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I welcome the noble Lord’s contribution to this debate, and I think that that is probably where the noble Lord, Lord Skelmersdale, is in his approach to this issue. I am willing to speak to him further about how we can ensure that those with learning disabilities are not disadvantaged, but I do not believe that these amendments are the right way to go. The noble Lord, Lord Rix, quoted data relating to those with learning disabilities and how far away they are from the labour market in comparison with others. I am very clear that that cannot be allowed to continue. We need to understand what is getting in the way of making further improvements for such people, and I believe that, by working together through an evaluation process, we can make such improvements.
Lord Kirkwood of Kirkhope: I am not an expert; I defer to colleagues who know more about this than me, but I refer to my declared interest on day one as a non-executive member of the Wise Group. We undertake contracts such as these and hope to continue to be engaged in that in future. It would be impossible to generate the data which the amendment, which I support, requires unless it was an item in the contract between Jobcentre Plus and the Wise Group, or whoever. If that contract term is missing, there is no way that we can get the data that the academics are all waiting to work on. I would like an assurance. There is an argument about money and resources, but it is essential that the contracts for providers contain a requirement to deliver, or in some way capture, the data that the amendment covers.
Lord McKenzie of Luton: It is certainly important and will be part of the contractual arrangements to which providers have to have regard that they make sure that they cater for all customers referred to them under the provisions, as well as fulfilling their ongoing obligations under the DDA. Part of the approach to evaluation—there are noble Lords here who are more
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Perhaps I can conclude by giving assurances about the planned evaluation of our contractual arrangements as the right approach, rather than the detailed prescription of what record keeping providers have to undertake. I hang on to the point that although we have made really good progress in supporting people in moving closer to and into the labour market, for some that journey is still a long way off. That is unacceptable and we cannot allow it to continue.
Lord Rix: I am obviously disappointed that the Minister cannot agree with me completely at the outset. I look forward to meeting him before Report, when we may consider the question of evaluation, and so on, to see whether we can come up with a different amendment that the Government can agree to at Report. It could quite simply be included in the Bill to ensure that contracts say what they mean. I thank all noble Lords, even the noble Lord, Lord Skelmersdale, for their support for the amendments.
As I said at the outset, many major charitable organisations representing all manner of disabilities are keen to have some form of evaluation in the Bill. I will be seeking their thoughts when they have had a chance to read the Minister's response. I, too, will enjoy reading the Minister's response, because I have a rather hidden disability: I suffer from tinnitus. Therefore, on these occasions, I have two boiling kettles in each ear, so it is rather difficult to hear what everyone is saying, but thank you all the same. I beg leave to withdraw the amendment.
3.58 pm
4.10 pm
Lord Skelmersdale: For the avoidance of doubt, I am at it again—probing, that is. New Section 17A(9)(a) speaks of hardship payments being payable only if,
Hardship payments should be paid only to people who, for whatever reason, lose their income-based jobseeker’s allowance and have little or no other money to live on. This, we believe, is the right approach in a civilized society. However, the question arises of how
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My other question is: since hardship payments already exist in legislation, as we discussed a few moments ago, why does provision have to be made for them in the Bill? I am also confused by the juxtaposition of subsection (9)(b) and subsection (6), which is why I have tabled Amendment 17. In what circumstances may the prescribed period be different in each case? I beg to move.
Lord Kirkwood of Kirkhope: I endorse the line of inquiry that the noble Lord, Lord Skelmersdale, is pursuing. It would be remiss of us if we did not spend some time looking at hardship as it applies to welfare-to-work and the “work for your benefit” provisions in Clause 1.
In any case, I am worried about statutory deductions. A lot of the client group that we are talking about who may be faced with the provisions of Clause 1 are families who are already subject to such deductions. I have always been concerned about the interface between the hardship regime, which seeks to protect members of the family, and statutory deductions—for example, for repayments of loans that have come from the social fund.
