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I hope that has dealt with each of the points raised, but if noble Lords would please press me again, I will certainly have another go. Subject to that, I urge the noble Lord to withdraw the amendment.

Baroness Hollis of Heigham: I welcome my noble friend’s comments about, in due course, a mandatory transfer of people on existing IB over to the new employment and support allowance. Will that also apply to the regime previous to incapacity benefit; that is, invalidity benefit? We now have almost an archaeology of disability benefits, and because some of the older ones, particularly invalidity benefit, were sometimes more generous and certainly gave greater security, there is a real reluctance among the holders of those benefits to risk exposure to the labour market, or to anything that seems to suggest that they may not be able to return to their incapacity or invalidity benefit. Instead of seeking to re-enter work, they seek instead to retain their benefit.

I very much welcome my noble friend’s proposals to move all on to the new benefit—that is the only way we will be able to extend the opportunities for supported work and re-entry into the labour market for people who may have been on these benefits for five, seven or even 10 years—but will they also apply to the old invalidity benefit, given that when we introduced incapacity benefit we did not then make any arrangements for moving people across from one to the other?

Lord McKenzie of Luton: I am grateful to my noble friend for giving me the opportunity to clarify that matter. I confirm that we intend over time to migrate all existing customers, including those on IVB, on to the new system. As I also made clear, our broad approach to protecting people’s entitlements is that no

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existing customer will lose out in cash terms. Our principle is then to simplify the system and to bring people on to ESA rules, so far as possible.

Lord Addington: I think the Minister will be able to confirm that the premiums will mean no one will lose out in cash terms. My amendment deals with this. Will he confirm that no one is expected to be worse off as a result of transferring to the new benefits? If he will clarify that, we can kill this off and go on to something else.

Lord McKenzie of Luton: The position of all existing claimants will be protected in cash terms. They cannot and will not be worse off. Under the new system I have outlined which premiums will operate under those arrangements and how they will do so. The disability premium will not be available because of the new structure of the benefit. We also need to bear in mind, when making these comparisons, that the ESA brings with it not only the cash benefits but also the support that is vital for getting people back into employment and helping them improve their lives.

Lord Addington: To come back on that, is it the case that existing claimants are fine, but there is a possibility that the financial situation for new claimants with equivalent conditions will be different?

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Lord McKenzie of Luton: Yes, it is possible because the allowance will deal with people in a different way. It is a different type of approach. Some people will be better off over a period because they may get access to higher benefits sooner than they would under the existing arrangements.

Lord Oakeshott of Seagrove Bay: To clarify that, will some people be worse off “over a period”, as the Minister put it?

Lord McKenzie of Luton: I stress again that the new rate has not been set and, until it has, it is not sensible to try to draw those conclusions. We have set out very clearly the structure of the new allowance and the support that goes with it. We have made it clear that, in the main phase, the basic allowance will be above the long-term IB rate. That seems to be an appropriate framework in which to consider these provisions.

Lord Skelmersdale: I am extremely grateful to the Minister. I appreciate that I asked a long list of questions, some of which are dotted around the surface of the Bill. For future reference, if the Minister has his editor’s pencil with him, at the moment none of my amendments is intended to alter the Bill at any stage. However, when we reach Report, and after I have studied the Minister's words of wisdom, the situation may change.

At the beginning of his answer, the Minister referred to the pilot Access to Work schemes—on which all this is predicated, is it not? Some time ago, I asked the noble Lord's predecessor a Question for Written Answer. I asked how many people who had been on these

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pilots had not volunteered. I will not read out the whole Answer because I knew what it was when I asked the Question. The Answer is “none”. Therefore, in encouraging disabled people to have access to work and to discover what work is all about and so forth, I find it odd that pilots are relied on. Pilots do not prove anything; they merely show that there are volunteers who have had gainful employment and think that they have the opportunity of gainful employment, but they do not do much for the great bulk of people on IB with whom we are concerned.

Lord McKenzie of Luton: I do not altogether follow the noble Lord’s argument; nor do I agree with him that Pathways to Work has not been valuable. I do not have the data readily to hand, although they are in the file here somewhere, but comparisons have been made of people in Pathways areas and non-Pathways areas who have reached employment and moved off incapacity benefit, and the process has helped them. Even if you did not have the data to support that, conceptually, looking at what is entailed in all this, it is certain that these processes help people. We are engaging with them in a positive way and helping to deliver on their aspirations rather than paying them for not engaging and forgetting about them.

Lord Skelmersdale: I accept that but, given that the existing experience is based entirely on volunteers and that the new system will not be, it is difficult to lead one's thoughts directly from the first experience to the second. It is a general point. I suspect that the Government will not find the scheme quite as successful as the results of the pilots have led us all—me included—to believe.

Lord McKenzie of Luton: To be clear, the Pathways have been mandatory for new customers with the six work-focused interviews, as they will be under the ESA. There is an opportunity for people to volunteer, just as there will be opportunities for people to volunteer under the new system. There is a mandatory component in the Pathways project.

