Welfare Reform Bill — Report (2nd Day) (Continued)

– in the House of Lords at 8:45 pm on 14th December 2011.

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Clause 12 : Other particular needs or circumstances

Amendment 21A

Moved by Baroness Meacher

21A: Clause 12, page 5, line 38, at end insert-

"(d) the fact that the claimant is a severely disabled person and no one is in receipt of a carers allowance or a carers premium for looking after them."

Photo of Baroness Meacher Baroness Meacher Crossbench 8:54 pm, 14th December 2011

My Lords, Amendment 21A seeks to provide for an addition within universal credit that is similar to the severe disability premium. The addition would be paid to those living alone, although it would not be restricted to that group. It would not be paid to a claimant with a carer who receives either the carer's allowance or the carer's premium. The point of the amendment is to provide for severely disabled people who do not have a carer, and for those who have a carer but who cannot qualify for carer's allowance because, for example, the carer is a student or a child. To achieve this result on a cost-neutral basis would require the level of benefit for the support group to fall slightly. The amendment, however, would ensure a fairer outcome than the Bill achieves.

The severe disability premium, which the Bill abolishes, aims to meet the extra costs experienced by disabled people living alone and is currently worth £53.65 per week for a single person. It helps people who are on a low income, whether in or out of work, who have a severe level of disability and who have no one living with them who can help them. It is well recognised that people in this position face much higher costs than other disabled people with a comparable disability.

I recognise that the Government plan to abolish the severe disability premium, but that plan is not designed to save money. The Government will instead transfer the money to fund an enhancement of the support group benefits. I understand, having just had a brief conversation with the Minister, that the increase will be something in the order of £44. However, the loss of the SDP will also apply to people who live alone and who move into the support group after these changes occur, so this very disadvantaged group will in fact lose out-although by something in the order of £8 a week, as I understand it. The support group people will lose the £53.65 per week, minus the uplift to support group benefits in the order of £44.

The reason why the transfer of funds from the severe disability premium to the support group might not be fair and efficient is that the costs of disability do not correlate well with the level of impairment, which is what will determine whether a person qualifies for the support group. The recent Demos/Scope report, Counting the Cost, based on a survey of 845 disabled people, found little correlation between the costs of disability for an individual and their level of impairment. It is quite difficult for someone such as me, who is not disabled, to understand quite how that works in practice but maybe others in the Chamber can illuminate that for us.

The relevant point here is that the severe disability premium targets help where it is most needed-on the additional costs that people have to pay because of their disability. Because this amendment will ensure that the SDP-equivalent benefit is payable only to those who receive either the middle or the highest rate of the care component of DLA, only those with frequent care needs throughout the day will qualify. It should be said that these care needs have to be for personal care rather than for the more mundane sort of activities such as shopping or housework.

The groups who would benefit from this amendment include those who become eligible for the support group after the introduction of universal credit but who live on their own and do not have a carer. These groups will include new cancer sufferers, for example, and those with a new and severe impairment. Without this amendment that group will lose the £53.65, as I have said, although they will recoup a fair proportion of that through the higher support group payment. Another group that would benefit from the amendment are those who are entitled to the middle rate of the care component of DLA but who are in the work-related group, or perhaps even found fit for work.

Going to work costs money, of course, particularly for disabled people who might not be able to use public transport alone, for example. Under the current system, a severely visually impaired person living on their own and earning £100 a week will have a disposable income of £188 per week, after housing costs have been paid, plus their disability allowance. Under universal credit the same person will, as I understand it, be little better off than someone without an impairment. That must apply to those who do not actually make the support group assessment. If you are assessed as not having a sufficient impairment to justify the support group benefit, obviously you are in a very different situation.

Young carers will also benefit. Severe disability premium has played an essential role in supporting young carers. If a lone parent is severely disabled and their child acts as a carer, the child cannot claim carer's allowance but the family can benefit from the extra financial help offered by the SDP payment. As I suggested at the beginning, this amendment is not designed to increase costs but rather to ensure that the money is not transferred from very needy groups to others whose impairments might be more severe but whose financial needs might be less. The issue is that these are different assessments, and come out with different results.

The Government strongly support the careful targeting of precious taxpayers' money. This amendment seeks to support the Government's objective, and to improve the fulfilment of that objective more effectively than the Bill currently does. I should say that this is a probing amendment, but I hope the Minister will understand the problem that I am raising and will consider a way forward. I beg to move.

Photo of Baroness Grey-Thompson Baroness Grey-Thompson Crossbench 9:00 pm, 14th December 2011

My Lords, I rise to support the amendment of the noble Baroness, Lady Meacher, and to look specifically at the removal of the severe disability premium and the effect that it will have on young carers who are looking after a lone parent who is disabled or two parents who are both disabled.

The severe disability premium is really important in supporting young carers. Children who are still in full-time education cannot claim carer's allowance, but many play an invaluable role in supporting disabled parents. However, if there is no other adult in the household, and no one claiming carer's allowance, the family can benefit from the extra financial help offered by the SDP.

The abolition of the SDP will cost families with a young carer up to £55.30 per week, which is £2,876 per year. This cost could be equivalent to 20 per cent of household income after housing costs. The Department for Work and Pensions estimates that around 25,000 lone parents are in receipt of severe disability premium. That is 25,000 families with a disabled adult, in receipt of the mid or high-rate care component of DLA, but with no adult either in the household or receiving carer's allowance to look after them, and with children in the household.

Many of these children are likely to be doing a substantial amount of caring for the parent, but this measure could force them to have to take on additional caring and household responsibilities because the family just cannot afford to pay for help. This is likely to put additional pressures on their children to make up for this loss of additional care. This is happening at time when support services for young carers are being cut back, according to a recent survey by Action for Children. The charity surveyed 23 of its young carer projects between May and June this year. Findings reveal that almost half of services questioned reported a rise in the number of children on waiting lists and had seen an increase in the needs of young carers.

The Children's Society, which works with young carers, gave the following example of the pressure that some of these children face and why they should not be pushed into even tighter financial circumstances. Kelly's mum, Jenny, became ill about 10 years ago when she was only 8 years old. An aggressive illness hospitalised Jenny, and has since entirely paralysed her down one side. After staying with relatives for several months while her mum was in hospital, Kelly was able to move back in to live with her mum from the age of nine. Since then she has cared for her mum non-stop. She makes meals and does the washing and cleaning. She said early on that she could only make simple dinners such as scrambled eggs on toast, but she has learnt quickly, and she has had to. She does not do it alone; she has a rota of professional carers who come to help out day to day, but they cannot do everything, and they do not stay overnight.

About three years ago, the year before Kelly was due to sit her GCSEs, Jenny became extremely ill for a while. Kelly had to get up around four times a night to help her out. Naturally, she was exhausted, dragging herself to bed as soon as she got in from school. Jenny currently receives the severe disability premium, meaning that she and Kelly are just one of 25,000 families with a disabled single parent. They will presumably be covered by transitional protection, unless Jenny's re-assessment for ESA from IB is viewed as a change of circumstances. It would be useful if the Minister would be able to clarify that. However, families who find themselves in a similar position after the measure is brought in are likely to be left £55 a week worse off as a result of losing this premium.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

My Lords, we should be grateful to the noble Baronesses, Lady Meacher and Lady Grey-Thompson, for introducing this important issue on which we have all received representations. Quite a lot of numbers have been bandied around with particular reference to benefits, and I will be interested in the Minister's response. As I understand it, in the current system the severe disability premium is paid to people, whether in or out of work, who receive at least middle-rate care, live on their own and do not have a carer. It is payable only as a means-tested benefit so it supports those with a severe disability who have a low income and face many extra costs as a result of living alone.

Alongside that is the disability element of the working tax credit, so under the present system someone who is entitled to DLA or has recently been receiving a long-term sickness benefit would be entitled to the disability element of working tax credit if they worked for at least 16 hours a week. That is where we start from. As we have heard, though, the proposed support for adults in the universal credit depends upon the gateway of the WCA. This is what will drive the new arrangements. The briefing that we have had says that only those with a level of impairment sufficient to be found not fit for work will receive any extra help. I am not totally clear whether in that context "not fit for work" means someone who would only be going to the support group or someone who was going to the WRAG as well. I think the Minister is shaking his head, or rather he is nodding to say that only those who in the support group would receive that.

That creates the difficulties that have been spoken about. The changes would mean that someone who could self-propel a wheelchair 50 metres or was registered blind but could undertake a journey unaccompanied could be found fit for work or, presumably, for work-related activity. Of course no one would want to claim that such individuals could not be encouraged to work if they wanted to, but that does not mean that they do not face considerable disadvantage and cost compared with someone with no impairment. So if they are out of work but found fit for work they face the same conditionality as everyone else, but if they are in work, because the gateway for extra support within the universal credit is the WCA, someone who is found fit for work will receive no extra support in work. The juxtaposition of the present and the future is concerning.

I am sure that the Minister will have seen the briefing that we have had. It says that the following are some of the ways in which different groups will be affected. Those who are terminally ill or who develop a severe level of impairment and live on their own could be disadvantaged to a significant degree-by something like £50 a week. Someone who is entitled to a middle rate of the care component but found fit for work-for example, someone who is severely visually impaired-will in many cases be found fit for work. However, if they are living on their own and doing some work, they are likely to have considerable extra costs that are not met by the DLA or by PIP when it comes along. Currently, most would be entitled to at least the middle rate of the DLA care component and therefore the SDP.

