Moved by Lord Freud
That this House do not insist on its Amendment 1 to which the Commons have disagreed for their Reason 1A, but do propose Amendments 1B, 1C and 1D in lieu—
1: Before Clause 4, insert the following new Clause—“Child poverty Child poverty: reporting obligation(1) The Secretary of State must lay before each House of Parliament an annual report on child poverty.(2) The report must include information on the percentage of children living in households where—(a) equivalised net income for the financial year is less than 60% of median equivalised net household income for the most recent financial year;(b) equivalised net income for the financial year is less than 70% of median equivalised net household income for the most recent financial year, and which experience material deprivation;(c) equivalised net income for the financial year is less than 60% of median equivalised net household income for the financial year beginning
The Commons disagree to Lords Amendment No. 1 for the following reason—
1A: Because it is more appropriate to report on the matters listed in clause 4 and because low- income statistics are already published annually.
1B: Insert the following new Clause— “Children living in low-income households Publication of data on children living in low-income households(1) Before the end of the financial year beginning with
1C: Clause 30, page 26, line 38, after “sections” insert “(Publication of data on children living in low-income households)”
1D: Clause 31, page 27, line 30, after “sections” insert “(Publication of data on children living in low income households)”
My Lords, the other House has now considered Lords Amendment 1, which was proposed by the right reverend Prelate the Bishop of Durham, the noble Baroness, Lady Sherlock, and the noble Earl, Lord Listowel. The intention behind that amendment was to insert a new clause into the Bill, which would have increased the measures on which the Secretary of State was required to report annually to include income-based measures. As I have said previously, that amendment has technical faults and would require redrafting to make it work as noble Lords intend but, moving quickly beyond the technical defects in that amendment, I have repeatedly tried to shine a light on the fundamental flaws of the income-based measure.
The “poverty plus a pound” approach that results from measures of this kind led to billions of pounds being invested under the previous Government, with little or no transformational impetus in the life chances of young people. It is widely recognised that the low-income measures can give a misleading picture. For example in a recession, when average income falls, poverty can appear to be falling too even if living standards have not improved for those at the bottom.
I stress again that low-income measures drive the wrong action, as I have sought to explain throughout the passage of the Bill through this House. Such measures simply focus on treating the symptoms of child poverty, whereas the Government are intent on tackling the root causes such as worklessness and educational failure. It is in these areas where we believe that the right action can make the biggest difference to the lives of disadvantaged children, both now and in the future.
Moving on, it is clear that substantial concerns remain that publication of the statistics on children in low-income families through the Department for Work and Pensions annual HBAI—households below average income—may not continue. This is despite the very clear commitments that the Government have given in both Houses and the protections already in place to safeguard HBAI as a national statistics product.
As I have said previously, I believe that the only difference on this issue between us is the word “statutory”. Given the doubts and concerns that remain about the continued publication of this low-income data, I am able to say that we have listened, we have heard and we are willing to provide further guarantees. Three of the four income measures—including relative low income, combined low income and material deprivation, and absolute low income—are already routinely published in the HBAI publication.
Through the government amendment we are putting forward today, we propose to place a statutory duty on the Secretary of State to publish this information annually. This provision will give the data the additional statutory protection that noble Lords sought. The amendment also places a statutory duty on the Secretary of State to publish new data on children living in persistent low-income households annually. The information will be based on a new data source, and the first figures will be published before the end of the 2016-17 financial year.
However, let me be clear that although we have given full statutory guarantees that this data will be published annually, we will not commit ourselves to laying a report before Parliament on it. This amendment is about providing a further guarantee that information on low income is made available for all to see, every year. Reporting to Parliament on income measures would incentivise government to take the wrong action and would simply continue to incentivise actions, such as direct income transfers, that will not tackle underlying factors.
We need to move on from this unhelpful approach. Resources are finite and it is crucial that the Government prioritise the actions that will make the biggest difference to children. The evidence is clear that this means tackling worklessness and low educational attainment, as set out clearly in our life-chances measures and approach. Any move to report on these low-income measures would divide government’s efforts and undermine this new life-chances strategy. I firmly believe it would not help to bring about the transformative change that we all wish to see.
It is worth talking briefly on one technical point in our amendment. Subsection (3) provides for the absolute low-income measure to be rebased in the data publication. This is vital because over time an absolute low-income measure using a 2010-11 baseline, such as that proposed in Lords Amendment 1, would be likely to become increasingly meaningless due to growth in the economy. As a national statistics product, the data publication already has significant statutory protections, guaranteeing that any rebaselining would be carried out by statisticians following best practice and free of any political influence. I reassure colleagues on this point.
I hope that these proposals will be welcomed in this Chamber. I urge noble Lords not to insist on their amendment and beg to move the Motion on the government amendments in lieu.
My Lords, throughout our debates on the Bill, we have all consistently expressed our desire to see child poverty in our nation reduced and, ultimately, eradicated. We have different views about how this might best be achieved, and about the impact the Bill will have. I continue to have deep concerns about its impact. I fear that it will lead to more children and families being poor.
Having said that, I fully agree that, in most cases, the best way out of poverty is through work, and work that is better paid. I remain unconvinced that the measures in the Bill will have the complete effect suggested. Among the many concerns that a wide range of noble Lords and those outside the House have expressed has been the matter of the publication of the information and statistics on financial poverty. The Government have consistently noted that to work simply on financial targets in relation to child poverty is inadequate, and I have consistently agreed.
I meet children from very affluent backgrounds who are poor. They are poor because they lack being loved. Sometimes, their parents are working so many hours to maintain a wealthy lifestyle that they give no time to their child. Such children in homes where money is plentiful have been emotionally starved and, generally, spiritually malnourished. Theirs is a different kind of poverty.
I meet children from very poor backgrounds, in terms of financial income, who are rich in being loved and cared for by their parents or parent. They are emotionally strong, doing well at school and have a wealth of spiritual life. In many cases, they have a parent, or sometimes two, in work but on low wages and working only part time, the latter often because the parent prioritises—rightly, in my view—time with their child over time away from them simply to earn more cash. They are not poor in very many ways.
It is right to look properly at life chances, therefore, because issues of educational achievement, work, housing and the like have a serious impact on children’s lives now and their long-term life chances.
There is also a danger that, with only financial modelling of poverty, the very poorest are not properly helped. Strategies can be worked that just lift people above a specific target, rather than supporting those who are persistently and consistently the very poorest in financial terms. However, along with the almost unanimous view of academics and practitioners from the areas of healthcare, social care, education, economics and other disciplines, I share the conviction that lack of finance is one of the factors that places children in poverty, and that this affects their life chances. The evidence is clear that income poverty impacts cognitive development, school achievement, social and emotional development and health.
Absolutely, that is compounded significantly when other factors are also considered, and they too must be tackled, but not to take seriously the reality of financial poverty would be a major mistake. As the wise proverbialist Agur, from the book of Proverbs, said:
“give me neither poverty nor riches; feed me with the food that is needful for me, lest I be full and deny you and say, ‘Who is the Lord?’ or lest I be poor and steal and profane the name of my God”.
The four indicators that have been used since 2003 work well together. It is how they are worked together that matters: any one standing alone and being used alone is inadequate. So I am delighted that the Government have decided to listen to the arguments and agreed to make a statutory provision for the continued publication of those figures. I think that a persistent poverty figure could well be a very useful addition, although how it is arrived at will need to be as robustly worked through as have been the existing, well-tested measures. It will be important, if it is to be a valuable addition, that it be as rigorously tested as they are.
In conclusion, I thank the Minister, and his team, for the time that he has given us and for how they have listened and worked with us to reach the conclusion that stands before us today in relation to publishing financial child poverty figures. These last weeks have been an interesting journey for myself and my colleagues on this Bench. We are pleased to have been able to serve those whom it is most important we serve well, the children in our nation who are living in poverty—a poverty which all of us must keep striving to end, and which I believe the publication of these figures will assist.
My Lords, I am grateful to the Minister for bringing forward his amendment, and I am pleased that the Government have seen sense on the need to publish these important measures. They will help policymakers and others better to understand the issues affecting child poverty and the levers that may be used to help to lift children out of poverty. The argument with the Government was never really about their life chances measures, which it is clear will provide an important point of reference for policy interventions in the incredibly complex and multifaceted problem of child poverty. It was about understanding that, while child attainment and parental worklessness are important to understanding the problem, the money in a parent’s pocket is still important to understand when seeking to help to lift children out of poverty.
I understand the Minister’s concerns that focusing entirely on income risks the “poverty plus a pound” approach to policy. However, I equally understand that, for example, an intervention in the cost of transport may help to boost attainment, because you can understand that the cost of the bus for extra classes costs more than most of the families that you are trying to help can actually afford. That means that you must have access to data on income; that is important. These four additional measures will help, and not hinder, the Government’s attempt to take a more active approach to this issue. I am particularly pleased with the inclusion of the long-term poverty measure in subsection (1)(d), and I suspect that there may even be policy officials within DWP itself who will find that measure helpful in developing interventions.
This is a good compromise and I am pleased that the Minister has been able to achieve it. Thank you.
My Lords, I warmly welcome Amendments 1B to 1D, and I offer my thanks to various people, at the risk of sounding a bit like an Oscar winner, which I am not. First, I thank the right reverend Prelate the Bishop of Durham, who spearheaded the original amendment and made such a powerful speech on Report and again today. I thank the Minister for listening, hearing and bringing forward what I agree is a pretty fair compromise at this stage. As he said, it gives legal status to the commitment to continue publishing the very important HBAI statistics. Also, there was a letter to the Times last week from nearly 180 academics, including those at the forefront of child poverty measurement, including Professor Sir Michael Marmot—I declare an interest as one of the signatories in my academic capacity. Despite what the Minister said, I think that they will see this as recognition of what was said in that letter: income and material deprivation should be at the heart of child poverty measurement, because such indicators are vital to our ability to track the impact of economic and policy change. I thank Dr Kitty Stewart of the LSE, who organised that letter, and all those who signed it, along with the voluntary organisations that have worked tirelessly to achieve something like this outcome.
