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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

With permission, Mr. Speaker, I wish to make a statement on the Government's Green Paper, "A new deal for welfare: Empowering people to work". After eight years of a Labour Government, there are now 2.3 million more people in work. There are 1 million fewer people on benefits. Some 2 million children and almost 2 million pensioners no longer live in poverty.

Since 1997, we have worked to build a modern, active welfare state. Through the minimum wage and tax credits, we have made work pay. Through record investment in the new deal and Jobcentre Plus, we are creating an enabling welfare state that responds to the needs of individuals. All that contrasts with the record of the Conservative party. Eighteen years of economic mismanagement and welfare failure resulted in 3 million more people of working age on benefit. Unemployment went up 50 per cent. The numbers claiming incapacity benefit trebled as it was used to hide mass long-term unemployment, and 3 million more children were left to live in poverty. It is time now finally to bring that shameful legacy of Thatcherism to an end. That is why ensuring that people have the right to work must be a fundamental responsibility of any modern Government.

Work is good for people. Work can be the bedrock of personal responsibility, dignity and well-being. The challenge that we face today is how to build a modern welfare state that allows people to exercise the right to work when our national economy is changing more rapidly than at any time since the industrial revolution. It is not only our economy that is changing. We are confronted by a rapidly ageing society and a falling birth rate. Soon, and for the first time in our history, there will be more people over the age of 80 than under the age of five, so our welfare state must continue to adapt to meet those challenges.

We have set ourselves the ambitious goal of an 80 per cent. employment rate. Its achievement will be critical for our nation: for individuals, for families and communities, for the process of wealth creation, for economic competitiveness and for social justice. I do not underestimate the scale of meeting that challenge. It will mean a million fewer people claiming incapacity benefit, a million more older people in work and 300,000 lone parents off benefit.

The proposals that we are putting before the House today will make a significant contribution to realising those ambitions. Today's Green Paper builds on reforms that we have already introduced to remove the remaining barriers that hold people back from work. Our approach is based on a belief in an active welfare state that balances rights with responsibilities, and that provides work for those who can and support for those who cannot. Our proposals will be fair to claimants and fair to taxpayers.

We will reform incapacity benefit. Nine out of 10 people who come on to incapacity benefit expect to get back into work, but if people have been on incapacity benefit for more than two years, they are more likely to retire or to die than ever to get another job. That cannot be right. The circumstances of claimants are changing, too. No longer is incapacity benefit associated with only Britain's industrial heartlands. There are more people on incapacity benefits in the south-east than in the north-east, and there are at least 150,000 people on incapacity benefit in every region in the UK. A third of new claimants now cite mental health problems as the main reason for coming on to the benefit, compared with a fifth in 1997. The issue affects all the country, not just parts of it.

We have already made a start. The combination of increased support through the new deal for disabled people and the extension of rights through the Disability Discrimination Acts has started to improve the opportunities available to disabled people. Building on those reforms, our strategy is threefold. We will act to reduce the number of new claimants. We will provide greater help for those on the benefit to return to work. For the most severely sick and disabled, we will provide even more support.

The Green Paper sets out proposals to improve workplace health. General practitioners have an important role to play in helping to ensure that their patients are able to work, so we will test the impact of putting employment advisers in GP surgeries. The first of those will be in place within a month. We will work with GPs and primary care professionals to support individuals to remain in work or return to work, and we will reform statutory sick pay to simplify it and ensure that it helps people to stay in work.

We will reform the medical test, which acts as the gateway to incapacity benefit. We must ensure that the assessment process is focused on people's potential capability and capacity to engage in the labour market, rather than just their incapacity. Central to that will be the reform of the exempt category in the existing benefit structure. We must ensure that it no longer writes people off simply because they have a particular condition. For example, if people are blind, the current benefit structure assumes that they will always be incapable of work. That is wrong and unfair. We will correct it by reforming the criteria for exemptions.

In future, all claimants will be assessed to determine not just their eligibility for benefit, but also their capability to work. I recognise the sensitivity and, of course, importance of getting this crucial aspect of the reforms right, and we will consult on that and other issues to ensure that we take a fair and equitable approach. We will also review the mental health component of the test.

In addition to reforming the gateway, we will also reform the benefit itself. From 2008, new claimants will receive a new employment and support allowance, replacing the current system of incapacity benefits. The perverse incentives in the current system will be removed. Unlike today, no one will be eligible for the benefit until they have completed the proper medical assessments. Claimants will no longer receive more the longer they claim.

For those who are exempt, the new benefit will be paid at a rate higher than the long-term rate today. As now, they will be able to take up support if they want to, but it will not be a condition of their benefit. However, for the vast majority—those who will not be exempt—the new benefit will have a clear framework of rights and, yes, responsibilities. People will be required to attend regular interviews, complete action plans and engage in work-related activity. The level of benefit they receive will be above the current long-term rate of incapacity benefit, but those refusing to engage in the help and support offered could see their benefit reduced progressively in stages, to the level of jobseeker's allowance.

