Photo of Lord McKenzie of Luton

Lord McKenzie of Luton (Parliamentary Under-Secretary, Department for Work and Pensions; Labour)

My Lords, I beg to move that this Bill be now read a second time.

The reforms in this Bill mark a watershed in the history of social security in this country. They break the link between welfare and dependency; they destroy the old notion that sickness or disability equates to a life on benefit; and they replace the concept of incapacity with a new focus on capability, delivering on the Government's commitment to reform incapacity benefits, while ensuring security for those who cannot work.

The Bill is premised on the belief in an active, enabling welfare state that matches rights with responsibilities and puts tackling poverty and social exclusion at its core. It enshrines a new and very welcome consensus, founded on clear progressive values of opportunity and security. It is supported by an evidence base that highlights both the crucial importance of these reforms in meeting the challenges of an ageing society and the potential of developments in the management of health conditions for helping people to realise their ambitions in the workplace.

Soon, there will be more people celebrating their 85th birthday each year than starting primary school. The potential implications of this rapid demographic shift are profound, whether in terms of the potential tax burden, the demand for state services or the pensions that people receive. Ultimately, as an economy and as a society, we cannot afford to be denied the skills and contributions of any of those who want to work. Indeed, our economic security and future prosperity hinge on the opportunity for work being open to all.

However, the rewards of work are much more than just economic. A report published only last year concluded that work is central to a person's individual identity, their psychosocial needs and their physical and mental health. It found that unemployment can lead to higher mortality rates and poorer health, while returning to work improves health by as much as unemployment damages it.

From the amalgamation of the Benefits Agency and Employment Service to the extension of the Disability Discrimination Act, extending the opportunity to work has been at the core of our welfare reform agenda since 1997. We have made work pay through the minimum wage and tax credits, and through record investment in the New Deal and Jobcentre Plus we have begun to create an enabling welfare state that responds to the needs of individuals, pioneering new active welfare support to overcome specific barriers to work. The Bill marks the next stage of that journey, building a modern welfare state, allowing people to exercise this fundamental right to work. Importantly, it takes us a step closer to our aspiration of an 80 per cent employment rate, aspiring for a million fewer people receiving incapacity benefits, as well as a million more older people in work and an extra 300,000 lone parents off benefit.

For too long, people with health conditions and disabilities have been denied the right to work, condemned to a lifetime on benefits because the system presumed them incapable. This has culminated in over 2.6 million people becoming dependent on incapacity benefits. When people come on to benefit, eight out of 10 want or expect to return to work. After two years, however, they are more likely to die or retire than fulfil their goal. The current benefit system does not support their aspirations. That is why the Bill seeks to embed those aspirations within the structure of a new benefit.

Part 1 of the Bill makes provision for the new employment and support allowance which will replace incapacity benefit and income support based on incapacity or disability. That will eradicate the concept of incapacity embedded within the current system, and replace it with the concept of capability. For the majority, this will mean the additional responsibility of being actively engaged in preparing for a return to the labour market in return for the additional support. This is achieved by embedding the principles of the successful Pathways to Work pilots within the benefit structure.

We know that Pathways to Work works. It is the most successful initiative of its kind across the world. In pilot areas, the recorded number of job entries for people with health conditions and disabilities has almost doubled since it started. In return for the additional support provided by the national rollout of Pathways to Work, the vast majority of claimants will be required to attend regular interviews and, in time and when resources permit, undertake work-related activity. Those refusing to engage with the help and support offered without good cause could see their benefit reduced progressively in stages, down to the basic level of jobseeker's allowance rates.

At the heart of our early success with the New Deal and Pathways is the fundamental principle of "something for something". Simply to introduce a voluntary system of employment support would be to exclude those who have lost the motivation and confidence to volunteer. Our experiences from existing programmes conclusively show the importance of actively engaging people and the difference it can make to their aspirations to return to work. The added incentive to participate embedded within the benefit structure is therefore essential to its success.

Proof of the success of these measures will not come with a large number of cases where benefit sanctions are imposed, but in the number we can get out of poverty and back into employment. Indeed, in current Pathways to Work areas, where extra conditions have been put in place, around 1 per cent of claimants have been sanctioned, a mark of the success of the deal that we have developed for people on incapacity benefit. A core component of that deal, however, is the recognition that there are some whose benefit it would be unreasonable to make conditional on undertaking work-related activity. For those whose health condition or disability has the severest impact, there will be a higher rate of benefit, exempt from work-related conditions, although they will be able to volunteer for appropriate available support.

The new personal capability assessment (PCA) will make the distinction between these two groups. It is a crucial distinction, on which the Government have rightly consulted extensively. We have been particularly conscious of how important this process is for people with mental health problems and learning difficulties, so we have worked closely with consultative groups on the design of the assessment. Rather than just being focused on benefit entitlement, the new PCA will examine not only what an individual person cannot do but what they can do and what help they need to fulfil their potential. The points system used by the existing PCA to determine entitlement to incapacity benefit through looking at whether people can carry out certain activities will remain. There will be a revised assessment of both physical and mental health, and revised descriptors and point scores will be used.

Following our continued consultation with stakeholders, we intend that regulations will continue to allow the point scores for physical and mental health descriptors to be added together to calculate the final assessment. This decision has been made as a direct result of continued engagement with our stakeholder groups. These regulations will be included in Welfare Reform Bill—Draft Regulations and Supporting Material, which will be available in the Library later this week. Those assessed not to have to undertake work-related conditionality will still have the opportunity to voluntarily access appropriate support. A modern welfare state cannot afford to leave anyone behind. No one will be written off under these reforms.

That is also why existing claimants of incapacity benefits are already able to volunteer for the support available through Pathways; this coverage will be extended as Pathways is rolled out nationwide. Over time, we will migrate existing customers on to the employment and support allowance. I can assure noble Lords that people on incapacity benefits will have their current cash levels of benefit protected. The evaluation of interventions with existing customers in the original seven Pathways to Work pilot districts will help to inform our approach to conditionality for those claimants. As has been the case in Pathways areas since their inception, anyone currently on incapacity benefits will be able to volunteer for any appropriate support on offer. This radical new approach to the treatment of people with health conditions and disabilities will transform not only the lives of the tens of thousands of benefit claimants who will be helped into work but also the lives of their families.

Part 2 provides for the simplification of the existing housing benefit system to improve work incentives and encourage greater personal responsibility. Housing benefit is complex, does little to promote social responsibility and, at times, can act as a barrier to work. It is also a passive benefit. Most claimants have their benefit paid directly to landlords, which means that many are unaware of how much rent is paid on their behalf. It does nothing to prepare people for work and is completely at odds with the active contract which we are seeking to create with our wider reforms of the welfare state.

That is why the powers in Clause 29 will facilitate the rollout of the local housing allowance to all tenants of the deregulated private sector. Local housing allowance bases housing support payments on a system of standard maximum allowances that are calculated according to both the size of household and the location of the property. As with the Pathways programme for those on incapacity benefits, this policy has been tried and tested and has proved successful not only in simplifying the benefit but in promoting fairness and personal responsibility.

Under the local housing allowance pathfinder areas, wherever possible, payments are made to tenants themselves rather than to landlords. This not only promotes financial inclusion and gives people more freedom over their housing choices, it prepares people to move out of benefit dependency and for the responsibility of paying their full rent. The appropriate safeguards are in place for when tenants have difficulty in managing their affairs. However, evidence from the pathfinders has shown that the proportion of payments being made to tenants as opposed to landlords has risen from 40 per cent to 85 per cent. There has been no rise in landlords reporting payments in arrears, which shows that people are taking on the responsibility of managing their housing costs.

Clause 30 seeks to test out a further mechanism for embedding social responsibility into the benefit system through taking the powers to sanction housing benefit from people who are evicted as a result of anti-social behaviour and who then refuse to take up rehabilitation when offered to them.

People have the right to support but they also have a duty to act in a socially responsible manner which does not damage the community in which they live. We have to make a stand to ensure that people realise that there is a line that they cannot cross if they want to continue to expect state support. That is right and fair. We intend to pilot this scheme in 10 local authority areas over a two-year period, with the appropriate safeguards in place for vulnerable children and adults.

Let me be clear: the proposal is not a punishment; it is a measure of last resort to encourage people who have already been evicted to take up the rehabilitative support that we offer them. If we really believe in the principle of rights and responsibilities, there must be clear limits to the behaviour that we will tolerate.

At this point, I acknowledge the debate that has taken place on the single-room rent and the desire of some to see it abolished. I reiterate that the consequences of that could mean that young single people could afford a level of housing which many of their working peers could not. That would undermine work incentives and go against the grain of what we are trying to achieve with the welfare reform agenda.

Part 3 takes forward several measures to improve the administration of social security. It includes powers to improve information-sharing between my department and local authorities. This will help us to work towards our goal of improving the take-up and delivery of benefits—in particular, pension credit, council tax benefit and housing benefit. Common information would need to be given only once to one agency, and that would reap both efficiency gains and improvements in customer service.

Although fraud in income support and jobseeker's allowance almost halved between 1998 and 2005, there is still a long way to go. For a suspected fraud involving both housing benefit and jobseeker's allowance, the local authority can only investigate and prosecute fraud against housing benefit. That could mean either that the offence involving jobseeker's allowance was not investigated or that a duplicate investigation could be carried out by a DWP investigator. Clauses 45 to 47 remove the need for that duplication, both allowing local authorities to conduct investigations and freeing up time and resources for other investigations.

Clause 48 extends the period covered by the "two strikes" rule from three years to five. That means that, if a person commits a benefit offence within five years of a previous benefit fraud conviction, benefit may be withdrawn or reduced for 13 weeks. Extending "two strikes" builds on the positive deterrent effect already shown by the current regime and is a central part of our strategy to reduce fraud in the benefits system.

Part 4 comprises a series of smaller measures correcting some of the anomalies in the benefit system. These include measures to ensure that disability living allowance recipients at the age of 16 do not lose out on three months' benefit entitlement, as well as amendments to simplify the budgeting loan scheme, which provides support to the most vulnerable in society.

The broad consensus that the Bill has received in its passage so far reflects the fact that it is founded on shared values: values of opportunity for all; the contract between the citizen and the state; and the fundamental importance of work. It extends the opportunities that participation in the labour market can offer to people who had previously been denied that chance. It enshrines rights and responsibilities within the structure of the benefit system, and it provides the legal framework through which a real difference can be made to people's lives.

I firmly believe that, if we are to meet the challenges ahead, break down the remaining barriers to work and successfully tackle poverty and social exclusion, this Bill is the right way forward. I commend it to the House.

Moved, That the Bill be now read a second time.—(Lord McKenzie of Luton.)

5:19 pm
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Lord Skelmersdale (Shadow Minister, Work & Pensions; Conservative)

My Lords, I am grateful, as indeed the House should be, to the Minister for introducing the Welfare Reform Bill. It is inevitable that, in a 17-minute speech, he has been able only to scratch the surface of this very complicated Bill. It will create, if only temporarily, no fewer than six levels of benefit under which claimants may fall. Is that really necessary? It will make the social security system even more complex and difficult to administer than it is now. However, I say straightaway that we on this side of the House agree with the policy that the Government are enacting. To that extent, there will be the same consensus here that was widely commented on in another place.

First, we agree on the figures: some 2.7 million people are claiming invalidity benefit, 1 million of whom say they would like to be in some form of employment. It is therefore perfectly rational that the Government should seize on this as an objective. The way they have chosen to do so is to propose a new benefit which turns, as the Minister almost said, traditional social security logic on its head. Rather than concentrate on incapacity for work, this Bill is all about capacity for work. To my mind, that is the right approach. Your Lordships will know that I am a long-term believer in the proposition that the objective of social security is to help people to help themselves.

I therefore have no hesitation in repeating my mantra that disabled people are people first and disabled second. It follows that many disabled people are capable of some work-related activity, which will include unremunerated work as well as salaried employment. We also know that many disabled people want to work. To achieve that ambition it is vital that they have practical support to find suitable jobs and then to remain in employment. It is the intention of this Bill to make that happen.

So far, so good. However, to advance the proposition that 1 million people on existing benefits are to be weaned off them over 10 years causes consternation among current claimants. Two of the recent letters I have received about the Bill are pertinent here. The most recent is the most trenchant. It starts:

"The Government seems to be determined to harass the mentally ill into seeking employment. Why?".

I hope that the Minister will kill this proposition stone dead and tell us that there is absolutely no intention of harassment of people with mental illness, cancer or any other affliction, not least because, if this idea is generally held, the Government will be suffering from their own spin.

The other letter, which I received just as the Bill was published in another place, is more complicated. That correspondent refers to himself as the full-time sole carer of a sufferer of a chronic mental illness. She receives both incapacity benefit and disability living allowance, though at what rates I do not know. The carer, for his part, receives carer's allowance and, due to his wife's chronic schizophrenia, is "unable to work". He further comments that,

"being a full-time carer is hard enough as it is, without having the constant fear of possibly very harsh reform policy being implemented".

Clearly, he lives in fear of benefit withdrawal. I replied that I saw no likelihood of that happening, but that I would write to him again if the situation changed. I ask the Minister: was I right in my response? I certainly hope so.

It is noteworthy that both these letters concern mental illness, an affliction that will be referred to many times during the subsequent stages of the Bill. It is easy, in social security terms, to cope with long-term illnesses, whether mental or physical. It is much harder to support those with fluctuating illnesses, or those whose treatment is temporarily debilitating. The obvious example here would be the radiotherapy or chemotherapy of cancer patients, who suffer sometimes quite long periods of tiredness and inability to concentrate once their treatment is completed. The treatment, too, may on occasion need to be repeated, and before Third Reading we will need to be assured that the regulations and administration surrounding the Bill will cover the situation of such patients.

There is a lot in this Bill that we will have to tease out of the Government. My honourable friends were grateful that the Government saw fit to produce many of the regulations flowing from the Bill in draft form during the proceedings in another place. However, some regulations have not yet seen the light of day. I note that the Minister said that two of them would soon appear before the public gaze. I mention in particular those in Clauses 8, 10, 12 and 15. I hope that the Minister will be able to do a little better than produce just two of the four I have mentioned. Three would be excellent; four and I would let him off.

The detail of the Bill rather than the policy concerns us; for example, is the 13-week assessment period too long for some disabled people? Will there be a system for fast-tracking those with terminal conditions?

There are also issues surrounding the assessments; for example, will specialist medical practitioners be involved in the medical rather than the capacity tests? The Explanatory Notes state that there will be a two-part assessment, the first part concerning evidence provided by the claimant and supported by his GP and the second concerning advice to the decision-maker, presumably a lay man, from a doctor or other healthcare professional approved by the Secretary of State. We will have to probe how specific such advice will be or whether it will be of a general nature. We also need to consider the third interview regarding the sort of work or work-related activity it would be appropriate for the claimant to do. One fact about the assessment process that concerns me is that with some conditions, especially in mental health, the claimant does not understand, or even hear, the questions posed by the interviewer. There should therefore be an arrangement like the one that exists now, to an extent, so that the potential claimant can bring an intermediary with him when appropriate.

The Minister referred briefly to migration. I understand that on day one of the new benefit—which I assume will be at the beginning of April, but that is yet to be confirmed—only new cases will be admitted to the new employment and support allowance and no new claimants will be eligible for invalidity benefit. What will happen to those still on IB? I welcome the news that I heard just now that their current benefit will be maintained in cash terms, but will they be allowed to wither on the vine? Will people currently drawing the higher rate of IB automatically be transferred to the support component of the new benefit? What happens to their current passported benefits, such as free prescriptions and housing benefit?

We know, because the Green Paper tells us, that around two-thirds of the 2.7 million people on incapacity benefits have been on them for over two years, and the Minister and his predecessor told us that they are more likely to reach retirement age or die than to gain employment. Those are deplorable statistics. One of the reasons for them is the lack of reassessment or, to put it more fairly, the irregular nature of reassessment. It seems only reasonable that if the state is providing income support for disabled people, it should monitor them, sensitively, of course, but none the less periodically. This is especially relevant for people with fluctuating conditions.

