Welfare Reform Bill

I shall start in the same vein as the noble Lord, Lord Skelmersdale, by acknowledging the expertise in the Room today. There are people, including my noble friend Lord Morris, who have been engaged in these matters for many years, and the approach taken in the other place, at Second Reading here and in the engagement since bodes well for the issues that we have to address. As the noble Lord, Lord Skelmersdale, said, these amendments are designed to explore the Government's intentions regarding the rate and payment of the employment and support allowance, for both new and existing customers. Pathways to Work pilots have already demonstrated that, with the right help and support, many people on incapacity benefits can move back into work, reinforcing our view that labelling people on incapacity benefits as incapable of work is wrong and damaging. This, coupled with the complexity and structure of incapacity benefits, works against our intention to help people focus on their aspirations. Our intention, as your Lordships know, is to replace the current system of incapacity benefits with the new employment and support allowance. Unlike current incapacity benefits, the new allowance will rightly focus on how we can help people into work and will not automatically assume that because a person has a significant health condition or disability they are incapable of work. We believe that that is the right approach, which has been broadly welcomed by many organisations representing people with ill health and disabilities as well as by Members of this Chamber on Second Reading and throughout all parties in the other place. With your Lordships’ agreement, I shall address some of the issues more fully and seek to answereach of the questions that has been raised. Amendment No. 1 would remove the first subsection of Clause 1, which introduces the new employment and support allowance and establishes that it will be payable subject to the provisions of Part 1. This is a fundamental part of the Bill which is essential in establishing a new system of hope and support to help give sick and disabled people the opportunity to make the most of their capacity. Amendment No. 2 seeks to remove Clause 1(3)(e) and (f). These paragraphs set out that for a customer to be entitled to employment and support allowance, they cannot simultaneously be entitled to income support or jobseeker's allowance. The amendment, as I understand it, looks at our intention regarding entitlement to employment and support allowance and the possible additional access to other income-related benefits. Indeed, the noble Lord confirmed that. The new employment and support allowance is not structured in the same way as the old incapacity benefit, where incapacity benefit may in certain circumstances be topped up with income support. Instead, employment and support allowance is an integrated benefit, where a customer need apply only once and can, if necessary, receive both strands of the allowance. As the noble Lord recognised, no final decisions have yet been made on the exact rate for the main phase of the benefit. However, as the Government have previously made clear, the main phase rate of benefit—the basic allowance for someone on the contributory benefit or for a single person on the income-related benefit plus the work-related activity component—will be higher than the current long-term rate of incapacity benefit, and those on the support group will receive a higher amount. Above that rate, people in the most financial need will continue to receive premiums such as the enhanced or severe disability premiums, where appropriate. For some people only one benefit will be available. However, for others there will be a choice. For example, a lone parent who also has a disability may be able to claim either income support or employment and support allowance. In such circumstances, we believe that a customer should only be able to claim one of the two benefits. To be paid two benefitsat once would lead to duplication of provision, creating an inappropriate and significant burden on the taxpayer. The purpose of these paragraphs in Clause 1, therefore, is to ensure that that does not happen. This is common to other social security legislation, such as the jobseeker’s allowance. However, noble Lords will know that in the current system income support is not the only source of help that the Government provide to people on low incomes, and we intend to bring similar provisions forward for people on ESA. For example, people on income-related ESA will have automatic access to full housing benefit and council tax benefit; and we expect that customers on income-related ESA will also have access to a range of other passported benefits, such as prescription charges or free school meals. The noble Baroness, Lady Thomas, has tabled a separate amendment on these issues, and I am sure that we will discuss them in more detail later. I turn now to Amendment No. 17. Clause 4 provides for the calculation of the applicable amount, which is the amount of benefit a customer will receive if he, or his partner, has no income. If they do have income, the applicable amount will be reduced by the amount of that income. I believe that the intention behind Amendment No. 17 is to probe our intentions, rather than to remove the amount altogether, which of course would be the effect of the amendment. As I have already said, the applicable amount for income-related ESA includes the personal allowance for the customer and any partner and, from the14th week of the claim, either the work-related activity component or the support component where the PCA is satisfied. The applicable amount also includes the enhanced disability premium, severe disability premium, pensioner premium and, where appropriate, the carer premium. It will also include certain housing costs such as mortgage interest and service charges, which are currently payable as part of income support. Turning to Amendment No. 18, I recognise the concerns noble Lords have about the benefit position of disabled people who would previously have qualified for the disability premium. However, the employment and support allowance introduces a new structure to the benefits for people with limited capability for work. That cannot be compared directly with past systems. Where a customer meets the personal capability assessment threshold, the