HL Deb 21 March 1994 vol 553 cc501-28

3.10 p.m.

The Parliamentary Under-Secretary of State, Department of Social Security (Viscount Astor)

My Lords, I beg to move that the Bill be now read a second time.

I think it important to start by setting the scene for the changes that this Bill will bring about. Last year my right honourable friend the Secretary of State announced a long-term review of the social security system. To assist in that process, the department published an analysis of the growth of social security provision over the next decade. The findings highlighted that benefits for incapacity were one of the three areas of likely growth.

Invalidity benefit is the fastest growing contributory benefit. It is second in cost only to retirement pension. Spending on this benefit has doubled in real terms in the past 10 years, from £2.7 billion to £6.2 billion. No responsible government could let that growth go on unattended. If we did, spending would grow by a further 50 per cent. in real terms by the end of the decade. That is why the Government decided to tackle that area first. The Social Security (Incapacity for Work) Bill brings about a fundamental reform of benefits for people who are unable to work because of sickness or disability.

The new benefit—incapacity benefit—will replace sickness and invalidity benefit and has three major objectives: first, to ensure that benefit is targeted on those who are genuinely too sick or disabled to work; secondly, to provide a more rational structure of benefits; and thirdly, to ensure that incapacity provision is affordable and sustainable into the next century.

Before we embarked on this reform, we commissioned a series of research projects to look at the reasons behind the massive growth in invalidity benefit which has taken place, despite the improving health of the nation as a whole. That research highlighted two particular problems. The first is the structure of invalidity benefit itself. It is not a means tested benefit, neither do we propose to make it so. But it is poorly focused on need. It provides a basic income in lieu of earnings, yet unlike those earnings it is tax free. It is paid to people who are unable to work, yet it is also payable for up to five years beyond pension age. And a significant element of the benefit, the additional pension, is earnings related, which often duplicates occupational and private provision for sickness.

The second problem we identified is the existing medical controls; the means by which a person's incapacity for work is judged. Over the years the original intention of the benefit to provide an income for people whose medical condition prevents them from working has become blurred.

The GP's role has become difficult. Through no fault of their own, GPs are often placed in the unacceptable position where, on the one hand, they have an obligation to their patient but, on the other, have to act as gatekeeper for the social security system. Ineffective medical controls have led to some abuse of incapacity benefits. Many people who are capable of work view invalidity benefit as a readily available supplement to their occupational pensions. The public at large resent this abuse. We concluded that the reforms must deal with both structural reform and new medical controls, in order to return to the original intention of the benefit.

The Bill will introduce a new benefit—incapacity benefit —which will be payable at three rates. The longer the period of sickness, the higher the benefit. Most people receive statutory sick pay for the first 28 weeks of sickness. The Bill will simplify statutory sick pay by replacing the two existing rates with a single rate set at the present higher rate. It will be worth an extra £4.70 a week at April 1994 rates for mainly lower paid and part-time employees. Those people are less likely to work for employers with generous occupational sick pay schemes.

For those who do not receive statutory sick pay, incapacity benefit will be available for the first 28 weeks, at the same rate as sickness benefit now. After 28 weeks it will increase to the same rate as SSP and it will become taxable. It has always been our intention to bring benefits-replaced earnings into tax, including invalidity benefit. But it is important to remember that not everyone receiving the benefit will pay tax. Only those with income from other sources bringing their income above the tax threshold will be affected. After a year of incapacity the basic rate will increase once again to the same rate as basic IVB.

The long-term element of the new benefit will not be available beyond pension age. Short-term incapacity benefit will be paid for up to 52 weeks where a person has become incapable of work before their 60th or 65th birthday. The earnings-related additional pension will not be part of the new benefit for those who come on to the benefit after April 1995. The additional pension has been recognised as somewhat of an anomaly.

Increases for age and adult dependants will continue but these will be restructured in order to better target the benefit. The age-related invalidity addition will be simplified and the ages of entitlement brought forward. People whose incapacity begins before the age of 35 will receive an extra £12.15 a week on top of their basic benefit. Those incapacitated between the ages of 35 and 44 will receive an additional £6.10 a week. The age addition will continue to be paid for as long as a person remains on incapacity benefit. Increases for adult dependants will be paid for those who are looking after children, and for spouses aged 60 or over.

A key element of the reform is the new medical test of incapacity which is being developed to provide a clearer and more objective assessment of incapacity. An aim of this Bill has been to refocus the benefit on those who are medically; incapable of work. It is right that a benefit designed for the long-term sick and disabled should have entitlement restricted to those who are unable to work because of their medical condition.

We arrived at cur current proposal—that is, that incapacity should be measured by a functional assessment—after a thorough and wide-ranging research programme. The incapacity test will assess the effects of a claimant's medical condition. The test will measure limitations in a number of functional areas, and assess them against a commonly agreed standard of mental sensory and physical capabilities required for work.

