Welfare Reform — Statement

Part of the debate – in the House of Lords at 3:33 pm on 10th December 2008.

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Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government) 3:33 pm, 10th December 2008

My Lords, with the leave of the House, I shall repeat a Statement made earlier today in the other place by my right honourable friend James Purnell. The Statement is as follows.

"With permission, Mr Speaker, I would like to make a Statement on our White Paper, Raising Expectations and Increasing Support: Reforming Welfare for the Future.

This White Paper will transform lives. We know the support we offer helps people get back to work. It can turn lives around. We want to make sure as many people as possible have this chance. That is why we want virtually everyone claiming benefits to be preparing for or looking for work.

It is a fair deal: more support, in return for higher expectations. It is a deal that has always underpinned the welfare state. As early as 1911, those claiming from the unemployment exchange could be disqualified if they refused a suitable job offer. It is a deal that was extended by the Beveridge report and championed by the 1945 Labour Government.

In 1947 Herbert Morrison said, 'We have no hands or brains to waste, and no resources to fritter away on those who don't contribute to our national effort'. Today, when the national effort is about a global downturn, we can no more afford to waste taxpayers' money on those who play the system than they could then. But most of all we cannot afford to waste a single person's talent.

We inherited a welfare state where less than a third of claimants had to do anything in return for their benefits. Even that third got paltry support to get back in to work, and the rest got nothing. This truly was a welfare state that wasted talent and wasted money, paying for the costs of failure because we were not prepared to invest in the possibility of change. This Government set about putting that right. We taxed the excess profits of the privatised utilities to create the New Deal. We merged the Benefits Agency and the Employment Service to create Jobcentre Plus, so everyone who signed on for benefits also signed up for work. That was the first phase of reform—deepening the obligations to work so there was no fifth option just to stay on benefits.

As we saw those obligations cause youth and long-term unemployment to tumble, we set about the second phase of reform—we widened their scope. We piloted helping those on incapacity benefits with the New Deal for Disabled People and then with the groundbreaking Pathways to Work programme which increases the chances of someone being in work by 25 per cent. So, since this April, we are requiring all new claimants to take part except those with the most severe conditions, and in October we replaced incapacity benefits with the employment and support allowance which focuses on what people can do, not what they cannot. We improved the help for lone parents. With the help of the New Deal for Lone Parents, more than 300,000 more of them are in work. But we wanted more to benefit, so we are requiring lone parents of children between seven and 16 to look for work, and expect that to increase employment and lift 70,000 children out of poverty.

Now the White Paper kicks off the third phase of welfare reform. It is based on a simple idea: that no one should be left behind, and that virtually everyone should be required to take up the support that we know works. It is built on the recommendations of two independent reviews: the Freud and Gregg reviews. This White Paper confirms that we will implement the Freud report in full, including his "invest to save" proposal, where private and voluntary providers invest money to spend on helping more people back in to work, and get paid out of the resulting benefit savings.

Professor Paul Gregg's report was published last week, and this White Paper confirms our support for his vision. It sets out how we will put it into legislation and pilot his recommendations so that nearly all claimants are either preparing for work or looking for work. We will migrate everyone on incapacity benefit on to ESA. Under the new benefit, the poorest and most disabled will get nearly £16 a week extra. Everyone else will get support to manage their conditions and prepare for work. They will be required to attend interviews to develop their plan to do this, and in the pilot areas advisers will be able to require them to implement that plan.

We agree with the Gregg report's recommendation that parents should not be left until their youngest child is seven before they get help to prepare for work. The support we offer for lone parents has been transformed. We pay a £40 per week bonus to any lone parent going back in to work. We pay 80 per cent of childcare costs. We pay for travel costs to the job interviews and for interview clothes if necessary, and when the parent finds work there is up to £300 for emergencies. We can also help people with more serious problems such as depression, debt or drug addiction. Most of all, we have made work pay. A lone parent with one child, working 35 hours a week, will be on at least £304 a week in April 2009, compared to £182 in 1999 when the minimum wage was first introduced. Our goal is simple. We want more parents to benefit from that help in order to help themselves and their children.

That is why conditionality is so important. Only around 5 per cent of IB stock claimants voluntarily took up the support that Pathways offers, and only around one in four lone parents takes up the support offered by their New Deal. Partners in couples where no one is working face even fewer obligations.

The Gregg report found that,

'conditionality backed with a regime of sanctions improves outcomes'.

As a result, the UK enters the downturn with the second lowest unemployment rate in the G7. But the report also found that countries such as Denmark and the Netherlands had lower unemployment and lower child poverty rates than the UK. So, if we want to abolish child poverty and improve social mobility, we need a welfare state that learns from the example of these countries.

This Queen's Speech made it clear that we will reinforce our commitment to ending child poverty through the legislation which the Government will introduce. This White Paper is the other side of the coin, matching higher support with higher expectations.

Some people say that we should be slowing down the pace of welfare reform because of the downturn. The Government believe we should do the opposite. We should not repeat the mistake of the recessions of the 1980s and 1990s, when hundreds of thousands were shuffled on to inactive benefits to keep the unemployment count down, and trapped there without support, abandoning them and scarring their communities.

In contrast, we are investing an extra £1.3 billion in helping people find work. But we will have increasing requirements of people the longer they are out of a job to make sure that they do not fall out of touch with the world of work. After a year, everyone will be allocated to a private or voluntary provider and expected to do four weeks' full-time activity. After two years, we will pilot requiring people to work full time for their benefit.

This White Paper will also support children whose parents' relationship has broken down. We will bring forward legislation so that it becomes the default option for both parents to register the birth of their child. And we will fully disregard child maintenance when working out income-related benefits from April 2010 so that children can take full advantage of the money provided for their upbringing.

The White Paper also makes clear our intention to apply new benefit rules for problem heroin and crack users. Instead of receiving jobseeker's allowance or employment and support allowance, crack and heroin users will receive a treatment allowance, alongside an obligation that they address their problem.

But there needs to be help for people to find and keep work as well as responsibilities to look for work. So we will double the Access to Work budget to allow more people than ever before the support they need to do their jobs. And because we recognise that disabled people are the experts in their own lives, we will legislate for disabled people to have the right to exercise choice and control over support they receive from the state. This 'right to control' will be a major step toward achieving disability equality by 2025—a transformation in the rights of disabled people.

These reforms point the way to a fairer society where children do not grow up in poverty, where disabled people enjoy real equality and everyone is given real help to overcome the barriers to achieving their full potential. We are looking after taxpayers' money but looking after the future, too, by making sure we do not waste anyone's talent.

I commend this Statement to the House".

My Lords, that concludes the Statement.