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We will not have a meeting of minds on this today but I am sure the Minister will reflect, as he always does, on the data, facts and arguments that have been put to him. It seems very clear today that, overwhelmingly, those arguments have been against what the Government are proposing. Having said that, I beg leave to withdraw the amendment.

Amendment 71M withdrawn.

Amendments 71N and 71P not moved.

Amendment 72

Moved by Lord Freud

72: Clause 51, page 36, leave out lines 31 to 35 and insert-

"(3) In calculating for the purposes of subsection (1) the length of the period for which a person is entitled to a contributory allowance, the following are not to be counted-

(a) days in which the person is a member of the support group,

(b) days not falling within paragraph (a) in respect of which the person is entitled to the support component referred to in section 2(1)(b), and

(c) days in the assessment phase, where the days immediately following that phase fall within paragraph (a) or (b).

(4) In calculating for the purposes of subsection (1) the length of the period for which a person is entitled to a contributory allowance, days occurring before the coming into force of this section are to be counted (as well as those occurring afterwards)."

Amendment 72A (to Amendment 72) not moved.

Amendment 72 agreed.

Amendments 73 to 75A not moved.

Clause 51, as amended, agreed.

Clause 52 : Condition relating to youth

Amendment 76

Moved by Lord Freud

76: Clause 52, page 37, line 10, leave out subsection (5) and insert-

"(5) In calculating for the purposes of subsection (4) the length of the period for which a person is entitled to an employment and support allowance, the following are not to be counted-

(a) days in which the person is a member of the support group (within the meaning of Part 1 of the Welfare Reform Act 2007),

(b) days not falling within paragraph (a) in respect of which the person is entitled to the support component referred to in section 2(1)(b) of the Welfare Reform Act 2007, and

(c) days in the assessment phase (within the meaning of Part 1 of the Welfare Reform Act 2007), where the days immediately following that phase fall within paragraph (a) or (b).

(6) In calculating for the purposes of subsection (4) the length of the period for which a person is entitled to an employment and support allowance, days occurring before the coming into force of this section are to be counted (as well as those occurring afterwards)."

Amendment 76 agreed.

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Amendment 76ZA

Moved by Baroness Lister of Burtersett

76ZA: Clause 52, leave out Clause 52 and insert the following new Clause-

"Condition relating to youth

For paragraph 4 of Schedule 1 to the Welfare Reform Act 2007 (condition relating to youth) substitute-

"4 The third condition is that-

(a) the claimant has limited capability for work-related activity;

(b) he was under 20 when the relevant period of limited capability for work began; and

(c) he has had limited capability for work for at least 28 weeks.""

Baroness Lister of Burtersett: I rise to speak relatively briefly, the Committee will be relieved to hear, to move the amendment and to support the noble Lord, Lord Patel, in opposing the Question that Clause 52 stand part of the Bill.

Currently, people who are disabled from birth or early in life may claim ESA in youth from age 16. This has, in different guises, been a feature of the social security system since 1975. When it was incorporated into ESA in the Welfare Reform Act 2007, I understand that the then Opposition did not question the inclusion of young people. Indeed, during the Lords Committee stage, the noble Lord, Lord Skelmersdale, from the Front Bench, asked my noble friend Lord McKenzie of Luton why young people should receive a lower rate of ESA during the initial assessment phase. The implication was that the Conservatives not only supported the inclusion of young people, but thought they should be included on more generous terms. Similarly, Liberal Democrat spokespersons in both Houses, one of whom was Danny Alexander-now in the Treasury-were at that time pushing for more generous treatment of young people.

It thus seems rather strange that in the other place, the Minister commented that,

"It seems to be an oddity that a young person with a disability or a health challenge, regardless of their circumstances, should automatically be able to migrate to contributory ESA even if they have never worked".

As the Minister acknowledged:

"This may not have been debated hotly in the past".-[Official Report, Commons, Welfare Reform Bill Committee, 3/5/2011; col. 654.]

I would suggest that this is because it has been accepted for nearly 40 years that it is fair and proper to include disabled young people in the contributory system.

The availability of contributory ESA provides those who become severely disabled in youth with a sustainable income to support their transition to independent adulthood in particularly difficult circumstances. It has long been accepted that the normal contribution conditions should not apply in order not to exclude a group whose members have not had the opportunity to build up a contribution record and may well not have that opportunity in the future through no fault of their own. For those who are hung up on the "something for something" principle, I think we can agree that it can be suspended in these circumstances. Instead, the

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removal of this long-standing right will undermine the goal shared by all of us of supporting disabled people to live independent lives.