We have based our test of incapacity on the approach used by the Office of Population, Censuses and Surveys in its disability surveys in the 1980s. OPCS used established definitions of disability, but a new feature of its method was an attempt to measure the overall severity of disability arising from a number of different limitations. We are seeking to do the same for incapacity for work. There are several stages to this: first, the development of a series of scales covering all the areas of disability that might affect capacity for work; secondly, the ranking and scoring of the items in the scales in terms of their effect on capacity for work; thirdly, the identification of the point in each scale at or above which a person should be considered unable to work for the purpose of deciding benefit entitlement; and fourthly, the development of a model for assessing the effect of combinations of disabilities of different types and severity on capacity for work.

We published, on 1st December, a consultation document with detailed proposals for the new test, describing the proposed assessment and how it had been developed. The consultation period ended on 11th February and has prompted over 350 responses so far. All the responses have been extremely useful and are now being fed into the development process.

We have convened an expert panel, which is working through these stages. It has been at work since December, reviewing the scales and assigning incapacity scores to items within them. We have now reached the fourth stage, in which we ask the panel to score combinations of disabilities. There are over 80 people on the panel. They include disabled people, members of disability organisations, medical and occupational health: specialists, researchers and members of the Departments of Employment, Health and Social Security. All are included to provide expert views rather than to represent particular interests or organisations.

A sub-group of the panel is looking at the particular questions raised by the assessment of mental health. A second expert panel has begun work to assess the effects of disabilities on capacity to do particular jobs. Its findings will serve as a check on the results of the main panel.

The detail of the test will be revised to take account of the outcome of the consultation, development and evaluation processes. We will then issue a report which will summarise all the work that we have undertaken and present our proposals for the test. Only after all this shall we present our final proposals on the test to Parliament for approval, in the form of regulations. As a consequence, the Bill seeks from Parliament powers to prescribe in affirmative regulations the detail of the new test.

We propose to apply the new medical assessment after 28 weeks of incapacity for work. For the first 28 weeks of incapacity most people will be assessed against their ability to carry out their normal job. That is little different from now. It will be based on a GP's certificate.

After 28 weeks, people will move automatically on to a higher rate of benefit. Most will be sent a questionnaire for completion. Claimants will need to ask their GP for a statement of diagnosis, together with a description of the main disabling conditions. The majority of cases will be referred to a departmental doctor for a report and examination. The assessment will create an overall picture of the effect of the medical condition on the person's ability to carry out a range of work-related activities and hence their capacity for work.

When the new test is introduced it will apply to existing as well as new recipients. To do otherwise would be inequitable. No existing beneficiary of invalidity benefit who is genuinely incapable of work need have any worry. Indeed, the new test is being designed specifically to ensure that such people continue to get incapacity benefit.

The new test will not be applied to those new and existing claimants who are clearly incapable of work. That includes the terminally ill, those in receipt of the highest rate care-component of disability living allowance and those suffering from certain specified illnesses. A preliminary list of such illnesses was announced by my right honourable friend the Secretary of State in another place on 24th January. It is not final, and will be developed during the consultation process. We are consulting with the Disability Benefits Consortium on the content of the list.

In addition, existing IVB recipients who are aged 58 or over at the point of change, and who have been continuously in receipt of invalidity benefit since the proposals were first announced on 1st December last year, will not have to go through the new test. In total some 850,000 out of 1.5 million people will not be subject to the new test; they will, instead, continue to be subject to the existing medical controls.

We intend to use transitional arrangements to ensure that existing beneficiaries continue to receive their old rates of benefit and, with the exception of any additional pension, have it uprated annually, so long as their incapacity continues or there is another change in their circumstances. An important feature of the new arrangements is that people will be able to undertake voluntary work subject to an hours limit of 16 hours per week without it affecting their benefit. That has been widely welcomed by voluntary and charitable organisations.

It had been our intention to bring this provision into effect when the new benefit is introduced. However, following representations, I am pleased to announce that the Government are bringing forward those arrangements for voluntary workers so that they will apply to recipients of sickness benefit, severe disablement allowance and invalidity benefit before April 1995. We will bring forward regulations to give effect to this intention at the earliest opportunity. I hope to have the arrangements in place by the summer.

The new arrangements will recognise the sensitivities of the vulnerable group for whom incapacity benefits were originally intended—the long-term sick and disabled. It will protect their benefit against those who abuse it. Nevertheless, we must have a system that combines safeguards for the vulnerable with being modern, realistic and affordable. I beg to move.

Moved, That the Bill be now read a second time.—(Viscount Astor.)

3.23 p.m.

Baroness Hollis of Heigham

My Lords, I should like, first, to thank the Minister for his clear introduction to the Bill. The number of people on invalidity benefit is growing and the cost is rising. The Prime Minister said that it "beggars belief- that that can have anything to do with increasing sickness and disability. Therefore, instead, as the Secretary of State said when introducing the Bill in the other place on 24th January, it must be to do with, in his words, "haphazard" access, "lax" controls and a system, again in his words, that is "open to abuse". In other words, according to the Secretary of State invalidity benefit costs are rising because too many people on invalidity benefit are malingering; benefits are too generous; and GPs are being too lax.