Existing claimants will remain on their existing benefit, which will be protected. Over the next few years, we will ask existing claimants to attend a work-focused interview and agree an action plan to take steps to return to work. Those who do not engage will, as now, potentially see their benefit reduced. That process of re-engagement has already started, but we can only ask more of people if the help and support that they need is in place. Our pathways to work pilots—combining employment and health support—have already shown significant success in getting people off benefit and back into employment.

I can confirm that over the next two years we will be investing a further £360 million, from within my existing resources—from my own budget—to extend pathways to work to every part of Britain by 2008. For the first time, as a result of that investment, we will bring new hope and opportunity to some of the most disadvantaged communities.

I am confident that the reforms outlined today will move us significantly closer to our goal of an 80 per cent. employment rate and the realisation of that vision. I believe that if we take the measures that I have outlined, and work together with health professionals, local authorities and employers, we can get 1 million people off incapacity benefit within a decade. In doing so, we could ultimately save up to £7 billion a year for taxpayers. That should be the scale of our ambition.

We also need to do more to help lone parents to get back into work. Today, 56 per cent. of lone parents are back in work compared with only 45 per cent. eight years ago. We know that many lone parents want to work but face barriers to returning to the workplace. That is why we have extended support through the new deals and our 10-year child care strategy. Building on those reforms, we will increase the number of interviews lone parents are expected to attend. We will require those whose youngest child is at least 11 to attend interviews every three months, alongside piloting a new premium so that lone parents are better off if they take serious steps towards preparing for work. Those with younger children will have to attend twice a year, compared with once a year now. We will pilot more intensive support for lone parents during the first year of their claim and we will also simplify the rules so that lone parents are not penalised for joining work experience programmes.

A key part of our strategy is to ensure that many more older people are able to remain in work for longer. I have spoken about the challenges of an ageing society. The Green Paper sets out proposals to extend all aspects of the new deal 25-plus to the over 50s. We will improve the back-to-work support for JSA claimants and their partners who are over 50, and will work with employers to extend flexible working opportunities to older workers. The Green Paper also sets out our plans to simplify the existing housing benefit system to improve work incentives and encourage personal responsibility for housing choices.

The Green Paper sets out a challenging goal—one that central Government acting on their own cannot meet. Instead, we will need to engage those in the public, private and voluntary sectors in a new mission to improve employment opportunities in our disadvantaged areas. Moreover, there is a crucial role for local community leaders. Tackling worklessness can be achieved only if we work with partners in the local community—including the private and voluntary sectors—and harness their energy and commitment to deliver real progress. Some of our biggest cities in particular have a disproportionate number of benefit claimants.

I am committed to opening a new chapter in the evolution of our modern welfare state. Local leaders will be asked to bring together local employment, training and health providers to help tackle concentrations of worklessness. They will be able to ask for greater flexibilities over the use of existing funding. In return, I will ensure that local communities share in the rewards of reducing the number of benefit claimants. For successful bids, I will provide seedcorn funding, and provide outcome payments when they meet their goals.

The publication of our proposals today will start a three-month consultation process. We will engage with and listen carefully to all who respond—to everyone who shares our commitment to improving the employment prospects of those currently living on benefit. The proposals will help build a modern welfare state that responds to individual need, balances rights with responsibilities, tackles poverty and disadvantage, and invests for the long term.

The Government stand ready to make that investment in our people and our country. That is why I commend the Green Paper to the House.

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Philip Hammond (Shadow Secretary of State for Work & Pensions, Work & Pensions; Runnymede and Weybridge, Conservative)

I am grateful to the Secretary of State for letting me have an advance copy of his statement and the Green Paper.

We broadly welcome the thrust of what the Secretary of State has said and we will study with great care the detail of the Green Paper. The world of work and the global economy are changing rapidly, and Britain's future prosperity depends on harnessing the skills and abilities of all its people. We cannot afford, either in social or in economic terms, to leave 2.7 million people abandoned on long-term benefits.

Incapacity benefit has operated as a crude system that condemns hundreds of thousands of people who have something to offer to inactivity, deprivation and social exclusion. It creates and perpetuates dependency and squanders ability. It is failing individuals, it is failing our economy, and it is failing our society. It is no longer fit for purpose, so we welcome the Secretary of State's shift of emphasis to the abilities and skills that people have rather than the disabilities that they suffer.

Let me be clear where we stand: we believe that work works. For those who can work, it restores self-esteem, it re-includes them in the social fabric of everyday life and it rescues them from the trap of long-term benefit dependency. It is the job of policy makers to ensure that work also pays—that the perverse disincentives of a bureaucratic benefits system are removed, so that the phenomenon of the benefit claimant who wants to work and who can work but who risks being worse off by doing so is consigned to history.

