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The noble Lord, Lord Young, asked a number of detailed questions about the operation of a mutual Post Office. As I have said, the mutual needs to develop from the ground up, and therefore we will not determine all the answers today. The Government have made it clear throughout that there will be a full public consultation before any move to a mutual. I also take on board the comments of my noble friend Lord Razzall, who has encouraged me to take as seriously as I would have done the important questions put by the noble Lord, Lord Young. I can answer some of those questions now, if that would be helpful.

The noble Lord asked whether mutualisation is the first step towards the privatisation of the Post Office. Mutualisation is absolutely not that first step. Our legislation makes it clear that the Post Office will not be for sale and can be owned only by the Government or a mutual that fulfils strict criteria. A mutual will be unable to sell its shares in the Post Office and there will be restrictions on disposals of Post Office assets. It is worth remembering that the vast majority of post offices-97 per cent-are already privately owned businesses being run by sub-postmasters. Our legislation could allow this group of people to be part of a mutual Post Office Ltd, giving them a greater say in how the national business is run. As I have said, we believe that a mutually owned Post Office could be ideally suited to the particular commercial and social functions that the post office network provides up and down the country.

In answer to the noble Lord's question about who will monitor whether the Post Office continues to be run for the public benefit, the Secretary of State will have to be satisfied that the mutual is set up to act for the public benefit both now and in the future by promoting the use by the public of post office services.

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He must also be satisfied that disposals of property or rights that would be inconsistent with the purpose will be prevented. Safeguards will be built into the mutual's governance structures to ensure that this is the case, and under Clause 11 Post Office Ltd will be obliged to provide a detailed annual network report to Parliament, irrespective of whether it is owned by the Government or by a mutual.

The noble Lord also asked how we will ensure in practice that a mutual structure represents the public interest in the post office network and is accountable to Parliament. The Government will ensure that a mutually owned Post Office represents the public interest in the network and acts for the benefit of the public. Clause 7 ensures this, and before making any move to a mutual structure, we would conduct consultations so that the public can have their say, both as customers and as taxpayers, about how this should best be done. The Bill also imposes clear requirements for the structure of any mutualised Post Office, including on the ownership and disposal of shares. It requires a post office network report to be laid in Parliament each year, detailing the number and location of post offices, the services offered and the accessibility of the network. This will be the case whether the Post Office is mutualised or not.

The noble Lord, Lord Young, put other questions to me which, as I have said, may be answered as we go through later amendments. However, I will write to him and, if he feels it appropriate, I will make sure that those answers are placed in the Library. I am sorry to have spoken for so long on this major group of amendments, but it comes right at the beginning of our talks about the Post Office. I am grateful to all noble Lords who have spoken to these amendments. I ask them to be patient and listen to the responses that we will make to other amendments that are to follow. I hope that I have provided sufficient reassurances for the noble Lord to feel able to withdraw his amendment.

Lord Whitty: My Lords, I am grateful to the noble Baroness for some of the reassurances she has given, which were the basis for tabling the amendments in the first place. I am also grateful to all noble Lords who have indicated that they too need some reassurance to the effect that mutualisation will not be pursued until there is a clear and robust Post Office Ltd or Post Office network if not absolutely in place, at least in prospect. I thank particularly my noble friend Lord Young for the complementary amendments which, in addition to the assessments that I have proposed, would require a report to Parliament and a parliamentary process. I shall come back to that in a moment.

I say to the noble Baroness and the noble Lord, Lord Razzall, that I am not attempting to slow the process down. I think that it will take time to get to a position whereby we are able to mutualise, and some of what she said indicates that. Nor am I am not trying to restrict flexibility because I recognise that a range of different options is available, some of which may not be a single option because different parts of the network may be dealt with differently. As I say, I am not trying to be restrictive in this respect. However, there are some deep worries. As the noble Lord, Lord Cameron, indicated, there are particular worries in rural areas. The other areas that are particularly an

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issue are what I would call the remoter suburbs, those areas between the inner city and Surrey or Cheshire, where again the post office is an important focus and social element for those who are somewhat cut off from the economic and social mainstream. There are substantial parts of the country where the post office is a major institution, and there are anxieties. That has been demonstrated through reactions to the reduction in the number of post offices over the past few years. As my noble friend Lady Donaghy indicated, it has become a social and political issue.

The Minister said that we do not want to institute a parliamentary veto here. I think that when the Bill is considered in another place, she will find that Members of Parliament from all political parties may not want to regard it as a veto, but they will want a pretty strong reassurance that the time is right for mutualisation to take place, and therefore a report to Parliament along the lines proposed in the amendments tabled by my noble friend Lord Young is necessary.

Obviously I will not press the amendment tonight, but the problem is that the noble Baroness has to be completely convincing. The noble Lord, Lord Razzall, slightly mysteriously referred to a package that he hopes Ministers will come forward with. I have some inkling about that in relation to the Ministers in the noble Baroness's department, Ed Davey and Vince Cable, and, indeed, the noble Baroness herself. I am not attempting to split the coalition-not tonight anyway-but there is a different sort of split between Ministers in BIS, who I think are genuinely committed to the future of the Royal Mail and the post office network, and other departments which are not prepared to make any sacrifices in relation to the network. As the noble Lord, Lord Cameron, and other noble Lords said, we have just had yet another example-we had some significant ones under the previous Government-of a department taking a silo view of what is in its most cost-effective interest helping to destroy the interests of government and society as a whole, particularly in rural and underprivileged areas. I think the split is not between Ministers or parties but between different Whitehall departments. We need to get some coherence there in parallel with setting up the terms of the mutualisation. We need greater clarity that the Government as a whole are behind the objective of making the post office network work. Only at that point can we clearly be reassured that this mutualisation is likely to work.

I think the main points have registered with Ministers, and I suspect these debates will go on in another place. Ministers in the noble Baroness's department will need to ensure that the network that they envisage over the next few years will be robust, will be sustainable for a long period of time and will meet the social and economic needs of a large proportion of our population. If they can do that, godspeed to mutualisation. I beg leave to withdraw the amendment.

Amendment 21A withdrawn.

Amendment 21B

Moved by Lord Stevenson of Balmacara

21B: Clause 4, page 3, line 2, at end insert-



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"( ) Before making any direction under subsection (2), the Secretary of State shall give full consideration to the creation of a Post Bank and shall, following consultation with relevant persons, lay a report before Parliament."

Lord Stevenson of Balmacara: My Lords, in earlier contributions many noble Lords, particularly the noble Lord, Lord Cameron of Dillington, expressed concern at the removal of government services from the post office. Particular concern has been expressed over the recent loss of the green giro account to PayPoint, which took away another source of business from the post office.

The post office network is a unique national resource. It has as many social and community functions as it has business activities. It is woven into the fabric of all our lives. Communities, businesses and individuals all depend on it, and I believe it should be protected and grown. I welcome the Government's commitment that there will be no closure programme for post offices, but we are seeing the loss of many hundreds of post offices across the country. It is therefore paramount that we take action to ensure that there are no further closures of post offices by looking to build and strengthen the business.

We suggest "a cunning plan". A post bank based on the post office is in many people's view one of the best ways of strengthening the post office by building up and extending its current financial services and thus securing the future of the network. As both bank and post office branches have closed in many local communities, particularly the poorest, many people and small businesses have seen their direct access to postal services and essential financial services disappear. Establishing a post bank would ensure the provision of financial services based on a return to basic banking principles under which bankers are situated in and understand their local community and its needs. With its network of branches throughout the country and the high levels of trust that it enjoys, the post office is ideally placed to house a post bank. The proposal also builds on the central idea that post offices are there in great numbers, and it seems sensible to build on what we have rather than to think of other ways to use the service.

A post bank would hugely increase post office custom and would enable the Government to increase the work they pass to the post office. It would enable the post office to build up its business profitably. It would also enable the Post Office card account to be embedded in a trusted bank and would thus remove the threat that it could again be put out to tender. The post bank would be an economic driver, lending at small margins and supporting local enterprise in local communities. The current banking crisis surely provides an opportunity for a radical redesign of retail banking, including combating financial exclusion and creating an accessible and trusted banking system.

One way of doing this would be to put in place a universal banking obligation, similar to the universal service obligation placed on Royal Mail, to create a post bank in the model of the post office with statutory obligations to provide a service. A post bank would allow every local post office to offer current accounts, access to credit and direct debit facilities and to expand its present savings capacity. It would not be shareholder driven and would be able to act in the best interests of local communities and local businesses. It would be localism in action.



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6.15 pm

As I alluded to a moment ago, the new post bank could address the problem of financial exclusion. Commercial banks have physically retreated from large tracts of the country, leaving people badly served. There are 3 million people in the UK without a bank account, and that figure is still rising as the banking crisis has increased the number of those who have difficulty accessing banking services, especially if they need mortgages, loans or overdrafts. People without access to financial services effectively pay an unfair premium for basic services. I declare an interest as chair of the Foundation for Credit Counselling, which helps nearly 350,000 people a year deal with problems from their credit card use. Many of them are paying high rates of interest for basic services. The establishment of a post bank would be an essential safeguard for the future of the post office network and would hugely increase post office custom. It would enable the Government to increase the work they pass to the post office.

I shall talk a little about the role a post bank could play with small businesses. As many noble Lords have argued, the UK economy relies on small businesses which, in turn, rely on the post office and its efficient, affordable and local service. A post bank would safeguard the post office network and offer more extensive services for small businesses. A recent Federation of Small Businesses survey, which received responses from about 5,500 small businesses, revealed that 38 per cent thought that a post bank based on the post office network was a good idea and that they would consider banking with such a bank. Many respondents also said that they wholeheartedly support the idea, regardless of whether they would use it as a banking service. Clearly, measures that will prevent future post office closures are welcomed by the small business community, as many small businesses rely on local post offices for mail services. The survey showed that 79 per cent of respondents use the post office for their mail services and 88 per cent use stamped mail rather than metered mail. They make the journey to the post office regularly to purchase stamps, and they have parcels weighed and franked. It is an important part of what they do. If small businesses could also access a wider range of financial services at the post office, they could deal with many more errands in one visit, saving them valuable time.

A post bank would reconnect banking with local economies and would liaise with other financial bodies, including credit unions and community development financial institutions. There is growing expertise in the credit union and CDFI sector about how best to service the needs of financially excluded households. Credit unions and CDFIs have been evolving sensitive responses to the financial needs of lower-income households. These sectors of the market involve higher credit risks, higher transaction costs and a high level of professional skill in budgeting and money-management service. A post bank would support these initiatives very well.

There are many international examples of successful post banks. Many of Post Office Ltd's overseas equivalents have developed comprehensive banking services to

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offset the loss of other traditional services. These have made substantial contributions to the viability of those national post office networks. Even if they are not exactly like-for-like comparisons, they are useful examples of what could happen. The French postal service, La Poste, launched its bank in January 2006, and by 2007 it had over 11 million postal banking accounts and accounted for nearly a quarter of La Poste's turnover. The Italian postal service, Poste Italiane, launched BancoPosta in 2000, and by 2002 Poste Italiane showed a net profit for the first time in 50 years. This turnaround is largely attributable to the business generated by BancoPosta and has led to an expansion of the Italian post office network, which now stands at over 14,000 post offices in a country of very similar size to the UK. In Germany, Deutsche Post's Postbank, although it has recently suffered problems, remains the largest German retail bank by customer numbers, with 14.5 million users, and Germany's largest issuer of credit and debit cards. Banking transactions account for 39 per cent of business over German post office counters.

I remind the House that the Liberal Democrats 2010 manifesto states, on page 54, that they will,

On page 83, it states that they will:

"End the post office closure programme to keep post offices open in rural areas where they're the lynchpin of community life, improve access to banking and help secure the future of the Post Office through a PostBank".

To conclude, I have outlined how a successful post bank would offer real, long-term financial security to individuals and businesses and provide a vital role for the post office in accordance with the high esteem in which it continues to be held by the British people. At a time when the Government are creating a green investment bank to deliver funds for clean energy and low-carbon projects and a big society bank to help social enterprise, why not complete the hat trick and create a post bank that will help safeguard the post office network while also delivering a reliable banking service to people who need it most? I beg to move.

Baroness Turner of Camden: I rise to support my noble friend in respect of this amendment. It is very important to accept that post offices have an important social role. One of the social roles they perform is that they are a point of access for-often not very well paid-people, including elderly people, who do not use banks because they do not know how to use them, are too concerned about them or are anyway not interested in speculative investment. Some people simply want somewhere safe to put their savings so that the savings are readily available when they need them, and they know that the savings are going to be safe because they trust the Post Office.

For those reasons, along with the excellent case made by my noble friend on the Front Bench, the Government really ought to look very seriously at what is proposed here. I am sure it would be popular with a very large number of the less well paid members of the public. People want to have somewhere safe where they can put their savings. We are hoping that people will save more and we have been saying for a

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long time that people are not saving enough. Well, some people do save, but they do not always know where to put their savings or where to go for financial advice or assistance. This would be an excellent idea, so I hope the Government will be prepared to accept what has been suggested in this amendment.

Baroness Kramer: My Lords, I have long been a fan of the equivalent of a post bank-as you know, it was Liberal Democrat policy. All of the arguments were made very strongly about the advantages that a post bank would bring to the financially excluded and those who are looking more for vanilla banking as well as to improving access for small businesses. It is hard to do anything other than come up with a list of absolute positives for a post bank.

