Clause 4

Welfare Reform Bill – in a Public Bill Committee at 11:45 am on 29th March 2011.

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Photo of Stephen Timms Stephen Timms Shadow Minister (Work and Pensions) 11:45 am, 29th March 2011

I beg to move amendment 4, in clause 4, page 2, line 15, leave out ‘18’ and insert ‘16’.

Photo of James Gray James Gray Conservative, North Wiltshire

With this it will be convenient to discuss amendment 5, in clause 4, page 2, line 24, leave out ‘prescribed cases’ and insert

‘claimants who come within section 22’.

Photo of Stephen Timms Stephen Timms Shadow Minister (Work and Pensions)

This first group of amendments was tabled before the Minister sent us last night’s note on the regulations that clarified some of the points I wanted to raise.

The amendments are about youth eligibility for universal credit. Specifically, they would make it clear that the minimum age for receiving universal credit was 16 rather than 18 as stated in the Bill. That change would put in primary legislation an important protection, which is particularly important for vulnerable young people. At the moment, 16 and 17-year-olds can claim means-tested benefits if they are in a vulnerable group, for example if they are themselves lone parents, carers or responsible for a child, if they have a limited capability for work or if they are estranged from their parents and in difficult circumstances. Housing benefit can be claimed by 16 and 17-year-olds to meet liability for rent. They can also claim working tax credit if they are responsible for a child or have a disability.

I think that I am right in saying that only jobseeker’s allowance excludes under-18s, and even then there are exceptions in regulation for cases of severe hardship. I am disappointed that the least generous position among all the benefits being merged has been chosen as the position in the Bill. It would be better to make it clear that there are circumstances in which 16 and 17-year-olds would be entitled to claim universal credit. The note that the Minister sent makes it clear that that is the Government’s intention. I think they would want to replicate the current position in regulations as far as they can. However, the point of the amendment is to make it clear on the face of the Bill that 16 and 17-year-olds are not excluded from receiving universal credit in a blanket way, as a cursory reading of the Bill would suggest.

The point of the second amendment is to enable the Government to replicate the current position on JSA eligibility by allowing a higher eligibility age for those subject to work-related requirements, as set out in clause 22, as opposed to people with limited capability for work, carers or lone parents who are not subject to all work-related requirements and are covered instead by clauses 19 to 21. I am grateful to the Child Poverty Action Group, which suggested both amendments. I think they are right and I hope the Minister will be sympathetic to the intent they convey.

Photo of Chris Grayling Chris Grayling The Minister of State, Department for Work and Pensions

Amendment 4, as the shadow Minister has said, proposes that entitlement to universal credit would usually begin at the age of 16 rather than 18, as we proposed, apart from particular exceptions. Amendment 5 proposes that only when a claimant is subject to all work-related requirements should it be possible to set a different age limit. It would be wrong to set a default position that 16 and 17-year-olds, except those who are subject to all the work-related requirements, were entitled to universal credit in their own right. To do so would send a wrong message to the public about the status of young people.

The context is that successive Governments, both this one and the Government the right hon. Gentleman was part of, have taken the view that 16 and 17-year-olds should be in education or training and not living on benefits. The system we have inherited is designed on that premise. We think it is the right approach. We have confirmed that we are committed to continuing the previous Government’s policy of raising the age of participation in education or training to 17 in 2013 and 18 in 2015. In light of that, and given that we are talking about writing primary legislation that will sit on the statute books for a significant period, it would be both inconsistent and regressive for the benefits system to treat 16 and 17-year-olds as ordinarily independent from their parents. The current system of child benefit and child tax credits gives parents the means to provide for dependent young people. We will maintain that provision through an amount of universal credit paid to parents for their children, and that will not change. Child support is an important part of what happens through the universal credit.

There are instances when young people should be able to claim universal credit in their own right, but they should be the exception, not the rule. Let us be absolutely clear to those listening from outside that we aim to continue the goal of the previous Government to support young people who find themselves in straitened and difficult circumstances, through leaving care, family break-up or whatever, at the age of 16. There are circumstances when those people will need support. In the current benefit system, when 16 or 17-year olds have a responsibility for a child, when they are disabled or when they are estranged from their parents, they have the right to receive support. We intend to continue that. We intend to create appropriate exceptions under the power in clause 4(2), but to set the lower age limit at 16 would send a signal that young people should be financially independent of their parents at that point.