The Secretary of State has been in his post for only four months, but his Government have been there for nearly nine years. We like much of what we have heard today, but he will forgive me if I say that we have heard much of it before. Much of what he has said was trailed in the five-year plan; we were promised this Green Paper before the summer recess. Further back, at the 1997 general election, Labour proclaimed itself the party of welfare reform, but while the Labour Government have done "sweet nothing"—[Hon. Members: "Oh!"] Those are not my words but the words of his own Minister for Employment and Welfare Reform. While the Labour Government have done "sweet nothing", total numbers claiming incapacity benefit have gone up, the numbers claiming for more than five years have gone up, the number of young people under 25 claiming has gone up by 70 per cent., and the number of people claiming on the grounds of mental and behavioural problems has doubled. So we will take no lectures on legacies from the right hon. Gentleman. The test of this Secretary of State will be whether he at last can start to deliver where his predecessors failed to do so.

Unfortunately for the Secretary of State, his plans are presented against a backdrop of a slowing economy, steadily rising unemployment and an unprecedented funding crisis in NHS trusts, all of which will make it much harder now than it would have been a couple of years ago to achieve the laudable objectives of rehabilitating people and then getting them back into work.

We have not yet had time to analyse the Green Paper in detail, but we have heard enough to identify some of the key areas where we will want to satisfy ourselves that the small print matches the headline rhetoric. Reform of the system so that it delivers a focus on what people can do, rather than what they cannot do, will require changes to the personal capability assessment, as the Secretary of State said. It will also require a change in the mindset of the tens of thousands of people who administer the system. Can the right hon. Gentleman tell the House how the personal capability assessment will be reformed, in particular, to make what is still primarily a physical capacity test more responsive to the high levels of mental illness among claimants?

Effective early intervention in respect of new claimants is the key to catching them before they become trapped in benefit dependency. Does the right hon. Gentleman agree that prompt and early medical assessment, coupled with the availability of rehabilitation resources, is the key? How will those resources be delivered, given the pressure that primary care trusts are under? Will he buy in NHS services with Department for Work and Pensions funding, or will he buy in rehabilitation services from providers in the private sector? Can he assure the House that he does have, somewhere in his locker, a more subtle approach to the vital question of engaging GPs in the early intervention process than that of offering them cash inducements?

We will study the way in which the proposals, as well as dealing with new claimants, address the needs of the 2.7 million people currently on incapacity benefit. The Secretary of State may be tempted to concentrate on new claimants, but if the new focus is the right one it would be a betrayal both of those who are already on incapacity benefit and of the taxpayers funding them not to apply the same work-oriented approach to them. Off-flow rates have decreased by a third since 1997; will he set himself a specific target for getting current incapacity benefit claimants back into work?

A couple of weeks ago, the right hon. Gentleman identified 100 constituencies with the highest concentration of incapacity benefit claimants, which we cross-correlated with job vacancy figures. Perhaps unsurprisingly, we found that those constituencies have very few job vacancies—in fact, there are only a quarter as many job vacancies as there are incapacity benefit claimants. Does he recognise that in those areas simply refocusing and retraining people to exploit the skills and abilities that they have will not necessarily result in their finding work? How will he deal with the geographical mismatch of work opportunities and incapacity benefit claimants?

Can the Secretary of State guarantee some concrete and effective measures that will ensure that private and voluntary sector organisations can compete on a level playing field with public sector organisations? The evidence for the contribution that they can make is clear in the results of the new deal for disabled people—a programme that has been substantially delivered by private and voluntary sector contractors—but the National Audit Office report shows that the playing field is still tilted against private and voluntary sector organisations when contracts are placed. Only if that bias is removed can such organisations play their full role—the role that the right hon. Gentleman says he wants them to play. What specifically is he doing to deal with that matter and is he willing to spend some of his political capital standing up to those who will no doubt fight tooth and nail to preserve the predominance of public sector provision in this area?

In the long run, reducing the number of people on incapacity benefit will save substantial sums of public money, but in the short term significant investment of resources will be required. Can the Secretary of State tell the House over what period the reforms that he is proposing will become self-financing?

The right hon. Gentleman referred in his statement to incapacity benefit as masking long-term unemployment figures. Can he confirm that claimants of his new benefit will be included in the unemployment count?

Finally, it has been reported in the press that the implementation of the proposals that the Secretary of State has outlined today will depend on the installation of a major new IT system. Is that true? If so, given the history of problems with IT systems in his Department, what reassurance can he give the House that the bold initiatives that he outlined will not be beset by the same kind of IT problems and delays as we have seen in the past?

The Secretary of State deserves credit for finally grasping the nettle of incapacity benefit reform, but the true test of his resolve is yet to come. Will he hold firm to the principles that he outlined today? Will he resist the temptation to tack and to trim in response to Labour Back-Bench demands? Will he take effective action to bring about the increase in private and voluntary sector involvement that he says he wants? If he performs on all those issues, we will support his proposals and work towards a consensus that is not afraid to say that for all who are capable of work, work is the best option, for individuals, society and Britain's future prosperity.

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

May I start by welcoming the hon. Gentleman's commitment to work with the Government to bring about these important reforms? I welcome his support and his recognition that incapacity benefit has failed millions of people. Most Labour Members would probably prefer the Conservatives to have done something about it when they had 18 years in government. [Interruption.] As many of us can testify, no such measures were taken.