In fact, the justification that we have received for ending the long-standing consensus on this matter is nothing to do with principles or even costs, unlike Clause 51. It is primarily, I understand, about administrative simplicity. It is stated that abolition of the youth concession is a simplification and will create consistency in the run-up to the introduction of universal credit. I am not sure that any policy that increases reliance on means-tested benefits, which the impact statement acknowledges will be the case, adds to the sum of simplicity in the benefits system. I do not think that tidy alignment for administrative purposes is a good enough reason to withdraw a long-standing right, not least because alignment of the rules with those for contributory ESA would be another option open to the Government.

A rather more persuasive argument on first sight is that those receiving contributory ESA are not automatically entitled to passported benefits, to which they would be entitled were they receiving income-related ESA. However, this is true of those receiving contributory ESA generally, not just young people. Therefore, it is a problem that should be resolved for all this group as part of the current review of passported benefits. Can the Minister assure us that those who would have qualified for income-related ESA under the present system will continue to receive passported benefits under the new regime? If he cannot give us this assurance now-and I understand about SSAC looking at all this-then this justification is rather weakened.

The availability of contributory ESA is of particular importance to certain groups of disabled young people. I am grateful to the Child Poverty Action Group for providing me with a number of case studies that illustrate the kind of people particularly affected.

First, there are young disabled people who have been temporarily in and out of local authority care or have moved areas, as it provides a secure, independent income. I know that there are a number of noble Lords here who have particular concerns about this group of young people generally. I do not think that the names I shall use are real but they are real examples. Sanjeet, who is in foster care, is at school and planning to go to college. He is aged 18, severely disabled and lives with foster carers. He was advised to claim ESA in youth to give him some of the extra income and independence that he needs. We should note that a severely disabled young person such as Sanjeet may have limited earnings capacity during his life and may not have parents who can provide financial support. If he has to rely on a means-tested benefit, he will never be able to build up savings beyond the £16,000 limit to help him with equipment, housing and so on for independent living.

Another example is Anna, who lives with a kinship carer. She is 16 and has been living with her grandmother since her mother died. Anna has severe problems with depression and post-traumatic stress. She is not working or in education. Her grandmother is struggling to

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support her out of her pension. Anna was advised to claim ESA in youth to provide her with her own independent income.

Another group is young disabled people who have built up savings to be used for an adapted car, disability equipment, a deposit on a property or future care needs. In the absence of non-means-tested support, using savings for basic daily living costs will have long-term implications for the welfare state when these people's carers-usually elderly parents-are no longer able to provide care and accommodation.

An example of this group is Jackie, who is 19 and in full-time education. She has Down's syndrome and gets the DLA highest-rate care component and lower-rate mobility component. When her parents stop claiming benefit for her, she can claim ESA in youth as her own independent income. Jackie's parents think that their daughter will never work and she will not have an inheritance from them, so having a contributory benefit of her own means that she will have the option of saving from her DLA towards the cost of future disability-related needs. If her parents were able to leave her some money, she would be able to keep it to fall back on if she had contributory ESA in youth but not if she had to rely on income-related ESA with the capital limit.

Another group is young disabled people who may be vulnerable to forming unsuitable relationships or may avoid forming a suitable relationship due to fears about losing an independent income. The case study is Caitlin, who has learning difficulties and is aged 20. She gets DLA and is attending a life skills course at college. To move towards independence, she is advised to claim ESA in youth, topped up by income-related ESA. Caitlin is currently living at home with her parents. Having a contributory benefit of her own means that she could in the future choose to form a relationship without fear of losing her independent income.

Moving on to young disabled people in education, the example is Nadia, who has cystic fibrosis. She is at university and gets ESA in youth. She has tried to work but has been unsuccessful because of the effect on her health. Unlike other students, she cannot support herself through university by working during the year or in the vacations. Her ESA in youth helps to make up for this. Because it is contributory, it is not reduced because of her student loan. Had she needed to claim income-related ESA instead, she would have been entitled to little or nothing during the year because of the means test.

The CPAG is also concerned about young disabled people trying out work. It says that the removal of contributory ESA in youth would bring young disabled people into the universal credit system. The current permitted work rules for ESA provide a useful opportunity for young disabled people to try work without having an effect on their benefits, in some cases for an indefinite period. There are concerns that the transfer to the universal credit system will increase complexity and reduce the incentive to work for people whose main objective is stability and security of income. The impact assessment says that there may be a "positive employment impact" from this change, but it does not explain how and why, so perhaps the Minister could do so.