Obviously, my colleagues in the other place were very eager to seize the opportunity for a post bank as part of the restructuring of Royal Mail, but then they came across the contract between the Post Office and the Bank of Ireland-although I do not know how much they know about it because obviously the contract will be confidential. However, I notice that the three names down on this amendment are those of the noble Lords, Lord Young, Lord Stevenson and Lord Tunnicliffe, and-I am sorry if I get their histories slightly wrong-I think it must have been on their watch that the contract with the Bank of Ireland was signed. That contract hidebounds the Post Office and makes it virtually impossible for it to provide the kind of comprehensive service and range of financial services without buying out that contract. Without breaching any confidentiality, perhaps they could tell us how many hundreds of millions of pounds would have to be paid to Bank of Ireland to buy out the contract so that a post bank could be put in place. I do not have access to that information, but perhaps, having been on the watch when that contract was originally put in place, they could give us a sensible estimate of what that amount of money could be. I am rather afraid it is such a large sum that it would have been difficult even in a time of prosperity and exceedingly difficult in a time of deficit. I greatly regret that.

I am glad that we had some discussion-there will be other opportunities-about bringing on board the credit unions. This House will be well aware that the Minister, Ed Davey, and others are committed to financing the technical platform that would make it possible for the post office to be used as the face of the credit unions. Credit unions are far more fragmented than a coherent bank would be, but at least that would open up the opportunity. I will also have a few words later to say about at least providing access to current accounts in the various high street banks. I wonder if they would give us an indication of what they think the cost would be for the Government to buy out that Bank of Ireland contract to make this very attractive proposition possible.

Lord Clarke of Hampstead: The noble Lord, Lord Stevenson, said he had "a cunning plan". Well, I wish it was cunning-it is not original. In fact, it was the Conservative Government of the 1970s that abandoned National Girobank. I was one of those who agitated for many years for the creation of Girobank. By

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copying the arrangements in the Netherlands, it was possible to introduce a simple banking system that brought cheque books and bank accounts to many thousands of people who never thought they would have a bank account. I mention National Girobank because one day, when I get enough money, I am going to ask a student or someone to do the proper research on what happened to our people's bank, as it was in those days.

As I said in the debates on the previous Postal Services Bill a couple of years ago, only one paper in this country covered the story of what I considered the give-away of a national asset. Reference has been made to the shock that you get when you find you have got to buy out a contract, but if you had the figures on what happened at Girobank, you would start to worry even more. I know this because when it was announced that it was going to be abolished-and it was really abolished because it was so successful-Co-operative Bank, Unity Trust and a consortium of trade unions got together to try to buy the bank when it was put up for sale. First, they were told, "You need £200 million to buy Girobank". That was the easy bit, because that was gathered together. Then the rules were changed, and Girobank was to be sold only to an established finance house-which the consortium was not-but the consortium established itself as a finance house. Then they were told, "You cannot buy it unless you have an alternative computer system that will be there if this system goes down". So the dice were quite loaded from the start. The £200 million that was mentioned at the time of the sale of Girobank actually paled into insignificance, because the actual figure-I am quoting from memory as I have no notes here-was £118 million when it was sold to the Alliance & Leicester. The Alliance & Leicester obviously grabbed it because, at the time, there were thousands of people waiting to open an account with National Girobank. Political dogma said, "This has got to stop. It's too successful and we're going to do away with it".

What has happened since? Alliance & Leicester of course has been swallowed up by Santander. If anybody thinks that the service they are getting from Santander is anything like what they got from National Giro in the beginning, and to some extent with the Alliance & Leicester, they are dreaming, because the rapacious way in which these banks work frightens me.

There is a demand for a people's bank, so I welcome the comments from the noble Baroness, Lady Kramer. I ought to declare another interest: I am a member of the St Albans District Credit Union. During my years as a councillor in Camden, I saw what happened when people were at the mercy of loan-sharks, when people were threatened on their doorsteps with an extortionate amount of interest week on week. Of course there is a chance to get a link between the growth of credit unions and a people's bank-or post bank, post office bank or Royal Mail or whatever-but the important thing to is to have a simple banking system, which allows people to have confidence in where they are putting their money. At the back of it all, despite all my criticism of what has gone on in the last few years, I still believe in the brand name of the Post Office. The Post Office has a good reputation and I hope that the Minister and her colleagues will go into one of those

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dusty offices, pick up the box file that says National Girobank and check what I have said about the way it was virtually given away. Incidentally, the punchline was that, within two years of trading, Alliance & Leicester cleared the amount that it paid for the bank.

Lord Young of Norwood Green: My Lords, I shall respond to the noble Baroness's request for information. It was a substantial sum. I am not saying that to be evasive; I cannot remember the precise amount. The only thing that I would say about our arrangement with the Bank of Ireland was that it enabled a large amount of business to be generated. We should not forget that aspect of it. As an original member of Girobank when it was first formed, I concur absolutely with the regretful history of its sad demise that my noble friend Lord Clarke has recounted. For a period we had a successful people's bank, which unfortunately disappeared as the result of another privatisation.

6.30 pm

Baroness Wilcox: I thank the noble Lord, Lord Stevenson, for tabling this amendment. The Government are clear that the wide range of financial services that the Post Office offers-personal loans, credit cards and savings products, for example-are an important part of its total product suite. The Government made clear in the coalition agreement that we would look at the case for developing new sources of revenue for the Post Office, including the creation of a post office bank. We have looked at the different options and arguments for such a bank very carefully and have come to the conclusion that, particularly in the financial climate that we are experiencing, it is just not a viable option. My noble friend Lady Kramer spoke further on this and gave us her views, and I think that she felt the same.

Setting up and capitalising a new bank would be very expensive as well as creating a much more volatile and risky balance sheet for the company. Instead, we are committed to ensuring that the Post Office continues to offer wide access to existing banking facilities. For that reason, we were extremely pleased that in November last year the Royal Bank of Scotland reached agreement with the Post Office to allow RBS customers, including NatWest customers, access to their current and business accounts at the post office. That will mean that almost 80 per cent of all current account holders will be able to withdraw money free of charge at the post office, while many can also pay money in and check their balances.

In response to points raised by the noble Lord, Lord Stevenson, on financial inclusion, supported by the noble Baroness, Lady Turner, the Post Office already offers a range of services to help people on lower incomes, including the Post Office card account and the ability to access all basic bank accounts.

The noble Lord, Lord Clarke of Hampstead, will be heartened to know that we are extremely supportive of a stronger link-up between the Post Office and credit unions. Recent announcements by the Department of Work and Pensions on credit union funding open up excellent opportunities for the Post Office to provide access to credit union services to many more people. This builds on existing co-operation between the two

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sectors, which is already strong. Maintaining the large branch network and increasing access to bank accounts at the post office, as I have said, is an important step towards financial inclusion.

Financial services are clearly an area with significant potential for growth. As I have said, though, the creation of a post bank would not be in the best interests of the post office network. Instead, we strongly believe that funding for the Post Office will be best spent modernising and maintaining the network. The funding that we have provided to the network will mean that the Post Office is better placed to compete for new business.

Lord Lea of Crondall: I may have misheard the Minister, but did I hear her say that all these desirable things are dependent on the maintenance of a wide network? Is it part of the Government's guarantee that that wide network will be there?

Baroness Wilcox: Yes, that wide network will be there.

We strongly believe that funding for the Post Office will be best spent modernising and maintaining the network. The funding that we have provided to the network will mean that the Post Office is better placed to compete for new business and to further develop its offer to both local and national government, in its ambition to become a front office for the Government. As part of this strategy, we will of course also support the Post Office in expanding its financial services offering, but at this time we believe that that is best done by offering access to the existing high street banks through the post office network.

The noble Lord, Lord Stevenson, asked a number of further questions on credit unions. It would be best for me to deal with those concerns when we discuss credit unions specifically in the later amendment under Clause 11. I hope that it is possible at the moment for the noble Lord to withdraw his amendment.

Lord Stevenson of Balmacara: I thank the Minister for her reply. I suspect that I made a mistake in trying to bring a touch of levity to the debate by quoting "Blackadder"-it was picked up by only a couple of people, one of whom used it to beat me over the head with. I suppose that that is the risk of quoting Blackadder, who seemed to have a singularly unsuccessful way of making his plans come to fruition. I should probably never use that again, so I will not.

We are delighted that the Minister has confirmed that she has looked so hard at the question of a post bank-given the coalition agreement, it would have been rather hard not to do so. I am surprised, given the way that the coalition agreement seems to permeate so much of the business in this House, that my proposal has not been given more of a favourable wind, but there we are. It got a lot of support in the speeches that my noble friends and others on both sides of the House made, and I still think that it is a good idea.

My amendment was an attempt to express the frustration that came out in the intervention that the Minister took. In some senses, we seem to be underplaying the capacity of the existing network to do so much more for society. These post office branches exist. In

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most cases they are active, vibrant places. People use them-I quoted the figures in my address. We need a complete rethink about the way in which the Government do business. We should take the post office network and use it to achieve more than it is currently capable of doing, given the single use that we are making of it.

How do we save our declining post offices? We use the brilliant brand. We use the securely established places that these post offices inhabit in wonderful locations, with huge footfall, in every part of our country. They are used and valued by people but we do not use them properly to achieve the further output of government. They are places that people go to for their services. People use them for transactions and pick up more information to learn-

Baroness Wilcox: If the noble Lord will bear with me, I must intervene. We do believe that there is an exciting future, so much so that we are supporting 11,500 post offices. The previous Government closed them, but we are not closing any.

Lord Stevenson of Balmacara: I am afraid that the Minister did not quite get my point; I was in the middle of a wonderful peroration which, had she heard it to the end, would have made it clear.

I am talking not about post offices qua post offices but about post offices as an engine for doing more for the whole of government. That is what I am trying to argue the case for. The post bank would therefore be one of a number of things that, if it were located in post offices, used and built on, would be able to sustain the network and perhaps to build back to the numbers that we want to see. However, given that this is not the time to make that sort of speech or to make these sorts of arrangements and that the amendment is framed very narrowly, I beg leave to withdraw the amendment.

Amendment 21B withdrawn.

Amendment 21C not moved.

Amendment 21D

Moved by Lord Young of Norwood Green

21D: Clause 4, page 3, line 8, after "of" insert "any part of"

Lord Young of Norwood Green: My Lords, I shall also speak to Amendment 21E. By nature these are somewhat technical probing amendments to see whether there is a loophole in the disposal of "any part". That is the basis of those amendments. I am trying to set the world record for brevity in moving an amendment. I look forward to the Minister's reply.

Baroness Wilcox: My Lords, Amendments 21D and 21E refer to the circumstances in which a relevant mutual could dispose of its interest in the Post Office. I understand that these are probing amendments.

Clause 4(4) makes clear that the only people who can own an interest in the Post Office are relevant mutuals, the Secretary of State, the Treasury, a nominee of either the Secretary of State or the Treasury or a

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company that is wholly owned by the Crown. The clarification envisaged by Amendment 21D is not required to achieve this.

Amendment 21E seeks to ensure that any disposal made by a relevant mutual would be a disposal of its entire interest in the Post Office. While in practice we would expect only one relevant mutual to own the Post Office at any one time, we believe this amendment to be unnecessarily restrictive. For example, there may be circumstances in which different stakeholder groups form separate corporate bodies, each taking an interest in the Post Office. Provided the Secretary of State was satisfied that each body met the conditions set by Clause 7, it would seem overly restrictive to rule out the possibility.

We will debate Clause 7 shortly, but I shall briefly summarise the strict safeguards that are put in place under it. The Secretary of State must be satisfied that the conditions in Clause 7(2) to 7(4) will continue to be met before there can be any transfer to a Post Office mutual. Those conditions ensure that the Post Office mutual must continue to act for the public benefit by promoting the use by the public of Post Office services, that its members have a clear interest in it so doing, and that disposals that might jeopardise that will be prevented.

I hope that I have sufficiently reassured the noble Lord, and I ask him to withdraw the amendment.

Lord Young of Norwood Green: My Lords, I thank the Minister for her reply. I will certainly reflect on those measured words. In those circumstances, I beg leave to withdraw the amendment.

Amendment 21D withdrawn.

Amendment 21E not moved.

Clause 4 agreed.

Clause 5 : Report on transfer of interest in a Post Office company to a relevant mutual

Amendments 22 to 22ZD not moved.

Clause 5 agreed.

Clause 6 agreed.

Clause 7 : Meaning of "relevant mutual"

Amendment 22ZE

Moved by Lord Stevenson of Balmacara

22ZE: Clause 7, page 4, line 15, leave out "C" and insert "D"

Lord Stevenson of Balmacara: My Lords, this amendment seeks to embed employee involvement in the operation of a mutualised Post Office by including representatives from the workforce, particularly the sub-postmasters, on the board of the mutualised entity. We on these Benches are not opposed to the principle of the mutualisation of the Post Office, but for that

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mutualisation to work effectively for those running the business it is logical for them to have a direct say in the operational management of the business at board level.