The hon. Gentleman referred to the record of the present Government, and his hon. Friends have been shouting rudely about it. Incapacity benefit numbers fell last year for the first time ever in the history of incapacity benefit. The numbers coming on to incapacity benefit are down by a third, so the argument that no progress has been made is totally untrue. We are making progress. The reforms will allow us to make further progress still.

The hon. Gentleman spoke about the position in the labour market. I remind him that we have in the UK now the highest employment rate of all the countries in the G8, something never achieved under the Conservative Government. We remember their record on unemployment. I do not want to say any more about that.

The hon. Gentleman asked me how the personal capabilities assessment will be reformed. We say in the Green Paper, and I am sorry if I did not make it clear today, that we will be convening an expert group to work with the Department to undertake that reform of the medical procedures. It is important that we do that. We want to build consensus around the new system. That is very important for the success of the reforms, for various reasons. People must have confidence that the assessments are right, and we will work with the disability movement to make sure that that is true.

I agree with the hon. Gentleman that prevention is the best tactic that we should deploy to prevent people from coming on to benefits in the first place. The Green Paper contains a series of measures—I did not go through all of them this afternoon—which will make a significant difference, including supporting greater investment in occupational health. I hope the hon. Gentleman will welcome that.

Where will the health care providers come from? They will come from the NHS and some will come from the private sector. I was in Derby recently and saw at first hand a hugely successful strategy of involving cognitive behavioural therapists employed from the private sector to provide services for people on incapacity benefit.

I can confirm that existing incapacity benefit claimants will have access to the pathways to work extensions. The hon. Gentleman asked about the work that we were doing with existing IB claimants and said that the focus should be on them. Of course, all the work that we do between now and 2008—I think it will be 2008 when we have legislated for the new benefit and got the system in place—will, by definition, have to be with existing claimants under the existing IB system. There is no one else to focus on, so they will have plenty of opportunity to work with us and get back into work.

On the hon. Gentleman's point about vacancies, I saw his figures, as have hon. Members on both sides of the House. I make two comments about his figures and his analysis. First, Jobcentre Plus holds only about a third of the total number of vacancies in the country at any one moment in time. His figures were based on Jobcentre Plus vacancies. We need to bear that in mind. Secondly, as we all know, some of our constituents work in other constituencies where there might be more vacancies. It is true that that happens, but I do not think that the hon. Gentleman recognised that.

We envisage the private and voluntary sectors being very much involved in the pathways to work projects across the country, because we know that if we get the contractual frameworks right and choose our partners correctly, the voluntary sector will be able to make a hugely important contribution to improving the service that we offer. It is true that these reforms will require significant investment. It is equally true to say that we are the first Government ever who have been prepared to stand here and say that we will make that investment to get people with a disability back into work.

The hon. Gentleman's final question was about whether we would count people on the new employment and support allowance as unemployed. No, we will not, for one very obvious reason, which I am surprised that he did not recognise. To count as being unemployed, a person has to be available immediately to take up employment. The very notion here is that we are dealing with people with a measure of illness and incapacity, and we will work with them. We are not going to apply the full jobseeker's allowance conditionality regime to people on incapacity benefit; it would be wrong to do so.

The hon. Gentleman said that I had been in my post for four months. In fact, it is two months; it just feels like four months.

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Terry Rooney (Bradford North, Labour)

I congratulate my right hon. Friend on his very encouraging and positive statement. Does he agree that all those on incapacity benefit have a civil right to work, just as anybody else does? Does he also agree that the state's role should be to remove any barriers that are preventing those people from taking up employment and escaping from poverty? We still have a major problem in this country because too many employers discriminate against disabled people. Will my right hon. Friend tell us what the Government are going to do, collectively, on that issue?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am very grateful to my hon. Friend for raising those points. I agree that people with a disability should have the right to work, just like anyone else in our country. The reforms that I have outlined today will mark a significant step forward in that regard. We were the first Government to legislate for comprehensive civil rights for people with a disability, and we will do nothing in these reforms that will compromise or undermine the civil rights of people with a disability.

In relation to my hon. Friend's important point about employers, we have instigated and are continuing to support a very important programme—the access to work programme—into which we are putting about £60 million. That programme helps people on incapacity benefit who are going back into the world of work to make the necessary adjustments. Sometimes that could involve adjustments to the physical environment in their workplace. We will continue to offer that help, and to emphasise that support. There are also provisions in disability discrimination legislation to require employers to make reasonable adjustments in the workplace. That will be very important. We are also working with a significant network of employers, through the employers coalitions. For example, many big, significant employers are working with Jobcentre Plus to ensure that there are vacancies for people with a disability, which is crucial. The proposals that I have outlined today will help in all these areas, and I hope that my hon. Friend will be able to support them.

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David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

May I also thank the Secretary of State for giving me advance sight of his statement? We share with him the ambition of seeking to help people with disabilities back into work and ensuring that the benefit system and our training systems are designed to help them. The Secretary of State has rightly set a very ambitious target for the reduction of the number of people on incapacity benefit by 1 million over the next 10 years. Does he agree, however, that even if he achieves that, it will take the level of people on incapacity back down only to the 1991 level, which was itself double the level that was inherited in 1979? There is therefore a long way to go, even if the target of 1 million is achieved.

