Welfare Reform Bill

My Lords, I shall concentrate on two areas covered by this important Bill. The first, as the noble Baroness, Lady Hollis, mentioned, is the area of permitted work rules for disabled people. Secondly, I want to touch on the situation for older workers. The objective of the Bill is a welcome one: to help large numbers of disabled people in moving towards work. With that objective in mind, I wish to raise an issue around the impact that proposals in the Bill will have on the ability of people claiming incapacity for work benefits to undertake permitted work. Currently, people claiming incapacity benefit or severe disablement allowance are able to undertake a limited number of hours of paid work each week to help them gain work experience and remain in touch with the labour market. They are also able to volunteer for an unrestricted number of hours. Those rules form an important means for disabled people on benefits to try out work without any threat to their benefit entitlements, which for many people is a source of great anxiety, having often been through long and complicated processes to secure those benefits. The permitted work rules changed on 10 April last year. A new category of permitted work was created for people who were exempt from the personal capability assessment, which establishes entitlement for incapacity benefit. People in this group are able to work for less than 16 hours a week, on average, and earn up to £81 each week without having an impact on their benefit entitlements. However, as part of this Bill, a review of the personal capability assessment has been conducted, and it is proposed that the exemption from the assessment for certain groups of disabled people is to be ended. While that has been welcomed in the sense that it means that these groups of disabled people will no longer be automatically regarded as unable to work and therefore included in the additional help that will be offered under the Bill, it is unclear what will happen to claimants who are undertaking permitted work under these provisions when employment and support allowance is introduced in late 2008. I should be grateful if the Minister could clarify the Government’s intentions regarding how the introduction of employment and support allowance will impact on people who are at that time undertaking permitted work on the grounds of being exempt from the personal capability assessment. Perhaps he could also let your Lordships’ House know what plans his department has to provide claimants with information about how people who are currently exempt from the PCA and who are undertaking permitted work without a time limit will be dealt with when employment and support allowance is introduced and the exempt group abolished. I ask because the current systems can be confusing, and benefit claimants face difficulties in understanding what sort of work they can undertake, how it will affect their benefit entitlement, and what can happen as they move between benefits and employment. Indeed, if as part of the Bill we can move towards improving the clarity of information for benefit claimants to assist them to understand the opportunities and responsibilities around undertaking work while claiming benefit, that would be a welcome achievement. We must acknowledge that an older workforce will mean more people with acquired disabilities. The Government need to ensure that they strike the right balance between prescriptiveness and entitlement. Incapacity benefit is a contributory benefit, so recipients have a stake in the system and are not asking for hand-outs. Often, they will have worked for a substantial amount of their life. Any health conditions affecting their ability to work may even be workplace-derived. I am pleased that the Government acknowledge that early intervention is essential to stop the rot and prevent long-term dependency. Forty per cent of unemployed people over 50 have both health and skill limitations. However, I fear that, if the work-related activities are too restrictive, the reforms will fail. We need maximum flexibility to capitalise on individual circumstances, education, training and life commitments such as family and care. We should remember too that older workers may need or wish part-time work, and the reforms must accommodate that. It is regrettable that funds have been withdrawn for education and training in later life. One-third of those in their early 40s do not have five GCSEs or equivalent, so the problem is more systemic than just an incapacity benefit bill for the over-50s. Those in the pipeline, as it were, are already building up the same problems. That needs attention. The Minister acknowledged in June last year that there was a lot of resistance from employers to employing older people, as we have heard. The Government must take the lead and campaign to enable employers to understand the benefits of employing older people: the experience and loyalty that they bring to a company and the saving on recruitment costs, as older workers tend to stay in their jobs for much longer than younger ones. Finally, the reductions in incapacity benefit if occupational pensions reach above £85 are worrying. Incapacity benefit is then reduced at 50p per pound. The Government said in 1999 that that would be reviewed annually to ensure that pension value was not eroded, but the figure is still £85, and there is no public evidence of it being reviewed. Will the Minister give a commitment that the figure will be uprated to take account of inflation? I look forward to hearing what the Minister has to say on these important issues.