Welfare Reform Bill

My Lords, I thank everybody who has spoken today. There have been some truly excellent contributions. I need to congratulate my noble friend Lord Feldman on his remarkable maiden speech, which I think we all enjoyed. We look forward to many more equivalent contributions. The Bill deals with some really important matters and I am extremely pleased that the debate has been both informed and committed. I may not have enjoyed some of the things I heard but it has certainly been extraordinarily well considered. I think I can claim that we share a consensus on the need for reform and that there has been a great deal of general support for the principles underpinning the Bill. We all believe that the welfare system should be fair; we all agree that it should be affordable; and we all share the aspiration of a welfare system that incentivises people to work, releases people from the net of benefit dependency and ensures that work pays. There has been a little debate about the order of priority from the noble Lord, Lord Knight, among others, but I think that we can all agree with those main principles. The discussion is about how we get from here to there and I know that the detail of that will be heavily scrutinised in Committee, which is absolutely right. I also expect that our debates in Committee will be just as informed as they have been today, and I assure noble Lords right around the House that I will be listening with extraordinary care to the informed views of its Members. I have had a large number of specific questions relating to particular clauses and scenarios. There is no way that I can deal with them all in the time that I have today but clearly we will have ample opportunity to go into great depth in all those areas, so to the extent that I do not deal with an issue now I know that we will come back to it. Perhaps I may remind the House of the commitment that I made in my opening remarks. Over the next few weeks I shall publish a great deal of detailed information which was previously provided in Committee in another place. It will include notes on every regulation-making power in the Bill, full policy briefing notes and, where possible, illustrative draft regulations which will go into considerably more detail than has previously been published. In addition, as we approach each section of debate in Committee I will ensure that officials from the Department for Work and Pensions are available to host briefing meetings for noble Lords. These sessions will be a further opportunity to go over the detail of each clause before it is debated in Committee. I hope that both these sessions and the additional information that will be published will be of use to the House and will go a reasonable way to answering many of the questions and specific points raised today. Clearly, we will pick up the outstanding issues in Committee. Let me try now to summarise in my closing remarks some of the identifiable themes that emerged this evening. The most disturbing thing that I heard today was the concerns of many noble Lords about the anxiety of disabled people. The noble Baronesses, Lady Murphy and Lady Gale, talked about how people were terrified, or petrified, and that worries me more than anything I heard. We are committed to supporting disabled people to exercise choice and control and to lead independent lives. There has been a growing consensus that the disability living allowance has not been delivering and, as I said in my opening remarks—actually, I think that I said it yesterday—it is inconsistent and confusing and does not reflect, in particular, the needs of people with non-physical impairments, such as mental health conditions. Our intention is that the personal independence payment will focus support on those individuals who experience the greatest barriers to remaining independent and leading full, active and independent lives. The intention of the reforms is to ensure that the benefit is sustainable for the longer term, with a more objective assessment of individual need, and that it will be responsive to changes in people’s conditions. In answer to the question that was raised by a number of noble Lords, including the noble Baroness, Lady Finlay, and the noble Lord, Lord McKenzie, about the relationship with the carer’s allowance, I can reassure the House that the personal independence payment’s daily living component will be part of the gateway for receipt of carer’s allowance, but only when we have completed the modelling and testing of the assessment criteria will we be able to update the impact of the new PIP assessment on carer’s allowance recipients and the rate of daily living allowance to be actually used. We published the initial draft of those assessment criteria in May. These were developed in collaboration with a group of independent specialists in health, social care and disability and we drew on a wide range of relevant expertise. The aim of the criteria was to look at the ability of individuals to carry out a range of everyday activities. I think that there are currently 11 separate criteria and, for example, the introduction of communication will ensure that we take the effect of impairment of hearing, speech and language comprehension into account much better. My noble friend Lady Thomas asked what account the assessment