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The impact assessment also says that about 15,000 people a year are likely to be affected. A fifth of these, who have no other income, will receive the same amount of benefit in income-related ESA. It is estimated that a further 70 per cent will qualify for income-related ESA, either at the same rate or at a lower rate, with an estimated average loss of £25 a week. That is not an insubstantial amount, even if it does open up eligibility to passported benefits.

Finally, one in 10, or 1,500 a year, will lose all entitlement to benefit, probably because they have a partner in full-time work. This is a small group. I hesitate to use the word vulnerable because the noble Baroness, Lady Campbell of Surbiton, has reminded us that disabled people are not intrinsically vulnerable but made vulnerable by disabling institutions and circumstances. This clause will increase the vulnerability faced by a small group of young disabled people, particularly those in the kind of difficult circumstances I have mentioned. The savings are miniscule: an estimated £11 million net per year.

Who was consulted on the likely impact of what I am afraid I see as a mean-minded little measure? I find it difficult to believe that the Minister is comfortable justifying it. I hope that he will therefore be able to give us some indication that he is prepared to reconsider and, at the very least, that he will look favourably on this amendment, which would at least retain contributory ESA for young people in the support group. This would be consistent with the exemption of this group from the one-year time limit. I beg to move.

7.15 pm

Lord Patel: My Lords, I support the amendment moved by the noble Baroness, Lady Lister, but I would also remove Clause 52 from standing part of the Bill. Many charities including CLIC Sargent, a charity which supports children with cancer, and other disability charities are also against this clause. The charities, such as that leading charity for young people with cancer, have serious concerns because of the negative impact that proposals in the Bill will have on young cancer patients and other disabled young people. I believe the Government must undertake a proper assessment of the financial support available to those young people with long-term health conditions and/or disabilities before making these changes, as well as considering the cumulative impact of their programme of welfare reform on this age group.

I emphasise that my proposals do not seek to secure higher rates of benefit for those aged 16-24 but simply to ensure a more level playing field in relation to access to benefits and financial support. For example, I believe it is wrong that students with a long-term illness must already be in receipt of DLA to be eligible for income-related ESA. These proposals are supported by other charities too, particularly young disabled peoples' charities.

As far as cancer is concerned, every day 10 families are told that their child has cancer. A study in 2007 found that 83 per cent of families incur significant extra costs associated with their child's cancer treatment, with 68 per cent of families experiencing worrying financial difficulties. New research, published last December, found that on average young people with

8 Nov 2011 : Column GC55

cancer spent £277 each month over and above their normal expenses, as a result of their illness. Half of those young cancer patients surveyed had to borrow money as a result of their illness. More than one in five had borrowed over £1,000, with almost one in 10 borrowing over £2,000. The top two expenses were travel and clothing.

My proposal would retain the youth provisions for contributions-based employment and support allowance and would ensure that young people with long-term health conditions and/or disabilities are not disadvantaged under the proposed new arrangements for ESA. The reason for these proposals is clear; under the youth provision, a person under the age of 20 who is not in full-time education and who has had a "limited capability for work" for 196 consecutive days can gain entitlement to contributory ESA despite not having reached the contributions threshold. ESA youth claimants are disabled people who are aged 16-19 inclusive or who satisfy the age exception rule, which revolves around rules for education or training, if aged between 20 and 25; they have at least 28 weeks of continuous medical evidence to support a claim for ESA; they are not in full-time education; they have been resident and present in Great Britain for 26 out of 52 weeks prior to the claim; and they do not meet the normal national insurance contribution requirements.

The youth rules were introduced for incapacity benefit in April 2001 as a result of provisions in the Welfare Reform and Pensions Act 1999, which were intended to,

The rules were carried over into ESA following the Welfare Reform Act 2007, again to ensure that young people who might not have had the opportunity to build up a sufficient contribution record would not be excluded from the non-means-tested allowance.

The Government intend to abolish the youth condition as part of the Welfare Reform Bill, as well as time-limiting its receipt to 12 months for existing claimants. The justification for this change, as set out in the impact assessment, is that it will simplify the benefits system and ensure consistency of treatment for those claiming ESA. This assessment completely fails to recognise that young people with long-term health conditions and/or disabilities are already in a place of disadvantage in comparison with older adults, hence the introduction of the youth condition in the first place, and that this change will entrench this disadvantage. This will mean that young people, including those unable to work because of cancer, for instance, will be extremely unlikely to be able to access the contributory element of ESA and will have recourse only to the means-tested income-related element to be subsumed into universal credit. Young people who are ineligible for the income-related component, which will include those with a partner who works more than 24 hours a week and some full-time students, could therefore lose up to just under £100 a week. This will have a devastating impact on those who are unable to work and are struggling with the significant additional costs of a cancer diagnosis.

