. Administrative systems of that kind are contrary to natural justice, have unintended consequences and result in a degree of complexity from which we are already suffering too much. Bills of this kind should always have a simplification clause, as standard. There are some simplifications in the housing benefit aspects of the legislation, which are welcome, but not much else. I hear that the department is now thinking of predictive data techniques to speed up benefit claims, but there is a world of difference between having techniques to manage complexity and getting a simpler system in the first place. There should be a rolling programme of simplification measures, and the Bill does not have enough of them.
The role of the private sector will be distinctly different in the implementation of the legislation, and I am particularly interested in the Minister’s view of what Sir John Freud will bring to that agenda, because I hear that he takes the view that private sector companies could easily enter the field and increase efficiencies in the roll-out of the administration. I hope that the Minister will advise Sir John to go and talk to the managing director of Capita, who had some very inelegant experiences administering housing benefit systems for some of the London boroughs in the not too distant past.
The department is in pretty bad shape right now. It is an excellent department, and the professional staff are all admirable people, but it has suffered from a series of circumstances that cannot be ignored if we expect success in the deployment of this policy. The Gershon efficiency savings are taking a toll. The absence and sickness rate in the department itself—rehabilitation systems and processes—is terrible, and the departmental record in absence management has been chronically bad for a long time. In addition, the department faces a 5 per cent efficiency saving cut, which is being worked on now. At the same time, the Comprehensive Spending Review to be completed later this year will take effect but will probably not make things any better. The frequent changes at Secretary of State level, with six Secretaries of State in the past 10 years, have led to incoherence. The department has suffered in that regard, and we have to take all that into account.
Staff morale at all levels in the department is low, particularly at a local level. In my area of south-east Scotland, the former integrated local office based in Galashiels, with 45 to 50 loyal, professional and high-quality staff, is being replaced by a supermarket—it is now a branch of Tesco. The staff are being relocated to new offices and being given no assurances at all about long-term established work, so they are finding other work because they are able people at the end of their tether. That background cannot be ignored when
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I have been scarred by my own experience, and I have no alibi, because I was there when we debated the initial legislation on child support in 1991. The noble Baroness, Lady Hollis, spent most of her departmental career trying to fix the mess. It was not her fault that the thing got into such a fankle, to use one of my granny’s favourite Scottish words.
The combination of two things concerns me. First, the House may know that the DWP abandoned the benefits processing repayment programme last year. Noble Lords may not know that that was a fundamentally important set of processes that underpinned the new employment allowance that this legislation introduces. The department’s investment strategy programme, published for the years 2005-08, declared that the BPRP was,
- “a core Information Technology Platform which will provide a lasting foundation for modern, flexible IT solutions which support business priorities, including improved service for customers and employers, reducing the operating costs of legacy systems, efficiency savings and improved programme protection”.
According to the press, the Government wrote off £141 million as a result of the abandonment of that programme. The good news, as, I am sure, the House would like to know, is that those who administer Jobcentre Plus believe that only £70 million was lost because some of the work can be recycled and salvaged. I hope that it can.
That measure underpins the roll-out of the IT platform in Part 1 of the Bill. Almost simultaneously with that measure, the department asked for a Section 82 power, under the Welfare Reform and Pensions Act 1999, to spend in advance of Royal Assent. As the House probably knows, the department is, unusually, spending money already on this IT platform before Royal Assent—there are powers to do that, and it has gone through in the other place. I cannot but think that those two things are connected. The last time that the Section 82 power was used was to bring forward an IT platform for the CSA, so the auguries are not necessarily good.
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