Photo of Jennifer Willott Jennifer Willott Liberal Democrat, Cardiff Central

Will the Minister clarify whether the Government intend to set the benefit level for those aged 16 or 17 at a different amount from that for those aged 18 and over? In the benefits system set up by the  previous Government there are currently different amounts allocated by age, which many people feel is unfair, given that the cost of living is the same no matter how old people are. Will the Minister confirm what the Government’s intentions are?

Photo of Chris Grayling Chris Grayling The Minister of State, Department for Work and Pensions

We have no immediate plans to make changes. There are many things we might like to do, but the financial circumstances that we face mean that we cannot.

The support that we provide to young people of this age group should very much be the exception rather than the rule. We should focus on getting those young people into education or training. My Department and the Department for Education are working closely on that, and we are acutely aware that young people are slipping through the net and ending up on benefits at 16 or 17. We really want to address that problem, because if we do not support them in the right way they will undoubtedly end up not in education, employment or training after the age of 18. However, we have no immediate plans to change the benefit rates that apply to that particular group.

What we propose is the right way to do things, but it is a point of nuance. The Opposition say that the age should be 16 unless we make exceptions; we say that it should be 18 unless we make exceptions. We both agree on the need to support young people who find themselves in the circumstances that I have described, but the Government are not minded to make a change. I urge the right hon. Gentleman to withdraw the amendment. I hope that I have given sufficient reassurance that the commitment that he has shown to these young people in the past will certainly continue.

Photo of Stephen Timms Stephen Timms Shadow Minister (Work and Pensions)

I am grateful for those reassurances, and the assurances provided in the note on regulations that the Minister sent us last night. He has made it clear that it is the Government’s intention to support some 16 and 17-year-olds with universal credit. I would have preferred it to have been included in the Bill. However, the real concern is that the support should be provided. It is not my intention to press the amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Stephen Timms Stephen Timms Shadow Minister (Work and Pensions)

I beg to move amendment 6, in clause 4, page 2, line 37, at end insert—

‘(c) specify circumstances in which certain groups, which shall include parents, young people and disabled students, are treated as not receiving education.’.

The amendment deals with the entitlement of students to receive universal credit. Most students will rely on income from student support arrangements, from their families or from work, but it is important that the Government should not remove entitlement to universal credit from students who currently receive support from one element of another of the benefit. I have not been able fully to study the note that the Minister sent us last night about which students will be entitled to receive universal credit, and I look forward to his comments on that.

The rules are clearly different for different benefits. I particularly hope that the Minister will accept that universal credit should be available to students who are  parents, whether lone parents or otherwise, and including single foster parents; students with disabilities; students who are vulnerable and therefore regarded as qualifying young persons because they are young parents, who live away from their own parents because of difficult circumstances or who were previously in local authority care; students who are refugees in the UK studying English; and students from abroad whose funds have been disrupted. I understand that all those students are able to obtain support under the existing system, and I should be grateful for confirmation from the Minister that is the Government’s intention that each of those categories will be able to receive universal credit under the new system.

I have another question for the Minister. I understand that only those disabled students entitled to disability living allowance can claim income-related employment and support allowance but that other disabled students who do not qualify for disability living allowance can get help from housing benefit. Can the Minister confirm that that wider group will be able to get help under universal credit?

Again, this is an example of something that we will come across frequently in the Bill. Different rules apply to different benefits, but there will be one benefit in the future. A question arises about which of the numerous pre-merger rules will apply in the post-merger situation. There is a particularly important question here about the position of disabled students under the new arrangements.

Photo of Chris Grayling Chris Grayling The Minister of State, Department for Work and Pensions 12:00 pm, 29th March 2011

The shadow Minister has raised an important issue and provided an opportunity for the Government to offer reassurance. He says, rightly, that there is a long-standing principle that, in general, the benefit system should not be a source of financial support for those in the education system, but that there are some for whom exceptions are made. Young people are primarily the responsibility of their parents until they leave school. For students in higher education, there is a comprehensive system of student loans and grants. In most cases, there is no reason to pay benefits to those in education.

