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10 Dec 2008 : Column 384

Arrangement of Business


3.32 pm

Lord Bassam of Brighton: My Lords, as noble Lords will know, my noble friend Lord McKenzie of Luton will shortly repeat a Statement on welfare reform. There are 33 Members on the speakers list on the humble Address today. In order to accommodate the Statement and to allow us to rise at the target rising time of 10 pm, it would be helpful if Back-Bench contributions could be kept to a maximum of eight minutes.

Welfare Reform


3.33 pm

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, with the leave of the House, I shall repeat a Statement made earlier today in the other place by my right honourable friend James Purnell. The Statement is as follows.

“With permission, Mr Speaker, I would like to make a Statement on our White Paper, Raising Expectations and Increasing Support: Reforming Welfare for the Future.

This White Paper will transform lives. We know the support we offer helps people get back to work. It can turn lives around. We want to make sure as many people as possible have this chance. That is why we want virtually everyone claiming benefits to be preparing for or looking for work.

It is a fair deal: more support, in return for higher expectations. It is a deal that has always underpinned the welfare state. As early as 1911, those claiming from the unemployment exchange could be disqualified if they refused a suitable job offer. It is a deal that was extended by the Beveridge report and championed by the 1945 Labour Government.

In 1947 Herbert Morrison said, ‘We have no hands or brains to waste, and no resources to fritter away on those who don’t contribute to our national effort’. Today, when the national effort is about a global downturn, we can no more afford to waste taxpayers’ money on those who play the system than they could then. But most of all we cannot afford to waste a single person’s talent.

We inherited a welfare state where less than a third of claimants had to do anything in return for their benefits. Even that third got paltry support to get back in to work, and the rest got nothing. This truly was a welfare state that wasted talent and wasted money, paying for the costs of failure because we were not prepared to invest in the possibility of change. This Government set about putting that right. We taxed the excess profits of the privatised utilities to create the New Deal. We merged the Benefits Agency and the Employment Service to create Jobcentre Plus, so everyone who signed on for benefits also signed up for work.

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That was the first phase of reform—deepening the obligations to work so there was no fifth option just to stay on benefits.

As we saw those obligations cause youth and long-term unemployment to tumble, we set about the second phase of reform—we widened their scope. We piloted helping those on incapacity benefits with the New Deal for Disabled People and then with the groundbreaking Pathways to Work programme which increases the chances of someone being in work by 25 per cent. So, since this April, we are requiring all new claimants to take part except those with the most severe conditions, and in October we replaced incapacity benefits with the employment and support allowance which focuses on what people can do, not what they cannot. We improved the help for lone parents. With the help of the New Deal for Lone Parents, more than 300,000 more of them are in work. But we wanted more to benefit, so we are requiring lone parents of children between seven and 16 to look for work, and expect that to increase employment and lift 70,000 children out of poverty.

Now the White Paper kicks off the third phase of welfare reform. It is based on a simple idea: that no one should be left behind, and that virtually everyone should be required to take up the support that we know works. It is built on the recommendations of two independent reviews: the Freud and Gregg reviews. This White Paper confirms that we will implement the Freud report in full, including his “invest to save” proposal, where private and voluntary providers invest money to spend on helping more people back in to work, and get paid out of the resulting benefit savings.

Professor Paul Gregg’s report was published last week, and this White Paper confirms our support for his vision. It sets out how we will put it into legislation and pilot his recommendations so that nearly all claimants are either preparing for work or looking for work. We will migrate everyone on incapacity benefit on to ESA. Under the new benefit, the poorest and most disabled will get nearly £16 a week extra. Everyone else will get support to manage their conditions and prepare for work. They will be required to attend interviews to develop their plan to do this, and in the pilot areas advisers will be able to require them to implement that plan.

