Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch & Strathspey, Liberal Democrat)

It is a pleasure to welcome you to the Chair again, Mr. Hood. I look forward to serving under your chairmanship in what promises to be a lengthy but engagingly good-tempered sitting. I shall be brief, as much of what I wanted to raise was mentioned in the previous debate.

This is a probing amendment to ensure that the requirements of the Disability Discrimination Act 1995 and the Human Rights Act 1998 will be taken into account in the Department’s contracting with private and voluntary organisations that are to be engaged to deliver much of the work involved in rolling out pathways to work, and so on.

As he did during our sitting on 19 October, in his reply to the previous debate the Minister gave some welcome reassurances on the Disability Discrimination Act and the disability equality duty, which comes into force later next month and which providers in the private and voluntary sector will have to take into account.

I ask the Minister to say something in this debate about the Human Rights Act, because much of what we are discussing has implications under that Act, not least in respect of benefit sanctions, but in other areas, too. What consideration has the Minister’s Department given to the human rights implications of the contracting out of public functions under clause 15?

In respect of the sanctions, the Minister made it clear that the Government have no immediate intention of giving providers the power to sanction that the clause allows for. That may well come about in due course in the circumstances that the Minister tried to describe in the previous debate—if not to my satisfaction, at least to his.

Will the Minister give an undertaking that an assessment will be made of the policy’s impact on human rights, on child poverty and on disability equality, so that the potential adverse impacts of giving those powers to contracted-out providers are taken into account before any decision is made on contracting out sanctions? I got the impression from  the Minister’s remarks in the previous debate that he is keen to enter a substantial number of caveats before any decision is made to contract out benefit sanction or decision-making powers. Before any decision is made, a wide range of factors must be taken into account and I will add them to his list: human rights, child poverty, disability equality. I look forward to the hon. Gentleman’s response.

Jim Murphy (Minister of State (Work), Department for Work and Pensions; Renfrewshire East, Labour)

It is great to see you in your place, Mr. Hood. We have made substantial progress since you last refereed our proceedings. A cursory look at the Hansard record shows that we have made progress via Marx, Stalin and the Jacobites’ visit to Derby. To understand where they fit in you will have to read the record carefully, Mr. Hood.

I shall be brief so that we can make progress. I can confirm to the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) that child poverty has been established as the No. 1 priority of the Department for Work and Pensions. We are reviewing all our employment and welfare programmes to ensure that they have the maximum impact on child poverty and we will examine not just this Bill and the transition of existing customers, but every proposal to discover their impact on child poverty and their likely outcome.

I confirm again for the purposes of the record the assurances that I gave on 19 October, to which the hon. Gentleman alluded, about the protections of the Disability Discrimination Act and the Human Rights Act.

The effect of clause 15 is to allow the Secretary of State to authorise providers to carry out certain functions of his relating to conditionality. It does not transfer those functions to the providers. Where a contractor is exercising functions by virtue of clause 15, subsection (7) provides that in most cases any act or omission of the contractors in carrying out these functions is to be treated for all purposes as an act done or omitted by the Secretary of State. For the purposes of the Disability Discrimination Act or the Human Rights Act, anything done by a contractor would be regarded as done by the Secretary of State. That means that the Secretary of State remains responsible for ensuring that those functions are carried out in away that is compatible with both the Disability Discrimination Act and the Human Rights Act. I hope that that reassures the hon. Member for Inverness, Nairn, Badenoch and Strathspey and my hon. Friend the Member for Caerphilly (Mr. David), who also raised the matter in an earlier contribution to our proceedings.

Tim Boswell (Shadow Minister, Work & Pensions; Daventry, Conservative)

I am grateful that I am able to intervene on the amendment, although I do not need to do so, particularly after the extremely helpful response that the Minister has given. However, will he concede two things? First, will he concede that it is important, as indicated in the earlier amendment, that any contractor, whether contracted for services, let alone for decision making, is well apprised of the requirements of the legislation and trained on it? Secondly—this is a wider issue—will he confirm that, as a matter of good practice, both the  pathways to work Jobcentre Plus providers, and the other providers of contracted services, should be encouraged to get together from time to time to share best practice in this and in other more operational areas?