Under the current system, a severely visually impaired person in the work-related activity group and living on their own earning £100 a week will be left with a disposable income of £188 a week plus their DLA, after housing costs are paid. Under the universal credit, the same person will be left with a disposable income of less than £100 a week plus whatever PIP is payable after housing costs. There are plenty of other examples and we have heard some of them today from the noble Baronesses. These sorts of disparities are quite disturbing. The Minister might say that these are quite specific and narrow examples of the full spectrum of people who are affected by this, but a serious issue has been raised here and we need to understand fully how people are being protected in comparison with the current system under the new world of the universal credit.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, this amendment seeks to put an additional element into the amount of universal credit that is payable for those who are severely disabled and who have no one receiving either carer's allowance or a carer's premium for looking after them. In essence it seeks to recreate the current severe disability premium within universal credit. As such it would involve a significant increase in cost compared with the Government's plans. That increase stands at £400 million, unless there were other readjustments. However, let us just take it at face value. At face value, it is unaffordable.

On Monday the House approved the Government's plans to simplify the disability-related additions. Instead of the seven different components within the current system of benefits and tax credits for adults, and two further rates in child tax credits for disabled children, universal credit will just have two rates for both adults and children. By restructuring the rates in this way, we are not looking to make any savings. We are redistributing around £800 million of current spend without returning any savings at all to the Exchequer. The full amount will be reinvested by increasing the higher rate for more severely disabled people. In our policy briefing note we made it clear that there would be some phasing. I know that I owe the noble Lord, Lord McKenzie, a letter on that matter.

Once resources became fully available, we expected to be able to provide a higher rate, at around £77 a week. This is significantly higher than the current £32.35 payable as the support component within ESA: £44.65, to give the noble Baroness, Lady Meacher, the exact figure she was seeking. It will provide a much more meaningful amount to severely disabled people than the current patchwork of premiums, which gives some people more than others and makes it difficult for people to understand and obtain their full entitlement. I should make it clear that one of the features of the universal credit as a whole is that we are expecting a substantial amount of the gains to the poorer people to come from much better take-up. The simplicity of a system with automatic provision of everything that people are entitled to will mean that more people in this category are likely to be recipients and get what they deserve.

Photo of Baroness Meacher Baroness Meacher Crossbench

It would be helpful if the Minister could explain whether there is any provision in the new system for child carers, where the mother might not be in the support group. You have to be very disabled, as I understand it, to be in the support group. Yet a mother might need her child to do an awful lot in the home: shopping and cooking and all the rest of it. Is there any provision for her?

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, I will come to that. What we are dealing with here is rather interesting, as we move from one system to the universal credit. We are dealing with the current system as it exists on paper, we are dealing with where we want to go in the universal credit, and then we are dealing with something in the middle, which is how things actually work on the ground. This is one of the areas in which things are working on the ground as they are not really meant to. It is simply not the role of the severe disability premium to provide money for young carers. Clearly young carers could be affected if they are providing support for a disabled parent who receives the severe disability premium. Under the current system, the youngster gets it because there is no adult in the house looking after them and they are not allowed to receive the carer's premium. It is one of those things that has unintentionally fallen through the cracks. It was simply not intended as a support for young carers; it was designed to support severely disabled people who live alone.

As I said in Committee, the needs of young carers cannot be dealt with effectively through the social security system. The noble Baroness, Lady Grey-Thompson, gave us a very moving example. One could not help but be touched by that story. The Government's carers' strategy, published last year, made it clear that support for young carers should focus on achieving their educational and employment potential, and that they should have the same opportunities as other young people, without assuming that they should always be a carer. In achieving this aim, the primary responsibility for supporting young carers must lie with local authorities and social services, not with the social security system. That is the right place for it to be.

The other point that I need to make, going back to the main thrust, is that it is right to target additional support for severely disabled people in universal credit on cases where the work capability assessment has established that there is limited capability for work and work-related activity-that is, on severely disabled people who have the least opportunity to work. Noble Lords are concerned that some disabled people who currently get additional premiums will in future get the lower addition in universal credit, equivalent to the work-related activity component in ESA. That is why we are providing transitional protection for those claimants with existing premiums whose overall universal credit entitlement would be less than under the old system as a direct result of moving to universal credit, provided their circumstances stay the same. In response to the question from the noble Baroness, Lady Grey-Thompson, on defining transitional protection, we are still working on pinning that down with precision. We are also looking at the interaction between ESA migration and the move to universal credit.

The structure that we have is a means-tested universal credit. We have deliberately kept the extra costs of disability outside, within the DLA and to be within PIP. That is the structure and it is not means-tested for the deliberate reason that the extra costs of disability are there regardless of whether you are in work. Regardless of your level of income, you have extra costs as a result of your disability, so it is structured in that particular way.

In conclusion, the amendment would return us to the complexity of the existing system and would entail an additional cost of around £400 million, unless there were other changes to the amendment. I can assure noble Lords, from the bottom of my heart and with scars on my back, that the £400 million is simply unaffordable right now. Therefore, I urge the noble Baroness to withdraw the amendment.

Photo of Baroness Meacher Baroness Meacher Crossbench 9:15 pm, 14th December 2011

I thank the Minister very much for his response. Certainly, the idea was that this amendment should be cost-neutral and a redistribution between the support group benefits and this benefit. There will obviously be significant losers in this; child carers will certainly be among them. I do not envisage local authorities picking up the tab in the years ahead. There are very real concerns but, at this time of night, I must accept the Minister's response and withdraw the amendment.

Amendment 21A withdrawn.

Clause 13 : Work-related requirements: introductory

Amendment 22 not moved.

Clause 15 : Work-focused interview requirement

Amendment 23

Moved by Baroness Turner of Camden

23: Clause 15, page 7, line 13, at end insert "but a claimant unable to comply with the requirement to attend for interview may provide evidence to the effect from a health care professional as defined by section 16(6)"

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

My Lords, this is a very short amendment which I came to as I leafed through the Bill before writing any amendments down. It is an attempt to amend and make clear what is meant by work-focused interview requirement. The Bill states:

"The Secretary of State may specify how, when and where a work-focused interview is to take place".

We must bear in mind that we may be dealing with a number of people who are not terribly well or who are not very well clued up about what arrangements are necessary. There would, presumably, be some sort of sanction if the claimant did not turn up. I have therefore drafted an amendment which enables a claimant who cannot comply with the requirement to attend a work-focused interview to provide medical evidence to say that, on that occasion, they are not able to turn up. In that way, they would avoid any sort of sanction which might exist. I hope that this, or something like it, will be acceptable to the Minister. As we are dealing with people who are often not very well, I am trying to make it clear that there is no sanction if they simply cannot make it.

Photo of Baroness Drake Baroness Drake Labour

My Lords, I have Amendments 23A and 24A in this group. Amendment 23A requires the Government to have regard to the interests of the child when operating work conditionality and work availability requirements under universal credit. Work availability applies not only to those seeking work but can set requirements on those in work to increase their hours of work or to seek higher paid work. This conditionality has acquired greater significance because the Government will expect people with children aged five and upwards to be subject to full work requirements and are extending full work requirements to couples with children.

I do not seek to make a speech about what the needs of the child are and I do not seek to debate the detail of how work availability requirements will operate, though I have my opinions. What I do seek is to place a requirement on the Government to implement and operate work availability requirements with reference to the interests of the child of any carer subject to work conditionality. Universal credit imports a novel and extensive level of discretion over a sizeable section of the working-age population and powers to follow through with sanctions. However, a policy that is premised on the belief that parents and their attitude to benefit or responsibility are better if they work has to be balanced by the need to protect the interests of the child of the carer, subject to such conditionality.

It is not a question of whether we do or do not accept the Minister's assurances; I am sure he gives them in good faith. But those assurances are not of themselves sufficient. If the Government want to take, for the Secretary of State, a powerful range of discretions necessary to apply work conditionality, which even the Minister admits is not fully defined or refined operationally, then Parliament should require the Secretary of State to exercise those discretions with reference to the needs of the child whose care will be impacted by the application of that discretion.

In response to concerns on this matter expressed in Committee, the Minister said:

"Jobcentre Plus does not dictate to parents the type of childcare or which provider they should use".

He added:

"Advisers will continue to have an important role in both challenging and supporting parents who may have preconceived ideas about childcare".

Furthermore, he said:

"Where the adviser considers that the parent has not taken reasonable steps to identify or access appropriate childcare they will refer the question to a decision-maker. The sanction will only be imposed if the claimant does not have a good reason".-[Official Report, 26/10/11; col. GC 326-327.]

He had earlier said that,

"in due course we will provide more detailed guidance on how the system will operate in practice".-[Official Report, 26/10/11; col. GC 296.]

That is a lot of guidance, a lot of discretion and a lot of work still to do, even though some reassurances are given. Currently, there is also a lack of clarity as to what would or would not be a good reason for a carer not to have access to childcare.

The amendment does not seek to answer those questions but seeks to insert in the Bill a requirement that the work availability requirements have to operate by reference to the interests of the child or any carer subject to them. Amendment 24A seeks to exempt family and friends, and kinship carers, from the conditionality requirements to seek work for a period of 12 months when they take on a child or children who cannot live with their parents because of parental death, drug or alcohol abuse, serious illness or imprisonment-most of whom would otherwise end up in local authority care. These carers are doing an enormous service, both to the vulnerable children and the state. Such carers often step in in extremely difficult circumstances, often at short notice, and voluntarily embrace responsibility to protect the child. Such children are covered by an order under one of the various provisions laid out in this amendment.

It is important to remind ourselves that we are talking of a population of some 200,000-plus highly vulnerable children who are being raised by grandparents, older siblings, other family members or friends. If just 5 per cent of the children currently in family or friends' care were in independent foster care, this could add £500 million a year to the cost of providing for children in care. A number of provisions in the Bill could unintentionally disadvantage family and friends carers, and one certainly wants to avoid the risk of children needlessly being taken into care. These include not only the conditionality requirements I am referring to but other matters such as the benefit cap, to which I hope to return.

However, it is important to recognise that three in 10 family and friend carers give up work when a child moves in, and a similar number reduce their hours, often because they are told to do so by a social worker because of a trauma that the child has experienced that has led to them being taken into the family and kinship care. Many of the social workers feel that the carers have to do this in order to meet the child's needs. Someone who adopts a child is entitled to adoption leave, but family and friends carers have no such entitlement to help them to settle a child-during what is often a very difficult period when they first arrive-and cope with the upheavals in their lives. They often have to take on these children without notice and often to avoid the children being taken into care.