We will discuss these issues and many more in Committee. However, one point is fundamental to the success of the Government's policy: the attitude of employers. Many employers are reluctant to take on people with disabilities and, in some cases, to keep them on their staff. What will the Government do to encourage them to change their attitude? Are they relying on contractors to do that for them, or does the Minister agree that a concerted campaign by the Government is sorely needed? We need to see a huge increase in flexible employment patterns, and we will want to know how the Government intend to achieve that.

So far, I have commented only on the employment and support allowance. However, the Bill contains rather more than that proposal; there are 40 more clauses. I do not intend to go through all the provisions now, but I shall highlight the first of them, which is housing benefit. At the moment it is paid according to an assessment made by the local authority rent officer of whether the rent charged is appropriate to the area, the individual property and the claimant's needs. The Bill simplifies that, essentially, as I understand it, by establishing area rent tables for different sizes of dwelling and then setting standard maximum allowances, varying according to the size of the household. At the moment, in many cases the benefit is paid directly to the landlord, and the claimant never sees it. The Minister said that that happens in about 20 per cent of cases. The Government are right that that limits social responsibility, and they wish rent to be paid directly to the claimant's bank account for onward transmission by standing order, but there are problems. The reason the benefit goes directly to the landlord is that experience has shown that often the claimant does not pay over the money.

If there is to be a bar—and I am not entirely sure whether there will be—on the landlord's direct receipt, it is inevitable that the private rented sector will stop providing accommodation for people on benefits. Already one sees advertisements for houses to rent in local newspapers with the words "No DSS". In my local paper last week, there were 15 such advertisements out of a total of 48 properties or rooms—almost a third. If this rises any more, where will rented housing come from? We have enough problems already with the social housing sector. I accept that all this has already been piloted in nine local authority areas; however, I am rather sceptical of the comment on page 6 of the Green Paper that,

"across the pathfinders most tenants have payments made into a bank account".

Two things strike me about that sentence. First, "most" can refer to any number over 50 per cent; and, secondly, "a bank account" does not necessarily mean the claimant's own bank account, even a joint one. We will need much more precise information before we can agree to that policy.

As the Minister said, the Government are also taking powers to deprive people of housing benefit following eviction for anti-social behaviour. Here, too, I need to be given a lot of reassurance that that is the right course of action.

Since local authorities administer the passported benefits of housing and council tax benefit, I agree with information-sharing between local authorities and the department, so long as the information is relevant to the inquiries pursued; for example, in suspected fraud cases. I am surprised that such a power does not exist already in social security law. However, I am not enamoured of the Secretary of State's view that the computer networks of the Government and local government should be linked. What business is it of a general practitioner, for example, to have access to the police national computer?

As I have said, there is much in the Bill to be teased out, not only in revising it—your Lordships' principal job—but for the information of those disabled people whom the Bill is designed to help.

5:31 pm
Photo of Lord Oakeshott of Seagrove Bay

Lord Oakeshott of Seagrove Bay (Spokesperson in the Lords, Treasury, Spokesperson in the Lords, Work & Pensions; Liberal Democrat)

My Lords, I start by welcoming the noble Lord, Lord McKenzie, to his new DWP duties. I have always found him open, courteous, thoughtful and honest in our exchanges on Treasury matters. I hope that by saying that I am not putting the kibosh on his career when Gordon Brown takes over. The House has been very fortunate in recent years in all its Work and Pensions Ministers: the noble Baroness, Lady Hollis, the noble Lord, Lord Hunt, and now the noble Lord, Lord McKenzie.

I am very fortunate in opening the debate from these Benches to be able to put the problems which the Bill addresses in their wider social and economic context to some extent, particularly because the real experts on disability—my noble friends and colleagues on our team, Lord Addington and Lady Thomas of Winchester—will be bringing all their practical experience and passion to bear, as your Lordships will hear shortly. We very much look forward also to the contribution of my noble friend Lord Kirkwood of Kirkhope, with his long and distinguished record in another place.

We heard about consensus from the noble Lord, Lord Skelmersdale. We all agree with the ends of the Bill; we differ only on the means. We welcome the measured and balanced tone of the Minister's opening speech today.

Some 2,700,000 people are on incapacity benefit—almost one-tenth of the 29 million people now at work in this country. It is a truly shocking statistic. We know that the first big surge on to benefit came in the Thatcher years as the pits, the mills, the steelworks and the shipyards shut down, leaving middle-aged men with no realistic prospect of finding work in depressed areas such as south Wales and the north-east. They are the casualties of deindustrialisation, and you can still see a marked difference between the rates of incapacity in southern England and in the rest of the UK. But now we are suffering a second, different surge, this time from the casualties of our fractured society. Over 40 per cent of people now on incapacity benefit have mental health problems such as depression or schizophrenia, 40 per cent of them women. My noble friend Lady Thomas will go into much more detail on that. But why, for example, is cognitive behaviour therapy for depression not much more freely available from the National Health Service, as the noble Lord, Lord Layard—whom I am delighted to see in his place—has argued so strongly?

Last week my colleagues and I visited the jobcentre in Stockwell, just over the river. In Lambeth the overall employment rate is only 63 per cent compared with almost three-quarters nationally. In Stockwell and Brixton, it feels even lower. We were very impressed by the dedication and professionalism of the staff we met, who were trying to do their best for vulnerable people who often have serious mental health problems. The staff told us that they needed more training and more immediate access to specialist advice. My noble friend Lord Addington will expand on that later and will be moving relevant amendments in Committee.

I was also struck by the number of large gentlemen standing round in uniformed blazers. I was told that they were customer care officers, but they were supplied by Group 4 and looked awfully like the security men I see just up the road guarding the tills at Tesco in Kennington Lane. Of course jobcentre staff must be properly protected, but it is a sad commentary on the state of our society 10 years into a new Labour Government that the staff need so much protection from the people whom they are there to help to find work or secure the benefits to which they are entitled. What a waste of scarce resources on essentially unproductive security that is when eight of the 52 posts in that jobcentre have had to be cut as part of the massive DWP job-reduction programme over the past few years. Good management and dedicated staff can take you only so far; resources—and that means money—are the key to giving a sensitive and effective service to the hundreds of people with varied needs who come to jobcentres every day.

Getting 1 million or more claimants into work is a daunting task, but the payback for our economy and the Exchequer, if we can pull it off, will be immense. Can the Minister give us chapter and verse on how the Pathways to Work programme, which he mentioned, will be rolled out across the whole country and convince us that the Department for Work and Pensions is not trying to make water flow uphill by trying to do this at the same time as front-line posts are constantly being cut? Is "one million into work" just a typical Tony Blair instant initiative for a cheap and nasty headline in the Sun, or is it really a firm long-term commitment with the political will and the cash to make it happen? You cannot solve a persistent deep-seated, institutionally ingrained problem like incapacity on the cheap.

Can the Minister also tell us which categories of claimants will be worse off as a result of the Bill? Will vulnerable people now have to wait longer to receive the full benefit to which they are entitled if they pass the assessment, instead of having payments backdated to the date on which they first claimed? How does he reply to the Child Poverty Action Group, for example, which points out that families will have to wait up to 13 weeks on the jobseeker's allowance before they receive the employment and support allowance? Can he also tell us how his department will respond to the very cogent criticisms of the citizens advice bureaux that,

"a quantum leap in the quality of medical assessment and decision making is necessary",

in view of the 60 to 70 per cent appeal success rate for disability living allowance claims? What about the view of the citizens advice bureaux that the quality of ATOS ORIGEN doctors' assessments of suitability for benefit must be improved?

The citizens advice bureaux speak with great authority because they see thousands of people every day. Perhaps I may add one case from my own personal experience. I will write to the Minister with full details and ask him what went wrong, but the essential facts are these, and they confirm everything that the CABs and others say about the difficulty of sanctioning people with mental health problems and the poor quality of decision-making. A young man I know has been receiving disability allowance because he has severe mental health problems. He has been sectioned three times under the Mental Health Act, most recently from January to June last year. Last August, he was sent a letter telling him to attend a medical assessment in Enfield—he lives in Brixton by the way—and containing a 20-page questionnaire. He did not attend the interview or fill in the questionnaire and a few weeks later his disability allowance was cut off. Like many other people suffering from severe mental problems, he does not open his post, and if he did, he certainly would not have been able to fill in the questionnaire. By chance, the young man's father called in recently. He discovered what had happened and that his son's benefit had been cut off without either his legal guardian or social worker being informed, although both their addresses were on file.

How many other highly vulnerable people are penalised in this way, people who perhaps have no relatives or friends able to complain on their behalf? Again in the words of the CAB,

"the DWP needs to focus much more strongly on what it should do to prevent such injustice".

On housing, we on these Benches, like Shelter, the Child Poverty Action Group, the Scottish Council for Single Homeless and many other organisations, oppose the single room rent restrictions and will be moving amendments to that end. We are in very good company; in 1996, just before they came to power, Tony Blair, Gordon Brown and John Hutton all voted that same way in Parliament. What has changed?

Along with these housing organisations and many others, we also have grave reservations about Clause 30 of the Bill, which withdraws housing benefit following eviction for anti-social behaviour. This really would be visiting the sins of the fathers on innocent children. If this provision, as the Minister has just told us, is being piloted for two years, it should be subject to a sunset clause so that, unless it is renewed, it automatically lapses after that period. We shall, I am bound to say, need some more persuading from the Minister in Committee if we are not to oppose the clause outright.

The Bill acts on the supply side of the job market. It attempts to encourage and help people to apply for jobs, which we wholly support, and penalises people who do not co-operate. Here we will be trying to save the Bill from unfairness and sanctions that do not work. However, the demand side is just as important. How do the Government plan to encourage and persuade thousands of employers that people with disability or mental health problems can be productive, reliable and, let us be frank, profitable employees? Otherwise the Government might just as well be pushing on a piece of string, and any idea of getting a million people, or even several hundred thousand, off benefit and into work would just be moonshine.

I touched earlier on the problems that people with depression and other mental health problems have in getting real help from the National Health Service. In this Bill we are also trying to pick up the pieces from another failure of so-called joined-up government—in basic education. In our work in the Economic Affairs Committee of this House, the message comes across loud and clear from employers that far too many of our people lack the most basic skills in reading, writing and simple maths. "Working on the Three Rs", the joint study published last August by the CBI and the Department for Education and Skills, says:

"Poor basic skills damage people's lives and their employment prospects. Weak functional skills are associated with higher unemployment, lower earnings, poorer chances of career progression and social exclusion".

Exactly. For the least well educated 20 per cent, Britain's record is far worse than that of Germany, France and the other main European countries. Instead of wasting our children's time by teaching them Britishness, whatever that may mean, we must give them the most basic life skills of all—the ability to read, write and add up. Our competitors do not teach their young people to be German; they teach them a trade.

So we are all on the same side with this Bill. As we scrutinise it, improve it and help it on its way through the House, our watchwords on these Benches will be training and fairness; encouragement not punishment; carrots not sticks; practical help and advice, not threats. In my experience, those work better for most people most of the time, whether employed already or still stuck on benefit. Britain is one of the world's richest economies and, in the Blair decade, the wealthiest in our society have grown richer, often beyond their wildest dreams. It is high time to help many more of our people into productive work so that they can share in building and enjoying our prosperity and not suffer, as all too often happens, in the shadows of our society. In that fine cause, we must all work to produce an Act of which Parliament can be proud.

5:44 pm
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The Bishop of Leicester (Bishop)

My Lords, I, too, thank the Minister for introducing the Bill to this House. I want to speak at rather greater length than the noble Lord, Lord Oakeshott, about the housing benefit sanctions placed on those who have been evicted for anti-social behaviour. In doing so, I affirm the aspirations set out in the Government's Respect Action Plan, in which they write:

"We want to create a decent, civil society in which people can shape their own lives and participate fully in their local community".

I recognise, as all of us do on these Benches from our pastoral experience in our dioceses, the negative impact that crime and anti-social behaviour can have on neighbourhoods, communities and, in particular, the lives of children and young people and their families. At this point I declare my interest as chair of the trustees of the Children's Society in what I have to say. My work with that charity repeatedly reveals that children often become the victims of other people's behaviour. I suggest that this Bill, if left as it is, will continue that trend. Of course, I support proportionate responses to prevent criminal anti-social behaviour but I have grave concerns about the proposal to reduce or remove entitlement to housing benefit from families with dependent children.

Any proposals brought forward must be considered with respect to their specific impact on children and young people. As noble Lords will know, the rights of this group are defined under both domestic and international law. I draw your Lordships' attention to the principle of ensuring that all decisions are made in the child's best interests under both Article 3 of the United Nations Convention on the Rights of the Child and the Children Act 1989. This principle is reinforced in the Children Act 2004 and in the Every Child Matters agenda, in particular the outcome to achieve economic well-being, which includes as its aims "Live in decent homes" and,

"Live in households free from low income".

The proposals in this Bill directly contradict the five outcomes framework of Every Child Matters and, in my view, will lead to greater social exclusion for some children and families.

I turn to the issue of child poverty and protection inherent in Clause 30. I believe that the introduction of the principle of conditionality to housing benefit entitlement may inadvertently place children at risk and undermine the Government's pledge to eradicate child poverty. I believe that basing delivery of welfare benefits on behaviour, rather than on need, represents an attack on the fundamental principles of welfare provision.

Those in receipt of housing benefit have already demonstrated that they are in need of financial assistance. That assistance is already calculated on the basis of a minimum standard of living. While the draft regulations make provision for a maximum level of benefit reduction of 30 per cent for claimants who have responsibility for a child or young person, it must be recognised that any reduction would likely result in homelessness, indebtedness and destitution for some of these families. A 30 per cent reduction in housing benefit may make it impossible for the parent or parents to provide sufficient financial support for the child or children. In extreme cases, it may lead to the need for the child to be placed in the care of the state. A key principle of the Children Act 1989 is that a child should be removed from their family only if they are at immediate risk of significant harm. Surely that principle must remain in place.

The Government intend the offer of rehabilitation to address not only the symptoms but also the root causes of problematic behaviour by linking reductions in housing benefit with the offer of appropriate rehabilitation. However, I question the likely efficacy of this approach when evidence in relation to parenting support, for example, shows that voluntary interventions are more effective than coercive ones. I am concerned that the clause does not set out how the offer of rehabilitation will operate. For example, it is not specified whether the conditions will consist solely of a requirement to take part in rehabilitative programmes or whether they will also include, where appropriate, referrals to mental health or substance misuse services, training programmes or family therapy.

The current proposals could aggravate an already complex situation. It is also unclear whether the sanctions placed on a named individual are intended to punish the parents, the children, the family or whoever in that family is principally responsible for the alleged anti-social behaviour. That is pertinent, as any accompanying rehabilitative or supportive programme must identify and address the behaviour, and whatever is causing it, of different individuals with their different needs and concerns. The programme, as described in government literature, is meant to deal with group behaviour. It is unlikely to be able to do both.

Finally, I have serious concerns about the availability of such intensive therapeutic programmes. Can a local authority that decides to refer a family to such a service guarantee that places will be available on that programme? If no place is available or the family is placed on a waiting list, does the reduction in housing benefit still apply? Unless the availability and quality of support can be assured, such a system would be setting people up to fail. The proposals are inequitable and discriminatory, as they apply only to those in receipt of housing benefit. Although the Government have outlined their intention to introduce a house closure order to deal with anti-social owner-occupiers, as currently described, the order would be in force for up to six months, whereas this clause permits the removal of housing benefit for up to five years and is not attached to any requirement to attend a programme of rehabilitation. Thus, those dependent on state benefits receive a harsher penalty than those who can afford to own their own property.

I am also concerned that the measures may inadvertently punish those who cannot control their behaviour, such as those with mental health problems or learning difficulties, to whom noble Lords have already referred, or those who cannot control other family members or visitors to the home. The general point is that the anti-social behaviour of children and/or their parents does not happen in isolation. This behaviour is the manifestation of a complex plethora of problems and issues that need to be addressed appropriately. Many of these families have a history of strained relationships with statutory agencies and personnel, and reducing housing benefit to coerce them to take part in a rehabilitative programme is extremely unlikely to be effective.