new benefit provides that, after an initial assessment phase of 13 weeks, a work-related activity component or a support component will be payable. We should recognise that for most people that is considerably earlier than under the current arrangements, where the higher rates of benefit are payable after a year of incapacity. This amendment means that the disability premium will continue to be payable in addition to the work-related activity component or the support component. In our view, the new structure of ESA better supports our aim of encouraging people with a limited capability for work to engage in work-related activity where they can. In addition, disabled people with additional needs will still have access to a range of appropriate income-related premiums, as I spelled out. The new arrangements provide that many people will receive additional support far sooner than under the outdated arrangements of the past. Amendment No. 103 removes paragraph 5(1) of Schedule 4, which allows us to apply the linking rules to people leaving the benefit under prescribed circumstances and then returning to that benefit within two years. At Second Reading, I was clear that people migrating to employment and support allowance as part of the mandatory process from the existing system would maintain the same cash level of benefit. As has been made clear during the passage of the Bill, it is our intention that, over time and as resources allow, existing incapacity benefit cases will be migrated across to the employment and support allowance, so that they too may benefit from the new complementary structure of benefit and support, which will also help to smooth administration and reduce complexity. We want to migrate existing customers on to the new regime as resources allow, but we need to do so in a controlled manner. Therefore, we do not intend to start the mandatory migration process immediately at the commencement of the employment and support allowance. This is consistent with previous changes of this scale and will allow us to make sure that the new process is bedded down, to make sure the migration is as smooth as possible for customers and to reduce the risks around such a large undertaking. We believe that it is right to migrate first those with children and those who have been on benefit for the shortest time, as we want to help families with children return to work to lift them out of poverty and to prevent long-term benefit dependency before it arises. However, depending on what evidence comes out of the Pathways to Work extension pilots, before we begin migration we will of course refine and if necessary change this strategy in line with the evidence we have. In the interim, as has been the case in all the Pathways to Work pilots from their inception, anyone already on incapacity benefits may volunteer for any appropriate support we offer. We propose that, until the mandatory migration process starts, existing customers will remain on their current benefit and current linking rules will apply. Therefore, if someone leaves incapacity benefits they will return to their current benefit, as now. However, once the mandatory migration starts we will be in a position to provide the complementary support provided by the employment and support allowance to existing cases, so at that stage it would be appropriate for people returning to benefit on linking rules to return to employment and support allowance, but they would return to the same level of benefit as they left. We believe that our approach with the new employment and support allowance is right. These amendments add nothing to the Bill as drafted. Powers elsewhere within Part 1 provide for the entitlement to thenew allowance. They enable us to move away from a culture of incapacity and despair to a new regime of rights and responsibilities, where there is opportunity for all. I shall seek to answer some of the residual questions from noble Lords. If I fail to cover them, I hope noble Lords will press me on the matter. On the issue of linking rules and existing cases, until the mandatory migration process starts, the current linking rules will apply to existing customers. If someone leaves IB, he will return to it. I was asked why we are having young people’s rates in the assessment phase but not in the main phase. We have made it clear that we do not want to make any assumptions about a person before the main medical assessments have been satisfied in the first three months of the benefit. That is why the assessment phase rates are based on basic jobseeker’s allowance personal allowance rates. Once in the main phase, customers will receive the same rates regardless of age. The issue of the PCA for existing customers was raised by the noble Lord, Lord Skelmersdale. We are still reviewing and testing the new PCA and, once that is finished, we will be in a better position to say what is the most appropriate stage to introduce it for existing customers. We expect that it will be at the first PCA review following migration to the ESA. It has been suggested that our policy is not clear, and that there is no new detail. It is not possible at this stage to give every last shred of detail, because I do not want to commit prematurely to something that turns out not to work. However, we need to develop our proposals in line with the evidence. There were questions about what will happen in the ESA to 16 and 17 year-olds who receive disability premium, and will get the 18 to 24 year-old personal allowance rate at the moment. Many young ESA customers will have access to the higher main phase rate of benefit earlier in the ESA than they would under the current system. It is a question of introducing a balance into these new allowances. The noble Lord asked what ““in whole or part”” means in Schedule 4 in relation to matching terms. Schedule 4 contains wide powers to allow us to make sure we can move people smoothly from one benefit to another. Because the structures of the ESA and the IB and IS are different, it is important that we have that flexibility. It has also been clear that we want to simplify rules wherever possible, while protecting customers’ cash level benefits. I hope that has dealt with each of the points raised, but if noble Lords would please press me again, I will certainly have another go. Subject to that, I urge the noble Lord to withdraw the amendment.