So we have the Bill which will make the medical test tougher, thus making it harder to claim incapacity benefit. If the person passes the medical test, that benefit will be sharply reduced in value to make it less attractive; and, finally, as the Minister made clear, it will take away from GPs—who might know about people's conditions—the job of certifying that people should remain on benefit after six months and give it to independent adjudicators who will not have that knowledge.

Even if the assumptions of the Secretary of State which inform the Bill were valid, we would still argue that the Bill is both unnecessary and harsh. As the disability groups have all reminded us, the safeguards in the system are already adequate to root out any abuse or fraud. But when, instead, we know that the assumptions behind the Bill are false—and we know that they are false because the department's half a dozen pieces of research (which are in the Printed Paper Office and the Library) tell us that such assumptions are false—then the Bill is unusually unpleasant. As one of the disability groups stated, at the core of the Bill is an assumption about malingering and abuse. Indeed, the noble Viscount referred to that this afternoon. The aim, according to that disability group, is to cut public expenditure by character assassination of the disabled. The group is right.

Let us take the first of the Government's assumptions; namely, that the growth in IVB is about malingering or abuse connived at by the general practitioner. Sir Michael Partridge, the Permanent Secretary of the department, was very clear when he told the Public Accounts Committee that, the theory of increased numbers due to fraud is not borne out by research". Quite so, my Lords. However, I am not entirely sure whether the latter told the Minister the same thing. Why does he believe that the disabled are not abusing the system? The reason is that they are steady workers; indeed, more than half of those on benefit worked for their previous employer for more than 10 years and struggled to stay on in work as their health deteriorated, even though three-quarters of employers did nothing to help them stay in work by altering hours, conditions or types of appliances, but often actively pressed them to go.

I quote from the Government's research regarding a woman who was a supervisor for 15 years in a fish factory who suffered from severe osteoarthritis which became worse by standing on wet and cold concrete floors. She said: They"— that is, the employers— weren't interested … you are just a number to them. It didn't matter if you had been there years, if you couldn't do the job, that was just too bad". As I said, that example comes from the Government's research.

Once on invalidity benefit, in nine cases out of 10 the disabled do not find their health improving. However, in those cases where it improves—and they are usually the younger men and women—they try desperately hard to find work. They put themselves on the line time and again only to be met with rebuff and rejection. One manual worker with diabetes said that he was turned down each time because of his illness.

Again, I quote from another case which comes from the Government's research. A building labourer with severe arthritis who needed occasionally to sit and rest, stated: These employers have got that many people to choose from now … why should they hire me? Why indeed? After all, most disabled people are middle-aged, unemployed men from manual jobs with no formal educational qualifications. Their work, and their world of work, are disappearing around them. At the best of times and even in good health, they remain marginal to the labour force. Add to that the cost of their disability to employers through statutory sick pay, and it is not surprising that, once on invalidity benefit, those people find it hard to re-enter work.

They are told that they are fit for light manual work. But what does that mean, if such work does not exist? It is suggested that they might, for example, be car park attendants in an age of pay-and-display systems; lift attendants or garage pump attendants when such jobs no longer exist; or swimming pool attendants, when pools have been closed. Even more bizarre was the case of a disabled man whole only language was Punjabi being told that he was fit to be a telephone operator, or that of a 59 year-old electrical engineer with respiratory disease, who was told that he was fit enough to be a dispatch rider even though he had never held a driving licence in his life. A scrap metal dealer with angina was told that he was fit enough to be a tax collector; and a roofing tiler with spinal injury was told he was fit enough to be a computer operator. Others were told, bizarrely, that they could be artists' models—presumably for someone other than Lucian Freud—taxidermists or embalmers. This would be funny if it was not used as an argument for depriving decent and desperate men of their benefit. How can it be right to tell them they are fit for work—work which for them does not exist—and then remove their benefit?

If the Government really believed—as the Secretary of State has said—that abuse was the problem, and that people were malingering who truly were fit for work, the Government and the Benefits Agency could simply refer more cases for review. However, the Government are, not going down that path precisely because they know that so few additional cases would be thrown up that the process would not generate the savings the Treasury is demanding. After all, last year the Benefits Agency reviewed 900,000 cases of people on invalidity benefit and the judgment of the GP and the claimant was upheld in 800,000 of those—that is, eight out of nine cases—and many of the rest comprised either those experiencing fluctuating conditions in their health or were mental health cases, which are notoriously hard to determine.

It is because claimants are not malingering and because they pass the existing medical test—there is no reason to think that test has become easier over time—that the Government need to make the test harsher and more stringent if they are to save any money that is now spent on the sick and the disabled. It is precisely because the disabled are not malingering that the test and the rules of the game have to be changed. Hence there is to be a new medical test which, it is suggested, will in a full year take nearly 200,000 people off invalidity benefit (or incapacity benefit as it will become) and will prevent a further 70,000 people who would have qualified for it becoming eligible for it. That will save the Treasury £1.45 billion as that procedure bites.

