Clause 48 - Use of information for, or relating to,
Employment
5:45 pm

Mr Malcolm Wicks (Parliamentary Under-Secretary, Department for Work and Pensions; Croydon North, Labour)

It may help the Committee if I outline the purpose of the clause, albeit briefly, owing to the time constraints on our proceedings.

The Government's strategy for reforming the welfare state is firmly founded on the belief that work is the best form of welfare. Our policies are increasingly focused on helping people to move away from benefits and towards the labour market. That philosophy is given substance through the development of innovative labour market policies such as the new deal, employment zones and the creation of the Department for Work and Pensions. Those reforms have been successful. Employment is at near record levels: more than 28 million people are in work—1.25 million more than in 1997—and recent figures show that unemployment is the lowest, in broad terms, since the mid-1970s.

However, although we know that our welfare to work approach is working, isolating the effectiveness of individual programmes and initiatives has been more problematic in methodological terms. For example, 30 per cent. of those who leave the new deal leave for unknown destinations. Once a client has left an employment or training programme, they are under no obligation to inform the Department for Work and Pensions of their activities. Although many clients do provide the Department, through its agencies, with the necessary information, a significant minority do not. Not knowing how many of that group are in work weakens our ability to judge the efficacy of the new deal and, incidentally, to respond as rigorously as we should like to parliamentary questions about it.

We want a more complete picture of how many people we have helped and are now in work. We should also like to know how well clients are doing at work, because we want to encourage them into jobs that last and in which they will progress. Under the clause, the Department will be able to obtain Inland Revenue data on whether the client has entered work, for how long and with what annual income. That will help us to evaluate the welfare to work programme.

Another important reason for obtaining that data is that many of our programmes are run in partnership with private and voluntary organisations. Those organisations are paid by results, and if they cannot confirm that a person whom they have helped has actually moved into work, they cannot claim payment. Access to Inland Revenue data will enable us to verify that the individual has moved into work, ensuring that delivery agents are properly rewarded for their efforts and giving my Department confidence in the integrity of the funding arrangements.

That aspect is likely to become increasingly important over time. In future, providers are likely to be rewarded not only for placing people in jobs, but

according to how long they remain in employment and the progress they make while they are there. Such a funding regime would be practically inoperable if we were to remain reliant on current methods of information gathering. It would also be impossible to secure against false claims for payment. Developing more appropriate funding mechanisms will produce better outcomes for our clients, and acquiring Inland Revenue data will facilitate that.

I realise that new data-sharing provisions always, rightly, raise questions in relation to human rights legislation and the Data Protection Act 1998. However, I assure members of the Committee that the measures do not remove anyone's rights under that Act. They do not permit any disclosure of information beyond that which is required for the proper exercise of Government functions. The Department will abide by the Act when using the information. The provisions are in line with the article in the convention on the right to respect for private life. They will help to ensure the rational and effective use of public funds and are therefore necessary for the economic well-being of the country.

As well as enabling us to obtain new information from the Inland Revenue in the context of welfare to work programmes, the clause will allow the new Department to pool the data it holds for use in any of its purposes. That will further break down outdated distinctions between social security policy and employment and training policies, establishing a consistent framework for information management reflecting the business needs of the Department.

At individual level, staff dealing with a customer's employment and training needs will be able to access the customer's benefits and child support records. Similarly, staff dealing with benefit or child support aspects will have access to information on the customer's employment and training needs.

Having set out the purposes of the clause and given assurances about data protection and privacy, I hope that members of the Committee will support it.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I start with a confession: I had not focused in any great detail on schedule 5. However, as I listened to the Minister I became increasingly alarmed. Any ministerial speech that seeks to authorise disclosure by the Inland Revenue of hitherto confidential information on a disaggregated, individual basis and includes the words, ''necessary for the economic well-being of the country'', makes me suspicious. The provision has been slipped into the Bill in a couple of lines because the Department will find it useful, but it gives rise to some of the concerns that the Minister mentioned.

I understand that he needs the information to pay his contractors by results. However, although he says that the information will not be shared or disseminated beyond what is required for the purposes of his Department, it will presumably have to be shared with the private sector contractors who are doing the work, because otherwise they will have no way of validating the Department's assessment of how much money is owed to them. Are we to assume that anyone who has contact with the Department will have to accept that

their earning patterns thereafter become an open book to the Department and its private sector contractors?

I am sympathetic to the underlying need for the provision, but it is a rather drastic step. Can the Minister reassure the Committee by telling us about any areas in which the Inland Revenue is already required to make information available on a disaggregated, individual basis to support arrangements between a Department and a private sector provider?

Mr Malcolm Wicks (Parliamentary Under-Secretary, Department for Work and Pensions; Croydon North, Labour)

I recognise that the hon. Gentleman broadly supports the clause, but he may have misunderstood its purpose. As we enter into partnerships with private sector bodies or voluntary organisations increasingly make use of payment by results. We need to know what those results are so that we can verify claims, which is why we need the new powers to track people with the help of Inland Revenue data. The hon. Gentleman suggests that the measure is intended to enable us to supply personal data to private sector or voluntary organisations, but that is not the case. The information is for internal purposes to help us to verify claims.

Mr Derek Conway (Old Bexley and Sidcup, Conservative)

Order. It may help hon. Members if, while we debate this clause and the principle of schedule 5, we take the opportunity to debate schedule 5 itself, which is on page 61. The schedule and the clause relate to one another, and if any hon. Member seeks to catch my eye on any section of the schedule, in addition to the clause itself and the general principle, I shall hear them.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I am grateful for that guidance, Mr. Conway, because we were broadly debating the meat of schedule 5.