Jim Murphy (Minister of State (Work), Department for Work and Pensions; Renfrewshire East, Labour)

I will give a very brief response. On the contractors, I made that position clear in respect of the Disability Discrimination Act and the Human rights Act, but it also captures what happens with subcontractors. That is the important point. Contracts under the clause will be drawn up so that providers are required to carry out their functions with proper regard to the needs of disabled people. For example, pathways contracts will have clauses that prohibit discrimination and harassment on the ground of disability. Providers will also have to provide reasonable adjustments so that customers can participate in conditionality, and promote equality of opportunity. A cursory reading of the contracts and the paperwork concerning the contracts—I made a commitment in our earlier proceedings to place that in the public domain—will show that the potential contractors in the private and voluntary sector will be under no illusions about their statutory responsibility in terms of the legislation. With those comments, and that reassurance, I invite the hon. Gentleman to consider withdrawing his amendment.

Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch & Strathspey, Liberal Democrat)

As has been mostly been the case over the past few days, the Minister’s response on the amendments has been reassuring.

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

We have had a good debate about the preceding amendments, but I should like to say one or two things about the importance of the involvement of the private sector and the voluntary sector, and why Conservative Members support, with some reservations, the proposition contained in the clause. The Employment Related Services Association—ERSA—which gave evidence to the Select Committee earlier this year, rather punchily suggested this about the advantages of private and voluntary sector, non-state-employed personal advisers being involved in the roll-out to pathways to work:

“Rightly or wrongly, individuals are often uneasy dealing with Jobcentre Plus officials. These officials are sometimes viewed as ‘agents’ of the state, put in place to judge, and determine whether or not an individual is actively seeking employment.”

Those are not my words, and that might be stretching a point. Incapacity benefit personal advisers and the other officials at Jobcentre Plus are dedicated professionals who are there to help people, not to catch them out wilfully or with malice aforethought.

What ERSA is driving at, however, is this. In seeking support, claimants will often show a willingness to take part in training or condition management programmes, or they will say that they want to get better. However, they know that the Jobcentre Plus official to whom they are speaking will be wondering how ill or disabled  they are, and outside groups get the sense that claimants feel that they might compromise their right to benefit by disclosing too much. Again, those are not my layman’s perceptions, but the thoughts that were expressed time and time again in the evidence to the Select Committee. There can be an element of trust and a special bond between a personal adviser in a charitable body and the person whom the personal adviser is helping to get back into work, and it is important that we compare that with the relationship that a person will have with someone who is working for the state.

There is a second issue on which we must reflect when discussing increased contracting out to the private and voluntary sector. It is an issue about which sector must have confidence in bidding for contracts, but we have not yet discussed it, which is why my comments will be very apposite to the clause stand debate. Working Links is a public-private sector body and does not belong purely to one sector or the other. I have had many discussions with its representatives and visited various of its projects over the past months. As the Select Committee notes, Working Links believes that the current approach taken by Jobcentre Plus and some pilots has

“promoted unnecessary complexity in providing employment support to benefit claimants”.

That is the result of the perceived complexity of the administration process and the form filling. Working Links said that that did not happen to the same extent in employment zones, which are private sector led, as we all know.

The argument for the employment zone model was supported by the Centre for Economic and Social Inclusion and Reed in Partnership, which, according to the Select Committee, suggested that

“a national roll-out of Pathways based upon the pilots would not be as effective as one based upon Employment Zones which allow greater freedom and flexibility to service providers”

to test different approaches free from too much form filling. The Secretary of State for Work and Pensions acknowledged that in evidence to the Committee, saying that

“in the Employment Zones, for example, the private and voluntary sector providers have a very good track record in improving outcomes for Incapacity Benefit claimants and Jobseeker’s Allowance claimants. I think their performance”—

that of the private and voluntary sector—

“actually exceeds Jobcentre Plus in a number of very important respects.”