Of course, by making the medical test more stringent, those who fail to get invalidity benefit or incapacity benefit will sometimes still be too poorly to be regarded as available for work and therefore they will be refused unemployment benefit as well. A man who injured his spine as a result of falling from a roof discovered that he was refused invalidity benefit but denied unemployment benefit because he could not walk very far. What do people in such situations do as regards income? They are considered too 5t for invalidity or incapacity benefit but not fit enough to receive unemployment benefit. What do they do? Presumably they go on to income support except that half of them will not be eligible for it because they will fail the means test either because they have modest savings or a partner in work. So, in return for what has been a contributory benefit, those who are in poor health will find themselves without any independent income at all.

The Government also argue that the numbers on invalidity benefit were growing because claimants were malingering and this was happening because the benefit was too generous and hence acted as a disincentive to work. That really is not true, and again the Government's own research shows that. Over half of those on invalidity benefit found that the benefit was worth less than half of what they had earned in their previous job. Invalidity benefit is not generous compared with earnings, and it is not therefore an incentive to leave work to go onto the benefit. What is true is that invalidity benefit is relatively more generous than other benefits such as unemployment benefit, sick pay, income support and old-age pensions precisely because it carries—as it was always intended to do—an additional allowance to cover the additional cost of disability. We all know that disability incurs necessary extra costs for special diets, extra heating, aids and appliances and for laundry.

This Bill will not only make the medical test harsher but—what is even worse in some ways—it will sharply cut the level of benefit thus requiring the disabled to shoulder the cost of their own disability. At the moment a disabled man aged 48 with two teenage children who has received invalidity benefit for 30 weeks receives, believe, £120 a week. In future, that same man, if he has passed the medical test and is receiving incapacity benefit, will receive just £79 a week. He will be £40 a week worse off, and he will receive the same income whether he has one child or three. He will receive no help for the costs of disability. Therefore he will receive £79 a week, whereas currently he receives £120 a week. If he were on income support, which is regarded by the state as the minimum poverty level for a family, he would receive not £79 a week but £109 a week.

In other words, not only will the new medical test result in invalidity benefit being withheld from over 200,000 people a year, but it will so depress the value of that benefit that thousands of people will, for six months, receive a benefit which is considerably below the level of income support. I would ask the Minister how those people are supposed to live. How will they rebuild their health and re-enter work living on £30 a week below income support? These people have passed the medical test and have been deemed to require a disability allowance.

No one denies that there are increasing numbers of people receiving invalidity benefit. However, as all the research shows, that has not occurred because more people are claiming the benefit, but because it is harder for poor people in poor health to come off the benefit. As the PSI report of June last year showed, this is true all over Europe. The reason for the increasing cost of invalidity benefit lies in the economy as a whole and derives from the firing and hiring practices of employers rather than in any malingering by the disabled.

We know—we debated this matter when we discussed the Statutory Sick Pay Bill—that the disabled are three times more likely to be unemployed than the able bodied. We know that the disabled are six times less likely to be interviewed than the able bodied; and when they are interviewed, the disabled say that the biggest obstacle to their returning to work is the refusal of employers to take them on. When they have sought to return to work, one in six disabled people have experienced health problems as they could not carry out heavy work, and they could not move around much or work in long stretches. However, two in three disabled people said that they failed to return to work because employers would not interview them or because, when they did, the disabled failed the firm's medical test.

It is not the case that the disabled are abusing the system but that the system is failing the disabled. With the economic recession, the marginally employable across Europe have become unemployed, and as they are even more marginalised as a result of their disability and ill-health, it would have been sane and humane to allow such men and women to continue to qualify for invalidity benefit. They are unable—not unwilling—to work; but the Government's insistence that the country is keeping in idleness many disabled people who can work but will not do so confronts the employer's view that he cannot afford to employ those who may want to work but who, in his view, cannot do so. Caught between them, the disabled are distressed, maligned and impoverished.

I end by referring to an article which appeared in my local newspaper last December under the headline "Wife's Anguish". Mr. Skipper lived not far from me in Norwich. He was 50 years old and had been on invalidity benefit since 1990 because of a heart condition. His GP wanted him to remain on invalidity benefit but was overruled by the Benefits Agency Medical Service. In December, 48 hours after losing his invalidity benefit on the grounds that he was fit to return to work, he died of a heart attack. His doctor said: There have been patients which I have been quite certain were not fit to work but each time I have never succeeded in overturning the judgment of DSS doctors". Mr. Skipper was told that he was fit for light work. According to his wife, it was worry about losing his benefit that brought on the heart attack. She said: I am angry, really angry with the Government. How many more people are going to die because they have been taken off invalidity benefit? Because it was December she had bought his Christmas present, a music centre. He played it just once.

