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It is important to remember that encouraging people to work, build skills and increase their confidence is the foundation on which ESA is built. Our goal is to help as many people as possible to leave benefit dependency and to support themselves through work, with all the advantages that that brings. As part of this process, we recognise that part-time work can be important to well-being and to developing self-worth, and that it can act as a stepping stone to sustained work off benefits. That is why we have the permitted work rules in incapacity benefit. We think that they serve an important purpose, so we plan to bring them forward to ESA customers. These rules aim to act as a valuable gateway into the world of work and give claimants the opportunity to explore what kind of work is right for them. Moreover, the permitted work rules are generous and, combined with the voluntary work rules, provide customers with a wide range of opportunities to try out work for themselves.

We have been looking for more flexible ways of helping people to take up opportunities and to increase their options without fear of their benefits being removed straightaway. One of the advantages of introducing a new, unified benefit is that it provides the opportunity to peel back the complex layers and rebuild, making improvements where we can. We have looked in particular at how the permitted work higher limit, which generally applies only to the contributory benefit, could help more people to try out work. As a result, I can announce today that, within ESA, we will be aligning the existing permitted work higher earnings limit between the contributory and income-related elements of the benefit. This will be a significant step in addressing the issues raised. Anyone claiming ESA will be able to earn up to £86 per week for up to 52 weeks, without it affecting their benefit entitlement. This is an important change, which will provide many more people with the opportunity to realise their aspirations. I am sure that noble Lords will join me in welcoming the change.

To illustrate the overall impact of the change and how it will be of benefit to many more people, your Lordships may find it helpful if I provide an example. A customer who is receiving income-related ESA would be able to carry out permitted work for up to 16 hours and earn up to £86 per week for up to 52 weeks—that is, at existing rates. Currently, a man in similar circumstances on income support would have his benefit removed pound for pound for anything over £20 that he earns. That is a substantial change. At week 40, let us say, the customer’s self-esteem and health are such that he feels able to move into sustained full-time work, safe in the knowledge that he will be protected by the generous linking rules and supported not only by his regular wage but by the tax credits system and the return-to-work credit, which provides a generous £40 per week of additional support for 52 weeks if earnings are below £15,000.

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We want to encourage participation in public life and it is right that people should be given the opportunity to help themselves whenever they can. That is why we have recently changed 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 where there are specific reasons for believing that the work that 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 future.

We also believe that people should not be allowed to keep all their benefits while undertaking work or receiving remuneration for other activities, such as paid service-user involvement. That is subject to the rules that I have just outlined. There is an important balance to be struck between income from working in and representing the community, and avoiding duplicate provision from the public purse.

A number of specific points were raised. The noble Baroness, Lady Thomas, referred to service-user activities not being paid work. We do not agree that that is a helpful distinction. Service-user involvement involves many of the skills and activities in which people routinely engage in their everyday employment. In creating any distinction, we would be dismissing the value of service-user engagement in helping disabled people to feel confidence and to develop skills that will help them to find other types of work. As such, service-user involvement could count as part of a person’s work-related activity.

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Baroness Hollis of Heigham: My Lords, could the Minister help me on this? He spoke very carefully; I listened to the syntax. What he said is very welcome indeed and very sensible; I am sure that we all congratulate the Government on that. But he said that that involvement “could” count as work-related activity. What people, if any, might not qualify for the £80 or so a week disregard that will otherwise be on the new employment and support allowance? Who would not come within the scope of the change?

Lord McKenzie of Luton: My Lords, I believe that everybody who is on employment and support allowance will be within the scope of that change, whether they are on the income-related strand or the contributory strand; that is the key. My references to work-related activity involved other components. At the moment, the Bill does not provide for mandatory work-related activity, but there are powers in it when resources—

Baroness Hollis of Heigham: My Lords, is my noble friend confirming that no staff member in a local benefit office could decide that such an activity was not part of work-related activity and therefore did not come within the earnings disregard, and that therefore the person would not be a beneficiary of the change in policy? Is he saying that that could not happen?

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Lord McKenzie of Luton: No, my Lords. With respect, we are dealing with two separate things: one is permitted work rules and their parameters, and the other is whether or not the activity as a service user—whether it is described as paid work or not is not helpful to our discussion—could count as work-related activity when you reach the stage when work-related activity is something that people who are not in the support group would be required to participate in. My point is that service-user involvement could well qualify as work-related activity, which would be relevant in due course when that component of the Bill comes in. It has many of the features that help people to move towards the job market. I hope that that clarifies the position for my noble friend.

Baroness Howe of Idlicote: My Lords, could the Minister help me? I wonder whether there would be a difference between the two groups if we applied what I call my local authority councillor test.