The principle of contracting out is therefore a good one, but—there is a but—there is a demand for safeguards. We need to understand that, as the Minister will when he oversees the contract design, which will be an iterative process. As the Disability Rights Consortium said,

“The impact of using private and voluntary sector providers to deliver Pathways in new areas without having to replicate existing provision will need to be closely evaluated as support may vary”

under the contracts

“by locality, provider or individual adviser. Identifying the impact on employment rates by different impairment groups will be important.”

Is that point reflected in the way the Minister is designing the contracts, looking at the effect of these contracts in different areas with different providers on  the employment rates of different impairment groups? I imagine that he has thought of this, but is there any mechanism by which that will be measured as the roll-out goes forward?

I turn to another area where safeguards are clearly required. The Opposition do not believe in red in tooth and claw, free market provision; in particular we are not keen on widespread, so-called cherry picking or creaming. Some claimants, whether for employment and support allowance or incapacity benefit, by definition have different disabilities. Some will find it easier to find employment than others. Those with severe learning disabilities, mental health conditions, autistic spectrum disorders as well as those with severe physical disabilities will require more support and take longer to find sustained employment than those with less serious conditions.

Contractors should not be allowed to cherry-pick just those claimants who are easiest to place. Contractors must be able to meet their targets by getting more people back into work so that the Government can hit their target of 1 million men and women off the IB rolls by 2016. But it must not be a simple, bog standard form of target hitting by helping the easiest first. I am not asking for specimen contracts, but will the Minister share his thoughts on this and give us assurances that the contract design process is looking at how cherry picking can be minimised? It will never be eliminated and it would be quite unrealistic to think that it could be.

The Minister referred to proposals first mentioned by my hon. Friend the Member for Runnymede and Weybridge (Mr. Philip Hammond) on Second Reading about payment by results. I do not want to have a second reading debate now about what Opposition policy is. I know that you, Mr. Hood, being a stern and disciplined chairman, will not want anyone to be tempted down that route. But the Minister mentioned it on the first day of these proceedings and he said that he might want to raise it later on the Bill. I have a sneaking suspicion that this clause stand part debate is the right time.

For the record and so there is no ambiguity, the Government proposals and the briefing that they have given to the outside organisations are to the effect that payment by results, the outcome-based part of the new regime that the Bill introduces and to which this clause relates, will involve roughly a 30 per cent. upfront fee to the private and voluntary sector providers and 70 per cent. will be payment by results: put crudely, if a job or training is delivered by the contractor who will be able to do the roll-out for ESA if the Bill goes through. It will be done anyway as part of the national roll-out of pathways before ESA comes in.

The Minister referred to a Conservative proposal for the payment by results not being 70 per cent. purely outcome based and 30 per cent. upfront fee, but being 100 per cent. payment by results. That is not true in relation to all the new claimants who will be subject to the Bill. New claimants going on to ESA will be helped by contractors who will get 30 per cent. upfront and70 per cent. payment by results.

The Minister will be pleased to hear that we are not in dispute with that proposition. Our point is slightly different. The Minister has said correctly that, if  someone is on incapacity benefit for two years, they are more likely to die or retire than to ever find a job. He then went on to say:

“as a priority we will focus on those who are newest to incapacity benefit or employment support allowance.”

In the same vein, the Government Green Paper said, in the roll-out of pathways to existing claimants: it will be only “as resources allow”. That got my hon. Friend the Member for Runnymede and Weybridge, my hon. Friends on the Opposition Front Bench here today and me, together with other outside groups, thinking how we could get a better deal for existing claimants than just what resources allow. We know the phrase “as resources allow” is Treasury speak for “we’ll see what we can do on the public spending round, but maybe they’ll get more money and we’ll let them have more support, but only dependent on what the Treasury can find”.