Mr. Skipper's wife was angry. We should be ashamed. I hope that together your Lordships will substantially amend the Bill.

3.41 p.m.

Earl Russell

My Lords, I should like to thank the Minister for the encouraging words that he said about volunteers in the course of his speech. I shall want to read those words carefully before I decide whether they are sufficient to save us some time in Committee. I was at least pleased to hear them.

Those of us who are in the habit of moving amendments to Bills know that in Whitehall there are two categories of recognised amendment: the unnecessary and the wrecking. Similarly, I am beginning to suspect that in the Department of Social Security there are two recognised categories of benefit: the unnecessary and the abused. In fact, I am beginning to wonder whether Cardinal Morton has taken up occupation in the Department of Social Security since the famous fork is alive and well in Richmond House—for if few people claim a benefit it is not needed; if more people claim a benefit it is abused. The Department is well known for looking on itself as a honey pot surrounded by benefit seeking wasps.

Speaking in another place on the Second Reading of this Bill the Secretary of State said, as the noble Viscount said today, that the system is open to abuse. He might perhaps have said that the system is open to use, for this benefit is being changed because there was an increase in the number of people claiming it. The department and the Minister have made an assumption as to why the increase occurred. As far as I can see, they have no significant evidential reasons for that assumption.

It is interesting to look at what appear to be the reasons. As the noble Baroness pointed out, the Policy Studies Institute has noticed the same increase all across Europe. It therefore seems a little improbable that it should be the result of a quirk in the British benefit system. Some people, rather than receive the first five years of pension, have been on invalidity benefit because it is not taxable. The Bill changes that. Therefore, if that were thought to be the cause there was no need for the whole mechanism of a new test as well.

Most important, the Policy Studies Institute has found that the major problem is that, because of changes in the labour market, on which the noble Baroness touched, it is becoming harder to get off benefit. Rules of order forbid me from quoting from the excellent speech of Mr. Alan Howarth on the Second Reading of the Bill in another place, but I trust that at least the Minister and any of his noble friends who take a special interest in this Bill will read that speech with great care.

Today the noble Viscount talked about the improving health of the nation and used that as a reason for doubting whether so many people could be entitled to invalidity benefit. That carries an assumption that previously take up was 100 per cent. That is possible, but it is improbable. If the department thinks that, I should like to know why.

It is perfectly possible that the health of the nation as a whole may be improving. But the health of that part of it which is liable to unemployment, which has regrettably increased, may be worsening. If, for example, one looks at the Caine study undertaken following the closure of the Harris bacon factory in 1985, one finds that in the subsequent year GP consultations increased by 20 per cent., specialist referrals increased by 20 per cent. and hospital outpatient treatment rose by 60 per cent. Is that not in line with the increase which the department has found in invalidity benefit? Might we not be seeing here yet another example of what John Stuart Mill called the inability of the unanalytic mind to recognise its own handiwork? In addition, when we consider the possibility that many of these people will end up on income support we may wonder just how much saving this measure will produce.

So we have a spurious problem. To solve the spurious problem we have a spurious solution. Therefore, the Department of Social Security, in true Whitehall fashion, has bethought itself of an objective test. What does Whitehall mean when it thinks of an objective test? It thinks of filling in a form. The amount that can be discovered about anyone's health by filling in a form is very limited. Forms necessarily are concerned with what is quantifiable and measurable. They concentrate on the measurable, and it is called the objective because it is easier to measure. They remind me of the Black Country Enoch and Eli story. Enoch found Eli scrabbling in the gutter late one night and said, "What are you doing there?". "I dropped half a crown". "Did you drop it here?" said Enoch. "No. I dropped it over there". "Then why are you looking here?" "The light is better here" The objective test tests what is easy, not what is relevant.

I also have considerable misgivings about the use of the all work test. Most of us here, in any normal sense of the word, work. I would hesitate to pronounce that most of us were fit to apply for work as a docker, supposing such work to exist any more. Curiously enough, almost the only exception which occurs to me—my noble friend Lord Addington—counts as disabled because he is a dyslexic. That just goes to show how difficult it is to apply an all work test.

I also believe that it has been a mistake to refuse point blank to take account of non-medical factors. Take, for example, the case of somebody who has suffered an eye injury. If he goes to work from Highgate he can easily travel on the Tube. But if he goes to work from South Molton or from Ysbyty Ifan in Merioneth, or one of the increasing number of places from which he can only go to work by car, if he is told that he must go to work by car I just hope that I am not travelling the other way when he does so. So fitness for work may depend on the circumstances from which you have to go to work.

The test also misses the intermittent effect; it is a snapshot, as any examination must be. To take cases from my own recent teaching experience, I have been seeing pupils suffering from depression and bronchial asthma. I know well that they are much fitter to work on some days than on others and any test which measures only a single day is likely to have got it very wrong indeed. We also ignore the effect of the test on the patient. To take a slipped disc —and I speak from memory—one may be fit to lift the object one is asked to lift in that one can raise it up, but once one has done that, one may be unfit to do anything else for the next three months. It is not really a sensible idea.

