Report (3rd Day)
Welfare Reform Bill
Lord Freud (Parliamentary Under Secretary of State (Welfare Reform), Work and Pensions; Conservative)
My Lords, I speak in support of the amendments tabled by the Government in relation to Clauses 51 and 52-namely Amendments 33, 34, 37, 39, 40, 41, 43, and Amendments 63 to 67.
The important issue of the impact of time limiting on those with deteriorating conditions was raised in Grand Committee. I outlined in debate the existing safeguards which would protect people in these circumstances. However, when we looked again at the safeguarding provisions, it was clear that a person would be able to requalify only in very limited circumstances. In light of that helpful debate, we have decided that further clarification should be provided on the face of the Bill and are therefore moving these amendments.
The government amendments will enable people whose contributory ESA, while in the WRAG, has ceased as a result of time limiting, to requalify for an award of ESA if, after their award ends, they continue to have, or are treated as having, limited capability for work, and-I stress this point-at any time thereafter they develop and continue to have limited capability for work-related activity and would become eligible for the support group. The substance of this new category of entitlement is found in Amendment 43, which provides for claimants to have further entitlement after time limiting has been applied to an award of contributory ESA. I note with pleasure that the noble Lord, Lord McKenzie, and the noble Baronesses, Lady Morgan and Lady Meacher, have added their names in support of Amendment 43.
Without wishing to anticipate or foreshadow the debate on Amendment 42, tabled by the noble Lords, Lord Patel and Lord McKenzie, I trust that the noble Lord, Lord McKenzie, having lent his support to Amendment 43, may feel able not to proceed with Amendment 42. I shall endeavour to explain why shortly.
I turn to the remainder of the government amendments in this group. In previous versions of the Bill, the time-limiting provisions for ESA youth appeared in Clause 52. As a result of the amendments, we have moved to provide for new entitlement to contributory ESA through deterioration, and it has been necessary to amend how the time limiting of ESA youth awards will work to provide for the new deterioration category. This is because we wish the category of further entitlement to ESA after deterioration to cover both claimants who deteriorate after their time-limited contributory ESA awards end and claimants who deteriorate after their time-limited ESA youth awards end. We have therefore moved amendments to provide for Clause 51 to deal with the time limiting of ESA youth awards where a claimant is in the work-related activity group. To be clear, the clauses as revised by the government amendments still have the effect that claimants awarded ESA on grounds of limited capability for work developed during youth will have their awards time limited, if the claimant is not in the support group.
Amendment 42 is similar in a number of respects to Amendment 43, and I think I can probably say was the inspiration in an earlier form for that amendment. However, the point is that Amendment 42 is less favourable than Amendment 43 in one important respect, as it states that a claimant must be assessed as having limited capability for work-related activity within five years of the termination of the first ESA award. The approach taken by the government amendments would not seek to put this time limit on the new form of entitlement to ESA for claimants whose condition deteriorates. We would allow a claimant to return to a contributory ESA award at any time after their time-limited award has ended, as long as they develop limited capability for work-related activity or fall to be treated as having it, and as long as they have continued to have or be treated as having limited capability for work throughout the period after their time-limited award ended.
Lord Patel (Crossbench)
My Lords, I speak to Amendment 42, to which the Minister has just referred. Before I start, perhaps I might wish him a happy new year and, in doing so, thank him enormously for his Amendment 43. It may be claimed that it was in response to my amendment in Grand Committee; if so, I am very grateful for it. I thank him and I do not need to go any further.
Baroness Meacher (Crossbench)
My Lords, I support Amendment 43, tabled by the noble Lord, Lord Freud, and I also wish to congratulate him on levering a little money out of his Government, or the Treasury, to enable that amendment to be tabled. However, I also want to speak to my Amendment 42A, rather late in the day, which seeks to introduce just a little more humanity into this part of the Bill. It simply extends a little the remit of Amendment 43.
At present, a claimant who has a terminal illness and who is expected to live no more than six months would be placed in a support group, which means that they would have no conditions attached to their benefit entitlement. If they have a few good days when they might be able to work, there is no commitment for them to have to do that although anyone in this position who has a job will no doubt wish to work as far as they possibly can. I am talking about those people who do not have a job and who therefore find themselves in the position of having to look for one, when they have a terminal illness that will deteriorate over time until they finally die.
This amendment applies to a group of people who are suffering from a life-threatening disease, the symptoms of which cannot be controlled by any recognised therapeutic procedure, and where there is reasonable cause for these symptoms not to be able to be controlled by any such procedure. At present, the default position is that these claimants will be allocated to the work-related activity group and will be expected to undertake interviews and activities on this rather wild and ridiculous assumption that they should be finding a brand new job, with a brand new employer, for whatever little bits of time they are able to function. At the same time, of course, they have to prepare themselves mentally for the ever worsening symptoms that will lead to their death.
My question to the Minister is whether he regards such expectations of persons on a downward path towards death as humane and reasonable. I hope very much that he will answer that question rather carefully in his response, in the sense that having accepted the government amendment and put that forward, he will find that this amendment is a very minor shift which brings people in a rather similar position into line. Again, I must emphasise that this amendment would not in any way discourage terminally ill people who can work from doing so. Rather, it is an attempt to remove callous pressures from being applied to people who already have probably far too much to cope with.
The Minister knows that I understand very well the need to reduce the numbers of people on ESA and, most particularly, to reduce the months and years that some people remain on it. We are really of one mind on that. Of course, proper conditions need to be applied so that if people are really sufficiently well to work, they make every effort to do so. However, we are talking about people whose lives are severely curtailed. They will not be around to spend years on ESA, let alone to claim pensions. Are we not in danger of throwing the baby out with the bathwater here?
I shall leave your Lordships with just one case to illustrate the point. A CAB client had had major surgery for breast cancer, twice. At the time of her assessment for benefit she was suffering severe pain and undergoing tests that revealed some abnormal bone activity. She told the HCP about her condition and the fact that she was due to have a further scan. This lady was found to have metastatic non-curative cancer of her bones, primarily in her pelvis, hips, back and spine, as well as down her legs and in the rib area. She was told that she had three or four years to live, although I have to say that sounds a little unlikely to me, and my guess is that it will be a pretty miserable three or four years.
On appeal, this claimant had her "fit for work" status-which is mind-boggling in itself-removed, but she was placed in the work-related activity group. She became very tearful and had to see a psychologist. She was unable to return to her previous job due to pain from the operations removing the lymph glands under her arms. She got extremely tired, of course-if you have metastatic cancer you are not going to be in a good way to do anything. The CAB adviser was of the view that this client would not be able to work again due to the increasing pain levels that she was going to suffer.
Anyone who has known anyone with metastatic bone cancer will know that this is not a happy thing to have; it is seriously deleterious. That is the point that I want to make: here you have people whose pain, tiredness and general debility cannot be adequately controlled, and there should be some fairly automatic procedure to deal with them. Perhaps the Minister could consider the position of a potential employer. Who would take on an employee with metastatic bone cancer? I have to say that I would not. How reliable would such an employee be, and for how long-for how many days or weeks at a time? Who knows? The prospects, though, are pretty poor.
This client will have to go through the humiliating and endlessly negative experience of writing applications and going for interviews, knowing in her own mind that employers, if they are half sensible, simply will not take her on. It is that aspect that we need to get hold of. Also, she could be accused of wasting employers' time: why should they be reading these applications and interviewing her when, poor soul, she really is not in a fit state to work?
Noble Lords have mentioned in previous debates that terminally ill claimants will be saving taxpayers substantial amounts of money because of course they will not be living for decades with dementia, as people like myself might be doing. All we are looking for is dignity in those last months and, if they are lucky-although perhaps this might not be lucky after all-years before they die. As the Prime Minister said in his first party conference speech as Prime Minister,
"people who are sick, who are vulnerable, the elderly-I want you to know that we will ... look after you. That's the sign of a civilised society and it's what I believe".
We are really not talking about a lot of money here. I hope that the Minister will consider this matter.
Lord Kirkwood of Kirkhope (Liberal Democrat)
My Lords, I would like to make a brief contribution to this debate. Anyone who was part of the collective consideration in Grand Committee would have to acknowledge the very constructive role that the Minister played in this part of the Bill. The Bill is very difficult territory. I think that it was an amendment in the name of noble Lord, Lord McKenzie of Luton, that opened the door to some of the changes that the Government are now proposing, but it was palpable to everyone who was watching the Minister that the defence that the department was taking at the time was not adequate to meet the demands that were being made of it in the cross-examination that he was getting. For myself, I think that it was commendable that he was alive enough to what was being said by adult people around him at the time on an important issue. It is not a huge issue; there may be 4,000 or so claimants who might now benefit from this measure, but those who do will get substantial benefit. It is appropriate, particularly from my side of the coalition on this side of the House, to recognise that this is a significant amendment that was won only because the Minister was willing enough to listen and make a constructive response. That is why we have the amendment in front of us today, and I hope that the House will support it unanimously.
Baroness Finlay of Llandaff (Crossbench)
My Lords, I shall make a brief intervention in support of the noble Baroness, Lady Meacher. It is important for the House to remember that whatever is said in the prognosis of someone who has an advancing life-threatening disease, it is completely unreliable; it is no better that a guess. These patients are living with uncertainty. They may die much sooner than their prognosis predicts or they may live longer, but they know that death is staring them in the face.
We are talking about adults of working age. They often have dependants. They often have children for whom they must make provision. If they do not use what energy they have to work on making provision for those children, the problems in the next generation among bereaved children will be much greater. There are questions about who will care for the children, what provision will be made, what the children are being told, how they are being prepared for bereavement and so on, quite apart from legal arrangements. Many people who are single parents say that making provision for those children is particularly difficult at times. Therefore, it does not make sense to take what little energy people who are ill have and put them through a system that stresses them further. It is much better for our society to use the energy that they have to do the thing that they know needs to be done, which is to make provision for those who will be left behind after their death.
I just emphasise that the uncertainty with which they live makes their lives even harder. It is impossible for an employer to know accurately about taking someone on. They may take them half way through an induction period before they become ill. Given the competition for jobs at the moment, any employer seeing this will, if they are in their right mind, say about the job that needs to be done, "Hang on, is this sensible for my place of work?", however much they want to help someone. I caution the Government against preventing people using the energy that they have to make provision for the future of those who will be left behind after their death.
Baroness Morgan of Drefelin (Crossbench)
I just want to thank the Minister for bringing forward Amendment 43 and the other government amendments in this group, and for listening to the debates in Committee. I do not want to detain the House in any way-I know we are engaged in several critical debates this afternoon-but the noble Baroness, Lady Meacher, has explained very eloquently the challenges that the Government have in addressing the thorny, knotty and difficult problems of people facing terminal and life-shortening illness. I do not want to say more than that because her points have been made so clearly.
Lord McKenzie of Luton (Labour)
My Lords, I start by also thanking the Minister for Amendment 43 and wishing him a happy new year. I am sure it will become happier when we get into February. That is the case for several of us. Perhaps I can comment first on some of the other amendments to which the noble Lord referred. I understand that Amendments 33 and 34 are consequential. The fact that they include references to provisions that cover 365 days or the clock for counting those days already being under way does not imply our acceptance of them. They are the subject of subsequent amendments that we are about to come to. Similarly, as we have heard, Amendments 37, 39, 40 and 41 are the formulation to confirm the intention that the limit should apply to contributory claims under the youth condition. Again, as will be clear, we do not support the 365-day limit or the future denial of claims under the third condition, and we will address this by amendments in the next group. Therefore, our not challenging these amendments should not be taken as accepting this as the final position; likewise in relation to Amendments 63, 64, 65, 66 and 67.
Amendment 43, tabled by the Minister, obviates the need for Amendment 42. It covers the same point and, as he said, goes further in that there is no time limit. This is to be welcomed. This enables someone to reconnect with contributory ESA after time-limiting should their condition deteriorate and they become eligible for the support group. It would appear that this applies equally to those with an existing youth condition claim and those accessing contributory ESA via the first and second national insurance contributions. Perhaps the Minister would just confirm that. It would appear that there is no time-limiting factor-I think that he confirmed this-so the gap between the time limiting of the contributory allowance and arrival in the support group could be five or 10 years or, in theory, even longer. I touch on this particularly because I am bound to say that this is not something to which the Minister warmed in Committee. On
"However, this could mean benefits being reinstated 10 or more years after the claimant last worked, which is not reasonable". -[Official Report, 8/11/11; col. GC 33.]
Further, he stated that,
"people in the WRAG who have gone through their time-limited period do not then have a right to go into the support group on a contributory basis".-[Official Report, 8/11/11; col. GC 36.]
