New Clause 6

Welfare Reform Bill – in a Public Bill Committee at 12:30 pm on 3rd March 2009.

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Minimum income level for persons subject to sanctions

‘Regulations made by the Secretary of State shall set minimum income figures per week which no individual or family in receipt of benefits, and subject to any sanction under this Act, is permitted to fall below following the imposition of any sanctions.’.—(John Mason.)

Brought up, and read the First time.

Photo of John Mason John Mason Scottish National Party, Glasgow East

I beg to move, That the clause be read a Second time.

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

With this it will be convenient to discuss the following: new clause 7—Implementation of sanctions in relation to income—

‘External providers and jobcentres shall not apply sanctions under this Act when the job offered to a claimant provides a lower income than that provided by unemployment benefits.’.

New clause 8—Means inquiry before sanctions imposed

‘(1) In any case where regulations made by the Secretary of State under this Act or other powers contain provisions for the imposition of sanctions resulting in the loss or reduction of any sum in benefit, the regulations shall contain a duty that before any sanction is imposed—

(a) a means inquiry is conducted as to the means of the person on the day;

(b) regard shall be had to the welfare of any person residing with him;

(c) regard shall be had to a medical report as to his/her physical and mental well-being and any person residing with him/her;

(d) any sanction resulting in loss or reduction of benefit will be reasonable in the circumstances;

(e) regard shall be had to the impact of any deduction on the ability of the person to pay costs in respect of the accommodation which he/she may occupy.

(2) Following consideration of the matters prescribed in paragraph (1) the decision maker shall then determine whether the income remaining to the person who will be subject to the sanction falls below the minimum figure for income in one week which is set by the Secretary of State.

(3) If any sanction is imposed following the inquiries in (1) above of any sanction, the decision-maker shall ensure that no person will be left either with a total income which is either below the minimum figure for income set by the Secretary of State or in any other case is no more than two thirds of the amount in benefit payable to the person in any one week during which it is proposed that the sanction shall operate, unless the relevant amount of benefit payable in any one week is £5.00 or below.

(4) Where the means inquiry establishes that a person is already subject to deductions from benefit which but for the effect of this subsection would result in the amount of benefit available to the person in any one week falling below the amount set by the Secretary of State, the imposition of any deduction shall be suspended.

(5) Any regulations made by the Secretary of State permitting or allowing any sanction resulting in loss or reduction of benefit to any person shall be subject to a right of appeal.

(6) Any person affected by a sanction imposed may appeal to the Secretary of State for a variation of the amount, provided that no variation however occasioned shall as a result leave the person with less than the sum prescribed in regulations under paragraph 2.’.

Photo of John Mason John Mason Scottish National Party, Glasgow East

I would like to challenge the Committee with a question: what is our starting point as we look at this Bill? Is it that the state is so generously funding people who do not really deserve it that we must cap all our expenditure and, if possible, reduce it? Some might say that is the traditional view of the main Opposition party. Alternatively, are we approaching the Bill from the point of view that every adult, family and child needs to have enough to live on so that they are able to eat, have a proper home, and be properly clothed? Anything that we do under the Bill must take account of those points, and some would say that that is the traditional view of the party in government.

One of my fundamental problems with the idea of sanctions is that some people are already living on a minimal income. If we cut that income further, where will that leave those people? In particular, where will it leave families, and especially children?

The Committee has discussed loans at some length. There has been mention of social fund loans, but people take other loans as well, and they eat into their ability to pay bills. In fact, on Friday, a constituent came to me who had got seriously into debt because of his mother’s funeral. He was unwise to pay as much as he did on the funeral, but—[Interruption.]

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

Order. There are four conversations going on in the room. I ask hon. Members to listen to the hon. Member for Glasgow, East.

Photo of John Mason John Mason Scottish National Party, Glasgow East

Thank you, Mr. Hood; you are very generous.