We agree with the Gregg report’s recommendation that parents should not be left until their youngest child is seven before they get help to prepare for work. The support we offer for lone parents has been transformed. We pay a £40 per week bonus to any lone parent going back in to work. We pay 80 per cent of childcare costs. We pay for travel costs to the job interviews and for interview clothes if necessary, and when the parent finds work there is up to £300 for emergencies. We can also help people with more serious problems such as depression, debt or drug addiction. Most of all, we have made work pay. A lone parent with one child, working 35 hours a week, will be on at least £304 a week in April 2009, compared to £182 in 1999 when the minimum wage was first introduced. Our goal is simple. We want more parents to benefit from that help in order to help themselves and their children.

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That is why conditionality is so important. Only around 5 per cent of IB stock claimants voluntarily took up the support that Pathways offers, and only around one in four lone parents takes up the support offered by their New Deal. Partners in couples where no one is working face even fewer obligations.

The Gregg report found that,

As a result, the UK enters the downturn with the second lowest unemployment rate in the G7. But the report also found that countries such as Denmark and the Netherlands had lower unemployment and lower child poverty rates than the UK. So, if we want to abolish child poverty and improve social mobility, we need a welfare state that learns from the example of these countries.

This Queen’s Speech made it clear that we will reinforce our commitment to ending child poverty through the legislation which the Government will introduce. This White Paper is the other side of the coin, matching higher support with higher expectations.

Some people say that we should be slowing down the pace of welfare reform because of the downturn. The Government believe we should do the opposite. We should not repeat the mistake of the recessions of the 1980s and 1990s, when hundreds of thousands were shuffled on to inactive benefits to keep the unemployment count down, and trapped there without support, abandoning them and scarring their communities.

In contrast, we are investing an extra £1.3 billion in helping people find work. But we will have increasing requirements of people the longer they are out of a job to make sure that they do not fall out of touch with the world of work. After a year, everyone will be allocated to a private or voluntary provider and expected to do four weeks’ full-time activity. After two years, we will pilot requiring people to work full time for their benefit.

This White Paper will also support children whose parents’ relationship has broken down. We will bring forward legislation so that it becomes the default option for both parents to register the birth of their child. And we will fully disregard child maintenance when working out income-related benefits from April 2010 so that children can take full advantage of the money provided for their upbringing.

The White Paper also makes clear our intention to apply new benefit rules for problem heroin and crack users. Instead of receiving jobseeker’s allowance or employment and support allowance, crack and heroin users will receive a treatment allowance, alongside an obligation that they address their problem.

But there needs to be help for people to find and keep work as well as responsibilities to look for work. So we will double the Access to Work budget to allow more people than ever before the support they need to do their jobs. And because we recognise that disabled people are the experts in their own lives, we will legislate for disabled people to have the right to exercise choice and control over support they receive from the state. This ‘right to control’ will be a major step toward achieving disability equality by 2025—a transformation in the rights of disabled people.

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These reforms point the way to a fairer society where children do not grow up in poverty, where disabled people enjoy real equality and everyone is given real help to overcome the barriers to achieving their full potential. We are looking after taxpayers’ money but looking after the future, too, by making sure we do not waste anyone’s talent.

I commend this Statement to the House”.

My Lords, that concludes the Statement.

3.47 pm

Lord Skelmersdale: My Lords, the House will be grateful to the Minister for repeating the Statement on welfare reform that was issued to the press yesterday afternoon, I believe, in its entirety. At least we in Parliament now know for certain what has been in the public domain for many hours. So when we get inappropriate briefings for the press from government departments well in advance of Parliament being informed of the Government’s intentions, should there not be established guidelines on what can be said and when? Was the White Paper, which was embargoed until the Statement began in another place, leaked to the press as well?

On the Statement itself, which we on these Benches broadly support, it has been my party’s policy that with rights go responsibilities. In whichever part of the House we sit, I hope that we were all brought up with that central tenet. That is why, before many of your Lordships graced this Chamber, a Conservative Government introduced the concept of availability for work as a condition for getting what was then unemployment benefit. It is a bit rich, then, for the Statement to say that the Government inherited a welfare state where less than one-third of claimants had to do anything in return for their benefits. In case anyone has forgotten—I certainly have not—the Government have had more than 11 years to correct this so-called anomaly. Why have they taken so long to come up with these proposals?