The test also downgrades the GP. At Second Reading on 24th January 1994 the Secretary of State said at col. 41 of Hansard that the GP was not to give an opinion on the person's capacity for work. That ignores the best advice and—this is the crucial piece of Whitehall thinking—it ignores all the individual factors which are the most important points in the story. It also leaves us with a crevasse between signing on for work and losing invalidity benefit, down which many people appear to be falling and more will fall when the Bill is in place.

A citizens advice bureau in Sussex reported a client with crushed vertebrae who was in receipt of invalidity benefit. He was found by the Benefits Agency medical service to be fit for light work. He was told to sign on with the employment service agency, where he was told that he was not fit for any work that it could find. That is important, because if you cannot sign on and you are not pronounced unfit, you lose your national insurance contributions, with considerable long-term effect.

Before this Bill goes through we must somehow find a way of bridging the crevasse so that people do not fall into it. At present I do not see how that can be done. But I would be extremely grateful if we could do it on a consensual basis so that we may have consultation about it.

However, the test itself gives me the greatest misgivings of all; in particular, the use of the allegedly objective test for mental health. It is the key to mental health that in its more severe forms the patients lose insight and therefore their responses to a standard checklist test are not likely to be particularly reliable. The man who believes that he is the Emperor Napoleon is likely to pass with flying colours. A citizens advice bureau in Somerset found a manic depressive diagnosed as psychotic who passed the test with flying colours. But those of us who are in better mental health,. because of the much more self-critical nature of our answers, are liable to come out a good deal worse.

Some of the questions are very silly: Do you care about other people?". The only person I can think of who would have answered no to that was the jolly miller who, in the song, lived on the river Dee. He said: I care for nobody, no, not I, If nobody cares for me". He was not showing mental illness; he was showing the effects of enjoying a privatised monopoly. It is not good for one's social relations.

Some of the questions prove a good deal too much. Let us take a few of them: Do people or things so upset you that you just lash out?". I presume that it means metaphorically, but it does not say so. When I found that I had lost this document at midnight last night, remembering the unflappable competence of my Whips' Office was the only thing that restrained me from qualifying myself as insane under the test. Do you prefer to be left totally alone at all times?", otherwise known as the "Greta Garbo" syndrome; Do you feel panic-if you are on your own even for a brief time?", otherwise known as the club bore syndrome; Do you need someone always in reach in case of problems?", otherwise known as the Junior Minister syndrome; Do you hate the slightest change in your daily routine?", otherwise known as the Lord Chancellor's Procession syndrome; Do you often sit for hours doing nothing?", otherwise known as the Lobby-fodder syndrome. The test proves a great deal too much and it puts us in a quandary when we consider Clause 5 of the Bill.

That clause authorises the Minister, without further approval, to bring in the test by regulation. Members in another place may vote against it if they are not satisfied, and that illustrates why in the end this place will have to think again about voting against regulations. I am not yet convinced that the House is ready for it and therefore I cannot let Clause 5 go through in its present form and give the Minister a blank cheque to bring this into effect. I hope that we may be able to consider an amendment which, like the one we had on the Social Chapter, demands that this House should approve the test by resolution before we allow it to come into effect. I look forward to the comments of the Delegated Powers Scrutiny Committee on that and other matters in the Bill with a great deal of interest.

3.56 p.m.

The Countess of Mar

My Lords, I accept that the number of those claiming social security benefits because they are incapable of work by reason of illness or disablement has risen rapidly in recent years. I also accept that there is a need to curtail unnecessary expenditure. However, I do not accept that the provisions of the Bill will ensure that those who are genuinely incapable of work will be protected.

I shall confine myself to Clauses 5 to 7 which concern the tests for incapacity for work. Noble Lords will be aware of my interest in sheep farmers and others who have suffered chronic ill health which they believe is attributable to exposure to organophosphate pesticides. For several months I have been receiving letters from these people asking for an explanation of the behaviour of officials from the Benefits Agency. All have had their claims for invalidity benefit disallowed by an adjudication officer. Some have undergone a medical examination of sorts by a Benefits Agency medical service doctor. From the letters it appears that very few, if any, of the doctors know what signs to look for or what symptoms to ask about in the case of chronic ill health caused by exposure to organophosphates. Their tests are rudimentary and seem to take no account of the fluctuating levels of ill health which can vary from hour to hour, let alone from day to day.

As a result of the letters, I have had a protracted and not very satisfactory correspondence with the chief executive of the Benefits Agency and his deputy about the problems encountered, particularly with medical examinations. It was not until last Friday that I was told through a third party that the chief executive of the Benefits Agency is not responsible for advice to the BAMS GPs, nor for monitoring them. That is the responsibility of the chief medical executive at Quarry House. Why was I not told this months ago, when I first inquired? It is beyond me.