Mutualisation is not a new concept; its origins date back to the establishment of the Co-operative movement in the 19th century, which has many facets and is still going strong today. We on these Benches all support the Co-operative endeavour and can trace the roots of the Labour Party to it, but surprisingly, and somewhat disappointingly, mutuality is still not a particularly common concept today. The John Lewis Partnership is considered to be an outstanding example of how a mutualised business can operate. In that respect, the John Lewis Partnership is admirable, but there are very few other mutualised entities of a similar size to the one which the Government propose in this Bill. Indeed, in the financial services sector, where there is a history of mutualisation, the tide has rather been flowing the other way and only a few building societies have survived as mutuals. I understand that the Government's mutuals task force is looking at how government can stimulate the transfer of assets of NHS bodies and local government to mutual status.

Understandably, public sector workers have been hesitant to jump into new and untested structures. Recently, the Trades Union Congress claimed that a ballot at a south-east Sussex PCT showed that 90 per cent of staff were opposed to being "spun out" as a mutual-those are their words. The TUC stated with regard to that case:

"The moves towards mutuals are being driven by management rather than bottom-up. That makes a nonsense of the model because it relies on a buy-in from staff. You can't force mutuals".

Now there is potentially a new kid on the block-the Post Office. It is indeed an interesting idea and there is clearly an opportunity to establish that business as a thriving mutual. All of us want the post ffice network to prosper, and, we hope, one day be free of subsidy, but at a level that provides coverage for the whole of the UK. I understand that the Minister has said that the minimum number of post office branches required to sustain a universal obligation is 11,500; indeed, she said that only a few minutes ago. We welcome that and look forward to receiving more detail about how that number is to be sustained. That is an important point to make in respect of this amendment. While we welcome the mutualisation of the post office network, we want to understand in more detail how this might work in practice.

In one respect mutualisation might be a straightforward share of any profits made among the members of the mutual, primarily its workforce. That is a common form of mutualisation, particularly in the Co-op, but given that the post office network relies on a significant subsidy that far exceeds its profits at present, such concepts as profit share might not appeal to the workforce if it means sacrificing their collective bargaining rights. Perhaps in this case a more attractive mutualisation model will be one that extends the participation of the workforce in the day-to-day running of the business beyond simply being the passive recipients of profit

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share schemes. That kind of model may also assist organisations such as the TUC to overcome their scepticism.

The logic is equally strong for the participation of a sub-postmaster representative on the board. After all, sub-postmasters run their own businesses. They know what works and what does not. There is disquiet among members of the postmasters' federation about this Bill-a disquiet reinforced by the decision by the DWP to announce the cancellation of the green giro contract during the passage of this Bill.

As I have suggested, mutualisation can take a number of forms. My own party when in government looked at industrial democracy concepts for the Post Office way back in the 1970s and the party opposite did the same in the 1980s. Both those schemes ultimately came to nothing because quite simply employees in such businesses are always loath to give up their collective bargaining rights. Who can blame them? Therefore, in order to make the offer of mutualisation more attractive we would expect to see the Government bring through a package of measures that give the employees, managers and agents of the Post Office a real and genuine say in how the business is run. That should include direct participation on the board of Post Office Ltd.

The amendment is not prescriptive; it would leave the decision on who is elected or appointed, and how they are elected or appointed, to the employees and sub-postmasters to decide. The employees, for example, might decide to nominate an outside expert or elect one of their own trade union officials. That is a matter for them to decide. The board would benefit significantly from the input of two people directly representing the interests of the core of the workforce, and that would make the prospect of mutualisation more attractive to those who may be hesitant to embrace the concept of democratic ownership. I beg to move.

6.45 pm

Baroness Wilcox: My Lords, I thank the noble Lord, Lord Stevenson, for this amendment. The Government are very keen to see sub-postmasters, sub-postmistresses and staff of Post Office Ltd-the very people who know the network best-involved in the running of the business. That is why this Bill contains provisions that enable the mutualisation of Post Office Ltd.

We believe that mutualisation could help to ensure that sub-postmasters, sub-postmistresses, staff and communities could in the future all have a say in how the Post Office is run. Co-operatives UK is seeking the views of the Post Office's major stakeholders and will soon report back to my department on proposals for a mutual Post Office. The work that Co-operatives UK is carrying out seeks to address questions such as who the members of a mutual might be and which stakeholders should play key roles in how the Post Office is run in the future. A mutual Post Office must be established with the best interests of the company, the sub-postmasters and sub-postmistresses and the wider public, who are its customers at heart. It must be allowed to develop organically, with the willingness and participation of its members. We believe that it simply would not work if government imposed a rigid top-down structure.



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Indeed, it is by no means clear at this stage that the selection of sub-postmaster and sub-postmistress and employee representatives to the board by election would necessarily be the best option for the Post Office network. There is an obvious reason for this; the mutual has not been designed yet, so we cannot know its governance structure. Enshrining its governance in legislation now and then trying to develop the mutual within these requirements goes completely against our commitment to ensuring that the mutual is developed by the people who know it best.

The Government strongly believe that the Post Office and its key stakeholders should be allowed to form their own mutual governance structure as appropriate. In the light of this, and in view of the work that is being carried out on the mutualisation of the Post Office, I hope that the noble Lord will feel able to withdraw the amendment.

Lord Stevenson of Balmacara: I thank the Minister for her positive remarks. I am certainly interested in seeing Co-operatives UK's report because that will obviously help us to progress this debate. I have little further to say. There are dangers in not specifying a little more what the Government really want out of mutualisation, but I accept that it is early days and that there is plenty of time for that. I beg leave to withdraw the amendment.

Amendment 22ZE withdrawn.

Amendment 22ZF not moved.

Clause 7 agreed.

Clause 8 : Transfer schemes

Amendment 22ZG not moved.

Clause 8 agreed.

Schedule 1 agreed.

Clauses 9 and 10 agreed.

Amendment 22A

Moved by Lord Whitty

22A: After Clause 10, insert the following new Clause-

"Counter access to postal, government and other services

(1) For the purpose of ensuring continued universal counter access through a Post Office company to services specified in subsection (2), the location and geographical distribution of counter access points shall be governed by the following access criteria-

(a) 99.7% of the total population shall be located no more than 3 miles from a counter access point;

(b) 93.2% of the total population shall be located no more than 1 mile from a counter access point;

(c) 99.8% of the total population in deprived urban areas shall be located no more than 1 mile from a counter access point;

(d) 99.1% of the total population in urban areas shall be located no more than 1 mile from a counter access point;

(e) 99.2% of the total population in rural areas shall be located no more than 3 miles from a counter access point; and



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(f) in each postcode district, 95% of the population in that postcode district shall be located within 6 miles of a counter access point.

(2) The access criteria specified in subsection (1) relate to, but are not limited to, the provision of counter access to the following services-

(a) postal collection and delivery services as specified by the universal postal service order;

(b) postal service products;

(c) processing social benefit and tax credit payments;

(d) processing of national identity and licensing scheme applications;

(e) payment facilities for essential utility services;

(f) cash and banking facilities; and

(g) government savings instruments.

(3) Within six months of the commencement of this Act, the Secretary of State shall determine and publish-

(a) the process by which the number of counter access points to services specified in subsection (2) and access criteria specified in subsection (1) shall be reviewed;

(b) the frequency at which the number of counter access points to services specified in subsection (2) and access criteria specified in subsection (1) shall be reviewed.

(4) In undertaking a review described in subsection (3), the Secretary of State shall consult-

(a) the Post Office company;

(b) bodies able to represent the interests of consumers using counter access to the services outlined in subsection (2); and

(c) such other persons as the Secretary of State considers it appropriate to consult.

(5) Following a review established under subsections (3) and (4), the Secretary of State may by order amend the access criteria specified in subsection (1).

(6) The power in subsection (5) to amend the access criteria in subsection (1) shall be subject to the procedure in section (Super-affirmative procedure)."

Lord Whitty: My Lords, we have reached this amendment slightly quicker than I had thought we would. Although the amendment looks complicated, it is, in essence, an amendment to probe how the Government intend to fulfil the commitment made in the paper to which I previously referred-and to which the noble Baroness referred twice-that they will maintain a network of approximately the present size. The noble Baroness stated that even more precisely in her reply to my noble friend Lord Lea.

I have tabled the amendment from the perspective that my previous organisation, Consumer Focus, and its predecessor, Postwatch, have been through two alleged rationalisations of the post office network, the first of which was based on no objective criteria at all. It worked from where sub-postmasters were finding it difficult to maintain a post office, were retiring, or had some other reason for not wanting to continue. The second round of rationalisation worked on substantial and clear issues of access that were specified in crude distance terms, but nevertheless gave rationality to the assessment of whether one post office or another should change.

I must say, having inherited this situation at three-quarters of the way through, that I found it difficult for a consumer organisation to be forced to choose between the post offices in any particular town. Nevertheless, the criteria against which we operated-

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access to post offices among different populations, distance to travel to a post office, and so on-are reproduced in the paper from which I quoted earlier, but which I unfortunately gave to Hansard for verification. However, the document includes a table that sets out the current criteria.

My concerns are twofold. Those criteria would arithmetically allow for a network that is significantly smaller, particularly in towns and suburbs, than the current network, and I therefore need to square the assurance given by the Government that they are looking for and are in effect subsidising for the next few years a network at its current size, with the fact that theoretically, using the same criteria, they could reduce it to a size of between 7,000 and 8,000. I hope that the Government reaffirm their commitment to retaining a network of the current size.

The calculations in proposed new subsection (1) in the amendment, according to my former colleagues in Consumer Focus-I did not do the arithmetic-would sustain a network of roughly the present size. In other words, the first four criteria are considerably more stringent than those used in the previous round of rationalisation and specified in the Government's document on the future of the network. This would not mean that every post office would need to remain open. There would obviously be temporary closures and what the Post Office somewhat euphemistically calls business-as-usual closures. There would also be movements of sites within particular areas. However, one would arrive at roughly the same number of post offices, were these criteria to be followed.

It would be interesting to know whether the Government intend to tighten up the criteria or to add different criteria that would produce figures similar to those in the amendment, or whether their commitment to the current size of the network is irrespective of particular criteria because they envisage that the moves they claim to be making to improve the volume of post offices' business-to sustain and inculcate a different sense of purpose through mutualisation-will mean that we will end up with a network of roughly the current size.

I see that the noble Lord, Lord Skelmersdale, is once more in his place. When we were discussing the IBA, he raised a pertinent question as to whether any failure to commit to the IBA-and, I would add, to direct other government work to the post office network; an earlier debate today demonstrated that we were moving away from that-threatens the Government's commitment to the size of the network. There is a circle to be squared, and I am not entirely clear how the Government intend to square it.

One option would be to reassure consumers, sub-postmasters and the staff of the post office network that the criteria would be tighter. Another option would be a more detailed way of reassessing those criteria. In fact, proposed new subsections (3) to (6) in the amendment would allow the Government systematically to assess the criteria of access and the nature of services provided.

Another dimension that has been mentioned is that part of Post Office Ltd's plan is to reduce the range of services provided in some post offices. There was the

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experiment of Post Office essentials outlets that provided a reduced range of services. Some have worked and some have not. That is not necessarily entirely consistent with the government commitment to maintain the network broadly as it is, but it may mean that different gradations of post office outlets appear within the total. It would also be useful to know about that.

Although I do not expect the Government to accept the amendment, it gives them options in adopting criteria that would sustain more or less the present network or having a process whereby they redefined the criteria for access and the services provided. It would be useful to know what the Government's strategy was in this respect. Obviously, we take great heart from the reassurance that the present network will remain in place, but the question of how that will happen and how we square that with certain other developments that were referred to earlier remains. I will be interested to hear the Minister's comments. I beg to move.

Lord Young of Norwood Green: My Lords, I speak to my noble friend Lord Whitty's "omnibus" amendment and to Amendments 22C and 22E.

They all seek to introduce new clauses to strengthen access criteria to prevent the further erosion of the post office network, to ensure the provision of a wide range of services at all post office branches, and to ensure a fair distribution of the Post Office's proposed new main post offices.

Amendment 22A writes into the Bill the current level of access to post offices in the UK. As part of the 2007 changes to the post office network that included an investment of £1.7 billion and incorporated the Network Change Programme, resulting in the closure of 2,500 post offices, the Government introduced a series of distance-based access criteria. These remain applicable but are not included in Royal Mail's licence and are not set out in law. The minimum access criteria introduced by the previous Government state that 99 per cent of the total UK population should be within three miles of their nearest post office; 90 per cent of the population should be within one mile; 99 per cent of the total population in deprived urban areas across the UK should be within one mile; 95 per cent of the total urban population across the UK should be within one mile; 95 per cent of the total rural population across the UK should be within three miles; and 95 per cent of the population of the postcode district should be within six miles.

7 pm

The current post office network of 11,905 offices exceeds the Government's minimum access criteria. Post Office Ltd has stated that a network of 7,500 post offices would be consistent with these criteria. We believe that the criteria are insufficient on two counts. First, they do not guarantee to keep the network at its current size. The Government have stated that they wish to retain their network of 11,500 post offices. In his evidence to the Postal Services Bill Committee late last year, the Minister, Ed Davey, stated that,



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This commitment would be better strengthened by introducing minimum access criteria that guarantee the network at its current size, rather than maintaining the current access criteria that could allow for a further 4,000 closures.

As a result of the current distribution, 99.7 per cent of the total UK population is within three miles of their nearest post office; 93.2 per cent of the population is within one mile; 99.8 per cent of the total population in deprived urban areas across the UK is within one mile; 99.1 per cent of the total urban population across the UK is within one mile; 99.2 per cent of the total rural population across the UK is within three miles; and 95 per cent of the population of the postcode district is within six miles. Amendment 22A calls for this level of access to be enshrined in the Bill. The amendment goes further in strengthening access requirements that have their origins in the 2007 Network Change Programme measures by putting them into law for the first time.