I do not wish to be churlish about this but that is why we included the five-year limitation in Amendment 42, which sought to meet the Government at least part way. However, the Government are to be congratulated on Amendment 43, which deals with the disconnect from the national insurance contributions and also addresses the concerns powerfully expressed in Committee about people with deteriorating conditions who are initially placed in the WRAG. My noble friend Lady Morgan of Drefelin spoke about people with Parkinson's disease, motor neurone disease and some forms of cancer. The Government will fulfil their stated intent that the time limiting of contributory ESA will not affect those in the support group.
However, as ever, I have a couple of questions. Amendment 43 states that the employment and support allowance entitlement,
"is to be regarded as a contributory allowance for the purposes of this Part".
Why is "regarded as" used rather than "is"? Is it or is it not a contributory allowance? The requirement is that the person remains assessed as having limited capability for work. How is this to work in practice in circumstances where entitlement to the contributory allowance has lapsed and income or capital levels preclude entitlement to income-related ESA? Does it require the individual to be subject to the crediting-only arrangements? Would a claimant commitment still have to be in place? If somebody's prognosis of limited capability for work has lapsed but there has been no reassessment because nothing is due, how does this affect the position in practice? Where someone's reassessment has initially led to a fit-for-work designation but this has been overturned on a reconsideration or appeal, will the claimant be treated as being continuously in the WRAG and remain entitled to the benefit conferred by the government amendment? The noble Lord's letter of
Amendment 42A, spoken to by the noble Baroness, Lady Meacher, and supported by my noble friends Lady Morgan and Lady Finlay, raises an extremely important point about individuals with life-threatening diseases where there is evidence that their diseases are uncontrollable or uncontrolled by a recognised therapeutic procedure. It requires them to be treated as being in the support group to obtain the benefit of the easements in the Government's legislation. I would be interested to know how often such individuals would not be assessed as being in that group anyway. I think that we heard some examples from the noble Baroness, Lady Meacher. I await the noble Lord's reply but I hope that he can give her a sympathetic response to this important issue.
Lord Freud (Parliamentary Under Secretary of State (Welfare Reform), Work and Pensions; Conservative)
My Lords, picking up the point of the noble Lord, Lord McKenzie, about the discrepancy between Amendments 42 and 43, sometimes when a powerful argument is made in Committee, it succeeds even more than do the proponents of that argument. In this case we went back, thought about the measure and said, "If we are going to do it, let us do it properly". That is why the measure is indefinite and not for five years. The noble Lord asked whether Section 1B on further entitlement after time-limiting covered contributory ESA under the first and second contribution conditions and the ESA youth awards. The answer is yes
Let me turn to Amendment 42A. I very much understand noble Lords' concerns on this, but the amendment would not achieve the stated aims of placing in the support group individuals with conditions that reduce life expectancy to two or three years. Substantial provision is already available to ensure that individuals with life-limiting diseases are provided with appropriate support. The amendment seeks to ensure that individuals with uncontrollable diseases who do not meet the support group criteria of the WCA, set out in regulations, are treated as having limited capability for work-related activity. Under the current system, individuals who meet this provision and are treated only as having limited capability for work will have a condition that does not significantly limit their functional ability such that it would be reasonable to expect them to undertake work-related activity. However, anyone who has an uncontrollable condition may still meet the current support group criteria if, as a result of their condition, there would be a substantial risk to their health if they were held to be capable of work-related activity. A large number of protections are therefore built in.
Perhaps I may provide an example of how that might work-and does work. Consider an individual with extremely severe uncontrolled hypertension, who has little or no symptoms or functional impairment. This individual will not meet the test of limited capability for work-related activity necessary to go into the support group, or even the test of limited capability for work to go into the WRAG. As a result of their condition, work-related activity is likely to pose a substantial risk to their health.
Baroness Meacher (Crossbench)
I apologise for interrupting the Minister. The point that I was trying to get across was in the example of the woman to whom I referred. It may be that today she could do a little bit of work-although probably not. The difficulty is that the assessors do not take into account the likelihood over a number of weeks that this person simply will not be able to maintain an employment pattern. No employer in their right mind would therefore take them on. The issue that I am trying to raise is that the assessment processes, as I understand them, absolutely do not go anywhere near that level of sophistication. I agree that we are not talking about large numbers of people, but each and every case is a tragedy in its own right. There will be people who, for reasons that we can understand, will be assessed as not qualifying for the support group at this moment, yet for whom employment is completely unrealistic. I hope that the Minister can get the sense of what I am trying to say.
Lord Freud (Parliamentary Under Secretary of State (Welfare Reform), Work and Pensions; Conservative)
I am sympathetic to this issue-one has to be. Clearly, we are continuing the whole time with improvements to the WCA process. We are getting a lot of improvements. We are beginning to sense that. Although the figures do not show it, the anecdotal feedback is becoming much more encouraging. This is an area in which we can make the assessments with the kind of detail that is necessary as we work through the process. Indeed, that is where it should be done. As the noble Baroness, Lady Finlay, said, in these situations it is extraordinarily difficult to come up with a six-month or a year's prognosis. We all know that. The position, on the balance of probabilities, is that if the prognosis is six months, people go straight into the support group. That has happened since 2008 and for about 10,000 people.
The data are extraordinarily imprecise. There is great variability among clinicians. It is very hard to pin down anything that we could use with any consistency stretching out to two or three years. Medicine is advancing with great rapidity, so whatever we decide on today may be radically different in two years' time. A longer prognosis could mean that a condition could be very well controlled for a period and then deteriorate dramatically towards the end. The amendment concerns only conditions that are uncontrolled and uncontrollable. Clearly, that may not be the case for many life-limiting diseases. I think there is consensus around the House that in many circumstances work is beneficial and important for those with life-limiting conditions. Some will want to continue to work, and it is important that we have a system that does not write people off but allows for that.
The most important point is that it is simply not appropriate to put such provision into primary legislation. We already have powers in the Welfare Reform Act 2007 to treat claimants as having limited capability for work or for work-related activity. Where appropriate, we use those powers to make regulations that allow for people who would otherwise fail to demonstrate limited capability for work or work-related activity to be treated as having either or both. It is important to place those treating provisions in the regulations, so that we have the right flexibility to ensure that the test is operating properly and covers the right people.
Terms such as life-threatening, uncontrolled, uncontrollable, recognised and therapeutic are subject to different interpretations. That is why it is important to be able to refine the wording or adjust it over time to ensure that the test remains accurate and appropriate. If we placed such wording in primary legislation, we would not be able to amend it with the flexibility that we would need. We would need future primary legislation-I think that everyone in the House knows what pressure there is on time for primary legislation-which would hinder its being updated.
We already make provision for a variety of "treating as" provisions in secondary legislation. There is no basis for inserting this provision into primary legislation when the other important provisions are contained in and work effectively through secondary legislation. Bluntly, that would lead to inconsistency in both primary and secondary legislation.
I ought to pick up a couple of points made by the noble Lord, Lord McKenzie. On his question about how appeals work, claimants will be treated as having limited capability for work where an appeal has been made, and will be able to benefit from the new provision if they move to the support group, having won the appeal. How will we continue to assess capability to work after the time-limited award ends? Credits-only claimants will continue to have work capability assessments, as will claimants on income-related ESA. This is clearly a complicated area. I hope that I have dealt with it. I can write to the noble Lord if he needs further detail.
I thank noble Lords for their comments on Amendment 43, for which I am pleased to have had so much support. That was one of the really good things that came out of Committee. A lot of good things came out of Committee, but that provided a real learning opportunity for us and I hope that we have responded in style. I ask noble Lords to support the series of government amendments, as I am sure they will, and I urge them not to press Amendments 42 and 42A.
Amendment 33 agreed.
Moved by Lord Freud
34: Schedule 3, page 126, line 3, at end insert-
"( ) section 1B(1) (as inserted by section (Further entitlement after time-limiting) of this Act;"
Amendment 34 agreed.
Clause 40 : Interpretation of Part 1
Amendment 34A not moved.
Clause 44 : Claimant commitment for jobseeker's allowance
Amendment 35 not moved.
Clause 46 : Sanctions
Amendment 36 not moved.
Clause 51 : Period of entitlement to contributory allowance
Moved by Baroness Meacher
36A: Clause 51, page 36, line 31, after "2007" insert ", and subject to section 52,"
Baroness Meacher (Crossbench)
Amendment 36A is a paving amendment for Amendment 46, which is consequential upon it. Our aim with these two amendments is to ensure that young people who are very severely disabled and who are assessed as qualifying for the support group continue to be entitled to contributory employment support allowance in the future. Clause 52, if not amended, would remove this entitlement from all such young people. Amendment 46 would accept the Government's position that those somewhat less disabled young people would be entitled to employment support allowance as a member of the work-related activity group, or WRAG, but for one year only, so this is a very modest amendment. We recognise the financial constraints within which Ministers are working. Having said that, in principle I support Amendment 45, but Amendment 46 is more limited.
Until now, under the Welfare Reform Act 2007 the contributory allowance of ESA is payable to all those who have paid sufficient contributions and to young people who have not had an opportunity to make contributions because they have had limited capability for work for at least 28 weeks prior to being awarded the benefit. In other words, under the 2007 Act and under Amendment 46 a young person with a long-term condition or impairment which is so severe that they qualify for the support group-thus having a condition which prevents them working and paying contributions -can qualify for benefit as of right without having to be subject to a means test. The Government plan to remove this entitlement-at least for new claimants. As I understand it, those who have gained this entitlement as young people will continue within the support group.
The Government's arguments in their impact assessment are, in my view, extraordinarily weak. First, they argue that abolishing the youth entitlement to contributory benefit puts those young people on the same footing as everyone else claiming contributory ESA. This is surely simply not the case. These young people with congenital conditions or impairments so severe that they are entitled to the support group provision are in a completely different category from people who are able to earn and build up capital, pay contributions and thus have some kind of dignity. They are surely in a category of their own.
The Government have said that they will protect the most vulnerable. As I said in my previous speech, the Prime Minister himself made a very personal commitment to protect these people. Is there anyone more vulnerable than a severely disabled young person who has never had, and will never have, the chance to earn a living? I find it difficult to think of anyone.
The second government argument is that the abolition of the youth entitlement to contributory benefit will simplify the system. My question is: simplify the system for whom? I understand that one of the most common errors made by jobcentre staff is the failure to advise young people of their entitlement to contributory ESA. Balancing a reduced number of errors against the hardship which Clause 52 will cause hardly justifies the reform. For the claimant, a contributory benefit which does not change with a change in income or capital is surely much, much simpler. Simplicity for whom? It may be simplicity for Jobcentre staff but certainly not for the complainant, so the Government's argument does not stand up.
The Government's attempt to save money by denying this particularly disadvantaged group of people may indeed backfire. Would it not be wonderful if some of them could find a partner, despite the level of their disabilities? In the long run, such a relationship would undoubtedly save the taxpayer. How much more difficult for someone to find a partner if not only do they have to cope with their own severe disabilities, but they are also a financial burden if they have no entitlement of their own to any income should their partner have any earnings? Such a position is quite different from an able-bodied person who has had an opportunity to build up earnings and capital-and indeed a pension of their own. These people will never have a pension; they will never have any sort of entitlement unless we make that provision for them in this Bill.
This is not an even playing field. The Government will argue that most of these young people will be entitled to some means-tested benefit. Indeed, I understand that only 10 per cent will receive nothing at all under a means-tested system. Then-you could turn that argument on its head-there will therefore be very little savings by denying these people the dignity of an entitlement to some benefit. Why remove that dignity from this peculiarly disadvantaged group?
The noble Lord, Lord Freud, in a letter sent to the Cross-Bench Convenor on
We need to be very clear that young people with very severe disabilities or impairments, which qualify them for the support group, are among the greatest priorities for this Government. As I said, the Prime Minister made his commitment to that group. Taking account of the EU ruling, but also the absolute priority for this particular group of claimants, I ask the Minister to take away this issue and consider tabling an amendment at Third Reading that would provide residential conditions, or perhaps parental contribution conditions for entitlement to this youth contributory benefit-the passporting in of youth to this benefit. There must be some way of providing for conditions for this benefit for young people that would preclude people abusing the benefit as the EU ruling has made possible.
If the Minister can agree to take this matter away and positively discuss with us and others a way forward to protect this group of people, while precluding the abuse, I would withdraw the amendment. But I would want the understanding that I will bring back the amendment at Third Reading if we cannot arrive at some satisfactory arrangement. We should not be ignoring the real entitlement of these young people-the most disadvantaged people in our society. They should have an entitlement to benefit, so that they do not have to rely on means-tested benefits for the rest of their lives. That is what we are talking about here. Either they have an entitlement to benefit or they are subject to means testing in perpetuity. It is an important matter and I hope that the Minister will be willing to take it away.