In Committee, an amendment was tabled to give working-age family and friend carers exemption from conditionality requirements for one year after a child moves in. I recognise that I may not have the influencing powers of my noble friend Lady Hollis of Heigham, but it is very much welcome that in Committee the Minister made a very intelligent observation when he recognised the enormous contribution that family and friends carers make to society and children, and that it makes good sense to support them. I quote the noble Lord, who said:

"I am absolutely convinced that this is a key area and am currently looking closely at ensuring that this group is treated appropriately under the universal credit ... However, we recognise that clarity of treatment and a clear legislative exemption could be of value".-[Hansard, 26/10/11; col. 338.]

The Minister concluded:

"I am on the case".-[Hansard, 26/10/11; col. 341.]

I am delighted by that. I hope that he is still on the case. I urge him to translate his warm words into action by supporting the amendment.

If the Minister is unwilling to accept the amendment, will he instead be willing to commit to introducing protection for kinship carers through regulations? I specifically ask him commit to include in regulations that there should be an exemption for conditionality requirements for family and friends carers for one year after taking on the care of a child who is not their own; and that family and friends carers who are required by the local authority to give up work who reduce their hours to look after such a child or children will be entitled to have their jobseeking requirements switched off or constrained for the duration of that requirement.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government) 9:30 pm, 14th December 2011

My Lords, I speak initially to Amendment 26. The amendment takes us into the as-yet uncharted waters of in-work conditionality-waters into which my noble friend Lady Drake has at least dipped her toe.

The Bill introduces for the first time the requirement on claimants who already have a job to take action to secure more paid or better paid work. We understand the need, within a system that has no clear distinction between in-work and out-of-work benefits, to have some mechanism to ensure that people do not simply reduce their hours of work to take advantage of the more generous support for lower-hours jobs that universal credit provides, but there are a host of unanswered questions about how in-work conditionality will work. The amendment is intended to ensure that Parliament has an opportunity to review the arrangements once they have come into force.

We debated these questions at some length in Committee, and the Minister's response was basically, "We are thinking about this", with some indication that he would not be in a huge hurry to introduce this element of the Bill. The most fundamental of those questions is: what exactly is taken to be work in the context of universal credit? When will the state judge that someone is doing enough to be free of the requirement to report on their activity to the jobcentre? Although we have some indication that single people with no caring responsibility or health issues will be expected to work for 35 hours a week, and couples in the same situation for 70 hours, we have no idea what flexibility will be given to those whose circumstances mean that that is not reasonable.

For example, what will happen if one partner of a couple decides to reduce their hours-perhaps to look after children? The way that the incentives are structured within universal credit may encourage many second earners to do just that. Will they then face a jobcentre penalty for not engaging in sufficient work?

It is also unclear exactly how the in-work conditionality provisions will impact on the employment relationship. How will it impact on the likelihood of employers offering somebody a part-time job if they know that the jobcentre will be encouraging them to leave their job for one with longer hours? We know that, despite today's employment figures, some unemployment was avoided at the start of the recession due to employers reducing people's working hours rather than making redundancies. Would they have been penalised for reducing hours in that way under the Bill? The in-work conditionality proposals will bring many more people into the orbit of Jobcentre Plus at a time when the agency is being asked to make challenging efficiency savings. Can the Minister outline what estimate he has made of the additional resource that will be needed to deliver conditionality for in-work claimants and whether he expects to be able to secure that?

In Committee we discussed the position of the work programme providers under these provisions. The Minister assured us that the fact that work programme providers must get somebody into work for 16 hours and keep them there for two years was not in conflict with the aim of this part of the Bill to ensure that somebody leaves a 16-hour job and goes into one that either pays more or has more hours of work each week. A review of this provision after a year will enable us to see whether the Minister's confidence is justified.

Finally, we have had no equality impact assessment on this proposal. A review would enable us to assess its impact on different groups. As the proposal intends to assess whether somebody is fulfilling their in-work conditionality requirements by looking at how much they are earning rather than how many hours they are working, for those who earn more these requirements will obviously be easier to meet. I hardly need remind noble Lords of the substantial pay penalties faced by women, by people with disabilities and by certain ethnic groups. We will need to look carefully at whether people within these groups are significantly disadvantaged by these proposals.

This amendment in effect accepts the assurances that the Minister gave us in Committee that these matters are under consideration and simply asks him to report back to Parliament on how the proposals are operating in practice. I am sure that he will want to accept it, if only in order to be able to demonstrate that, as we all hope, this policy is achieving its intended aim of supporting people to move on in work.

I move on briefly to the contributions of my two colleagues. As well as talking about the very important issue of the focus on children being the driver of these provisions, the noble Baroness, Lady Drake, referred again to kinship carers. The amendment that she spoke to seeks to add kinship carers, carefully defined, and limited to the first year in which they are caring for a child, to the existing list of exemptions. When we debated this issue in Committee, my noble friend Lady Hayter said that she was able to rip up her speech given the willingness of the Minister to recognise this issue, suggesting that he was looking to address it. My noble friend, who has provided me with the text this evening, says that she is perfectly happy to rip up another one if the Minister can let us know the results of his deliberations and what these have been.

I will not repeat the powerful case made by my noble friend Lady Drake. As she emphasised, kinship carers can play a vitally important role, offering children in extremely vulnerable situations some family continuity and, in doing so, saving the state the considerable costs of taking a child into care-some £40,000 a year in independent foster care. The Who Cares? Trust has highlighted the difficult experiences of many children cared for by their parents, estimating that one-quarter will have lived with abuse, neglect and violence and one in four will have been deserted by their parents, often after drug and alcohol abuse. Sixteen per cent go to their grandparents after family breakdown, one in 10 after a parent's illness-often mental illness-and one in 10 after the death of a parent.

Although the existing conditionality arrangements provide some protection to those caring for young children, with no conditionality until the child is one, and then work-focused interviews until the child is five, many of the children who move to live with kinship carers will be older than five, as older children-indeed, those over 12 years old-make up a higher proportion of those in kinship care than in the wider population. Despite not being babies, for obvious reasons they need pretty much full-time attention and care. They will be new family members when they arrive, yet, not being adopted, will have no equivalent recognition. They also usually arrive after some sort of trauma and are therefore likely to take time to settle down. The amendment my noble friend spoke to simply seeks to provide for those who take on the care of a related child a year in which they will not be asked to look for work. This will give those considering taking on this huge task some certainty about their income and security during this first year and a chance to focus on their care for the child. A year's exemption from looking for work would give them time to manage the upheaval in their lives before starting to juggle work and care.

Our concern, expressed by my noble friend, is that, without this amendment, the Bill risks undermining families' capacity to care for children and increases the likelihood of those arrangements breaking down. Unlike with formal adoption, there is no adjustment period for family carers, despite the needs of the children. Furthermore, carers often have to give up work as a condition of a placement. We are aware that, as my noble friend said, the Minister is sympathetic to this case and we look forward to hearing his response.

Finally, I should like to refer briefly to the contribution of my noble friend Lady Turner of Camden in relation to Amendment 23. As she explained, this amendment seeks to ensure that evidence from a health professional will be accepted as good reason for failing to attend a work-focused interview-a requirement that will, under the Bill, primarily be placed on lone parents with children aged between one and three. We hope that this will be a simple amendment to accept, as my noble friend has explained. In Committee, the Minister told us:

"We will not sanction claimants with limited capability for work, or those who have learning difficulties or mental health conditions, without first making every effort to contact them, their carer or healthcare professional to ensure that they have fully understood the requirement placed on them and had no good reason for failing to meet it".-[Official Report, 1/11/11; col. GC 417.]

We hope that the Minister will be able to extend this to include those who provide their adviser with evidence that they have a health-related reason for failing to comply with the work-related requirement.

This amendment also enables us briefly to revisit the question that arose in Committee about the relationship between Jobcentre Plus advisers, Atos assessors and the healthcare professionals who deal with a claimant. It also enables us to ask the Minister again to clarify exactly what information is available to Jobcentre Plus and work programme advisers, who have to decide on the type of requirements to which the claimant should be subject. Will they have access to information about a claimant's health and capability for work that has been uncovered during the assessment phase for employment and support allowance?

We want this whole scheme to work to help those who can be helped but not to waste advisers' time, nor to bring the system into disrepute by demanding inappropriate behaviours of claimants where evidence of their health needs exists within the system. Therefore, we hope that the Government will feel able to accept my noble friend's amendment.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, this group of amendments contains a number of measures that align with our intentions, so we are apparently in agreement. Indeed, many are in line with current practice and we intend to carry them forward into universal credit. I shall take each of them in turn.

With regard to Amendment 23, we recognise that there may be medical reasons that prevent a claimant attending a work-focused interview. We do not need expressly to legislate for this to be recognised. If a claimant gives advance notice that he will be unable to make an appointment and has good reason for this, the interview can be rearranged. If a claimant fails to attend an interview, he will have a reasonable period of time to explain why. As part of that explanation, the claimant will be able to provide any relevant information, including any medical evidence. If the claimant has a good reason, then obviously no sanction will be imposed. This is essentially what happens already and it will continue.

I turn to Amendment 23A in the name of the noble Baroness, Lady Drake. I appreciate the sentiment behind the amendment and agree that it is important to balance the requirements placed on claimants with any childcare responsibilities they may have. Therefore, legislation will provide clear safeguards, ensuring that no claimant who is responsible for a child under five can be made to look for or take a job, and no claimant with a child under 13 will be required to look for a job that does not fit with their child's school hours, including a reasonable allowance for travel time.