5:52 pm
Photo of Lord Morris of Manchester

Lord Morris of Manchester (Labour)

My Lords, this is a profoundly important debate for people among the most needful in Britain today—one in which I have interests to declare both as the first Minister for Disabled People and a serial legislator on their problems, needs and rights. Interestingly, the debate takes place very close to the date, 37 years ago, when your Lordships' House gave a Second Reading to my Private Member's Bill that became the Chronically Sick and Disabled Persons Act 1970. My friends—then, as now—the noble Baronesses, Lady Masham and Lady Darcy de Knayth, made their maiden speeches.

As they know well, all our current disability benefits are founded on legislation promoted during my years as Minister for Disabled People from 1974 to 1979: incapacity benefit; the non-contributory invalidity pension, often described as the severe disablement allowance; the mobility allowance; the disabled housewives' allowance; and the carers' allowance—all of them were aimed at reducing the socially handicapping effects of disability. Thus I have a deep personal interest in the Bill.

In legislating both as a private Member and a Minister, my priorities have consistently embraced that of seeking to secure for disabled people the employment opportunities needed to end their dependence on social security payments and to achieve the independence and dignity of becoming taxpayers. My approach this afternoon will be informed by that priority.

The Bill has the potential to bring considerable benefit to hundreds of thousands of disabled people now in danger of drifting away from the world of employment due to the failure of others to understand their needs. Crucially, it offers rehabilitation and work-focused support to help to simplify the life-changing transition that appropriate employment opportunities can bestow, and is further evidence of the Government's commitment to bringing disabled people more into the mainstream of social life by providing support appropriate to their needs in achieving and retaining the right to work.

I am delighted that my noble friend Lord McKenzie is promoting the measure. He has made an excellent start in his new ministerial role, and I wish him well. As he will know, concerns have been expressed by disabled people and their organisations about a range of issues, some of which I shall touch on today; but, meanwhile, his presence itself vouchsafes careful consideration of their concerns, as does the involvement and input of Anne McGuire as the Minister for Disabled People. She has an admirable record of achievement and an abiding commitment to do the right thing by long-term sick and disabled people.

One of the issues that disability organisations have raised is their concern about the Bill's proposals for engaging with employers. The new benefit that it proposes—the Employment and Support Allowance, or ESA—would place conditionality on people in receipt of the work-related activity component to attend work-focused interviews and undertake agreed work-related activities. This contrasts sharply with the absence of measures for tackling employers' resistance to employing disabled people. That resistance is real, as the Disability Rights Commission and the UK Disabled People's Council have emphatically made clear. The DWP's own report—No. 202—says that nine out of 10 employers think that employing a person with impaired vision would be either difficult or impossible. But it is of double concern that employers are not only resistant to employing disabled people; they are also unaware of the extent of support available to them in employing a disabled person. As of now, 74 per cent of employers are not aware of the Access to Work scheme and its support for meeting extra costs when employing a disabled person. So they still perceive disabled people as potentially expensive to employ, with scant help available from the Government.

Turning from employers back to claimants of ESA, it is instructive to look at the proposals for payment of the allowance to people who are seriously ill and/or disabled through cancer treatment. As Macmillan Cancer Support has shown, they can be forced to attend work-focused interviews because of the way in which Jobcentre Plus uses its discretionary powers. Macmillan welcomes the Government's recognition in Committee on the Bill in the House of Commons that it would be wrong to treat people undergoing treatment that in itself has very severe disabling side-effects as capable of work-related activity.

As of now, receiving radiotherapy and non-invasive forms of chemotherapy are not protected from conditionality via inclusion in the support group which, in Macmillan's view, must be changed. It insists that the best way to stop people who are physically ill and/or disabled through cancer treatment being pressured to attend work-focused interviews is to include all patients undergoing active cancer treatment and the terminally ill in the support group.

Cancer poverty is a particular problem for people of working age and their families. Macmillan's research shows that of those aged 55 or under, seven out of 10 households suffer a loss in income averaging 50 per cent following a cancer diagnosis, making disability benefits extremely important to them.

Yet a great many people with cancer miss out because they are unaware of benefits to which they are entitled. As the National Audit Office has reported, 77 per cent of cancer patients are not given information about financial support, while Jobcentre Plus staff rarely inform them of disability benefits administered by the Disability and Carers Service. Indeed, the scripts used in Jobcentre Plus call centres do not include any prompts to give information about disability benefits.

In summary, Macmillan wants the agency's scripts improved so that claimants know about all their benefit entitlements, together with measures to ensure that the focus is more strongly on improving take-up. The charity wants Jobcentre Plus routinely to refer claimants to sources of guidance, information and advice, such as the DWP's own benefits inquiry line, as well as disability awareness training for front-line staff.

If we are to fulfil the admirable aspiration of helping a million more disabled people into work during the next decade, we must urgently challenge unfounded concerns about employing disabled people and make strongly renewed efforts to publicise the help available to employers.

Parliamentary replies state that the DWP spends £320,000 a year on marketing and publicising its disability services and programmes, of which, such is their number, the sum available for publicising Access to Work is small. For many disability organisations, this explains why the department's message is not reaching most employers. They feel, too, that a Bill such as this could have something to say on the key role of ministries other than the DWP, such as the Department of Trade and Industry, in putting together a cross-departmental strategy for countering employers' concerns about taking on disabled people. Moreover, they say that without such a strategy,

"there must be serious concern about achieving the aim of getting a million disabled people off benefits and into work".

The Commons Public Accounts Committee report on DWP support for disabled people states:

"In 2004—05, the Department for Work and Pensions spent around £320 million funding a number of programmes and schemes to help disabled people find and stay in employment. However, they reach only a minority—160,000—of those who could potentially benefit".

Unsurprisingly, this prompts disability organisations to query the adequacy of the £360 million promised to roll out Pathways to Work nationally when, as we have seen, the £320 million spent on funding other programmes reached only 160,000 people; perhaps my noble friend could have that seemingly well founded concern looked into urgently.

I turn very briefly now to some other points worthy of attention. The first concerns the Bill's title. It surprises many disabled people that the word "welfare" is itself in the Short Title when the emphasis in this policy area is on rights, not on "welfarism". Why, I am asked, is the measure not called the "Disabled Persons Employment and Support Bill"?

A further point raised with me by their organisations is that disabled people should be more protected against the popular assumption that fraudulent claiming of disability benefits is rampant whereas, to take just one example, at 0.1 per cent, the rate of fraudulent claims for incapacity benefit is the lowest for any major benefit. The much bigger problem here is low take-up by entitled people.

Finally, I am asked also to press the issue of sanctions as dealt with in the Bill. The DWP's analysis last year of the Pathways pilot areas showed the number of sanctions imposed on claimants to be about 0.4 per cent of all benefit starts in Pathways. Is the department convinced that this finding justifies the Bill's significant powers of sanction, given the widely accepted figure of 1 million disabled people who want to work but are left waiting for the right help and support to enable them to do so? It is put to me:

"We clearly have the carrot in the form of the help and support being offered, but do we really need a stick in the form of sanctions when so many disabled people crave the right to work?".

I know my noble friend will not be able to respond today to all of the points raised with him in the debate, but I hope that he will at least have time to say more in his winding-up speech about engaging with employers to promote the support available to them and challenge negative attitudes about employing disabled people. No Bill that I have known in all my years in Parliament was incapable of being improved by constructive scrutiny and I hope the points I have raised today will help to ensure the Bill's emergence from parliamentary scrutiny as one that disability organisations, employers and all the departments involved can accept as well worth speeding to the statute book. I wish my noble friend all success.

6:06 pm
Photo of Baroness Thomas of Winchester

Baroness Thomas of Winchester (Liberal Democrat)

My Lords, it is a pleasure to follow the noble Lord, Lord Morris of Manchester, who has done so much for disabled people over the years.

The Pathways to Work pilot schemes have demonstrated that a great many disabled people of working age want paid employment. Being out of work is alienating, unsociable and, for many, begins an inevitable slide into poverty. Being out of work for a long time is even worse, as confidence levels plummet, with unemployed disabled people quickly believing that they are completely unemployable, leading to feelings of worthlessness. So I welcome the purpose of the Bill, which has the ambitious aim of trying to reduce the numbers of disabled people on incapacity benefit by helping them enter the workplace. I very much hope that the Government have allocated enough resources to this ambition—£360 million over two years does not sound very much—and that they are still listening not just to Parliament but to all the expertise in the specialist voluntary organisations that work tirelessly for their client groups.

Those suffering mental health conditions, who, as we have heard, account for about 40 per cent of those on IB, are among the most vulnerable people that the whole scheme must try to help. If more help was available to deal with mental health problems in the early stages, perhaps there would be fewer people with that problem on benefits. After all, more money spent early on is bound to be cost-effective. Are there, for example, enough cognitive behavioural therapists working in the National Health Service? What has happened to the health and well-being strategy which is supposed to be running alongside the Bill?

It is especially important that personal advisers at jobcentres are trained properly in helping vulnerable people who are trying to overcome their problems and enter or re-enter the workplace. Here I am particularly concerned about the sanctions regime in the Bill which, as others have said, could add to the stress and intimidation felt by those prone to mental illness. Will the Minister confirm that decision-makers have some discretion in the imposition of a sanction if a claimant falling into this category misses, for example, a work-focused interview without necessarily giving a "good cause"?

Employers also need to be especially understanding with employees suffering from fluctuating conditions such as clinical depression, and there is a strong view amongst specialist groups that not enough attention has been paid to the vital role and responsibility that employers have in ensuring the success of what the Government are attempting to do. Although employers of disabled people are very positive about the experience, there is no question that most employers continue to discriminate against disabled employees. That fact is borne out by the statistics reported in the Joseph Rowntree Foundation report Monitoring Poverty and Social Exclusion2005. The Minister for Employment and Welfare Reform, Mr Jim Murphy, said in a debate on 29 November in the other place that the Government needed to do more to engage employers, and I wonder what they have in mind. Unless there are stronger requirements for employers to assist employment in the future, many disabled people in the employment group are going to be condemned to engage in endless work-focused activities with no prospect of a job.

No one can say that the Bill is making the whole disability benefits field simpler, as the noble Lord, Lord Skelmersdale, said. A complex web of procedures is set out in the Bill, starting with the familiar personal capacity assessment although, of course, in a new form. We have not yet seen the draft regulations for this test—they are promised tomorrow—which does not give us much time to examine them properly before the Committee stage. However, the specialist groups have seen the draft proposals and there is great concern about the proposed withdrawal of several low-scoring physical descriptors. I do not think the noble Lord said that they have been restored, so I assume they are still withdrawn at present. The point of having descriptors such as, "Can only walk up and down a flight of stairs if he goes sideways or one step at a time"—I can identify with this—is that those people who fall into such a category need help and support with work. They are not necessarily seeking exemption from work, but they need physical obstacles to be taken into account lest they get forgotten. However, I welcome the announcement made by the noble Lord that the physical function and mental health function will be added together, which shows that there is now movement towards a social rather than just a medical model of disability; that is very welcome.

Still on the subject of the personal capacity assessment, presumably there will still be a request for information from the claimant's doctor. I urge that this process is closely monitored. The claimant should be given an up-to-date assessment before the report is sent in, and then it should be sent in as soon as possible thereafter. We hear that many doctors do not submit a report in time for the claimant's PCA. The up-to-date doctor's report at the outset would surely save a lot of time wasted in later appeals, the majority of which are successful.

My last word at this point on the PCA comes from my experience of claiming disability living allowance, which was only granted on appeal, and here I must declare that particular interest. The form asked how far I could walk outside unaided. This is a difficult question and the form seemed well designed to take a range of answers into account, yet I was marked down because I was not VUTW. I had to phone up to ask what that meant. It means virtually unable to walk. None of my comments had been taken into account at all. Was it anything to do with a computer only understanding black and white answers, I wondered? In which case, God preserve all claimants from what a Member of the other place cited as, "Computer says 'No'". Watchers of "Little Britain" will recognise the phrase. What is the role of the computer is in this particular assessment? Is it the case that if pre-coded answers are not given, any non-standard responses on the form will not be attached to any particular descriptor and might just as well not have been written? Does that not make the case for having an independent assessment of the whole PCA process, and many dummy runs, before national roll-out?

I turn now to the subject of the work-focused health assessment. First, it is very important that assessors are able to call on specialist knowledge of certain conditions, and my noble friend Lord Addington will expand on this point. The second matter is the understandable concern that by undertaking this assessment at the same time as the main PCA, claimants will have to focus on what they cannot do and what they can do almost simultaneously. It is quite likely to be in the disabled person's interest that they do not have to make two trips to the medical centre for these two tests, and quite a few claimants obviously will not need to take the second one, but it does raise questions. Will the two tests be entirely separate and will the decision-maker be the same person on each occasion, or will the answers to one test influence the other? Perhaps the Minister can enlighten us as this is a worry to several specialist groups.

Before leaving this part of the Bill, why will no benefit entitlement except for those with a terminal illness be backdated to the start of a claim; that is, roughly the 13-week assessment phase when the benefit is at the lower jobseeker's allowance level? I know this is not the not the first time that the question has been put this afternoon, but it seems unjust, particularly for those in the support group. Is this the only benefit which will not be backdated to the start of the claim?

I should like to look at the whole question of passported benefits, an issue also raised by the noble Lord, Lord Skelmersdale. I refer to benefits such as free school meals and prescriptions, housing and council tax benefits. This was hardly touched on during the Bill's scrutiny in the other place. Will the Minister set out at some point just where the triggers are with the new employment and support allowance? However, there are almost certainly too many variables for a simple explanation now. A question involving passported benefits was put to me the other day in relation to the help and support a disabled person needs when they start work, and it is one which goes to the heart of the Bill. If a severely disabled wheelchair user whose circumstances mean that she is currently on income support and who is at present entitled to passported benefits wishes to seek a proper job—that is, a job with more hours than the permitted work rules allow—using her new skills acquired at an FE college, will there be adequate support available? A person such as this is unlikely to take the plunge into the world of work without such support in case they had seriously misjudged their ability to cope. Will there be enough flexibility in the system for such a person, after completing the transitional period, to go back on to benefits if necessary without starting from scratch? The phrase, "What if I find it all too much?", is one which must be familiar to personal advisers. I should be grateful for the Minister's comments on such a case.

This brings me to the Access to Work scheme, which has been described as one of the best kept of all Government secrets. One of my disabled friends is a highly gifted primary school teacher in a north London borough who can only do her job thanks to an Access to Work scheme helper who writes on the blackboard, carries books, photocopies and does all the practical tasks my friend cannot manage. Are there any plans to make this excellent scheme better known? When Pathways to Work is rolled out nationally, it must surely be the case that the Access to Work scheme will have to be expanded, and I hope this has been taken into account in its budget, particularly in the number of staff engaged in administering the scheme. Perhaps we could have a reassurance on this point.

Finally, I wish this Bill had had pre-legislative scrutiny, given that it is a carryover Bill. The Government may say that the Green Paper and the successful pilot schemes carried out so far are enough, but they are no substitute for detailed parliamentary scrutiny. The problem is that the regulations which will have to be made under the Bill are just as important as the Bill itself, and they cannot be amended. Obviously all social security Bills have to contain detailed regulation-making powers, but sooner or later Parliament is going to want a better way of having its say about what is in these important regulations. The Delegated Powers and Regulatory Reform Committee can warn all it can and the Merits of Statutory Instruments Committee can play its part after Bills become law, but when all is said and down, the balance is still heavily tilted towards ministerial fiat becoming law. We in this House can seek to make the most important regulations come under the affirmative process more than just the first time, or suggest amendments in a non-fatal Motion, or use the blunt instrument of a vote against the whole order. However, none of these courses of action is really satisfactory, so I urge the Minister to keep an open mind on what should go in the regulations before the Bill leaves this House. There are many other matters of concern to be explored which I have not had time to mention, and I look forward to a more detailed scrutiny of the Bill in the weeks to come.