The Earl of Listowel (Crossbench)
My Lords, I put my name to Amendments 36A and 46, to which my noble friend has just spoken so eloquently. I strongly support them. Young people with a severe congenital disability, or a severe disability developed early in life, merit contributory employment support allowance; it should not be removed from them. Noble Lords who are acquainted with families who have disabled children will know of the appalling difficulties they face when their child makes the difficult transition to adult services. It is particularly important that such disabled young people have financial support because the transition to adult services is often very poor.
Vital to a safe transition is a social worker, who can be a powerful advocate for a child and their family. However, what does one hear again and again from such families? Their social worker continually changes, the parents have to keep rebriefing the social worker on their child's needs, and there is no continuous and strong advocate for the child.
We should consider another group. As vice-chair of the parliamentary group for children in care, I know of the high rates of disability among children taken into public care. There must be absolutely no erosion of financial support for these children as they leave care. Amendment 46 would ensure that this erosion would not happen.
I am most grateful to the Minister for his helpful letter to the Convenor. I recognise that retaining contributory ESA for this small group of very vulnerable young people would be somewhat inelegant. I also recognise the concerns that my noble friend raised about the European judgment. However, I hope that the Minister may be able to help in this area, given the particular needs of this vulnerable group. I also hope that my noble friend will press this matter as far and as hard as she can.
Lord Patel (Crossbench)
My Lords, I speak to my Amendment 45, which takes a much more radical view and proposes leaving out Clause 52. I guess the happiness will end now. However, I take note of the comments made by the noble Baroness, Lady Meacher, about the anxiety over abuses in the system, and I will listen carefully to the response from the Minister, because it is an important issue. I agree with the noble Baroness that it will not be worthwhile pressing any of the amendments if the Minister's response is that there is a need to reconsider matters in the light of our comments.
I will outline the reason for my suggestion that we leave out Clause 52 by exploring historically why youth ESA was set up. Under the provisions, a person under the age of 20 who is not in full-time education or who has had a limited capability for work for 196 consecutive days can gain entitlement to contributory ESA despite not having reached the contributions threshold. This measure has existed in some form in the benefits system for nearly 40 years to enable young people to access contributory benefits if they are unable to work because of illness or disability.
The youth rules were introduced for incapacity benefit in April 2001 as a result of provisions in the Welfare Reform and Pensions Act 1999. They were intended to refocus benefits on people disabled early in life who had never had the opportunity to work and gain entitlement to incapacity benefit through the payment of contributions. The rules were carried over into ESA as part of the Welfare Reform Act 2007, again to ensure that young people who had not had the opportunity to build up a sufficient contribution record would not be excluded from the non-means-tested allowance.
With the Welfare Reform Bill the Government now intend to abolish the youth condition, as well as time-limiting its receipt to 12 months for existing claimants. The justification for this change, as set out in the impact assessment, is that it,
"will simplify the benefits system and ensure a consistency of treatment for those claiming ESA".
This assessment completely fails to recognise that young people with long-term health conditions or disabilities are already in a place of disadvantage in comparison with older adults, hence the introduction of the youth condition in the first place, and that this change will entrench this disadvantage. This will mean that young people, including those unable to work because of cancer, will be extremely unlikely to be able to access the contributory element of ESA and will have recourse only to the means-tested income-related element to be subsumed into universal credit. Young people who are ineligible for the income-related component, which will include those with a partner who works more than 24 hours a week and full-time students, could therefore lose up to just under £100 a week. This will have a devastating impact on those who are unable to work and are struggling with the significant additional costs of a cancer diagnosis-and, believe me, there is a significant cost for all kinds of reasons once cancer is diagnosed.
The eligibility of young people for benefits is extremely dependent on their circumstances and particularly on their education status. I have serious concerns about how students, for example, are treated under the system. Full-time students are able to claim income-related ESA only if they are already in receipt of DLA. This is another example of how the eligibility rules at present disadvantage young people. I am also concerned about the knock-on effect of many young cancer patients who are students becoming ineligible for DLA as a result of the introduction of PIP-and we will discuss that later. I believe it is critical that the Government ensure that the eligibility of students with long-term health conditions and/or disabilities for ESA is not dependent on their receipt of DLA.
Let me give an example. David was diagnosed with stage 4 Hodgkin's lymphoma when he was 22. Before he was diagnosed, he received a full wage working for the NHS that stopped when he was undergoing treatment. As he had been working for his employer for only six months, he was entitled to three weeks' paid sick leave. He was subsequently unable to claim any benefits, including ESA, because he was forced to move back home with his parents. David told me: "It can be really difficult for young people to build up time with one employer so that they are entitled to sick pay at full pay". Similarly, it is extremely difficult for young people to build up national insurance contributions, so I am thankful that at present the youth rules enable young people, including those with cancer, to access contributory ESA, which can be a lifeline when they are already impacted by a loss of earnings.
DWP statistics show that 17 per cent of the current caseload of ESA claimants aged 16 to 24 are currently accessing contributions-based ESA, or both income and contributions-based ESA, and could therefore be negatively affected by this change. The DWP impact assessment estimates savings of only about £11 million per annum while noting that 70 per cent of those affected will lose £25 a week as a result of qualifying for income-related ESA only, which equals about £1,300 a year. A further 10 per cent will lose almost £100 a week by virtue of not qualifying for income-related ESA. Over a year, this amounts to almost £5,000. Only 20 per cent, or just under 3,000 claimants, will get exactly the same amount of income-related ESA that they would have got under the youth provisions. Based on the Government's own estimates, this loss of income may affect as many as 10,000 people by 2015-16.
This means that only 20 per cent of claimants will be financially unaffected by these changes. I believe that it is wrong that these savings should be levied from such a small group of vulnerable young people. Indeed, the department's own impact assessment notes that:
"The abolition of the ESA 'Youth' provisions is more likely to have an impact on disabled people because ESA is directly targeted at people with health conditions that limit their ability to work. There is a risk that the affected group will be more likely to need more support because of their condition than all ESA customers".
I therefore believe it is wrong that the Government should seek to remove a vital form of financial support for young people with serious long-term health conditions. For a proposal that by the Government's own admission will impact around 10,000 young people, the cumulative savings will be only £11 million.
In Committee, the Minister stated that he believes that his,
"proposals have built-in support for this group of claimants".-[Official Report, 8/11/11; col. GC 58.]
I can assure the Minister that this is not the case and that his proposals will have a significant financial impact on young people with serious health conditions who may have no other option for financial support. For example, young people with cancer are not always able to access DLA, particularly if they have a treatment period of less than nine months. ESA may be their only option while they are undergoing treatment.
The Minister has also argued that no other group has this kind of concession in contributory benefits. However, that is exactly the point: the rules exist precisely because it is unlikely that young people will have been able to build up the requisite national insurance contributions, but they should still be able to access a benefit designed to provide financial support to those unable to work because of illness or disability. I do not see how this proposal can be part of a "principled approach to reform", which is the basis for the whole of welfare reform.
The measure will remove a vital source of financial support for young people with serious health conditions and disabilities. I hope that the Minister will give some indication that he recognises this and that he is willing to look at it again or at least give it further thought. I take the point made by the noble Baroness, Lady Meacher, about the abuse of the system, which certainly needs to be addressed. When the time comes for me to decide whether to press my amendment, I will be mindful of that.
Baroness Lister of Burtersett (Labour)
My Lords, I support Amendments 45 and 46, to which my name is attached. The purpose of the amendments has already been explained and the case has been made convincingly. I simply want to add to that. Young people who are disabled from birth or early in life have been entitled to claim ESA or its predecessors from the age of 16 since 1975, as the noble Lord, Lord Patel, pointed out. That has been accepted by all the main parties as a fair and proper way to treat young disabled people. Indeed, my noble friend Lord McKenzie did not thank me for reminding the Grand Committee that in a previous Parliament he was urged to be more generous to this group of young people by the then Opposition spokesperson, the noble Lord, Lord Skelmersdale. I was therefore rather surprised when the Minister argued in Grand Committee that no other age group can qualify for contributory ESA without having paid, or been treated as having paid, national insurance contributions. That is because all other age groups will have had the opportunity to earn such contributions, as the noble Baroness, Lady Meacher, and the noble Lord, Lord Patel, have already pointed out.
We are talking about a very small group. According to the Government's figures, about 15,000 young people are likely to be affected each year. Some of these will qualify for income-related ESA, although sometimes at a lower rate, when there will be an estimated average loss of £25 a week, which is a significant sum for those on a low income. They may become automatically eligible for passported benefits such as free prescriptions, depending on the outcome of the review currently being undertaken by the Social Security Advisory Committee, but that does not justify removing their underlying entitlement to a weekly income. One in 10-or 1,500 a year-will lose all entitlement to benefit, perhaps because they have a partner in full-time work or because of the capital rules.
What kind of young people are we talking about? In Grand Committee I gave examples provided to me by CPAG that illustrated the kind of young people likely to be affected, which I know noble Lords found very moving. They were of young disabled people in foster care or living with a kinship carer; young disabled people who had built up savings to be used to help them maintain their independence; and young disabled people who might be fearful of forming a relationship for fear of losing their independent income. I will not repeat the case studies but will provide a couple more that CPAG has kindly given me:
"Martin has been disabled since childhood. For years his parents have been putting money into a savings account for him, including saving money from his disability living allowance. Now a young man, Martin cannot work but can nevertheless look forward to living an independent life. Claiming contributory ESA in youth will help him to do this. Because of the capital his parents have painstakingly saved for him, he is excluded from income-related ESA. Instead of having the means to pay for the independent living equipment and support he needs, if he cannot access ESA in youth he will have to run down his savings on day to day living costs, leaving him with no financial cushion for extra needs or against the day that his parents are no longer able to provide any support.
Ryan is 17 and has significant mental health problems. He currently lives with his grandmother. He is looked after by the local authority which pays his grandmother a small allowance for his upkeep. She cannot get child benefit or tax credits for him and is finding it difficult to manage. Ryan can get ESA in youth to provide him with his own independent income and some security for himself and his grandmother".
Noble Lords may well ask what could possibly justify depriving this very small group of vulnerable young people of the independent means that offer them some security without the vagaries of means-testing. Is it a matter of principle? No principle has yet been enunciated by the Government and I think we can all agree that the something for something principle can be suspended in these circumstances. Is it cost? It would appear not. The department has indicated that this is not about cost. That said, the Minister's final card in Grand Committee was the statement that the amendment tabled there, a slightly less restrictive version of Amendment 46, would reduce the expected cumulative benefit savings by around £10 million by 2015-16. That is cumulative, not annual, savings and, as was pointed out in Grand Committee, £10 million was easily within the margin of error. That was a very weak card to play.
What it seems to come down to is administrative simplicity. I am not sure that any policy that increases reliance on means-tested benefits, which the impact assessment acknowledges will be the case, adds to the sum of simplicity in the benefits system. I do not believe that your Lordships would want to deprive a small group of very vulnerable young people of a degree of financial security simply to make the overall system look tidier administratively.
I hope I am not doing the Minister a disservice when I say I did not feel that his heart was in the uncharacteristically feeble defence he put up for this clause in Committee. If there are any remaining technical problems with the amendment, including those raised about the European Court of Justice ruling and its possible implications-which I admit I was not aware of until today, although the noble Baroness, Lady Meacher, has made some suggestions about how they could be dealt with in an alternative amendment-these could be put right at Third Reading.
Given that the costs will be lost in the margin of error, I hope that the Minister will show the same openness of spirit with this amendment as he showed with the earlier government amendment, and accept either this amendment or one along similar lines-or, as the noble Baroness, Lady Meacher, has suggested, that he will bring forward an alternative amendment at Third Reading. If he cannot make such a commitment, I hope that your Lordships' House will stand up for this very small group of vulnerable young people.
Baroness Finlay of Llandaff (Crossbench)
My Lords, I have also added my name to Amendment 45, which was so ably spoken to by the noble Lord, Lord Patel, and the noble Baroness, Lady Lister of Burtersett. There are many complex issues in this group, all of which been addressed pretty comprehensively, but I would like to add a piece of new research which emerged in December. It shows that half of young cancer patients have to borrow money as a result of their illness. More than one in five have borrowed over £1,000, while almost one in 10 have borrowed over £2,000. The eligibility of young people is heavily dependent on their circumstances, such as their educational status and so on, and they are in a unique situation.