However, there have always been exceptions to the general rule. Currently, there are a number of situations where benefits including income support, employment and support allowance, and housing benefit can be awarded to young people in non-advanced education and to students. Students can also receive the child tax credit.

Our intention under the universal credit is not to redraw any boundaries. We do not want to widen the extent to which those in the education system get support for benefits, nor do we want to remove support from groups of young people and students who get support under the current system, where that continues to be appropriate. For that reason, the Bill as drafted provides a general exclusion for education, along with regulation-making powers to define the precise scope of the exclusion and to create exemptions.

As the right hon. Gentleman just said, anyone who has looked at the current regulations will know that the rules on education are hideously complex, and that the  details change frequently to keep up with changes in the education system. We will certainly try to simplify and update the approach in drafting regulations, but subject to that, I expect the regulations to define the circumstances for someone who is or is not receiving education in much the same way as happens now. We will provide exemptions for young people who live independently from their parents, for students who are themselves parents and for disabled students. We will continue to have regard to the income that is available to students through loans and grants so that there is no duplication of support. On the specific point raised by the right hon. Gentleman, we certainly intend to make the same provision as now for refugees studying English and for those from abroad.

On the face of it, the definition of disability is broader than simply the ESA provision, but in practice both definitions focus on longer-term disabilities, and our intention for both benefits is to exclude short-term sickness. The aim is to have an aligned rule in the universal credit, which will have to be designed, but which basically replicates the situation that we have at present. The aim is to regulate for no change in all of this, and the right hon. Gentleman will see that in a number of cases as we go through the Bill. I will be happy to clarify the situation at those stages.

Because of one of the things that I thought was slightly worrying about the evidence sessions, I want to give out a message from this Committee—this is a prime case in point—that we are not intending to remove some of the basic entitlements from people in the system.

Photo of Stephen Timms Stephen Timms Shadow Minister (Work and Pensions)

I am grateful to the Minister, who has given us some reassurance. May I press him on that last point? Is he confirming, then, that disabled students will not necessarily have to be entitled to disability living allowance in order to obtain universal credit?

Photo of Chris Grayling Chris Grayling The Minister of State, Department for Work and Pensions

We will seek within the universal credit to replicate, as effectively as we can, what exists at present. I am not saying that anyone’s basic entitlement will change; we will seek to regulate a replica of the existing system in the universal credit system that follows it.

Photo of Stephen Timms Stephen Timms Shadow Minister (Work and Pensions)

I am grateful for that. I appreciate that this may be a matter that has not yet been decided, but as I understand it, it is not necessary at present to be entitled to DLA in order to claim income-related employment and support allowance or claim housing benefit, and I am anxious that the Minister has not at this stage excluded those who are not entitled to DLA from receipt of universal credit. Can he give us that reassurance?

Photo of Chris Grayling Chris Grayling The Minister of State, Department for Work and Pensions

We have not made final decisions on the detail. The hon. Gentleman has made an important point, which I will happily reflect in our discussions. However, I simply emphasise that we intend to replicate the status quo. The issue around DLA will be materially impacted on by the current review, which will lead to the creation of the personal independence payment. We will debate that new payment later in our consideration of the Bill.

With regard to students, it is not our intention to change the level or nature of entitlement, and in the Bill we will seek to create a comparable structure to what we have now.

Photo of Stephen Timms Stephen Timms Shadow Minister (Work and Pensions)

I am grateful to the Minister for those reassurances. I accept that there is still work to be done. The particular point that I pressed him on will be of interest to quite a large number of people. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Photo of Chris Grayling Chris Grayling The Minister of State, Department for Work and Pensions

I will not trouble the Committee for long, but I will touch on one or two other aspects of the clause, which establishes the basic conditions that people must meet to receive universal credit. They include conditions relating to age, being in Great Britain, education, and the need for people to accept their claimant commitment, which sets out their responsibilities in relation to their award. We will discuss the claimant commitment at greater length over the course of debates on the Bill. We see it as an important part of the universal credit and the structure that we are creating.

As universal credit replaces a range of existing benefits with different rules, we must set out a clear framework for entitlement that must be simple enough for advisers in Jobcentre Plus to explain to the public. The principle that only working-age people should be supported by working-age benefits will continue under universal credit. Clause 4 limits eligibility to people between the age of 18 and state pension credit age to avoid duplicating support that is available elsewhere, such as in provisions for students that support the state pension system. We have just discussed the issue of 16 to 17-year-olds.