We were concerned, as were outside bodies, about what is a resource constraint. Under the Bill, not enough support will be given to existing claimants when they come on to ESA, nor will requisite support be given to existing claimants on IB before ESA kicks in.

We all know that the Department works under cash constraints. An example of how that works is that the National Audit Office has identified anecdotal evidence of creaming within the new deal for disabled people. Contracts out to tender for the NDDP were based on price, encouraging a large number of low unit price and low volume contracts offering services. Low numbers were also targeted by the programme because Jobcentre Plus was allocated only enough funds for around 4 per cent of the total IB population in an area. This is not something I say critically of Ministers, but we have to acknowledge, as the National Audit Office have acknowledged and the Government in replies have occasionally acknowledged, that the numbers of people who are the subject of help in, for instance, the new deal for disabled—it would also apply in similar programmes—is 4 per cent. This is a very small figure and we have to ask ourselves why it is only 4 per cent. It is not because Jobcentre Plus only wants to help 4 per cent; it is due to public spending constraints.

Let me give one example. Ministers will be aware of this and I do not think they are any more happy about this than we are. The Sure Trust, among many others—I could also name the Patwith Trust—say that there can be a contract to get, for the sake of argument, 500 people into work who have physical disabilities and who have been on benefit for, say, two or three years. If the contract is to get 500 people into work in Birmingham, for example, the organisation has a yearly contract to hit that 500 target.

The organisation may hit the 500 target after three months. It has done very well. Having reached the target nine months ahead of schedule, it goes back to Jobcentre Plus and says, “We have done in three months what the contract says we can do in 12 months. We are on a roll here. We are doing terribly well. Can you give us more money so that in the next nine months we can get more people back to work?” The answer is no because of the spending constraint at the Department. The departmental budget for that cannot be exceeded.

We know this is not an anecdotal example, it happens all the time.

Adam Afriyie (Windsor, Conservative)

Is my hon. Friend suggesting that the policy of the Department for Work and Pensions or the policy of the Treasury could be holding back the speed of roll-out and take-up of ESA?

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

My hon. Friend is there. The Minister is saying—we are all saying it—that existing claimants will only receive the support in the roll-out process before 2008, when ESA kicks off, and after ESAis introduced “as resources allow”. If I have misunderstood the meaning of “as resources allow”, no doubt the Minister will put me right when he replies. It seems that priority will be given to those closest to the labour market. There is nothing wrong with that; they have to be given support to get back to work. The Minister said:

“As a priority, we will focus on those who are newest to incapacity benefit or employment support allowance”.—[Official Report, 10 July 2006; Vol. 448, c. 1093.]

The Green Paper says that the roll out of pathways to existing claimants will happen only “as resources allow”. That is not the same regime as that for new entrants coming on to incapacity benefit in the roll-out period, or new claimants for ESA. If we are wrong about that, I should be grateful if the Minister could point to where he has changed his view about the statement “as resources allow”. I want a constructive debate because the point about existing claimants was not invented by Her Majesty’s Opposition. Nor was it an hallucination on the part of experienced private and voluntary sector providers. It is fact. If there were a new policy that the Government have announced about existing claimants that none of us has heard about, we should be grateful to be put right.

My final question relates to the pathways to work roll-out, which is essential to the proper functioning of the ESA contracting regime under the clause. The contracting regime for ESA will be the same as that for the roll-out to pathways. The Minister said in his letter of 4 July to Members of Parliament that the phase that will begin in October 2007, the start of the roll-out of the pathways service to the remaining 60 per cent. of new IB claimants and repeat IB customers, will be

“mainly via private and voluntary sector partners”.

That will roll on until April 2008.

I do not wish to be known or thought of as a politician who likes dancing on the head of a pin when it comes to language, but will the Minister quantify “mainly” in that context? Does it mean 90 per cent.-plus private and voluntary sector providers getting that business? Is it 60 per cent., or somewhere in between?