The amendment goes on to strengthen the Bill by ensuring minimum levels of service provision at post offices. These will require not just the provision of postal services but access to social benefit and tax credit processing, national identity and licensing schemes processing, payment for essential utility bills, cash and banking services and access to government savings products. This does not constitute a requirement for all post offices to provide all post office services, but it does mean that a core range of services must be available at all post offices. This is important for the viability of those offices and to ensure universal access to the core government and postal services that are so important to communities across the country, particularly those in urban deprived and rural communities.

The amendment requires the Government to establish the number of post offices that is consistent with the minimum access requirements and to decide on the frequency with which this shall be reviewed. They must undertake this work in consultation with the Post Office and with representatives of relevant consumer groups. These access criteria can be reviewed by the Secretary of State and changes can be recommended, but ultimately it is for Parliament to decide through a super-affirmative procedure.

Amendment 22C calls for further strengthening of the access criteria to reflect the Government's proposed new model for the post office network. In November, the Government announced a funding package of £1.34 billion: a combination of investment and subsidy for the network until 2015. This includes just under £500 million that has been designated for "network modernisation". The November BIS paper on the post office network states that the funding will allow Post Office Ltd to do more than simply ensure the status quo: indeed, it is envisaged that there will be a fundamental change to this. The paper proposes two key strands of the network. The Government have asked Post Office Ltd to have, by the end of the current Parliament, about 4,000 main post offices in town and city centres, and to have converted about 2,000 sub-post offices to the "local" model. This last commitment gives cause for concern. The local model is also referred to as "Post Office Essentials" because it offers a slimmed-down

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provision of services. These are likely to be offered over the counter of other shops, not necessarily through dedicated post offices.

While the Government have provided little detail on the model, David Smith, the managing director of the Post Office, wrote to the MP for St Austell and Newquay on 13 July 2010. The letter is available in the House of Commons Library. He stated that products not offered as part of the essentials package are,

Alongside this, it is already the case that a range of products and services is available only in specified post offices. These include motor vehicle licence renewals, passport check-and-send services and the online lottery. The new identity and passport machines are also limited to certain branches, and it is likely that any expansion of government or financial services will be restricted to certain branches. The Government have claimed that the remaining branches will provide 86 per cent of post office services, though there is no way to verify how this has been determined. Crucially, no figure has been given for the percentage of revenue or business that sub-post offices currently have. This model sees a loss of core payment and sub-postmasters estimate that a conversion to the essentials model will reduce their revenue by around 60 per cent. Surely that figure is worrying for the future of sub-post offices.

The local model has the clear potential to impact on the terms on which sub-postmasters operate sub-post offices and on the terms and working arrangements of their staff. The changed physical working arrangements in the open-plan office envisaged by the pilot also carry implications for the safety and well-being of staff members. These must be taken fully into consideration. The range of services on offer under the pilot is restricted to core services, which means that customers needing to access more time-consuming or complex transactions will need to go to a main post office.

The report does not envisage restrictions being imposed on which services may be regarded as core by a local post office, and which may be dispensed with. Therefore, the local model has the potential to threaten the existence of the universal postal service by concentrating an increasing number of services in main post offices. Over time, this would mean that a higher percentage of the population would have to travel further to access the full range of post office services. The problem is likely to be particularly acute in rural areas where the distance to a main post office is likely to be greater.

It is also clear that a network of 4,000 main post offices and 2,000 new locals would leave more than 5,500 branches untouched. However, the BIS paper states that under POL's commercial strategy the local model,

This would mean a fundamental change to the current network; I hope that the Minister will address this key point.



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Amendment 22C calls for the development of access criteria to ensure an even distribution of main post offices across the country in order to maintain fair access and to ensure that communities are not disadvantaged by the network changes planned by the Government. Amendment 22E inserts another new clause that calls on the Secretary of State to review the range of services that will be offered by post offices, including services for the collection of vehicle excise duty and facilities for purchasing television licences. It also calls on the Secretary of State to lay before Parliament, at least once a year, a report on what services should be provided by post offices.

In conclusion, I urge support for Amendments 22A, 22C and 22E in order to prevent any further erosion in the post office network, in terms of both size and levels of service provision.

Baroness Wilcox: My Lords, these amendments seek to strengthen the current access criteria so that they match current post office network coverage, and to enshrine them in legislation, as well as to provide mechanisms to review these criteria. They also seek to specify the services which should be provided across the network and in which locations a full range of services is to be provided.

On Amendment 22A in the name of the noble Lord, Lord Whitty, the Government are committed to maintaining a nationwide post office network. The Post Office is required to provide a network of at least 11,500 branches. This is a legally binding commitment to a minimum number of post offices. The Government have made a commitment that there will be no programme of post office closures.

Post Office Ltd is also legally obliged to ensure that precisely the same access criteria introduced by the previous Government are maintained. The previous Government, of course, had the opportunity to put these criteria into legislation in their 2009 Postal Services Bill, but they did not see the need to do so. Indeed, during debate on the 2009 Bill, the noble Lord, Lord Tunnicliffe, observed that the access criteria were "very stringent". By legally obliging the Post Office to maintain these criteria in return for the £1.34 billon of funding over the duration of the spending review period, this Government have introduced another safeguard to ensure that these stringent access criteria will still be met. In fact, Post Office Ltd continues to exceed these criteria. Last year's report by Postcomm on the post office network, from which I believe the criteria in this amendment are derived, demonstrates this fact.

The amendment seeks to press the metaphorical pause button, to prevent any changes in the post office network from today's position. However, this is unrealistic; 97 per cent of post offices are privately owned and operated, and there will always be changes in the network where, for example, sub-postmasters retire or move on to pastures new. It is not through regulation that we will save the post office network. To ensure that the Post Office has a vibrant future, it must be allowed to develop, to modernise and to evolve. It must focus on its customers, reaching out to new customers and winning back those who have drifted

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away. Major modernisation is needed in order to address the underlying economics of the network. That is what our £1.34 billion funding package will achieve.

The noble Lord, Lord Young, raised the issue of the new Post Office local model. I will come back to that in detail later this evening during the debate on Amendment 24EA in the name of the noble and gallant Lord, Lord Bramall, which will be moved by the noble Viscount, Lord Tenby.

The Post Office's access criteria are the strongest that we know of in Europe, when you consider our safeguards for rural, urban and urban deprived areas. In Germany, for example, the requirement is for a post office every 80 square kilometres, whereas we mandate that 95 per cent of the rural population must be within three miles of the nearest post office. The £1.34 billion that we are providing will ensure that our network continues to thrive in the future.

Subsection (2) of the proposed new clause in the amendment of the noble Lord, Lord Whitty, seeks to ensure that certain services are provided across the network. Let me reassure the noble Lord that the Government are absolutely committed to maintaining the network, and supporting Post Office Ltd as it seeks to win new business from government and other sources. The Post Office is determined to become a front office for government, by developing and applying services in a number of ways. There is continued progress on this agenda. For example, the Department for Work and Pensions has recently announced plans for three new pilots, opportunities to support the universal credit reforms, and funding set aside for credit unions that will increase opportunities for the Post Office to deliver credit union services to many more people.

An important part of restructuring the network will be for the Post Office to ensure that services are tailored to meet the needs of its customers up and down the country. We cannot, and should not, expect the Post Office to provide all its 170 services at all branches across the entire network, as this amendment seeks to achieve. In smaller branches, for example, it makes far better commercial sense for sub-postmasters and sub-postmistresses to focus on the key services that most people need to use, most of the time. Of course, the services offered by the Post Office on behalf of local authorities may differ from area to area. Amendment 22C, in the names of the noble Lords, Lord Young, Lord Stevenson and Lord Tunnicliffe, does indeed take this fact into account. That amendment seeks a register of access criteria to be issued by the Secretary of State setting out the minimum location and geographical distribution of post offices which provide the full range of services provided by post offices.

7.15 pm

As I have just pointed out, Post Office Ltd must ensure that services are tailored to meet the demands of its customers. It must also negotiate its contracts on a commercial basis with a range of different clients. We want the Post Office to be able to provide the best possible service to the widest possible range of customers. We do not think that fettering its ability to agree the appropriate level of network coverage to the service would best serve that goal.



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The best people to develop new services, or improvements to existing ones, are the staff and management of Post Office Ltd. That applies whether we are talking about mail services, telephony, financial services or services on behalf of a range of central and local government institutions. They are the people with the appropriate commercial expertise and experience, and who know the Post Office's customers best. That is why the Post Office is set up to be at arm's length from government rather than run from an office in Whitehall.

The Post Office is run by a management team with extensive commercial experience under the effective leadership of Paula Vennells, the Post Office's managing director. Paula became managing director in April 2010, before which she spent three years as the Post Office's network director and chief operating officer, having previously been commercial director of Whitbread plc. Her blend of skills and experience give her a powerful focus on the Post Office's unique social purpose and the commercial challenges it faces. On separation from Royal Mail, Paula Vennells will be the chief executive of a Post Office board bolstered by the appointment of a new chairman, a process which is under way. These reasons are why it is also appropriate for the Post Office itself to report annually on the range of services provided at its post offices, as required by Clause 11, rather than a report being produced by the Secretary of State, as would be required by Amendment 22E.

One particular example of where Post Office Ltd has been flexible in negotiating contracts is through its relationship with the DVLA for car licensing services. Post Office Ltd works with the DVLA to decide the broad national distribution of branches which should offer this service in order to ensure that there is good national accessibility for a customer group which, by definition, is mobile. The DVLA limits the number of post office branches which provide its services to ensure that delivery of the service is cost-effective. Were the service to be extended to all branches, there would be a significant loss of income to those branches currently offering the service and this could adversely affect their viability.

I reassure your Lordships again that the Government are committed to being a responsible owner of Post Office Ltd. We are fully aware of the value of the post office network, of the social and economic role it plays, and of its key importance to communities up and down the country. That is why we have made a commitment that there will be no programme of closures on our watch. There will continue to be at least 11,500 post offices across the network and our funding will enable the Post Office to do much more than simply maintain the status quo.

However, the Post Office must be allowed to be flexible and to respond to the needs of both its clients and its customers, or we will see the network wither rather than thrive. With these reassurances, I ask the noble Lord to consider withdrawing his amendment.

Lord Whitty: My Lords, I am extremely grateful to the noble Baroness for giving such a detailed answer, including a good number of commitments, which are reassuring. I think she overcharacterised this amendment

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as too rigid. It does not say that every post office should have the whole range of services, nor does it say that the access criteria can never be altered. By this amendment, I was trying to establish whether the commitment to the 11,500 post offices is an absolute commitment or whether there is some headroom in the criteria. The noble Baroness has made it absolutely clear on several occasions tonight that the commitment is to a network of 11,500, although that is not to say that one or two might change location and quite a few might change the services that they offer and the sub-postmaster or mistress who runs them might change. You need that flexibility.

My remaining anxiety is that, although I recognise that different levels of post office would have different gradations of services, we have to allow some flexibility and some change over time as the market develops, particularly in the growth businesses. It is also important that there is some criterion for the distance to main post offices which cover the whole range of services. I think the noble Baroness said that in addition to the general criteria in relation to post office outlets, there would be some criteria about the maximum distance that people were from a main post office, or a post office-different terms are used-which offered pretty much the whole range of services. If she said that, that is more reassurance.

We have a number of things on the record, including the Government's very clear commitment to the size of the network. I hope that within that there is not a serious diminution in the range of services which a large part of the network offers, and I certainly hope that the distance to main post offices is taken up. Subject to that, I shall be happy to withdraw the amendment at this stage.

Amendment 22A withdrawn.

Amendment 22B

Moved by Lord Young of Norwood Green

22B: After Clause 10, insert the following new Clause-

"Closure of post offices

(1) Where any company or any other person proposes to close a post office, it shall at the earliest opportunity begin consulting representatives of the employees affected and community and other groups with an interest in the proposed closure, including consultation on that company or person's plans for alternative provision of services provided by the post office.

(2) No decision to close may be made within the period of six weeks from the start of the consultation required by subsection (1).

(3) No decision to close a post office in a rural or a deprived urban area or an outreach service shall be taken within 16 weeks of the start of the consultation required by subsection (1)."

Lord Young of Norwood Green: My Lords, as all noble Lords will be aware, post offices continue to provide a lifeline to residents in rural and urban deprived areas not only through access to postal services, but also as the shopfront for government services, as a means of benefit collection, and often as the only source of cash withdrawal in an area.

Amendment 22B aims to ensure that proper consultation procedures are followed when a post office closure is considered. It is not intended to

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prevent all post office closures; it simply aims to strengthen the opportunity for stakeholders to have input into the consultation process. It also provides for a longer consultation process for potential closures in rural and urban deprived areas. Rural and urban deprived areas clearly suffer disproportionately when a post office closes. Post offices have closed in vast numbers in recent years, both through formal closure programmes and through natural wastage when sub-postmasters close their businesses and post offices are not replaced.

Over the past 10 years, the post office network has declined from 17,845 in 2000-01 to 11,905 in 2009-10. This is, in large part, due to two major closure programmes, the Urban Network Reinvention programme from 2003 to 2005 and the Network Change programme from 2007 to 2009. Between them, these programmes resulted in the closure of 4,854 post offices. That means that more than 1,000 post offices have closed outside of those programmes as sub-postmasters leave, often because their post offices have ceased to be viable, and the Post Office is unable or unwilling to provide a replacement.