I want to ask the Secretary of State some specific questions about the reform of incapacity benefit. Does he accept that delivering tailored support for people with diverse medical conditions is going to be quite expensive? Is he confident that he has the resources to do that, against the background of a decline in Jobcentre Plus staff of some 20,000—almost one in four—employees between 2002 and 2008?

The Secretary of State spoke of an extra £360 million over the next two years. A quick look at the figures suggests to me that that is a good deal less per person than the amount that he has been spending on pathways to work. Has there been any contraction of expenditure per person to make this scheme possible?

May I ask about changes in the benefit system? Has there been any extension of means-testing that is implicit in the new employment and support allowance? That is not clear from the Green Paper, and it would be helpful to have it on the record.

Does the Secretary of State plan to take further action to make the benefit system more accessible to those who can work only for limited periods? Will he also tell us whether he has ruled out for good the suggestion of his right hon. Friend Mr. Field—a single working-age benefit with top-ups for people with disabilities?

Safeguards are vital for some of the groups whom we are discussing. The Secretary of State clearly indicated that he would undertake to complete the assessment relating to the new personal capability test within three months. That is important, because until people have passed the test they will be stuck on the jobseeker's allowance rate, which is considerably lower than the rate that they would obtain today. Can the Secretary of State offer us any reassurance about what will happen to people who are not seen within three months? Will they automatically move to a higher rate?

What protection will there be in terms of sanctions for people who might otherwise lose their employment and support allowance? Does the Secretary of State accept that there is real concern, particularly about people with mental health difficulties that cannot easily be detected? There is worry about whether there will be a proper process of scrutiny, with appeal rights.

We are willing to work constructively with the Secretary of State to find solutions to extremely important issues that have been neglected for too long. Does he accept that today's announcement and the target that he has set represent the easy part, and that the test will be whether he can deliver the improvements during the years ahead?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am grateful to the hon. Gentleman for his support for the direction of travel that we set out in the Green Paper. We look forward to working with him in the months ahead. I am confident that we can deliver the programmes of help and support that I have announced. As I confirmed to Mr. Hammond, it will involve the use of private and voluntary providers as well, which I consider entirely sensible.

My proposals involve no extension of means-testing. Yes, we are considering making more part-time options available to people on incapacity benefit and lone parents, and we mentioned some in the Green Paper.

Mr. Laws asked about long-term reform. He has only had a few minutes in which to look at the Green Paper, but the final chapter sets out the options, and picks up some of the points that my right hon. Friend Mr. Field has been making. We have already announced changes in the linking rules, extending the 52-week period of grace allowing people leaving incapacity benefit to test whether a new job works for them to two years. They can return to the existing level of incapacity benefit without having to reapply. I hope that that gives the hon. Gentleman some reassurance. Of course there will be proper appeal mechanisms in relation to any benefit sanction initiated here.

The hon. Gentleman asked whether we could guarantee that we could complete the medical tests within 12 weeks. Yes, that is the commitment that we are making. His supplementary question, asking me to revise the benefits paid in the event of a failure, therefore does not arise.

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Peter Kilfoyle (Liverpool, Walton, Labour)

Given that last year the Secretary of State's Department closed the biggest employer in my constituency, an area of high unemployment, and is now busy closing the jobcentre in Walton, the right hon. Gentleman will forgive my scepticism about where and how these jobs will be delivered.

I should be grateful if the Secretary of State would clarify one point. The figure of 2.7 million is constantly bandied about. Does it refer to claimants and recipients of incapacity benefit, or only to claimants? If it refers only to claimants, what is the true figure for recipients?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

My hon. Friend is right: the Department is currently undergoing a major reorganisation of its Jobcentre Plus services. It is also a major investment, however. We are spending more than £2 billion on trying to improve the service for his constituents and others. As he will know, that involves change. I entirely respect the position that he takes in relation to his constituency, but we are trying to improve the service nationally, and have set out a course of action that we think will achieve that.

In relation to my hon. Friend's specific point about the 2.7 million figure, 2.74 million people are currently in receipt of either the means-tested income support element, which supports those on incapacity benefit, or contributory incapacity benefit. I have made it clear today that we want to reduce that figure, and I hope that he will work with me to make sure that we do.

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George Young (North West Hampshire, Conservative)

I welcome the Secretary of State's statement, but does he accept that on occasions there will be a genuine disagreement between his Department's medical assessment of an individual's ability to return to work and that individual's assessment with his or her GP? Does he have any plans to review the appeals system, which many people find slow, complex and bureaucratic, with a view to enhancing its efficiency and credibility?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am grateful to the right hon. Gentleman—yes, we do, and we set out three specific proposals in the Green Paper that will address that. I agree that it is not acceptable for 50 per cent. of such appeals to be subsequently overturned. We need to consider that fairly and reasonably. That will be part of the review of assessments that we have set in train today, and if we can work with a variety of different stakeholders to improve the efficiency and effectiveness of the medical assessment procedure, I hope that we can alleviate the need for so many appeals.