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The eligibility of young people for benefits is extremely dependent on their circumstances, particularly in relation to their education status. There are serious concerns, for example, about how students are treated under the system. Full-time students are able to claim income-related ESA only if they are already in receipt of DLA. I can give noble Lords a case study. This is another example of how the eligibility rules currently disadvantage young people. I am also concerned about the knock-on effect of many young cancer patients who are students becoming ineligible for DLA as a result of the introduction of PIP, removing their eligibility for ESA. It is critical that the Government ensure that the eligibility of students with long-term health conditions and/or disabilities for ESA is not dependent on their receipt of DLA.

I shall give noble Lords an example of a student. A young woman of 20, who was a full-time university student, was diagnosed with an aggressive sarcoma and came home to have treatment. Her mother is a single parent on income support with a younger child. The mother's former partner died of cancer during the young woman's treatment, meaning that the mother no longer received child maintenance for a younger child. The young woman was refused DLA initially and, as a result, was ineligible for ESA. In addition, this meant that the mother was not eligible for carer's allowance, nor did the patient have access to a student loan, as she had taken a year out from university to have treatment. The family of three was therefore living on the mother's income support alone and was in huge financial trouble, completely unable to pay the bills and under a lot of stress. The social worker, supported by CLIC Sargent, applied for a reconsideration and the patient was awarded DLA, which meant that she could get ESA, her mum got carer's allowance and they got some housing and council tax benefit. Without the DLA and other benefits, this family would simply not have been able to cope financially.

A further 10 per cent of people will lose almost £100 a week by virtue of not qualifying for income-related ESA. Over a year, this amounts to £5,000. Only 20 per cent, or just under 3,000 claimants, will get exactly the same amount of income-related ESA that they would have got under the youth provisions. Based on government estimates, this loss of income may affect as many as 10,000 people by 2015-16. It is wrong that this saving should be levied from such a small group of vulnerable young people. Indeed, the department's own impact assessment notes:

"The abolition of the ESA 'Youth' provisions is more likely to have an impact on disabled people because ESA is directly targeted at people with health conditions that limit their ability to work. There is a risk that the affected group will be more likely to need more support because of their condition than all ESA customers".

My amendment is linked to my subsequent amendments in that they all seek to create a more level playing field for those young people with long-term health conditions and disabilities who require support through the benefits system.

Baroness Hollis of Heigham: I wanted to say only that I support the very moving amendments of my noble friend Lady Lister and the noble Lord, Lord

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Patel. When we introduced the 1999 Act, which I remember vividly, and replaced invalidity benefit with incapacity benefit, we considered and decided against the proposals that are now being introduced. This was primarily on the grounds of decency, but behind that lay another argument. The group that we were most concerned about at that time was not so much the cancer patients to whom the noble Lord, Lord Patel, referred, but those people with severe learning difficulties who would never find their way fully into the labour market and, as a result, could never build up contributions or savings. They might at some point receive a modest legacy or something that would help them but we did not want contributory IB to be dependent on that lottery. Therefore, we did not go down that road. Given the very small sums of money involved, in the interests of decency and given that such young people cannot build up the financial resources-and often the practical resilience, with the help of partners and so on-to allow them to cope, I very much hope that the Minister will think strongly about reconsidering the approach taken in Clause 52.

The Earl of Listowel: My Lords, briefly, I join in the request for the Minister to think very carefully about these matters. I have been moved by the speeches on this amendment. Reference was made to children leaving care, which certainly resonated with me. We know that disabled children are greatly overrepresented among children in care. We know that the transition from care is very difficult for many children without disabilities, so those with disabilities may be doubly disadvantaged as they make that transition into adulthood. Furthermore, we also know that for children with disabilities, in the general run, the turnover of social workers and many disturbances mean that the transition to adulthood and adult services is often very problematic. There are many good reasons why this amendment should be given careful consideration. I look forward to what I hope will be a sympathetic response from the Minister.

Lord McKenzie of Luton: My Lords, on this occasion I am happy to be at one with my noble friend Lady Lister and the noble Lord, Lord Patel. I am not sure that I am happy to be reminded about being assailed from the left by the noble Lord, Lord Skelmersdale; I try to put those memories far behind me. These are two important amendments and I hope that the Government will consider them seriously and take them on board. As my honourable friend Stephen Timms said in another place, it is,

He said that it is a measure that seems "unreasonably punitive". I agree.