Approximately 11 per cent of the post office network is in urban-deprived areas. As Consumer Focus clearly states:

"Urban offices play an even more important role in urban deprived areas, particularly as they provide free access to cash, plus pensions and benefit payments".

The 2003-04 Urban Network Reinvention programme was an attempt by Post Office Ltd to reduce the size of the network with a view to developing a more commercially viable network. It further hoped to manage the so far unplanned decline in network size that was arising from sub-postmasters' decisions to close their businesses. At the time of the programme, there were serious concerns over the fate of post offices in urban deprived areas. The Government stated that they would not close post offices in urban deprived areas unless there was another branch within half a mile or unless there were exceptional circumstances to justify the closure.

The Post Office was heavily criticised at the time due to its lack of adequate consultation. As the then Trade and Industry Committee concluded in its report on the programme:

"Post Office Ltd and Postwatch paid insufficient attention to the need to ensure that adequate consultation procedures were in place before the network reinvention programme began. Although improvements have subsequently been made, and while we understand that sub-postmasters could appreciate a speedy conclusion to consultations over the future of their branches, we think that it is vital that all stakeholders should be given the time and opportunity to present their views on closure proposals. A twelve week consultation period would have satisfied this requirement. It was inconsistent of the Government to allow a company of which it is the sole shareholder to ignore guidelines for consultation which it encourages other organisations to follow".

Equally, the 2007-09 Network Change programme was an attempt to reduce the size of the network with a view to making it economically viable. Over an 18-month period, more than 2,500 post offices were closed and a further 500 were replaced by outreach services. Outreach services provide postal services to communities where a post office is not deemed to be

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viable. These are often in the form of a mobile post office, a van which visits communities at certain designated times each week and provides a core range of post office services. There are now 772 outreach services in the UK, making up 6 per cent of the post office network.

The Network Change programme was also heavily criticised due to the difficulty stakeholders had in influencing closure decisions. Research into the programme by Consumer Focus found that,

The Post Office's code of practice for the Network Change programme closure consultations included a six-week consultation process. Many stakeholders felt that the consultation processes were inadequate. This was, in large part, because the criteria for closures and the decision to close 2,500 post offices had already been made prior to the consultation process. This meant that opportunities for preventing individual closures were very limited.

Post offices are still closing every week. More than 150 post offices closed on a long-term temporary basis in 2010 alone. There is no guarantee that they will reopen and many are likely to stay closed indefinitely. As Consumer Focus has said:

"Since the last programme of post office closures finished we have continued to see a dwindling in the overall number of branches".

According to the National Federation of Sub-Postmasters, 900 post offices, an unusually high number, are currently up for sale. Many sub-postmasters are retiring or leaving the business because of the low levels of revenue generated in sub-post offices and the Post Office is struggling to find alternative premises and service providers.

It is vital that adequate protections are in place to protect rural and urban deprived communities from these closures. I urge support for Amendment 22B which ensures consultation ahead of any post office closure, planned or unplanned, and provides additional protection to rural and urban deprived post offices. I beg to move.

Baroness Wilcox: My Lords, I thank the noble Lord, Lord Young, for his Amendment 22B. An annual report on the Post Office network laid before Parliament is an important means of achieving transparency around the Post Office network. The statutory requirement in Clause 11 to lay such a report before Parliament already goes further than the current requirement in the Postal Services Act 2000, which requires only information about the number and location of post offices and their accessibility. Neither Government nor Post Office Ltd can ensure that no post offices close during the reporting period, nor can they ensure that there is always time to carry out a consultation before an office closes. For example, a sub-postmaster or sub-postmistress may retire or move away, or the premises may be damaged by fire or flooding. After all, 97 per cent of post offices are privately owned and privately operated businesses.



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7.30 pm

Other than in exceptional circumstances, Post Office Ltd will always seek to maintain service provision including outreach or community options. If permanent closure without any replacement is proposed, the Post Office must undertake a local consultation in line with the code of practice agreed with Consumer Focus. Indeed, that code has recently been updated and now includes a number of significant benefits for consumers with specific protections which will require Post Office Ltd to keep local representatives better informed in cases where the branch does not reopen for a significant period. It will, for example, allow consumers to use a telephone helpline to find out about temporary breaks in service and, for the first time, see Post Office Ltd notifying those customers who respond to consultations with substantive comments of the relevant decisions made following the consultation.

Post Office Ltd will now, as a matter of fact, also contact local and parish councillors about proposed service changes to provision in the area. That will be an important means of putting local communities in the driving seat, empowering them to work more closely with the Post Office to develop services which respond to local needs and priorities. In view of these reassurances regarding the number of post offices that must be maintained and the information included in the report, as well as the revised code of practice, I hope that the noble Lord, Lord Young, will feel able to withdraw his amendment.

Lord Young of Norwood Green: My Lords, I welcome some of the assurances that the Minister gave. Unless I missed it, she did not address the period of consultation but perhaps she can address that in writing. There may also be an opportunity in a further contribution. In the circumstances, I will obviously take into account what she has said and, for the time being, I beg leave to withdraw the amendment.

Amendment 22B withdrawn.

Amendment 22C not moved.

Schedule 2 agreed.

House resumed. Committee to begin again not before 8.32 pm.

Employment and Support Allowance (Limited Capability for Work and Limited Capability for Work-Related Activity) (Amendment) Regulations 2011

Copy of the SI
Copy of the Report

Motion to Annul

7.32 pm

Moved By Lord Kirkwood of Kirkhope



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Lord Kirkwood of Kirkhope: My Lords, this is an important debate. I start by declaring my own interest as a director of the Wise Group in Glasgow. I have no pecuniary interest but the purpose that I am afforded by being a director of the Wise Group is that, four times a year, I get to go on a wet Friday to Glasgow after a six-hour train journey. Nevertheless, it is very fulfilling and important work. The group does an excellent job for the communities that it serves in Glasgow and I am pleased to be associated with it. That explains my interest in this important subject.

The background to this debate is, quite simply, that after considerable consultation the disability organisations-most of which colleagues will know well, as we have been working with them for many years-have concluded through the Disability Benefits Consortium that these regulations imperfectly achieve their policy objective. That is a clear steer that the disability community would like the House to consider annulling these regulations and we owe them nothing less than to do that.

I start by acknowledging the work of the Minister, who has brought drive and commitment to this policy area since he wrote his original report those few years ago. I am absolutely at one with him in trying to discourage inactivity and encourage sustaining work. I think we both understand that Carol Black's work changed the game of active labour markets and I stand four-square with him in trying to make sure that we can develop and deliver schemes that enable people to get out of inactivity and into work. That work has to be productive and sustainable, but if they can do that then the well-being of the client group that we are seeking to serve will improve.

I am founding the evidence for this evening's debate on the excellent work that has been done, as I say every time we talk about the subject, both by the Social Security Advisory Committee and by the Merits Committee, which looked at this in very great detail in its 23rd report. These are complicated regulations but if any colleagues are looking for a quick summary of exactly where this subject's importance lies and of its importance to the individuals concerned, they should look at appendix 1 of that report and the evidence that was laid out there compellingly. The Social Security Advisory Committee report that was produced, which was done with formal reference to these regulations, also repays careful study and is worth reading.

I start with a concern that is new to me and disturbing if true. I would like to hear the Minister's view on it. The SSAC says, in its conclusions at paragraph 19:

"The Committee is concerned that there is a disagreement of substance between the Department and the external stakeholders who participated in the review as to whether the",

work capability assessment,

If that is true and the stakeholder community is talking past the department and neither party tries to get back into some sort of meaningful communication, it is in no one's interests. I do not know what happened in the past but that is the first time I have ever seen an SSAC report saying anything so stark. I do not know whether it is true but I would like an assurance that the Minister will redouble any of the efforts which I know

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he has been making to ensure that that gap is expeditiously closed. It would be inimical to the interests of the client group that we are trying to help if the pressure group community does not have confidence in its channels of communication with the department. I hope that he can give us that reassurance.

The other evidence which is the core of the debate is the Social Security Advisory Committee's view at paragraph 4.3. I will quote another sentence which encapsulates a whole load of evidence that I do not have time to go into. Perhaps other colleagues might pursue that, particularly on mental health, learning disability and fluctuating conditions. After a very big consultation-I think it had 400 responses-the committee noted that the department is undertaking an ongoing programme of review but concluded, among other things:

"There appears to be a widespread perception that, overall, rather than simplifying, streamlining and refining the test, these amendments",

in these regulations,

That is the core of my concern, which the department now has to address. As I say, I am absolutely indebted to the Social Security Advisory Committee and the Merits Committee, as we all are. Indeed, Richard Tilt, the chairman of the former committee, is an extremely wise man and his experience will, I hope, be available to us for some time to come.

Briefly stated, this is one of the biggest changes that I have ever seen in social security since I started studying this policy area when I was elected to another place in 1983. Why? Because in April we will open the door to a national reassessment of 2.6 million people. We have a model which arguably does not work for employment and support allowance claimants yet. It is a work in progress, but I am absolutely persuaded that Parliament is trying its best to get on top of it. However if in April we are really considering taking on an extra 10,000 or 11,000 new cases each week-it might be each month, but whichever-it is a very big increase and raises questions about capacity. We have to consider the capacity of the Atos Healthcare medical professionals who do these functional capability assessments for work capability assessments, and it raises questions about capacity for jobseeker's allowance as well.

There is a huge difference between a customer making an application de novo for employment and support allowance and somebody in Glasgow who has been unemployed for 10 years, who has been on incapacity benefit, and who gets a letter asking him to call at the Atos Healthcare professional centre to have his benefit assessed. He will know that if he does not get the continuing levels of support that he currently enjoys he could be £30 per week worse off at a stroke.

I go back to where I came in. I am absolutely in favour of ensuring that everybody who can contribute to the world of work should do so. There is no doubt in anybody's mind that there are people who need a wake-up call, to use the expression of my American

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friends. Indeed, there are people who swing the lead, do not play the game and act in bad faith. I know all these things. However, to take 2.6 million over three years and put them through a process where the model has not been absolutely rigorously road-tested to everybody's satisfaction is not safe. That is the case that the disability organisations have been making to me.

If that is not hard enough we have the deficit reduction programme, which I also support. We cannot ignore the fact that this country is now poorer than it was a while ago. There are also regional and spatial dimensions because labour markets vary. The labour market in Reading is very different from that in downtown Glasgow, which must be borne in mind. On top of that, the work programme, which again I support, is still in gestation. We do not know the detail of how the work programme will serve the client group that we are seeking to help. I think that the identified concerns about the functional capability assessment-it is not a medical assessment-are well founded. If anybody has any doubt that there are problems around it, I point out that the successful appeal rate against decisions on the current scheme is high, suggesting that attention must be paid to these provisions, particularly for mental health and fluctuating condition clients.

There are advantages in the regulations. I certainly welcome the chemotherapy and residential drug changes. They are not to be diminished in any way because they will help substantially the group that they are designed to serve. The biggest complaint comes from the disability stakeholder pressure group community. Professor Harrington has published his phase 1 report, which is truly an excellent piece of work. It offers a series of recommendations which really deal in a much more real-world way with the kind of problems that people face. The complaint is that we are not waiting for the totality of the Harrington work to be put in place. He is already starting on the second annual independent assessment, where he will look at the descriptors for fluctuating circumstances and the like. The results of that will be available probably in late 2011. We should not be opening the gate to the national reassessment of incapacity benefit claimants until we see what Professor Harrington can come up with. That is what the disability organisations say and it is a prima facie valid claim.

Colleagues will know this because we spent a lot of time on the Welfare Reform Act 2007, when the previous Government sensibly required a five-year annual set of reviews. Some of the complaints that the disability groups make is that this will be a piecemeal change, which is the legislators' fault. We rightly felt that it was not safe to do it without getting independent reviews. The previous Government were right to do that and this Government were right to get Professor Harrington on the case. He brings hope to the whole situation-he certainly does to me.

7.45 pm

I have three questions for my noble friend before I sit down. They are all about Harrington phase 1. First, if that report were in place in its totality before the April rollout of the national reassessment-all of it, including its tone-that would be of signal reassurance to me, if to no one else. I am speaking this evening for

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no one but myself. Secondly, the key recommendation that leapt out of the page of the Harrington phase 1 report was the fact that decision-makers were not properly shouldering the responsibility that the scheme was designed to give them. They were rubber-stamping Atos Healthcare professional decisions because they had not seen the client. The functional assessments were allegedly done by healthcare professionals, so why would you want to change anything? The system was never designed to do that. Can my noble friend give me a clear understanding that Harrington phase 1 will be available by 1 April? Decision-makers should have much more discretion, which would take them back to the position of the old adjudication officers whom we abandoned in 1998 and who were much more independent of the department than arguably some of these decision-makers. Can we get them to use a little grey-cell common sense on what is in front of them? That would be of considerable assistance.

Communication between the system and the clients is essential. Harrington again fundamentally points out that communication is not yet adequate. Nobody going through the process should have to do it without direct access to the recommendations of the Atos Healthcare professional after the work capability assessment. I do not think that that happens properly now but that information should be shared, and shared with the decision-maker as well. If the results were communicated to people, it would improve things enormously.