As a result of my failure to obtain a satisfactory answer from the Benefits Agency, I was prompted to inquire further. I am no longer surprised that matters are in such a mess. In the West Midlands there are about 120,000 claims for invalidity benefit outstanding; 60,000 of those are waiting for further information and 30,000 claimants are waiting for medical examination. There are 667 doctors to cope with the workload.

The doctors who conduct the examinations are volunteers. There is no requirement that they have experience in either occupational medicine or disability and they are not vetted to ensure that they have no prejudices. Many are newly retired GPs. Their GP training, however distant in time, is considered more than adequate to enable them to identify individuals who are incapable of work. Let us compare that with paragraph 3.4 of the consultation document in respect of GPs who do not know whether or not someone is capable. The only specific training is half a day on form filling. There is no age limit, and dismissal is only on the grounds of professional misconduct. While I have a high regard for the medical profession as a whole, I am well aware that within it there are practitioners who leave much to be desired. I do not believe that sick and disabled people are best served now. What will be the situation when the Bill is enacted?

I see that the Government consider that only 1,100 extra staff will be required for the first two years; and that figure will be reduced to approximately 260 from 1997–98. Does that take into account the Benefits Agency medical services? It may well be that the Government believe that self-assessment questionnaires will weed out many of the applicants who at present go forward for medical examination. Experience with that type of questionnaire for claims for disability working allowance indicates that there would be difficulties for several groups of applicants for the new benefit. I am thinking particularly of those whose illnesses present symptoms of fluctuating severity. There is a long list of such diseases. Chronic illness caused by exposure to organophosphates is one of them. How, for example, is an applicant to complete a question asking whether he can lift a particular weight when one day he can and another day he cannot? If he answers "no", he can be accused of lying. If he answers "yes", he does himself an injustice. From my own experience I know that on some days I feel able to do quite a lot; on others I feel very weak, am in severe pain and need to sleep most of the day. Would I be considered capable of work because I have good days? What employer would employ me on the basis that I would only be able to perform my duties in an unpredictable manner?

I ask the Minister: will special provisions be made for those whose illnesses are of a fluctuating nature? Will the Government ensure that the Benefits Agency medical services are given the funds to employ and train enough suitably qualified doctors to give applicants for incapacity benefit an efficient and fair service? I do not deny that I am unhappy about several aspects of the Bill. I hope that they will be dealt with during its passage through this House.

4.2 p.m.

Lord Dean of Harptree

My Lords, the easy way when dealing with a situation like this is to do nothing, to turn a blind eye and to let expenditure rip. I give the Government considerable credit for tackling a difficult and sensitive issue on the lines of this Bill. After all, the original statute laid down quite clearly the definitions for sickness benefit and invalidity benefit. It was clear that it was intended for people who by reason of some specific disease, or bodily or mental disablement, were unable to work. As my noble friend said in introducing the Bill, the definition has been progressively widened to introduce non-medical factors, and it has become increasingly difficult for GPs to work the system. Therefore I believe that the Government are right to act. I am very glad that they are conducting detailed research. It is clearly very important to get the definition right if we are to avoid hard cases arising.

Another reason why I believe that the Government are right to act is that in all such social security matters we have to get a balance between the needs of those who are on benefit and the cost to those who have to meet the cost; namely, employers, employees, the self-employed and the taxpayer. That balance has to be kept in mind all the time. In making changes such as this from an old system to a new one, the transitional arrangements are all-important. They were referred to in particular by the noble Earl, Lord Russell. After all, expectations are built up. There must be many people who have been on invalidity benefit for a long time who were led to believe that they were likely to remain on the benefit for life. As a consequence, their budgets, mode of living and housing arrangements have been built upon the expectation that the benefit will continue. I am very glad to hear my noble friend say that those who are on invalidity benefit at the present moment will continue to have their rate of benefit protected. I assume that will be so only so long as they qualify under the new test.

As I understand it, three broad categories of people will he affected by the transition arrangements. First, there are the most severe cases, who, as my noble friend pointed out, will have no new test at all. They will go straight on to the new benefit. If they have been on benefit for any length of time, it will remain at the same level as invalidity benefit and will be up-rated on an annual basis in the customary way. The second category will be those who will undergo the new test and who will qualify. They will move from invalidity benefit to incapacity benefit. That will be paid at the same rate after 52 weeks of incapacity. Those groups seem to me to be straightforward. What about the rest?

There will be another category of people who will undergo the new test and will fail. That is not a new situation; it happens under the existing arrangements. But I assume that more people will be involved. I wonder whether my noble friend can give us a little more information about that category. I assume that some of those people, when they lose the benefit, will be entitled to one or more of the "back to work" benefits. Others will be entitled to income support. In those categories it seems very important that we should avoid hard cases arising. Certainly the organisations that represent the disabled are concerned about this group. They feel that there will be some cases where there will be substantial loss of benefit, and hardship will be created. I hope that my noble friend will be able to give us some assurance particularly about this category of people.