I should like briefly to address the situation of students. They are unable to access contributory ESA, and can access income-related ESA only if they are already in receipt of disability living allowance. Many young cancer patients, particularly those with initial treatment periods of less than nine months, may not be able to access DLA. Furthermore, there are students who are fit and well one day but, for whatever reason, discover that they are not on the following day. Some are diagnosed with devastating diseases such as osteosarcoma or cancers like Hodgkin's lymphoma. There are also those involved in traffic accidents or who suffer catastrophic sports injuries, head injuries and so forth. The numbers are small, but suddenly these young people become very dependent and require long periods of rehabilitation. If you are a full-time student whose life suddenly collapses around your ears and treatment starts immediately, the costs mount up quickly. The problem with the way that the Bill is worded at the moment is that it closes the door on young people being able to access options for financial support. The complications of this have already been discussed, and I hope that between now and Third Reading the Minister will be able to consolidate the sentiments and ensure that we do not inadvertently remove a very important safety net for young people.
Baroness Howe of Idlicote (Crossbench)
My Lords, those of us who sat through the entire Committee stage and have listened to and contributed to these arguments are now hearing it all again. We are hearing the horrific details about the suffering of children and their families and carers, and indeed of grandparents who are often involved in the care needs of these children and young students. All this must help to persuade the Minister, who we know has tried his very best in a number of respects, and has succeeded in a number of areas in which we had considerable concerns. In this case, however, with the numbers so small and the need to look elsewhere to make savings if that is necessary, why should we continue to penalise this group? Surely we can get around the European inhibition confronting us, and we have even had suggestions about that. Some brilliant speeches have been made today and I hope that they have had the desired effect.
Lord McKenzie of Luton (Labour)
My Lords, I speak in support of Amendments 45 and 46. As the noble Baroness, Lady Howe, has just said, we have heard very powerful presentations by my noble friend Lady Lister, the noble Lord, Lord Patel, the noble Earl, Lord Listowel, the noble Baroness, Lady Finlay, as well as from the noble Baroness herself. I do not plan to repeat all the key issues associated with why I support these amendments. We have gone over them in Committee and we have heard them again today.
Society imposes significant challenges on young disabled people, especially so far as employment is concerned. These challenges will be particularly acute in the next few years as unemployment soars, particularly youth unemployment, which is now more than 1 million. Given the determination to place a time limit-we have yet to settle whether it should be one or two years-on contributory ESA for those in the WRAG, the abolition of the youth condition seems particularly spiteful.
The amendment of the noble Earl, Lord Listowel, would preserve the third condition, but only in circumstances where the claimant was and remained in the support group, thus focusing the support on those with the highest needs. The amendment would not appear to add any further benefits to existing claimants who qualify for ESA as a result of the third condition, because that is now covered by the government amendment. However, it would preserve the third condition for new claimants who fell within the support group. As such, I suggest that it is absolutely consistent with the Government's Amendment 43, which was so widely praised earlier. I would hope that it was readily acceptable.
Just to be clear: the effect of government Amendment 43 is to provide among other things for those with an existing claim which relies on the third condition, the youth condition, to remain entitled after time- limiting if they have moved into the support group. Amendment 46 would allow the third contribution condition still to be applicable for new claimants but only where they would go directly into the support group. So there is a parallel in enabling young people with the most severe needs, existing and new claimants, to make use of the third condition. It is unlikely to have any significant cost, but doubtless the Minister will advise on that.
The letter sent by the Minister to the Cross Benches, and perhaps more widely, states that a "recent" European Court of Justice ruling limited the circumstances. How recent is "recent"? I do not believe that we debated or touched on this issue in Committee-if I am wrong, the Minister again will correct me. The letter goes on to say that the judgment further weakens the ESA youth provision, making it potentially much more widely available than intended. Of course, none of us would support benefit shopping if that is what is behind the concerns felt and we would work with the Government to try to make sure that it did not recur and was stopped, but until we have a much clearer idea of what is involved here, it would seem wrong to throw out now, on the basis of this potential issue, the prospects before us in the Bill to deal with the third condition and people entering the support group. If we do that now on the basis of the judgment, we close it off because we are coming to the end of the primary legislation.
At the very least, I hope that the Minister will be able to give a clear assurance to the House today that there will be an opportunity to come back to this issue at Third Reading and for us have more detail, and that he will facilitate that. I would urge him also, because it would be consistent with that, not to press his Amendment 45A, because it would cut off the opportunity for people to make use of the youth condition for employment and support allowance. If noble Lords who have tabled these amendments are going to withhold pressing them on the basis that this issue requires further input, I hope that the Minister will undertake to do the same when he responds.
My Lords, I start with government Amendment 45A, on which the noble Lord, Lord McKenzie, ended his remarks. We have already discussed government amendments to provide for further entitlement to ESA after a contributory award has been time limited. As I mentioned in the previous debate, it has been necessary to amend how the time limiting of ESA youth awards will operate as a result of providing for that new category of entitlement. We have introduced the amendments so that the deterioration category will be open to both claimants with a time-limited contributory ESA award and claimants with a time-limited ESA income-related award. In practice that means that the substance of the ESA youth time-limiting measure has been placed in Clause 51 instead of Clause 52. The government amendment preserves the intended policy for preventing new claims to ESA youth from being made in the future. The amendment to Clause 52 seeks to remove the substance of ESA youth time limiting, which will now feature in Clause 51, but to retain the measure that prevents new ESA youth claims being made.
Our proposed changes to the condition relating to entitlement to ESA on grounds of limited capability during youth are part of, basically, a set of principles around the form, where we are trying to focus our support for the poorest people. We are seeking to avoid duplication and to redefine the contract between the state and individuals as we move towards introducing the universal credit, which is clearly a far more efficient way of directing our resources to the poorest people.
As we go through some of the specific areas, I should remind the House that the universal credit, when it is introduced, is designed to focus each year an extra £4 billion into the pockets of the poorest people. On the other side, we do not think it is right in principle that, for example, a claimant who under the existing youth provision has qualified for contributory ESA as of right and then comes into a large amount of money-for instance, an inheritance from a parent-should then be in a position to continue to receive the scarce resources of the state in terms of contributory ESA without having paid any contributions. The figures available show that there is support for these youngsters in income-related ESA and that, indeed, 90 per cent of existing recipients will go from contributory to income related.
Baroness Meacher (Crossbench)
My understanding is that many of these people may receive some income-related benefit but not at the same level of the contributory benefit that they would receive under the amendment. My second point is that the Minister has frequently referred to the £4 billion addition in the Welfare Reform Bill: is that a monetary addition rather than a real-terms addition because surely in real terms there will be a considerable drop in the overall welfare reform cost under the Bill?
To be absolutely honest, unwinding the effects of the first full year, which will be in 2017, is quite hard to do in simplistic terms when compared to an SR. The simple answer is that the £4 billion is a real £4 billion, not an eroded £4 billion. The impact assessment makes it clear that it is made up of roughly half and half efficiency; it is a much more efficient system. We have taken the efficiencies that we have gained and put them back into the pockets of people, plus an extra amount of £2 billion. That is where the money is coming from. The bulk of it is going into the lowest two quintiles in a rather efficient way; I forget whether it is 80 per cent or 90 per cent, but the bulk of that money is directed very efficiently.
I turn to Amendment 45 in the names of the noble Lord, Lord Patel, and the noble Baronesses, Lady Lister and Lady Finlay. Clearly, the design of that amendment removes Clause 52 altogether. As I have just mentioned in my remarks on Amendment 45A, we have a principled approach to reform, in which we are trying to modernise and simplify the current welfare system and remove duplicate provision when our resources are limited.
As we move towards universal credit, on which I have just spent a bit of time, there are other areas of rebalancing the relationship between the state and individuals. I remind noble Lords again that the small number of youngsters who do not qualify for income-related ESA are in this position only because they have alternative resources available to them. All those in the ESA support group will continue to receive unlimited support. We will also, of course, provide support to ESA youth claimants whose awards end, and they later become vulnerable through their conditions deteriorating so they develop limited capability for work-related activity.
Baroness Lister of Burtersett (Labour)
Does the Minister accept that there may be resources available to that group but that they are not resources over which they would have control, as they do not provide those young people with any form of independence, as does the contributory ESA?
My Lords, where they have other resources, as they move into young adulthood, clearly they have to be resources of their households at that stage and their own capital and household income. The reality is that very many of this small group of youngsters are inheriting very substantial sums of money; that is why they are in the position that they are in. That is a decision in principle over whether we should support people who have very adequate resources of their own. We will continue to support those who have deteriorating conditions even when they have a high income. They just go back into the support group.
Let me just go into the rather complicated position with European law and the specific judgment here, which I am looking at. I do not know whether the noble Lord, Lord McKenzie, will regard it as recent enough-this is the Lucy Stewart case on
I cannot be absolutely hard and fast on the European benefit-shopping issue; I can tell your Lordships only that this is causing us enormous concern at a number of levels and we are currently challenging Commission lawyers on it. The issue, at the simplest level, is that if you can call something social support it is much less likely to be abused and taken abroad than if it is a contributory right. That is where the battleground is and your Lordships can clearly see what we are doing here. When we are asked for a concession and whether we can get round the European law, what we are looking at is a system that basically provides the support for the vast bulk of the youngsters whom we want to support without opening our doors wide to current and future dangers of this kind of benefit exportability. That is the approach that we have adopted to try to get round this problem.
Baroness Hollis of Heigham (Labour)
It is a dilemma. I think that the entire House sympathises with the noble Lord. Many of us have been faced with this dilemma in the past. You are eligible for benefits in the UK if you are ordinarily resident. Much of the protection has been about whether you are allowed to go away for extended periods of holiday and still continue to claim. That is secure, but the problem of contributory benefits is that which flows out of the free movement of labour and, as a result of that free movement, generates you a right to a contributory benefit whichever state you may subsequently live in.
We understand the Minister's dilemma very well, but I would have thought that there is a route out, which is of course to recategorise this as a special non-contributory benefit. That has a long pedigree in social security and European Union co-ordination of benefits and would therefore take it out of the label "contributory". It would take it out of the labour market eligibility, because these young people have never been in the labour market. We are trying to apply a label to them that is not appropriate. By relabelling this, perhaps along the lines suggested by the noble Baroness, Lady Meacher, we should in my view be secure.
My Lords, I do not think that we ought to spend a huge amount of time on this-it is really difficult and moving very fast. The principle is that it is the automatic entitlement that makes us vulnerable. If it is for income supplement and social support, it protects us. Your Lordships can see that the change that we have made here is to cover the vast bulk of the youngsters with support, but it is not automatic. That is precisely the safety that we are going into with this European legislation. I do not think that the precise workaround from the noble Baroness, Lady Hollis, works or that we should sit round this Chamber and work something out. All I can tell your Lordships, for your consideration, is that this is the way that we have found to get round it while, as I say, covering 90 per cent of those youngsters.
I ought to hurry along, but let me move to giving your Lordships the figures on Amendment 45. The reduction in the cumulative benefits savings by 2016-17, over five years, would be around £70 million, which we would need to find elsewhere. A little bit here and a little bit there-it is a very hard thing finding bits of money.
Baroness Lister of Burtersett (Labour)
I am sorry to interrupt again but in Grand Committee the cumulative saving during that period was £10 million. Now, suddenly, it is £70 million. Where has the other £60 million been accumulated?
Amendment 36A, moved by the noble Earl, Lord Listowel, and the noble Baroness, Lady Meacher, and Amendment 46 would allow new claims to ESA to be made by those claimants who at the end of the assessment phase would be placed in the support group. We understand the purpose of Amendment 36A to be to provide support for Amendment 46. I have already listed the rationale for rejecting Amendment 45, which would remove Clause 52, and that rationale applies to Amendments 36A and 46 as well. In addition, Amendment 46 would have accepted considerable unwanted-
Lord May of Oxford (Crossbench)
At the risk of exposing my lack of full comprehension of this, I have been listening to the debate and I resonate with the concern that the Minister has expressed about the abuse of this system, but at the same time I have not heard clearly that his resolution of one problem has not created a different and arguably more severe problem that has been emphasised by people who really understand this.
My Lords, we have had a pretty good Socratic debate on the welfare Bill for some time. I hope that I can get over to noble Lords that the move from an automatic payment system, which is what we have for these youngsters, to one based on their income needs will pay them effectively the same amount depending on the position of their disability, will cover 90 per cent of the same people and will leave out the last 10 per cent who have their own means of one kind or another. That is the solution that works best in terms of the European legislation.
