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Monday, 22 June 2009.
Welfare Reform Bill
Main Bill Page
Copy of Bill
Explanatory Notes
Amendments
7th Report from the Delegated Powers Committee
14th Report from the Joint Committee on Human Rights
9th Report from the Constitution Committee
Committee (5th Day)
3.30 pm
The Deputy Chairman of Committees (Lord Colwyn): If there is a Division in the Chamber, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
71: After Clause 2, insert the following new Clause—
“Work-related activity: additional premiums
(1) The Social Security Contributions and Benefits Act 1992 (c. 4) is amended as follows.
(2) In section 135, (the applicable amount) after subsection (6) insert—
“(7) The applicable amount shall include an amount in respect of a work-related activity component if the claimant undertakes work-related activity as defined in section 2D(8)(c) of this Act.”.”
Baroness Hollis of Heigham: I shall be moving Amendment 72 as a separate amendment, but I shall not move Amendment 73, as we have already explored the issues in it fairly fully. However, I should like to make a couple of points that relate to both Amendments 71 and 72 before going into the detail of Amendment 71.
As I am sure members of the Committee appreciate, I should like to emphasise how much I support the philosophy of the Bill to keep lone parents attached to the labour market. The later you return to work, the harder it is. The best way of helping children out of poverty is to help their parents, particularly a lone parent, back into work. I was delighted to see that half the mothers on the NDLP programme—the New Deal for Lone Parents—were volunteers, even though they have young children, because they were attached to the labour market and had recently worked.
Secondly—and we have said this before—I believe that we are making a profound mistake if we try to fit lone parents, with all the pressures they face, into a model of JSA designed for the feckless 22 year-old young man who does not care to get up in the morning. One of the problems is that JSA is conceptually based on men; it assumes that they are either out of work and, without a health reason, therefore lazy, or in full-time work—one or the other. There is no recognition of, and probably no need in that situation for, sensible disregards, mini-jobs or stepping stones—all the things that make sense for lone parents who not only have children whom they are bringing up single-handedly but who may have been out of the labour market for some time and need a more gradual re-entry than just pressure and hassle. We do not want the lone parents dichotomy of slammed doors—in work, out of work. We need a staircase, a ladder, so that every hour you
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Amendment 71 proposes that we offer women on IS who are required to engage in work-related activity a premium or an additional component. Currently, if they are on employment and support allowance, they receive an additional £24 above the JSA rate for participating in a series of work-focused interviews. But no such additional premium is proposed if instead, because of the age of their child, they are on IS. Instead, they will receive a sanction, as will their child, for failing to do what the adviser has required.
I do not understand why one group of lone parents gets the premium and the other does not when they are both required to participate in work-related activity. In practical terms, we are far more likely to get a positive response and outlook from lone parents with an additional premium than with the threat of sanction, which impoverishes and demoralises both them and their children.
This amendment proposes what the Government themselves proposed for this group of lone parents in paragraph 2.70 of their July Green Paper No One Written Off. It says that,
- “to encourage those with children under five to take part in these activities voluntarily at an earlier point in time, we will also pilot a “skills for work” premium for agreed activity, on top of existing benefit entitlement”.
Note the language—it says, “We will also”, not “We may”, not “We shall consider”, not “We shall reflect”, not even “We shall consult”. And then nothing.
We know that the amendment is in line with the Government’s original proposals, which seem to have got lost. Can we hope that this is a temporary loss of memory, and that we can help my noble friend recover it on behalf of the department? Can we hope that my noble friend, appropriately nudged, will come back with his own amendment to introduce a work-related premium to lone parents in this situation? I beg to move.
The Deputy Chairman of Committees: There is a mistake in this amendment. In the last line of inserted subsection (7), instead of the words, “this Act”, it should read, “the Social Security Administration Act 1992 (c. 5)”.
Baroness Hollis of Heigham: I am grateful for that.