Advisers will have flexibility to tailor the requirements placed on claimants-including allowing limitations to the work that claimants must search and be available for-to take account of their circumstances and the needs of any children for whom they are responsible. Where the child is over 13, advisers will continue to have discretion to permit the claimant to limit their availability if the child's needs make it necessary. We do not intend to make blanket rules for this age group in legislation, as the children's maturity and need for parental supervision will vary widely. Therefore, although we agree with the spirit behind the amendment, we do not think it necessary.

On Amendment 25, we are now making provisions in the jobseeker's allowance on domestic violence. The regulations giving effect to this policy will be subject to affirmative debate early next year as parliamentary time allows. The changes will take effect soon afterwards. The draft jobseeker's regulations will provide that where a claimant has left the abuser because of violence or the threat of domestic violence, they will be treated as complying. This will be automatic whenever the claimant provides evidence of violence or the threat of violence and may be extended through existing domestic emergency provisions to up to 17 weeks, or to 24 weeks for claimants with childcare responsibilities. The amendment would allow an exemption from work-related requirements only while the threat continues. Our proposal recognises that claimants may need unconditional support for a period after the actual threat has receded.

Photo of Baroness Lister of Burtersett Baroness Lister of Burtersett Labour 9:45 pm, 14th December 2011

We are very pleased to hear that. Can the noble Lord tell us what definition of domestic violence the Government have in mind? They are consulting at present on the question of domestic violence and I wonder what the implications are for this provision.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

I am going to have to write with a precise definition of domestic violence and the threat of domestic violence.

Turning to Amendment 26, we are all too well aware that in-work conditionality is a difficult and contentious area. In this debate and in Committee noble Lords raised a number of concerns and questions. I think that I have been open enough to admit that I do not have all of the answers to those questions right now, but I hope that I can provide some real reassurance by describing our planned approach. We are going to take some time to get this right, because it is a new area. I said in Committee that there may be a role for piloting and I can now be much clearer on that.

We have decided that when universal credit is launched we will not be imposing conditionality on claimants with income or earnings which would, broadly speaking, have taken them over the cut-off point for the current out-of-work benefits. So we are effectively continuing with the current system. Rather than a review, our approach will be to pilot the application of conditionality on claimants whose income is above this level. We will want to gather views on the sort of approaches that could be tested and I commit to publishing the details of these pilots. We will then reflect on the results of that process before adopting any national approach.

Finally, turning to Amendment 24A, I have listened very carefully to the feelings of noble Lords on this and again let me say that we are of one mind on this matter. Work is already underway, as I said in Committee, around how kinship carers should be treated for conditionality purposes. I agree that kinship carers who need a period of adjustment should be given time to return to a stable footing before being expected to meet work-related requirements and juggle conditionality with new caring responsibilities. Advisers will have discretion to lift temporarily the requirements on individual claimants where a child's needs are such that the claimant must be able to provide full-time care. I repeat what I said in Committee. I recognise the potential for value and clarity in a legislative exemption from conditionality and we are carefully considering options for further provisions. The Bill provides scope for flexibility in this area and we have powers to make regulations as necessary. These things take time, but I can assure noble Lords that work is progressing. I am on this case. We are currently talking to the Department for Education-

Photo of Baroness Drake Baroness Drake Labour

I shall not miss any opportunity on this because I know that this important community will hang on the Minister's every word-and I say that in the warmest sense. The Minister said that advisers would have the discretion to lift the conditionality and, at the same time, he repeated the reference to the value and clarity of legislation. If I may push him, is he saying that guidance and discretion around guidance are not of themselves sufficient to address this community?

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

I think what I am saying is that you can take away the discretionary elements of support for this community, and that is already in the bag. I would like to add more to that, and that is what I mean when I say that there is value in legislative exemption. Then I move on to say that I am working on it. I am seeing some noble Lords who are familiar with government having a good giggle because they know exactly what is happening and they giggle with reality.

The way I have to express this-again, some noble Lords will recognise this better than others-is that doing more for this group may come at a cost, and we are operating in difficult financial times. I reiterate that I have a real interest in this area, and when I am able to give firm answers, I will do so. This is a matter with which we will deal in regulations rather than in primary legislation. On that basis I urge the noble Baroness not to press her amendment.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

My Lords, I thank the Minister for his response to my amendment on the requirement to attend work-focused interviews and for his promises. As for domestic violence, I did not get around to speaking to my amendment mainly because it was grouped with a number of other amendments and was not called. However, I am very obliged to the Minister for what he said about domestic violence. I beg leave to withdraw the amendment.

Amendment 23 withdrawn.

Clause 18 : Work availability requirement

Amendment 23A not moved.

Clause 19 : Claimants subject to no work-related requirements

Amendment 24

Moved by Baroness Morgan of Drefelin

24: Clause 19, page 9, line 16, at end insert-

"(e) the claimant is receiving specified treatment for cancer, is recovering from that treatment or is likely to receive such treatment within 6 months"

Photo of Baroness Morgan of Drefelin Baroness Morgan of Drefelin Crossbench

I shall speak also to Amendment 47. First, I want to declare an interest as chief executive of Breast Cancer Campaign. I am grateful to have the opportunity to speak to these amendments that aim to ensure that cancer patients awaiting, receiving or recovering from chemotherapy or radiotherapy will automatically qualify for the employment and support allowance support group without having to undergo an assessment. I have to admit to being disappointed that we have had to come to the point where it is necessary even to lay these amendments now. This is a debate that we should have had in Committee, but we were unable to do so because at the time the outcome of the Harrington review and the Government's response to it were not known. That is why we are having what is probably a Committee stage debate now-although obviously within the correct procedure for Report.

While I am sure the Minister will be able to highlight technical flaws in the wording of the amendments, I hope that the discussion today on these amendments will focus on the intention behind them, which I believe is clear. I am sure that if there are technical flaws that need to be addressed, they can be looked at for Third Reading.

Over several months, we have heard a number of seemingly very reassuring statements from the Government in relation to employment support allowance and supporting people with cancer. I note, for example, the response by Chris Grayling MP, the Minister for Employment, on 18 October to a Written Question, in which he said:

"Ministers have had a number of discussions with Macmillan Cancer Support since the spending review announcement, as we are determined that the benefits system should support people who are diagnosed with cancer in the most sensitive, fair and appropriate way. The Department has no interest in making it harder for those who cannot work to claim benefits and is committed to an ongoing process of review and improvement".-[Hansard, Commons, 18/10/11; col. 930W.]

That was a very reassuring statement.

Unfortunately, the recent publication of the Harrington review and the Government's response to it resulted in anxiety across the cancer community. I have listened to the views expressed by organisations such as Macmillan Cancer Support and others and am sorry to say that I am not reassured by the news that the Government are considering withdrawing automatic qualification for the support group of ESA to those on non-oral chemotherapy-commonly referred to as IV chemotherapy-instead of extending the exemption to cancer patients receiving oral chemotherapy. In effect, that is going in exactly the opposite direction of that pointed to by the Minister for Employment.

We know that Macmillan Cancer Support undertook an expert consultation on this matter for the Harrington review. It did an enormous amount of work and I pay tribute to it for it. There is no doubt that the recommendations produced by it through consultation with an expert group of clinicians have not been adopted. Macmillan has been very clear on this point. I have had a look at the government response and it seems that Macmillan is making a fair point.

The Minister will no doubt suggest, as he has done previously, that the Government's response is not contrary to Macmillan's conclusions. However, it is my understanding that while the clinicians consulted provided the charity with a range of views-Macmillan has been totally transparent about all the views that it has received-a clear consensus was reached by experts that certain groups of cancer patients undergoing treatment should qualify for the support group automatically. As was stated by the charity, this is because those patients are more likely than not to be debilitated by their treatment and should not be made to go through an assessment while undergoing this debilitating treatment.

While I am not suggesting that it was the intention of the Minister and his colleagues to add to the struggles and difficulties that cancer patients experience, I fear that what is currently being proposed would do just that. In the Sunday Times this week, the journalist Jenni Russell shared her experiences of chemotherapy very movingly and said:

"I read these proposals with incredulity. I have been seriously ill at times in my life ... but I have never felt as appalling as I did on chemo ... I had assumed I would overcome it with a bit of willpower. Instead I had vomiting, nausea, headaches, muscle weakness and an inability to tolerate bright lights. For the first four days in every fortnight's treatment, I couldn't eat, speak, read, listen to the radio or get out of bed. My white blood cell count sank so low that I needed injections to boost my bone marrow production. For the next six days I was too weak to want to walk upstairs. There was no fight left in my body; every cell was being affected and it seemed every cell was losing the will to live. Then for three days I would feel almost normal until the cycle began again".

Jenni Russell then provided her view on how cancer patients might interpret what was being proposed by the Government in this Welfare Reform Bill. She said:

"What people in treatment are hearing is that they will be assumed to be guilty of skiving unless they can prove otherwise. Nothing could be more demoralising to the individuals who are already having to cope with being cut open, poisoned or burnt in the hope of saving their lives".

These are very hard-hitting comments in the Sunday Times and very difficult to read. While there are hundreds of thousands of other people who do not have the opportunity to share their experiences in the House today, I feel sure that the views expressed by Jenni would be endorsed by many cancer patients around the country.

I noted the Minister's comments on Monday-I was disappointed that I was not here for the Question-that part of the rationale for not allowing automatic qualification for benefit is that it is important for many cancer patients to stay in work. I do not disagree with that at all. However, it seems far fetched to suggest that qualifying for the support component would stop cancer patients who wish to continue working for as long as they can from doing so. I do not understand how that holds up.

The Minister may also argue that the automatic support group status encourages the wrong kind of behaviour in cancer patients. The Minister shakes his head; I am sure he will put me right in a moment in his very clear way. I would welcome hearing from him whether he really believes that cancer patients would decide to leave work just because they are automatically eligible for this benefit. What picture does that paint of the motivations behind cancer patients' behaviour? It is my understanding that automatic entitlement to ESA support group status would not prevent patients who wish to remain in work for as long as they are able from continuing to do so. If the Minister has any evidence that the existing exemption for cancer patients on IV chemotherapy, for example, has been or is being abused by cancer patients who are clearly capable of working, it would be very useful to hear about it. The House would welcome that.