Lord McKenzie of Luton (Labour)
Before the Minister sits down, is the ruling in question a concern only in relation to the youth condition that we are discussing today, or does it have a wider implication? If the latter, how are the Government proposing to address that?
My Lords, I am being dragged a long way away from my brief. This is a widespread concern that runs to benefit tourism. We are currently challenging the Commission in the Court on one of its findings and trying to build a constituency with other European countries that are also enormously concerned at the implications of this. As I say, though, the principles are that these automatic payments leave us far more vulnerable than income support in this area.
I know that noble Lords are listening very hard to this, because it is an important concern that we all have. I hope that I have been as clear as I possibly could have been on this issue. It is a moving target and changing all the time. It is not settled at all, so I cannot lay it out absolutely-I can talk only about the risks involved.
Lord McKenzie of Luton (Labour)
I think that we all understand that, but the Minister is praying this EU ruling in aid of his desire to stop the youth condition continuing in future. He has already said that that ruling has much wider implications, and that there will be a wider need to look at how it can be fully addressed. In those circumstances, is it not unfair of him simply to target this particular benefit and say, "This can be dealt with by stopping it", rather than addressing a wider solution in due course?
My Lords, not really. This is a prime area in which we have automaticity without any payment system. This is one of the areas where we are very vulnerable so it makes enormous sense to look at it now and as it comes up. Therefore, I would not agree with that point. Shall I rattle along?
Amendment 46 would create considerable and unwanted uncertainty for claimants and operational difficulties for the department. A claimant would need to claim ESA and go through the assessment phase without any entitlement to ESA at all until the question of limited capability for work-related activity was determined at their WCA. This is because, under Amendment 46, only claimants who were found to have limited capability for work-related activity at the end of the assessment phase would be entitled to ESA on the grounds of youth. As I have already said, the amendment would save rather less-£17 million until 2016-17. The discrepancy is in the SAR, which is covered by a very similar amendment, to pick up the point of the noble Baroness, Lady Lister.
I confirm that the Government see Amendment 46 as linked to Amendment 36A, but none of the amendments in this group is consequential on any other. We would expect the House to make a decision on each individually. In due course I will move the amendment in my name, Amendment 45A, and I urge noble Lords not to press theirs.
Baroness Meacher (Crossbench)
I thank the Minister very much for his reply to the various amendments, and many Members of the House for their contributions. What we have here is an attempt to protect the dignity of a very vulnerable group of severely disabled people at a cost of £10 million, which is absolutely paltry. I refer to Amendment 46.
I feel that we are being somewhat sidetracked by the intervention on the European Union. Contributory benefits of all sorts are vulnerable to this situation. I think that the whole House has made it very clear that we are behind the Government's fight to make sure that benefits tourism is stopped. We do not want to see it happen.
My Lords, can I make it absolutely clear that contributory benefits per se are not vulnerable because they are paid? The vulnerability is in assumed contributory benefits, where they have not been paid.
Baroness Meacher (Crossbench)
If I may say so, that brings me back to the point that I made earlier. We need to find a way of making it clear that this is a non-contributory benefit for people who, sadly, will never be able to contribute towards a contributory benefit. This is a social benefit for very disadvantaged and disabled people-a very small group of such young people, who will never have a chance, almost certainly in the rest of their lives, of any sense of independence or dignity, unless we give it to them today at a cost of £10 million to the entire tax-paying population of this country. On that basis, I do need to test the opinion of the House. However, I respect the Minister's position and hope we can have further discussions about how we can prevent benefits tourism, which is completely unacceptable.
Moved by Lord Freud
37: Clause 51, page 36, line 33, at end insert "by virtue of the first and second conditions set out in Part 1 of Schedule 1"
Amendment 37 agreed.
Moved by Lord Patel
38: Clause 51, page 36, line 34, leave out "365 days" and insert "a prescribed number of days which must be at least 730"
Lord Patel (Crossbench)
My Lords, I shall speak also to Amendments 38A and 39A. These amendments oppose the introduction of a 12-month limit on the amount of time in which those in the work-related activity group, or WRAG, are able to claim contributory employment and support allowance, or ESA.
All the cancer charities, such as Macmillan, the Disability Benefits Consortium and the wider disability sector also oppose the principle of time-limiting ESA. I believe that people with a disability or illness who have paid into the system should be able to receive support for as long as they meet the eligibility criteria for ESA and are unable to work due to their condition.
As I said, Clause 51 amends the Welfare Reform Act 2007 to introduce a 12-month limit on the amount of time that a person in the WRAG is entitled to contributory ESA. The cancer charities, such as Macmillan, along with the rest of the disability sector strongly oppose the principle of time-limiting. There is already more than enough incentive for people with disabilities and long-term illnesses such as cancer to get back into work. What they need is enough time and the right support. What they do not need is to be penalised for not recovering quickly enough.
The Government are clearly opposed to removing time limiting altogether. Therefore, I understand the need to find a compromise that meets the Government's priority of finding savings but, crucially, gives disabled and sick people a more realistic timeframe in which to return to work. Evidence supports extending the one-year time limit.
The impact on disabled people of time-limiting ESA will considerable. The Government's own figures show that 94 per cent of people in the WRAG will need ESA for longer than 12 months. Those affected, including 7,000 people with cancer, will lose up to £94 a week of vital support, despite having paid national insurance contributions throughout their working lives. The proposal in the Bill is based on the Government's objective of making savings. However, the Government have provided no evidence to demonstrate that a 12-month time limit is reflective of the amount of time needed by people in the WRAG before returning to work.
"People who are sick, who are vulnerable, the elderly-I want you to know we will always look after you. That's the sign of a civilised society and it's what I believe".
It cannot be right to take crucial financial support away from people who have paid into the system but are unable to work due to illness.
The Government's own figures estimate that 94 per cent of people in the WRAG will not be ready to return to work after one year-I repeat: 94 per cent-but the Government have stated that the change will help to encourage people to come off benefits. They have also stated that the proposal is aimed at making savings and is not based on an estimate of what is a reasonable length of time within which to expect people with a disability or illness to be able to return to work. It cannot be right for the Government to propose such a significant policy change without providing evidence that the measure is appropriate or reasonable.
In Committee, the Government were asked to publish evidence to demonstrate that a 12-month time limit reflected the needs of people in the WRAG. I have seen no such evidence. The Government were also asked which organisation of experts they had consulted before making the decision to introduce a time limit for contributory ESA. They have not consulted any of the organisations which have subsequently raised concerns about the impact of this policy. The time limit will be imposed on people who are in the WRAG. Those in the WRAG are people who are following the work capability assessment who have been found not to be fit to work because of their disability or illness. While those in the WRAG are expected to carry out some work-related activities to help them to return to work, they are still considered to be not fit for work. If, following the WCA they had been found to be fit to work, they would be eligible for ESA and placed on jobseeker's allowance. People in the WRAG could still be severely disabled or debilitated, as is the case with people recovering from aggressive cancer treatment.
Let me give an example. Martin was diagnosed with primary progressive MS in 2007. He continued to work until November 2009, albeit with difficulty. He cannot walk or stand up. He has incontinence problems and suffers badly from fatigue and muscular weakness in his legs and back. Martin recently received a letter from the DWP outlining how the Government are seeking to change the rules on ESA and to impose a time limit on benefit. He said:
"The real sting in the tail is that the 'clock' starts ticking from the date you first ever started receiving the benefit. In my case that is since June 2009-so, some 27 months ago, so in their eyes I am 15 months over the limit! Therefore, my payments would stop immediately once the policy comes into force next year".
Currently no one is placed in the WRAG indefinitely. Only those who meet the strict eligibility criteria for ESA and are unable to work will be able to continue to receive ESA. People in the WRAG can be called for an assessment at any time and will lose benefit if they are found to be fit for work. The current system works on the basis that people should not receive support for longer than they require it. The Government's proposals, therefore, will affect only those vulnerable people who are too unwell to work. The vast majority of disabled people want to work if they can and do not need an incentive. Unlike incapacity benefit, the WRAG or ESA is clearly focused on supporting people into work, and receipt of the benefit is conditional on claimants taking agreed steps and activity to move towards work. This can include training, education or condition management. Claimants who are taking the agreed steps to return to work should not be penalised simply because they need longer than one year. Many disabled people will simply not be fit enough to return to work after just one year. For example, people with cancer will often experience side effects of their condition and treatment, such as severe fatigue or depression for many months, and in some cases years, even after the treatment has finished.
People with cancer face a range of barriers that impact on their ability to return to work. This House understands that more clearly than anywhere else because many in the House, or their relatives, have experienced what it is like to be on treatment, such as chemotherapy, radiation or post-surgery. People can experience debilitating physical and psychological effects from cancer and its treatment, including severe pain, fatigue, nausea, fever and diarrhoea. The majority get poor advice about the impact of the cancer diagnosis on their working life and on how to manage their condition. They are not routinely offered a range of the back-to-work services that they need, such as counselling, retraining and work-based advocacy. They are less successful in securing workplace adjustments to which they are legally entitled and which help them to return to work. That is probably linked to the fact that just 43 per cent of employers know that people with cancer have legal protection against discrimination.
Stephen Townsend started claiming ESA in March 2011. His partner earns roughly £160 a week. Under the Bill, he will lose his ESA in April 2012. He states:
"I can't believe the Government is planning to take away all my ESA after just 12 months because my wife works more than 24 hours a week. I had renal cancer and have had a kidney removed. I'm still in a lot of pain. I need to stick to walk and get awful pins and needles down my legs. Without my ESA we would find it really difficult to get by. We have used up virtually all our savings already. I have worked all my life and paid into the system but this doesn't seem to mean anything".
A lot of these patients will not just have paid into the system; they will have paid into their pensions, which they will not live to collect.
Under means-testing thresholds, thousands of people will lose their ESA if their partner earns as little as £150 a week. Of the people who will lose out, 51 per cent will be in the lowest-third income centile. The average drop in income will be £52 per week for those who lose out. For those in the lowest-income centile, the figure will be £35 per week. It is a significant amount of money for people who are struggling to make ends meet.
This policy will penalise people who worked before their disability or illness, paid into the system, often for many years, and are doing all they can to return to work. They are not part of the something-for-nothing culture of which the Government have been so critical. The people who will be affected have paid their national insurance contributions. Therefore, it was disappointing when, in a response to the press, an official spokesperson for the Department for Work and Pensions drew a distinction between disabled people and taxpayers.
The Government claim that alternative means of support, such as housing benefit and tax credits, will be available for people who lose their ESA. However, these benefits depend on personal circumstances and many cancer patients will be ineligible. For instance, a couple without children who own their own home will not be eligible for housing benefit and will qualify for tax credit only if the working partner works for more than 30 hours a week, which may not be possible because of their caring commitments.
In 2008, Julian was diagnosed with cancer of the jejunum, which is part of the small intestine. He stated:
"Many people may not be aware that when you have cancer, you tend to feel the cold a lot more-even in the summer months! Especially if you are recovering from an operation or having chemotherapy. Additionally, your body is more susceptible to the cold whilst it is fighting disease.
Due to my illness I am no longer working and am at home during the day, which means that I have the heating on. This has meant that my heating and electricity bills have practically doubled".
The Government have not made a satisfactory assessment of the likely impact of time-limiting health and social care budgets. For instance, and unbelievably, the impact assessment from the Department for Work and Pensions states that there will be no impact on health and well-being. Unfortunately, it does not provide any detail on how this conclusion was reached. In response to recent Parliamentary Questions, Ministers admitted that no robust assessment had been made of the impact that time-limiting ESA would have on the number of people in poverty, on health and social care budgets, on the demand for benefits advice services such as Citizens Advice and on people with long-term degenerative conditions.
Many of today's newspapers cover a report that states that for many cancer patients, financial worries are second only to worries about their condition and treatment, and are even more important than the possibility of dying. I have serious concerns about the impact that time limiting will have on the psychological well-being of sick and disabled people who might already be experiencing depression and anxiety. This will also put pressure on mental health services funded by local authorities. In Committee and in answer to PQs, it became clear that the Government failed to adequately consider the profound impact that the proposal will have on sick and disabled people. Given the clear inadequacy of the Government's impact assessment, how can they be confident that the change will not have a significant impact on the health and well-being of those who will lose support, and will not simply displace costs to other areas of already stretched local authority health and social care budgets?