What we have here is not part three but part two of benefit reform, which started with the Welfare Reform Act, aimed at getting 1 million of the 1.7 million people on disability benefit into work. I discount the administrative rearrangement that the Statement calls “part two” as I cannot believe that it has made any difference to unemployed people, especially when the Statement confirms that only 5 per cent of invalidity benefit claimants voluntarily took up the support that Pathways to Work offers.

It was just the other day that we debated an affirmative instrument that added new conditions to income support for lone parents with children and put them on to jobseeker’s allowance. Over the next year or so, that will affect lone parents with children as young as seven. In that debate I pointed out that lone parents will be happy in work only if they can find suitable childcare. I still have not had an answer from the Minister about whether that can be guaranteed in all parts of the country. If it cannot be guaranteed for seven year-olds, surely the chances of lone parents of three year-olds finding suitable work, and being satisfied that their children are being properly looked after

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during working hours, are even lower. It is no use the Government paying 80 per cent of childcare costs if childcare is non-existent.

I agree unequivocally with the Government that it is wrong to believe that, because of the recession, this is not the time to be introducing the reforms in the White Paper. The doubters believe that, with Britain having the highest unemployment figures for nine years, with 1.8 million people out of work, any changes to the availability-for-work regime should be delayed. I say to them that there is a strong evidence base showing that worklessness is associated with poorer physical and mental health and well-being. Even in these straitened economic times there are job vacancies to be filled in some places, even if they have been reduced by 40,000 over the past quarter. Opportunities therefore exist, and in my book there is never, ever a bad time to encourage people to seek them. I remember my noble friend Lord Tebbit being roundly criticised for the phrase that he never uttered, “Get on your bike”. It was of course spun—just as much as the first four pages of this Statement are spin.

We also agree with separating family units when calculating jobseeker’s allowance and income support. We see no reason why half the unit should have to sign on, with the other half getting the relevant benefit with all the conditions that are attached to it while their partner need do nothing at all. That must be wrong.

Chapter 2 of the White Paper sets out the very beginnings of a plan to reform the benefits system, which is so complicated that it is widely recognised as a disincentive to getting people both on to benefits and into work. The amalgamation of benefits was proposed last year by David Freud in his report. I pay credit to him for a piece of work that has framed not only the debate in this area but the very similar proposals of both the Government and my party, as shown in our recent Green Paper.

The Freud report, which the Government say is accepted in full—after, by the way, a Prime Ministerial hiccup that originally rubbished it—gave three options for working age benefits. They were: to continue to reflect people’s different circumstances based on the income support personal allowance rate; a single benefit with a single rate; and a single system with two rates, a basic rate and a long-term rate. He concluded that the current system is relatively inefficient whereas a single system with a single rate could maximise efficiency, and a single system with two rates would be very similar to the present arrangements but may be an improvement on it.

Even though the Government have had over a year to go nap on one of these options, they seem to me to be sitting on the fence. They propose to,


That is hardly accepting a report in full. It leaves the door wide open as to what the Government will end up doing. How long will this consultation last, and when do the Government expect to respond to it?

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That said, much of the White Paper will be reflected in the welfare Bill, which I hope the Minister will confirm will be published in January in another place, where I would expect a speedy passage. On this side of the House we will give it every support, although as usual I cannot guarantee that it will leave our House in exactly the form that it arrives.

3.50 pm

Baroness Thomas of Winchester: My Lords, we on these Benches also thank the Minister for repeating the Statement. I endorse what the noble Lord, Lord Skelmersdale, said about the press getting hold of the White Paper before this and the other House. Tomorrow’s debate gives the House a chance to explore some of the wider issues raised by the White Paper, so I shall be relatively brief this afternoon.

We give a warm welcome to the intention in the White Paper to help as many people as possible into meaningful work, but we are more guarded about some parts of it and opposed to other parts of the surrounding policy. It is something of a relief to have the final document before the Bill is published, which I presume will be early in the new year. We have had the Freud report, the Government’s Green Paper, No one written off, and just lately the Gregg review, and there has been much speculation about what will be in the final Bill.