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Frank Field (Birkenhead, Labour)

I congratulate the Secretary of State on the resolve that he has shown today, noting that he does so as the economic boom slows down and the welfare-to-work budget is fully spent. Does he accept that many of our constituents are anxious to go back to work but are worried that if they get a part-time job, the job might fold and they will lose housing benefit? In those 100 constituencies with the highest number of incapacity claimants, will he scrap all the restrictions on part-time work, provided that claimants tell their local office what they are doing? They could be reviewed within, say, six months, to see in what other ways we can build on the successes that they have made individually, without waiting for anyone at the centre or anywhere else to direct them.

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am grateful to my right hon. Friend. Yes, we are prepared to consider the issues to which he has referred, particularly in relation to the permitted hours rule and the notional earnings rule. My right hon. Friend the Minister for Employment and Welfare Reform has indicated that we are examining those areas, and I am happy to talk to him and other right hon. and hon. Friends who have an interest in this matter. I remind him that one of the important parts of the pathways to work schemes, which have helped enormously, has been the £40 return-to-work credit, which has helped bridge the gap between benefits and work. It was entirely remiss of me—I should have paid proper tribute to my predecessors as Secretary of State, some of whom I can see in the Chamber. In particular, my right hon. Friend Mr. Smith made some of the important early decisions, which were right and proper. I want to pay tribute to their contribution, too.

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Iris Robinson (Strangford, DUP)

Does the Secretary of State agree that many people would love to be back at work, but the Government have a history of being mean with drugs such as Enbrel, Remicade and beta interferon? We could see many more people off benefits and back in the work force if they got those life-changing drugs.

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I respect the hon. Lady's argument and the point that she has made. The changes that we have made have been designed to speed up access to some of those latest medical interventions and drugs, and we have made significant progress in doing that. In relation to Northern Ireland specifically, she will be aware that these particular reforms are a matter for Northern Ireland, and I understand that my right hon. Friend the Secretary of State for Northern Ireland will be publishing these proposals for consultation in Northern Ireland shortly.

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Andrew Smith (Oxford East, Labour)

I thank my right hon. Friend for his kind remarks. I welcome the measured way in which he has brought forward this statement. In particular, I welcome the extension that he has announced of the successful pathways to work programme to the whole country. Does he agree that availability of good-quality rehabilitation and a continuing drive against discrimination in the workplace are crucial for the confidence of benefit recipients and for the prospects of success in helping more of them into jobs? Can he tell the House a bit more about rehabilitation and other support services that will reassure people that this is about helping them forward?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am grateful to my right hon. Friend, and his decision to roll out pathways has given us the opportunity to go further. We have had two years of experience with pathways. In relation to his point about condition management programmes, we know from the success of pathways schemes that it is important for benefit recipients to have access to good-quality rehabilitation. That may be physiotherapy, cognitive behavioural therapy or any other service that we can provide. The NHS has been a good partner in delivering those services as part of the pathways to work schemes, but I think that it will be necessary to broaden the range of providers who deliver those services to Jobcentre Plus and to benefit recipients. We will work in partnership with organisations locally as well as nationally to ensure that there is the widest possible access to services that will help recipients to get off benefit and back into work. I am grateful for everything that my right hon. Friend has done.

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Paul Goodman (Shadow Minister (Childcare), Treasury; Wycombe, Conservative)

The Secretary of State has set himself the admirable aim of getting 1 million people off IB in 10 years. Since he has been so specific, can he tell the House how many people he expects this package to get off IB by the end of this Parliament—by, say, June 2010?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

No, I am not going to set annual targets. We are not going to do that. This programme of investment and reform will take at least a decade to deliver. I think that all my hon. Friends will be slightly surprised to hear a Tory Member of Parliament asking for more targets. We are not going to do that.

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Howard Stoate (Dartford, Labour)

May I tell my right hon. Friend as a GP that, by the time someone has been off work for six months, say, with a bad back, their chances of getting back to work are disappointingly low? Therefore, the real challenge is to prevent people needing incapacity benefit in the first place. I am particularly pleased by his statement that he wants to introduce employment advisers into primary care services, which is extremely welcome and overdue. Will he ensure that those advisers will be involved with the patient from the moment they are off sick, so that we can reduce the amount of time that they are off sick, and they go back to work before they get anywhere near incapacity benefit?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I am grateful to my hon. Friend for his comments. We should wait to see what the employment advisers can do for patients in primary care trusts. I am confident that they will be able to make a significant difference and provide more choice for people, rather than people being presented just with the unpalatable prospect of being signed off and going on to benefit. We should be able to do more for people in that situation. I hope that the other potential spin-off benefit of putting employment advisers into GP practices will be to relieve some of the pressure and work load on GPs themselves.