Baroness Thomas of Winchester: I shall be brief as the noble Baroness, Lady Hollis, has said it all, including the quote that I was going to make from the Green Paper. This is the ultimate carrot for lone parents, which we on these Benches support. As she suggested at Second Reading and today, giving lone parents on income support who come under the provisions of the Bill a financial incentive to undertake work-related activity would be a much better idea than sanctioning them if they failed to comply. As she has said, claimants of the work-related activity component of ESA already receive an additional premium of £24 above the JSA rate for participating in work-focused interviews. So the
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Basing the new policy on incentives rather than sanctions is a much more attractive proposition. It may be worth noting that when my honourable friend Paul Rowen suggested this proposition in the other place, the then Secretary of State, James Purnell, seemed to be confused. He referred to the additional financial support available to single parents starting in employment, not to those in the progression-to-work group of single parents. We support the amendment and look forward to hearing the Government’s reply.
The Countess of Mar: I heartily support the noble Baroness, Lady Hollis, in her amendment. Income support is not generous. For mothers having to struggle on benefits, the thought of losing benefit is more likely to be a disincentive than an incentive to the join the groups and the steps leading to work. It is very important to encourage rather than to penalise. I should like to say, “Well done to the noble Baroness”.
Lord Skelmersdale: I must confess that I got confused when reading this first amendment on today’s Marshalled List. We are looking at an amendment which would insert a new clause to the Social Security Contributions and Benefits Act, which in turn appears to refer to work-related activity, as defined in Section 2D of the Social Security Administration Act that is about to be created by the Bill. It is a tortuous path and I must confess that I am not there yet. But I hazard it that the aim of the noble Baroness’s amendment is to make sure that any money or at least some money on a work-related activity does not count towards any amount disregarded as income on which supplementary benefits are based. From what the noble Baroness said, she was talking about £24, which is the same amount as is available under ESA, to which I will turn in a minute.
I am not sure that I agree with the noble Baroness in her basic proposition. For a start, I am not at all clear that work-related activity will produce any income. I had assumed that if one was earning money from an activity, that would be work. We have touched on this before, but perhaps this would be a good opportunity for the Minister to clarify these definitions. If the work-related activity does not produce an income, the applicable amount referred to in the Social Security Contributions and Benefits Act would not be affected one way or the other. However, should the work-related activity generate an income, what reason is there for that to be entirely disregarded, which, as I understand it, could occur under the amendment? Let us take the hypothetical situation—I admit that it is very unlikely—where a participant in the back-to-work scheme lands a work-related activity which pays more than the amount that they would receive on benefits. Why should there be a total disregard so that full benefit is paid as well? I accept that this extreme scenario will almost certainly never happen, but the principle remains. I, too, would like to know why a single parent is to receive no disregard, while a single parent with a disabled child would receive a disregard. It seems totally illogical, and I, too, look forward to what the Minister has to say.
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The Parliamentary Under-Secretary of State, Department for Communities and Local Government & Department for Work and Pensions (Lord McKenzie of Luton): I thank my noble friend Lady Hollis for the amendment and for her express support for the policy thrust of the Bill. I say with respect to the noble Lord, Lord Skelmersdale, that he has conflated issues in this amendment with the amendment that is to follow. I think that the thrust of this amendment is that there should be a work-related component available for those undertaking work-related activity. It is the next amendment which looks at a level of disregard, which my noble friend’s amendment seeks to increase. We need to unpick those things. I note also that my noble friend’s amendment has the support of the noble Countess, Lady Mar, and the noble Baroness, Lady Thomas.
While the amendment has wider connotations, it is clearly directed at our intention, under Clause 2, to require lone parents and partners of benefit recipients to undertake work-related activity as part of the conditions for full benefit entitlement. We know that the vast majority of those on benefits aspire to work at some point and that paid work is good for them and their children in nearly every circumstance. To help more parents meet their aspirations and do more to eradicate child poverty, we have continued to invest heavily in evidence-based policy measures during the past 10 years. The changes that we are discussing today are a further step forward along that path.
This is all positive. However, as we have taken forward evidence-based policies, we have learnt that there is more we need to do. We have learnt from the current conditionality and support regime that we have in place that there is still a very significant disparity between the numbers who would like to move into paid work and those who actually take steps toward achieving this. We therefore want those parents in the progression-to-work group to undertake appropriate and personalised requirements as part of the condition of their benefit entitlement.