Lord McKenzie of Luton: Yes, my Lords. The local authority councillor test is different because the permitted work rules as they currently operate, and will continue to operate on an expanded basis, state that once you have breached the rules you are out of benefit. The local authority councillor rule will say that, once you have breached the threshold, that is deducted from your benefits. The Government are not proposing to extend those provisions relating to local councillors. I revert to our discussion about work-related activity. I stress that this would need to be judged on a case-by-case basis.

I shall comment briefly on service users who offer involvement on a voluntary basis having notional earnings attributed to them. My noble friend Lady Hollis touched on them. The notional earnings rules are an important safeguard that help to protect the benefits system from abuse. Customers are already able to undertake a wide range of activity, such as permitted or voluntary work, without their benefit being affected. As I said, we intend to build on that foundation in the ESA. We are looking at ways of modernising the rules to enable customers to make the most of their talents. For example, we have recently clarified the rules on the treatment of lunches provided to volunteers to ensure that they can continue to volunteer and receive benefit in the normal way.

On the references to rules on expenses, our key aim is to encourage people as much as possible to support themselves through work. We are always concerned about anything that discourages people from taking part in activity, and we will continue to look at how to make the rules more effective. Aligning the permitted work higher earnings limit will play an important part in enabling us to do just that. All changes that we make need to be underpinned by an understanding of the wider effects on earnings rules and work incentives.

The noble Lord, Lord Oakeshott, asked me about the cost of the amendment. We would have to look at its consequences and weigh everything up,

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particularly the impact on work incentives. But I hope that what we have announced today on the permitted work rules will satisfy noble Lords that we have taken a significant step forward.

Lord Oakeshott of Seagrove Bay: My Lords, as the noble Lord is telling us that he is making a significant change, what is the additional cost of the change that he has just announced compared with what he was going to do?

Lord McKenzie of Luton: My Lords, I thought that the noble Lord would ask me that when I spoke earlier. Perhaps I may write to him with a figure. Again, I reassure noble Lords that we will continue to look for more flexible ways of helping people to take up beneficial opportunities without fear of their benefits being removed. Accordingly, I urge the noble Baroness to withdraw the amendment, and I can now announce that no cost is attached.

Lord Skelmersdale: My Lords, before the noble Lord sits down, although aligning the earnings rules within the limit for the two streams of ESA is welcome, does this not blow a hole in Schedule 1? What else is there to distinguish between the contributory allowance and the income-related allowance?

Lord McKenzie of Luton: My Lords, quite a lot. The cap on the earnings-related component is driven by the various allowances that come from applying the system. If you had a contributory allowance and other income, that other income would not change the overall level of the employment and support allowance. So there are two strands to what is a single benefit, and the difference between those two strands is not just the permitted work rules.

Baroness Thomas of Winchester: My Lords, I have had to cross out the word “disappointed” in my reply. I thank all noble Lords who have spoken in this short debate. I am extremely pleased with the Minister’s announcement because, the more I and other people looked at the new system, the more it seemed that it was very unfair on those on means-tested benefits. I came across some research carried out by the Minister’s department that found that people who earned up to £86 a week under permitted work rules moved from benefits into work in greater numbers than those on means-tested benefits, so the system may have that very good outcome.

Did I hear the Minister say that jobcentres should never say to service users that being involved with the kind of committee that I was talking about means that they should no longer be on benefits? I think that he said that, just as people can be councillors and be on benefits, they can also be service users and still be on benefits—that is, that being involved in public life should not mean that people are automatically told that they are no longer incapable of work. Am I right?

Lord McKenzie of Luton: My Lords, perhaps it would be helpful if I restated precisely what I said so that there is no confusion. I said that we recently

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changed 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 where there are specific reasons for believing that the work that a customer is doing demonstrates that he no longer satisfies the conditions of entitlement to the benefit.

Baroness Thomas of Winchester: My Lords, once again I thank the Minister for clarifying that point. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 [Amount of contributory allowance]:

[Amendments Nos. 4 and 5 not moved.]

Lord Skelmersdale moved Amendment No. 6:

( ) he is undergoing or recovering from treatment for a serious or life-threatening illness or is terminally ill as prescribed through regulations.”

The noble Lord said: My Lords, this amendment has been discussed in the House before and I am retabling it to follow up on a point which I do not believe the Minister has as yet sufficiently addressed. In Committee, he said that,

However, the question I had asked previously was whether the Government had any intention of ever expanding those two categories to include other cancer patients taking different courses of treatment, or any other people undergoing treatment of an equivalent severity. I hope that the Minister can answer that now.