Finally, the client should be encouraged not just to bring his own medical evidence to the work capability assessment but to make it available to the decision-maker. If the decision-maker has, say, a GP report, he is taking more responsibility and discretion for the decision and he is communicating that clearly to the client. We still have fluctuating circumstances and conditions to deal with, which has not been addressed yet, so that would not be dealt with in my suggestions. Speaking for myself, I hope that my noble friend can give assurances that the seriousness of the situation is being fully comprehended and accommodated in departmental thinking and that Harrington phase 1 will be in place without peradventure before the reassessment starts. If some of the Harrington recommendations are highlighted in the way I have suggested, I certainly think that there would be some reassurance in the disability community that the situation is not as unsafe as it suspects. I hope that the Minister can help by explaining the situation later in the debate this evening. I beg to move.

Lord McKenzie of Luton: My Lords, the House should be indebted to the noble Lord, Lord Kirkwood, for giving us the chance to debate the regulations this evening. Like me, and other noble Lords I see present, he has been involved in issues concerning the employment and support allowance and the WCA for a long period. The noble Lord congratulated the former Government on insisting on the annual reviews. If memory serves, that may have been an amendment that he pressed on us at the time.

I start by explaining my understanding of the rationale of why the work capability assessment and the employment and support allowance were introduced.

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It was part of the journey which recognised the importance of work for people's route out of poverty, their self-esteem, well-being and health. The concept was that, for the vast majority, work, or good work, is good for you and that, as a society, we should support people to get into or closer to the labour market. I think that that is common ground between the previous Government and the current one.

As we know, the work capability assessment was designed to focus on a person's capability, rather than their incapacity, as a building block to help them progress, where appropriate, towards work. The switch from incapacity benefit to employment and support allowance was more than just semantics. Although support via Pathways was available before, the introduction of the WCA signalled a determined change to support those who could towards the labour market.

The approach seeks to identify three groups of people: those considered capable of work; those who could work at some point with the right support-the work-related activity group; and those who cannot or should not be expected to work. The concept is to make those determinations by reference to application and a range of descriptors with the objective of determining an individual's functional capability.

There is nothing in the documents that we have received from the stakeholders that calls into question that fundamental approach; and I doubt whether we will hear it called into question by noble Lords this evening. Indeed, the first independent review of the WCA by Professor Malcolm Harrington concluded that the principles underpinning the new assessment remain valid. He stated his belief that the system is not broken or beyond repair; that, at least, is reassuring.

We should acknowledge and welcome the fact that the introduction of WCA has been subject to review-the internal DWP review began in March 2009-and it is the recommendations from that review which, I understand, are reflected in the regulations. Professor Harrington's independent review, the first required under the Welfare Reform Act 2007, was responded to by the Government in November 2010. It was accepted as a vital contribution to the continuing development of the WCA, and the recommendations were accepted in full.

Although most of the recommendations were to do with process and covered customer experience, the Atos assessment, the decision-making process and the appeals process, there were important recommendations concerning descriptors-in particular, the need for further work to review the mental, intellectual and cognitive descriptors and how they are working for those with fluctuating conditions-issues which were raised at the start of the process and which have continued as the ESA has progressed. We support the recommendations, but that raises the question of how they sit alongside the outcome of the internal review, which has caused some of the challenges about which we will hear tonight.

The Government's response to Professor Harrington's report indicated that they would await a further report on mental health descriptors in late December and early January. Where does that report rest? Why is it

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considered appropriate to proceed with the current changes to the descriptors without the benefit of that report?

The criticism of the regulations has come from a range of sources, as we have heard from the noble Lord, Lord Kirkwood. They variously cover the points that the review has been carried out too early with limited evidence; that recommendations from the statutory review-Professor Harrington's review-are still being worked on; and that changes to descriptors will make it more difficult to identify those with limited capability for work, those who should be in the work-related activity component.

The noble Lord, Lord Kirkwood, referred to the Social Security Advisory Committee. It recommended that certain changes be postponed, stating:

"The Committee recommends that the Department does not proceed with the remaining proposed changes to the descriptors until these have been reconsidered in the light of the findings of the independent review of the WCA and the experience of the trial of the migration of IB customers to ESA".

Why has the department not taken that path?

Mind, and others, has raised concerns about the regulations regarding mental health descriptors. They extend to the simplification of the assessment, reducing the mental function descriptors by a third, from 10 to seven questions. Is that at the expense of comprehensiveness rather than in unison with it? There are deep concerns about how well the WCA descriptors record the impact of mental health issues. The simplification of the descriptors will exacerbate the problem.

Assessment of an individual's awareness of hazards will now simply focus on the need for supervision, rather than the significance and frequency of the risk posed. Ability to get about and cope with change will no longer be assessed in terms of frequency, which will impact negatively on people with variable or fluctuating conditions. The loss of the propriety behaviour descriptor means that the assessment fails to capture the significant distress caused to people with depression, anxiety and paranoia by misinterpreting or overreacting to the behaviour of others.

The National Autistic Society has expressed similar concerns about reducing the 10 mental health descriptors to seven. It states:

"This reduces opportunities for people to score sufficient points to receive the benefit. Five descriptors which specifically address the needs of people with autism have been reduced to 2. The lower-scoring elements of several descriptors have been removed, and many have been simplified. This makes it much harder to represent the complexity of needs many people with autism experience, and barriers to employment they face, through the assessment".

It has raised many other points.

Doubtless, noble Lords will also have read the brief from the Disability Benefits Consortium, referred to by the noble Lord, Lord Kirkwood. It asserts:

"An individual who 'cannot mount or descend two steps even with the support of a handrail' could now be classed 'fit for work' ... Someone unable to stand at a workstation for more than ten minutes could now be deemed 'fit for work'... The descriptors for turning star headed sink tap have been removed, consequently there is no functional assessment for the ability to turn or rotate

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the hand, despite this representing a form of manual dexterity vital in many workplaces ... The changes remove all lower-level descriptors in some categories, for example, there are now no six point descriptors within manual dexterity, making it hard for people with multiple impairments to qualify".

The noble Lord may not be able to deal with each of those points tonight, but those are genuine, practical, real issues raised by people who know. If they are right, that clearly undermines the thrust of the assessment, which we agree that we should be making.

We should have common cause in getting the descriptors and the process right. The Government must convince us that they have not jumped the gun on these changes and answer the searching questions raised by the various lobby groups, which will doubtless be raised further tonight.

We look forward to receiving the Minister's reply on these issues. The noble Lord, Lord Kirkwood, has initiated a very important debate, because these issues have run with the WCA and the employment and support allowance from day one. I believe progress is being made and certainly can be made, but there is some way to go yet.

8 pm

Baroness Browning: My Lords, I begin by declaring an interest as the named carer of an adult in receipt of severe disablement allowance. I also associate myself with the words of my noble friend Lord Kirkwood of Kirkhope. I concur both with his concerns and with his support for the need to enable as many people with a disability as possible who have not worked or have not worked for a long time to be assisted into appropriate work through an appropriate process that takes account not just of what they cannot do but of what they can do.

Among the many disability charities which consider this statutory instrument to be premature due to the as yet incomplete recommendations of the Harrington report is, as the noble Lord, Lord McKenzie of Luton, has mentioned, the National Autistic Society, of which I am a vice-president. I would like to focus on the concerns for people on the autistic spectrum. In order to qualify for the ESA in a work-related activity group, people have to be assessed to have gained more than 15 points. The way in which it is currently proposed to change the descriptors, as we have already heard, has a detrimental impact on people on the autistic spectrum. I remind the Minister that it was only last Thursday at Oral Questions that I asked him to confirm that the Government accept that autism is a communication disorder.

The descriptors take no account of communication difficulties, verbal or non-verbal, due to mental impairment. This is a major omission. Communication and comprehension are essential in the workplace, and it is a critical area of impairment for people with autism. Making oneself understood is covered only by a physical descriptor, descriptor 6. Unless guidance clearly states that this covers people who find it difficult to communicate due to a non-physical disability such as autism or a learning disability, these needs will not be recognised in the assessment. Noble Lords will understand my concern that already I am looking at areas where autistic people should be given a point on

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that descriptor scale, but getting them to reach the 15 points, if appropriate, is already excluding those areas where they will be in some considerable difficulty. Understanding and comprehension impairments are covered only due to a sensory impairment under descriptor 7, where the emphasis is on aids used by those with hearing or visual impairment.

The wording of the descriptor itself is vague; it is based on an ability to complete "two sequential personal actions" in the context of planning, organisation, and problem-solving. People on the autistic spectrum-even those with honours degrees and high IQs-always struggle with planning, organisation and problem-solving. It is too broad to be meaningful and leaves too much scope for interpretation to accompanying guidance. For people with autism, this may vary from turning on the tap and wetting their hands within the process of washing their hands, or getting ready for work and then making their own way to the workplace. For many, doing that unassisted will be a major challenge.

The National Autistic Society is also very concerned about changes to descriptor 17. It has been simplified to make the wording clearer, but it has become overly simplistic. Someone who frequently has uncontrollable episodes of aggressive or disinhibited behaviour, particularly when under pressure or in an environment with which they are really not familiar-that sort of behaviour would be unreasonable in any workplace due to cognitive impairment or mental disorder-cannot realistically be assessed as not having limited capability for work. As the proposals stand, we do not believe that employers would accept as employees people who the descriptors would deem as capable for work, but showed those sorts of behavioural problems in the workplace.

People with autism may exhibit behaviour which does not meet the minimum criteria set out in this new descriptor 17, but which would cause disruption in the workplace. For example, people will flap, hum or spin. I know of one person who, in a stressful situation in the workplace, would make cat noises as a sort of comforter in order to exclude the distress going around him. There is a limit to how long those working with people like that will put up with somebody making cat noises on a continuous basis in a busy office. These are all regarded as individual or rather quirky, but they are very real parts of their disability.

I say to my noble friend that there is genuine concern about the speed with which these changes are being brought in, ahead of what Professor Harrington is saying.

I mentioned that I am the named carer for a person on severe disablement allowance. This allowance, which comes within this legislation, is a very old disability benefit; it was something often given to young adults and adolescents who, having come out of full-time education, were at that time assessed and deemed not able to apply for paid employment. I would not even want to exclude them from the new opportunities for employment as disabled people, but-and I particularly refer to learning disability, mental health and autism-many of them are now getting on a bit because they were awarded this some years ago. Some of them will be in their 30s and 40s or even older and for many of

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them, getting the support they have been given to date to enable them to live as independently as possible or to be as socially integrated as possible has not been an easy journey. It has been a long journey and there has been a lot of input to get these people where they are today. But their situation is always going to be fragile, and there is nothing that I can see in the way these assessments are made to take account of what is at the moment a sustainable situation, as far as independent living is concerned. We must not put too many demands on them, however, and ensure that the process associated with it does not give them some form of detriment as a result. As my noble friend Lord Kirkwood mentioned, they might lose money, which is a very important part of their life and allows them to be able to plan and be secure with their finances.

There is another form of detriment. People may find that their self-confidence is shattered after it has taken years to build up; they may find that they can no longer cope with independent living of one sort of another as a result of being put through a process which undermines that stability. You cannot put a price on that detriment. I say cautiously to my noble friend who I know is sympathetic to these issues, please do not let this Government cause detriment to those vulnerable people.

Baroness Hollins: My Lords, I am very pleased to follow the noble Baroness, Lady Browning. I, too, will begin by declaring a personal interest. My 38 year-old son, who has a learning disability, was well described by the noble Baroness towards the end of her speech. He is always being assessed for what he cannot do and not for what he can do, which is incredibly demoralising for him. We his family spend our time trying to help him succeed and he would really like a job.

Some years ago, when I was consulted as president of the Royal College of Psychiatrists on the development of a work capability test, I suggested that the focus should be on capability, not lack of capability, from the point of view of the person being assessed. Although this is called a work capability assessment, it is an assessment of incapability.

I understand that, as my son is in receipt of severe disablement allowance, he may be required to undergo a work capability assessment. I tried out the online work capability self-assessment to see how he would fare. I will not go into the details but, of the three possible outcomes that we have heard about, he fell into the third category and would not be required, according to my assessment, to undertake any work-related activity. Perhaps that is a relief to me, in that his finances might not change, but I am sure that it would be a huge disappointment to him if that was the case.

So far that might be fine, except that the assessor may come to a different decision, in part perhaps because of my son's lack of insight or understanding of his difficulties. He might then have to undergo an appeal and not everyone has the stomach for, or the capability for, an appeal. My reaction to trying out the test was that there is some sensitivity in the mental, intellectual and cognitive descriptors but probably insufficient sensitivity in the questions which relate to the type of complex difficulties that my son faces in his wish to be part of the workforce. They are difficulties

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which would require focused and sustained support to enable him to obtain work-related activity. The last thing that I or any parent in my position wants is for my son to fail yet another assessment, especially one which emphasises what he cannot do.

Another concern is that, if the assessment finds that he is capable, he is then given insufficient support, which would do terrible things to his self-worth and self-esteem. I question whether this assessment has been adequately road-tested and would want to avoid even one disabled person and his or her family having to face unnecessary appeals or loss of income through being unwilling to face yet another appeal. Even participating in the process of this assessment could be detrimental to the person's mental heath.