I asked the Barnardo’s representative in our evidence session where this would leave families and children. The answer seems to be that the extended family will help the children to eat, that the parents might be out stealing, or that people will just not be eating at all. The constituent to whom I referred told me that he had gone three days without eating in the previous week. That is the kind of world in which, I am afraid, we are still living.

I am not against sanctions per se, if people have extra income above the amount that they need to live on. However, the benefit system is not exactly generous and does not give people a lot of leeway to meet such sanctions. New clause 8 proposes a means inquiry, which would help to re-emphasise that we must know people’s real circumstances—not theoretically or on paper—when we are talking about moving into sanctions.

Clearly, we are living in a society with many different kinds of people. There are people who try to screw the system to get every penny they can get and who contribute absolutely nothing to society. It is those people who the Government are probably seeking to target through the Bill. I am not opposed to that, but I urge them to think of the people in society who are struggling, who are scared of this House and of bureaucracy, and who find it difficult to read and write and to take part in our incredibly complicated system. I appeal to Ministers to consider how we can better protect these people, and I would suggest that these new clauses would help to protect them.

Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

I support the hon. Gentleman, who speaks for the Scottish National party, on these new clauses.

Throughout our proceedings, the Government have made much of international comparisons when they have talked about the success of using sanctions as a means of getting people back into work. However, there is one major difference when one looks at these international comparisons: the level of the benefits that are paid in the Netherlands or Australia, for example, compared with what is paid in the UK. That is part of the reason why many voluntary bodies and charities have expressed concerns about certain aspects of the Bill. When sanctions are applied, that should not, in itself, result in hardship—for example, for children—and lead to people falling further into poverty.

As the hon. Gentleman said, new clause 8 would not stop the implementation of sanctions, but would ensure that, before those sanctions were implemented, a proper means inquiry was carried out into what effect any particular sanction would have on a family. That would act as an important stop on the Department, because one of the overriding threads running through concerns raised about the Bill is the way in which sanctions will affect vulnerable people. I know that Ministers have tried to reassure us that situations will not arise that result in a vulnerable person losing benefit, either because of a mental health problem or some other issue. That is well made as a general point, but the new clauses would ensure that there was adequate protection via the means inquiry to ensure that safeguards were in place.

If the purpose of the Bill is to encourage more people back into work, it is clearly not in anyone’s interest if, as a result of sanction, a child is put into care because the parent is unable to cope with the situation, because the cost of that to the state would be much greater. I thus hope that the Minister will consider this important safeguard. If the wording being suggested is not correct, I hope that the Minister will agree to look at it and come back with a suitable provision on Report. We all want a Bill that works and a system of sanctions that has the desired effect, but we have severe concerns that there are no adequate safeguards in place to ensure that the effects of those sanctions do not result in a person being put in a much worse position, with consequential effects on other members of their family.

Photo of Ann McKechin Ann McKechin The Parliamentary Under-Secretary of State for Scotland 12:45 pm, 3rd March 2009

This has been an interesting debate. The hon. Members for Glasgow, East and for Rochdale have both forgotten the basic point: there is a contract between the applicant and the state and if one obeys the rules, no sanctions will be applied. It is not unreasonable for us to insist that people should obey reasonable rules that are set down, with appropriate provisions to consider people’s individual circumstances and also offer people a route out of work.

Photo of Paul Rowen Paul Rowen Shadow Work and Pensions Minister

I accept the Minister’s point, but does she not accept that the state often gets it wrong, and that the proposal that is put forward—whether it be at work, or whatever—can be inappropriate for a person, which can result in hardship?

Photo of Ann McKechin Ann McKechin The Parliamentary Under-Secretary of State for Scotland

With the greatest respect, that is why we have a comprehensive appeals procedure in place. For example, only one in 10 jobseeker’s allowance customers has their benefits sanctioned. Only a little over 1 per cent. of lone parents received second, or subsequent, sanctions in 2006-07. I respectfully put it to both hon. Gentlemen that the sanction system works and that we have in place an adequate system of protection and appeals.