6:18 pm
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Lord Low of Dalston (Crossbench)

My Lords, this Bill has the potential to greatly improve the support and opportunities available to disabled people, who have for many years not been sufficiently seen as able to move towards or engage in work. I therefore welcome the recognition by the Government that disabled people on incapacity benefit should not be written off and sidelined for the rest of their working lives and that those who have left work because of illness or disability should be assisted to move back towards the labour market. I should also like to pay tribute to the way the Minister and his department have, like his predecessor, been anxious to engage in dialogue with noble Lords over the Bill. I look forward to approaching its passage through your Lordships' House in the same spirit of dialogue, which is the surest way to achieve the best outcome for those the Bill seeks to help.

The Disability Rights Commission has produced statistics of the employment disadvantage experienced by disabled people which are too numerous for me to catalogue in full but which are frightening in their import. Whilst the number of working age disabled people in employment has increased over the past decade, 48 per cent remain outside employment. For people with a mental illness or a learning disability the percentages are 80 per cent and 90 per cent respectively. Due to stigma and discrimination, fewer than four in 10 employers would consider employing someone with a history of mental health problems, compared to more than six in 10 for candidates with physical disability. As the noble Lord, Lord Morris of Manchester, has reminded us, as many as 90 per cent of employers say that someone with a visual disability would be difficult or impossible to employ. On average, disabled people earn 10 per cent less than non-disabled people at every level of qualification, and 40 per cent of people on incapacity benefit have no formal qualifications at all.

The DRC welcomes the opportunity presented by the Bill to create an alternative future where, in return for taking steps towards work, disabled people can anticipate high-quality personalised support, wider employment opportunities, a labour market in which disability discrimination is eradicated, equal pay and prospects for advancement which make work pay both for them and their families. For this to be realised, the right conditions must be in place before conditionality is applied. The DRC fully accepts that with rights come responsibilities and that, as disabled people's employment rights and opportunities increase, so should society's expectation that more disabled people will make moves from benefits into work. Indeed, it is low expectations which are often at the root of the discrimination many disabled people face. But acceptance of greater responsibilities to work must be matched by the responsibilities of employers, employment support services and government, and should not place disabled people or their families in hardship. Applying conditions without adequate opportunities and support is not only unjust, it is a recipe for failure.

The DRC has a number of proposals for delivering its alternative vision. These are too numerous to list here but may perhaps be summarised in the following way. Entitlement to employment and support allowance should be based on work-related disadvantage, not limited capability. During the Bill's passage in another place, there were proposals to change the conceptual basis from "limited capability for work" to "work-related disadvantage" in an effort to highlight the external, non-medical dimensions which shape disabled people's employment opportunities, and through doing so, ensure greater consistency with developments such as the Disability Discrimination Act. This would provide a clearer picture of the specific challenges, both for particular individuals and structurally within the labour market, which need to be addressed to promote and widen employment opportunities for disabled people.

Your Lordships will be aware that concerns have been expressed by disabled people's organisations about a number of aspects of the Bill. One concern is the relationship between the work-focused health-related assessment, which is intended to explore what abilities a claimant has and what support might enable them to move towards work. As I understand it, this assessment is to be carried out immediately after the claimant has undergone the personal capability assessment interview, where they are interviewed about their application for employment and support allowance and how their impairment impacts on their ability to work. I am concerned that to have a discussion about what abilities a claimant has and what support might enable them to move towards work immediately after they have undergone the PCA interview, which focuses on what they are unable to do because of their disability or health condition, is potentially confusing and a cause of anxiety amongst claimants.

Disabled people have spoken to us most movingly of their desire to work, but also the pressure they feel themselves under at the prospect of being faced with these two contrasting assessments. After all, how are they to know that what they say when discussing their abilities could not be used to further inform whether they pass the personal capability assessment? At the very least, there is a tension between the objectives of the two assessments. Without knowing the rates at which benefit will ultimately be paid, it is impossible to say that there is not a disincentive for claimants to embrace wholeheartedly the idea of work-related activity which will operate at the point of the work-focused health-related assessment.

In another place, the Minister for Employment and Welfare Reform undertook to reflect further on the timing of the personal capability assessment and work-focused health-related assessment interviews. I would be grateful if the Minister could tell us whether he and his colleagues have had an opportunity to look again at the concerns expressed and at the possibility of increasing the time gap between the two assessments, with a view to reducing the potential for anxiety and confusion among claimants about the intentions of his department. I am sure the Minister would agree about the need to do everything possible to bolster claimants' confidence in the process if we are to get the best out of it.

The Government have set themselves an ambitious aspiration of getting 1 million disabled people off incapacity benefit and into work over the next 10 years. This is a laudable aim, but one concern I have is that the Bill does not introduce specific measures to help people who are at risk of leaving work due to a disability or health condition. It is estimated that, just in relation to people who experience sight loss, 3,000 leave work each year because they feel unable to continue in work, with more than 25,000 people in total leaving the labour force each year as a result of work-related injury and illness. Enabling such people to remain in work could do more to get people off benefit and into work than any measures designed to get people into work in the first place.

The Disability Rights Commission's code of practice on employment mentions reasonable adjustments that employers should consider to retain disabled staff. However, this code is not legally binding, and it has been argued that employers should be legally obliged to implement better employment retention policies and practices in order to retain disabled staff. The Minister may have heard of proposals made by the voluntary sector, trades unions and others to tackle this problem through the concept of disability or rehabilitation leave. Indeed, a Bill was introduced in another place during the last Session of Parliament designed to create just such a system to enable those who become disabled while at work to undergo a period of retraining or rehabilitation without losing their job. I was pleased that his party, in the Warwick agreement, committed the Government to take action in this area during this Parliament, and that the Labour Party's 2004 party conference report from its National Policy Forum stated that the party would go further to promote full civil rights for all disabled people, including:

"Taking action to ensure that employers fulfil the requirement already on them to make reasonable adjustments for disabled workers including where appropriate granting leave in respect of their disability and permission to phase a return to work without fear of losing their employment or livelihood".

I hope that the Minister will be able to respond positively on this point and indicate the measures that the Government are considering to meet this commitment and ensure that people who become disabled, or who develop a health condition while in work, are given the support they need for rehabilitation and retraining to remain in work. After all, as the Minister reminded us, someone who has been out of work for a year has only a one in five chance of being in work after five years, and those who are out of work for two years are unlikely ever to find work again. I am sure the Minister would agree that it is far preferable to enable a disabled person to stay in work than it is to have them leave their job, claim incapacity benefit and have to make their way back towards the labour market.

There is one other issue that I would like to raise on Clause 15, and that is the nature of the employment-related support that will be provided by contractors to disabled people on the work-related activity component of employment and support allowance and to those from the support group who choose to volunteer to underatke work-related activity. The evidence of the Pathways pilots is that people with mental health and muscular skeletal problems have been the main focus of support activity, with their combined numbers representing around 1.4 million of the 2.7 million current claimants of incapacity benefit or severe disablement allowance.

It is important, however, that we do not concentrate on those very large groups to the exclusion of other, smaller groups of disabled people who face significant challenges in finding and retaining work. I particularly have in mind visually impaired people, who, as I mentioned earlier, experience a rate of unemployment much beyond that of the average for disabled people. My concern is that, in looking at the large numbers who can be helped, we do not forget those smaller groups of disabled people who may be further away from the open labour market, and who may need long-term and well tailored support to move towards work.

I hope that, in awarding the contracts for delivering employment support, the Minister and his colleagues will consider carefully whether bids adequately set out how they will meet the needs of smaller groups of disabled people and those with high support needs. It would be a great pity if these reforms led to employment support providers helping only those disabled people nearest the labour market to the detriment of disabled people with greater needs, who will require more help and support to enable them to move towards work.

6:31 pm
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Baroness Hollis of Heigham (Labour)

My Lords, back in 1997, those of us campaigning for the poor usually did so by campaigning for higher benefits, until one calculated that if one raised every benefit by about £10 a week—which would have bought a couple of yoghurts a day and a cinema ticket at the end of the week—that would have equated to the entire spending then on the hospital service, and people would still be poor. They would still passively receive the dole, generation after generation. Since 1997, a dozen or so social security Bills later, we have instead been building up an active concept of welfare that is focused on work, to address not just income poverty but, as has been movingly said by other contributors today, the poverty of self-esteem of those on, and who regard themselves as being on, the edges of our society.

We have come a long way since 1997. Under a remarkable Chancellor, we have seen a steady and expanding economy, with another 2.5 million jobs. We have seen those jobs pay, through a minimum wage, tax credits and childcare support. We also know, though, that labour market policies are essential as well. We know that if youngsters leaving school at 16 have not had a job by 21, they will have become virtually unemployable, and that someone on disability benefit spends their first 12 months anxious to get back to work and subsequent years anxious to remain unthreatened while they remain on benefits. We know that the lone parent who stays on income support until their youngest child is 16 moves at that point not back into work, as we would hope, but almost always on to another benefit.

Those labour market policies are the subject of the Bill. For those who have been active—the problem now for all of us is inactivity, not unemployment—the labour market seems full of risk. It is about those risks that I want to talk tonight. Some have already been mentioned. Pressed to enter, many economically inactive people will become reluctant conscripts, engaging, I fear, with reluctant employers.

What are those risks, and to what extent does the Bill seek to address them? The first cluster of risks are the benefit traps. I shall touch on some of them. We know that the best predictor of whether, for example, a lone parent has a job this year is whether last year they had a mini-job. Yet, if she takes a mini-job, we punish her for it. Every hour she works after three hours, until she hits 16 hours, she loses her benefit 100 per cent, pound for pound. Surely that is not sensible. It is an invitation to build fraud into the system.

We need dials, not dichotomies. We need a properly tapered earnings disregard—in the same way, I suggest, we also need a review of the permitted earnings rule for disabled people—if we are to coax the inactive back into the labour market so that their confidence grows step by step. Even worse, when people find work, they face a steep withdrawal of housing benefit and a tax of 60p in the pound on top of all their other taxes, and then if the job folds it will take them weeks to get back on to housing benefit, so that to the financial risk of losing a job and means-testing is added the potential risk of homelessness.

The four-week rollover helps, but it is still not enough. I hope that the Bill's new housing allowance offers the possibility not only of shopping around—although I remain somewhat sceptical of that, given that something like 40 per cent of those on housing benefit have to use their benefit to top up an incomplete and inadequate housing benefit because of the recalcitrance in many areas of rent officers—but maybe of housing choice. More importantly, as my noble friend said in his opening speech, it will allow predictability, speed and simplicity.

We have also, with the best of intentions, built another risk into disability benefits. Incapacity benefit increases in value the longer you are on it. There are perfectly good reasons for that: over time you need to replace white goods, carpets and so on, which a person on JSA—80 per cent come off it within six months—would never normally need to do. However, that seems to produce a reward for not coming off the benefit. More importantly, it produces a high perceived risk that, if you come off the benefit and then your health or your job collapses, you go down the snake of benefit reduction and have to start all over again at the lowest rate.

That is why over recent years we have extended the linking periods—up to two years now, I believe—to absorb that very real risk, and why I am so pleased that those in the support group in the Bill will get a higher rate within 13 weeks, not 26, while any false incentive for those who might work not to do so is removed. We know that means-testing encourages fraud. It also multiplies the risk of error. Again, the simplification of benefits in the Bill and the sharing of information, as well as the firm line on fraud, will, I hope, diminish those risks. So there is a cluster of risks around the structure of benefits and its income-related forms.

The second set of risks I want to suggest tonight are around the work-focused interviews. Many benefit recipients have become economically inactive for good reasons—poor physical and mental health, functional illiteracy, weak language skills or exhausting caring responsibilities—and may end up without a qualification, a skill, a driving licence or a reference to their name. Work they might have attempted in the past—the classic job was always that of lift attendant—has been increasingly squeezed out of the economy. Many are a long way away from today's world of work. We could invest many pounds and many hours, and they would still not find work. Under any value-for-money scenario that is going to be troublesome, but try we must.

If the funding for outsourced contracts rewards outcome-based results, however, how much work will go into supporting and sustaining such people when other clients are easier and quicker to place? Can we hope that my noble friend will be able to assure us that more generous support funding will be put in place? Even if, with all this additional work, someone is not helped back into the labour market, they may none the less in the process have been able to become a better parent and a better member of society, able perhaps to do part-time work or volunteer.

New Deals have been transforming here. I am delighted that Pathways to Work will be rolled out nationwide over the next 18 months or so. The IFS has shown that it is beneficial for the older worker, that the New Deal for the over-50s has supported something like 160,000 people back into work since 2000, and that of those on incapacity benefit nearly 10 per cent more are in work nearly 12 months after Pathways—a significant finding.

We are right to concentrate on those entering IB before they have become dependent on their benefits and while they are still attached to the labour market. If there is one thing I have learnt about disability benefits, it is that early intervention is vital. But, as another noble Lord has said tonight, our record on occupational rehabilitation is among the poorest in Europe, and that has to be improved. It is much easier to hold someone in work than to bring them back into work a year or two down the line.

That brings me to the next risk, which has also already been mentioned. I refer to conditionality, compulsory work-focused interviews, the sanctioning of benefits, and the like. Unlike other noble Lords, including the noble Baroness, Lady Thomas, I think it is essential. In the early New Deals we quickly found that what was not mandatory was too often ignored.

Each time the Government introduced sanctions in social security, worries were rightly expressed about the quality of staff and their decision-making. The fear was that too many people would be sanctioned. Would staff understand the effects of cancer treatment, dyslexia, of having a sick child or of agoraphobia? As evidence that staff do not understand, it has often been said, and it has been repeated tonight, that half of all IB refusals were overturned on appeal. That fear was expressed tonight by the noble Lord, Lord Oakeshott. I believe this to be a misunderstanding.

Although most New Deal programmes deal with thousands of people, the number of sanctions in most of them can be counted on the fingers of a couple of hands. In my experience, staff are almost entirely sensible and decent about missed interviews for health reasons, caring crises and the like. They are not traffic wardens, rewarded for the number of benefits they refuse or sanctions they impose. We should not assume that that is what they are there to do.

The point about conditionality is that people do not know what they do not know. If they do not attend work-focused interviews, they will not know about the possibility of rehab, of job search techniques, practical help with aids and appliances, such as the access to work programmes, and the effect on family finances. After all, one person in six who is on IB has dependent children. Perhaps two-thirds of those coming on to IB will be in the support group, and of the third in the employment group, perhaps a third of those will be screened out to join the support group, but if we can reduce those risks, many of those in the support group may want to try to return to work, even if only on a part-time basis.

As for those going to appeal—often used as evidence that the staff have got it wrong—perhaps 50 per cent to 60 per cent of DLA appeals are overturned, which is about 5 per cent of the total IB caseload. As the president of the appeals tribunal has indicated, appeals are usually overturned on the basis of incomplete evidence, the problems of a fluctuating condition—very difficult for any decision-making—and, sadly, a deteriorating condition. What is key is to get it right as far as humanly possible at the early decision-making stages and to review that decision as new and more complete information becomes available before moving into the tribunal system.

This brings me to my final risk: the attitude of the employer, especially those in small and medium-sized enterprises, mentioned by the noble Lords, Lord Skelmersdale and Lord Oakeshott. Employers, particularly SMEs, understandably want hassle-free, reliable staff. They cannot easily cover unexpected absences—the woman with the disabled child, for example—and they dread entanglement in the tribunal system. Some 38 per cent of employers are unwilling to employ a disabled person and two-thirds are unwilling to employ someone with a mental health problem, yet 40 per cent of those on IB have a mental health problem or a learning disability. What can employers respond to when someone has fluctuating mental health or if they are presented with someone who has Asperger's syndrome and may have weak social skills? The Richmond community owns jobs collectively—with Boots, say—and the job gets done by someone in the commune. That seems a very positive way forward. Mentoring has had superb results, but we must think outside the box more than we have conventionally done.

We know that the best hope of employment for someone with a disability lies with re-employment by the previous employer, who sees beyond the medical record to the person they knew before. I wonder whether we were wise to abandon the employment credit for employers. Can we give greater help to those former employers, as they are the ones most likely to hang on in and make the job sustainable?

We have come a long way: there are 2.5 million more people in work and 1 million fewer on benefits, while 2 million pensioners and 2 million children have been lifted out of poverty. I greatly welcome the Bill and am confident that my noble friend will give us the assurances that we seek. If we can get it right, I believe that it will offer renewed life chances that could be transforming for those too easily written off in the past.