Last, but by no means least, I thank Rebecca, a mother of two who, off her own bat but with the help of CPAG, launched a petition to keep the measures and collected 50,000 signatures in less than a month. Writing in the latest edition of CPAG’s journal Poverty, she said that she had been very moved as she read through many of the words written by people explaining why they were supporting the petition. She concluded that we should make sure that all children who are living in poverty are counted in the measures so that we can really see if things are getting better for them. She wrote:
“Children in poverty already feel poor and disadvantaged, why should they also be unnoticed?”.
Amen to that.
My Lords, I have been studying these figures for as long as anyone. I start by acknowledging that I do not think the change would have happened without the direct personal intervention of the noble Lord, Lord Freud. I am very grateful to him, as the whole House should be, because he has the weight to be able to do these things and has the knowledge and understanding of what it means to people.
This gives me a lot more confidence that policymakers within the Conservative Government are not running away from the extent of this problem. I never really believed that that was the case, but this change means that they are not giving the impression that they do not want to see any of these figures published. Individually, these figures—they are relative, and there are well-recognised problems about relative measures—establish trends over time. That is important. Sixty per cent of national median income is perfectly well understood. It is a bellwether figure which we must all bear at the front of our minds as these policies unfold in future.
I remind colleagues that in the last figures the HBAI produced, in 2013-14, something like 17% of British children were in poverty. That is a ballpark figure of 2.3 million in all. That is a serious situation. If that is not difficult enough looking back, looking forward, the best estimate that I can find—the most accurate, up-to-date figure—is the projection that that figure might rise from 2.3 million to 3.8 million by 2020. That is the biggest increase in my generation and an issue of some concern. Obviously there are very difficult financial circumstances, and austerity has to be factored into the policy mix, but it struck fear in my heart when, speaking from Hong Kong, the Chancellor of the Exchequer said that he is looking for further savings in public expenditure. Looking forward to 2020, I think the pupil premium will help a lot in England, and the educational attainment and childcare provisions will help, but I do not think that the Government’s life chances strategy, as currently set out and planned, will deal with the projected increase in child poverty. That is serious and it is what we should be spending time on.
Having said that, reassurance will be provided by the Government accepting these figures and adding persistent poverty, which is a particularly important indicator, although it should be rebased, and I understand the technical need for that. This is a good and welcome step but, more than anything else, I want to acknowledge that it would not have happened without the intervention of the noble Lord, Lord Freud.
I thank the Minister for bringing forward these amendments. I was delighted to see them tabled. I agree with him that employment and education are the most important ways out of poverty. I am also delighted to keep reading the employment figures and seeing that we have the highest records of employment on record, I believe.
I thank the Child Poverty Action Group, which has briefed me on this and introduced me to the First Love Foundation, a bank providing food to hungry families in east London, and, through it, to Lorna, a mother of three boys—two, I think, with disabilities—who was working 16 hours a week. Two-thirds of children in poverty live in working families. It was so helpful for me to meet her and hear about her experience and that of her family, and the difficulties she faced living on such a low income.
I am also very grateful to my Cross-Bench colleagues, who listened very carefully to the debate on Report. I am most grateful for their attention to this matter. I thank the Minister again.
My Lords, I, too, am grateful for the Government’s decision to publish under obligation the three HBAI low-income measures, along with the further measure of children in persistent poverty. In welcoming this response to the clear wish of the House, I will not detain the House with my commentary on the tortuous routes to this wise and welcome decision, tempting though that is; we are in Lent and bidden not to succumb to temptation. As we have so powerfully and carefully considered in this House the plight particularly of children in poverty, I recall that the Minister said that he expected the Government to come under further pressure—I paraphrase—and I do not want to disappoint him.
Can he confirm that he retains an understanding of the special circumstances of children where there is bereavement or domestic violence? Widowed parents are not like other lone parents, and I hope that, as we look forward, there can be some recognition of that.
I reiterate the point that I made as I withdrew another amendment to this Bill: no society should tolerate violence. The Government recognise that in exempting victims of rape from the two-child limit. In the present proposals, those who suffer domestic violence are still encouraged to stick it out and put up with it or be penalised. If violence is wrong and to be deplored, then it is always wrong—rape, yes, but also the brutality, cruelty and horror of all violence. It is a thin line that divides rape and domestic violence, and it does no credit to a Government or a society that seeks to maintain such a marginal distinction. In welcoming these amendments, I wonder if the Minister can indicate that there can be still further consideration of the matters that I raise.
My Lords, I welcome this change of heart from the Government, and I thank the Minister for bringing forward his amendment. It is good to know that we can guarantee that in future robust data will continue to be published about the incomes of poor children so that we can see what is happening to child poverty in Britain. I congratulate the right reverend Prelate the Bishop of Durham on his leadership on this issue and, like all other noble Lords, I thank the Child Poverty Action Group and the End Child Poverty coalition for their work. I thank noble Lords who have supported us on this issue through their words and their votes as the Bill has moved through this House.
I regret that we could not persuade the Minister to carry on reporting on child poverty, but I reassure anyone listening outside this House that we will continue to use these data as they are published to hold the Government to account for the consequences of their policies, particularly should those policies contrive to increase the number of poor children in Britain. I fear that I share the view of the right reverend Prelate the Bishop of Durham that it is most likely that that will take place.
I was not going to get into the area of poverty measurement but I have been tempted. I say to the right reverend Prelate the Bishop of Portsmouth that while I have given up sugar for Lent I am not going to give up politics as well, so I hope that he will bear with me for just one moment. Since the Minister took the opportunity of saying why the Government do not want to be in the business of counting the incomes of poor children, I should say that no one has ever felt that it was just about money—but it is not not about money. I am still proud that the last Labour Government lifted 1 million children out of poverty. The Minister may not think that income transfers make that much difference but they really do to the families involved. Labour tried very hard not to focus on tipping people over some imaginary poverty line. Instead it invested child tax credits for all families; it put in place the New Deal to help parents into work; it created tax credits so they could afford to take their jobs; it gave them childcare so that women could afford to go out to work; and it created Sure Start to ensure that the children developed. Therefore I fully support his agenda to look at poverty across the piece. The right reverend Prelate the Bishop of Durham did a nice job of explaining the different kinds of poverty and wealth. However, in the end, if you cannot afford to feed your kids, money matters. I apologise to the right reverend Prelate but now I am back on track.
The particularly important thing about these data coming out is that there is very strong evidence of the scarring effects of living for a period of time on low income in childhood and what that does to children’s life chances. Therefore I hope that as the Government publish the data, because the data will then be available to them they will also influence policy-making. However, given all of that, the House of Lords has done itself proud; I am grateful to have been part of a process during the passage of the Bill where the House of Lords has been able to scrutinise the evidence and the Minister has been willing to listen. I thank all noble Lords and I thank him. I am grateful for this concession, which is important, and we are pleased to support the Motion.
My Lords, I thank noble Lords for their contributions and thank the right reverend Prelate the Bishop of Durham, who led in this area. I will make just one or two short points. In response to the noble Lord, Lord Kirkwood, I remind him that the forecasts of what happens to this measure of relative income are notoriously difficult to get right. I have been in this House on several occasions when there have been dire warnings that child poverty is about to go up over the next two years, but when you get to the figures two years later, it has not happened. I therefore hate having to defend myself against things that do not happen—it is bad enough having to defend myself against things that happen.
We have had a very useful debate on this area in this House. The point is that the debate succeeded in unpicking the concerns that noble Lords had, which is why we were able to find common ground. We are not in agreement in this area in our approach but we have found common ground here, and I hope both sides will be able to live with this amendment. However, I want to give some reassurance. One of the reasons we have brought forward this amendment is because we wanted to reassure the House and other people around the country that we take this whole issue seriously—that we have an agenda and we want to do something about this. We did not want to leave this issue with the impression that we were not taking it seriously. I can agree with the noble Baroness, Lady Sherlock, that I am convinced, as she is, that the publication of the HBAI will not go by without comment by someone on each occasion.
I will pick up on the point made by the right reverend Prelate the Bishop of Portsmouth, although I need to give him a two-handed answer. As I said when we went through this, we have separate arrangements—a specific set of payments—for bereavement. However, on domestic violence, which we dealt with specifically when we discussed it earlier, the right reverend Prelate has made reasoned arguments; I repeat my acknowledgement that this will remain an area of interest, at least for them, and anticipate the natural corollary of that. With those few words, I urge noble Lords to agree to the Motion.
Motion A agreed.
Moved by Lord Freud
That this House do not insist on its Amendment 8, to which the Commons have disagreed for their Reason 8A.
8: Clause 13, leave out Clause 13
The Commons disagree to Lords Amendment No. 8 for the following reason—
8A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.
My Lords, I will also cover Motion C and we will be able to take the issue in the round rather than have separate debates.
Since we last met, the other place has of course considered the amendments passed in this place to remove the changes to the ESA work-related activity component and the universal credit limited capability for work element. In both cases, there was a clear vote to reinstate the clauses. In addition, the Speaker in the other place ruled that these changes attract financial privilege.
However, a lot of specific, useful points were made by noble Lords during our debate and I would like to provide an assurance that I have listened to their concerns. I aim to address some of the unintended consequences of these measures and to announce how we propose to address some of the specific issues that noble Lords raised. I touched on some of them in a letter that I sent to the noble Lords who spoke during the debate but I will go through them in greater detail now.
The noble Lord, Lord Low, among others, spoke eloquently about the effect that these changes might have on people’s ability to engage in work-related activity, citing the extra costs that can arise from activities such as attending interviews and training courses, and accessing the internet to look for and apply for jobs. We are responding to that concern. We announced in the summer Budget a sum of £60 million per year rising to £100 million per year for practical employment support, but I can announce today that we plan to provide additional funding of £15 million in the first year, 2017-18, directed at the local jobcentre flexible support fund. This money will increase the fund by 22% and it will be set aside specifically for those with limited capability for work. The flexible support fund is used by district managers and work coaches to provide the local support that our claimants may need to return to work, and it has proved to be very effective.