criteria will take of the successful use of aids and appliances. We recognise that aids do not remove an individual’s disability and that there may be ongoing costs. We know that it is vital to get these assessment criteria right. Over the summer we heard the views of disabled people and organisations. We met with around 60 organisations and received about 170 other written responses. We tested the draft criteria by reviewing them with 1,000 people who are on DLA to see how they worked. The findings and the testing will be used to produce a second draft of the assessment criteria and the regulations later in the autumn in time for us to use them when we consider the relevant clauses in Committee. The noble Baroness, Lady Meacher, asked who will make the final decision on the assessment. I can confirm that that will be the DWP decision-maker and not the medical assessor. I can also confirm that all claimants, particularly those with mental health conditions, can be accompanied at the face-to-face assessment. As I have said in the past, the default position is a face-to-face assessment but I am conscious that in some circumstances that is counterproductive. A number of Peers are worried about autism and how that will be handled. Several noble Lords have commented on the extension of the qualifying period of PIP to six months. While there has been reasonable support for the principle of an overall qualifying period of 12 months, there is concern that a longer qualifying period will adversely affect certain groups of disabled people, particularly people who have had strokes and those with a recent diagnosis of cancer. My honourable friend the Minister for Disabled People and officials have engaged with disability groups during the summer and the Government are continuing to look closely at the issues they have raised in regard to this change. The other issue that is of great concern to noble Lords is the time limiting of ESA for those in a WRAG, particularly for cancer patients. The noble Lord, Lord Patel, with his direct experience of this issue, made a moving speech on it. The contributory ESA was always intended to be a benefit which provided temporary support for those in work-related activity. With the right support it is reasonable to expect people in this group to return to work; that is what this definition aims to do. In our view a time limit of one year strikes the right balance between the need to restrict access to contributory benefits for those under pension age while allowing those with longer term illnesses to adjust to their health condition. It is, of course, double the length of time for which the contributory JSA applies. I must emphasise that severely ill or disabled people in the support group, which includes many people with cancer, are fully protected and will continue to receive contributory ESA indefinitely. Income-related ESA will also be available for those with little or no alternative resources. My department has been working with Macmillan Cancer Support and others to ensure that we support people who are diagnosed with cancer in the most sensitive, fair and appropriate way. A number of noble Lords raised deliverability and IT—I am thinking in particular of my noble friends Lord German, Lord Kirkwood and Lord Brooke, and the noble Lord, Lord Knight. I am aiming as soon as I can to give a much more extensive demonstration of the IT, because what is happening is very interesting—it will not be in the Chamber because a lot of graphics are involved. Our aim is to process and implement the majority of claims automatically. By pulling the benefits and credits together, we break the factor of so many different organisations delivering them. It will not require large-scale IT, and it is absolutely not an IT development on the scale of that the NHS, which was cited by a number of noble Lords. We are already under way on the design and development. The agile process means that, rather than delivering the system in one go and then testing it, we are constantly testing how it works. The scale of the IT is similar to that for the ESA, which was successfully delivered by the previous Government on time and on budget in October 2008. We will not rely on last-minute testing. It is a fascinating area, and I commit to doing something quite elaborate on it. Another area that received considerable attention today was the benefit cap. Powerful contributions were made by the noble Baronesses, Lady King and Lady Lister, and my noble friend Lord Kirkwood, who is amazingly still in his place tonight despite his bad back. Let me be clear: the cap is being introduced for a number of reasons. It will address some of the problems of welfare dependency, add to the incentives to move into work and promote fairness between those people who are out of work and rely on the benefits system and taxpayers in work who pay for it. There is an important principle here: people should not expect a life on benefits getting more money from the state than people in similar circumstances could earn in work. This is the legacy of a system where people are not always better off when they get a job, which is one of the fundamental problems that we are trying to fix with the universal credit. The introduction of a benefit cap will mean that households on out-of-work benefits