Lord Skelmersdale: That makes me even more confused, I am afraid. I shall now have to read out the Answer that the noble Lord, Lord Hunt of Kings Heath, gave me, which states:

We all know that, of course.

Lord McKenzie of Luton: I am sorry to keep interrupting. Is the noble Lord’s reference to Access to Work? That is a different programme from Pathways. I am not sure that we are talking about the same thing.

Lord Skelmersdale: There is an expression about quitting while you are ahead. Quitting while you are behind is equally valid in this context.

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Lord Oakeshott of Seagrove Bay: Nil desperandum.

Lord Skelmersdale: I shall go on to the supplementary questions asked by the noble Lord, Lord Addington. Some of our correspondents have pointed out that the higher rate of invalidity benefit is £80 a week, whereas the average in receipt is more like £90 a week. Therefore, one wonders whether the levels will be closer to the average or the minimum. By the look on his face, the Minister is not prepared to answer that, so I had better move on fairly swiftly.

Lord McKenzie of Luton: The answer that I can give is the answer that I have already given. We simply have not set the rate yet, but it will be above the long-term IB rate.

Lord Skelmersdale: I thank the Minister and shall be satisfied with that for the moment.

The Minister went on to say that there would be no topping up, as ESA is an integrated benefit, but that there would be enhanced disability benefit, if I understood him correctly. I am grateful, too, for that. Is the income support element to lose the disability premium of income support? That worries certain of my correspondents. I am glad to hear that at least some of the passported benefits will be continued—for example, housing benefit, council tax benefit, prescription charges, and presumably eye and teeth tests and those sorts of things. I also noted that the disability premium was to continue.

On the linking rules, I did not quite—

Lord McKenzie of Luton: I apologise for interrupting, but I do not want there to be any misapprehensions. The disability premium will not survive under the new arrangements because of the new structure of the benefit, but in the income-related amount the components can include the enhanced disability premium, the severe disability premium, the pensioner premium and the carer premium where appropriate. The pensioner premium is an overlapping benefit in that calculation. Those premiums will survive.

Lord Skelmersdale: I am grateful for that clarification; I clearly noted it down slightly wrongly.

As for linking rules, I understood the Minister to say that, when there was a break, the customer would go back to the same level of benefit income as they had before they went into work; I hope that I have that one right anyway. However, he did not rise to the challenge of my question about the £40 back-to-work grant or whatever it is technically called; that will suffice for the moment. Clearly, a broken work pattern would mean that people would lose the £40 for periods when they were not in work. Does the £40 continue for 24 months of work activity or do people start again at the beginning of the £40 period when they get back into work, having been off work for a period?

I was interested in the intention to migrate children first, but I would be horrified if the results of the Pathways to Work did not affect the precise way in which the relevant regulation would be drawn and

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laid when the time came. The Minister looks as though he is poised to answer my question about the £40, so I had better let him do it.

Lord McKenzie of Luton: The £40 is for a 12-month period. If somebody goes into work, that starts a 12-month period; if they come out of work, it ceases. If they go back into the system and start work again, the clock starts again on that 12-month period. I stress that the payment is due only when salary levels are at £15,000 and below.

Lord Skelmersdale: That explanation is very helpful and will be extremely welcome to the various people advising me. I had not appreciated that point; the voluminous papers on the Bill did not make it clear that the grant was for 12 months rather than 24. Never mind.

I am extremely grateful to the Minister. I am sure that we will return to these and linked subjects throughout the afternoon’s proceedings. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

Clause 1 agreed to.

Baroness Thomas of Winchester moved Amendment No. 3:

(a) a person who provides advice under subsection (1) shall be treated as having limited capability for work under section 8 in relation to the activities undertaken in pursuance of subsection (1) if he would otherwise be so treated; (b) in the case of contributory allowance or an income related allowance any fee received in recognition of the service undertaken shall be subject to such disregard and averaging as may be prescribed; (c) in the case of contributory allowance or an income related allowance, reimbursed expenses shall be disregarded as income in such cases as may be prescribed; and (d) regulations made under section 16(3)(a) shall not apply in relation to advice undertaken in accordance with this section.

The noble Baroness said: Amendment No. 3 introduces a new clause whose purpose is to remove the benefit disincentives to service users who are benefit claimants and who act in an advisory capacity for public services. The new clause states that users of health and social care services who may under the Bill become recipients of ESA and who agree to be involved with advising a health or social care provider should not be treated as fit for work just because of

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this involvement if the fee paid, plus reimbursed expenses that are treated as earnings, exceeds the current limit.

The reason that this is an important point is that it is an explicit requirement of the disability equality duty, which has been a statutory obligation for public bodies since the beginning of December last year. That duty requires public bodies to produce the disability equality scheme, setting out the actions they will take to address the barriers to equality faced by disabled people within a particular service. Central to the DES’s development is the involvement of disabled people. This is in addition to guidance issued by the Department of Health specifying that service users and carers who use social care or health services must be involved in all parts of the design and delivery of social work education and training. Many of these service users will have severe health or disability problems and are likely to be in receipt of ESA when it is introduced.