All three new clauses relate to sanctions. New clauses 6 and 8 attempt—although clumsily—to redesign the sanction system. They would introduce a minimum level below which the income of an individual or family could not fall for them to be subject to a sanction. That minimum would apply even if they were being sanctioned for not fulfilling their obligations to engage with the support that we were offering them. It would be applied only after all outgoings were taken into account. I know that the motivation behind the measures, as both hon. Gentlemen have stated, is to ensure that vulnerable people are protected, but they are unnecessary.

Hardship provisions, minimum levels of benefit and extensive safeguards already exist in the benefit system to ensure that the most vulnerable claimants are not unfairly sanctioned or left destitute. In addition, income replacement benefits, which are the only ones subject to sanctions, make up only a proportion of the overall support that a customer would seek to receive from the Government. For example, benefits paid to parents in respect of their children and housing benefit, which is one of the most generous systems in Europe, as well as  council tax benefit, tax credits and disability living allowance, are all unaffected. Vulnerable people are unlikely to lose all their income and become destitute, because their housing benefit and council tax benefit remain intact.

We accept that the sanctions system is not perfect and we are continuously reviewing current practice to see if it can be improved. That is why we are exploring an escalating sanctions model in pathfinder areas as we test the Gregg model of conditionality. We are in the early stages of designing that model. As we progress, we will engage with a range of stakeholders to ensure that the appropriate safeguards are in place to make sure that vulnerable claimants are protected and that the existing rights of appeal remain.

We must not lose sight of the fact that there is a very simple way for claimants to avoid being sanctioned in the first place: by meeting their obligations as citizens to prepare or look for work. That is the essence of an active welfare state, and such a system has been adopted by every other western economy.

The new clauses would give the very different message that benefits could be received with no conditions attached, and that even if a claimant had no intention of ever attempting to better their chances of employment, despite being clearly able to do so, taxpayers would still be supposed to pick up the bill for supporting them. That is the essence of the passive welfare state that has quite rightly been rejected.

New clause 7 is an attempt to ensure that no jobseeker will be sanctioned for refusing employment if the job on offer paid less a week than they would have got on jobseeker’s allowance. It would not apply to claimants of ESA or income support, because they are not required to take specific employment. Again, we believe that the new clause is unnecessary. The existing sanctions regime ensures that no one is sanctioned for refusing a job that pays less than the national minimum wage, which ensures a minimum income from employment. That is topped up by generous tax credits for those on a low income and those with children. Furthermore, we will help to ease the transition into work with the job grant for jobseekers who have been unemployed for more than six months.

The sanctions system is designed primarily to be an incentive to re-engage. It is the threat of a sanction that has the greatest effect, not the sanction itself, as is proven by the figures to which I have already referred. For that to remain true, the system must remain transparent, simple and clearly linked to the behaviour of the customer.

This new clauses would create a system that, frankly, would be so bureaucratic and resource-intensive that it would effectively cripple the sanctions system. Given that, and taking account of our current safeguards, I urge the hon. Member for Glasgow, East to withdraw the new clause.

Photo of John Mason John Mason Scottish National Party, Glasgow East

I must confess to disappointment at the Minister’s harsh tone. If there had been a bit of sympathy, I would have been a bit more supportive. The contract is an interesting idea. If we enter employment, we clearly have a contract with employer and we have to fulfil certain conditions, but there has to be a minimum  standard in a civilised society below which we do not fall. Even our prisoners are entitled to certain levels of food and benefit. Our children should also be entitled to such benefits. While I am happy to accept that the wording of the new clauses is not entirely perfect, I am not happy to withdraw new clause 6.

Question put,That the clause be read a Second time.

The Committee divided: Ayes 2, Noes 9.

Division number 5 Nimrod Review — Statement — New Clause 6

Aye: 2 MPs

No: 9 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.