6:46 pm
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Lord Kirkwood of Kirkhope (Liberal Democrat)

My Lords, it is a great privilege and pleasure to follow the noble Baroness, Lady Hollis. Her experience in the department has stood her in good stead; she is an expert in these matters, and her penetrating and skilful analysis, particularly of the risks involved in this piece of policy-making, is essential to its success and will repay careful study.

I should like to detain the House for a moment on the politics of the measure. I absolutely agree that active labour markets and the policy of having work for those who can and security for those who cannot were perfectly reasonable, sensible and beneficial policy changes that came in after 1997. Call me old-fashioned, but I imbibed with my mother's milk the idea of the social insurance principle. People paid in and, during periods of adversity throughout their life, they got help from the state.

After 1997, the Labour Government moved subtly away from that. There may have been good reasons, but it was done quietly, and I do not think that there was enough debate. I was perfectly happy to make the best of "work for those who can and support for those who cannot", but there is some evidence that the ground is shifting yet again, and we should be careful about that. Only a few days ago, Mr Murphy, the Minister of State at the department, made an important speech—important enough to go on the departmental website—which moved away from the adage of "work for those who can, support for those who cannot" to "work first, benefits second". I am not a conspiracy theorist, but that makes me deeply suspicious. If he is setting out a change in the thrust behind these policy measures, we may be moving into territory where people have to go on to a programme or a job or undertake some sort of training before they get any benefit at all.

I will be pleased to be told by the Minister or somebody that I am overthinking this, but, if that kind of philosophy is adopted, when the Bill— support it as I do—is eventually implemented, the environment could be very different. I hope that in the course of this evening's debate and in Committee we can clarify whether a new dimension and a new perspective are being brought to the philosophy that underwrites some of the policy.

As has been said by other people—indeed, it is the only thing about which I disagreed with the noble Baroness, Lady Hollis—conditionality is deeply worrying. Administrative systems of that kind are contrary to natural justice, have unintended consequences and result in a degree of complexity from which we are already suffering too much. Bills of this kind should always have a simplification clause, as standard. There are some simplifications in the housing benefit aspects of the legislation, which are welcome, but not much else. I hear that the department is now thinking of predictive data techniques to speed up benefit claims, but there is a world of difference between having techniques to manage complexity and getting a simpler system in the first place. There should be a rolling programme of simplification measures, and the Bill does not have enough of them.

The role of the private sector will be distinctly different in the implementation of the legislation, and I am particularly interested in the Minister's view of what Sir John Freud will bring to that agenda, because I hear that he takes the view that private sector companies could easily enter the field and increase efficiencies in the roll-out of the administration. I hope that the Minister will advise Sir John to go and talk to the managing director of Capita, who had some very inelegant experiences administering housing benefit systems for some of the London boroughs in the not too distant past.

The department is in pretty bad shape right now. It is an excellent department, and the professional staff are all admirable people, but it has suffered from a series of circumstances that cannot be ignored if we expect success in the deployment of this policy. The Gershon efficiency savings are taking a toll. The absence and sickness rate in the department itself—rehabilitation systems and processes—is terrible, and the departmental record in absence management has been chronically bad for a long time. In addition, the department faces a 5 per cent efficiency saving cut, which is being worked on now. At the same time, the Comprehensive Spending Review to be completed later this year will take effect but will probably not make things any better. The frequent changes at Secretary of State level, with six Secretaries of State in the past 10 years, have led to incoherence. The department has suffered in that regard, and we have to take all that into account.

Staff morale at all levels in the department is low, particularly at a local level. In my area of south-east Scotland, the former integrated local office based in Galashiels, with 45 to 50 loyal, professional and high-quality staff, is being replaced by a supermarket—it is now a branch of Tesco. The staff are being relocated to new offices and being given no assurances at all about long-term established work, so they are finding other work because they are able people at the end of their tether. That background cannot be ignored when we are making policy changes of the kind that are contained in the Bill. There is a series of operational factors that the department must address. We look forward to going through those systematically in Committee.

I have been scarred by my own experience, and I have no alibi, because I was there when we debated the initial legislation on child support in 1991. The noble Baroness, Lady Hollis, spent most of her departmental career trying to fix the mess. It was not her fault that the thing got into such a fankle, to use one of my granny's favourite Scottish words.

The combination of two things concerns me. First, the House may know that the DWP abandoned the benefits processing repayment programme last year. Noble Lords may not know that that was a fundamentally important set of processes that underpinned the new employment allowance that this legislation introduces. The department's investment strategy programme, published for the years 2005-08, declared that the BPRP was,

"a core Information Technology Platform which will provide a lasting foundation for modern, flexible IT solutions which support business priorities, including improved service for customers and employers, reducing the operating costs of legacy systems, efficiency savings and improved programme protection".

According to the press, the Government wrote off £141 million as a result of the abandonment of that programme. The good news, as, I am sure, the House would like to know, is that those who administer Jobcentre Plus believe that only £70 million was lost because some of the work can be recycled and salvaged. I hope that it can.

That measure underpins the roll-out of the IT platform in Part 1 of the Bill. Almost simultaneously with that measure, the department asked for a Section 82 power, under the Welfare Reform and Pensions Act 1999, to spend in advance of Royal Assent. As the House probably knows, the department is, unusually, spending money already on this IT platform before Royal Assent—there are powers to do that, and it has gone through in the other place. I cannot but think that those two things are connected. The last time that the Section 82 power was used was to bring forward an IT platform for the CSA, so the auguries are not necessarily good.

Was the timing of those two things consequential on one another? Was the Section 82 consent asked for because the benefits processing repayment programme was abandoned? If that is the case, I wonder whether the 22-month programme that was set in place by the Section 82 consent, which has been three months in gestation since the authority was given, is realistic. We have been here before with other IT platform programmes. It is a politically driven programme, and it is far too challenging. If it does not work, does A-day still happen on 1 April 2008, or does it move to November 2008? When it happens, what does "up and running" mean? Does it mean that the platform will be available to every front-line adviser on the day when the scheme is rolled out? Now that Jobcentre Plus has had that extra time since it got the consent for the spend under Section 82, can the Minister say whether the spend is up to programme or is it slipping further behind?

The department estimates that it has foregone "only" £70 million of the BPRP. Is there anything that can be salvaged from the remaining £70 million? I would dearly like to know whether efforts are being made in that regard. The department said that it was going to put a plan into effect to ensure that the most was made of the salvaged elements to deal with the legacy systems. Will the Minister undertake to share with us in Committee the details involving the underpinning IT provisions and operational platform for this new, important allowance? My experience suggests that, if he does not, the whole house of cards could tumble down because of operational difficulties because the computers do not work. If that happens this time, it will be a tragedy, and there will be no excuse, because Ministers could not say that they were not warned.

6:58 pm
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Baroness Greengross (Crossbench)

My Lords, I shall concentrate on two areas covered by this important Bill. The first, as the noble Baroness, Lady Hollis, mentioned, is the area of permitted work rules for disabled people. Secondly, I want to touch on the situation for older workers.

The objective of the Bill is a welcome one: to help large numbers of disabled people in moving towards work. With that objective in mind, I wish to raise an issue around the impact that proposals in the Bill will have on the ability of people claiming incapacity for work benefits to undertake permitted work. Currently, people claiming incapacity benefit or severe disablement allowance are able to undertake a limited number of hours of paid work each week to help them gain work experience and remain in touch with the labour market. They are also able to volunteer for an unrestricted number of hours. Those rules form an important means for disabled people on benefits to try out work without any threat to their benefit entitlements, which for many people is a source of great anxiety, having often been through long and complicated processes to secure those benefits.

The permitted work rules changed on 10 April last year. A new category of permitted work was created for people who were exempt from the personal capability assessment, which establishes entitlement for incapacity benefit. People in this group are able to work for less than 16 hours a week, on average, and earn up to £81 each week without having an impact on their benefit entitlements. However, as part of this Bill, a review of the personal capability assessment has been conducted, and it is proposed that the exemption from the assessment for certain groups of disabled people is to be ended. While that has been welcomed in the sense that it means that these groups of disabled people will no longer be automatically regarded as unable to work and therefore included in the additional help that will be offered under the Bill, it is unclear what will happen to claimants who are undertaking permitted work under these provisions when employment and support allowance is introduced in late 2008.

I should be grateful if the Minister could clarify the Government's intentions regarding how the introduction of employment and support allowance will impact on people who are at that time undertaking permitted work on the grounds of being exempt from the personal capability assessment. Perhaps he could also let your Lordships' House know what plans his department has to provide claimants with information about how people who are currently exempt from the PCA and who are undertaking permitted work without a time limit will be dealt with when employment and support allowance is introduced and the exempt group abolished. I ask because the current systems can be confusing, and benefit claimants face difficulties in understanding what sort of work they can undertake, how it will affect their benefit entitlement, and what can happen as they move between benefits and employment. Indeed, if as part of the Bill we can move towards improving the clarity of information for benefit claimants to assist them to understand the opportunities and responsibilities around undertaking work while claiming benefit, that would be a welcome achievement.

We must acknowledge that an older workforce will mean more people with acquired disabilities. The Government need to ensure that they strike the right balance between prescriptiveness and entitlement. Incapacity benefit is a contributory benefit, so recipients have a stake in the system and are not asking for hand-outs. Often, they will have worked for a substantial amount of their life. Any health conditions affecting their ability to work may even be workplace-derived. I am pleased that the Government acknowledge that early intervention is essential to stop the rot and prevent long-term dependency. Forty per cent of unemployed people over 50 have both health and skill limitations. However, I fear that, if the work-related activities are too restrictive, the reforms will fail. We need maximum flexibility to capitalise on individual circumstances, education, training and life commitments such as family and care. We should remember too that older workers may need or wish part-time work, and the reforms must accommodate that.

It is regrettable that funds have been withdrawn for education and training in later life. One-third of those in their early 40s do not have five GCSEs or equivalent, so the problem is more systemic than just an incapacity benefit bill for the over-50s. Those in the pipeline, as it were, are already building up the same problems. That needs attention.

The Minister acknowledged in June last year that there was a lot of resistance from employers to employing older people, as we have heard. The Government must take the lead and campaign to enable employers to understand the benefits of employing older people: the experience and loyalty that they bring to a company and the saving on recruitment costs, as older workers tend to stay in their jobs for much longer than younger ones.

Finally, the reductions in incapacity benefit if occupational pensions reach above £85 are worrying. Incapacity benefit is then reduced at 50p per pound. The Government said in 1999 that that would be reviewed annually to ensure that pension value was not eroded, but the figure is still £85, and there is no public evidence of it being reviewed. Will the Minister give a commitment that the figure will be uprated to take account of inflation?

I look forward to hearing what the Minister has to say on these important issues.

7:05 pm
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Lord Best (Crossbench)

My Lords, I want to add one or two further points to those already made by your Lordships on Part 2 on housing benefit. This is a subject of such complexity and, dare I say it, for those not directly affected, of such tedium, that it has defied reform and improvement for many years. I congratulate the Government on working up a revised housing benefit scheme with a new simpler system for calculating benefit—the local housing allowance scheme.

Over the past five years I have chaired a housing benefit reform group with representation from landlord and tenant bodies and from government departments, which has followed the progress of the new measures. In this instance the pathfinder schemes in pilot local authority areas have been the subject of impressive evaluation for the Government, not least at the University of York. This has involved a thorough appraisal of the concept and has shown that it is sensible to roll out the arrangements from the initial 18 areas to all local authority areas.

The scheme involves greater clarity and simplicity and will make the administration of housing benefit, which, frankly, has been a nightmare for the 408 local authorities handling housing benefit as well as for both landlords and tenants, infinitely better. However, perhaps unsurprisingly, the new arrangements are not perfect. The worst aspect of the current housing benefit regime is that many tenants have to pay out more in rent than they receive in benefit. This means that the tenant must cover the balance from their other income. But income support and other benefits do not have any leeway to pay the rent. Other benefits are calculated on the assumption that housing costs are fully covered.

The new regime has led to smaller shortfalls in many cases, which is of considerable importance, but shortfalls remain in many other cases. The Catholic Housing Aid Society in Kirklees carried out a survey of 37 landlords with 2,756 properties and found that the people who had a benefit shortfall went without meals on a regular basis: 50 per cent missed three main meals a week; 50 per cent were behind with other bills, and 15 per cent faced court action for debt; 50 per cent were behind with their rent, unsurprisingly, and 20 per cent faced eviction as a result. Why the shortfall, the gap, between the rent and the housing benefit intended to cover it? It occurs because the rent officer sets a rent level which is lower than the landlord charges the tenant. The new system involves rent officers setting the rates for the flat-rate local housing allowances. The problems of fixing maximum levels, which in many cases leave tenants trying to make up the balance, need to be minimised.

A problem can arise if the geographical area covered by the so-called broad rental market areas includes such an unbalanced portfolio of properties of different prices that the median rent is too low in relation to the actual availability of properties for rent. The boundaries for these broad rental market areas need an input from the local authority and its own housing experts. At the moment the rent officer service is quite separate and independent of the local authority. It also seems important for there to be a system of appeal against rent officers' decisions—an external, independent appeal mechanism, not just the unwieldy processes of judicial review. The existing rent assessment committees might perform this function.

More technically, there is an intention to move from the use of the mean rent in the calculation to the median rent. I am advised by Professor Steve Wilcox, acting for Citizens Advice, that this innocuous-sounding change could mean a lower level of maximum housing benefit for all concerned. Will the Minister look at this technical issue and see whether his officials can do some sums in advance of implementing it, just in case this advice is correct and we are unwittingly coming up with a formula that will mean more of these dreaded shortfalls?

A specific aspect of rent-setting which has caused particular controversy is the single room rent for under-25 year-olds. This caps housing benefit at a level deemed to cover the rent of a room in a shared home, not a self-contained flat for these tenants. The Minister referred to this in his opening remarks. The requirement is now to be called the "shared room rate". The Minister pointed out that a large number—I think that the figure is 40 per cent—of younger people who pay their own rent live in shared accommodation. Is it fair, goes the argument, to seek a self-contained flat if you are on housing benefit when those who are not on benefit often must share their house or flat? This misunderstands the realities facing many young people who need accommodation in the real market place. Life is quite different for vulnerable, ex-homeless young people—people coming out of prison; people moving from a hostel or supported accommodation into their first home—from what it is for young, upwardly mobile young people, down from university, or students who share, and enjoy sharing, perhaps with help from their parents.

There are many areas in which there are practically no shared apartments on the market for that young person to go out and find. Houses in multiple occupation are closing in a number of places—there are fewer of them than there were. The huge phenomenon of buy-to-let, with lots of new landlords coming into the market place, is entirely in self-contained accommodation: one-bedroom and two-bedroom flats.

The Department for Work and Pensions has discovered that the average shortfall for young people in these circumstances is £35 per week. This is a very large sum of money to find if you really do not have any other source of income to sustain you. You have your income support to cover your food, your fuel and your clothing; there is nothing left to contribute to your rent. So, very soon, these young people, who are not able to move into shared accommodation, will find themselves, as they have in the past, in serious difficulty. The YMCA, Crisis, Centrepoint and Shelter have all sent us evidence on the problems which the old single-room rent, which is to be perpetuated in the new system, has caused for young people in these circumstances. I hope that the Minister will be able to offer some reassurance that this real defect in the old, and now in the new, housing benefit scheme will be remedied.

7:13 pm
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Lord Morris of Handsworth (Labour)

My Lords, I am grateful to my noble friend Lord Morris of Manchester for his contribution not only to this debate but to the debate in 1969 on the Chronically Sick and Disabled Persons Act, to which he referred. He was much too modest to repeat his profound contribution to that debate. Movingly, he said,

"if years cannot be added to the lives of the chronically sick, at least life can be added to their years".—[Hansard, Commons, 5/12/69; col. 1863.]

I quote my noble friend because it is sometimes said that the values of a society can be judged by the standard of its welfare system. While there are limits to that statement, it is true that the welfare system can define a society. Welfare defines our common humanity. It defines our collective compassion and our sense of social justice, and, for some of us, it defines our moral compass. How we treat our retired citizens, our pensioners, our children and those with disabilities can say much about what kind of society we are.