There is no evidence that oral chemotherapy has less debilitating side effects than intravenous treatment. I checked that with a Member of your Lordships’ House from the medical profession who advised me:

Macmillan Cancer Support, in particular, is very concerned that the draft guidance that we have seen makes no mention of the limitations that cancer treatment can impose on patients, especially when appearing for work-focused interviews, which will be compulsory for many cancer patients. If the Minister cannot give us reassurances on moving all cancer patients into the support group, can he at least confirm that regulations will include guidance that assessments, interviews and activities that are subject to conditionality can be postponed for reasons relating to the claimant’s treatment or condition? Currently, it appears that claimants cannot postpone a work-focused assessment unless they can show it would not be helpful or appropriate. Can the noble Lord confirm that this covers the claimant who is feeling too unwell or fatigued to appear for interview?

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We do not live on the Continent, where you are presumed guilty until you have proved your innocence. In this country you are presumed innocent until you are proved guilty. Does the Minister not therefore feel that the guidance should make specific allowance for claimants to postpone an interview rather than having to go through the rigmarole of being threatened with sanctions and essentially having to prove their innocence?

Guidance on all the other aspects of ESA assessment and expectations are similarly silent on the subject of what cancer patients can be limited by. For example, fatigue and low immunity are common side effects, but they are not mentioned anywhere as a consideration on whether a claimant is capable of undertaking work-related activity. Does the Minister expect most cancer patients to be moved into the support group by the current assessment? If not, can he confirm that guidance will ensure that personal advisers will be fully aware of how debilitating cancer treatment can be? I beg to move.

Lord Addington: My Lords, I shall briefly come in behind this amendment. The most important part is not so much that cancer groups are themselves the main claimants, but the flexibility on new groups coming in and how we expand from here. Can the Minister give us an idea about what is going on, because if a new group, new type of treatment or new awareness comes in, it would make me feel slightly easier about the whole process? If you get it wrong, the whole thing will break down and those who are most vulnerable will suffer. It is that group and the degree of flexibility that concerns me, and I would like some information about the process.

Lord McKenzie of Luton: My Lords, the amendment is intended to allow people suffering from the most serious conditions and the terminally ill to automatically enter the support group. While I entirely understand the well intentioned motives of the amendment, it undermines a key principle of the new benefit and would help to maintain the concept of incapacity for work, which we are trying to remove. Our reforms are about trying to ensure that as many people as possible have the chance to engage in work. As such, the support group criteria set out in the schedule to the draft regulations for Clause 9 have been drafted to ensure that only people with the most severe levels of functional limitation arising from disabling conditions, which prove that they demonstrate limited capability for work-related activity, will be placed in the support group. The criteria are not based on specific health conditions or disabilities but instead focus on the impact that an individual’s health condition or disability has on his ability to function. We strongly believe this is the fairest way of carrying out such an assessment, as different individuals can be affected by conditions in very different ways. We think it only right that we look at each person as an individual, assessing what he can and cannot do and what it is therefore reasonable to expect of him.

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4 pm

We have, of course, accepted that there are a small number of situations where we need to treat people as having limited capability for work-related activity even though they might not satisfy the descriptors we intend to use to test for it. As such, we have made special provision in our draft regulations for people who are terminally ill, as we do not believe it is reasonable to require a person in the last few months of his life to have to engage in work-related activity in order to receive ESA. We have made provision for people who are receiving the most debilitating forms of cancer therapy. This is because we are confident that they will all experience severe functional limitation during the course of treatment and for a period after it has ended, to the extent that it would be unreasonable to require them to engage in work-related activity—I am not sure whether the noble Lord, Lord Skelmersdale, was suggesting that that judgment might not be right and that we should not put even that group of people into the support group.

This does not mean that people receiving other forms of treatment will not be given access to the support group. We know that many other forms of treatment, including many other treatments for cancer, can be debilitating for many customers, but they will not be for everyone, which is the fundamental point. That is why, when considering whether someone has limited capability for work-related activity, we want to consider his individual circumstances and the way that his treatment affects his functional ability. Where people suffer from severe functional limitations, they are likely to satisfy one of the 46 support group descriptors and already demonstrate limited capability for work-related activity so that they are placed in the support group. Let us take the example of cancer patients suffering from severe fatigue as a side effect of their treatment. They are highly likely to meet one of the 46 descriptors that we will use to determine limited capability for work-related activity and will therefore be placed in the support group, but we will consider that on a case-by-case basis.

Meanwhile, draft Regulation 3(2)(c) makes provision to treat people as having limited capability for work-related activity if engaging in such activity would pose a substantial risk to their physical or mental health, even if they do not meet any of the descriptors. As an example, perhaps I can look once more at cancer patients. Many people undergoing cancer treatments can have a significant risk of infection because their immune system can be compromised by their treatments. I know that Macmillan Cancer Support is concerned that asking such people to engage in work-related activity could be seriously damaging to their health. Anybody who is at such serious risk of infection, whatever the cause, will be treated under these provisions as having limited capability for work-related activity and will be placed in the support group. This is again something that we want to consider on the basis of individual circumstances.

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