We will also provide guidance to ensure that jobcentres target this additional money at claimants with limited capability for work. The fund will be used to help those affected by the changes to the ESA WRAG and the UC limited capability for work element to attend training courses on gaining practical skills, access mental health support, attend community projects or take part in motivational courses.
The noble Baroness, Lady Meacher, raised the possible impact of these changes on people with progressive conditions. Indeed, several noble Lords expressed real concern on this issue. I have had a very close look at this. I assure noble Lords that we are committed to ensuring that all claimants receiving ESA or UC due to a health condition are subject to appropriate conditionality, based on the way that their condition limits their ability to function. For some people with progressive conditions, this will be the WRAG; for others, it will be the support group.
While the department already offers reassessments to claimants who feel that their condition has deteriorated, I am aware that we can and should do more to make claimants aware of this. To this end, I am committing to improving the awareness of this option to claimants with progressive diseases, as well as the guidance for claimants and disability charities on reassessments. We will also provide training for jobcentre staff to ensure that they are aware that they may need to talk to claimants with deteriorating conditions about requesting a reassessment. This is not an easy area. It is an operational area, and I have told noble Lords who are interested in it that we will work with them and other stakeholders to make sure that we get the guidance and processes absolutely right.
The third area is work incentives, which many noble Lords, including the noble Baroness, Lady Meacher, talked about at length. Clearly, this Government have a strong focus on the importance of work incentives. Indeed, the very structure of universal credit provides a strong incentive to find a job and will continue to do so. It is estimated that 300,000 more households will be in work once the impact of universal credit is fully realised. We intend to build on the success of universal credit and will be releasing a White Paper this year to improve support for claimants with health conditions and disabilities.
I want to act now to improve the work incentives for those continuing to get ESA—in other words, before they move on to UC—by removing the 52-week limit that applies to permitted work for those in the ESA WRAG. ESA WRAG claimants can currently work up to 16 hours and earn up to £107.50 per week under the permitted work rules, and keep their benefit. But the existing position is that, after undertaking permitted work for 52 weeks, ESA claimants in the WRAG have to stop work altogether, reduce their earnings to £20 per week, or lose their benefit. We will amend the regulations to remove the 52-week limit and allow claimants to continue to undertake 16 hours of part-time paid work and earn up to £107.50 per week, gaining skills and experience and building their confidence while still receiving benefit over a longer period.
As many noble Lords will be aware, we have set up a task force to advise us on the use of the £60 million, rising to £100 million, of employment support funding that was announced as part of this change. This task force included disability charities and disabled people’s user-led organisations, employers, representatives of the employment services industry, and policy think tanks. The charities include Scope, Leonard Cheshire, RNIB, the National Autistic Society and the Disability Action Alliance. I would like to report that we have had excellent discussions over three meetings, and task force members have also contributed case studies and views individually.
A wide range of views has been presented and we are working with the group to distil and agree its advice on key principles and priority areas to address. This will then inform development of the employment support package in the context of a wider reform agenda that we will set out in the forthcoming work and health White Paper. Alongside the task force recommendations for the summer Budget money, we will be investing £43 million over the next three years in trialling ways to provide specialist support for people with common mental health conditions—a point I have touched on in the past.
I turn now to the amendment tabled by the noble Lord, Lord Low. This is the third time this amendment has been tabled—once in the other place and for a second time in this House. It seeks to do two things. The first is to require the Secretary of State to publish a report before the changes relating to the ESA work-related activity component and UC limited capability for work element comes into force. That report covers the impacts that the provisions would have on those affected by the changes, in particular the impacts on the person’s health, finances and ability to return to work. We debated this amendment in Committee, when it was laid by the noble Lord, Lord Patel, and a similar amendment was laid and debated in the other place.
As I have said before on such amendments, it is clear that what is proposed in the majority of the amendment will be impossible to provide through our analysis. This is because the data that are currently available do not allow us to make a meaningful estimate. We would therefore need to undertake a large-scale trial over several years which would substantially delay implementation. A trial starting, perhaps, in April 2017 with 15,000 claimants would not yield results before 2019-20. Therefore, the earliest that we would be able to roll out the change would be 2020-21. This delay would not only impact on the savings associated with the change but would hinder the Government’s commitment to providing the right incentives and support for people with health conditions and disabilities to allow them to improve their life chances and fulfil their potential.
The impact on the savings associated with these changes, some of which we plan to recycle into employment support, is significant and would cost the Government more than £1 billion over the four years of this spending review period plus at least a further £1 million in research and analysis costs. What it is possible for the Government to provide—namely, the estimated financial effect of the reforms—has already been provided, along with other impacts, in the impact assessment that was published on
Those who may be affected by this change are people who claim ESA or UC due to a health condition from April 2017 who might otherwise have been found eligible for the work-related activity component in ESA or the limited capability for work element in UC. How the changes affect individuals will depend on their circumstances, including the nature of their illness, which can vary considerably. There is a large body of evidence that shows that work is generally good for physical and mental well-being. Combine this with the growing awareness that long-term worklessness is harmful to both physical and mental health and it becomes clear why it is so important that, where health conditions permit, sick and disabled people are encouraged and supported to remain in or to re-enter work as soon as possible.
The second part of these amendments is a most unusual idea. It seeks to require that the commencement regulations be made under the affirmative resolution procedure. The changes to the ESA, WRAG and UC limited capability for work element—and, indeed, this specific amendment—have been debated extensively throughout the passage of the Bill with both Houses having ample opportunity to vote to express their view. That is why, in line with the usual process, the commencement regulations are not subject to any parliamentary process. Indeed, I have not been able to find any previous example of affirmative DWP commencement regulations. I would have thought that this House would agree that the time to take decisions of substance on these measures is now, during the passage of the Bill following extensive debate and scrutiny by both Houses, rather than postponing it to the commencement regulations.
In fact, this could appear to be a mechanism that sails perilously close to the wind in terms of trying to overturn normal parliamentary process, and I am sure that I am not alone in having concerns that this appears to be an attempt to block primary legislation through the back door. I cannot agree that requiring further debates in both Houses on the commencement regulations is either necessary or an appropriate use of parliamentary time. Furthermore, noble Lords are fully aware that we have committed to publishing a White Paper which will provide considerable opportunity for further debate on issues relating to support for people with health conditions and disabilities. In the light of the convincing vote in the other place, the application of financial privilege and the additional support I have outlined today, I am disappointed that the noble Lord, Lord Low, has felt it necessary to table his Motion. At best, as currently drafted, it is a delaying tactic that undermines conventional parliamentary process, but in practice, and I am sure unintentionally, it acts as a wrecking amendment. I therefore urge the noble Lord to withdraw the amendments and hope that noble Lords will feel able to support the Government. I beg to move.
Motion B1 (as an amendment to Motion B)
Moved by Lord Low of Dalston
At end insert “but do propose Amendments 8B and 8C in lieu—
8B: Clause 13, page 14, line 24, at end insert—“(8) Subsections (2) and (3) shall not come into force until the Secretary of State has laid before both Houses of Parliament a report giving his or her estimate of the impact of the provisions in those subsections on the—(a) physical and mental health,(b) financial situation, and(c) ability to return to work,of persons who would otherwise be entitled to start claiming the work-related activity component of employment and support allowance.(9) Regulations bringing subsections (2) and (3) into force shall not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”
8C: Clause 13, page 28, line 2, at end insert “, subject to section 13(8) and (9)””
My Lords, I beg to move Motion B1 as an amendment to Motion B. I shall speak also to Motion C1. The proposed amendments set out in Motion B1 provide that cuts to ESA should not come into force until the Secretary of State has laid a report before Parliament, while the amendments set out in Motion C1 make similar provision in relation to the limited capability for work component, the equivalent component in the new universal credit which will replace ESA and a number of other benefits. My remarks will mainly be directed to Motion B1 but they should be taken also to apply to Motion C1 mutatis mutandis.
When the matter was debated during consideration of Lords amendments in the other place last week, Jeremy Lefroy said from the Conservative Benches that he hoped that the House of Lords would have taken up the idea which he moved as an amendment on Report that the Government should carry out an assessment of its impact before implementing a cut of £30 a week for those in the work-related activity group of ESA. These amendments in lieu are what Mr Lefroy was looking for. The case for removing Clause 13 and the £30 cut from the Bill remains as strong as when we did that on Report on
“physical and mental health … financial situation, and … ability to return to work, of persons who would otherwise be entitled to start claiming the work-related activity component of employment and support allowance”.
The Government have brought forward no more evidence for their central contention that reducing benefit support incentivises people back to work. In the debate in the other place last week, Dr Eilidh Whiteford MP said:
“If someone is seriously sick or disabled, reducing their income will not make them better quicker. There is not a shred of evidence to support that ill-founded fantasy, but there is plenty of evidence that financial worries and the stress associated with work capability and PIP assessments have a negative impact on people’s health. A large and growing body of evidence suggests that hardship and stress slow down recovery and push people further away from the labour market”.—[Official Report, Commons, 23/2/16; col. 236.]
Indeed, several of those who spoke in the debate made the point, supported by the Institute for Fiscal Studies, that abolishing the WRAG component of ESA could strengthen the incentive for claimants to try to get into the ESA support group. Taking the disincentive thesis head on, Paul Scully MP said that,
“61% of people in WRAG want to go back to work. The majority of people who are out of work want to go back to work”.—[
Stephen McPartland said:
“I do not accept that £30 a week is an incentive for somebody not to go to work. Most Conservatives do not accept that. Most Conservatives consider it to be their proud duty to look after the disabled. Ideologically, we have no issue about providing a welfare system that is a safety net for those who need support when they fall on hard times, to help people back into work”.—[Official Report, Commons, 23/2/16; col. 232]
Heidi Allen MP made the case positively for retaining the ESA WRAG component. She said:
“I do not believe mentoring and support alone will heat the home of someone recovering from chemotherapy or help the man with Parkinson’s who needs a little bit of extra help. I remain unconvinced that these people do not also have financial needs. The DWP states that many people stay stuck in the WRAG for too long—up to two years—but I would question its conclusion that they are financially incentivised to stay in that group. For me, the fact that they are stuck in that group says more about the failure of DWP processes than about claimants’ active choices”.—[Official Report. Commons, 23/2/16; col. 214.]