Calls for a rethink on the time limit have been widespread. There has been severe criticism of the policy from experts and commentators in the media. Today's newspapers are full of it. Liberal Democrats voted to change their party's policy to oppose an arbitrary time limit on ESA. In Committee, the Government's case was unconvincing and did not stand up to scrutiny, at least by the Committee Members who attended. Despite assurances from Ministers throughout debates on the Welfare Reform Bill that the Government will improve the WCA for cancer patients in the light of Professor Harrington's recommendation, the Government are now consulting on proposals that will reduce the protection offered to thousands of cancer patients undergoing treatment. Today's report by Citizens Advice about the accuracy or reliability of the WCA points out that for 96 per cent of people who are assessed it is inadequate, inappropriate or inaccurate. Instead of extending automatic entitlement to ESA to cancer patients undergoing chemotherapy to other patients receiving equally debilitating treatment, the Government's proposals would remove automatic entitlement altogether and force all cancer patients, even those on intravenous chemotherapy, no matter how sick they are, to undergo an assessment to prove their eligibility, an assessment that today's report has found to be totally unreliable and faulty.
This is why leading cancer charities, Macmillan Cancer Support and many others, and oncologists have been unable to support these proposals. Even without this retrograde step for cancer patients, it is widely recognised that the WCA needs significant improvement. Why this change before improving the WCA? Why subject sick and vulnerable patients to a faulty testing mechanism? Instead of taking away support from sick and disabled people who are still unable to work, the Government should be working with disability organisations to design back-to-work programmes that offer personalised support appropriate to customers' needs.
There are additional concerns about the amendments that ensure that time limits for contributory ESA for those in the WRAG are not applied retrospectively. As it stands, because of the retrospective nature of the proposals in the Bill, anyone placed in the WRAG in April 2011 or before will immediately lose their contribution-based ESA when the proposed legislation comes into effect in April 2012. Those who will not qualify for income-based ESA because of savings or a partner in work will lose £94 a week. I do not believe that the time accrued in the WRAG prior to the proposal coming into effect should contribute to any time-limit period.
The Government had an amendment to protect those with deteriorating conditions, and I welcomed it, but although it addresses the concern of people with deteriorating conditions, it does not go far enough. It is extremely important that a person in the WRAG who has been subject to the ESA time limit of 365 days is able to requalify for the contributory benefit at any time that they are subsequently assessed as eligible for the support group. The Government's amendment does not address the central concerns about the inadequacy of the 12-month time limit. I beg the Minister to consider this again.
I know the argument will be that in cost terms this is very significant, but I wonder whether there might be other ways of trying to find a compromise, even if it is to see whether a review can be carried out and its results assessed to see whether the 12-month time limit is satisfactory. As I said before, I am sympathetic to cutting the deficit, but I am highly sympathetic to sick and vulnerable people not being subjected to something that will make their lives even more miserable. I beg to move.
Lord Low of Dalston (Crossbench)
My Lords, I understand that short speeches are the order of the day so that we may make progress. I shall therefore try to make a short one. I put my name to this amendment because I feel very strongly that the proposal to time limit contributory ESA to one year is one of the most retrograde features of the Bill. At Second Reading, I identified as many as five things wrong with the Government's position. I will not repeat all those here but I will refer to a sixth, which I did not quite crystallise at Second Reading. The matter was gone into in great detail in Committee, although I was unable to be present. However, I have carefully read the debate twice, most recently through the long watches of last night as I travelled back from Bangkok on an overnight flight with an active two-year for company.
In any case, the argument emerges most starkly if one sticks to its bald outlines, which have to do with the basic unfairness of the proposal. This was incisively encapsulated by the Disability Benefits Consortium in the words of a woman with Parkinson's disease. She said,
"There's no guarantee that I'll find a job in 12 months. It could take me much longer".
At this point, one might interpolate, "especially in current economic conditions".
"I've worked all my life and paid for decades into the system on the understanding that there will be support if I need it. To be told that all this support could have an arbitrary time limit is both unfair and stressful".
There are two aspects to this unfairness besides the one which I have just interpolated. First, the condition of sick and disabled people in the WRAG is such that their likelihood of being able to get into work within a year is remote in the extreme, especially in present conditions. As my noble friend Lord Patel has told us, the Government's figures show that 94 per cent of people in the WRAG need support for longer than a year and a DWP research report entitled Routes onto Employment and Support Allowance, which was published last September, revealed that, despite its name, after 18 months, only 9 per cent of claimants who had previously been out of work on incapacity benefit had found work and still only 25 per cent of those who had entered ESA from work had found new employment. In these circumstances, as the lady quoted by the Disability Benefits Consortium said, to limit ESA to just one year is both arbitrary and unfair. It is in no way evidence based and is simply cost driven. The DWP estimates that by 2015-16, 700,000 people will lose their entitlement, of which 280,000 will lose it entirely, which will mean a loss of £94.25 a week.
The second unfairness resides in the breach of the contributory principle that the noble Baroness, Lady Lister, was so concerned about in Committee; that is, the breach of faith of citizens who have paid their national insurance contributions perhaps for 30 or 40 years in the belief that the support would be there if needed. A correspondent who wrote to me said:
"I believe it is totally wrong that people who have worked and paid tax plus national insurance for many years-36 in my case-should have their entitlement to state support time limited in this manner. It seems that the state is breaking its side of the contract at a time when people are most vulnerable".
The Minister dismissed this in Committee. He said that national insurance contributions were to cover a wide range of contingencies, including the state pension and the NHS. He argued that a year was a reasonable amount of support to give someone when they got into difficulty. In a letter dated
Finally, I come to my sixth point, which I failed to develop at Second Reading. Ministers are constantly pointing to the unprecedented amount of support that they are putting in place to help people back or into work. Only last night a statement was read out on the radio from a DWP spokesperson, which said:
"We are absolutely committed to supporting more disabled people into work. That is why this Government has protected the budget for specialist disability employment services. Aside from our disability employment advisers, we also have specialist teams at Jobcentre Plus who actively work with businesses to encourage them to interview disabled people with the right skills. Work Choice is expected to support more disabled people into employment each year than any of its predecessor government programmes".
As regards specialist teams, Ministers have little idea of the reality. No Minister could go on the programme and this statement was read out in response to a blind woman-an able person with a lifetime of successful, professional employment, who had been made redundant last May. She told a woeful tale of the poor advice and lack of support that she had received. She received none of the interviews or training that had been promised. She is very eager to find a new job but few, if any, openings have been drawn to her attention. Despite repeated requests, no information has been provided in an accessible form. Her adviser seemed to have had little training. I know the woman concerned and on one occasion she told me that she felt she could do the adviser's job better than the adviser.
The Work Programme is not working. In these circumstances it is not only unfair but downright cruel to time-limit contributory ESA to one year. At present it is unlimited. To reduce the level of support to just one year at a stroke is draconian in the extreme. I would drop Clause 51 entirely but I am a realist and recognise that, to have any prospect of success, compromise will be necessary. The amendment proposed by my noble friend Lord Patel is surely the least one could make to ameliorate the draconian nature of the Government's proposal. I very much hope, too, that in the light of their conference's decision to oppose the time-limiting of contributory ESA last September, Liberal Democrat colleagues will search their consciences and also give my noble friend's amendment their support.
Baroness Hollins (Crossbench)
My Lords, local health charities and services are also very concerned about the impact of time-limiting ESA. They are well aware of how difficult it is for people with severe and enduring mental illness to obtain and to sustain employment, especially at a time of deficit. My postbag is full of angry letters. One correspondent wrote to say that her brother took his own life largely due to difficulties in his working environment. She wrote:
"I personally have only ever managed a very chequered career due to living with complex mental health conditions and welcome any effort on the part of our Government to encourage a mental-health friendly workplace and specialist schemes to support people with mental health conditions into work, but"-
and here is the rub-
"on a voluntary basis because I am deeply concerned that any system built on a backdrop of conditionality, sanctions and time limits will prove to be totally counterproductive, leading to fear, anger and disengagement".
I could speak at great length about some of the many issues that have been raised with me and I support this amendment.
Baroness Thomas of Winchester (Liberal Democrat)
My Lords, the time-limiting of ESA is one of the most emotive issues in the Bill, as we have heard. As the noble Lord, Lord Low, said, people affected by severe illness in their working lives who have paid national insurance for many years expect to be protected by the state.
As I said in Grand Committee, by bringing in this change in policy, the Government are acting like a private insurance company that changes the rules when a person makes a claim. However, as we know, the comforting words "national insurance" are really a myth, as many are about to find out when those in the WRAG who have been receiving ESA for a year by this April will have their money stopped immediately. Of course, some will go straight on to income-based ESA, but according to the impact assessment about 40 per cent will find their income dropping by a staggering £90 a week if they have modest savings or a partner earning only about £148 a week.
The key question is whether it is fair to cut the benefits of those too ill to work, in this time of austerity, when the highest spending department in Whitehall has to take its share of deep cuts in expenditure. As we know, the change to universal credit, which we discussed at the beginning of the Bill, is going to be very expensive initially before savings will be made. Presumably the Treasury demanded this measure as a quid pro quo for finding the money to pay for universal credit.
What troubles many people, and certainly troubled the Lib Dem conference last year, is the arbitrary nature of the one-year cut-off. As we have heard, the DWP's own figures show that 94 per cent of longer-term claimants were on ESA for more than a year. The many briefings that we have all received tell us that most people with severe but not necessarily rapidly deteriorating conditions struggle to be well enough after a year. I welcome the Government's amendment, which would mean that those with deteriorating conditions will have a reassessment with a view to them migrating from the WRAG to the support group after a year.
What about the others? Will everyone be entitled to ask for a reassessment at the end of the year or only those with deteriorating conditions? For example, what about people who have had quite severe strokes? Their condition may not be deteriorating but they may be a very long way from the jobs market although that will be their eventual destination. If reassessments are to be allowed, at what point will people be asked to be reassessed? If it is too near the one-year cut-off point, I can envisage such a backlog that it may be many months before the reassessment is carried out.
Is the answer Amendment 38 tabled by the noble Lord, Lord Patel, to allow two years in the WRAG instead of one-another arbitrary time limit? I understand that this would be prohibitively expensive. The figure of £1 billion over the next few years has been mentioned. If this amendment is successful, the House of Commons will almost certainly claim financial privilege, which will mean that this House cannot even debate it again. A vote for Amendment 38 might lead to ping-pong, if it were to be won, but only to ping, not to pong. It would therefore be a merely Pyrrhic victory as the amendment would not go any further.
The work capability assessment is at the heart of this debate, and Professor Harrington's reviews of it are most welcome and instructive. He advises patience, saying that the changes he has asked for and which the Government have accepted are taking time to bed down. I quite understand that, which is why I am so opposed to what I still wish to call the retrospective nature of this part of the Bill, even if strictly speaking it is not retrospective as it is not actually clawing money back from people. However, stopping someone's claim the minute the ink is dry on the statute book, having warned them in a round robin letter, is pretty sharp practice. The Government maintain that people have been given enough notice of the April 2012 cut-off date because they could have read about the proposal in the small print of the comprehensive spending review in October 2010. How incredible is that?
If the Government were to wait, even if only for six months rather than a year, it might give Professor Harrington's recommendations for improving the WCA a chance of being implemented consistently around the country; if six months would be too expensive, what about three months? I am sorry that the Government are including the 13-week assessment phase in the year because that is paid at the lower JSA rate rather than the WRAG rate. If they ignored this phase, it would at least give people 15 months instead of 12 months, and again those three months could be useful in concentrating minds on improving the work capability assessment. As the noble Lord, Lord Patel, said, we have all received the CAB report, which is pretty damning about the work capability assessment right now.
One of Professor Harrington's recommendations is that DWP decision-makers should look independently at the Atos Healthcare assessments, in particular the person's medical reports, and then make their own minds up; in other words, they should not just rubber-stamp the Atos recommendation. I wonder whether that now happens routinely across the country and whether and how it is being monitored. The Government should pull out all the stops as a matter of urgency to make sure that the Harrington review proposals are being implemented in full throughout the country as the payback for bringing in this policy so soon. Does my noble friend the Minister know whether this is happening?
I believe that the number of appeals about the WCA is beginning to drop, but I fear that there will be many more appeals when this policy is brought in from people wanting to migrate from the WRAG to the support group. Even the impact assessment reckons that 50 per cent of those affected by time-limiting will appeal, of which 20 per cent might be successful.
Many of us are uneasy about the whole policy because of the unintended consequences that we expect to flow. Low-paid partners may be tempted to give up work so that means-tested ESA can be claimed, while the category with the highest claimants-those with mental health conditions-could give up in complete despair. Those with modest savings will wonder why they are being penalised if they are saving for care in their old age. However, I reiterate that voting for Amendment 38 might make us all feel better but it could be seen as a rather cynical move because we know that it will not stick and it might be reported as a great victory. I would rather vote for a more modest amendment such as Amendment 40A, which leaves out the assessment phase, which has more of a chance of success. However, I shall listen to my noble friend's winding-up speech with great care.