Jim Murphy (Minister of State (Work), Department for Work and Pensions; Renfrewshire East, Labour)

Again, I would not wish to test the patience of the Committee by going into every detail of all the substantial questions that the hon. Gentleman asked. They have all been fair, and I acknowledge the legitimate issues that have been raised by others. I am not accusing him of dancing on the head of a pin and, with my size 13 feet, there is no pin big enough to  dance on. I was not about to raise the issue of the 100 per cent. incentivisation on outcomes, although I have had the details of it with me at each sitting. The hon. Gentleman is right; on Second Reading, the shadow Secretary of State for Work and Pensions, the hon. Member for Runnymede and Weybridge, pressed the Government on such matters. He said

“A payment of 30 per cent. of the fee up front is precisely what creates the resource constraint which is constantly referred to as a reason for not rolling out the programmes more quickly. Why not utilise the private and voluntary sectors’ appetite for risk...on a genuine no win, no fee basis...paying them only when they have not only placed someone in work but maintained them in work”.—[Official Report, 24 July 2006; Vol. 449, c.636-7.]

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

The full quote would be nice.

Jim Murphy (Minister of State (Work), Department for Work and Pensions; Renfrewshire East, Labour)

I will read the whole lot if the hon. Gentleman wishes. The quote can be found at column 636 of Hansard. I make the point not to dance on the head of a pin, but to say that we simply do not believe that constructing the contracts in terms of 100 per cent. outcomes is the right way to progress.

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

My hon. Friend the Member for Runnymede and Weybridge was talking about existing claimants. The proposal would enable a much faster and deeper roll-out of pathways to work to include existing claimants. Our proposition is only in relation to existing claimants who would not otherwise get the full support because, as resources allow, it is a constraint. I repeat that we do not dispute the 30 per cent. up-freeze, 70 per cent. outcome model that the Minister proposes for new entrants.

Jim Murphy (Minister of State (Work), Department for Work and Pensions; Renfrewshire East, Labour)

Uncharacteristically, the hon. Gentleman has not grasped the detail of what we seek to achieve. I say that that is uncharacteristic, because I think that all members of the Committee will acknowledge that he has taken great care to understand the detail of the proposals, as they all have. However, I shall respond to the specific points that he raised. The 100 per cent. outcome funding model is not attractive for existing or future customers in terms of the national roll-out of pathways and any future contracting.

In answer to the question about how existing customers will be treated in provider-led pathways, I return to my earlier comments. In the key criteria document, which we will place in the public domain, subject to commercial confidentiality, section 1 asks potential contractors to address the specific needs of and barriers to all customers, so there will be no distinction or creaming. The hon. Gentleman quite fairly raised this issue on behalf of himself and others, and we all share his concern that contracts should be constructed in such a way as to ensure that opportunities for creaming are minimal.

My assertion that we should help the newest IB claimants as a matter of priority is based on the lessons learned and experience gained from pathways, and on the information that the hon. Gentleman rightly gave us about people who are on IB for two years or longer being more likely to die or retire than ever work again. Three quarters of current IB claimants fall into that category. What I am saying is that, at the point of migration, my personal priority would be to move the  newest claimants across first. That is the distinction I am making about supporting the newest claimants over and above anyone else.

We are happy to learn from the experiences gained as pathways is rolled out elsewhere in the country, but the current approach is that the newest claimants and those with dependent children will be first. That is the distinction that I seek to make today and will seek to make in the future and as we migrate people on to ESA, and that is the point that the hon. Gentleman seems not to have grasped. I do not say that in any negative way—

Jeremy Hunt (Shadow Minister (the Disabled), Work & Pensions; South West Surrey, Conservative)

Say it gently.

Jim Murphy (Minister of State (Work), Department for Work and Pensions; Renfrewshire East, Labour)

I will say it gently, rather than Ruffley, of course. I have been making that joke throughout the Committee, but it has taken hon. Members until now to realise.