My noble friend Lord Rix shares my concerns and has asked me to express his support to the noble Lord, Lord Kirkwood, today and to give his apologies as he is unable to contribute to this debate owing to family illness. He believes that many people with a learning disability will be denied vital support to help get them into work if they are not found eligible for employment and support allowance. That mirrors my concern. My noble friend believes that the crude indicators used in the regulations must be changed to more accurately reflect an individual's capabilities.

For example, my noble friend is deeply concerned about the merging of the three descriptors-"memory and concentration", "execution of tasks" and "initiating and sustaining personal action"-into one. They have been replaced with just one descriptor, "Initiating and completing personal action". According to the regulations, this,

The removal of the descriptor titled "execution of tasks" means that the time taken to complete a task will not be included as part of the assessment. This is particularly relevant to people with a learning disability and is likely to be a significant barrier to employment.

The current system already fails to meet the needs of people with a learning disability. My noble friend Lord Rix suggests that these regulations do not effectively assess limited capability for work, which means that the additional barriers and support needs of people with a learning disability are not being fully recognised in the assessment.

With less than 7 per cent of people with a learning disability who are known to social services being in any form of paid employment, the barriers to finding a job, combined with deep-rooted prejudice and discrimination, are already significant. Is it too much to ask that a coalition Government who claim to put fairness at the heart of their decisions should seek to tackle some of these barriers instead of perhaps making them even more difficult to overcome? For this reason alone, I and my noble friend Lord Rix, call for these regulations to be annulled.

8.15 pm

Baroness Thomas of Winchester: My Lords, the DWP is in the middle of doing a very large jig-saw. The picture on the box is of a lot of people scurrying

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to work. In one corner older people are still going out to work, and in another corner people with disabilities are going about their business with the replacement DLA. But at the moment the pieces of the jig-saw are all jumbled up on the table, perhaps with the Minister frantically trying to find the straight edges. Are these regulations the pieces with the straight edges or not? I am very grateful to my noble friend Lord Kirkwood for giving us the opportunity to discuss these regulations because there are some disturbingly divergent views, as we have heard most movingly this evening.

The Merits Committee has said that the regulations may imperfectly achieve their policy objective, which is not something that it says at all frequently. In particular, it encourages the House to seek further information from the DWP on the rationale for putting these regulations forward now. It will not be disappointed, as all noble Lords have raised this matter. This is a recurring theme in all the evidence that we have been sent, from the CAB to the disability benefits consortium.

There is puzzlement that the DWP wants to bring in these changes now for several reasons. The principal reasons are: that the data from the migration trials from incapacity benefit in Aberdeen and Burnley have not yet been evaluated; that we are expecting more changes to the descriptors and to the work capability assessment as a whole once Professor Harrington has published his second-year review; and that the bar is thought by some groups to have been raised so high that there is now hardly any difference between those in the employment group of ESA, which comprises the limited capability for work people, and the support group, which is the limited capability for work-related activity people.

The Social Security Advisory Committee is more forthright because looking at DWP regulations and commenting on them is its job. It says, as we have heard, that apart from a few changes which it welcomes, the department should not proceed with the remaining proposed changes to the descriptors in the WCA until they have been reconsidered in the light of the findings of the Harrington report into the WCA and the migration trial of IB claimants. Why is it that the DWP believes that the changes to many of the descriptors are improvements, when the disability and other lobby groups say, as we have heard this evening, the exact opposite; namely, that the changes represent a tightening of the screw, making it harder for claimants to claim ESA?

I believe that the answer may lie in the different interpretations of the purpose of the work capability assessment. It was set up to replace the personal capability assessment as a test of a person's capability for work rather than their incapacity. As Professor Harrington says in his review,

However, he also says that it is not working as well as it should, which is borne out by the fact that 40 per cent of appeals against a decision that an individual is capable of work are currently upheld. This surely shows that something is seriously wrong with the assessment. In particular, Professor Harrington says

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that there are clear and consistent criticisms of the whole system and much negativity surrounding the process.

The wider interpretation of the purpose of the WCA is not just whether it looks at someone's theoretical capability of work but whether it works in the real world of work. This is where the Social Security Advisory Committee report and the lobby groups diverge quite strongly from the DWP. The SSAC tries to be fair. I think that it is worth quoting two sentences from the report in full, which states:

"The Committee recognises that the assessment of capability for work is a contentious and emotive issue and has always advocated a positive approach to the assessment of capability that looks at what the individual is able to do and their adaptation to their health condition or disability, rather than focusing solely on what a health condition or disability prevents the individual from doing. However, the Committee also recognises the complexity of many individual cases and the significance of the factors that may determine capability in the real world but which cannot be easily measured by a test that scores functional capability".

I would contend that this is why there are such divergent views between the SSAC, the Merits Committee and the lobby groups on one side and the DWP on the other. The DWP is obviously not prepared to wait until the migration trials have been evaluated to change the descriptors or for Professor Harrington's task group to report on the mental, intellectual and cognitive descriptors, which will report to the Minister later this year.

However, there is a way forward, bearing in mind that the recommendations from Professor Harrington's first report have been accepted in full by the Minister-here I echo my noble friend Lord Kirkwood. There are five recommendations, which can be summarised as follows: that more empathy should be built into the process, with JCP managing and supporting the claimant; that the transparency of the Atos assessment should be improved; that there should be better understanding by Atos of mental disabilities; that decision-makers should be better empowered; and that there should be better communication of feedback between Jobcentre Plus, Atos and the First-tier Tribunal to improve the quality of decision-making on all sides.

Professor Harrington's full report is very instructive on all these matters. For example, he says that the language and logic used in the LiMA computer system,

He goes on to say:

"The Atos Training and Development handbook encourages",

healthcare professionals,

However, in practice this hardly ever happens. He also sheds light on the fact that claimants are expecting a medical examination, which looks at their illness or impairment, rather than an assessment of their functional capability. It does not help when the Atos healthcare professional conducting the assessment does not look at the claimant at all, but rather at the screen, nor does it help when the healthcare professional has poor knowledge of some of the less common health conditions, such as Parkinson's disease. Another key part of Professor Harrington's report was that the Jobcentre Plus decision-makers rarely make a decision that disagrees with the

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evidence provided by the Atos assessment because they lack the confidence to do so. In other words, the decision-makers are often just decision stampers.

The DWP says it is working to implement these recommendations as quickly as possible. I think the whole House would like to know how the department is getting on with this implementation, because this is not just an extremely important matter but, I believe, the key to the whole reputation of the work capability assessment when the migration from incapacity benefit is rolled out nationwide. Therefore, I would be grateful if the Minister would tell us what steps are being taken to implement the current Harrington proposals.

The Merits Committee report is, as usual, an absolute model of clarity. It states, as has been stated already today, why it is so important that the work capability assessment is got right. Those who are deemed to be fit for work and are on JSA will receive £65.45 a week, those who are found to have limited capability for work, and therefore on the work-related activity group of ESA, will receive up to £91.40, while those in the support group of ESA will receive up to £96.85. The difference in the levels is substantial.

Before I finish, I unequivocally welcome the change in Regulation 35 which allows claimants awaiting chemotherapy to be placed in the support group. However, in general, it is difficult not to agree with the SSAC's view that, in removing some of the subtleties in the descriptors, about which we have heard so graphically today,

The Countess of Mar: My Lords, I am grateful to the noble Lord, Lord Kirkwood, for tabling this prayer today, and I echo his core concerns. I declare my interest as chairman of Forward-ME and that one member of Forward-ME is a member of Professor Harrington's task group looking at fluctuating conditions.

There has always been a problem with the descriptors for the work capability assessment, particularly for people with mental illnesses and for those with what are termed "fluctuating conditions". During the progress of the Welfare Reform Bill four years ago, I raised concerns about the ability of Atos medical staff to discern the difficulties encountered by people with ME/CFS when, on the day of the assessment-which is not, as some claimants think, a medical examination-those being assessed might have been able to perform a number of tasks on a one-off basis but they were frequently unable to repeat the tasks on a consistent basis. There seemed to be no room for detailing pain, muscle weakness, fatigue and other disabling symptoms that occur intermittently and often severely. As a result, the assessor has awarded very few points and the decision-maker has then considered them fit for work. In every case that I have encountered, people with ME/CFS who have appealed to the medical tribunal have succeeded in their appeals and their benefits have been reinstated.

When Professor Harrington published his An Independent Review of the Work Capability Assessment last November, the hopes of ME/CFS sufferers were raised. Other noble Lords have quoted from his report, and I am sure that the Minister knows it off by heart, so I will not repeat it all. The Secretary of State for the

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Department for Work and Pensions, as others have said, accepted all of Professor Harrington's recommendations on behalf of the Government. Under "A programme for work for year two" in that report, Professor Harrington wrote:

"This programme focuses on: the descriptors, particularly in assessing fluctuating conditions".

He had already set up a task group to look at mental, intellectual and cognitive descriptors, and I am aware that that group has reported to him. In the new year the task group to review the descriptors for fluctuating conditions started work. They are due to report to Professor Harrington in April this year. I understand that the mental conditions report will be published in the summer and that for fluctuating conditions in the autumn.

I am aware that the internal review of the operation of the regulations was required by statute. I am also aware that all of the disability organisations involved disowned the report, which they say was flawed. They rejected the recommendations because of, among other things, the negative effect that they would have on disabled people and their families. As other noble Lords have mentioned, the Social Security Advisory Committee was unhappy with the part of the regulations that relate to the descriptors. It recommended that they be deferred until Professor Harrington's independent review of the WCA was complete and the evidence of the outcome of the trial of migration of incapacity benefit claimants to employment support allowance or jobseeker's allowance was available. As we have heard, the House of Lords Merits of Statutory Instruments Committee accepted that the internal review found that the performance of the WCA was not working satisfactorily and it commended the DWP for wanting to revise it. However, the committee also highlighted some of the flaws in the current statutory instrument. These have already been discussed.

Like the noble Lord, Lord Kirkwood, and the noble Baroness, Lady Thomas of Winchester, I am pleased that the regulation that applies to claimants undergoing or likely to undergo chemotherapy is to be amended, as well as that which applies to drug or alcohol rehabilitation claimants. However, in the light of the conclusions of several reports and the views of a great many experts in mental health and fluctuating illnesses, and the fact that Professor Harrington has been asked to review the descriptors for both these conditions and will be reporting on both by the autumn, I cannot understand why the Government insist on making changes which all the experts, except the DWP, regard as draconian and premature.

We keep hearing about the Prime Minister's ambition that we should all be happy, and that any government measures should include a happiness score. Has the Minister measured the happiness of the thousands of claimants who are terrified that their benefits are going to be severely reduced, who will go through months filled with anxiety and apprehension as they wait in an ever-lengthening queue to appeal to a first-tier tribunal, or who become totally demoralised because they are forced to apply for jobs knowing that no employer will take them on? Has he calculated the cost of the increased financial burden that will fall on

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the Department for Constitutional Affairs, which will have to cope with the anticipated increase in the number of appeals following decisions that are likely to be seen as unreasonable?

In order to improve the fairness and effectiveness of the WCA, Professor Harrington recommended building empathy into the process, better training for decision makers, accounting for the particular difficulties in assessing mental, intellectual and cognitive impairments, and empowering and investing in decision makers so that they are able to take the right decision. Would the Minister kindly tell the House whether these recommendations have been implemented?

How are decision makers to come to the "right decision" if they are not given all the information because of the limitations of the descriptors to be used according to these regulations? Are they free to ignore the Atos report if the claimant's statement and any accompanying medical evidence conflicts directly with the findings of the Atos doctor? I am particularly concerned about people with ME/CFS who have frequently been denigrated and who feel defeated by a system that refuses to recognise their illness. The additional stress these regulations will impose on them will not help to improve their condition. Like many others, I am deeply unhappy about these changes. They are going to prove hugely costly, both financially and emotionally, to claimants and I suspect to the DCA, but then that is another department, is it not? Why can the DWP not wait until Professor Harrington reports later this year? Why the urgency?

8.30 pm

Lord Low of Dalston: My Lords, many speakers have already gone over the new regulations in great detail, and I do not wish to repeat what others have said and go into all the ramifications. I propose just to talk about the impact of the new regulations on blind and partially sighted people, which is likely to be quite serious and which illustrates that the regulations as we have them at the moment are not fit for purpose. I think that other speakers have been unduly kind about the regulations. The noble Lord, Lord McKenzie, said that he was in favour of them. I have to say that I am not in favour of them as they stand. I am more with the Social Security Advisory Committee, which has said that they are not yet fit for purpose in a number of respects, that they were being rushed through prematurely, and that the department should take them back to await the second phase of Professor Harrington's review. There should be more mature reflection on some of the points that have been made about the regulations and further consultation with the stakeholders who have been so critical of them, about which we have heard.

As has been stated by the noble Baroness, Lady Thomas, these regulations fundamentally undermine the structure of the employment and support allowance where claimants with limited capability for work are put into either the work-related activity group or the support group. The new descriptors make the limited capability for work test, the gateway to the benefit, unreasonably difficult to pass for many disabled people, certainly for blind and partially sighted people. By

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setting such a high threshold for eligibility for the ESA, they transform the limited capability for work test into a limited capability for work-related activity test, which large numbers are bound to fail. This in effect erodes the distinction between the two tests, undermining the intention of the Welfare Reform Act 2007 that there should be two distinct groups of claimants, one moving towards work-the work-related activity group-and the other with no conditionality-the support group. Under these regulations, the number of disabled people able to qualify for the work-related activity group will drop dramatically, as whole groups are largely excluded by the eligibility threshold.