To date, the Government's strategy has been one of empowerment, directed, rightly, at getting people from welfare to work. This must be welcomed. Yet, only half of Britain's disabled people of working age are employed. Those who have been on incapacity benefit for more than two years are more likely to die or retire than ever to get back into work. So we certainly need reform of the system.

Sadly, the history of previous reforms has been underpinned by a culture of sanction and even fear. But let us be very clear: no one will argue against reform of the incapacity benefit regime. No one will argue against the crackdown on benefit fraud. The better co-ordination of the housing benefit regime is just one of many worthy objectives that the Bill seeks to address.

However, it is essential that the Bill sets the right tone of incentive and support. The measures in the Bill must therefore tackle employers' prejudice against those with disability; it must enable and empower those who can work to do just that; it must ensure that those who are deemed unfit to work receive the support and decent benefits that they deserve; and it must crack down on fraud in the benefits system. However, for these reforms to be successful, it is vital that the many fault lines caused by the complexity of the benefits system are addressed.

We all recognise the scale of the task which faces the Department for Work and Pensions. It pays out more than £100 billion in benefits every year. It processes more than 60 million cheques per month. It handles more than 200,000 appeals per year against benefit decisions. Thirty million people in the United Kingdom receive income from at least one pension or benefit department. That is a huge task.

It is therefore self-evident that it is not possible to satisfy every claim from every individual, but do we really need the multiplicity of benefits that is highlighted in the report on complexity of benefits by the National Audit Office in November 2005? I am confident that this Bill will add to the complexity.

Sadly, due to the complexity of the system, the people who need the benefits most understand it least. When staff at the sharp end of the system have to ring up the citizens advice bureau or the Family Welfare Association for advice on and interpretation of the regulations, we are all in trouble.

Delivery is a crucial part of the benefits system. Yet the 2005-06 Social Security Advisory Committee's report drew attention to the difficulties that many claimants will face following the termination of the Post Office card account system in 2010. In addition, the current round of Post Office closures will cause real hardship to claimants, particularly senior citizens who are not mobile and those who live in rural areas.

Finally, on the culture of the Bill, it is short on principles on the face of it—there are just three or four key ones—and limited in details. It is essentially an enabling Bill in many instances, as the Explanatory Notes say. The key objectives will in reality be delivered by a framework of rules and secondary regulations. I have no doubt that this House will pay as much attention to the secondary regulations as to the Bill, because reform of the benefits system is a matter of fundamental importance, requiring rigorous legislative scrutiny for the details and primary provision. In conclusion, the Bill should be about welfare, not work fear.

7:22 pm
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Baroness Murphy (Crossbench)

My Lords, I shall address my comments to the Bill's mental health aspects. They have already been well addressed by other noble Lords, so I can cut down considerably on what I was going to say; many of the facts and figures have been ably addressed by the noble Lord, Lord Low, and others.

Paid work gives people with mental health problems tangible evidence of their own value, improves self-esteem and can give them a sense of mastery over their lives. I welcome the Bill, in building on the Pathways to Work pilots, while pointing out that early evidence suggests that people with a mental illness have been less successfully helped back into work than those with physical health problems.

The Bill raises some practical issues. As the noble Lord, Lord Morris of Handsworth, has just said, one of the Bill's problems is that the devil will be in the detail of the regulations. I may therefore be raising issues to be addressed in regulations; if so, I hope that the Minister will bear with me for the moment.

The accuracy and appropriateness of the revised personal capability assessment (PCA) is clearly crucial. The revised version is a big improvement for people with mental health and learning disabilities. However, we know that, when implemented across many hundreds of thousands of people, the sensitivity and skill with which these assessments are carried out might in practice be less than perfect. We must ensure that staff are better trained to understand fluctuations in mental state, difficulties in social interaction and the importance of taking time. As mentioned by the noble Baroness, Lady Hollis, staff often want support and have a good approach to it, but not the knowledge or skill to apply it properly. The personal capability assessments can therefore be applied incorrectly.

Given the pivotal role played by the PCA and the concerns about the review process, I add my voice to those who believe that there should be long-term government monitoring of the new PCA. When conducting the PCA, medical assessors from Atos Origin are guided through the issues to be covered by the computerised questionnaire known as LiMA (logic integrated medical assessment), which the noble Baroness, Lady Thomas, described so accurately in her vignette. As they go through an assessment, the doctor records claimants' responses by selecting pre-coded options suggested by the LiMA system. In the main, the final assessment report is made up of a series of selected pre-coded responses.

I am perhaps referring to a period before Atos Origin took over this contract, but given the lamentable knowledge and skills about mental health issues frequently demonstrated by medical assessors, we might be better off trusting a computer program. However, for accuracy it unfortunately still requires high-quality input and sensitivity from the doctor. On average, the process takes 45 minutes and is completed in a one-off snap-shot assessment. What must be addressed is the quality of decisions currently being made. It is interesting that, in spite of the promised objectivity of these "mouse-driven medicals" as they are called, appeal after appeal—over 70 per cent—still says "No" to computer-generated reports and "Yes" to the claimant. Something is not right here. How we implement this may be important.

Requests for access to LiMA have been turned down, I understand, because it is exempt from disclosure under freedom of information legislation, as that might threaten the commercial interests of Atos Origin. It seems extraordinary that such an important tool should not be available for parliamentary or public scrutiny. Can that be correct? I was surprised to be informed of this by organisations. Can the Minister confirm why we cannot scrutinise it and judge whether it is an appropriate tool? At present, the great majority of appeals against decisions are successful, indicating that gate-keeping is poor. There should be regular customer surveys about the PCA process to ensure that it is fair, credible and can be continuously improved.

Under the current system, many people find themselves subject to a PCA once they begin to take steps to work, such as volunteering or educational activity. For people on the support component of ESA in particular, fear of an untimely PCA could become a barrier to participation in such activities, leaving them in the benefits trap. The regulations will provide an opportunity to stipulate when and in what circumstances a PCA can occur. That would give people on ESA greater trust in the system and more security to take the necessary steps towards employment. I recognise that, in Pathways to Work areas, many personal advisers ensure that customers taking steps to work are not penalised by an unexpected PCA. The regulations should ensure that this becomes standard practice in all areas.

Individuals applying for employment and support allowance will be required, as we have heard, to undergo both a PCA and a work-focused, health-related assessment at the same time or sequentially, with a doctor who is not necessarily qualified to assess work capabilities and rehabilitation needs. That is a serious concern. The PCA is a means of determining whether a person is eligible for one or other component of the benefit, while the WFHA is a further test of,

"the extent to which a person still has capability for work",

and whether it,

"may be improved by the taking of steps in relation to his physical or mental condition".

Combining the two assessments risks confusing both the assessor and the claimants, and could sow mistrust between claimants and their personal advisers. Health professionals trained to determine a person's ability to work or undertake work-related activity are not necessarily best placed to assess a person's vocational rehabilitation training needs. We need to learn more about how people will be trained to administer these two related assessments; it is by no means clear.

The Bill goes further than the Green Paper in extending the use of sanctions. They have been extended to cover attending a work-focused, health-related assessment and undertaking work-related activity. There is no evidence that sanctions are necessary to achieve the welfare reform objectives, and it is not clear why the use of sanctions has been extended and how they will work in practice. For people with a serious mental illness, further sanctions would add a fear factor in the system which will be counterproductive. I do not believe that it is desirable for sanctions to be extended to cover health-related assessment and work-related activity, nor am I confidant that the skills and knowledge of DWP staff can ensure that sanctions are fairly applied. However rarely they may be applied in practice, in reality everyone will know about them and have an instinctive fear of them.

People with a mental illness usually want to work, and it is a tragedy that three-quarters of all adults with schizophrenia in this country have no employment; indeed, many employers say that they would not employ them under any circumstances. Yet, we know that no adaptations have to be made to employ patients who suffer from schizophrenia and that many such people are employed and have useful and constructive lives which, with support, many more could enjoy. If the reforms do not work for people with serious mental illness, the policy will fail. I look forward to hearing more on the Government's plans for implementing these reforms, through the regulations, for the benefit of people with mental health problems.

7:31 pm
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The Countess of Mar (Crossbench)

My Lords, this Bill seems to have been an awfully long time on the way, so to speak, but I am as pleased as the Minister that it is here at last. A few points give me concern. I hope that they will be clarified by the Minister at this stage—or, perhaps, he can write to me, because I have many questions—and that we will be able to improve the Bill during its passage through this House.

For many years, I have been concerned about the manner in which claims for incapacity benefits from people with a diagnosis of CFS/ME, fibromyalgia, organophosphate poisoning, multiple chemical sensitivities and other diseases that are multi-symptomatic and difficult to define have been dealt with by the Benefits Agency. Despite an enormous amount of peer-reviewed scientific evidence from researchers and clinicians from all over the world, the view persists in this country that they are psychosocial behavioural problems and that there is no need to look too closely at causation or for biological signs of organic illness.

Recently, I have been a member of a panel, led by Dr Ian Gibson MP, which inquired into the current state of research into CFS/ME in the UK. We heard evidence from many sources, perhaps the most distressing of which was from sufferers of CFS/ME who were severely ill and who had been sidelined by the social security system because nobody would believe that their illness was real. Such people are usually bed-ridden, often living alone and isolated from the community, and the aids that they need are unattainable. We were told that that had resulted in at least one death and several suicides. This is a welfare reform Bill. I do hope that the reforms made will take into account the seriousness of an illness that far too many men, women and young people in this country suffer, and that will offer them the security of knowing that at least the most basic of their needs will be provided for.

I will confine myself to Clauses 8 to 15. I am most concerned about the very large number, at least 27, of applications of the Henry VIII clauses, which will make it extremely difficult for either House to reject major secondary legislation that will affect the lives of many disadvantaged citizens. As the noble Baroness, Lady Thomas of Winchester, said so strongly, and as stated often in this House, that is not a satisfactory way to legislate.

Experience has taught me that, unless those responsible for the examinations are sympathetic, it is very likely that claimants suffering from the illnesses that I have listed will be given short shrift. I have written frequently to the Minister's predecessors and have challenged them at the Dispatch Box—that includes the noble Baroness, Lady Hollis, who I am pleased to see in her seat, the noble Lord, Lord Hunt of Kings Heath, and even the noble Lord, Lord Skelmersdale, who resisted pulling my leg this evening. Inevitably, original decisions on claims have been overturned. I cannot immediately recall the proportion of refusals overturned on appeal, but my noble friend Lady Murphy said that the figure was 70 per cent, a huge figure. It leads to an enormous amount of stress for claimants and is a huge waste of public money. If the new system can be rationalised to reduce both those factors, I, for one, will be delighted. It grieves me that I receive many communications from frightened and anxious people or their carers.

Clause 8(2)(b) states that regulations will,

"define the assessment ... [of] the extent to which a person who has some specific disease or bodily or mental disablement is capable or incapable of performing such activities as may be prescribed".

Most of the illnesses that I have mentioned involve symptoms that fluctuate in severity and duration. Some sufferers get better, others do not. It is known that claimants will prepare themselves for an interview or medical examination by resting beforehand, and it may be that they perform well at the time. However, it is extremely likely that they will suffer a setback which may involve several days of serious disability. How are those who are to make the determinations to decide whether the claimants are lying in bed because they are lazy or because they have one of those ill-defined conditions? Most of the people in this group whom I have encountered have been very distressed about their illness and keen to get back to work and to lead a reasonable social life. They are frequently frustrated by the relapsing nature of their illness. In fact, it is their eagerness to get going again that often leads to such relapses.

Clause 8(3) requires evidence to be provided. I would be grateful if the noble Lord could indicate what that evidence might be. Under the current system, the evidence of the patient's GP or consultant is frequently disregarded. Whose evidence will the assessors believe?

Will the Minister kindly explain the need for two almost identically worded provisions, subsections (1) to (4) of Clauses 8 and 9? Will he explain also the difference between "limited capability for work" and,

"limited capability for work-related activity"?

As regards Clause l0(1)(b), I have sought in vain for a clear definition of a,

"member of the support group".

That phrase has been used several times this evening. What is that support group, and will the Minister consider defining it in Clause 23? Will he explain more fully what the Government have in mind in subsection (2)?

Is it the Government's intention that the healthcare professionals mentioned in subsection (7) will be appointed on the same basis as they are currently; that is, that the work will be subcontracted to a private company? What type of training will the professionals receive and from whom? One of the current problems is that examining doctors do not always have a good grasp of English, particularly when a patient has a strong regional accent. As the noble Baroness, Lady Murphy, said, often those doctors are not capable of distinguishing between different sorts of illnesses. Perhaps a computer would be better. Can we be given an assurance that that will not be a problem in the future?

Regarding Clause 11(2), what will be the qualifications of the people responsible for conducting the work-focused interviews? Subsection (7) states that an interview will be conducted by the Secretary of State, but I am sure that that cannot be the case. Who will it be?

What would be the position of one of the Secretary of State's officials who, under this legislation, persuaded the claimant against his better judgment to take up a work-related activity which resulted in a serious deterioration in the claimant's condition? I ask that because I am aware that, under some circumstances, cognitive behavioural therapy and graded exercises are recommended for people suffering from depression and chronic fatigue syndromes—with some success. That is not necessarily the case regarding people suffering CFS/ME, because, although they may be depressed and fatigued, they may have also a number of other symptoms that may not be picked up in a medical examination, and which can be exacerbated by exercise.

Clause 13 provides for an action plan in connection with work-focused interviews. Subsection (3) makes provision for them to be provided to the person who is subject to a requirement to undertake work-related activity. Are those plans to be agreed with the person involved?

I have read and re-read Clause 14(1) and cannot understand its meaning. I would be grateful if the Minister could translate it into plain English.

The Bill is both necessary and timely. The system for paying benefits to people who are sick or out of work has become much more complex than it was when I worked in the Ministry of Pensions from 1959 to 1962. In those days, it seemed that everyone got two pounds and 10 shillings a week, whatever their condition, and the pension was two pounds and 10 shillings a week as well. I look forward to the Bill's progress through this House.

7:40 pm
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Lord Young of Norwood Green (Labour)

My Lords, I thank my noble friend Lord McKenzie, the Minister of State, for his introduction, and I congratulate him on his new appointment.

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Lord Oakeshott of Seagrove Bay (Spokesperson in the Lords, Treasury, Spokesperson in the Lords, Work & Pensions; Liberal Democrat)

My Lords, he is not there yet.

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Lord Young of Norwood Green (Labour)

My Lords, that was a bit of anticipation on my part.

This is essential legislation, which seeks to modernise the welfare state. I agree with those who say that the change needs to combine compassion and care, but I think that we should look at Labour's inheritance between 1979 and 1997. The number of people on incapacity benefit trebled, as people were written off to a life on benefits to hide the true number of unemployed. If numbers on incapacity benefit had continued to grow at the rate that they did under the previous Government, there would now be 4 million people on incapacity benefit. Unemployment doubled between 1979 and 1997; it twice hit 3 million. We had long-term youth unemployment, which topped 300,000 compared with just 6,700 today. We had a benefits system that was passive, providing little support and few obligations to encourage people out of benefit dependency and poverty. Over an 18-year period, child poverty more than doubled. That was the situation that this Government sought to improve, and in many areas, whether it is employment or reducing child poverty and benefit poverty, there have been significant gains.

As it was for others, it was a privilege for me to hear the noble Lord, Lord Morris of Manchester, give us an historical analysis based on his previous disability legislation. I believe that this Welfare Reform Bill has it right when it talks about the rights to benefit being accompanied by each person's responsibility actively to seek work, recognising that some people, by virtue of their disabilities, will be unable to work, a point made by many noble Lords. Even changing the name of the benefit from "incapacity benefit", which seems to define a non-changing, permanent condition, to "employment and support allowance" seems positive.

I welcome the Government's assurance that this is not about cutting benefits or forcing people into work, but I recognise the concern expressed by some. The noble Lord, Lord Kirkwood, expressed his anxiety about conditionality, and the noble Baroness, Lady Murphy, referred to the sanctions. They saw it in a negative light; I see it as a positive encouragement, although I recognise that disabled people face barriers.