Professor Gregg, who is my guru for the purposes of this Grand Committee, says that there is a risk of disengagement and dispossession in families who go completely out of the system altogether. That drags them in the direction of addiction, crime and the grey economy. That can all be foreseen, and we must try to make provision for it. Careful attention to how the hardship provisions interface with statutory deductions, disconnection from a law-abiding life and a timely return to work are proper concerns, and if the Minister can say anything to reassure us about these issues then the Grand Committee will be the better for it. I am happy to support the amendments on that basis.
4.15 pm
Lord McKenzie of Luton: These amendments, like Amendment 14, relate to hardship. Before I begin to address these specific amendments, I should repeat that we intend to replicate in “work for your benefit” the hardship provisions that currently apply in jobseeker’s allowance. These amendments would damage our ability to do that but I accept that they are probing amendments.
Amendment 16 focuses specifically on the requirement for claimants to provide information allowing decisions on hardship to be made. I think it is self-evident that the information provided by claimants about their personal circumstances is vital in determining whether they receive a hardship payment. No reasonable decision could be made without such information. I also believe it is reasonable that the onus is on the customers to demonstrate why they feel that they would suffer hardship without the payments. We are talking here about a group of jobseekers who are capable of work and will have been found, by a decision-maker, to be failing in their responsibility to engage with employment
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Amendment 17 would remove some clarity from the Bill surrounding the ways in which we could use the hardship regime. The wording, as it stands, makes it clear that a hardship payment would not necessarily have to last for the entire length of a sanction. We would not, for example, want a claimant to continue to get hardship payments for the length of their sanction if they were no longer in hardship due to their circumstances having changed. That would make a nonsense of the hardship regime. Although the amendment would not necessarily prevent us achieving this aim, it would introduce potential doubt about the scope of the powers. It would also make the drafting inconsistent with previous and similar powers elsewhere in social security legislation and would risk introducing unnecessary complexity and confusion into the legislation. Specific information which might be needed could include birth certificates, child benefit books, a note from a doctor, a repeat prescription, or details of someone for whom the claimant has caring responsibilities, such as award notices or bank or building society statements.
The noble Lord asked why we are taking hardship provisions in the Bill if they already exist elsewhere. Although provisions exist elsewhere, we need provision here to enable payments to be made to participants in this scheme. One reason for including these provisions is to ensure that our policy on “work for your benefit” is transparent rather than simply constructing it through regulations under existing powers. The level of information required will depend on the circumstances but decision-makers must be satisfied on the balance of probabilities.
The noble Lord, Lord Kirkwood, pressed me on a wider matter. He asked: if statutory deductions are applicable, how will that interrelate with the hardship regime? We do not envisage that there will be a change from the existing arrangements, but I shall write to him on that. On that basis, I hope that the noble Lord will feel able to withdraw the amendment.
Lord Skelmersdale: I am, again, very grateful to the Minister. I am glad to hear that the onus is on the customer rather than on the officer to seek to prise that information out of the customer. Clearly customers will reveal their personal circumstances. Perhaps they would be a little reluctant to produce their bank statements, credit card statements or building society statements, or even a doctor’s letter or birth certificate. Surely, there must be some degree of compulsion in this requirement. The Minister has explained very well why we need to make a reference to hardship payments within the context of Clause 1. It is because the existing ones do not cover the clause as it is not yet enacted. I am also glad to hear why the prescribed period is different in each case. I beg leave to withdraw the amendment.
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18: Clause 1, page 2, line 48, at end insert—
“( ) The prescribed rate shall not be less than that normally paid to workers in the same employment.”
Baroness Turner of Camden: I have been contacted by the TUC on various aspects of the Bill, with particular reference to “work for your benefit” schemes. It is not surprising that the TUC contacted me, because I was for many years a member of the TUC General Council. The issue at stake for the TUC is the undesirability, in its view, of what it sees as unfree and unpaid labour. Obviously, requiring people to do work experience in return for their benefit is not as serious as extreme forms of compulsory work, but it is within the same spectrum. Equally, schemes that produce an hourly rate well below the minimum wage are not in the same class as unpaid work, but, in the view of the TUC, they are still a form of exploitation.