The Minister argued that the WRAG was not working. She said:
“While one in every five JSA claimants moves off benefit each month, this is true of just one in 100 ESA claimants in the work-related activity group”.—[Official Report, Commons, 23/2/16; col. 195.]
However, Dr Philippa Whitford pointed out that,
“people in the ESA WRAG have been classed as not fit for work, unlike those on jobseeker’s allowance, so one would not expect the same success rate”.—[
Dr Eilidh Whiteford said:
“In contrast to ESA, jobseeker’s allowance is for the most part a short-term benefit. Depending on the state of the economy, the vast majority of jobseekers move off JSA in a few weeks or months, but those with long-term health conditions and disabilities are far more likely to face long-term unemployment”.—[Official Report, Commons, 23/2/16; col. 236.]
Finally, the Minister made reference to the White Paper that the Government are working on that will set out plans to improve support for people with health conditions and disabilities to further reduce the disability employment gap and promote integration across health and employment. Neil Gray, from the SNP, spoke for several in the debate when he asked whether the Minister was,
“not approaching the matter the wrong way round? Should she not introduce the White Paper first and then look at making changes to ESA?”.—[
Heidi Allen acknowledged,
“that a taskforce drawn from the Department and charities will be set up, but that should have happened before decisions were made to reduce financial support. I am uncomfortable about agreeing to the cuts until I know what the new world will look like for such people”.—[
That surely brings us to the nub of the matter, and why it is right to be bringing this moderate amendment in lieu. It does not seek confrontation with the House of Commons.
Just before the debate, I was handed a letter from the chief executive of the EHRC to Roger Godsiff MP. She writes: “We consider that the Government’s impact assessments make very little attempt to set out comprehensively how the three aims of the equality duty have been considered. On
In the face of such a devastating critique, your Lordships may consider that my humble amendment in lieu is moderate indeed.
The Commons disagreed with the amendment we passed on Report on grounds of financial privilege. I do not think that my amendment falls foul of the rules on that. We are not seeking just to send the same amendment back. Rather, we have brought an amendment in lieu with which the Government should be able to comply in the time before implementation without adding to costs. The Minister said it would be an expensive and time-consuming matter to provide the information my amendment calls for, but I would say that if the Government do not already have this kind of information they should not seek to implement such a drastic cut to ESA in the first place. I react to the Minister’s blood-curdling predictions a bit like those who want to leave the European Union and say that the scare stories put out by those in favour of remaining in are simply that—just scare tactics, and not to be taken seriously.
Before I conclude, I pay tribute to the Minister for the way that he has conducted this discussion. In keeping with his usual style, he followed an extremely open process. He has given most generously of his time to meet several groups of your Lordships to discuss the matter. Most to the point, he clearly listened and laboured valiantly within government, as we heard, to find concessions or commitments he could make to blunt the force of a cut to ESA. So it is no disrespect to the Minister when I say that his concessions are just not enough. I genuinely thank him for his efforts, but the concessions are really just at the margins. Against a reduction in the incomes of disabled people of some £640 million by the end of this Parliament, I estimate that the Minister’s concessions would return only about £25 million or £30 million to the pockets of disabled people. I am afraid that that is just not enough. From the passages I quoted from the debate in the House of Commons last week, it is clear that the Government may have had the votes but they clearly lost the argument. That is why it is right for us to make the argument again today.
I support the amendments of my noble friend Lord Low. I, too, am extremely disappointed that the other place rejected the amendments passed by this House. Like my noble friend, I thank the Minister for his genuine attempts to find some concessions to alleviate the effect of the outcome of the cut. He generously met us, took great pains to explain how far he could go, and listened very hard to our concerns and worries that this may not be enough. However, I am afraid that the concessions—I studied them very hard over the weekend—do little to address the real reasons why the disability employment gap remains at a constant 30%.
I remind the House why disabled people placed in the work-related activity group of employment and support allowance receive £30 a week more than those on jobseeker’s allowance. This group of disabled people faces multiple costly barriers in finding work and in just living from day to day. First, they have to manage very severe conditions, whether complex, progressive conditions or long-term illnesses, which may or may not be associated with severe fluctuating pain. It is important to remember that when they are awarded ESA WRAG, they are judged to be unable to work. Almost 40% of them are not expected to improve for at least a year. The majority of this group also struggle with mental health challenges or learning disabilities, and that is just for starters.
The next barriers are the problems of getting to work and staying in work. You have a hostile built environment with inaccessible transport, offices and information systems. Then, when you are finally through the door, you face your biggest challenge ever—the attitude of employers. Trust me, it is comparable to doing an SAS assault course before you even get to do your day’s work. The concessions will do little to address these barriers that have nothing to do with sorting out the individual but have everything to do with sorting out society. This is borne out by the fact that almost 60% of people on JSA move off the benefit within six months, while almost 60% of disabled people in the WRAG need this support for nearly two years. Until now the ESA WRAG component has recognised that disabled people are seeking work for far longer than their non-disabled counterparts. If one looks at the Minister’s concessions, they are focused solely on supporting the individual. This is good but it is only a very small part of the problem. It ignores the major reasons behind disability unemployment, which are the countless external barriers. To suggest that this cut will incentivise disabled people to work is deeply flawed and, frankly, quite offensive.
The Government say that there is evidence of a correlation between employment rates and the level of disability benefit, but this is found only in countries where the level of disability benefit is significantly higher than in the UK. The think tank Reform produced a report last year citing Norway, where the equivalent benefit to the WRAG rate is 66% of the average wage; Sweden, where it is 80%; and France, where it is 50%. By contrast, the ESA WRAG rate is only 20% of the average wage. Believe me, this is not sufficient to provide a financial incentive to remain out of work. In addition, the OECD data show that, since the mid-1990s, in every country where there has been a reduction in the proportion of people receiving disability benefits, unemployment among disabled people has gone up.
I am pleased that the Minister will bring forward a White Paper in the coming months, setting out how the Government intend to close the disability employment gap. I hope this will address all the barriers that disabled people face getting into and staying in work. For instance, I am currently a member of the Lords post-legislative scrutiny Select Committee which is examining how effectively the Equality Act is addressing the discrimination faced by disabled people in the UK. The evidence we received, which was pretty tough going, overwhelmingly suggests that legislative remedies and awareness need attention if disabled people are to be treated equally in society. That, of course, includes disabled people trying to get a job and stay in work.
The recommendations made in the committee’s forthcoming report need to be addressed in the White Paper because these are the real barriers preventing disabled people joining the workforce. They are incentivised, but the barriers stop them. Will the Minister assure the House that his department will include in the White Paper a detailed consideration of those recommendations? I think he will see that therein lies the problem.
It is nonsense to make such drastic changes to the financial support received by disabled people in the WRAG before the House knows what a reformed employment and support system will look like in the future. The Government are asking us today to take a massive leap of faith in their future policy intentions. This is a huge gamble with people’s lives and survival, and I am not prepared to take it. I urge the Minister to accept the amendments proposed by the noble Lord, Lord Low. They make total sense and are very realistic. They would ensure that the up-and-coming reforms are coherently structured to support the Government’s commitment to halving the disability employment gap. What we do not want is a policy that drives the most severely disabled in our society further into a life of poverty and further away from any hope of employment.
I start by thanking the noble Lord, Lord Low, for his leadership and commitment to this issue, and other noble Lords who have also given their wholehearted commitment. This is a fundamental and important issue, not only to Members of this House, but to the most vulnerable in our society. I thank the Minister for the three concessions he has offered. These are real, substantive changes to the operation of ESA, and the wider system of support for disabled people, which will have a positive impact on the lives of some sick or disabled people. I am particularly pleased by the decision to end the 52-week rule, allowing those who are able to do so to stay close to the job market by working part-time. This is really important. This is a positive change to bring things in line with the system that will be in place under universal credit, and it is to be strongly welcomed.
I am also pleased by the decision to increase funding for the flexible support fund by £15 million to help those who are struggling to stay in work while managing a sickness or disability with whatever will make that task a little easier for them. However, I hope the Minister can look at ensuring that those who may benefit from the fund are aware of it. As we all know, with many of these kinds of funds the difference between availability and awareness can be significant in their success.
Finally, the commitment to ensure that those with degenerative conditions are able to move quickly into the support group if and when their condition worsens is important, although I hope the Minister will be able to give the House some details now of how this may operate. I also hope that he will commit to providing further updates to the House as details of this mechanism become clearer so that we may help to ensure that it operates in a way that is most beneficial to those who may need to call upon it.
It is to his credit that the Minister, despite not needing to do so, has fought for further concessions and I applaud him for it. These concessions will and could benefit many sick and disabled people, regardless of the cut to ESA being imposed by the Bill. But, as he well knows, no matter how hard fought, the concessions he has secured are merely tinkering around the edges. I do not believe for a minute that the Minister really thinks that the cut to ESA WRAG is a sensible measure or that it will somehow, as the Government have claimed, incentivise people to get better and into work more quickly. Some 50% of those likely to be affected by this cut suffer from mental health conditions. These are people living with depression and other conditions that make it hard for them to get through the day. The idea that pushing them closer to financial hardship, making it harder for them to afford their rent or feed their children, is going to help them in any way is, frankly, ridiculous. The fact is that for some, the risks of this added pressure could be severe.