We know from our experience with the New Deal and jobseeker's allowance that successful support is founded on complementary benefit and support structures. The examples that we have had of the Pathways to Work pilots and jobseeker's allowance give us encouragement. Transforming the gateway to benefit—the personal capability assessment—from being purely focused on establishing benefit entitlement to a much more constructive and proactive approach which focuses on capability is, I believe, the right way forward. It will examine not only what an individual cannot do but also what they can do and how they might be helped to improve their capacity.

I share the concerns of those who cite mental health problems. We know that the number of people involved has risen significantly from less than 20 per cent in the 1980s to nearly 40 per cent now. We want this new personal capability assessment to be more sophisticated so that it can better identify people with mental health conditions and tailor help to them more effectively. That means more resources, and I hope that that will be taken care of in the Minister's reply. The policies are not about forcing people to seek work or undertake work-related activities that are detrimental to their health conditions; they are an attempt to break down the barriers faced by incapacity benefit recipients.

I share the concern of a number of noble Lords about changing employers' attitudes, but the laudable desire to get people back into work will not succeed unless we can make a fundamental difference in this area. Some years ago, I tried to get a young deaf person back into employment and I remember the difficulty that I had with a large employer. It characterised itself as an equal opportunities employer yet seemed unable to understand the flexibility that it had to apply in recruiting someone with that disability who could make a positive contribution. There is plenty of work to be done in that area if the Government's long-term aims and aspirations are to succeed.

We also need to break down the age barriers, recognising the huge demographic challenge ahead: by 2050, we will have 50 per cent more pensioners. The Government's aspirations are laudable: 80 per cent of the working-age population in employment, reducing the number of people on sickness benefit by 1 million, and getting 1 million older people and 300,000 more lone parents into work. Those are challenging targets.

Having listened to the contributions of others more expert than me, I am not sure whether the current proposals will simplify the benefits structure, but I hope that they will. I agree with my noble friend Lord Morris of Handsworth that we have to tackle benefit fraud. That is essential if we are to maximise support for the deserving cases. Although the noble Lord, Lord Oakeshott, said that it is just a question of carrots, I do not see this as a carrot-and-stick situation. That is an unfortunate and negative analysis. People in this country expect fairness, and benefit fraud has to be dealt with, regardless of the extent of that fraud. I think of the recent case, which received a lot of publicity in the papers, about the marathon runner who had clearly overcome his incapacity to work. My noble friend said that he lacked any motivation to seek work; no doubt he was too busy training.

I was also interested in the comment of the right reverend Prelate the Bishop of Leicester on housing benefit withdrawal. I am sure that that would be the last resort. For those of us who have lived either in or close to estates where there are serious problems, the question is: what do you do about families who refuse to achieve a reasonable standard of behaviour? Do you let them continue to terrorise the rest of the estate where you live or do you decide that, as a last resort, and having attempted to help as best you can, some action has to be taken? I do not believe that the Government intend in any way to punish children. As I have already said, the record on reducing child poverty has to be acknowledged.

I do not want to end on a negative note, because I believe that this is positive legislation. It is time to reform our welfare programme. The Bill allies the right to work with the right to benefits for those who need help and care, and I commend it to your Lordships.

7:49 pm
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Baroness Meacher (Crossbench)

My Lords, I applaud the objective of the Bill to reduce by 1 million the number of people who are dependent on disability benefits. I should have thought that for people who, like me, have had a longstanding concern about unemployment, this would be a day of rejoicing, but I find myself deeply worried by what I regard as the unintended consequences of the Bill. To explain why, I shall concentrate on the 50 per cent or so of people who have a mental health problem as either their primary or secondary diagnosis. My noble friend Lord Low spoke eloquently about the impact of the Bill on physically disabled people.

I should declare an interest. I chair the East London and City Mental Health Trust and a clinical ethics committee for the Central and North West London Mental Health Trust. The aim of the Bill is to enable people to return to employment, but for those with fluctuating disorders, including most mental health disorders, the fear of taking a job is considerable. First, they face stigma when they return to work. They are very likely to face suspicion on the part of their manager and peers. They generally lack confidence and are likely to assume that they will probably fail. They will often be able to work only part-time, and on fairly low incomes. On top of that, they fear that if the job goes wrong, it will take months to restore their benefits. That fear is based on their personal experience; destitution is never far away from these people.

If the Bill could assist just one of those very real problems, it should do so. Reform of the linking rules would be an important start. These rules are designed to ensure a rapid restoration of benefits to a person previously on disability benefit who takes and then loses a job. These linking rules simply do not work. First, the restoration of benefits is not automatic. The applicant still has to complete an application form and visit the jobcentre for an interview. If a person with a mental health problem has just lost a job, they are likely to be curled up in bed thinking that life simply is not worth living. The last thing on their mind will be to make a claim for benefit. Similarly, the likelihood of the person turning up at the right place at the right time for an interview is small and in some cases non-existent.

I recently asked the manager of a jobcentre to talk me through exactly what would happen to a mentally ill person who takes and then loses a job. Her response was devastating. She explained the system as it was supposed to work and then she said, "Quite honestly, what usually happens is that the police pick them up and they are taken back to hospital. We can't really help. We don't really understand mental problems. There's no doubt that mentally ill people really suffer in this system". Those were the comments of a person responsible for operating these rules.

The linking rules will never work with this group unless they are truly automatic. Ministers tell me that the reason for the lack of automaticity is the need to avoid abuse. I would ask the Minister to consider whether it might be less costly to the Exchequer to restore benefit immediately and then to undertake checks when this approach would prevent extremely costly hospital admissions. We need only go back to the jobcentre manager for evidence of that.

Vitally important, too, is the need to extend the linking rules to include automatic restoration of housing benefit at the previous higher level for a person not in work. As noble Lords know, if you go into work, your housing benefit drops; if you leave work, in theory, your housing benefit rises. I know that the department has been considering that position and I should be grateful if the Minister could give the House an assurance that plans are in place to render the linking rules, including housing benefit, truly automatic for the most vulnerable group in the context of the new Bill.

I have thought long and hard about how those with fluctuating disorders, including those with moderate or severe mental health problems, can be helped by the Welfare Reform Bill. There is a positive and constructive way forward, but only on the basis that this entire group would be placed in the support group. I do not like to disagree with the noble Baroness, Lady Hollis, but sanctions will not work for people with moderate and severe mental health problems. The NHS and DWP need to work closely together to deliver the right package of help and support to return as many as possible of these people to employment for as much time as they can manage. I therefore greatly support the Government's objectives; my only concern is about the means to attain them.

The package, which appears to be readily available, requires four elements. The first is evidence-based psychological therapy at a cost of just £750 per person. This work is currently being piloted in two NHS trusts. The second is evidence-based individual placement and support, a form of supported open employment widely tested in the US and found to be successful for people with mental health problems. London mental health trusts, and no doubt many others, are introducing this approach, and in two cases they have already done so. The third is work with employers to reduce the stigma of mental health issues and to ensure a more supportive environment in the workplace with the support of NHS staff. I understand that the DWP is doing important work in that area. Nothing I am saying is new, and if you put it all together, you really begin to get somewhere. The fourth crucial item is the reform of, and rendering automatic, the linking rules to take away the fear that these people face when they take the first steps into jobs.

I turn to other concerns about the Bill. The policy presented in the Bill was tested in the Pathways to Work pilots, which were well resourced and included regular back-to-work interviews and opportunities to benefit from a variety of support services and a back-to-work bonus of £40 a week. I hope that that bonus is in the regulations. The pilots were rightly heralded as a success, but hidden behind the success was the fact that people with mental health problems were not assisted into work by the Pathways to Work pilots. The pilots worked for others.

The system to be introduced by this Welfare Reform Bill will be a pale reflection of the pathways pilots' design. For a start, the DWP faces a 5 per cent spending cut in 2007-08. There will be fewer staff and, no doubt, staff less well trained to process the employment and support allowance system. All this bodes ill for vulnerable claimants. What, then, are the important differences between the pathways pilots and the Bill itself?

First, the Government plan to contract out all the work associated with the new employment and support allowance. The justification for contracting out the service is based on a flawed evaluation of an entirely different project involving the placement of unemployed people. In that project, the contracted-out service was altogether stronger in design than the in-house model with which it was compared, thus proving nothing. The successful Pathways to Work pilots were, by contrast, undertaken in-house by Jobcentre Plus. The fact is that we have no evidence that contracting out the employment and support allowance will help clients back to work. There are reasons to fear the opposite.

Secondly, contractors will be outcome-focused. They will, I understand, be paid only if they place a person in a job. That did not apply to Pathways to Work. We can assume that the financial incentive of payment by results, or payment for every successful job placement, will either result in undue pressure being placed on people with mental health problems, whose symptoms are likely to increase under stress, or this group will simply be left out in the cold.

Thirdly, the £800 per job placement is based on the actual cost of placing someone in work in the pathways pilots. But we know that mentally ill people were not helped into work. The question then is: what would it cost to place people with mental health problems in work? It would certainly cost a good deal more than £800 per person. For example, we know from the Sainsbury Centre that the average cost of condition management in the pathways pilots was £1,200. The figures stack up only because 12 per cent of people on those pilots received condition management.

Apart from the dilution of the pathways model, there are many other concerns. One of our problems in debating the Bill is that most of the detail will be in the regulations. The personal capability assessment that others have mentioned will determine whether a person is deemed to have a "limited capability for work" and is entitled to the ESA, or whether they fall into the support category. The PCA is thus of huge importance to claimants; it determines their livelihood.

The PCA has until now failed to assess mental disorders effectively, as others have mentioned. A lot of work has been done to improve the tool used for mental health assessments, and I applaud the Government for that, but the accuracy of the PCA will depend on more than the tool itself. It is essential that the person undertaking the mental health assessment has appropriate training as well as regular contact with the person being assessed so that he really understands how the person is over time. At present, the person's GP will be invited to complete a form before the assessment begins. Many mentally ill people, particularly those with severe and enduring problems, rarely see their GPs. A member of the community mental health team would be in a far better position to help. In view of these failures, I trust that the Government will test the new PCA all the way to appeal in order to ensure that it will be successful.

A major issue is the conditionality introduced with the ESA group. It sounds very reasonable, until we get down to individual cases and what it will mean in practice. I met someone recently who suffers from clinical depression and anxiety. She is literally terrified by this system. Her symptoms are made worse by leaflets coming through the door, and it is difficult to imagine how she is going to cope with the process of being invited to assessment after assessment, interview after interview, and so on. She feels that her whole life will be under threat.

I fully support the Government's commitment to increase the number of people in employment by 1 million over 10 years, but I am profoundly concerned that the Bill will cause increases in NHS expenditure and will not achieve the Government's objectives unless the concerns that we have all expressed are addressed.

8:02 pm
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Lord Addington (Spokesperson in the Lords (Disability), Work & Pensions, Deputy Chief Whip, Spokesperson in the Lords (Sport), Culture, Media & Sport; Liberal Democrat)

My Lords, one of the advantages of being called on to sum up a debate is that I can refer to noble Lords who have clarified points. This is an odd Bill. Getting people off benefits and into work whenever they want is rather like motherhood and apple pie—how could anyone possibly be against it? The problem is how to do it effectively and to benefit people without damaging a few of them, some of them or all of them along the way; that is, how to minimise the risks and personal damage. That is where the problems lie. Throughout this debate noble Lords have said that the Bill is a good idea, but they have also asked about this or that aspect of it. That is not unusual in this area, and I do not think that the Minister will thank the business managers for scheduling the debate on the Mental Health Bill so close to this debate.

I turn to the concerns that have been raised. The main point was that the provisions' success or failure will lie in work-focused interviews and activity. In practice, the provisions will stand or fall on correctly placing people according to their skills, condition and disability. How can we give people the back-up they need to get off benefits and into the workplace? I have long been dealing with disability matters in this House, and there have always been two issues to address: perception and practical help. I believe that perception is the first issue to address. If it is perceived that someone in a wheelchair is unemployable, to take an easy example, he will be unemployable because he will be told that he cannot work. The minute the problem is addressed in a slightly more lateral manner, it becomes a minor problem because other jobs that he can do will be discovered. But people in wheelchairs are comparatively easy to deal with provided that that is their only problem. Although they have a movement problem, modern regulations have been introduced to help enable them to get into offices. Much work is based around modern business technology—PCs—and using a keyboard. Many people in wheelchairs will not have great difficulty using that technology once the initial impact of doing the job has been overcome.

When we get to the more complicated group of people with mental health problems, the perception is that that they are all raging psychopaths waiting with an axe at the coffee vending machine, or that if they hear a cross word they will break down in tears or not turn up the next day. They will not do those things. Those perceptions must be broken down. Other legislation has attempted to do so. The Government must take that on board when they implement this legislation or much of it will fail that group.

The noble Lord, Lord Low, made the excellent point that certain groups—those with straightforward mobility problems, for example—can be creamed off and dealt with quite easily now. Other groups with physical disabilities will be more difficult because they are not understood. Unless we co-ordinate what can be done and what should be done, we will fail. The conditionality clauses, Clauses 10 to 15, are where the legislation will stand or fall. Unless we get the right support for people undertaking interviews and assessments, everything else will be of limited value. I have looked at the Bill and dealt with this subject over a number of years, so I shall ask the Government a series of questions about the conditionality process that go back to the theme of training which the noble Baroness, Lady Hollis, and I have raised. I did catch the spray from that shot across my bows.

When a person's needs are more complex and they belong to two groups, things can get more complicated. As has been pointed out to me, somebody who has AIDS or a physical disability may have more reason to be slightly depressed than someone who does not. It may be complicated to place a target group of people with a complicated cocktail of disabilities. How do we address placing them when they have to face two sets of perceptions?

Provision for training and best practice should be written into the Bill, as should a duty on those undertaking the assessment and interview to call on expertise and support when they feel they need it, or suspect they do, in order to prevent the wrong advice being given. Such advice has led to successful appeals under the current system. If we achieve a degree of success in this part of the Bill, we will have made real progress.

Although I appreciate that this will have to be teased out in Committee, I hope that the Government will give us some idea about the linkages—the joined-up government, if we must use that now rather worn expression—with the Government's awareness programme for employers. Let us concentrate on the employers who do not feel a need to employ a public relations firm; that is, the small employers who are supposedly the dynamic part of the economy. The big people who have big advertising budgets know how to implement the Government's schemes. They also know that it is worth their while to do so, because they are playing at a higher level. How are the Government getting into the small and medium-sized parts of the economy to address the bad perceptions facing some groups? If we could hear about such linkages and co-ordinate them with support for those implementing the system, I would be considerably less worried less about it.

If we do not address those problems we will have real trouble. We may unintentionally go backwards and not forwards. But that probably will not happen because of creaming-off. People will say, "Statistically, we were able to do this". But that will have been comparatively easy. We could create a second class of people who are pushed yet further back. I think that people suffering from mental health problems will probably comprise the biggest part of that group. We have to press on.

The situation will change as drug treatments, like support for those with physical disabilities, improve. We must be able to update and inform these people on a rolling basis. I could flog that point to death, but I should look more widely at other parts of the Bill. For example, will the Government themselves take action to improve access to work? All noble Lords have mentioned that point although it was supposed to be the best-kept secret. I wonder how the Budget will survive such secrecy. I believe that the departments themselves are supposed to be taking on the related expenditure. How much money is being put aside to implement this? Is there a guarantee that the result will not be departments which need three clerks deciding not to hire someone in a wheelchair because accommodating them would take up some of their budget and allow them to hire only two clerks? How will that be addressed in the departments? It would be an interesting example for other employers.

I can quickly address the housing benefit provisions in Part 2. The single room rent issue is an anomaly of catastrophic proportions. It guarantees that a young unemployed person will be discriminated against. As the prison statistics show, many young unemployed males end up in prison. I therefore again urge the departments to look over their shoulders at other departments. Also, on housing benefit, what exactly will be the on-costs? Perhaps a little punishment and a rap across the knuckles are in order here. I wonder what exactly the costs will be as people lose housing benefit because they are badly behaved and lead chaotic lives. I suggest that it will only build on the problems, not remove them. One may feel better by implementing the provisions until they come back to you on your doorstep.