A separate requirement of justice to other workers requires that no compulsory or unpaid work scheme should ever cover economic work—that is, work that would otherwise be undertaken by workers with employment rights paid the rate for the job. It is felt that that is unfair to workers in employment when they face competition from workers who are paid much less than them and have inferior rights. Workers whose pay and conditions are most likely to be undermined in such a situation are often the lowest paid and most vulnerable.
In addition to being unfair, according to abstract principles of justice, mandatory unpaid work experience is, in the view of the TUC, not an effective active labour market policy. The failure to pay a proper wage in a work experience programme can undermine its effectiveness. The TUC believes that employers are often not impressed when a job applicant’s CV includes a period spent in such activity. The TUC says that the impact on a participant’s morale and motivation is unlikely to be very good.
I place these amendments before the Committee. I should be very interested to hear the response of the Minister, because this view is apparently strongly held by the TUC, and it is important that, if the scheme is to be effective, unions should at least be benevolently inclined towards it. I beg to move.
Baroness Thomas of Winchester: There is a lot of concern among a lot of people, not just the TUC, that it would be invidious if benefit claimants were working full time, for more than a week or two, alongside a person who was doing exactly the same job but receiving a proper wage. Under the Bill, the claimant could potentially be working alongside that fully waged person for up to six months. It is worth saying that in the other place, the honourable Member who is the successor to my noble friend as chairman of the Work and Pensions Select Committee thought that these people could be working for six weeks. That was what was said during the Report stage in the Commons—but it is up to six months. I should be very interested to hear what the Minister says.
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Lord Skelmersdale: I must say, especially after what we have just heard from the noble Baroness, Lady Thomas, that I am curious to hear what the Minister has to say in response to the amendment. The noble Baroness, Lady Turner, is concerned that workers under the scheme will, by being paid less than the going rate, either end up on less than the minimum wage or undercut existing workers by working essentially for free.
However, they are not working for free, are they? They are still on benefit, and that is the whole point of the exercise. There may be an argument that they are taking work away from other potential employees. I could understand that, but surely it is in the interests of the unions to obtain more members—union membership has been declining for many years—and the way they are going to get new members is by having members in employment.
The Child Poverty Action Group has described the provisions in the Bill as “workfare”, with which I disagree, but it has come up with a figure of £1.73 per hour by combining current JSA rates with a 35-hour week as the amount that some participants may get. I think the noble Baroness is also getting at this. I do not think that this is an accurate way of regarding back-to-work schemes where people are being moved into the labour market. However, I expect that the Minister will enjoy the opportunity to put the record straight by saying that the Government do not intend to undermine their own minimum-wage rules.
In that connection, in fairly recent times we have had anecdotal reports of workers being paid less than the minimum wage. Has the Minister any information on this point? If so, what are the Government doing about employers that are breaking the law in this respect? This is all part of the noble Baroness’s argument.
Lord McKenzie of Luton: The amendment would entitle participants in a “work for your benefit” programme to payment of jobseeker’s allowance at a rate, fixed in regulations, at the same level as for employees doing similar work. I acknowledge the concerns that have come from the TUC and, at the same time, the sterling work that my noble friend has done over many years with the TUC and trade unions.
The noble Lord, Lord Skelmersdale, asked about compliance with the national minimum wage generally. That is outwith my briefing.
Lord Skelmersdale: It is not outwith the amendment, though.
Lord McKenzie of Luton: In any event, I am delighted that the noble Lord is keen to ensure that the national minimum wage is fully enforced, as are we all. If there are any breaches, we will ensure that the systems in place to investigate and monitor come into operation. That is a key part of tackling poverty in this country, and it has made a significant contribution to it.
The amendment would fundamentally alter the nature of the programme. “Work for your benefit” is not subsidised employment; that is available in other parts of the jobseekers’ regime and at an earlier time. “Work for
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Regulation 12 of the National Minimum Wage Regulations 1999 specifies that a worker who is participating in a scheme,
- “designed to provide him with training, work experience or temporary work, or to assist him in seeking or obtaining work ... does not qualify for the national minimum wage in respect of work done ... as part of that scheme”.