Baroness Lister of Burtersett (Labour)
My Lords, I want to make a very brief point in support of the amendments. The Government say that time-limiting ESA is not based on an estimate of a typical recovery time-it is not evidence-based-but on the principle that these are people who have other means of financial support, which of course is exactly the same principle that the Minister raised earlier to justify removing the ESA youth condition.
This other support is of course income-related ESA, and the Government point out that 60 per cent of people affected will be able to claim it. That means that 40 per cent of those affected-roughly one-third of men and nearly half of women-will not be able to. We are talking here about an erosion of their financial autonomy. Many noble Lords have received many letters from people saying that they are shocked and anxious at the implications of this.
An article in today's Guardian summed up very well what this erosion of financial autonomy means. This quotation is from a man who is going to be affected by this:
"The satisfaction of being able to contribute to the family budget with a benefit that has been earned and paid for will be removed. The last shred of dignity will be stripped from people who have already lost a great deal in life and who may already feel a burden on those who care for them".
Disabled people should never feel that they are a burden on those who care for them, and it is terrible that they are being made to feel that way by this clause.
Baroness Hollis of Heigham (Labour)
I shall be very brief and respond, if I may, to the noble Baroness, Lady Thomas of Winchester, who over the years has been a doughty champion for disabled people. However, I have never before heard her make a speech based on the sole proposition that because the House of Commons might reject an amendment, it should not be moved in this House. That is not a sound base for policy, as the noble Baroness will accept. That does not mean to say that at Third Reading there may not be compromise or fallback amendments and so on, but this House has never walked away from its proper duty to scrutinise because it feels that the other place may not accept what we are doing. I hope that the noble Baroness will not run up that sort of argument again.
Baroness Thomas of Winchester (Liberal Democrat)
My Lords, I shall respond to that. What I said was that noble Lords may think that we will go into ping-pong: that the House of Commons will say one thing and we can come back to the debate and have a dialogue. That does not happen with financial privilege. There are many new Peers in the House who will not realise that financial privilege is imposed by the Commons, which it may be-it may not, but it probably will be because this is going to cost around £1 billion over the next few years. People outside will be given a false sense that we have done something and scored a great victory by defeating the Government and so everything will be all right. No, it will not be. That is what worries me. This is not like ordinary ping-pong; it is quite different.
Baroness Hollis of Heigham (Labour)
My Lords, almost everything passed in this House has financial implications. The House of Commons is entitled to and regularly will dismiss every amendment passed in this House under financial privilege. There is nothing new in that. We do indeed then go into ping-pong because this House will offer an alternative amendment for the House of Commons to consider. Should we reach that situation, some of the fallback amendments mentioned by the noble Baroness could then be considered.
Lord Blencathra (Conservative)
My Lords, it is with some trepidation that I intervene briefly in this debate in view of the learned comments that one has heard from both sides. I seldom contribute to debates of this nature because it is outside my areas of expertise, but I am prompted to do so as the result of a speech made yesterday. I heard the leader of the Opposition say that,
"in these times, with less money, spending more on one thing means finding the money from somewhere else".
He went on to say that:
"When someone wins, someone else loses".
I have looked briefly at the amendments before your Lordships' House today and I had not intended to say anything on them because I knew that they had considerable spending implications, but I am tempted to speak out because of what the leader of the Opposition said yesterday.
The noble Lord, Lord Patel, has made a powerful and compelling speech, and it would be easy for me and no doubt for other noble Lords to vote for his amendment and feel morally good. But the sting lay at the tail end of his remarks when he said, I think, "Of course, this could have some enormous cost implications", and then he came up with not what I would say is a formula but a suggestion, which I must admit I did not quite understand, about how one could try to save on some of those considerable costs. However, I am informed that his amendment as it stands has serious cost implications. I believe that it would cost up to £200 million next year, maybe £400 million the year after and again the year after that. I hope that my noble friend the Minister has the correct figures, but I believe that it will be around £1 billion of expenditure over the next three years. The House needs to know exactly what those figures are.
Perhaps I may turn to the Opposition and say this. If the Opposition are tempted to support this amendment -I hope that I am not being too political here-I hope, in view of what the leader of the Opposition said yesterday, that they will spell out where the money is to come from. At this stage I am not concerned about whether the Commons will reject the amendment or whether there will be ping-pong, although that is a valid debate to have in due course, but it is incumbent on the Opposition or on those who are arguing for this amendment to say where the £1 billion, if indeed it is £1 billion, is to come from. Is to come from higher taxation or from a cut in public spending somewhere else? Is it to come from increased government borrowing? Someone somewhere will have to pay for this.
Lord Boswell of Aynho (Conservative)
I am most grateful to my noble friend for allowing me to intervene. Having listened to the debate this afternoon, does he not acknowledge that whereas the previous amendment, which was supported by noble Lords, was in comparative terms a relatively small matter of cost, this is of a different level and magnitude of costs-at least 10 times as great? Whatever might have been said about the previous amendment being comparatively trivial, this could not be possibly be so described.
Lord Blencathra (Conservative)
My noble friend is correct. The last amendment would cost around £70 million, and no doubt the Government will say that that is going to hurt and that the money will have to come from somewhere. But if the costs of this amendment are £700 million, £800 million or £1 billion, as I have read somewhere, we need to know that before we go into the Lobbies in support of the powerful speech made by the noble Lord, Lord Patel, in which he spelt out some of the difficulties that a large number of people will face if this cut is made.
I conclude with these remarks. It is easy to feel morally good because we have done something to help those who will be affected, but we have to bear in mind the others who will lose £1 billion of expenditure, or wherever that £1 billion will come from.
Lord Wigley (Plaid Cymru)
My Lords, we went into this matter in considerable detail in Committee and the Minister withstood the pressure at that point on the basis of it being so expensive. Perhaps I may repeat the point made from several different directions in Committee. If it is indeed £200 million plus £400 million plus £400 million, that is money that is coming off vulnerable disabled people. There are other priorities which I believe are not as pressing as the needs of these people.
It has been said that some will lose £90-odd a week. That is a considerable amount of money for those who are dependent on help such as this. If they are indeed fit to work and can hold down a job, they would earn considerably more than that, so there is an incentive to go to work, but the disability itself might well prevent them being able to take up opportunities, and indeed the psychological effect of the uncertainty of waiting out the 12-month period might add to the lesser likelihood of their being able to work. In a civilised society it is not the disabled people at the end of the queue who should be bailing out successive Governments for the economic mess that we are in. If we need to share it out, as the noble Lord said a moment ago, there is such a thing as taxation, which shares out the burden more equally. Why put the burden on the shoulders of the most vulnerable in our society?
Lord May of Oxford (Crossbench)
My Lords, I suspect that others might share my feeling that in some of the last exchanges the discussion has taken on a curious additional aspect. The exchange about whether whatever we do will ultimately be nullified by the Parliament Act speaks to me not as an argument for doing one thing or another but in support of the distinctive character of this Chamber. Particularly from the Cross Benches, the Chamber brings to debates that in the lower House would be basically political in nature a degree of expertise and knowledge of the impact on the ground of the things that we do. That is often missing, particularly in the upper chambers of parliaments in other countries with which I am familiar. I shall mention the acquaintance with uncomfortable facts, and again we have here an echo of what we heard a moment ago.
I have every sympathy for the Minister, who has quite properly to tackle questions of fiscal responsibility. At the same time, powerful points are being made about individuals and how this is going to play out in the system by people who really know it. That is something distinctive which we add to the debate, and I hope that it is taken into account when things go back to the Commons.
Lord McKenzie of Luton (Labour)
My Lords, we support each of the amendments tabled in the name of the noble Lord, Lord Patel. As we have heard, the first would amend the Bill's 365-day limit on the contributory employment and support allowance and proposes to replace that with an order-making power for setting a limit, but with the proviso that it should be not less than two years. The proposal that any limit should be set by order opens up the opportunity, sadly missed in the Government's formulation, for any time limit to be evidence based. The 365-day limit currently in the Bill is supported by scant evidence, apart from some references to "international practice", which did not bear scrutiny in Committee.
What the Government are proposing is fundamentally unfair. The unfairness is compounded by issues to which we will come later; for example, the inclusion of the assessment phase in the time and the counting-in of contributory benefits already received when the legislation enters into force.
As the noble Lord, Lord Patel, said, to be entitled to employment and support allowance, an individual must be assessed as having limited capability for work and/or limited capability for work-related activity; that is, they are not fit for work. Contributory ESA is a non-means-tested benefit and is earned by having a national insurance contribution record, some of which requires payment and some of which is credited in. It demonstrates a recent attachment to the labour market, but the long-standing principle underlying it is that people pay contributions on the basis that, if they fall out of work through ill health or disability, they have a degree of financial protection. Some may pay in throughout their working lives and may never have to draw on it; some may pay in for just a few years and need recourse to the benefit for an extensive period. That is what social insurance is all about.
But we should be clear: being in receipt of a contributory benefit does not amount to having a life on benefits. The benefit is payable only for so long as somebody is unfit for work. We have accepted with some reluctance that a time limit could be imposed on contributory ESA, but it would have reasonably to reflect a time period sufficient to enable people to overcome their illness or disability and to access employment. A minimum of two years is to an extent still arbitrary, but there is no doubt that it is a more realistic timeframe within which to expect a return to work. However, an evidence-based process rather than an arbitrary figure should be locked into primary legislation.
Why will the Government not at least agree to remove the 365-day limit from the primary legislation? They have prayed in aid international comparisons for the one-year restriction, but even cursory probing in Committee, particularly by my noble friend Lady Hollis, demonstrated this to be a trifle flimsy. Our Library was unable to access any meaningful international analysis. Comparisons are made with the JSA regime and the fact that contributory JSA lasts only for six months, but JSA is a regime applicable to those deemed fit for work-that is, work ready. Let us be clear: to be eligible for ESA, a person must be assessed as having limited capability for work. That is defined in the Welfare Reform Act 2007 as being where a person's,
"capability for work is limited by his physical or mental condition, and ... the limitation is such that it is not reasonable to require him to work".
Of course, it is expected that people who are able should take every opportunity to move closer to the labour market, but any suggestion that the one-year time limit will act as a spur to force people towards work by making them poorer seems particularly pernicious. We and the Government know full well that many people in the WRAG will not be able to access work within a year.
The Government propose to do this irrespective of the particular health circumstances of an individual and in the knowledge that the prognosis for many people is that they will not be fit for work within 12 months. Indeed, they know full well that the data indicate the contrary. As we have heard, some 94 per cent of contributory ESA claimants have a claim which will last longer than one year. An analysis of the Pathways programme showed that, for 2008-09, only some 13 per cent of those who started the programme found work within one year. Perhaps the Minister would let us know the expected job conversion rates in the Work Programme for those entering from the WRAG.
The Government seem almost to be seeking to undermine the WCA and WRAG designations by bringing further policy levers to bear to push people back to work. There is the implication that it is somehow easy to be assessed as eligible for the WRAG. Pretty much all the evidence, as we know and have debated often, points in the other direction. Despite some improvements on Harrington, the volume of successful appeals against exclusion from the WRAG remains high.
The Government offer in mitigation the availability of income-related employment and support allowance without time limits, which will certainly help some, but the thresholds, as we have heard, are low-household income of £7,500 or capital of £16,000-and will preclude many from benefiting. We have heard about the numbers affected-100,000 people losing their benefit overnight and, overall, some 700,000 people. Income losses will amount on average to £36 per week.
We are told that time limiting ESA will save some £1.3 billion a year by 2016 and that our amendments are unaffordable, but we should challenge this. If we are to be denied the opportunity to amend anything which the Government have cut, what purpose do we serve here? Of course the Government have to tackle the deficit and of course this is not easy, but it is for the Government to justify why this particular burden should be borne in this particular way. On their own impact assessment, of those who lose out from these proposals, more than half fall within the bottom three income deciles. Those in the lowest income decile lose on average £35 a week. What definition of fairness allows this to happen?
Amendment 38A, which I hope is more palatable to the noble Baroness, Lady Thomas, because of its cost implications, is more narrowly focused. It would remove time limiting in its entirety from those undergoing treatment for cancer or those who are in the WRAG as a consequence of being diagnosed with cancer. We heard in Committee and again today powerful testament about the range of barriers faced by people with cancer and its impact on their ability to return to work. They are not the only ones in this position, but we should take this opportunity today to secure greater justice where we can, even if this cannot be delivered for all. Supporting these amendments would not deny the Government a contribution to the government deficit; supporting these amendments would not give people a life on benefits; but it would give them a better chance to overcome the barriers which prevent them doing what they overwhelmingly want to do; that is, access the labour market with all the benefits that this can bring.