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Angela Browning (Deputy Chairman (Organising and Campaigning), Conservative Party; Tiverton and Honiton, Conservative)

The Secretary of State has repeatedly referred to getting people back into work, but how will he deal with the group of people in their 20s, 30s and 40s who have never been in paid employment? I am talking about people with lifelong disabilities such as autistic spectrum disorder, chronic mental health conditions and learning disabilities. Is he going to have a special package for them, because to put them through the same process as someone with a back injury would be wrong? They need much more specialised assistance. I would welcome it if some got the opportunity to get into work, but that will not be easy. It will require a lot of resources. Will he bear it in mind that many of them have undertaken independent living and that maintaining independent living and not being overburdened with paid employment will require a lot of flexible packages? Perhaps they can work part-time—even a quarter of a week, not necessarily half of it—in order that independent living remains viable.

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I pay tribute to the hon. Lady's extensive knowledge and experience in this area. I would be happy to discuss with her any of those ideas in more detail. That is right and proper. The whole point of the reforms is to try to personalise and individualise as much of the support and help that we provide to people on incapacity benefits as we can. I do not think that a one-size-fits-all approach would be right. I indicated in response to other questions that we are prepared to look at some of the alternatives to encourage part-time work. Nothing in the proposals affects the issue of disability living allowance. We are not proposing any changes to that. I understand that my right hon. Friend the Secretary of State for Health will outline shortly further proposals in relation to individual budgets, which I know that the hon. Lady follows with some interest. I hope that that will provide greater choice and flexibility, to which she has referred.

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Michael Meacher (Oldham West and Royton, Labour)

Does my right hon. Friend recognise that there are considerable differences between north and south? The percentage of working-age adults claiming incapacity benefit, for example, in Merseyside, south Wales and the north-east is six to 10 times higher than in the south-east. We all know that the previous Conservative Government shifted probably over 1 million people off unemployment benefit on to incapacity benefit to get the unemployment figures down. Does that not suggest that we cannot solve this problem purely by getting tough on incapacity benefit? It can be solved only in conjunction with a much tougher regional industrial strategy to increase employment opportunities in areas of persistent high unemployment.

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I largely agree with my right hon. Friend. This is not a punitive package of measures; I think that that is clear, and I hope that he is clear about it. The challenge for us on the Government side of the House is to develop proposals that are radical and have that far-reaching effect, but are not characterised by the label "punitive". I do not believe that that would work. I agree with my right hon. Friend that if we are to succeed in moving people from incapacity benefit towards the opportunity of taking up employment, we shall need a dynamic local labour market and a strong national economy—and I am confident that if the Labour Government continue with the way in which they have managed the economy, we shall achieve that goal as well.

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Michael Weir (Spokesperson (Work & Pensions; Trade & Industry); Angus, Scottish National Party)

The Secretary of State has mentioned rolling out pathways to work throughout the UK by 2008. Many disability groups have expressed concern about whether the scheme covering the whole country will be of the same quality as the undoubtedly successful pilot schemes. Can the right hon. Gentleman assure us that when the scheme is rolled out, it will have all the functions that the current pilots have enjoyed?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

The national roll-out of pathways to work will certainly be focused on ensuring quality, and outcomes for people who are disabled. I can give the hon. Gentleman that absolute assurance.

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Madeleine Moon (Bridgend, Labour)

I welcome the statement, as the pathways to work project in my constituency, organised largely through the Shaw Trust, has been incredibly successful. How will the changes to housing benefit affect young people who have had difficult relationships and family breakdown and have ended up in voluntary housing settings such as Ty Cornel in the Porthcawl area, and those in the constituency of my hon. Friend Huw Irranca-Davies, in the Yellow project in Maesteg? They need to get back into education so that they can move forward, but they cannot then access housing benefit, because they are past the statutory breakdown age. Will we allow young people to stay in education and still be able to access housing benefit?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

The education maintenance allowance has, I hope, been an important contribution to securing what my hon. Friend is concerned about. The chapter in the Green Paper dealing with the reform of housing benefit makes it clear that the local housing allowance that we propose to replace housing benefit in the private rented sector will be available for new claimants. People who are currently claiming housing benefit will stay under the existing rules.

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Peter Law (Blaenau Gwent, Independent)

Coming from south Wales, from a very depressed constituency, as I do, I ask the Secretary of State how he can justify these proposals. How can a Labour Government justify proposals that will put poor people further down in the poverty trap? That is a disgrace, and something that the Labour party will feel very ashamed of.

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

I can only assume that the hon. Gentleman has not read the Green Paper, because we are not cutting incapacity benefit for existing claimants. We will introduce a more generous employment and support allowance in 2008, and we are providing more help and support for his constituents. I am utterly astonished that he has not had the good grace to recognise that today.

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Roger Berry (Kingswood, Labour)

Obviously, we shall all want to look at the details in the Green Paper, but in view of previous debates on incapacity benefits in this House and elsewhere, I warmly welcome my right hon. Friend's very positive statement, particularly the speedy national roll-out of pathways to work, which is about recognising the barriers that disabled people face and taking the actions necessary to remove those barriers. Does my right hon. Friend agree that one of the key essentials is to ensure that those responsible for giving support and advice to benefit claimants have the skills and the resources to do their job properly? Without that, there is a great danger that this magnificent way of dealing with the problem might not be as effective as would otherwise be the case.