Lord Freud: My Lords, I shall briefly explain what the existing rules are for young people. Special conditions for young people who are exempt from meeting the usual PAYE national insurance conditions are set out in paragraph 4 to Schedule 1 to the Welfare Reform Act 2007. These provide that a person aged 16 to 19, or 20 to 25 in certain prescribed circumstances, who is not in full-time education and has had a limited capability for work for 196 consecutive days, will be entitled to contributory ESA. No other age group can qualify

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for contributory ESA without having paid or being treated as having paid national insurance contributions. Nor does any other contributory benefit have similar arrangements. The vast majority of claimants who presently receive contributory ESA on the grounds of youth-around 90 per cent-are expected to receive income-related ESA. Those who do not qualify for income-related ESA are likely to have capital in excess of £16,000 or a partner in full-time work who may be entitled to working tax credit. Clause 52 removes these special rules.

7.30 pm

Amendment 76ZA seeks to retain these measures. It would retain the provision for people who are in the support group who have limited capability for work-related activity. The amendment extends further than the existing provisions in that it extends the youth provisions to claimants in full-time education and to more persons living outside Great Britain by the removal of the residence and presence rules. We do not think it is right that people who do not have a recent link to Great Britain should be eligible for our benefits.

We want to ensure equal treatment for all groups when establishing entitlement to contributory benefit. We believe our proposals have built-in support for this group of claimants. The vast majority of this group, around 90 per cent, are expected to receive income-related ESA. The amendment would add complexity to the benefit system because it would allow full-time students in this group to be entitled to ESA. It is not intended to be paid to students in full-time education. Income-related ESA is made available because of entitlement to DLA. This is because we do not want the benefits system to support students. We believe that linking eligibility to DLA enables those with continuing conditions to receive additional financial support. This provision will continue.

Importantly, this amendment would add complexity by exempting this group from our well established rules on residence and presence in Great Britain. The amendment would also disadvantage ESA youth claimants by requiring limited capability for work-related activity to be demonstrated before someone was entitled to ESA on grounds of youth. Under this amendment, we would not be able to pay ESA until the WCA had been carried out.

I pick up the point from the noble Baroness, Lady Lister, on passported benefits. One of the positive consequences of the abolition of the ESA youth provision is that young people who qualify for income-related ESA instead will automatically qualify for passported benefits such as free NHS prescription charges, rather than having to claim such help separately. As the noble Baroness mentioned, we have asked the Social Security Advisory Committee to let us have a report about the eligibility for passported benefits, and we have not yet received that report. It would therefore be somewhat premature at this stage for me to say precisely what the future arrangements for passporting would be under the universal credit.

If this amendment was accepted it would reduce the expected cumulative benefit savings by around £10 million by 2015-16. I ask the noble Baroness to withdraw her amendment.

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Baroness Lister of Burtersett: My Lords, perhaps it is the lateness of the hour but I did not think that the Minister read his brief with his customary gusto. I hope that that reflected his embarrassment at trying to justify what I called a mean-minded measure. I did not know that the previous Government had considered this, and I am very glad that they decided not to take it further, as my noble friend said, on the basis of decency. We are talking about decency here and this is an indecent clause. The amendment is purely a fall-back amendment. It would be much preferable if the Minister simply said, "We will continue with the status quo". Therefore, the amendment would not be necessary. It is a minimalist amendment and, if it creates new problems, they could of course be considered. However, if the clause were to be withdrawn, we would not have to worry about the amendment.

I take the point about why the Minister cannot give us an assurance now about passported benefits, but I suggest that that should not therefore be used as a justification for this measure, given that we do not know who will be receiving passported benefits under universal credit. The Minister said that no other age group has this kind of concession. Of course there is no other age group because any other age group would normally be in paid work and be able to get their contributions. The whole point is that this group cannot

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be in paid work to get their contributions. I have to say that I am disappointed by the Minister's response and I hope that perhaps he will reflect on what has been said and think again about this. He then came back and said that there would be a cumulative saving of £10 million. I mean, really-£10 million is absolute peanuts in public spending terms.

Baroness Hollis of Heigham: It is a margin of error.

Baroness Lister of Burtersett: A margin of error-I thank my noble friend. We are told that this is not about saving money. Therefore, it is totally inappropriate to say what the cumulative savings will be if it is not about saving money. With a heavy heart, I beg leave to withdraw the amendment.

Amendment 76ZA withdrawn.

Clause 52, as amended, agreed.

Lord Freud: My Lords, this may be a convenient moment for the Committee to adjourn until Thursday at 2 pm.

Committee adjourned at 7.36 pm.

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