It would be very sad if this important and growing group of people were thwarted in performing this kind of public service because they were worried it would affect their entitlement to benefit. When this point was raised in Committee in the other place, the position of local authority councillors was made clear—their position would be safeguarded under the Bill. But the position of service users was not addressed, although the Minister there said:

I would be glad if the Minister could address this point when he replies. I beg to move.

4.15 pm

Lord Morris of Manchester: I am happy to speak on this amendment and will do so briefly. Refusal to respond positively to it could be self-defeating. All of us here know that charities save the public purse very considerable sums year by year in providing services that would otherwise have to be provided by public authorities; and in any way to inhibit people from helping them could be much costlier than conceding the amendment. This is not to say that cost is the only consideration. Knowing the value of policy initiatives is no less important than knowing their cost. I am sure that my noble friend Lord McKenzie will want to help if he can; if not now, then at a later stage of our consideration of the Bill.

Lord Skelmersdale: One of my correspondents told me of an individual who is currently in receipt of incapacity benefit but is able to volunteer for occasional days advising her local primary care trust. So it is not necessarily charities with which we are concerned here; it can be any public service of the state or charity or anything else. All other members of her advisory group receive one-off payments for this work but, as this one-off payment is higher than

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allowed under permitted work rules, she is unable to receive any payment for performing this public service, which seems to me to be a bit silly.

I accept that in many cases there will be a very fine line between work that is therapeutic and work that is done simply as a job. One of the case studies in the not-so-little red book mentioned a part-time job in a gift shop that would be allowed under the earnings rules for income-related ESA. A similar job possibly involving more hours a week could be very useful in helping a disabled person to gain confidence before returning to full-time work. That prompts me to ask how the Government intend to distinguish between regular work and therapeutic work, because it is hoped that both will eventually lead into full-time employment, which is what we are all after.

Lord McKenzie of Luton: The amendment seeks to provide powers to disregard payments received and ensure that activity undertaken as part of service user involvement will not be taken into account in calculating benefit entitlement or payments.

The Government recognise the importance of encouraging public bodies to involve service users in improving services, and we are also aware of the concerns that have been raised about how current benefit rules can make it difficult to ensure service user involvement. The noble Lord, Lord Skelmersdale, gave us an example of that.

Employment and support allowance is an earnings replacement benefit, so we have to consider very carefully the effect on benefit entitlement of any activity which provides income. Equally, we have to take into account the effect of that activity on eligibility for benefit. However, it is equally important to remember that ESA is built on the aims of encouraging people to work, to build skills and to increase their confidence. It is essential that we provide an appropriate balance between encouraging participation in public life and protecting taxpayers’ money.

I know that it is argued by some that service user involvement is not work but I do not think that that is a helpful distinction to make. Service user involvement involves many of the skills and activities that people routinely engage in in their everyday employment and ensures that services reflect the needs of the people who use them. In creating any distinction, we would be dismissing the value of service user engagement in helping disabled people to build confidence and develop the skills that would help them into other types of work. As such, service user involvement could count as part of a person’s work-related activity.

Everything that this new clause proposes in respect of treatment of service user engagement can already be done through the Bill. For example, the aim of the amendment could be achieved through the flexibility we already have in Clause 3 where we can regulate for the appropriate treatment of any payments regarding the contributory allowance, including the treatment of expenses.

However, whatever we do must be consistent with the principles underpinning the employment and support allowance. ESA is built on a foundation that people should be encouraged to work, build skills and

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increase their confidence. We want to encourage participation in public life as part of that, but we think that, as is already the case with councillors, a balance is to be drawn between income from working in and representing their community and avoiding duplicate provision from the public purse.

We want to ensure that people are rewarded properly and appropriately for their contribution and involvement in their communities, and that there is the right balance between benefits for people who are unable to work full-time due to illness or disability, and the income those people can earn. Any changes we make need to be approached with care. We need to understand what the effects would be, not only for service users and public bodies, but, more widely, for earnings rules and work incentives.

While service user involvement is an important activity, we also need to take account of the fact that our goal for many people with health conditions or disabilities is work, and we must not create disincentives for people to achieve that in our enthusiasm to ensure that all members of society can engage in activities in addition to employment.

We also need to make sure that the procedures and guidance properly deal with service user involvement. Some Members of the Committee will know that we have recently announced a change to the rules on expenses paid to volunteers to ensure that people who give up their time when on benefits are not penalised. Alongside that, we have revised the guidance on applying the incapacity-for-work test to emphasise that when people take part in service user involvement they should not automatically be sent for a reassessment. A reassessment should be done only when there are specific reasons for believing the work a customer is doing demonstrates that they no longer satisfy the conditions of entitlement to the benefit. We intend that similar guidance will apply to ESA in the future.

The noble Lord, Lord Skelmersdale, made reference to therapeutic work. The permitted work rules replaced the old idea of therapeutic work, as agreed with the person advised that—oh! I will leave that note to one side as I cannot read it. The question of permitted work rules is important, but in certain circumstances service users would fall outside the rules, but permitted work rules might be a route for some to engage in the manner envisaged.

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