My Lords, I am grateful to all noble Lords who have contributed to this debate. It is probably worth my summarising that the two amendments we are talking about seek to make changes to the ESA. Amendment 2 would remove from the Bill the 1% increases in the personal allowance for those in the support group, while Amendment 3 relates to those in the work-related activity group.
I understand why noble Lords have tabled these amendments and raised the points that they have in this debate. We all want to protect those who are furthest from the labour market, or who have additional costs because of disability, and that is what the Government are doing.
On the points raised by the noble Baroness, Lady Meacher, referring to the principles outlined by my noble friend Lord Freud during the passage of the Welfare Reform Act, I am clear that those principles—that we will target welfare spending to those most in need and ensure that we do not do anything to disincentivise people from pursuing work—remain intact via this Bill. We are prioritising those in greatest need.
It is right to say that there will still be some effects among disabled people through the Bill because we are including the personal allowance for both types of ESA as well as the additional element for those in the work-related activity group. However, we are ensuring that all those benefits that are paid specifically to cover the additional costs associated with disability are not included in the Bill. For example, the disability living allowance and the attendance allowance are protected, as are the disability premia in benefits such as income support, ESA, JSA and housing benefit, and we have excluded the disability elements of tax credits from the Bill.
In many cases, the basic rate of ESA is just one element of the total package of benefits received. Many people on ESA are also in receipt of other benefits, such as DLA, to which I have just referred, and housing benefit. It is worth noting that around 65% of people in the support group also claim DLA. The point I am trying to make here is that ESA is not the only benefit that most people are relying on. People in the support group receive a component worth £34.80 a week, as has already been said, and they are also automatically entitled to the enhanced disability premium of £14.80 a week if eligible for
income-related ESA. We should not forget that some people will be eligible for the severe disability premium or the carer premium. All these are protected, like the support component. Income-related ESA households where a member of the couple is over pension age also receive a pensioner premium to ensure that the rate of benefit is the equivalent of the pension credit rate. This rate is also uprated as normal.
My noble friend Lord German asked in particular about the personal allowance aspect of ESA and why it is included in the Bill. It is important for me to be clear that the personal allowance is there to provide basic support. It is designed to meet the basic needs of all those on out-of-work income-related benefits. The personal allowance is consistent across all benefits which relate to those of working age. There is a standard amount. For single people, it is currently £71 a week. It is important that I am clear that this rate is common across all claimants who receive ESA, JSA, income support and housing benefit and reflects the fact that they perform a similar function of providing basic support for everyday needs. They do not reflect disability or the additional costs of disability, so therefore it is right that they are set at a standard rate. That is the rationale for including the personal allowance in this Bill and for the personal allowance to be subject to the 1% cap on annual increases. Treating one personal allowance rate differently from that in other benefits would mean that there would be no clear level of income at which state support is set and at which access to other help would be available across a wide range of services. It would also introduce an element of complexity in terms of the coherence of the benefit system which would introduce new challenges and be likely to add further costs to the running of the overall system.
As has been acknowledged, the support group component is protected, so it is not included in the Bill. It is the component element of ESA which differentiates the need based on the effects of a disability or a condition. That particular component relates to the effects of a specific disability. The support group component is paid in recognition of the fact that more severely disabled people are less likely to be able to increase their income by moving into work and may have additional needs. Therefore we pay those in the support group a higher increase than those in the work-related activity group.
It is worth making the point that for those in the work-related activity group, ESA is not like the old incapacity benefits that usually led to people being in receipt of that benefit for a long period. This is intended to be a short-term benefit for those in this group. Those who are placed in the work-related activity group are there because they have been found able to prepare for work. As such, they will be referred for appropriate support, training and provision to ensure that they get the help they need. ESA for people in that group is intended to be a short-term benefit and we expect these claimants to be closer to the labour market and be in a better position to prepare for work. Therefore, while they may not be looking for work immediately in receipt of that benefit, they have some ability to affect their own incomes. That is why it is
right that the annual increase for those in the work-related activity group should—unlike that for those in the support group—be fully within the scope of the Bill.
In his opening remarks, the noble Lord, Lord McKenzie, again referred to the alternative option of the Government bringing forward annual orders rather than introducing the Bill. It is important for me to stress heavily that a central purpose of the Bill, in addition to achieving savings, is to provide certainty. I will say that regularly throughout the passage of the Bill; it is an important aspect of what we are doing. I know that the noble Lord seeks to undermine that, but it is central to what we are trying to do. It is important that we recognise the long-term benefits of providing that certainty; that is how we retain the credibility of the Government’s fiscal policy.