If I could, I would seek to strike these measures out of the Bill again but, as we know, the Commons has spoken and the constraints of financial privilege have been put upon us. So we are left with the amendment to the Motion in the name of the noble Lord, Lord Low. This is a good amendment. It is not aiming to wreck the Bill, it is simply asking the Government to do one simple thing: to prove their case. The Government have said that this cut will help incentivise people to return to work. If that is the case, they should prove it. The Government say that this will have a limited impact on people’s physical and mental health. If they truly believe that, the noble Lord’s amendment gives them the chance to prove it. The Government say that sick and disabled people do not need that £30 extra a week. If that is the case, they should prove it.
When experts and NGOs from across the spectrum are saying the case is flawed, the least the Government can do is to present their evidence to prove their case before they implement the changes. That is what the noble Lord’s amendment does and that is why I and my Lib Dem colleagues strongly support it. Surely that is the bare minimum needed in the interests of good lawmaking.
The reason this cut has to happen is because of the need to meet an arbitrary spending target to completely abolish public sector borrowing set down by the Chancellor. The job of balancing the books can be done without this or other welfare cuts. These cuts are a choice, not an obligation. People deserve to know that they are happening because the Chancellor has made the calculation that it is better to look tough on spending and welfare by hitting those who are the most vulnerable than to accept, perhaps, that he has made a misjudgement about the economy.
I support the amendment of the noble Lord, Lord Low, not just because I believe that it is vital in ensuring that these cuts to ESA will proceed only if the claims by the Government about their impact can be proven but because those affected deserve some transparency—some honesty—from the Government. The Treasury must not hide behind good and honourable Ministers such as the noble Lord, Lord Freud, while doing immeasurable damage to some of the most vulnerable in our society.
My Lords, perhaps I may respond briefly to the points that we have heard in the last three speeches, which I listened to with great interest and respect. The points fall into two categories: one is on the substantive issues about the benefit changes; the other is the argument about the procedural changes mentioned in the amendment.
On the substantive changes about whether ESA claimants in the WRAG should have their benefits realigned with those on JSA, with comparable changes to those on universal credit, the reality is that these changes have been debated extensively by both Houses. They were debated most recently last Tuesday in the other place, where after a three-hour debate the House of Commons insisted with a majority of 27—above the Government’s national majority—that the changes which we made should be resisted. The time has come to recognise, as I think the noble Baroness has just indicated, that we should respect the view of the Commons on this.
The noble Lord, Lord Low, said that the Government lost the argument but won the vote. Whether one has won the argument is a subjective decision and I happen to take a different view. Whether one won the vote is not a subjective decision, and that is the basis on which we should proceed. I hope that those who have expressed anxieties have been reassured by what my noble friend Lord Freud said in introducing this debate. There is the increase of £15 million for the flexible support fund, aimed at those with limited capabilities for work and enabling them to attend job interviews and training courses. I hope that that reassurance and the extra resources will allay some of the concerns that have been expressed.
Amendments 8B and 9B seem, briefly, to be going in exactly the opposite direction to that in which the House wanted to go in the context of the debate on my noble friend Lord Strathclyde’s report where, by and large, we wanted more done in primary legislation and less in statutory instruments. In that debate, I urged the Government to set the tone for constructive discussion by not using SIs where primary legislation is more appropriate. These amendments go in precisely the opposite direction to what I think the majority of the House wanted by putting the substantive change not in the primary legislation but in the statutory instrument. That would deny the opportunity for a conversation, which the House has always preferred, because the SI would not allow that. In effect, the amendment would give the House of Lords a veto over this part of the legislation, which the House of Commons has approved, and we would be back in the same territory as we were last October. I, for one, do not want to be back in that debate again and I hope, for those reasons, that the amendment will be resisted.
My Lords, I strongly support the amendment in the name of the noble Lord, Lord Low of Dalston. He has made a strong case today, as he and other colleagues have made consistently, yet the Government continue simply to repeat that the original clauses will improve work incentives and somehow provide more support for disabled people moving into work, without any convincing evidence. Indeed, in the Commons the Minister fell back on the assertion that the Government strongly believe that this is the right thing to do. However, she did not even convince all her own Back-Benchers. As the noble Lord, Lord Low, said, a number of them had grave reservations about steaming ahead without the kind of evidence that is being sought, never mind the reservations and concerns of the wider constituency of disabled people and disability organisations.
However, the main point I want to make is the one that I and the noble Baronesses, Lady Grey-Thompson and Lady Thomas of Winchester, made on Report, which was brought to our attention by Sue Royston. Because the limited capacity for work element acts, in effect, as a gateway to the extra £30 in universal credit to cover the additional cost for disabled people in work, abolition means significant future losses for the very group the Government say they want to support. When the three of us made the point on Report, the Minister did not provide any substantive response. I did not receive the letter until just now, so it is possible that I have not read it properly. I have a horrible feeling that it might be languishing in my junk email folder, because a number of previous letters from the Minister finally turned up in that folder—I do not know what my email knows.
At the time, I said that I could not believe that this was an intended consequence. The Minister talked earlier about unintended consequences, and I apologise if he has actually dealt with this, but on a very quick reading of the letter, I do not think that he has. It appears that the Government are happy to countenance this as an unintended consequence, so that in the name of improving work incentives for disabled people, it will worsen the situation of those in work and in receipt of universal credit in the future. Whatever one thinks of the underlying premise that the measure is necessary to improve work incentives—I and others have made it clear that we do not believe that the evidence supports this premise—this cannot make sense. It is therefore essential that there is a proper review of the full impact of the original clauses before they are implemented, to address this issue if nothing else.
Despite the welcome concessions that the Minister has made, I hope that noble Lords will feel able to support the noble Lord, Lord Low of Dalston, who has worked so hard to protect disabled people from the worst effects of this Bill.
My Lords, I rise to support briefly but most strongly the amendment to the Motion tabled by my noble friend Lord Low. I thank the Minister very sincerely for meeting us last week, and more particularly for his very real attempt to respond to the concerns expressed by noble Lords on Report. However, it is perfectly clear from the very restricted nature of the amendments that the Minister has been working within the tightest possible straitjacket. I accept that the Minister has done his very best, but I hope that he will understand that those sick and disabled people who genuinely cannot find an employer willing to take them on—which in my view is the very big problem they face—will face the most incredible hardship if Clauses 13 and 14 are implemented.
I shall address my next remarks directly to the Chancellor of the Exchequer. Mr Osborne, when it was our greedy and unscrupulous bankers, not disabled people, who generated the budget deficit, is it not immoral to reduce the meagre incomes of sick and disabled people by £1,500 a year to raise some half a billion pounds to deal with the deficit? Most bankers would regard £1,500 a year as literally peanuts—they would hardly notice it—but for these people, that sum is very considerable indeed. For me, the purpose of pressing this amendment today is to provide another chance for MPs in the other place to challenge the Chancellor directly about the scandal of such a policy.
The Minister said that the amendment would delay implementation until 2020-21. I am sure that he is right, but if I am right, Clauses 13 and 14 will not incentivise sick and disabled people to get into work—quite the opposite. They will find it ever more difficult to do so. So what are three or four years to find that out and prevent the hardship that these clauses will cause?
The Minister has agreed that if people with a lifelong progressive illness suffer a step down in their condition, it should be made easier for them to be assessed quickly. I thank him profusely for that concession, but it is very difficult to have confidence in the process. Even if DWP staff are able to deliver that commitment, the assessment process itself is deeply flawed—we all know that—and often very distressing indeed.
I should be really grateful if the Minister could assure the House that, whatever happens to the amendment moved by the noble Lord, Lord Low, today, for these groups— people with terminal, progressive, lifelong illnesses—the assessment process will be very straightforward and paper-based, simply involving a letter from the doctor to confirm that the individual indeed has a lifelong progressive health issue, has suffered a downward step and is unlikely ever to work again. It should be unnecessary—and, in my view, it would be cruel—to demand anything more than that.
My only other point is that the Minister’s concessions will do little or nothing for the 50% or so of ESA WRAG claimants who have mental health problems. Yes, as others have said, until universal credit is introduced the 52-week rule will end—and again I am grateful to the Minister for that. But there are two main problems for these groups. First, the chances of being referred to high-quality therapy services and receiving those services remain small. I know that cross-departmental work is always extremely difficult, but we can go to the moon, so I expect we can do this, too. We need from the DWP some way for these people to get the therapy that they need, just as somebody with a broken leg gets something done about it.
The second major issue is that it is extremely difficult for these people even to get an interview, let alone to find an employer willing to take them on and keep them. So the loss of income for these people is simply a punishment for something that is no fault of their own. That is my problem with all this. The Minister’s concessions, I am afraid, do very little to set right this injustice. It is despite my respect for and thanks to the Minister that I will vote for the amendment of the noble Lord, Lord Low, today. My vote will signify my disbelief that disabled and sick people are being asked to pay the price for the bankers’ greed and appalling behaviour—which, according to a former Governor of the Bank of England, continues pretty much unchecked today.
My Lords, I shall contribute briefly to this debate. As noble Lords have already said, we have had substantive, detailed debates both in Committee and on Report in this place and in another place, and I do not want to repeat at length arguments made then.
We should not underestimate the value and importance of the further enhancements that my noble friend has announced to the House. They respond directly to many of the points made in the debate. From my point of view, there is specialist support for those with mental health issues, to which the noble Baroness, Lady Meacher, rightly referred. With the noble Lord, Lord Layard, in his place, I think we can look forward to strong cross-departmental working between DWP and the Department of Health, with the therapists required being recruited to support the rollout of the access to psychological therapies programme to be completed by 2017-18. That gives us, for the first time, a realistic hope that those who are out of work with mental health problems—largely depression and anxiety—can have access to psychological therapies sufficiently quickly that they can be supported back into work before their condition deteriorates. It is one of the abiding characteristics of the failure of the work-related activity group that people have not had the support they needed both into work and for the treatment of their condition at the earliest possible stage.
These are important enhancements. As my noble friend Lord Young said, the flexible support fund responds to the points made. For those who are in the existing work-related activity group who are not to be cash losers, the enhancement of removing the 52-week rule will put them in a good position to be incentivised and supported into work, and encouraged to do so.