The economic climate for any major change to the welfare system is not good, but we know that the Government are determined to press ahead with the full package in spite of the caution given by their own advisers, the Social Security Advisory Committee. Other groups representing disadvantaged people are also very concerned about aspects of the policy, the most concerning being how the tougher sanctions regime is going to work in practice. We must be sure that claimants understand just what is expected of them by Jobcentre Plus offices. Research on how sanctions affected lone parents found that they often did not understand that they were being sanctioned. Why should they necessarily understand that word, or the ghastly word “conditionality”? Other DWP research on Pathways sanctions showed that they incentivised people to attend work-focused interviews, but not to engage further; therefore, it is imperative that the sanctions system is communicated clearly to claimants before it is invoked. I am glad that this was highlighted by Professor Gregg and is mentioned in the White Paper.

However, we hope that the sanctions regime will be a last resort. Will there be real flexibility in Jobcentre Plus offices for dealing with those who have fluctuating conditions such as ME, MS and mental health difficulties? I know that the purpose of the regime is to get people to comply with their obligations by attending work-focused interviews and, later on, taking part in work-related activity, but there will be many people who are not fully engaged simply because of health problems. It would be heartless to subject them to sanctions.

Another area of concern is compulsory community work experience in return for JSA after two years of claiming. We are absolutely opposed to treating the

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unemployed like criminals, which is bad enough in a benign economic climate but unforgivable in a severe recession. Nor do we agree with supplying free labour to employers while paying individuals less than the minimum wage. What would be the difference between this kind of work and community service? Punishment is one thing; meaningful employment or work experience is another, for which people should be paid adequately.

We are opposed to any measures that force lone parents with children younger than seven to find work until there is more flexibility in jobs, full evaluation of the changes already made in this area and, most importantly, affordable and adequate good-quality childcare in place across the country. I note that the Minister said that those with younger children must “prepare for work”. Will he tell us what that means?

What should be factored into any calculations of childcare is that, in a recession, when a lot of older workers have been made redundant, more grandparents are likely to be jobseekers and therefore not available for free childcare duties. On a more positive note, we warmly support the fact that parents on means-tested benefits will be able to keep all their child maintenance payments from April 2010.

We support moves to pay private and third sector organisations to provide back-to-work support that caters for individual needs rather than for a one-size-fits-all programme, but the Government must adopt the right funding model. There must be some incentive to ensure that companies help those furthest from the job market, otherwise they will cherry-pick those easiest to place and leave the rest, particularly in today's climate. The White Paper, I am glad to say, explicitly addresses this issue in the sentence,

Apart from the split infinitive, that statement is welcome, but must be properly monitored.

I am pleased to see that the White Paper makes clear that carers will not be moved from income support on to JSA until the Government have a clear and detailed plan setting out how they will reform the benefits system over the longer term.

Finally, we add our voice from these Benches to those who are calling for an independent commission to look at the whole benefits structure, including tax credits and the tax system in general to reduce complexity, increase transparency, improve work incentives, cut fraud and error and increase take-up.

3.56 pm

Lord McKenzie of Luton: My Lords, I thank those noble Lords who have participated thus far in our deliberations. The noble Lord, Lord Skelmersdale, started with the issue of press briefing. I simply repeat what I said last time he raised this point, when we debated the PBR. I have no idea who may or may not have leaked documents. That is not the way that I proceed, and I think that I have always dealt with the noble Lord and other colleagues in the House on a very straightforward basis as far as that is concerned.

I agree with the noble Lord absolutely, and it is a key thrust of the paper, that with rights come responsibilities. I am pleased that we have a shared

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understanding of that. He said that it was a bit rich that we should come forward after 11 years with these proposals. There has been a journey to deal with these issues. We started, as I said, with the New Deal and putting together the Benefits Agency and employment support in Jobcentre Plus. That was the start of the programme, and we moved on, as the noble Lord acknowledged, with the Welfare Reform Bill to introduce the employment and support allowance. It is not right to say that IB is only an administrative arrangement, which I think was the thrust of his point. The number on incapacity benefit is 2.6 million, but that is down 178,000 since its peak in 2003 and down 47,000 in the period from May 2007 to May 2008.

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