Here, I need to part company with my noble friend, because the thrust of the provisions in the Bill is focused on personalised support, the aspiration being that their level of support should be driven not by what benefit a person is on but by the help that they need in meeting those barriers to work.
To deliver this, we will ask claimants to agree with an adviser the steps that they are willing to take to make progress towards a return to work at the appropriate time for them. To help them achieve this, we shall provide a system of highly flexible and personalised support from the outset. The model of conditionality and support that we want to test is based on an expectation that they will undertake these agreed activities as part of their journey towards employment. Without this, many parents who can move towards the labour market will not take up the assistance that is available so that they can start to move closer to the labour market and be better placed to lift themselves and their families out of poverty.
In addition, we will ensure that we adopt a very broad definition of work-related activity that encompasses more traditional training, skills and job-related support,
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We do not believe that it is right to look at a single component of a particular benefit and compare it with another where the structure and client group are radically different. That is why we have decided, notwithstanding the quotes that my noble friend read out, not to mirror the employment and support allowance provisions in the progression-to-work pathfinders.
We acknowledge the extra difficulties and costs which lone parents face because of the caring responsibilities for their children. That is why they receive child tax credits and assistance with childcare payments. The extra expenses which occur when a lone parent on income support undertakes work-related activity are mainly for childcare and travel. That is why Jobcentre Plus will reimburse childcare costs and travel expenses, including those relating to travel to the childcare facility. Lone parents with a health condition can, of course, claim employment and support allowance and, if they do, they may qualify for the work-related component.
I appreciate that linking the requirements to undertake work-related activity with the payment with a specific additional premium can seem attractive but I think the noble Baroness will recognise that it is only reasonable in the context of the support provided as a whole. On that basis, I ask my noble friend not to press her amendment.
3.45 pm
Baroness Hollis of Heigham: Can my noble friend tell me why the Government thought it was a good idea in the Green Paper and no longer do?
Lord McKenzie of Luton: As often happens in the development of policy, we focus on one issue and then move on. The thrust of the proposition which we want to test through our pathfinders is to encourage people through a progression-to-work path. We give them support to undertake that journey and, in a sense, that should be the incentive which helps to move them from where they are to attaining work and all that that can mean. In shorthand, we have moved on from where we were.
Baroness Hollis of Heigham: Moved on or perhaps moved back—I am not sure. Has my noble friend any research evidence based on pilots, pathways or anything else to show whether the additional premium has been attractive and effective in delivering the outcomes of the programmes he seeks? Usually we do that and usually we find that it works. Can my noble friend share any such information with us?
Lord McKenzie of Luton: We have very limited experience of the employment and support allowance. It came in only in October last year and it is far too early to evaluate its impact. I stress again that the
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There are also issues about the extent to which sanctions effectively encourage compliance. The internal Department for Work and Pensions’ administrative data show that, under the current income support regime, around one in 20 lone parents who are subjected to the work-focused interview regime are sanctioned each year but of those sanctioned more than half go on to attend a work-focused interview within six months. We do not see sanctioning as the objective of the regime, as it means a failure of the regime, but there is evidence that a sanctioning regime is a necessary component of the conditionality in which we ask people to engage.
Baroness Hollis of Heigham: Let me make it clear: I do not object, in principle, to the issue of sanctions as I absolutely accept that without sanctions a lot of DWP proposals and initiatives become voluntary when they are meant to be statutory. I understand that. Can my noble friend tell me—I should know this, so forgive me—whether the Bill contains capacity through regulatory power to introduce a work-focused premium at a later stage by regulations as opposed to primary legislation? I understand the point my noble friend is making that at the moment he has no evidence to suggest that we need a work-focused interview premium let alone a work-related premium of £24 a week to add to the attractiveness for lone parents of coming into the programme and that, at the moment, he thinks that sanctions will be good enough because he has evidence that they work, to some degree, for lone parents failing to attend work-focused interviews at six-monthly intervals, but should he be proved erroneous, as is quite possible, and as there may be varying patterns in the country according to how far one lives from opportunities—a rural pathway may be very different from a city one with decent transport and so on—does the Bill contain the powers to introduce such premiums by regulation, whether on a piloted, regional or any other subset basis or would he have to come back for primary legislation? Can he assure me that there are powers by regulation and that as a result we will monitor this and see whether we need to introduce it? If so, I would be much more accepting of his position. If not, we may need to consider the matter.