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

My hon. Friend is exactly right and I pay tribute to his work in this area. It is very important that we invest in our disability employment advisers to make sure that they have the skills and expertise and, yes, the resources to do the jobs that we want them to do. As he knows, as part of the changes that we are making to Jobcentre Plus, we are trying to shift more people from the back office into the front office, in order that they can do the front-of-house work that needs to be done with benefit claimants directly. I hope that that will make a difference and ensure that the quality of advice that people receive is as good as it should be.

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David Heathcoat-Amory (Wells, Conservative)

This Green Paper has the very general title of "A new deal for welfare", so why does it not tackle the main feature of the Government's welfare policies in the past eight years, which is the vast extension of means-testing? Does the Secretary of State agree that the means-tested society that we have created is not only incredibly bureaucratic, but creates severe disincentives to long-term saving and self-reliance? When is he going to reform that aspect of his policies?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

In any welfare system, it is important—the right hon. Gentleman will not want to argue against this—to target specific and additional help on the poorest people in society. I make no apology for the fact that, through tax credits, the pension credit and other initiatives that we have introduced, we have lifted literally millions of our fellow citizens out of poverty altogether. That is a record of solid achievement that all Labour Members are proud of. These reforms are about incapacity benefit, older people and lone parents; that is the focus of the Green Paper, and I am sure that the right hon. Gentleman will benefit from a thoroughly good read of it.

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Anne Begg (Aberdeen South, Labour)

There will perhaps be a collective sigh of relief following the Green Paper's publication today. At long last, we have something to discuss, and I am sure that disabled organisations will engage with the Secretary of State and his Department and debate these proposals. There will also be a sigh of relief at the fact that many of the scare stories running in the press about how punitive the Government were going to be seem not to have been fulfilled; that said, we shall have to look at the detail.

Will the Secretary of State assure me that any new benefit that he puts in place will not contain the structural barriers associated with incapacity benefit, which puts obstacles in the way of disabled people and makes it very difficult for them to get work? Will he also provide support for those who need help, particularly those with mental health problems, who need assistance in accessing all those aspects of society that the rest of us take for granted?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

Yes, I can give my hon. Friend that assurance. The reforms that we are making are designed to take out the perverse incentives in the current system, and to provide more help and support. We want to develop these proposals over the next few months in dialogue and consultation with the widest possible cross-section of organisations with an interest in these matters, in order to ensure that we can design out, at the beginning of this process, any change that might have the consequences referred to by my hon. Friend.

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Philip Dunne (Ludlow, Conservative)

The Secretary of State said earlier that he acknowledges that the longer people are on incapacity benefit, the more support, help and training they often need to get off that benefit and into work. Has he been able to discuss with representatives of the various training bodies—they are often voluntary groups—the contractual arrangements entered into by his Department, which were described to the Work and Pensions Committee last week as nothing less than a shambles?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

Yes, we are certainly talking to the training and employment providers about precisely that issue, which my right hon. Friend the Minister for Employment and Welfare Reform is looking into in particular.

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Ronnie Campbell (Blyth Valley, Labour)

The one thing that worries me is the position of older people—particularly those who have worked all their life in heavy industry—who, when they reach the age of 62 or 63, go on to incapacity benefit. The last time that such a change was introduced, officers of the then Department of Health and Social Security were given targets, which they had to meet. Of course, the first people whom they went for were those who had worked all their life in heavy industry, who sustained many injuries in doing so. Will there be targets this time?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

No, there will be no targets. We are not going to follow that approach. It would be disreputable to go about reforming incapacity benefit in that way, but we are not going to write off people who happen to be of a certain age. We must look carefully at the support that we provide for older people. In many parts of the country, although perhaps not in my hon. Friend's area, people are choosing to work longer, if possible. A modern, proper welfare state must provide employment support for people, irrespective of their age. However, we are not going after people in the way that my hon. Friend described—

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

There will be no targets in the way that my hon. Friend suggested. I want to work with organisations, such as the training and employment providers, to give people on benefit the best possible help and support.

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Paul Rowen (Shadow Minister, Transport; Rochdale, Liberal Democrat)

I welcome the statement that the Secretary of State has made, and he is right that unemployment, incapacity benefit claims and poverty occur in specific areas. He said that action would be taken on that: will he elaborate, and say what he has in mind?

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John Hutton (Secretary of State, Department for Work and Pensions; Barrow and Furness, Labour)

The Green Paper sets out the broad direction of travel that we intend to take, and already we have had some discussions with city leaders about what the proposal would look like. I want to mobilise resources outside the Department in this matter. I am looking to people in the private and voluntary sectors, and in local government and beyond, to put together a new approach to delivering welfare-to-work services in our big cities. We shall explore the details with city leaders over the next few weeks and months, and I hope to let the first contracts next year and begin the new way of delivering welfare.