There are other qualifying criteria that have to be met for that exemption to operate, particularly when work trials last for longer than six weeks, but there is recognition under those regulations at the moment that there is a difference between a work experience operation and work to which the national minimum wage should apply.
The ultimate aim of the programme is to get people into the open labour market and into work. By paying benefit at wage rates, incentives to do that are diluted, particularly for those who may be experiencing a work environment for the first time in a long while. “Work for your benefit” could be seen as an alternative to work, and that is not why the scheme is designed as it is. However, I assure the Committee that “work for your benefit” will not replace existing jobs. We will make it clear to providers that any work experience placements must be in addition to existing or planned vacancies and cannot be used to replace existing workers. That will be written into contract specifications.
4.30 pm
Lord Kirkwood of Kirkhope: The Minister is talking about employment displacement, which is an important parallel concern. Will the evaluations of this employment scheme specifically ensure that no significant job displacement occurs as a result of its implementation?
Lord McKenzie of Luton: I believe that it is entirely reasonable for the criteria to be counted as part of the evaluation and I am reassured by the nods of assent from the Box. We are keen to work with the TUC and others as we develop plans for the pilots to ensure that proper controls are in place. We will not allow “work for your benefit” participants to take the place of fairly recruited and paid workers. I hope that that is an assurance for my noble friend and the noble Lord. The thrust of this is really to help people to get back into the labour market, particularly those who have been away from it for a long time. It will give them a chance. We all want to be in employment and to be able to look forward to a prosperous and fulfilled future.
Baroness Turner of Camden: First, I thank all noble Lords who have participated in this debate, particularly the noble Lord, Lord Skelmersdale. I am glad to hear that he is fully in support of the minimum wage. I also thank the Minister for his assurances about the kind of jobs that will be included in these schemes and the undertaking that there will be consultation with the TUC and other interested parties in regard to the introduction of the pilot schemes. They will be received with some gratification by the TUC. I understand also that job evaluation is to take place to ensure that the
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Lord Skelmersdale: I was tempted to table an amendment to leave out subsection (1) of new Section 17B in its entirety, but I doubt whether the Clerks in the Public Bill Office would have let me get away with it since paragraphs (c), (d) and (e) are money provisions and thus the province of another place, not your Lordships’ House. My next thought was to add yet another probing amendment to leave out paragraphs (a) and (b), which may have made it easier for the Minister to see what I was getting at. As it is, I chose just to leave out the words “by whatever means” in paragraph (b) to discover exactly what the proposal is here.
To my mind, the Secretary of State does not need to make arrangements for anyone in the department, including jobcentre personnel or their workplaces, because he already has adequate powers to do just that, as the Peers’ information pack makes clear. He already has the power to establish new providers, as in the case of the Flexible New Deal. The whole subsection must refer to contractors who are to manage people working for their benefit. The question therefore is what new powers is the Secretary of State seeking with regard to “work for your benefit” programmes that he does not have already?
I also intend to use this amendment to probe the all-important question of how the Flexible New Deal contracts are to be organised. As I said at Second Reading, and the Minister did not contradict me then, they are front-end loaded. As I understand it, the contractor gets 40 per cent originally, 30 per cent after 13 weeks and the last 30 per cent after six months. When this job lasts for only a week or two and the participant loses it, he becomes a new participant in the welfare-to-work provisions. This cannot be the right approach. First, we believe that the contract can be said to have succeeded only when the participant holds down a full-time job for six months, during which time the contractor should be guide and mentor if that is needed. Obviously, he would expect to be paid for this service, which I understand does not exist at the moment. I suggest 25 per cent for taking on the participant, 25 per cent after three months and 50 per cent when the contract can be said to be completed; that is, when the participant has held down a job for six months. Back-end loading of this nature will be a very big incentive to the contractor to concentrate more on individual participants and will remove the temptation to think that any job will do, no matter how long it lasts.
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