I hear what the Minister says, but I cannot see how he will be able to avoid making information from the Inland Revenue available to the contractor by way of verifying any performance-related payment the Government intend to make to them. Say the deal is that if Fred gets a job the contractor gets £300; if Fred is still in the job after one year it gets another £200; and if Fred is earning more than £20,000 a year it gets a further £200. That would be sensible. However, when the Government say to the contractor, ''Here is your £500 payment for Fred.'' the contractor might ask, ''Why is it £500? Why not £700?'' In that case, the Government must divulge the basis on which they have calculated the incentive payment, which amounts to divulging specific information about an individual that has been gathered from the Inland Revenue.

The problem is not insuperable. Individuals involved in those arrangements have engaged with the process because they want it to help them. Rather than giving a broad power to the Government to exchange information between the Inland Revenue and the Department for Work and Pensions, the Department could enter into an agreement with the individual, whereby he waives his right of confidentiality as a condition of going on to a programme. I would not have a problem with that.

Our consideration of the matter in this place will be less detailed and searching than scrutiny in another place. I suggest to the Minister that concerns will be

expressed there. His Department must give cast-iron assurances that people will not find themselves, in his words, being ''tracked'' as a result of having engaged with his Department or one of its contractors. That would give rise to human rights issues, as well as general concerns about the increasingly insecure nature of Inland Revenue data, which at one time was considered to be absolutely sacrosanct between the Inland Revenue and the individual. I cannot think of another example where Inland Revenue data is routinely divulged on a disaggregated basis. I always thought that the working assumption was that a person's position vis-à-vis the Inland Revenue was a private matter between the two of them. We seem to be embarking on a dangerous departure.

Mrs Joan Humble (Blackpool North and Fleetwood, Labour)

From my recollection as a member of the Standing Committee that scrutinised the Welfare Reform and Pensions Act 1999, there is a section in that Act that allows for information sharing between the Inland Revenue and the Child Support Agency to cover instances in which self-employed absent parents did not divulge the details of their earnings to the CSA, which meant that it had great difficulty in assessing them.

I point that out to the hon. Gentleman as an area in which there is information sharing. However, I also recall that that Committee had a detailed discussion in which all hon. Members agreed that for the reasons outlined by him and my hon. Friend the Minister, there had to be strict controls on the information released. Parameters must be drawn around the circumstances in which information can be given. I should point out that I speak as an ex-employee of the Inland Revenue.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

We shall all bear the hon. Lady's last remark in mind. Her intervention is helpful, and she may be right about the CSA. My recollection in dealing with constituency CSA cases is that the information is more routinely obtained from employers, but I may be wrong.

Mrs Joan Humble (Blackpool North and Fleetwood, Labour)

It was exactly because of the hon. Gentleman's point that that provision was included in the 1999 Act. The PAYE system can deal through an attachment of earnings with those in employment who are reluctant to pay the amounts that they should. The 1999 Act specifically dealt with those who were self-employed and not co-operating, which meant money was not going to their children.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

My experience of the CSA, which other members of the Committee no doubt share, is that despite its draconian powers, it is not spectacularly successful in ensuring that people who are not in conventional employment make the payments they should.

The hon. Lady highlighted an example of the use of Inland Revenue information for the purposes of other Government Departments. Although that is significant, her example is that of defaulters who fail to pay sums that they owe. That is qualitatively different from the circumstances that we are

discussing, in which the people involved have done absolutely nothing wrong: they have not failed to pay anything that they should have paid, and no one is suggesting that they have cheated the system. Indeed, they are people who have done exactly what we want them to do: they have engaged with the system to obtain the appropriate help to get into work. Indeed, the fact that such a person has Inland Revenue records suggests an element of success. It would be different to track a person in those circumstances for the statistical gratification of the Department for Work and Pensions, and for its convenience in calculating payments to its contractors.

Mr Malcolm Wicks (Parliamentary Under-Secretary, Department for Work and Pensions; Croydon North, Labour)

It will also be for the statistical gratification of the Opposition. Perfectly properly, they seek to scrutinise the Government by asking us questions about the success of the new deal and employment zones. We want to give better statistical answers than we have been able to do in the past.

I emphasise the point that we are taking powers—which we do not do lightly—with safeguards. Those powers will allow us to scrutinise Inland Revenue data for the purposes that I have outlined. The Inland Revenue data will not be passed on to private contractors, although we will need it to verify their claims. In any case, private contractors will probably have contact with many employees, and will obtain information from that source. If there were a dispute, we would not hand over Inland Revenue files to show that we were right; it would be up to the private contractor, if it wanted to, to seek the permission of the individual to get information to contest a claim. This is a cast-iron guarantee: we are not in the business of handing over Inland Revenue data to private contractors. I hope that that reassures the hon. Gentleman.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I am reassured, but I am less reassured by hearing the Minister speak on behalf of a Government Department that employs contractors about the way in which he will deal with disputes. He will use his privileged information to assert that his interpretation is correct, and leave it to the other chap to try, without having access to that privileged information, to prove him wrong.

Mr Malcolm Wicks (Parliamentary Under-Secretary, Department for Work and Pensions; Croydon North, Labour)

The hon. Gentleman cannot have it both ways.

Mr Philip Hammond (Runnymede and Weybridge, Conservative)

I am reassured by the Minister's confirmation—his cast-iron guarantee—that disaggregated data will not find its way outside his Department. The debate has been useful in that it produced that guarantee, but I predict, without any ability or wish to bind my noble Friends in another place, that they will want to look long and hard at the provision. This feature of the Bill is one concern that will probably be more expertly dissected in that place than it ever will be in this place.

Question put and agreed to.

Clause 48 ordered to stand part of the Bill.

Schedule 5 agreed to.