Nor will becoming eligible for the support component of the ESA while receiving chemotherapy lead to people spending a lifetime on benefits. I know the Government are very concerned about ensuring that we do not leave people to languish on benefits for a lifetime. I totally support that. We know that work is good for people. Even if that is what people wanted-which they do not-they are reassessed for eligibility for benefit after their treatment. This would mean that when they are no longer in need of the support on offer from the support group, it would be withdrawn. There were many personal examples given in Committee. When I was talking about PIP, I used the example of my niece who was in the process of being treated for Hodgkin's lymphoma. She is in hospital having her second transplant at the moment. Throughout her 18 months of treatment she has been reassessed three times for ESA to check whether or not she should still be receiving it in the support group. So there is no danger of her going on indefinitely in the support group.

The amendments will ensure that the added burdens associated with seeking financial support during the most difficult of times are minimised as much as possible. This would help to remove the anxiety experienced when people have to wait for the results of a decision-maker. With 40 per cent of appeals currently successful, we should not forget that these decision-makers are clearly frequently making the wrong decisions. It is feasible that, without the guarantee of receiving the support component of the benefit, cancer patients who are in the middle of treatment could be forced to attend back-to-work interviews or even be found fit for work.

I remain hopeful that the Minister will respond to the growing concern on this issue, which has been even more apparent over the past week. I hope he will be able to say that all patients receiving, due to receive or recovering from chemotherapy will automatically qualify for the support element of ESA. It would also be useful if the Minister could explain at this stage what further documentation and processes cancer patients receiving IV chemotherapy will have to provide and undergo in future as this would be extremely helpful in informing the debate at this point.

I hope very much that the Minister can give me reassurances that it will not become more difficult for those who are currently automatically put into the support group because of their cancer treatment to claim ESA. I hope very much that the Minister will be able to give undertakings about the consultation process, which I believe is due to be taken forward just before Christmas-Christmas holiday time-and that the consultation period will seek the views of many on a range of options. It looks a little like the Harrington review has asked Macmillan to do some work for it, does not like what has come back, and is going to ask some different people to see whether it can find some more opinions that it does like. I am sure-absolutely sure-that this is not what the Minister is proposing at all.

I hope that if there is to be a consultation over Christmas it will be done in a fair, open, transparent and timely way that looks at more than just one option and talks to patients, charities and a range of experts too. I beg to move.

Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Opposition Whip (Lords)

My Lords, like the noble Baroness, Lady Morgan, I think the fact that this amendment is necessary comes as a surprise. When we started discussions of the Bill, it seemed that the issue of whether recipients of debilitating cancer treatment in the form of oral chemotherapy should be automatically exempted from requirements to look for work was being dealt with in a sensible manner by discussions between the cancer charities, cancer specialists and the Government. It is extremely disappointing to find that these discussions appear to have broken down. Disappointing for us, but extremely worrying for the many cancer patients anxious about what support they will be able to claim and how they will qualify for it when their main focus is living through and coping with some pretty debilitating-as we have heard-albeit wonderful, lifesaving treatments. The Government's response to the second Harrington review states that its new proposals to ask everyone experiencing cancer treatment to go through the work capability assessment process,

"would increase the number of individuals being treated for cancer going into the Support Group".

It also states that:

"They would also reduce the number of face-to-face assessments for people being treated for cancer as most assessments could be done on a paper basis, based on evidence presented by a GP or treating healthcare professional".

While we welcome the acceptance of medical evidence, this proposal still puts cancer patients undergoing treatment through the uncertainty and stress of not knowing whether they will qualify for essential financial support or whether they will be expected to prepare for work while undergoing their treatment. With the proposals to time limit employment and support allowance for those in the work-related activity group, these assessments take on an added importance, since for many people they will determine when the clock starts ticking to the point when they will lose this contributory support altogether.

We do not think that anybody should be written off because they have cancer. We certainly do not think that no one with cancer will ever be able to work again. A brief glance behind me in your Lordships' House is great testimony. This is not, however, what automatic entry into the support group means. We know that those in the support group can volunteer for access to the work programme and the support there to help them get back into employment. We imagine that the vast majority of those who have overcome their cancer will want to do just that. But for the Government to suggest that those receiving chemotherapy need to be tested to see whether they are really ill enough to avoid a conditionality regime, which we will remind the House was intended to put pressure on people to return to work, suggests that the Government somehow view all cancer patients as potentially taking advantage of the state. We are sure that that is not the Minister's view and therefore hope that he will be able to accept the amendment.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, this is obviously a very sensitive issue, and I want to start by saying that we are determined that the benefit system should support in a sensitive, fair and appropriate way people who are diagnosed with cancer and coping with it. I shall try to go through the argumentation here in as simple a way as I can.

First, we know that cancer and cancer treatment affects individuals very differently. That was one thing that the Macmillan evidence demonstrated. It shows that some people can continue working straight through their treatment, are capable of doing so and want to do so. On that evidence, we believe that automatically putting everyone undergoing certain cancer treatments into the support group is not the right way forward. Clearly, there is the example that the noble Baroness raised, the one in the Sunday Times, of Jenni Murray, who had a bad reaction, and one can only sympathise with that. Everyone in this Chamber will have friends or relatives who have gone through this experience and had a bad reaction. It is always painful. We are all thinking exactly the same thing; we are all thinking of someone we know who has gone through hell on this process. But when you talk to the experts, you get examples of someone-let us take a man-who has had testicular cancer and has recovered well from curative surgery and is now being treated with radiotherapy without any significant side effects. On this ruling, he would be automatically placed in the support group. That is a kind of counter-example, which half of us should be so lucky to have.

Photo of Baroness Morgan of Drefelin Baroness Morgan of Drefelin Crossbench

When we look at the Macmillan recommendations, we can see that they take into account that people respond in a range of ways. In the recommendations that the charity made to the Harrington review, they came up with a lot of detail, and I could read it all out. No-I will not read it all out, but I could.

The point that I want to make is that a consensus process was gone through at the request of a government review. We could all pick out little bits of that wide range of opinion that we do not want to promote, but that was not what the charity did. It published it all, which now allows the Government to pick bits out that suit the argument. But the overall conclusion by the experts and the consensus statement was that, for the majority of cancer patients going through specific cancer treatments-and it is not all chemotherapy; we are not talking about long-term oral chemotherapy here-it is more likely than not that they would experience debilitating effects.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

Let me go through the argument and I will pause just before I sit down to let the noble Baroness to come back on the process. We asked Professor Harrington and Macmillan to review the current descriptors to provide evidence as to whether they could be improved, and we are committed to acting on the evidence that they put forward. The evidence provided by Macmillan showed clearly that there is no longer a basis for differentiating between certain types of cancer treatment in the way that current regulations do. The evidence showed that all types of chemotherapy, including oral chemotherapy and certain radiotherapy, can be debilitating but it also showed that there can be considerable individual variation in the impact of the treatment on each person, and that work can be very important for some individuals with cancer.

I think that there were 16 medical professionals-the oncologists-who were consulted in depth in this evidence. I shall quote just one as an example, who said,

"I am somewhat against the concept of including all chemotherapy", in the support group,

"as it will clearly be inappropriate for some patients, risks stigmatising these patients in the workplace and may delay useful reintroduction to the workplace".

A number of the experts consulted by Macmillan, and indeed Macmillan itself, volunteered evidence of the importance of work to an individual's rehabilitation and emotional well-being. Indeed, in a recent publication, Macmillan said:

"Many people who are working when they are diagnosed with cancer would prefer to remain in work, or return to their job, during or after treatment".

From this evidence, it is clear that while many people will not be able to work, some can and do. For them, it is an important part of coping with their diagnosis and treatment.

We want the work capability assessment to effectively reflect this new evidence based on what Macmillan, supported by Professor Harrington, has found. How it would work is that each individual would be assessed on a paper basis. The evidence required might be a note from the claimant's GP or consultant, and where a claimant is unable to provide information an Atos healthcare professional will contact their GP or consultant to gather the information and ensure that they are not unnecessarily sent on a face-to-face assessment.

We have had a request to look at this evidence more widely, so we are in the process of asking Macmillan whether we can make this document more widely available. At the moment, Macmillan is seeking permission to do that. I hope that that actual evidence becomes more widely available for consideration. We believe that our proposals meet the spirit and intent of Macmillan's assessment. If that were to be the case and we were to go ahead with those proposals-if your Lordships will bear with me, I will describe the process before we were to go ahead-there would be an increase in the number of people in the support group. About 10 per cent would move from the WRAG group to the support group, while there would be a reduction in the number of face-to-face assessments that individuals suffering from cancer would undergo.

Let me provide another example of how this will better support people by citing a woman who is being treated via oral chemotherapy and who is profoundly fatigued due to the treatment. Her GP confirms her diagnosis and symptoms. Currently, she may be invited for a face-to-face assessment; under the new proposals, she could be placed in the support group on a paper basis.

We are disappointed that Macmillan seems to be unable to support these proposals, which we have based on the evidence that it spent so much energy in collecting, and because we had hoped to introduce the proposals in April 2012. However, since we do not seem to have Macmillan's support at this particular moment, we will now seek a wider range of views through an informal consultation. As part of this we will seek the views of individuals affected by cancer, their families and carers, healthcare practitioners and cancer specialists, as well as representative groups and other lobby groups. We want to ensure that the benefits system treats individuals with cancer in the most sensitive way.