The Merits Committee, in its first report of this Session, stated that the department itself estimates that 23 per cent will be found fit for work and will be required to make a new claim for jobseeker's allowance, with its obligation to participate in activities to improve job prospects. The Social Security Advisory Committee believes that the DWP has underestimated the support required by this vulnerable group of claimants. It has also said a number of other things: first, that the current descriptors are also inadequate for measuring the capacity of those with mental health conditions, sensory disabilities or fluctuating conditions; and, secondly, that there needs to be a closer correlation between the tests and normal work situations. For example, someone who needs to be accompanied to familiar places by a helper is not sufficiently adapted to their condition to be capable of work, yet this would score only nine points under the proposed new descriptors and would therefore not enable that person to get through the gateway and qualify for the benefit.

The disability organisations that have made submissions to the Merits Committee have also made a number of other points. The perspective on work skills needs to be wider. Someone might be able to pack boxes all day, but not be able competently to find their way to the factory canteen; or again, people with a limited capability for work-blind people are actually instanced for this-may be able to work, but in a very circumscribed set of jobs. There is an insufficient supply of those jobs in a depressed job market.

I wish to concentrate on the impact of the regulations on the situation of blind and partially sighted people, and in doing so I declare my interest, although at my time of life I am not likely to be applying for employment and support allowance. However, I am a vice-president of the RNIB, which has had a certain amount to say about these regulations. Those who know about these things are clear that the new regulations will have a disastrous impact on blind and partially sighted people, who will in all likelihood fail to qualify for the ESA if the regulations come into force. This is deeply concerning, they say, considering that many blind and partially sighted people have limited capability for work and so should be able to qualify for the ESA, where limited capability for work can be demonstrated-which, I repeat, will be very difficult to do under the new regulations.

A person of working age who loses their sight will need to learn new skills such as independent mobility and how to use a computer using screen magnification or speech output software, as well as new everyday

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living skills such as cooking, dressing, cleaning and so on. It is not appropriate to require someone in this position to end up claiming jobseeker's allowance, yet that will be the impact of these regulations. Under the proposed limited capability for work test, a blind person's difficulties in performing most work-related activities would be ignored and only extreme difficulties in navigation and maintaining safety would be assessed. A visually impaired person would be considered to have a limited capability for work only if they were unable to navigate around unfamiliar surroundings without being accompanied by another person.

The RNIB says that it does not believe that Atos has the specialist knowledge and expertise in a medical test centre environment to carry out functional assessments of the mobility of people with sight loss. It says:

"For example, we are unclear how they would determine whether or not a person is unable, due to sight loss, to navigate a familiar route without support, when they will be assessed in an unfamiliar environment at the test centre, under conditions of limited time for the assessment to be completed".

The department's internal review stated that it was the department's intention to continue to work with experts and specialist disability organisations to refine the descriptors related to sight loss. However, this has not happened, despite requests to meet officials. For that reason, the department really ought to look further at the regulations before it has these discussions with interested organisations that it says in its internal review it is its firm intention to have.

For many blind and partially sighted people, the regulations, if brought into force, could see them denied the ESA. This is due to the high qualifying threshold being put in place around limited capability for work and the failure properly to assess the effects of sight loss. The regulations will seriously undermine the distinction between the work-related activity group and the support group, and force people who should be eligible for the ESA on to the JSA, which is not the appropriate benefit for people with limited capability for work. I do not believe that this is either appropriate or that it was the intention behind the Welfare Reform Act 2007.

Lord McKenzie of Luton: My Lords, I did not want to interrupt the noble Lord, but I think he said that I had said I was in support of these regulations. I am not and I do not believe I said that-if I did it was certainly not my intention. I tried to play back some of the concerns that have been raised with us. I certainly support the concept of the ESA and of the WCA, but I do not support these particular regulations.

Baroness Murphy: I will be very brief because the debate has gone on for quite some time now. Other noble Lords have eloquently described the present difficulties with these regulations. However, I sympathise in some ways with the difficulties that the Government have, because we all share the intention that we should get more people who are currently receiving disability support into work; and what the Government are trying to do-and the previous Government were trying to do-is exceptionally difficult to get right. The development of those descriptors and an assessment tool is going to take more than the time allowed.



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I am not saying that you should not pilot, try or try to revise the assessment tool, which is actually what the Government have tried to do. That seems perfectly legitimate, so I am not entirely in support of withdrawing these regulations, because unless we continually try to improve them, we will never get to the point at which they are adequate. However, I return finally to what the noble Baroness, Lady Thomas of Winchester, has said, because it is not the descriptors or the work capacity assessment that are the real problem. The real problem, which I think Professor Harrington described so beautifully, is that the process is,

Here we have a population of worried, anxious people with a profound range of difficult disabilities to try to assess accurately, and there needs to be a culture change within Jobcentre Plus, Atos Healthcare and the healthcare assessments themselves. That is the fundamental problem. We could work on these descriptors. I know that the Government are doing so with extra help from specialists in the mental health field. I ought to declare an interest here as a psychiatrist. The work that is going on is essential, but unless we can change the culture of these assessments to make them more user-friendly we will not get people back into the work that would help them to lead better, fulfilled lives.

8.45 pm

Baroness Finlay of Llandaff: As president of MS Cymru, I want to flag up the problem for people with fluctuating conditions. All the difficulties around the assessments have been clearly laid out and I will not repeat them, but there is a real problem for people who have an assessment and then, possibly a week later, dramatically deteriorate. It is the fluctuating nature of conditions such as MS that is causing a lot of anxiety to people out there. The provision for those on chemotherapy is greatly welcomed, but I ask the Minister to explain how the second part of Professor Harrington's review, which he is doing in conjunction with the MS Society, will be incorporated. How will the Government handle the possibility of quite a lot of appeals or even challenges when the next phase is rolled out?

Baroness Wilkins: My Lords, most of the points that I wanted to make have been made, so I will be brief. I emphasise the serious concerns that have been expressed by disability organisations, most particularly that these changes are premature. As we have heard, the second phase of the independent review led by Professor Harrington is still under way, and the advice on refining the mental, intellectual and cognitive descriptors has not yet been seen by Ministers, so in all likelihood we will be faced with two major, costly and confusing changes to the WCA to be made in a single year.

I emphasise that the cost of these changes has not been covered. The cost of people having to go to tribunals when their assessment needs to be overturned is enormous in terms of stress, worry and consequent ill health, but it is also a waste of time and money for the country. As the CAB has pointed out, the current WCA assessment routinely fails to identify disabled people's genuine needs and inappropriately allocates them to jobseeker's allowance, only to have that decision

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overturned on appeal. Currently 40 per cent of cases are overturned on appeal, which must cost the state a considerable amount.

According to the Welfare Reform Bill documents, almost £20 million was spent in 2009-10 on appeals to the tribunal service and, according to figures from the Disability Alliance, that means that roughly £8 million was spent on appeals to rectify the failings in the current WCA. There is now a nine-month backlog for appeals in some areas. If the new descriptors go ahead as planned, these changes could lead to even greater pressure on the system, especially since, as the noble Lord, Lord Kirkwood, pointed out, new ESA claimants will be joined by an estimated 10,000 people per week being migrated off incapacity benefits from April 2011.

The Government's expert independent body, the Social Security Advisory Committee, has recommended that these plans are not implemented now. I urge the Government to follow their advice.

Baroness Masham of Ilton: My Lords, I thank the noble Lord, Lord Kirkwood of Kirkhope, for bringing up this matter. He understands these matters so well and I support what he has said. This is a complex matter. Disability is complex, as it differs in so many ways.

There is great concern from many disability groups, as has been said, as well as the national AIDS group, which has not been mentioned. HIV is a very complex condition. People with it have to live on drugs for the rest of their lives. On some days they are better than on other days, and some drugs work in different ways on different people. This is a complex matter.

I hope that the Minister will get these regulations right. I have two questions for him. Who will be doing the assessments? Will these people be adequate? This is of great concern to many people, and this debate has illustrated how very complex the whole matter is.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, this is an important opportunity to discuss the regulations. A lot of points have been raised and I will try to deal with as many as possible. However, I take this opportunity to lay out the position coherently. I take the criticism of the noble Lord, Lord Kirkwood, that communication has been less than perfect. I shall try to describe what is happening to reinforce that communication programme and I commit to ensure that it is maintained.

There is still a lot of misunderstanding about the assessment and what we are doing to make it fairer and more effective. The first point to make is that these regulations seek to take the first step in improving the work capability assessment. They were developed in conjunction with technical experts and with considerable input from specialist disability groups. As noble Lords have acknowledged, they will ensure that individuals awaiting, or between courses of, certain chemotherapy will be placed in the support group without face-to-face assessment. They will expand the support group to cover people with severe disability due to mental health problems and communication problems-that includes people with autistic spectrum disorder, about whom the noble Baroness, Lady Browning, was concerned-and

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they will ensure that the descriptors take account of someone's adaptation to a condition or disability so that we can provide them with the right support.

Before proceeding to debate the finer points of the regulations, I would like to put the reform into a context. The legislation before us today is part of a far broader commitment by the Government to tackle worklessness and intergenerational poverty. This is a very real and very urgent problem for us all, especially given that there are now 2.6 million working-age people claiming incapacity benefits, of whom some 850,000 have been claiming for a decade. This is a massive brake on the economy, costing the taxpayer billions of pounds every year, but that is not the most important point. The true cost of this level of inactivity is paid for by individuals left languishing on long-term benefits without hope or opportunity for a better life. I echo what the noble Lord, Lord Kirkwood, said about the scourge of inactivity. If we abandon these people, we fail in our duty as Members of this House. For too long, too many people have had to pay for our failure to act.

Before the recession, there were 63 consecutive quarters of economic growth-that is the longest growth period the economy has enjoyed, as historians can best work it out-and the economy created 4 million additional jobs. Yet under the previous Government-I am not being political-just over half those jobs went to foreign nationals. The result was that, even before the recession hit, we still had 4 million inactive people. Millions of people were without jobs in a growing economy, yet the system was trapping them. That is why we were sucking labour from abroad. The system offered too few people the opportunity to escape and to make a better life for themselves. We must not fail them again, because the country cannot afford it, and neither can the individuals, their families or our society.

Studies have shown that welfare dependency, social isolation and lack of purpose in life have a debilitating affect on individuals. Decades ago, the late Aaron Antonovsky argued that the purpose in life-what he called coherence-was crucial to understanding human health and well-being. More recently, Waddell and Burton's excellent review of the issue, written four and a half years ago, reinforced the evidence that showed that work is generally good for you. There is ample evidence that prolonged periods of inactivity and unemployment contribute to declining mental health. That is why the welfare reforms that we are introducing are so important, and that is why the regulations are such an essential element in transforming the lives of millions of people at risk of being abandoned to welfare dependency.

These reforms are the key to providing the lost with a path out of the cycle of dependency and poverty, and helping them on to the path to new opportunities. That is why we are embarking on a large-scale re-evaluation of those on incapacity benefits through the work capability assessment that will take in some 1.5 million people-not the 2.6 million on incapacity benefit who the noble Lord, Lord Kirkwood, mentioned -over the next three years. It is also why we are introducing the universal credit to make sure that work pays, and why we are introducing the largest welfare-to-work programme that this country has ever witnessed.



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This is designed not to badger or bear down on the vulnerable but to give them a road map to a better life. It is only by tackling welfare dependency and starting to dismantle the benefits trap that we can help people escape the huge social costs of worklessness, social exclusion and intergenerational poverty. Many noble Lords will know how difficult it is to wrestle with the issue of child poverty without this kind of route.

Those who cannot work will of course continue to get the support they need. However, for those who can make the journey back towards the workplace, we will offer them structured support to become work-ready. This will provide real help for many of those who have previously been abandoned by the system-those who were simply labelled as incapacitated and largely ignored, whether they wanted to work or not.

The work capability assessment was introduced in October 2008 as a key part of the assessment process to determine entitlement to employment and support allowance. It replaced the personal capability assessment and represented a significant and overdue change in assessing an individual's ability to work. It was developed in conjunction with technical experts, along with considerable input from specialist disability groups.

However, it was clear from the outset that, unlike the PCA, the WCA should be subject to an ongoing process of review, evaluation and refinement. Indeed, it was this House that passed the amendment that introduced the requirement for an independent review of the WCA for the first five years after its introduction-a point made by the noble Lord, Lord Kirkwood. It was the only amendment from this House that made its way into the original legislation for the work capability assessment, and it received support from all sides. That was slightly before my time, but I know many noble Lords will remember it well.

9 pm

It was this House that called for, supported and enacted the requirement for continuous review and refinement of the work capability assessment. Through these regulations, we are doing exactly what the House asked for. Therefore, perhaps it is counterintuitive for some noble Lords today to suggest that we should wait until the whole process of continuous improvement has been completed. That was not the intention of the House, as the noble Baroness, Lady Murphy, effectively pointed out-if I may paraphrase her point.

The internal review of the work capability assessment, which led to the amendments to the regulations that we are considering today, was undertaken with significant input from technical experts and specialist disability groups, in the same inclusive way that we used for the original work capability assessment. We recognised the concerns of disability groups and undertook significant work with them to refine the assessment. The outcome of this layer of work was published as an addendum to the report, and the regulations before us today fully reflect those refinements.


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