will have to make the same decisions as families in work with regard to the lives they lead and the areas they can live in. People will have to take responsibility for their decisions in the light of what they can afford. We have said that we will consider ways of easing the transition for families on existing benefits and are looking at exactly what might be needed. In doing so, we shall be mindful of the points that have been made on this issue today and throughout the passage of the Bill to date. Housing has provoked much more interest around the House than is normally the case, possibly to the slight surprise of specialists such as the noble Lord, Lord Best, who is one of the gurus on the topic. Over the past 10 years, housing benefit expenditure has roughly doubled in cash terms. The Government are convinced that it is absolutely necessary to take steps to manage this expenditure. We have already introduced legislation to ensure that people who make new claims for housing benefit in the private rented sector are prevented from claiming excessive rates of local housing allowance. The Welfare Reform Bill introduces further measures to control expenditure and to ensure that housing benefit is fair and affordable. Noble Lords have spoken about the changes that we are making to housing benefit in the social rented sector. In England alone, around 5 million people are on the social housing waiting list and over a quarter of a million households are in overcrowded conditions within the social rented sector. Yet at the same time, something approaching nearly 1 million extra bedrooms are being paid for by housing benefit. That is simply a luxury that we can no longer afford. It is not fair to the taxpayer and not fair to those in housing need. The demand is such that we must do all that we can to make better use of our limited social housing stock. We need to do more to tackle the high rate of under-occupation, encourage more people to move as well as help those who want to move but have so far been unable to do so. If people continue to live in a property larger than they need, we will expect them to make a reasonable contribution to its cost through a reduction in housing benefit. On the connection between the CPI and the LHA uprates, I must point out that we are committed to that measure for two years; 2013-14 and 2014-15. If it then becomes apparent that local housing allowance rates and rents are out of step, they can be reconsidered. Many noble Lords including my noble friends Lady Stedman-Scott and Lord Ahmad, the noble Baroness, Lady Hollis, and the right reverend Prelate the Bishop of Leicester, raised concerns about childcare and how it fitted with the universal credit. It is a critical issue and we are taking the time to ensure that we get it right. The impact assessment showed that an average family with children is more likely to have a higher entitlement under universal credit, and the combination of higher disregards and a single taper will make work pay. If childcare costs are taken into account, some families may face a higher effective marginal deduction rate, but that is the same as happens in the existing system. It is not because of the universal credit. But I absolutely accept the point that noble Lords have made right around the House that we need to get this right and make sure that the way that we structure and fit in childcare is absolutely optimised. The impact of this Welfare Reform Bill will be greater than the sum of its parts. The introduction of the universal credit will mean around 2.7 million households will have a higher benefit entitlement. For more than 1 million households, that will amount to more than £25 per week. We anticipate that introducing a simplified welfare system will lead to greater take-up of benefits, potentially lifting 600,000 adults and 350,000 children out of poverty. The combined effects of welfare reform could mean up to 300,000 fewer workless households. That is at the core. The reason for this is as the noble Baroness, Lady Hollis, said so eloquently: we are de-risking being out of work compared with being in work. A point that I think noble Lords still have not really accepted—or perhaps not on the other Benches—is that when the pure universal credit comes in, in its entirety, it will put more than £4 billion each year into the pockets of the poorest people in this country. I know that there are other cuts which noble Lords do not like, but on the universal credit, we have had to invest a lot of money each year and the Treasury has supported that to make the system work. The welfare reform and the contents of this Bill are about much more than money. The reform is aimed at changing the state of our nation. Taken together, these measures will radically alter the mindset of dependency. They will create work incentives to drive positive behaviour. They will deliver a welfare system that is fair, flexible and firm. In essence, it will bring real, lasting change by directly affecting attitudes and behaviour. This Bill is a real opportunity to make a difference to the lives of some of the poorest, the neediest and the most vulnerable people in our society. It is an important and necessary piece of legislation. I commend the Bill to the House and ask for it to be given a Second Reading. Bill read a second time.