I recognise the points raised today. We want to get the balance right, which is why, as a result of the evidence presented by Macmillan, we will launch the consultation on these proposals this Friday. It will be informal; it will last 12 weeks, ending on 9 March, and it will follow the advice in the government Code of Practice on Consultation. We will be looking, as I said, for a wide range of evidence, and will consider all the issues, including automatic entitlement, as well as looking at previous experience of cancer assessment in the benefit system.

I hope that that will reassure noble Lords that there will be a proper process which will aim to come out with an answer which gets the general support of this particular community, and I hope that many of them would be a temporary part of that community. The noble Baroness is getting to her feet; I will hover.

Photo of Baroness Morgan of Drefelin Baroness Morgan of Drefelin Crossbench

I think that the Companion says that the Minister is able to respond on Report, so it is very nice of him to hover, but he can have a rest.

Obviously the automatic entitlement is set out in regulations; I think the powers are in the 2007 Act. It would be really helpful to understand what this paper basis will look like. Will it be possible for us to see what those regulations might look like? I cannot remember whether they are affirmative or not. I guess they probably are, but if they are not, then maybe they should be.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

Rather than go into detail now I would like to wait for the proper consultation. The document is coming out in two days; it will lay out the issues, the proposals and the background, and there will be a full opportunity for us to gather all those views and pull them together. With that reassurance that there is a real process going on to get agreement and to take everyone's views, I hope that the noble Baroness feels that she can withdraw her amendment.

Photo of Baroness Morgan of Drefelin Baroness Morgan of Drefelin Crossbench

My Lords, it is very late and I have only a couple of thousand words to get through. More seriously, the Minister has given me quite a lot to think about. Obviously, as this is only the first time that we have had a proper discussion about this, I will have to look at Hansard very carefully, and think about whether I need to come back to it. However, I appreciate the time that the House has given to this issue at this late hour, and I beg leave to withdraw the amendment.

Amendment 24 withdrawn.

Amendment 24A not moved.

Clause 24 : Imposition of requirements

Amendment 25 not moved.

Amendment 26 not moved.

Clause 26 : Higher-level sanctions

Amendment 27

Moved by Lord McKenzie of Luton

27: Clause 26, page 12, line 41, leave out "three years" and insert "one year"

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

My Lords, I will be brief on Amendments 27, 30, 31 and 29, which deal with sanctions. However, given the hour, there is just one particular point I wish to pursue.

We have already had the assurances of the noble Lord and his colleagues that there will be no target set in respect of sanctions. That is clearly on the record in Committee. We might like one more go at it, but we need not spend any more time on that. In the other place we made the argument for reducing the maximum sanction from three years to one. Given where we are, I do not see merit in going over those arguments again; we will just have to differ on that.

The point that I wish to pursue is the opportunity for people to mitigate that longer-term sanction. My noble friend Lady Hollis touched upon this briefly in Committee. If someone is sanctioned for three years, your leverage to encourage them closer towards the labour market is very limited. Three years is a long period of time; people change and perhaps understand the consequences of what they have done. It seemed a reasonable proposition that they should have an opportunity of mitigating and reducing that three-year period. That is the point that we wanted to pursue in this amendment. I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

My Lords, I strongly support my noble friend on his last point. The whole point of sanctions is not just to punish but to change behaviour. If someone does so and therefore, having learnt their lesson, is willing to comply, they should get rewarded for that, so to speak, otherwise there is no incentive for them to change their behaviour. I hope that the Minister will hear my noble friend's wise words, otherwise the sanctions regime will not work or stick-and, I suspect, will end up being judicially reviewable.

Photo of Baroness Meacher Baroness Meacher Crossbench

My Lords, I shall speak extremely briefly to Amendment 28, which is in this group, but I would not wish the House to take the brevity of my remarks as an assessment of the importance that I attach to it. The amendment concerns thousands of people up and down the country with mental health problems, mental impairments and learning difficulties and would affect whether they are fairly treated or denied benefits unfairly because of misunderstandings and a failure to understand why those people have failed to comply with the conditionality requirements and then have their benefits removed or cut.

I emphasise that it is not sufficient, as I believe the Minister said in Committee, that if a matter is drawn to the attention of the officials, they will take that matter into account. Many of these people will not be aware that they need to make that clear; they will not even necessarily have the capacity to make it clear that their disability, handicap or learning difficulty prevented them satisfying the conditionality requirements. They may indeed be lying in bed, not opening their post, not answering the phone, not responding to requests to come for an interview and so on.

The Minister is very familiar with these issues, but I was concerned in Committee that he seemed simply to suggest that a person can point out that they have a problem. I would be interested to know whether he can assure the House that specific actions will be taken by officials to ensure that they have considered and checked whether a person has a mental health problem or a learning difficulty, and whether that has in fact affected their capacity to respond.

The other issue in the amendment has to do with reasonable adjustments. Of course there are people who cannot get to the office and attend an interview or assessment, such as people suffering with agoraphobia. Many others are also sufficiently unwell in a mental health way that they simply will not be able to perform as others might. Reasonable adjustments have to be made for those claimants if they are going to be fairly assessed and not sanctioned unreasonably. I will be very interested to know what the Minister has to say in response to these issues.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour 10:30 pm, 14th December 2011

My Lords, I would like to speak very briefly to Amendment 36, which is in this group. This relates, again, to sanctions, and is an attempt to amend Clause 46, talking about high-level sanctions, which says that it is a failure sanctionable under this section if a claimant,

"through misconduct loses employment as an employed earner".

Not all allegations of misconduct are accurate; sometimes the employee may claim that he is being discriminated against, or perhaps that he has blown the whistle on some unsafe practice and has not been guilty of misconduct. He therefore attempts to institute proceedings to try to demonstrate that the dismissal is unfair.

In such circumstances it seems that it is in line with employment rights if the employee is not sanctioned under this provision, because he has disputed whether or not his dismissal was fair, and has instituted appropriate proceedings. It is quite a simple amendment, designed to protect people's employment rights, and I hope that the Minister will be prepared to look favourably upon it.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, I will also try to be as brief as possible. We had a very good discussion on this area in Committee, and I can make clarifications which have been informed by some of that discussion. One of those clarifications is that we will limit the sanction amount to three years, so we will not have it compounding above that level.

The second relates to the parable of the prodigal son. From the argument of the noble Lord, Lord McKenzie, there has got to be a way back into the system. We are trying to change behaviour: where someone has come back and got a job for six months at his job goal level, we will take away his sanctions at that point. I thank noble Lords for the very informed debate that we had.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

Did the noble Lord say that if the person got a job, after six months in the job the sanctions would be removed?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

I do not think that is good enough. That means that coming back in and searching for the job-in other words, conforming to the sanctioning conditions-is not enough. He also has to be successful, which will depend on the lottery of what jobs are available, and so on. I would have thought that providing he is conforming to the work conditionality regime in searching for a job, that ought to be enough. You should not be able to punish him just because he lives in Merthyr Tydfil and the jobs are not there, whereas in central London they may be.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, we thought about this matter very deeply and thought that it was very hard to genuinely measure compliance if there was not a hard result. We decided that the hard result was taking a job and holding that job for six months, and then we would take away the sanctions. That is where we are. It is a lot better than where we were.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

But if that means that he was previously on JSA and HB as part of his universal credit, and he has now gone into low-paid work, so is getting a wage, then presumably if the sanctions still apply he would fail to get the housing element going into his universal credit, and he would not have enough to live on.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

No, my Lords, the sanction regime does not work like that. It takes away the equivalent amount of the JSA, so you keep getting your housing credit, but have this amount taken off, which will be a proportion of the total universal credit.

Photo of Baroness Lister of Burtersett Baroness Lister of Burtersett Labour

I am sorry to interrupt the Minister, but is he saying that the department is unable to measure compliance with work-seeking requirements? If that is the case, surely the whole basis of the sanction regime falls apart?

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

I think I can safely say that we are not saying that. We are just saying that we want real proof of a change. The prodigal son must do more than turn up and warm his hands on the fire as the fatted calf is slaughtered. I am saying that he has to take a job and hold it for a minimum of six months.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

Could the noble Lord perhaps move from the Old Testament to the New Testament?

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

I thought it was the New Testament. It is definitely a New Testament matter. I am shocked that the noble Baroness-

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

I am utterly shocked. Let me keep going; the hour is late and I am forgetting what I am talking about very quickly.

Turning to Amendment 28, we will impose reasonable requirements, taking into account the claimant's particular circumstances, including any health condition or disability. Universal credit claimants with a health condition or disability that limits their capability for work will not be required to look for work. There are specific safeguards in this area. Decision-makers must consider any relevant matter raised by the claimant when considering whether there is good reason for a failure.

Photo of Baroness Meacher Baroness Meacher Crossbench

That was the issue in Committee. Does it have to be raised by the claimant?

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

When I say "by the claimant", it can be done on behalf of the claimant by someone else. There is a clear duty on decision-makers to watch out for vulnerable people. The request I am making of the noble Baroness is this: if we begin to introduce specific legislative provisions around such matters of detail, we will end up with a whole mound-

Photo of Baroness Meacher Baroness Meacher Crossbench

I thank the Minister for giving way. What I am looking for is an assurance that, in regulations, the Minister will guarantee that officials will ensure for themselves that this person could perfectly reasonably comply with conditions. That is all I am looking for-an assurance.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

Can I leave it like this, without giving a hard commitment right now, on my feet? When we get to the regulations on this, I will look very hard at exactly what the protection is. I cannot offer any more now but I am sure we will debate this in the months to come. My main point here is that overall duties, rather than lots of specific ones, are the way to go.

Let me turn now to Amendment 36, which proposes an exemption from the sanction for losing employment due to misconduct where the claimant disputes that the dismissal is fair and has instituted proceedings-in other words, is taking a case to an employment tribunal. First, I assure noble Lords that the decision-making process around sanctions for misconduct is rigorous and rounded. We are proposing nothing in this Bill that changes the current process. Decision-makers will take all relevant matters into account when determining whether a sanction should apply, including evidence about whether claimants have left employment through misconduct or been unfairly dismissed. If a tribunal finds that there has been no misconduct by the claimant, this will be very compelling evidence. Where a decision-maker decides that there has been no misconduct, a sanction will not be applied.