Lord Strasburger (Liberal Democrat)
My Lords, I fully support the Government's efforts to address the huge deficit which they inherited. However, my noble friend the Minister needs to explain why I should support this attempt to penalise some of the most vulnerable and disadvantaged people in our society for the greed of the financial services industry and the incompetence of the regulators. Do these sick and disabled people have the broadest shoulders, which we keep hearing about, to carry the burden of the cuts?
My Lords, before we consider this group of amendments, it is important to remember the context within which they are proposed. I remind noble Lords that our proposal to time-limit ESA applies only to contributory ESA claimants in the work-related activity group, or WRAG. Those in the support group and those claiming income-related ESA are unaffected by the proposals.
We will always provide a safety net for those who have limited income, and people will still be able to claim income-related ESA subject to meeting the conditions of entitlement, including an assessment of means. In addition, other benefits such as housing benefit and council tax benefit will be available. However, it is only right that those claimants in the work-related activity group who are above the income threshold for income-related ESA should have their contributory benefit time-limited in a similar way to contributory JSA.
Amendment 38, tabled by the noble Lords, Lord Patel, Lord McKenzie and Lord Low, and the noble Baroness, Lady Hollins, requires the time limit for claimants receiving contributory ESA in the WRAG to be a minimum of 730 days and to be prescribed in regulations. Amendment 39A, tabled by the noble Lords, Lord Patel and Lord McKenzie, is designed to have the same effect for claimants whose ESA youth awards are time-limited.
We understand noble Lords' concern about the proposal to introduce a time limit of 365 days for these claimants and the reasoning behind their request for the limit to be a minimum of 730 days. However, as I said in Grand Committee, the 365-day time limit is not an arbitrary one. It is similar to the limits applied in several countries overseas and around the world, including France, Ireland and Spain, and strikes a reasonable balance between the needs of sick and disabled people claiming benefit and those who have to contribute towards the cost. We strongly believe that a time limit of one year is the correct approach for a number of reasons. It strikes the right balance between restricting access to contributory benefits and allowing those with longer-term illnesses to adjust to their health condition and surrounding circumstances, and it is double the length of time allowed for contributory JSA in recognition of that fact.
There is also a very strong financial argument. As requested, I shall give my noble friend the figures on the costs. The total costs in this SR period are £1.1 billion -next year it is £270 million, then £420 million, and then another £420 million-and then £360 million, and then £140 million in 2016-17. Over the full five years it will be £1.6 billion, including £1.1 billion in this SR. It is a very large sum.
The noble Lord, Lord McKenzie, said that Governments have to justify reductions, and clearly reductions are difficult. However, when he proposes reducing our cuts by £1.6 billion over five years, he should consider that he also supported the move late last year on the social sector size criteria, which will cost £700 million in the SR period and £1.5 billion over five years. He is already up, over five years, to above £3 billion in reductions in cuts. The opposition Benches have also voted for or supported universal credit changes in excess of £600 million a year on an annualised basis once the system is introduced. These are huge figures which we will have to find elsewhere. Before one starts making such reductions, one has to ask: where are the alternatives? Where will we find these sums? That is why it has been such a difficult process for the Government to find ways of reducing the deficit while causing the minimum difficulties possible. Clearly, one makes the cuts where there is the most expenditure, but the expenditure has been provided to those who are the most deserving. That is the natural structure of it. That is why it is so difficult to do this.
The effect of Amendment 38A would be that no time limit is applied to contributory ESA for those claimants receiving treatment for cancer or where they are receiving benefit because of a diagnosis of cancer. Another effect of the amendment would be to extend the 12-month time limit for claimants in the WRAG if they are either having cancer treatment or their limited capability for work is caused by the effects of their cancer. I understand noble Lords' concerns in tabling the amendment and can confirm that at present around two-thirds of those with a primary diagnosis of cancer who complete their WCA are placed in a support group. This means that they would not be affected by time-limiting.
We want to make sure that the system is as accurate as possible and that is why we asked Professor Harrington to carry out his review.
Baroness Morgan of Drefelin (Crossbench)
The Minister referred to the position of two-thirds of cancer patients. Is that before or after the changes coming from the Harrington review with regard to intravenous chemotherapy versus oral chemotherapy and the automatic move of patients into the support group?
The figure that I quoted is the existing one. I shall come straight on to the cancer issue because it is clearly of great importance. On the basis of the Harrington recommendations, the figure is expected to go up by about 10 per cent on the existing figure on our modelling basis.
There is a great deal of misinformation about the position and I shall try to pull out some of the main issues on cancer. First, the Guardian printed a letter from Professor Harrington in which he said:
"I believe the government's proposals would significantly improve on the current system and would be of considerable benefit to those who face the real personal challenge of a cancer diagnosis and subsequent treatment".
He went on to say:
"The government's proposals have been developed as a result of evidence submitted to me by Macmillan and discussions with cancer specialists. The proposals would considerably increase the number of people who receive unconditional support in the benefits system. They would also reduce, not increase, the number of face-to-face assessments that individuals suffering from cancer would undergo. The proposals are underpinned by a presumption that people undergoing cancer treatment will be entitled to the benefit if they have the necessary supporting evidence. They widen the scope of the people this applies to, while also allowing people who want to work to do so. This will mean better provision all round. Delays in these proposals may ultimately affect individuals and their quality of life".
We have now published the Macmillan evidence, which I hope is available and of great interest to noble Lords. What is interesting about the evidence is how many professional oncologists support this approach. I have a few quotes here which I would like to share with the House. The first states:
"Not all patients will experience toxicity related to treatment ... Not all patients should be exempt".
The next states that,
"some people on long-term maintenance treatments may have little or no upset and be quite able to work",
and so on. That evidence is available to noble Lords.
As to where we are on the important issue of cancer, we are now carrying out a consultation with the industry. That will be ready in March, when we will pick up the responses and apply them. The noble Lord, Lord Patel, may take some comfort from the fact that there is now a major process going on as we consider this issue, and he would be right to take such comfort.
On the point raised by my noble friend Lady Thomas on the WCA, we are absolutely committed to making it as effective as possible. It is beginning to move quite quickly now in the right direction. We have taken forward all of Harrington's recommendations from year one, which means that decision-makers are better supported and have received new training, and all the ATOS reports now have a justification. Professor Harrington has praised the improvements that he has seen so far.
The other point raised by the noble Lord, Lord Patel, was-
Baroness Finlay of Llandaff (Crossbench)
Before the Minister moves on, I wonder if I could ask for some clarification. When he talked about the evidence from oncology, he implied that patients would have to be not working for two years. I do not see anything in any of the proposed amendments that stops people going back to work as soon as they want to go back to work. Indeed, one hopes that many people will get back to work, perhaps on a part-time basis or whatever, within months of having their treatment, but the purpose of the amendments is not to force those who are so debilitated post-treatment or during treatment, particularly with fatigue that can go on for weeks or months before it improves, and not to make them subject to a guillotine coming down at the end of the year. Can the Minister clarify that there is nothing in the amendments that stops people going back to work as quickly as they want to?
Clearly, there is nothing in any amendment or proposal to stop people going back to work should they wish to go back to work, but we are talking about the expectations that there are between the citizen and the state. That is a really important psychological relationship between the two, and that is what we are talking about rather than anything else.
I pick up the point made by the noble Lord, Lord Patel, when he quoted Citizens Advice. We were disappointed by what it said, not because it said stuff that we did not like to read but because it was based on the evidence of 37 work capability assessments when there were more than 600,000 completed in the year to May 2011. That report also relied solely on Citizens Advice's own interpretation of the healthcare professional's report and did not allow the HCP the opportunity to explain the reasoning.
Our view and policy is that the right way to address cancer diagnosis and treatment is by ensuring that the WCA provides an accurate and effective dividing line between the support group and the work-related activity group. We want the WCA to consider and assess fully the effects on an individual from both their cancer and the treatment they are receiving for that cancer. As I said, sufferers will be entitled to any income-related ESA.
I pick up the point raised by the noble Lord, Lord Wigley, on the burden on those who can least afford it, because some quite simplistic numbers are flying around here. We have said that income-related ESA will be available to those with the lowest incomes. I accept that if an ESA claimant's partner has earnings of £152.70 a week, no income-related ESA will be available, but that does not mean that the couple will be £94.25 a week worse off when the contributory ESA is withdrawn. I give an example of why that is not the case. A couple with a rent of £100 a week and council tax of £25 a week, one with the earnings of £152-odd and the other with a contributory ESA of £94, will have a total income of £291 before ESA is withdrawn and £277 afterwards. The main reason is that housing benefit and council tax rise substantially. So there is less income but there are not these very dramatic changes when you go through the actual sums-
My Lords, as noble Lords know, we have two systems of housing support. We have housing benefit for those who rent their property and support for mortgage interest for those who need support with their mortgage payments. Currently mortgage payments are running rather lower than benefit, but that is only because mortgage rates are lower and that can change. We are looking at the whole system of support for mortgage interest, but there is a system in place to support people whether they are home owners or payers of rent.
On the basis of what I have said, I hope that the noble Lord will feel able to withdraw his amendment. Before I ask that he do so, I confirm that the Government see Amendment 39A as linked to Amendment 38, but that none in this group is consequential on another, and we would expect the House to make a decision on each individually.
Lord Patel (Crossbench)
I thank the noble Lord for his response. I could pick up on each of the points that have been made and answer them, but the time does not allow that. I have to say to the noble Lord, Lord Blencathra, that we are talking here about the level of savings from welfare reform. We are not talking about the Government finding extra expenditure; it is the reduction in savings that we are talking about. The total reduction in saving of the whole welfare reform package will be in the region of £18 billion. We are talking here about not taking money away over five years even to the level of £1.3 billion from the most vulnerable in society. As I pointed out, they are those on the lowest third centile of income, to whom, as the noble Lord, Lord Wigley, said, it is £94 a week. If we are going to rob the poor to pay the rich, we are entering into a different form of morality. The noble Lord asked the question whether it is moral. I say that it is moral to look after those that are sick, vulnerable and poor. If that is immoral, what is moral is to pay the rich-and we are on a different planet altogether.
I come to the figures quoted. The figures are based on the assumption that no one goes back to work until they reach 24 hours. If you speak to cancer patients, you find out that their greatest desire is to go back to work, because it is part of therapy. Noble Lords should read the powerful article written by a very bold and courageous lady called Jenni Russell, which says:
"Not skiving, minister, just suffering cancer".
She describes what it felt like to have treatment for breast cancer. If you speak to patients on chemotherapy-and my noble friend Lady Finlay sees them every day-they feel good after four days of misery following chemotherapy. By the time they feel better it is time for another period of misery. The effect is cumulative to the point that after a few courses they cannot get out of bed and they wonder whether death might not be better than the disease. It is those people that we are talking about. They are not skivers or benefit cheats. They are the last people who cheat. Are we going to make savings there? I was honest in accepting that what I proposed was costly, but I am not going to be dishonest and say that therefore we should let those people suffer. I ask the House to determine who should be supported.
Moved by Lord Patel
38A: Clause 51, page 36, line 36, at end insert "except-
(a) where a person is receiving treatment for cancer when entitlement shall continue for so long as the person has (or is treated as having) limited capacity for work; or
(b) the person has (or is treated as having) limited capacity for work as a consequence of a cancer diagnosis."
Lord Patel (Crossbench)
My Lords, Amendment 38A is specific to cancer patients. I have already spoken enough about the suffering of cancer patients and why they require extra time to recover. I have already referred to the article in the Sunday Times, in which a lady who experienced this describes very fully how debilitating it is. The amendment is merely to say that those cancer patients who are currently undergoing treatment, whether it be chemotherapy or radiotherapy, or who have recently finished treatment and are recovering from it but need that extra bit of time, should be supported. This is a small number of cancer patients; there are not many because most of them have recovered within a year. I beg to move.
Moved by Lord Freud
39: Clause 51, page 37, line 4, at end insert-
"(2A) The period for which a person is entitled to a contributory allowance by virtue of the third condition set out in Part 1 of Schedule 1 (youth) shall not exceed 365 days."
Amendment 39A (to Amendment 39)
Moved by Lord Patel
39A: Clause 51, line 4, leave out "365 days" and insert "a prescribed number of days which must be at least 730"
Amendment 39A agreed.
Amendment 39, as amended, agreed.
Consideration on Report adjourned until not before 8.32 pm.