Lord McKenzie of Luton: I would need to check in more detail, but I do not believe that the Bill provides for a work-related component to be introduced for people on income support or on JSA after transfer across. It would need a change to primary legislation to achieve that.
Baroness Hollis of Heigham: Would not my noble friend welcome having in his back pocket the possibility at some stage down the line of introducing an additional work-related premium, so that if it was thought desirable it would not depend on primary legislation but could be introduced, possibly after consultation? If he were not willing at this stage not to go for this amendment—I accept that he is not going to do that—but to use his
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Baroness Thomas of Winchester: There is already in the Bill the clause abolishing income support—not yet, but when nobody needs it. So there is a precedent in that sense.
Lord McKenzie of Luton: I understand the point that my noble friend presses on me. I reiterate that it is no part of our current intent to have a work-related component for work-related activity outside the ESA regime. Our policy is as set out in the White Paper. The short answer is that there is no provision in the primary legislation at the moment, but I shall certainly go away and think about whether there should be. However, I do not want to give my noble friend false hopes on that, because it is not the intent. If all lone parents on income support with a youngest child between three and six received a work-related premium of about £25 a week, which is the ESA work-related premium, the cost would be of the order of £300 million a year. That assumes no change of behaviour; I accept that that does not necessarily follow. But the short answer is that there is no provision in the Bill at the moment and no intent to include one, but I shall take away my noble friend’s point.
Lord Skelmersdale: I do not think that the noble Baroness will be very pleased with me, but I caution the Minister in his thinking on this issue to divorce himself from any idea of introducing it in pilots. The situation between those in the pilots and those not in the pilots would be seen as monstrously unfair. I suspect that there will be a certain amount of thinking of unfairness in the pilots anyway, but that would be the straw that broke the camel’s back. If it were to be introduced after the Minister’s consultations and further thought, it should be introduced when the whole scheme goes live and not as a pilot.
Baroness Hollis of Heigham: I take that point. All that I was trying to suggest was that, if my noble friend was unwilling to take this proposal on in the current legislation—and I understand his point—he might give himself the reserve power so that he could. I take the noble Lord’s on pilots. My noble friend is relying on the power of sanctions to deliver compliance with work-related activity. All my experience shows that you need sanctions but that you get a further mileage in compliance with an additional premium, when it becomes increasingly cost effective. To find out whether that is the case, you sometimes have to do pilots in which you can compare a group with the premium with a group without. So I take the noble Lord’s point, but that is true for all the piloted new deals involving additional support. Unless you have a control group, you do not know what works. I agree that it is not especially desirable in the sense of any notion of unfairness, but it would at least allow you to establish how effective sanctions are as against, or in addition to, an additional premium.
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In the name of good public policy, not just this amendment, I urge my noble friend not to rule out an obvious possible future development that a Government might wish to return to down the road, given that it was part of departmental thinking in the Green Paper. If they have permissive powers in regulations, that is fine, but if they do not and have to wait for major legislation, given all the pressures on legislative time my noble friend or his successor could rue the day if that power is not there in reserve. With my noble friend’s assurance that he will take it away to see whether there could be a power by regulation should it be proven appropriate in future—I understand there is no commitment—I am content to withdraw the amendment.
Lord McKenzie of Luton: Responding first to the noble Lord, Lord Skelmersdale, it is inevitably the case, as my noble friend confirmed, that when having pathfinders and pilots it is not infrequent for there to be different financial arrangements in the pilots from the generality of benefits. As my noble friend says, we need a controlled situation to test the benefits of the arrangements that we are looking at. I stress that our pilots revolve around the benefit being conditional, not around inactivity being a choice.
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