However, we do not consider that there can be a blanket rule which says that, where a claimant has instituted proceedings for unfair dismissal, sanctions cannot be applied in that case. One of the reasons for this is that we want to avoid creating a perverse incentive for claimants to make claims to employment tribunals, which would put a burden straight on to employers for no fundamental reason. Decision-makers must have the flexibility to look at each case on its facts and to assess the strength of the evidence. I trust noble Lords will agree that this flexible, case-by-case approach is the right one.

The final amendment, which the noble Lord touched on right at the beginning, and which seemed like a game of tiddlywinks between us, is on targets. He knows what I am going to say-his side likes targets, we do not like targets-so I will say it, as it just keeps the night going. We will continue to collect this information to support our work. We need to know how many sanctions are being imposed, but collecting information is not the same as using it to target. It helps us to assess the consistency of approach in this area and to monitor and evaluate the impact of those sanctions, so that is what we are collecting.

On the basis of that rather rapid, somewhat biblical, summary I would ask noble Lords to withdraw or not move these amendments.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

My Lords, I thank the Minister for his reply. I thought we were going to have a quicker canter through these issues, and we may wish to return to at least one of them at Third Reading. In relation to the mitigation issue, I am obviously grateful for the Minister's consideration of that and recognition that there is an issue to address. However, like my noble friend, I am a bit dismayed that the route to dealing with it is the six months-

Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Captain of the Honourable Corps of Gentlemen-at-Arms (HM Household) (Chief Whip, House of Lords), Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I know that we are in a cordial mood and we have reached a magical moment as far as noble Lords and perhaps the staff, too, are concerned. As Government Chief Whip, I ought gently to remind the noble Lord, who was a Minister himself with distinction, that Third Reading rules are very carefully framed by this House and I know he would not wish to breach them. There are matters which may very properly be brought back at Third Reading. I know that he will consider whether any wish he expresses now to bring back at Third Reading will later be translated into action only within the rules.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

Indeed, my Lords. We aspire to do nothing but stay within the rules. We would not dream of treading outside of them.

It is disappointing, for the reason my noble friend gave, that if the idea is to get somebody to re-engage, it must surely be possible to evaluate prior to them actually getting into work. After they have been in work for six months, it may be that there is frankly not a lot to sanction in any event. It depends on the level of earnings and the impact of universal credit on that. I would urge the Minister to reflect and think again on this point. We have had our exchange on targets and I understand that the data are still going to be collected. I trust they are not going to be posted on office notice boards to act as an indirect incentive. I accept the Minister's assurance on that.

The noble Baroness, Lady Meacher, made a very important point which has not, I think, been fully addressed. In summary, she is seeking a requirement for the department to be proactive with people before they are sanctioned, not just relying on them to respond, question and challenge.

My noble friend Lady Turner's amendment raises an interesting point. If the decision maker is going to make an up-front judgment as to whether there has been misconduct by an individual who has left work or whose employment has been terminated, this might pre-empt the role of the tribunal itself, whose job it is to make that assessment.

I am not sure how that sits four-square but, given the hour, I would urge the Minister to reconsider the first item in relation to mitigation. I am sure we will all be happy if we can avoid Third Reading and a possible challenge from the noble Lords' Chief Whip. I beg leave to withdraw the amendment.

Amendment 27 withdrawn.

Amendment 28 not moved.

Clause 27 : Other sanctions

Amendments 29 to 31 not moved.

Motion

Moved by Lord De Mauley

That further consideration on Report be now adjourned

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

My Lords, we were happy to try and continue a bit further to reach the target amendment. My noble friends are nodding in agreement. Perhaps it is not too late.

Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Captain of the Honourable Corps of Gentlemen-at-Arms (HM Household) (Chief Whip, House of Lords), Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I know that it is unusual for the noble Lord to put such a matter. I certainly am content to accept that offer, but I do not wish in any way to make the House feel that it is being overworked. I am looking carefully at the opposition Front Bench and I see the noble Lord, Lord McAvoy, giving his consent. Perhaps I may check with my noble friend the Minister. We are all aware of the other side of the coin of that offer, to which I have no objection whatever. It is a perfectly normal way for an Opposition to behave and I certainly recognise it as such. It is a generous offer met in generous spirit. Perhaps we may continue.

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

I beg leave to withdraw my Motion to adjourn further consideration on Report.

Motion withdrawn.

Schedule 1 : Universal credit: supplementary regulation-making powers

Amendment 32

Moved by Baroness Donaghy

32: Schedule 1, page 111, line 20, at end insert ", where the Secretary of State has reason to believe that a claimant has deprived himself or herself of income for the purpose of securing entitlement to universal credit"

Photo of Baroness Donaghy Baroness Donaghy Labour

My Lords, the amendment was in the first grouping on the first day of Report, when we were all bright-eyed and bushy-tailed. I asked for this to be degrouped, and I therefore accept my punishment with good grace.

I asked for the amendment to be degrouped because the issue of self-employed people is extremely important and deserves a slot on its own. The purpose of the amendment is to recognise the particular needs of the self-employed. It will ensure that the power to prescribe a minimum level of income applies only to those self-employed claimants if they under-declare their earned income with a view to maximising their entitlement to universal credit.

While it is important to prevent abuse of the system, it is equally important not to discourage the genuine self-employed claimant with a potentially viable business in the early stages of development or in financial difficulty. There are some 4 million self-employed people in the UK and that number is likely to grow as employment becomes more difficult. They are an enormously varied group who face a greater degree of risk than traditional employees. Profits are affected by any number of events-the loss of a key customer, the sickness of the sole proprietor, a bad debt, the accumulation of slow payers, or even taking on a new employee.

The measurement of self-employed income for universal credit purposes should follow generally accepted accountancy principles and aim at a true and fair view of a business's profits. The welfare system needs to support business through such periods, not discourage them by imposing unrealistic levels of deemed income such as the minimum income floor. My amendment recognises that real abuse should be directly targeted. If you impose a minimum income floor for each hour worked, that in itself will open the floodgates for abuse. That view is supported by the National Farmers' Union, the Tenant Farmers' Association and the Federation of Small Businesses, as well as Community Link, Citizens Advice and the Child Poverty Action Group.

There are those with a disability or medical condition which makes it difficult for them to take traditional employment. Indeed, it is often difficult for the disabled to find employment. Being self-employed allows the disabled to work at their own pace and according to a pattern which suits their circumstances.

What steps are the Government taking to minimise the compliance burden on the self-employed? The current system requires only one set of accounts to be prepared, which is accepted for both tax and tax credits. That allows the individual to get on with running their business. If a different measure of self-employed income were to apply for universal credit, the burden would be increased by having to assess profits for tax purposes according to one measure; and income for universal credit purposes according to another, quite different measure. If income is to be based on reported hours, the harder a self-employed individual works to get their business on its feet, the more they could lose from their universal credit entitlement.

It would be unfortunate if the measure were to put off genuine claimants from taking the risks inherent in self-employment, when its purpose was to deter a minority from underdeclaring their profits. One real example, which I gave in Committee, was of an arable farmer whose crop was completely destroyed. I was going to give another detailed example of livestock farmers who could not move them if they were under BTB restrictions, but in view of the hour, I will not.

There are already regulatory powers to counteract moves by claimants to underdeclare their income for tax credit. For benefit purposes, under the income deprivation rules, a person is deemed still to have income of which they have divested themselves to maximise their claim to benefit or tax credit. Where the Government perceive that abuse, surely the right course is to enforce existing powers rather than to invent new ones which will discourage genuine cases.

This brings me to a group who are in practically every sense of the word employees, but where individuals are treated as self-employed because the alternative is no job at all. They are often referred to as bogus self-employed. The Government's difficulty in drawing up criteria to deal with the genuine self-employed may be alleviated by proper enforcement of the tax laws by HMRC and employment laws by the BIS department, with all the resources that that implies. It also means a greatly increased level of interdepartmental co-operation in Whitehall.

As I said earlier, self-employment entails a greater risk than traditional employment. The self-employed must often choose between taking drawings for themselves or reinvesting in the business to enable it to grow. Welfare policy must reflect those different needs if it is to succeed in promoting work through self-employment. The success of working tax credit in encouraging work and, in particular, self-employment, rests on its recognition, in alignment with the tax system, of the economic reality of how a business is doing-particularly with regard to investment in business equipment and trading losses. Will the Minister indicate what guidelines will be issued and when? I ask him to accept my amendment, which aims at the real target, rather than those struggling to survive in these deeply difficult times. I beg to move.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

My Lords, my noble friend Lady Donaghy has made a very strong case, and I look forward to the Minister's response. What she said warmed the cockles of my heart. She referred to generally accepted accounting principles-the true and fair view-and it took me back to another life, but she raises a real issue: rather than having artificial rules for assessing what people are deemed to earn, is it not better to try to capture the actual profits and to target resources on those who seek to abuse the position? That seems a very straightforward matter.

My noble friend raises once more, as she did in Committee, the matter of bogus self-employment. We all know that that is a continuing issue. I have always believed that it rests particularly with HMRC, together with BIS and other departments of government, to make progress on that. It is primarily HMRC that could begin to make a real difference. She wrote reports for the Government, as did the Minister, on the construction sector, and health and safety in particular. There is bogus self-employment in that sector, so she is an expert on that matter. We support the thrust of her amendment.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, when we discussed a similar amendment to this in Grand Committee, I explained that we intend to retain the existing practice in the benefit system whereby claimants can be treated as having income or capital in cases of deliberate deprivation. However, we believe that different issues arise in relation to self-employment. We think that it is right in principle to apply a minimum income floor to claimants who choose to be self-employed but whose earnings do not make them financially self-sufficient. I confirmed in Committee that the floor will not be based on the hours claimants work. We assume that claimants' earnings are at a level that we would expect from claimants with similar circumstances in employed work.

