My Lords, all of us want to protect those who are furthest from the labour market or who have additional costs because of disability, and I think that all of us who have contributed to this debate so far and all of us in the Chamber today share that view. There is no disagreement among us on that.
That is what the Government are doing. We have not included key disability benefits, including disability living allowance and attendance allowance in the
1% annual uprating decision in the Bill. Nor have we included the disability premiums in working age benefits or the disability elements of tax credits in the Bill. We have also excluded the support group component of employment and support allowance and the higher of the universal credit disabled child additions. All these benefits will continue to be uprated by CPI. We have protected them because they help support those who are furthest from the labour market or who have additional costs because of disability.
In one of the exchanges that has just taken place, the noble Lord, Lord McKenzie, referred to cancer sufferers and made the point that we want to make sure that we provide them with the support that they need. It is worth reminding noble Lords that earlier this year, in January in fact, we introduced changes that will mean that more people with cancer will now qualify for the support group, which is protected, whereas before they might have been placed in the work-related activity group. We have taken on board the concerns in that area. They were valid concerns, and we were glad to be able to act on them.
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Let me explain, however, why we have included the personal allowance and the work-related activity component of ESA in the Bill. The ESA personal allowance, which is subject to the 1% cap, is there to provide temporary basic support for everyday needs. It does not reflect disability or the additional costs of disability: hence it is set at the same rate as the personal allowance for the other working-age benefits such as jobseeker’s allowance, income support and housing benefit. The work-related activity group component—the additional component on top of the personal allowance—which is also subject to the 1% cap, is paid to those who are able to take steps to prepare for a return to work. As such, they will be referred for appropriate support, training and provision to ensure that they get the help that they need. It is the support group component that is paid in recognition of the fact that more severely ill and disabled people are less likely to be able to increase their income by moving into work and may have additional needs. That is why it is paid at a higher rate than the WRAG component, as the noble Lord, Lord Low, referred to it, and why it has been excluded from the Bill.
I will give noble Lords some comparison. The WRAG component goes on top of the personal allowance, which for a single person at the moment is £71 per week. For those who are considered perhaps to be ready, with some support, to be able to start thinking about moving back into work, that is £28.15 a week at today’s rate, while the support component is currently £34.05 a week. The noble Lord, Lord Low, questioned whether we were right to describe the work-related activity component of ESA as a temporary benefit. He may find it helpful if I remind him and other noble Lords that when the last Government introduced ESA—it was a new benefit that they brought in—the Command Paper that they published said:
“For the vast majority, ESA will be a temporary benefit as people recover from, or adapt to, their condition and prepare for a return to work”.
It also said that the support group should be the element that provides,
“security for the most severely disabled people”.
That is what the then Government set out when they introduced the new benefit.
Reference has been made to universal credit and to the component of it that is paid to parents of disabled children. In universal credit, a similar distinction is drawn between people who are in what we are currently calling the WRAG group and those who are in the support group: hence, the disabled child additions and their adult equivalents in universal credit are to be paid at a lower and a higher rate. The lower rate of the disabled child addition reflects that the parents are more able, with the right support, to move towards work. That is why it is part of this Bill. It is a payment that is made to the parents of children. However, the higher rate of the disabled child addition reflects the fact that parents of a severely disabled child who are entitled to the higher rate may not be able to increase their incomes through work. That is why it is not part of the Bill. That distinction is mirrored across into universal credit.
However, because I recognise the concerns that noble Lords have raised, I will stress again that the personal allowance—the payments for which increases will be capped at 1%—are not those that are paid to cover the additional costs associated with a person’s disability. There are fundamental distinctions here between additional cost disability benefits, such as DLA, which we have protected, and employment and support allowance; between the ESA support group component, which we have protected, and the WRAG and the personal allowance; and, finally, between parents providing care to a child receiving the higher rate of the universal credit disabled child addition, which we have protected, and the lower rate that is paid to parents who, with some support, could return to work.
Because all of us are concerned to see disabled people receive the support they need, it might be helpful for me to outline for noble Lords some of the wider support that the Government provide for disabled people. The Government are spending nearly £50 billion a year supporting disabled people. One of the ways in which we are doing this is by investing £320 million on disability employment programmes. I hear the comments that were made by the noble Lords, Lord Low and Lord McKenzie, about the Work Programme, but I disagree with them. I would also say that we have a scheme for disabled people called Access to Work, which in 2011-12 supported over 30,000 people at an average cost of over £3,200. We have invested more, another £15 million, in this area for this spending review. We have another programme called Work Choice, which provides tailored support to help disabled people facing the most complex barriers to employment find and stay in work. It is voluntary, and payable regardless of any benefits being claimed.
I know that many noble Lords are very familiar with the detail of different benefits that apply to disabled people and have been involved in debates and decisions in this area for many years. None the less, it is worth me making the wider point that the latest OECD figures show that the Government spend a
higher proportion of GDP on disabled people’s benefits and services compared with the rest of the EU. Of 34 countries, only Norway and Iceland spend more. We take this responsibility very seriously and ensure that the support that disabled people rightly need is provided.
This Bill seeks to make savings where we can, while protecting benefits that reflect additional costs. The Bill is expected to create savings of around £3 billion over the two years in question. My noble friend Lord King asked the noble Lord, Lord McKenzie, whether he was aware of the cost of the amendment that we are debating. It would reduce those savings by around £400 million, which would clearly put additional pressures on public services.
I believe that our proposals are proportionate and fair. I recognise, of course, that there are people who are affected by the changes that we are making here, but I hope that I have been able to demonstrate that, when seen in the wider context, we are also providing comprehensive support to people who are disabled, which is right and which we will continue to do. I hope, therefore, that the noble Lord, Lord Low, feels able to withdraw his amendment.