We can look at many other issues. I think that the noble Baroness, Lady Murphy, said that one should monitor the processes and the IT systems. It is vital to monitor everything to do with this system. During the Bill's passage we have to ensure as a collective unit that the Government clearly answer how they think their regulations will come in and how they will create a system that stands a chance of working. Unless they support their front-line staff to make correct decisions and give them the flexibility to call in the help they need, we will end up having to address this issue again—after perhaps five years of hiding behind statistics that are rapidly moved round to show that everything is fine, until we have to admit that it is not.

8:13 pm
Photo of Lord McKenzie of Luton

Lord McKenzie of Luton (Parliamentary Under-Secretary, Department for Work and Pensions; Labour)

My Lords, I am grateful for the deliberation noble Lords have given to the Bill today. It has been the House at its very best. I will seek to address the specific points raised. Before that I will take the opportunity to welcome the degree of consensus that has already been built up on the overriding principles behind the Bill, which has been evident throughout today's debate. I acknowledge the concerns expressed about practicalities, about resourcing and expertise—and I note that we will have some interesting debates about the shared room rate and housing benefit sanctions.

I will go through as many of the specific points as I can in the 20 minutes allotted to me, while recognising that when we get to Committee stage pretty much everything we have discussed today will feature again. The noble Lord, Lord Skelmersdale, asked whether this was all about fears of harassing people with mental illness back to work. It demonstrably is not. This is about people we know want to work and helping them to break down the barriers that prevent them working.

A question was asked about existing customers. People already on incapacity benefits will have their cash benefits protected. Over time we will migrate existing customers to the employment and support allowance to bring all customers under the same system, helping to smooth administration and reduce complexity.

The noble Lord asked whether a claimant with mental health difficulties would be able to bring an intermediary to the assessments. The answer is yes, we would encourage customers to bring a representative to medical assessments. It is most important that the entitlement is based on decisions that have the correct evidence. The noble Lord, Lord Skelmersdale, asked about regulations. Regulations relating to Clauses 12 and 15 have not been prioritised and are not in the release later this week. I hope that regulations relating to Clauses 8 and 10 will be informative and help our deliberations in Committee.

I was asked whether the terminally ill will go on to the main phase immediately. The way we treat people with terminal illnesses is obviously a very sensitive issue and I am conscious of the arguments put forward in favour of shortening the assessment phase for this group. We continue to look at how best to support terminally ill customers and will return to the House at a later date with our response. The issue about people undergoing cancer therapy was raised by the noble Lord, Lord Skelmersdale, and my noble friend Lord Morris of Manchester. There will be no automatic process on to the support group. We do not want to write anyone off, so the criteria for entitlement to the support group are based on the functional limitation that the individual has as a result of the condition.

On local housing allowance, the question was asked whether landlords would pull out of the market. It is true that there was initially a lot of opposition from landlords to the local housing allowance, but the pathfinder evaluation has revealed that while some landlords have left the market others have joined and there has been no impact on overall supply. One of the benefits of the local housing allowance is that the landlord will not necessarily know that the tenant is on the housing benefit so that will remove some of the difficulties that may currently be encountered.

A number of noble Lords—the noble Lords, Lord Addington, Lord Skelmersdale and Lord Low—asked what is being done directly with employers to ensure their engagement with people with mental health conditions in particular. The Government are committed to supporting employers and tackling discrimination, but we need to work on the good work of organisations such as the DRC, which works to raise awareness of disability issues with employers. The DWP has recently launched a major campaign aimed at employers, especially small and medium-sized enterprises—the point pressed by the noble Lord, Lord Addington—to help them recognise their obligation under the DDA as well as the benefits that that can bring.

In October last year, the Department of Health launched a new initiative, Action on Stigma: Promoting Mental Health, Ending Discrimination at Work. At Budget 2006, the Chancellor announced a cross-cutting review of mental health and employment outcomes which would look at existing best practice, holes in provision and options for the future. The review, which is ongoing, will provide recommendations for practical solutions and we hope that it will be completed by Budget 2007.

The noble Lord, Lord Oakeshott, raised the issue of psychological therapies and of CBT in particular. I agree that psychological therapies, such as CBT, can often play an important role in helping many people with mental health problems to manage their condition and return to work. As such, we are exploring ways of increasing access to those therapies. The Department of Health established the Improving Access to Psychological Therapies programme, which aims to develop a service model for delivering a range of evidence-based interventions. There are two national demonstration sites, in Newham and in Doncaster, one of which was referred to by the noble Baroness, Lady Meacher. While we believe that cognitive behavioural therapy has a role to play, we must remember that one size does not fit all and psychological therapies may not be appropriate for many of our customers. We need to consider a range of support for people with mental health problems, and I refer again to the Treasury's review of these matters.

The noble Lord, Lord Oakeshott, asked whether these resources were affordable. Over the next two years, we will be investing a further £360 million on our welfare reform Green Paper proposals, which include extending the Pathways to Work programme nationwide by 2008. The department is working through the implications of the spending review settlement for its employment programmes and is working closely with HM Treasury to ensure that spending plans between 2008 and 2011 support departmental aspirations. The question was asked whether we can deliver pathways while cutting staff. That is a question of prioritising resources. We have announced that the remaining 60 per cent of pathways will be rolled out using primarily private and voluntary sector participants.

The noble Lord, Lord Oakeshott, and the right reverend Prelate the Bishop of Leicester asked about the anti-social behaviour processes and the withdrawal of housing benefit. The Government have a wide range of measures to tackle anti-social behaviour as well as the provisions in this Bill. The court's decision to evict a household is often taken for the whole household and is dependent on robust considerations relating to the needs of the wider communities and the individuals concerned.

A question about safeguards was raised. There will be safeguards to protect the vulnerable. Each case will be considered on an individual basis before a local authority pursues a housing benefit sanction. It should take a decision about whether a sanction is an appropriate tool to use or whether a different route could be used. For example, if there are serious mental health issues, a referral to mental health services might be a more appropriate route. We intend to pilot the Clause 30 provisions for two years only and will fully evaluate that before any decision to roll out the scheme is taken.

The right reverend Prelate the Bishop of Leicester raised concerns both about children and about the creation of homelessness. We recognise those concerns. It is not the policy's intention to sanction large numbers of people. A sanction is not a punishment; it is an encouragement to accept an offer of support to households in crisis.

The right reverend Prelate the Bishop of Leicester asked what happens if support is not available. If support is not available either because the local authority does not have support structures in place or the programmes are full, then no sanction could be applied.

Why are we targeting people on housing benefit? Well, we are not specifically. No one is suggesting that anti-social behaviour is confined to those in rented accommodation or to those who claim state benefits. We do not see this measure as the primary tool for tackling anti-social behaviour; rather, it is one measure that can assist in that.

The noble Lord, Lord Oakeshott, asked how we are rolling out Pathways to Work whether it works. Pathways to Work already covers 40 per cent of the country. The remainder will be rolled out in two phases and delivered by providers. Phase 1 will be up and running by October 2007, with phase 2 by April 2008. Again, the issue of resources was raised. We have repeatedly committed to funding a national pathways service and there is no question of doing that on the cheap. This is not a cost-cutting exercise, but obviously we have to live within the spending review settlement.

My noble friend Lord Morris of Manchester, who I know was struggling to be able to stay for the whole of this debate, spoke with authority as usual. I acknowledge his expertise and welcome the benefit of his wisdom in the weeks and months ahead. He spoke, as others did, about employer resistance, which is a hugely important factor. He did say that sanctions do not work and asked why we needed them, as not many people have sanctions imposed on them. It is entirely right that, in return for our offer of pathways-style help and support, we ask customers to engage with us. Research with pathways customers found that sanctions are an important factor for some in maintaining their attendance at work-focused interviews. The success of this approach is demonstrated by the fact that only 1 per cent of customers in pathways pilots have had sanctions imposed on them.

The noble Baroness, Lady Thomas, asked whether personal advisers have discretion if someone with a mental health condition misses a work-focused interview. Yes, they will have that discretion. We have introduced a series of safeguards to ensure that no sanction is imposed in cases where someone has a mental health condition until a face-to-face discussion has been held with the customer to ensure that they understand the requirements. The noble Baroness also asked about the participation of GPs and whether they are effective. Procedures are in place to identify doctors who do not provide reports when asked. I can provide more information in Committee or otherwise if the noble Baroness so wishes.

A question was asked about investing more in mental health services. In 1999, the Department of Health published a national service framework that set out our vision for mental health care. Between 2001-02 and 2005-06, the NHS and local-authority planned expenditure on mental health services has increased in real terms by 25 per cent, and there are 50 per cent more consultant psychiatrists, 75 per cent more clinical psychologists and at least 20 per cent more mental health nurses than there were in 1997.

A question was also asked about the backdating of claims. We have decided that additional support should be provided at the end of the assessment phase. For many customers, this is an increase compared with the existing system in which customers must wait for up to a year before receiving the higher rates of benefits. We must strike a balance between the needs of our customers and the need to simplify the system.

Several questions were asked about the computer system for the PCA, and whether it would be flexible enough to take non-standard answers. Yes, it will. The LiMA system is there to support healthcare professionals carrying out the PCA assessment, and a healthcare professional remains in full control and can override the system wherever appropriate.

The noble Baroness, Lady Thomas, and the noble Lord, Lord Low, asked whether there was a conflict of interest in the work-focused health-related assessment being carried out at the same time as the PCA. We do not believe that there will be. The work-focused health-related assessment is an integral part of the revised PCA. It is a forward-looking assessment of health interventions that will help to break down the barriers to entering or returning to work. However, we will pilot the work-focused health-related assessment later in the year, and will then review its timing.

The noble Lord, Lord Low of Dalston, reminded us quite powerfully of the scale of the challenges that we face if we are to stimulate and facilitate the aspirations particularly of people with mental health problems. He also asked whether the PCA should reflect socio-economic factors in deciding limited capability for work. Of course these factors have an impact on the rehabilitation of people with a disability and on their confidence and ability to enter or return to employment. Entitlement to benefit must be defined in a way that applies nationally and consistently, not in a way that is dependent on local conditions such as the availability of transport or the attitude of prospective employers.

The noble Lord asked how we will ensure that contracts do not encourage providers to help only those people with fewer support needs. That theme was picked up by others, including my noble friend Lady Hollis. The bids for Pathways to Work contracts for potential providers should include details of the skills and experience that they have that enable them to address the specific needs of all customers and the barriers against them, and the bids will be assessed against that information. Contracts do specify that a provider should not discriminate against anyone on the basis of their disability. If providers ignore those with complex or longer-term needs, they will clearly breach this requirement and will have to remedy the situation, or ultimately their contract may be terminated.

The noble Lord, Lord Kirkwood, asked about the "work first, benefits second" approaches which my noble colleague the Minister of State referred to in a speech. This does not represent a change in direction from the current agenda in welfare reform. The concept of promoting work over benefits has been at the heart of the Government's agenda since 1997. The Minister of State discussed this matter at the first seminar of a series of seminars on the future of welfare in the next decade. The seminars are about exploring and discussing ideas for the future of welfare, rather than about representing specific policy proposals. The noble Lord referred specifically to the benefit process in Galashiels. Perhaps I should write to him separately on that matter.

The noble Lord also talked about the use of Section 82 and how it did not work satisfactorily before. I hope that the lessons have been learnt from that. It is very important that the resources are in place so that we get the IT systems fully up and running and tested before we press the button. There is a long lead time to that, which is why we need to go through these processes.

My noble friend Lady Hollis, in a typically thorough analysis, asked whether providers will ignore those who are harder to help: will they cherry pick under the contract facility? In any programme based on results, we can never entirely eliminate the risk that providers will cherry pick. Therefore, as part of contract management, we will need to monitor outcomes and regularly review providers' performance to ensure that any problems are dealt with early. She asked whether we can help former employers re-employ disabled people. We do not believe that that is financially viable. Our approach is about working with employers so that they understand the benefits of employing disabled people and ensuring that people are incentivised to go into work.

The noble Lord, Lord Kirkwood, asked about the details of the IT and BPRP situation. Perhaps I can cover that in correspondence in due course.

The noble Baroness, Lady Greengross, asked about permitted work for those who will never move to full-time work. We recognise the importance of part-time work to well-being and to developing self-worth and are looking at the best ways to continue to enable people who are currently far away from being able to work full-time to take part in work or work-related activity. People in the support group will still be able to undertake permitted work.

Are we going to increase the £85 limit at which deductions from the contributory allowance for pension payments start? No, we keep the figure under continual review but have no plans to increase it because we think that that is an appropriate level. The treatment of occupational pension payments is one of the most generous income disregards in the benefits system.

The noble Lord, Lord Best, asked how many claimants have a shortfall between rent and benefit in the local housing allowance pathfinders. In the pathfinders, about 39 per cent of claimants have a shortfall under the LHA, the average shortfall being about £17 a week. He referred to a switch in the average from mean to median rents. The median rent basically takes the point in the middle and therefore should address unrepresentative low or high rents at either end of the scale. Perhaps we can pick up the outcome of that when we return to the matter in Committee. On the shortfalls under the local housing allowance shared room rate, in the pathfinder areas, the average shortfall for those assessed under the single room rate has fallen from £30 per week before the LHA was introduced to its current level of £27 per week.

My noble friend Lord Morris of Handsworth spoke about the importance of the legislation and said that he was in favour of welfare, not workfare and it is certainly not about workfare. He asserts that the Bill should get full scrutiny and I am sure that that is right.

The noble Baroness, Lady Murphy, asked whether we would continue to monitor how the revised PCAs are implemented. The answer is yes. The Minister for Welfare Reform has given an undertaking that we will continue to monitor the revised PCA for the first years after its introduction. She asked about health care professionals carrying out the PCA and whether they will receive training in assessing mental health. The answer to that is yes. I am sure that we will return to that in Committee.

I was asked about access to LiMA software and why we cannot scrutinise it. LiMA software is the commercial property of Atos Origin, so it is exempt from disclosure.

The noble Countess, Lady Mar, referred to sufferers from CFS/ME. We fully recognise that CFS/ME is a genuine condition that can be very disabling. Each individual will be assessed on the functional limitation that he or she experiences as a result of their condition. She raised issues about the personal capability assessment. The personal advisers carrying out work-focused interviews will be able to defer an interview if the person is unable, on account of their condition, to attend on the appointed date. She raised a series of other questions which we shall have a chance to pick up in Committee—specifically on the detail of the regulation.

My noble friend Lord Young of Norwood Green referred to the demise of the term incapacity benefit. That encapsulates the change in ethos that the provisions are intended to introduce. I agree that this is a positive piece of legislation.

The noble Baroness, Lady Meacher, asked about linking rules. We intend to bring forward the current rules that apply to incapacity benefit to contributory ESA, including the more generous two-year linking rule for work and training that came into force in October 2006. We are seeking to bring the short-term linking rule for income-related ESA into line with the rule that applies to income-related JSA and income support; that is, a 12-week provision rather than eight weeks.

It has been suggested that we are rolling out the Pathways to Work programme on the cheap. I think I have dealt with the point: we are certainly not. It needs to be effectively resourced if it is to achieve its objective. The noble Baroness also asked about further evidence and whether the GP is always the best person. We fully intend that further medical evidence will be sought from the most appropriate source, which might well be someone other than the GP.

The noble Lord, Lord Addington, raised a range of issues about the practicalities, including questions about whether the resources are going to be in place, and if proper training will be available. The provisions in the regulations will help in some of that, but no doubt we will return to these points in Committee.

In 1997 we set out on a journey. Throughout that journey our values have underpinned our reforms and driven our agenda, but there is still more to do. Where discrimination still exists and where the right to work is still not truly open to all, we have to rise to the challenge and be radical to stay on track to deliver. That is why this Bill is so important. It is absolutely fundamental to our agenda. It promotes opportunity, it breaks down barriers to work, and it will deliver another blow in our fight against poverty and social exclusion. It will take us another step along the road of creating a welfare state which rather than foster dependency will facilitate aspiration. It is founded on a positive can-do attitude as opposed to the defeatist mentality that nothing can be done.

On Question, Bill read a second time.