Current customers on IB are able to access the support available in pathways in 40 per cent. of the country. As it is rolled out—before 2008 and before ESA is in existence—current IB customers will beable to access the support that is available in pathways. The distinction that the hon. Member for BurySt. Edmunds (Mr. Ruffley) reasonably raises as a concern, will not be there, because ESA is the benefit structure, and pathways, when it is on the ground across 100 per cent. of the United Kingdom, will be the enabling—

Natascha Engel (North East Derbyshire, Labour)

I am sorry not to let the Minister finish his sentence. On the issue of access, will he confirm, in light of yesterday’s announcement about the 0800 and 0845 numbers, that new claimants on ESA will use an 0800 number rather than an 0845 number?

Jim Murphy (Minister of State (Work), Department for Work and Pensions; Renfrewshire East, Labour)

My hon. Friend has raised this matter with me pretty doggedly. Earlier this week, we announced that in future all working age benefits information will be accessible through an 0800 number from landlines and telephone boxes, and of course we could examine how to enable that for pay-as-you-go mobiles. It is an important new announcement. That point of contact for Jobcentre Plus and working age benefits will help as regards access. Hon. Members might be interested to know that, when I had conversations with a small group of folk experiencing mental illness, one of the things that frustrated them was the complexity—the repeat phone calls, the additional cost. I do not want to overstate it, but in some instances that complexity was a barrier to accessing the support available, because they had not yet entered the system. I can confirm that, from 2008, ESA claimants will be able to access services through an 0800 number.

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

If it is the case that existing claimants will get the same level of support as new claimants in the roll-out and post 2008 when ESA is up and  running, why do existing claimants only have to volunteer? There is no mandatory requirement on them to attend WFIs.

Jim Murphy (Minister of State (Work), Department for Work and Pensions; Renfrewshire East, Labour)

I will come back to the sentence that I was halfway through, and then I will respond to that point. The national roll-out of pathways will enable progressive support—personal advisers and everything else—to back up the new employment and support allowance from 2008.

In respect of the conditionality that different groups will have to undertake, post 2008, new customers on ESA, depending on whether they are in the support group or the work-related activity group, will have to undertake work-focused interviews and, as we roll it out, work-related activity. Before the migration, existing customers on IB will continue to receive the six work-focused interviews. In different parts of the country, we are piloting to find the right mix of sanctions and conditionality in the pathways roll-out.

It is important to put on the record that we have made the policy decision, through the Green Paper process and elsewhere, that from 2008, as existing customers are migrated across, the conditionality will be in attending work-focused interviews on the basis, crudely put, that they signed up to IB as a certain benefit. We are changing aspects of that benefit, but we do not think that it would be right to force existing customers, at the point of migration to ESA, to undertake work-focused interviews and also work-related activity. The compulsion on work-related activity will be for new customers on ESA from 2008. That is the distinction. We can continue that legitimate debate, but that is what we have settled, as a matter of public policy, about where the burden of conditionality will lie.

I shall make some progress, if I may, on a couple of other matters. In terms of unnecessary administration, the hon. Member for Bury St. Edmunds makes a fair point. In determining what management information and reporting we require from providers—hopefully this will be reflected in people’s assessment of the paperwork that can be provided—we have tried to strike a balance between a genuinely black-box approach, which we discussed before our break, and ensuring proper contract management. He will recognise that it is an important and difficult balancing act to enable flexibility in the private and voluntary sector but also to maintain national standards, for example in condition management, to ensure a degree of quality.

On clause 15, all regulations, safeguards and appeals that apply to the process, such as work-focused interviews, will apply in the same way as they do in Jobcentre Plus. I think that the hon. Member for Inverness, Nairn, Badenoch and Strathspey asked about that.

I hope that I have reassured hon. Members. I had another excellently crafted, detailed speech to read out, and with the Committee’s permission and your indulgence, Mr. Hood, I will allow my noble Friend the Lord Hunt to read it out when the Bill reaches Committee in the House of Lords. That would save an awful lot of people drafting and crafting time.

There is real unanimity about the capacity of the private and voluntary sectors. Clause 15 enables that roll-out to those sectors. It is an important component and building block of the employment and support allowance from 2008.