Claimants will not be forced to take reduced benefit payments by accepting the minimum income floor. Self-employed claimants will have the choice in universal credit. Some will choose to continue solely with their existing activity with the expectation of increasing their earnings. They will accept the minimum income floor. Those who do not will need to satisfy conditionality requirements. The conditionality regime will aim to guide the claimant towards the most appropriate form of gainful work. For some claimants, this would combine their self-employed activity with part-time employed work. In other situations, the regime may very well encourage the self-employed to keep going in their self-employed efforts. We will need to build a quite sophisticated regime to manage this.

This approach differs from tax credits, which allow claimants to receive maximum support so long as they declare that they are working a minimum number of hours. However, in 2009-10, for example, around 60,000 of the households claiming tax credits that received some or all of their earnings from self-employment declared earnings of under £2,500 a year-less than £50 a week. While this is legitimate under current rules, we believe that some intervention to guide claimants towards increasing their income is justified in return for state support.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

Can the Minister explain what he expects here? The old enterprise allowance scheme, which was very effective, used to give people a top-up of £40 a week to start a business, and as far as I recall this ran for up to two years to give people a chance to establish a small business. How long will someone be allowed to have low earnings while they try to build up a business, and how quickly will guidance from young people in Jobcentre Plus, who frankly have never tried to start a business, steer them back into sanction and conditionality?

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

I do not automatically think that we will use the example of young people in Jobcentre Plus to deal with some of the more complicated issues here. We acknowledge that the real issue is that we need to create an environment that encourages entrepreneurship. We need to balance the exact rules about the interrelationship between the new enterprise allowance and the time that we will allow. I do not have the exact figures yet, as we are still currently elaborating them. We are looking through all the details of employment earnings. Clearly, the HMRC is expert in this area and we are working closely with it to develop our proposals. I must say to the noble Lord who said that it was a straightforward matter that on that basis he can come and help us to do it.

We are aiming to get the reporting requirements aligned as closely as possible with the tax system. However, in our view, it is reasonable for claimants to provide clear information on their income in return for state support. We are looking at a number of rules within the current benefit and tax credit systems to see what the most appropriate approach is for universal credit. We will then prepare regulations that will set out clearly the way in which earnings from self-employment will be assessed. This House will have the opportunity to debate those regulations in due course, and I think that that will be a fascinating discussion.

In today's debate we should focus on principles. We clearly need to avoid requirements that will add unnecessary burdens, especially for people who are starting out in business-the people whom we really want to encourage. However, we cannot have a situation where people can be treated as being in full-time work for conditionality purposes, but because they declare no earnings they receive as much benefit as though they were not working at all. That is taking it to the absolute extreme. I hope that this explains why the Government cannot support Amendment 32 and that the noble Baroness will feel able to withdraw it. I know that we will be discussing this area again.

Photo of Baroness Donaghy Baroness Donaghy Labour 11:00 pm, 14th December 2011

I thank the Minister for that response, and I look forward to seeing the regulations. However, I still have a concern and refer again to my example of a farmer who cannot move his livestock and is therefore getting no income. He is having to work harder than ever but will not be able to get a part-time job.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, I forgot to say something. There are two areas where we need to get really smart. One is the start-up period and the other is when a business hits a problem. The questions there are how long the process should be and what one allows. That is another area that we are actively looking at.

Photo of Baroness Donaghy Baroness Donaghy Labour

I am reassured by that. I certainly agree with the Minister that this is a very complex area and, as I said in moving the amendment, it involves a very varied set of problems. I look forward to seeing the regulations and beg leave to withdraw the amendment.

Amendment 32 withdrawn.

Amendment 32A

Moved by Baroness Hollins

32A: After Clause 33, insert the following new Clause-

"Criminal injuries compensation

For the purpose of this Part, a claimant in receipt of criminal injuries compensation, whether or not this is held in trust, will not have this amount included in the prescribed capital sum in section 3."

Photo of Baroness Hollins Baroness Hollins Crossbench

My Lords, in speaking to the two amendments in this group, I want to mention a personal interest in the issue that I shall be talking about, as some years ago a member of my family was affected by it.

As noble Lords know, the capital of a claimant is taken into account when assessing the level of benefit to be received. If the amount of capital is greater than a prescribed amount-I think it is currently £16,000-then the person's benefits are adjusted accordingly. There are several exceptions to what is counted as capital and these include any funds held in trust. This is clearly outlined in the 2009 Housing Benefit/Council Tax Benefit Guidance Manual, which states that certain types of capital should be disregarded in full, including the value of any funds held in trust and the value of the right to receive any payment under that trust following payments made to the claimant as a result of a personal injury, such as vaccine damage payments or criminal injury compensation. The value of these funds is not taken into account when calculating the capital of the claimant. Therefore, any payment made into the trust as a result of a personal injury, such as criminal injuries compensation, will not count when the claimant's benefits are considered.

These amendments seek to apply the principle that claimants who have received criminal injuries compensation should not lose benefits, regardless of the form in which it is received or kept. A year later, the 2010 Housing Benefit/Council Tax Benefit Guidance Manual states that officials should treat lump sum compensation payments as capital. Examples given include lump payments, such as those made by the Criminal Injuries Compensation Authority. However, the manual then reminds officials to disregard the value of any compensation payment for personal injury which is held in trust. I believe that criminal injury compensation payments should not be considered as capital at all when assessing the levels of benefit, regardless of whether this is a £1,000 payment for 12 weeks of blurred vision or the maximum of £500,000 which is paid out for injuries leading to indefinite loss of earnings. Recipients of larger sums are likely to put this into a trust, but recipients of smaller sums are not. They may intend to use it for a holiday-some recompense for the injury that they suffered. One of the purposes of criminal injury compensation is to give recipients the opportunity to improve their quality of life after their trauma.

These amendments would benefit some victims of crime, particularly people with mental health problems or learning difficulties. Not only are they more likely to be in receipt of benefits, they are also more susceptible to being victims of crime. The benefits that they receive are provided to cover essential costs, and any payments made as criminal injuries compensation are made in recognition of pain and suffering that the victim has gone through and perhaps for the purpose of making up any lost earnings.

The idea that the benefits that the person is receiving and the criminal injuries compensation provide for two distinct purposes is very important. It is for this reason that allowing one to influence the level of the other would be unfair. The Minister may consider that Clause 5 would have been a better place for these amendments. I hope that he will accept these amendments or undertake to bring them back at Third Reading in a more appropriate form. I hope he will reassure me that these simple amendments would be acceptable. I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

My Lords, I strongly support the amendment. I had the privilege many years ago of being responsible for vaccine damage payments within the department and always tried to make a distinction between payments that were in lieu of earnings, which tended be of the incapacity benefit sort, and payments which were a lump sum. Sometimes there was a structured payment of capital over a period of time as compensation for suffering and injury as opposed to an earnings replacement. We always excluded that second element from coming within the debiting of benefit. That distinction has been well drawn by the noble Baroness, Lady Hollins.

I hope that the Minister can respect the ethics as well as the long history of making a distinction between getting an income replacement benefit-ESA for example-and getting an element of compensation for damages, for suffering, for pain and so on. In my understanding that has always been protected and has not been debited against your rent. Otherwise it is not worth anything to you at all. That was never the intention of the law. I hope that the Minister can support the proposals of the noble Baroness, Lady Hollins.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

My Lords, the noble Baroness has brought an important point to our attention. I have only two questions for the Minister. Can he explain the extent to which the current rules are going to be translated and taken up in universal credit? The position at the moment is that the compensation recovery scheme does not apply to criminal injuries compensation. Can the Minister say whether that would continue under universal credit?

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, Amendments 32A and 34A seek to use primary legislation to exclude criminal injuries compensation from the capital test for universal credit. The existing benefit system does not have a specific disregard for criminal injuries compensation. However, such payments will usually fall under the rules governing personal injury payments where they relate to physical or psychological injuries suffered by the claimant. As indicated in the illustrative draft regulations on capital and income, shared with noble Lords in September, we intend to replicate these personal injury payment provisions in the universal credit regulations. I hope that that answers the question of the noble Lord, Lord McKenzie.

Personal injury payments are disregarded in the current benefit system for a period of 52 weeks from the date that they are paid. Even after that period, remaining capital will continue to be disregarded if it is placed in a trust, as the noble Baroness, Lady Hollins, indicated. This rule allows us to distinguish the personal injuries payment from other savings. If the payment is not separated by placing it into a trust, it becomes increasingly difficult to identify the source of the capital as time goes by. Ultimately, any capital test must consider the balance in a claimant's account, and over time it becomes impossible to say whether it is from one source or another, unless it is held in a different form. That is the reason for the way that this is structured.

The current arrangements are long-standing, and we are not aware of significant practical problems with their use. In any case, the details of capital disregards are a matter we will address in the universal credit regulations. If there are particular problems, we will have a further opportunity to consider them when drafting regulations, and I will bear in mind the points the noble Baroness has made.

In answer to the question asked by the noble Lord, Lord McKenzie, I agree that the compensation recovery scheme does not apply to criminal injuries compensation.

I hope I have made clear why the Government cannot support Amendments 32A and 34A. I hope the noble Baroness will withdraw her amendment.

Photo of Baroness Hollins Baroness Hollins Crossbench

Given the lateness of the hour, I will withdraw my amendment. I will study very carefully what the Minister said to make sure that I understand it. I think what he is basically saying is that it should be possible to protect that capital for 52 weeks, and I understand the point, but it is a little bit more complicated than that. I beg leave to withdraw the amendment.

Amendment 32A withdrawn.

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

My Lords, let me try again: I beg to move that further consideration on Report be now adjourned.

Consideration on Report adjourned.

House adjourned at 11.12 pm.