Clause 3
Welfare Reform Bill
9:10 am
Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)
I beg to move amendment No. 204, in clause 3, page 3, line 30, leave out paragraph (b).
I will be relatively brief. I am grateful to the Association of British Insurers for drawing to my attention a potential problem with subsection (3)(b). The ABI is concerned that, unless action is taken to amend the provision, many thousands of people with long-term health problems could be at risk of seeing the income from their former employment dramatically reduced.
As the Committee will know, income protection insurance provides people on long-term sickness absence, for example, with a regular monthly payment to keep their overall income at just below the level that it would have been had they been in receipt of wages. In setting the premiums that people pay for such insurance, the insurance industry currently takes the levels of incapacity benefit into account. That is because a person whose employment has not been terminated and who receives incapacity benefit and payments under income protection insurance purchased for them by their employer, does not have their incapacity benefit reduced by the amount of their income protection insurance. However, there is concern that the way in which the clause is drafted will mean that that insurance will be taken into account. That could raise premiums, discourage people from taking out income protection insurance and, in particular, discourage employers from taking out such insurance on behalf of their staff. I hope that the Minister can offer some reassurance on that point.