In response to the points made not least by some of our friends in another place, and on the point about improving the assessment, particularly for those with chronic or progressive conditions, the work capability assessment is really important. For example, it responds to the points made by the noble Lord, Lord Low, when he talked about Jeremy Lefroy’s speech, which was all about improving the work capability assessment. That responds directly to that.
The noble Lord, Lord Low, quoted extensively from the debate in the other place, but did not quote those who were in the majority. I am not going to have a corresponding series of quotations, but I regret that he did not get to the nub of the matter. The nub was that not only was the vote won but the argument was won. The nub of the matter was expressed by Paul Maynard, Member of Parliament for Blackpool North and Cleveleys, who in the course of commenting on a number of government policies to support those with disabilities—he was talking of the Government’s support for the Disability Confident campaign—in one phrase encapsulated the reason why the majority in another place supported the Government’s proposal and rejected this House’s amendment. He said:
“We all accept that the status quo is inadequate, and it would be the worst of all worlds to lock in a failed policy for the work-related activity group. That would benefit no one at all”.—[Official Report, Commons, 23/2/16; col. 207.]
I hope that your Lordships accept that the Government’s policy should be implemented. I am afraid that it would be continuing in exactly the same vein that was criticised in the other place if they tried to delay the implementation and remain with the status quo; that will be the inevitable consequence of passing the amendment in lieu proposed by the noble Lord, Lord Low. If we are to move to a better system to help and support people into work, we need to do it now, rather than remain with a failed status quo.
My Lords, I hope that I will not be considered to be lowering the tone of this debate if I ask the Minister a few practical questions about the concessions that he is offering and to say where I stand.
The Minister says that the funding within a flexible support fund will increase by £15 million a year to ensure that JCP targets the money at claimants with a health condition or disability. That is, of course, welcome—but which particular person within JCP will be doing this? Is it the decision-maker or the disability employment adviser? We know that there are not nearly enough DEAs to go around, so I am struggling to picture who will engage with the claimant to help them. There are also work coaches—will it be the work coaches and, if so, are there enough to go round, one to every Jobcentre Plus office? Will that person offer help to the claimant, or will they wait for it to be requested? If they wait, it will not happen, because how will claimants know about it? I do not suppose that they read Hansard.
The Minister says that the money might be used to pay for an internet connection at the claimant’s home, but who will teach them how to use this internet connection, particularly if their health condition poses problems? He may think that I sound sceptical, but I am afraid that is because, from long experience, I know that what Ministers say at the Dispatch Box and what actually happens on the ground are two very different things.
Furthermore, the Minister’s offer that the reassessment can be requested if a person with a long-term condition feels that they have got worse is just a restatement of the existing position. How long would people have to wait for a reassessment?
I welcome unreservedly the abolition of the 52-week limit for the permitted work rule, which I always thought was absolutely daft.
Finally, I agree with all those people who say that the Government have got things the wrong way round. Let us have a White Paper first and then see what needs to be done in this whole area, in the light of the proposals. I shall be voting for the amendment.
My Lords, I, too, thank the Minister for meeting a number of Peers last week and listening to our views. Unfortunately, that has not alleviated my concerns about the impact the Bill will have on a significant number of people. Many people are already close to crisis point. They feel so beaten up by the changes that they are finding it hard to articulate. It is not that they do not care. They just do not have the energy left and are just trying to survive.
I welcome the changes in the permitted work rules, and congratulate the Government, as they have been needed for a long time. They could perhaps have been made before, but I am really glad that they have been fixed. I listened with interest to the noble Lord, Lord Young, on what is technically right for us in this Chamber to do. We have to think about the effect the Bill will have on people outside this Chamber. I have received many emails on this subject from individuals worried about how these changes will push people further away from where we all want them to be.
My noble friend Lady Campbell of Surbiton made a compelling argument about the lack of proof about the incentive to get into work and about the contents of the White Paper. I should congratulate the DWP on our knowing so little about what is going to be in it, but it worries me greatly that we do not know what will be in it. As the noble Baroness, Lady Thomas, said, we are doing this the wrong way round. I understand that there is a need for us to save money, but I believe we can do it in a better way.
I have previously said in your Lordships’ House, and I will reiterate, that this change will affect disabled people in work as well as disabled people out of work. Disabled people in work will get less under universal credit. I thank the Minister for his letter, but perhaps we will disagree on the numbers that come out of it. To push these measures through, the Government are relying on the report by Reform, which is an ideological statement of the Government’s intent. I believe there are a number of flaws, especially around the erroneous contention that only 1% of claimants in the WRAG group end their ESA claims, as was raised many times in another place last week. The reality is that a simple check of the Government’s figures shows that more than 250,000 claimants in that group have ended their claims.
One of the many reasons that so few people ended up in work was that half the claimants were ex-incapacity benefit claimants and were too unwell for work. They have been through that assessment process. There is a great deal of difference between someone who is categorised as sick and will get better, say someone with a broken leg, and somebody who is categorised as sick with, say, Parkinson’s, where we do not know how quickly that condition will affect them. It almost feels as if we are putting the blame on disabled people, trying to fix them and not understanding the barriers that they face getting into work. Reducing the gap between those who are economically inactive through sickness and those who are unemployed throws away all recognition of those who are facing hardship through sickness and through no fault of their own.
I am sure the Minister will tell me that the answer is in the additional discretionary fund delivered through jobcentres. That sounds positive and it might be helpful to disabled people who are able to look for work, but we should remember that we are talking about an additional £15 million given to jobcentres to be used at their discretion with a range of clients, not just disabled people. Furthermore, this pales into insignificance when we think that the Government’s cut to ESA is taking £640 million out of disabled peoples’ pockets. It further introduces an additional round of bureaucracy, as claimants, many with mental health problems, will have to grapple with increasingly inaccessible local support networks, which will become a postcode lottery. It is thus likely to lead to claimants simply not applying for whatever help they may need because they just do not know that it exists.
I want to know what the support looks like. I was told by a special careers adviser that the best job I could ever get would be answering telephones and that I should not aim too high. That might have been 25 or 30 years ago, but right now disabled people are being told similar things. An adviser who works in a citizens advice centre told me that job coaches are telling people who are correctly in WRAG that they need to reapply when they do not have to. They are putting their support at risk, getting removed from WRAG, going to appeal and getting put back on WRAG. This is costing a huge amount of money and undermining everything that we are trying to achieve.
If job coaches right now do not understand the system, how are they going to be able to administer the discretionary fund? Reformers also claim that there is a financial advantage to being on sickness benefit. That suggests to me that they have no experience of what living on that amount of money if you are sick and/or disabled is actually like.
Universal credit is today a benefit that promises much but has yet to get off the starting blocks. No analysis at all has been provided showing how the lives of claimants with limited capability for work, or limited for work-related activity, will be enhanced by universal credit. It is hard for me to see how the Government taking £1,500 a year away from people who are profoundly limited in their capability for work will leave them better off under universal credit.
If you look at what others have said about universal credit, you see it reported that it is behind schedule, dogged by computer processing errors, poor communication with claimants and delays in fixing simple administrative problems. That is how it exists now. Noble Lords should remember that many of those people who are going to be affected will not be able to apply for PIP because of tightened criteria and will not be able to get support anywhere else. The decisions that we are taking today need to be clearly understood for the impact they are going to have on disabled people.
I agree that there is a lot of money wasted in the system through assessments and reassessments, and I have discussed that in the legal aid Bill. The appeals for ESA work capability assessment logged at HMRC have reached record levels; they are currently at 1.1 million, the highest for all benefits. We need to look at the system—that is essential—but right now disabled people are bearing the brunt of wastage in the system.
The amendment tabled by my noble friend is highly sensible. I urge the Minister to keep listening and think about the consequences that this will have on a significant number of people. I strongly support my noble friend in his endeavours.
My Lords, I would like to add a couple of broad points to this important debate on this significant subject. As far as I am concerned, the noble Lord, Lord Low, has done the House a great service in tabling his amendment. I take the point made by the noble Lord, Lord Young of Cookham, as a former Chief Whip; the amendment may well be defective, and I certainly do not want to go back into the territory covered by the report of the noble Lord, Lord Strathclyde. However, the noble Lord, Lord Low, is saying that the House of Commons has asserted its rights in the process of ping-pong but this is merely a Motion to ask for some extra time.
As one or two other colleagues have said in the debate, I would want that extra time, if for no other reason than—a point made by the noble Baroness, Lady Thomas—to look at the White Paper. The White Paper that is coming will be significant and I am looking forward to it; it is an opportunity to have a look at this whole important policy area again. Taking this decision this evening would be a retrograde step and might make it more difficult for us to take the proper opportunity that the White Paper represents. If this change were not to be introduced until May 2017, that would be a sensible pause. I take the Minister’s point about the difficulty and technicality of meeting the test set out in the amendment, but it would be perfectly possible to have a sensible stab at estimating the impact on this particularly vulnerable group of our fellow citizens—the DWP has hundreds of researchers who do this work all the time.
I want to draw a broader point from that: we would not need to be here if we had had a proper impact assessment in the first place. To make an even broader point, it is now deemed to be old-fashioned and not sensible to have White Papers, Green Papers and a pre-legislative process for our legislation because it all has to be done for the greater glorification of Chancellors at Budget time so that they can make ex cathedra statements and get plaudits in the Sun newspaper the next day, only for us to find a fortnight later that all is not as it seemed. There is a plea here and a lesson to be learned: we should be more deliberative about the consultation process in these specialist areas of policy in order to get this kind of thing done right in the first place.
I make a point in passing about universal credit that a number of colleagues have made: this strips out some of the many advantages that universal credit will have in future, and that is regrettable. I also make the point that the £640 million saving has to be measured against the £100 million. I accept that again the influence of the noble Lord, Lord Freud, on this has been entirely beneficial. No other Minister could have had the success he has had in refining in important but second and third-order ways when considered against the fact that we are spending a sixth of the savings we are making in support for people who are in the work-related activity group. That is not enough. If it had been 50:50 and the Government came forward to the House with the savings bill—and it is correct to bear in mind that we are facing austerity as you cannot ignore that either, but to put one-sixth of the saving into the support services that are necessary for people in the WRAG group is not a proper balance or the right judgment—the House would have been a bit more willing to listen if the balance had been a bit more even.