We will also focus our working-age benefit regime on those seeking work in Great Britain. However, we intend to create very limited conditions under which an individual might receive universal credit while temporarily outside the United Kingdom. Clearly, that is an issue that has to be handled with care and sensitivity. Universal credit will not replace existing support for people in education, such as student loans. That is why it excludes people who are receiving education. However, it is our intention to maintain and continue the support that is provided on an exceptional basis to people in education through the benefit system.

Clause 4 also includes the requirement that each universal credit claimant has to accept a claimant commitment. As part 2 of the Bill sets out, the claimant commitment will be introduced in existing out-of-work benefits before the introduction of universal credit. We think that the commitment is essential to ensure that advisers can make appropriate work-related demands on claimants to guide them into work. It will also include the duty on claimants to report changes in their circumstances. The claimant commitment is very important to maintain the focus on work and to limit error in the new system. With the introduction of the Work programme and a number of other measures designed to help shorter-term jobseekers, the claimant commitment is an extremely important part of creating the foundation for the process of job search, with Jobcentre Plus proactively looking for more opportunities to help people in the  early days of job search, and then the Work programme providing a greater intensity of support to those who have struggled to get into employment and who are out of work after a longer period of time.

Photo of Kate Green Kate Green Labour, Stretford and Urmston

I am still a new girl in this process, so I need your guidance and prompting, Mr Gray, on whether I can join in at all. Will the Minister say a little more in relation to the claimant commitment in clause 4? As he has explained, the claimant commitment is a basic condition for entitlement and I understood from the way in which he was describing it that it could be tailored to the individual, which might imply some period of discussion before that commitment is finalised. In particular, an interview will obviously need to take place with the claimant. That creates some potential for delay in the benefit entitlement being determined and payment actually being put into place. I would be grateful if the Minister clarified how any delay could be mitigated. In particular, is there an opportunity to clarify in guidance that, provided the claimant is engaging with the process, any administrative delay in completing the claimant commitment will not hold up entitlement and payment?

Photo of Chris Grayling Chris Grayling The Minister of State, Department for Work and Pensions

I give the hon. Lady that reassurance. As she will know, any new claimant will need to sit down with a Jobcentre Plus adviser and go through their plans for the job search. Our intention is that the claimant commitment is effectively a binding agreement to take part in job search activities. That should not be limited to a willingness to apply for a couple of jobs a week, or whatever the job search agreement may be. We are looking to encourage more people to do work experience and training, and she will know that we are seeking to strengthen the rules on training participation for the unemployed. That is the contractual basis between the state and the claimant that says that the claimant will actually do such things to try and get into work.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

If this is a contract, will duties be placed on the jobcentre to provide certain types of training and other activities? Contracts are usually two-way.

Photo of Chris Grayling Chris Grayling The Minister of State, Department for Work and Pensions

Jobcentre Plus already provides support for individuals. We are not seeking to prescribe from the centre what support should be provided for each individual. Indeed, we want the opposite. We are introducing greater flexibilities into Jobcentre Plus, so that advisers have more discretion about the nature of the support, guidance and advice that they provide for individuals. However, it has always been, and always will be, a core principle that, in return for the receipt of benefit payments, somebody who is looking for work has to do right thing and take part in the various activities to pursue work that have been agreed with Jobcentre Plus. The claimant commitment simply provides the basis for that.

I can absolutely assure the hon. Member for Stretford and Urmston that we do not envisage the formulation of the claimant commitment being a long process. I want it to be simple, clean, and straightforward, and I want it to happen in the first interview. I certainly do not want people to be disadvantaged by administrative issues around the issuing of the claimant commitment. That is not our intention. It is simply putting in place the underpinning for the requirement that, effectively,  the state will provide support to people while they are out of work. The state’s part is crucial in this two-way process.

The hon. Member for Edinburgh East asked what the role of the state is. Its job is to provide money to support people while they are out of work. We expect that the claimant will roll their sleeves up and do everything that they can to get back into work. The claimant commitment provides the underpinning for that, but it is certainly not our intention that there should be any administrative issues around finalising it or that individuals should be disadvantaged as a result.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.