The other thing is that the personal independence payment provisions we have introduced will not survive the test of time. The assistance we give people who are in the support group is nearly absent, and we need to do far more to provide help for people in that group to find work in the longer term. Therefore the Government would be well advised to think again. The noble Lord, Lord Low, has brought forward an important amendment; if he presses it to a Division I shall certainly support him, and I hope that other Members of the House will do the same.
My Lords, as others have said, we should be grateful to the noble Lord, Lord Freud, for his focus on a number of initiatives that seek to ameliorate the problems created by withdrawal of the WRAG component for new claims after March 2017, whether those were intended or unintended. However, I will be clear up front: we do not consider that the Government’s package of proposals adequately deals with the consequences of that withdrawal.
I will start by addressing the specific points raised by the Minister. First is the commitment to increase the funding in 2017-18 for the flexible support fund with guidance to jobcentres to ensure that the additional funding is targeted specifically at those with limited capability for work. The sum of £15 million has been mentioned. Obviously, this is to be welcomed so far as it goes and it could be used to help with extra costs of expenditure on attending interviews, training courses, accessing the internet, and so on. The focus on those in the WRAG is important because at present, as the 57 pages—would you believe it?—of guidance to district managers makes clear, the fund can be used to support all Jobcentre Plus customers, including 16 and 17 year-olds. Does the Minister have any indication of the current annual application of the fund to those in the WRAG, and how many claimants in the WRAG is the new money expected to help? With half a million people in the WRAG, £15 million amounts to 50p a week on average.
As for those with progressive deteriorating conditions, increasing awareness of the right to seek reassessment is fine but is this not just what the system should deliver anyway? Perhaps the Minister can say a little more about how it works at present, what data there are on the numbers currently seeking reassessment from the WRAG, and what information there is on the timescales within which these assessment are delivered. If it is envisaged that this awareness-raising would lead to greater numbers of individuals being reassessed, what additional resource is being made available to cope with it all?
On permitted work, the proposition is that someone on ESA will in the future be able to undertake work for more than 52 weeks, which, as we have heard, is the current limit, as long as it is for fewer than 16 hours a week and earnings do not exceed £107.50. It is understood that such earnings would not be taken into account for benefit purposes, including housing benefit. Perhaps the Minister can confirm that. Can he also say what the position will be in relation to council tax support schemes?
This proposal does not seem to add anything to the current arrangements for supported permitted work, where there is no 52-week limit at present, nor for permitted work for those in the support group. Of course, there are no permitted work provisions in universal credit, although the briefing note refers to the non-time-limited work allowance arrangements. We can see the similarity but there does not seem to be any direct read-across on the amounts. We can see the merits of removing the time limit for permitted work and the encouragement that this would bring, particularly to those closest to the labour markets, but it raises a couple of questions. What in fact would bring it to an end, and what would be the position of somebody on JSA and somebody on ESA, each working, say, 15 hours a week at the same rate of pay? What would be the consequences for somebody on ESA of having undertaken permitted work when it came to reassessment? As we know, the DWP has to be notified if somebody undertakes permitted work. Perhaps the Minister can say whether this would trigger any process for early reassessment. As a matter of fact, how many notifications does the DWP have in any one year?
All in all, these government proposals might be said to be helpful but they are a long way from being transformational or addressing the real damage being done by the removal of £30 a week from those in the WRAG. That is why we will support the amendments in the name of the noble Lord, Lord Low.
We have previously debated this matter at length and have rejected the clauses that abolish the WRAG component in ESA and the equivalent component in universal credit. We share the concerns of those who challenge the assertion that the removal of this component would be a work incentive and that it would assist in closing the disability employment gap. In particular, we agree that the analysis has not properly understood the barriers to accessing work faced by many disabled people—the noble Baroness, Lady Campbell, spelled those out in some detail—nor the poverty that they face, which will be made worse by implementing these provisions. Nor indeed has the analysis properly understood the adverse impact that there will be on the health of many disabled people. Widespread evidence has been presented to us on these matters, and we have had the Halving the Gap? review, led by the noble Lord, Lord Low.
In those circumstances, the call to hold back on the legislation until there has been a fuller impact assessment of its effects on the physical and mental health, the financial situation and the ability to return to work of those affected seems “modest”—I think that that was the word used. The Government have in part recognised that there is a serious issue and, as we have heard, they have promised a White Paper, although the timing and scope of this is unclear. It is hoped that it will in part make amends for a wholly inadequate impact assessment, but is it not at least a recognition that more is to be done and that legislating in this Bill in this way is premature? It is the wrong way round.
The Minister has told us that the data requested by the amendment are not currently available. Is that not a rather flimsy basis on which to legislate? It seems to us unacceptable—indeed, reckless—to legislate without those data and without that analysis, and it is playing havoc with the lives of many disabled people.
I start by thanking noble Lords for their contributions. Clearly, many of them feel very strongly on this issue and they have expressed that.
I was struck by the noble Lord, Lord Kirkwood, saying that this was merely an amendment to ask for extra time. However, the point that I tried to make was that the time being asked for was very substantial—as the noble Baroness, Lady Meacher, accepted, we are talking about the way this is constructed—pushing this measure out to 2021. The noble Lord, Lord Low, rather gave it away when he said that the concessions—the practical concessions I am trying to deliver to the House, and to the people who need them to help with their particular circumstances—were not enough, and that he would therefore bring forward this amendment to drive at the whole structure of the Government’s proposal. The noble Lord said that this amendment is a compromise, but in practice it is not, because it would mean that these measures could not go forward. Research has to happen, which we could not therefore do to any reasonable timescale.
There may be compromises—I have found three—but this is not a compromise. Although I am sure that this is not the noble Lord’s intention, his amendments effectively wreck this policy, for those reasons. I argue that that is not something this House is here to do, given the very clear message that was sent. This House sent this measure back to the other place, and it has come back with financial privilege. If the noble Lord’s amendment is carried, we will be sending this measure back with just as many costs—I gave an illustration of those—as were involved the first time. I know that a lot of noble Lords will feel pretty uncomfortable with that process. I accept that many noble Lords do not like this measure, but we are beyond that position now: we are into the question of the appropriate position of this House, in the context of a very substantial vote for the measure’s coming back.
Let me deal with some of the points that noble Lords have made. I point out to the noble Baroness, Lady Manzoor, that there is evidence that financial incentives do work in this area, and I have quoted those in the past.
Disability benefits was dealt with in a paper by Barr et al, published by the Journal of Epidemiology & Community Health in 2010, and there are some others.
People in the WRAG are not incapable of working: they have limited capability to work. That is the distinction—the tier down—from those in the support group. The noble Baronesses, Lady Campbell, and Lady Grey-Thompson, made the point about the barriers that exist. I accept that people face barriers to work in this category. One of the things we are focusing on in the White Paper, and which we will spend a lot of time on in future, is dealing with these barriers, because this Government are committed to halving the gap.
Meanwhile, the flexible support fund is designed to go to the work coaches. However, to pick up on the questions of the noble Baroness, Lady Thomas, this depends on whether it is in relation to ESA or UC. Within UC the work coach maintains the relationship right the way through regardless of the health status or employment status of the person. That is where we will focus our attention and, clearly, because there is a relationship with a work coach, the money will be available directly to support such people.
As to the point made by the noble Baroness, Lady Manzoor, on progressive conditions and reassessment, I thought that this was a legislative issue and I was considering how to sort it out. However, it is not a legislative issue but a communications and operational issue. That is why the approach I have taken is to work with some Members of this House and stakeholders to get the system working. It is important. Sometimes people who have Parkinson’s are fine at the beginning and go about their lives, but then it gets worse. So being labelled with a particular illness does not mean that you should be at the top rate but, if you take a downward move, it is vital that you are straight in. We need to look at the processes for that and I have committed to doing so.
As to mental health conditions, which many people have talked about, the most frightening single statistic about our system of welfare support is that 42%, I think the figure is—I am speaking without a note—of people go into ESA with mental health reasons as the primary indicator. Once they have been on ESA for a year, that figure has moved up to 68%. We have turned the system round. Work is part of the solution. Leaving people sitting at home is the worst possible thing we can do for them. The whole of our welfare system has been wrongly directed at that kind of projection and we are moving the system round to stop that—
It is true. We will debate it elsewhere.
The noble Baroness, Lady Thomas, asked who will do all this. We are developing a system we call universal support under which we join with local authorities to support people with particular barriers. We have never had this kind of system before. We have had systems where individual problems are addressed but no one has tried to sort out people’s problems in their entirety. We have now found a way of doing this. Through district partnerships with local authorities we are trying to make sure that people’s problems are addressed. We have a relatively narrow position at the moment—we are considering budget and digital issues—but it is a potent position and it is likely that we will pursue it.
The noble Baroness, Lady Campbell, referred to the Select Committee’s recommendations on barriers. We have already announced that we will replace both the work choice and the work programmes with the work and health programme.
The noble Lord, Lord McKenzie, showed his usual mathematical skills, but he got the wrong denominator. That is because £15 million is quite a lot of money in a flow measure in the first year, and I can assure him that he need not multiply it by everyone in the group because we are looking only at the flow. There is no impact on the work capability assessment of doing permitted work; it is a functional assessment.
Perhaps I may recap the commitments we have given and which noble Lords have generously pointed to. We have put an extra £15 million into the jobcentre flexible support fund, a rise of 22% that will go straight to the right people. We have removed the 52-week limit on permitted work in ESA. We have set in train a way of protecting people with progressive conditions to make sure that they have a rapid route into the support group when they need it. We have also made a number of commitments and changes to the Bill as it has gone through, and I thank noble Lords for their help in focusing on where those changes were needed. We have taken on the DPRRC recommendations. We have amendments to bring in exemptions to the benefit cap for people in receipt of carer’s allowance and guardian’s allowance. We have exemptions to the measures limiting support to two children in child tax credit and universal credit for kinship carers and sibling group adoptions. We have agreed a year-long exception for all supported accommodation from the rent reduction measures and we have placed a statutory duty on the Secretary of State to publish income measures annually. We have really gone through the Bill with the help of Peers around the House to get it right.
I shall return to the amendments at hand. I hope that the Government have made a strong case not to accept them because they do not work as intended. We have already had the original amendments returned with a ruling of financial privilege. I hope that the House takes the relationship between this House and the other place seriously and gets its judgment right.
My Lords, I thank the Minister and all noble Lords who have spoken. We have had 10 speeches in this substantial debate on my Motion which in my estimation break down to eight to two in favour of the amendment, so the opponents are gaining. We also had 10 speeches on Report, but they broke down to nine to one in favour of the amendment. Eight to two still gives us a substantial lead. Frivolity apart, I thank all noble Lords who have contributed to the debate and for the support which has been signified right across the House. I am also grateful to the Minister for the way he has engaged with this.
I wish to pick out four points from the debate to allude to. The noble Lord, Lord Young of Cookham, is very knowledgeable about the dynamics of these matters and I am sure we all respect his views, but I am afraid that we will just have to disagree about who won the argument in the Commons. Yes, it is a subjective question, but in support of my interpretation of the debate I would simply argue that, as I said when moving the amendment, the Government have not really brought forth any more evidence in support of their case. What they have said is based largely on assertion, and in the circumstances I believe that it would be wrong for your Lordships not to draw attention to the weakness of the case.
Secondly, we would be failing disabled people, who will suffer dramatically if these changes to ESA go through, if we did not at least move an amendment like this and, it is hoped, carry it. I have long thought that a particular strength of this place is its openness to pleas for support from constituencies of the vulnerable outside this House. I am strengthened by the independent mindedness of noble Lords and the comparative independence of the Whips. That makes this place more open and accessible to the concerns of vulnerable communities, and I do not think that we should clam up against them at this point. The House should be true to its traditions and true to the spirit that it showed in carrying Amendments 41 and 44 on
If we are to keep faith with disabled people, the only way in which to do that is by calling for a report to be brought forward under secondary legislation. That is why the amendment seeks to use secondary legislation rather than primary legislation; it is the only course open to us.
Thirdly, the amendment is extremely appropriate given the EHRC’s strictures on the impact assessment that the Government have come up with. Fourthly, it is a question of delay. I do not think that the amendment will be delaying because the Government have 14 months to comply with what it is calling for. To the extent that it is delaying, it is appropriate that the changes to the benefits system for claimants of ESA should be finalised in the context of the White Paper. That point has been strongly made by a number of noble Lords.
The Minister made the point that it is impracticable for the DWP to carry out the sort of assessment that the amendment is asking for. I cannot remember who it was—it may have been the noble Lord, Lord Kirkwood, who said that surely the DWP, with its hundreds of researchers, can at least have a stab at it. We are not seeking the last word in methodological rigour, but within the time available it should not be impossible for the department to have a better stab at an impact assessment than what we have seen so far.
I do not think it is a wrecking amendment. It is more than possible for the Government to come up with a passable show of what we are asking for. However this goes today, I undertake to the Minister that we will continue to work with him to get the best outcomes for disabled people, which I know is what he wants, too. For now I hope he will not mind if I seek to test the opinion of the House.
Ayes 289, Noes 219.
Moved by Lord Freud
That this House do not insist on its Amendment 9, to which the Commons have disagreed for their Reason 9A.
9: Clause 14, leave out clause 14
The Commons disagree to Lords Amendment No. 9 for the following reason—
9A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.
Motion C1 (as an amendment to Motion C)
Moved by Lord Low of Dalston
At end insert “but do propose Amendments 9B and 9C in lieu—
9B: Clause 14, page 14, line 27, at end insert—“(2) This section shall not come into force until the Secretary of State has laid before both Houses of Parliament a report giving his or her estimate of the impact of the provision in this section on the—(a) physical and mental health,(b) financial situation, and(c) ability to return to work,of persons who would otherwise be entitled to start claiming the limited capability for work element of universal credit.(3) Regulations bringing this section into force shall not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”
9C: Clause 31, page 28, line 2, at end insert “and subject to section 14(2) and (3)””
Motion C1 (as an amendment to Motion C) agreed.
Motion C, as amended, agreed.
Moved by Lord Freud
That this House do not insist on its Amendment 34 and do agree with the Commons in their Amendment 34A in lieu.
34: Clause 28, page 26, line 18, leave out from beginning to “does” in line 21 and insert—“(a) in a case where the maximum amount applying under regulations under section 26 or Part 1 of Schedule 2 is determined on a basis that treats an amount, or a description of an amount, payable by way of service charge as part of the rent payable, includes a reference to an amount, or an amount of that description, payable by way of service charge,(b) in a case where section 21 applies after regulations under section 26 have, or Part 1 of Schedule 2 has, applied a maximum amount determined on a basis that treats an amount, or a description of an amount, payable by way of service charge as part of the rent payable, includes a reference to an amount, or an amount of that description, payable by way of service charge,(c) in a case not falling within paragraph (a) or (b) where, under the terms of the lease or agreement, an amount, or a description of an amount, payable by way of service charge is part of the rent payable, includes a reference to an amount, or an amount of that description, payable by way of service charge, and(d) in any other case,”
Commons Disagreement and Amendment in lieu
The Commons disagree to Lords Amendment No. 34 and propose Amendment No. 34A in lieu.
34A: Clause 28, page 26, line 16, leave out subsection (5) and insert—“(4A) Regulations made by the Secretary of State may specify cases in which a reference in the social housing rent provisions to an amount of rent payable to a registered provider includes, or does not include, a reference to—(a) an amount payable by way of service charge, or(b) an amount payable by way of service charge that is of a description specified in the regulations.(4B) Regulations under subsection (4A) may, in particular, make provision by reference to—(a) guidance with respect to the principles upon which levels of rent should be determined issued by the Housing Corporation under section 36 of the Housing Act 1996;(b) a standard set under section 193(1) of the Housing and Regeneration Act 2008 that includes provision under section 193(2)(c) (rules about levels of rent);(c) a standard set under section 194(2A) of the Housing and Regeneration Act 2008 (the power of the regulator to set standards relating to levels of rent) that was published by the regulator before
My Lords, at Third Reading earlier this month, I informed the House that we had received representations from providers and the regulator for social housing about an unintended consequence of one of the government amendments we brought forward on Report. That amendment sought to enable continuation of existing policy on affordable rents and service charges which we had intended to be helpful. I said at the time that we would seek to address this issue by tabling an amendment in lieu when the Bill returned to the other place, and this Motion is the result of doing that.
In speaking to the Motion, I find myself reminded of Alexander Pope’s popular quotation, “To err is human”, but that would give noble Lords the chance to be divine in their forgiveness, which is clearly unacceptable. Perhaps it is more appropriate to quote William Hickson, the proprietor of the Westminster Review, who is credited with popularising the proverb:
“’Tis a lesson you should heed:
Try, try, try again.
If at first you don’t succeed,
Try, try, try again”.
I hope that I have now removed the opportunity for noble Lords to make jokes at my expense, but I doubt it.
I will outline briefly why the change is needed. The providers have told us that the drafting of the original amendment would inadvertently bring service charges within rent reduction measures for some standard social rent housing. This is because, although providers are entitled, under existing guidance, to charge service charges on top of formula rent, this has been implemented by providers in different ways. For example, some landlords of formula social rented housing reserve service charges as part of rent for purposes of enforcement in relation to non-payment of service charge. As a result, the service charge, even if it is separately itemised—and it is not always—forms part of gross rent and is captured by the provision. In such cases, service charge is part of rent and the entirety of the sum would be captured. This would result in a larger reduction in revenue for the providers than expected. We understand that these practices, while not general, are sufficiently widespread to be a problem for the sector. This was not our intention and we thank providers and the regulator for drawing it to our attention.
Given that this is a complex area, the amendment sets out a new regulation-making power instead, rather than setting the position out in the Bill itself. This will allow flexibility for further adjustments if they are ever needed. Regulations made under these powers would do two things. First, they would identify the cases where the social rent reduction limits being imposed by the Bill would limit both the amount of rent and the amount of service charge payable by tenants. This would apply to most affordable rented housing, where the rent is set using a percentage of market rent principle. Secondly, they would identify the cases where only rent is to be limited by the 1% per annum reduction policy. These are cases where rent is determined by a formula social rent approach. This is all standard social rented housing and that minority of affordable rented housing where rents are set by reference to the formula social rent model.
I regret the need for this late amendment. I am grateful to the housing sector for bringing this issue to light. I hope, with the explanation I have given and on the basis that the new provision will help providers, your Lordships will feel able to support the Motion. I beg to move.
My Lords, as the Minister has anticipated, we have a sense of déjà vu on this drafting. We have lost count of the number of amendments and changes the Government have made to their own legislation. Again, the Commons are disagreeing with an amendment that the Government themselves laid in your Lordships’ House and replacing it with an alternative. So confident are they now that they will get it right on this occasion that they have decided to address the point at hand in regulations.
However, the substantive point is serious and it is important that the legislation is right. It is understood that the issue is to properly identify those cases where the 1% per annum reduction will apply to only the rent and to where it will apply to rents and the amount of the service charge. The former will apply to rents determined by a formula social rent approach; the latter to what is known as affordable rents, which are determined on a percentage of market value. It is understood that the sector is content with this differentiation—the Minister has confirmed that—and so are we. We look forward to the regulations in due course. There will, doubtless, be various iterations of them.
I thank the noble Lord, Lord McKenzie, for being merciful in his remarks. As I said at the start of this brief debate, this Motion has been tabled as a result of representations made by the providers—I confirm that again—and the regulator. We welcome their input, as the noble Lord does. I urge noble Lords to support this Motion.
Motion D agreed.