I very much welcome what my noble friend said about people being able to do 16 hours' voluntary work without losing benefit. That is immensely important for disabled people: they can do some useful work; they feel that they are wanted; and it gets them out of their own home environment. That is most welcome. I understand, too, that—possibly not as part of the Bill but as part of this package—it is the Government's intention to improve the motability scheme. It is a very valuable, imaginative scheme which was introduced some years ago when we began to recognise how important it is that those who are disabled should have the maximum mobility. The scheme has been improved in the light of experience over the years, and I understand that there is to be a further improvement as part of this package. Perhaps my noble friend can give the House a little more information about that.

In conclusion, I believe that the Government are right to tackle this difficult and sensitive issue on the lines of the Bill. But I hope that my noble friend will be able to give the House some assurances particularly about those who will not be eligible for the new benefit.

4.9 p.m.

Lord Ashley of Stoke

My Lords, we have just been listening to the lone voice supporting the Government in this debate. I am afraid that I have to say that it was not the most convincing speech I have ever heard the noble Lord make either in this place or the other place. When the noble Lord referred to the old and the new system, that in no way disguised the fact that the new system under this Bill is very damaging indeed to disabled people. There can be no doubt about that among the organisations concerned with disabled people and disabled people themselves.

The basic fact about the Bill is that it attacks the recipients of sickness and invalidity benefit. It criticises both them and doctors. It criticises the recipients as malingerers, which means crooks, and the doctors for being less than truthful. Those are very serious allegations. The Government have not begun to substantiate any of them. My noble friend Lady Hollis in her marvellous speech was not quoting Labour Party propaganda. She was citing the Government's own research. It will be very interesting to see how the Government manage to meet and respond to that kind of criticism. I find it very impressive to quote the Government's own research. I had intended to raise some of the points which have already been mentioned but I do not propose to repeat what my noble friend said.

Basically, the Bill will reduce the very low incomes of disabled people. Those incomes are already grossly inadequate. It will hurt those people where they can be damaged most, and that is in their pockets. Their poverty will be made even worse. It will intensify their sense of persecution. I have spoken to many of them and I know how very deeply disturbed they are about it.

The new incapacity test has been well described by various speakers in the debate. To test on functional grounds whether any person is fit for any work, which is the core of the Bill, is a very major step. it is very controversial, to put it mildly. Yet the final details will not be available until August. So we are now discussing a Bill of which we do not know the details. That is a very strange procedure. We are debating the Bill today and will have to consider further stages of it without having precise knowledge of that very controversial test. Frankly, it is an absurd situation.

All we can do is consider the questionnaire in the consultation document. I hope that the Minister looked at the evidence of the citizens' advice bureaux. It shot the Government's case to ribbons. It was devastating. In the CAB's view, the questionnaire was loaded with loaded questions. The CAB felt that it was ambiguous and imprecise, with all or nothing questions, and was particularly difficult for mentally handicapped people. Yet it is on that information or something like it that the finances of disabled people will depend. It is like giving them cardboard crutches. The Government must do better than that. Disabled people are being let down by the provisions of the Bill.

I appreciate that determining incapacity for work is very difficult. The Government have very serious problems to consider. I accept that straightaway. I also accept that the old, cosy attitudes have been shattered by new technology. Paralysed people can now function by blinking, and those who have seen them regard it as a minor miracle. Also telecommunications permit worldwide contact from a bedroom. Willpower can be more important than muscle power and intellectual skill and experience can be most crucial of all.

If that is the case, and I believe that it is indisputable, how can an inflexible test be expected to operate? Such an inflexible test is almost bound to fail, unless there is a major allowance for discretion and common sense. There is no such allowance in the provisions of the Bill.

One of the outstanding disability groups is the Disability Income Group. I was disappointed that that group's amendment, which suggested, work which he can reasonably be expected to do", was not accepted in the Committee in another place, particularly as I understand that the panel of 80 experts was told to think of the concept of people, not normally expected to work". Some such concept should be part of the Bill.

It is quite clear that the incomes of disabled people are going to fall. That is the intention of the Bill. The Minister made no attempt to disguise that fact. It is deplorable. I entered the other place in 1966 and began to support the campaigners for a comprehensive disability income. It is very regrettable that after more than 25 or 26 years we are moving away from the concept of a comprehensive disability benefit rather than moving toward it. I cannot understand how any government can move in that direction.

It is particularly disturbing that the Bill looks likely to create a major gap in the welfare system, in that people will be deemed fit for work by the Benefits Agency, and therefore denied incapacity benefit, and will be assessed as unfit for work by the Employment Service and denied unemployment benefit. We simply cannot have two government agencies giving conflicting rulings to the detriment of disabled people. People are either fit for work or they are not fit for work. They cannot be both. Simple logic precludes us from fiddling about and shilly-shallying. It is one or the other. At the very least every disabled person should be offered the crumb of either incapacity benefit or unemployment benefit. It is illogical and unjust to deny both.

In conclusion, the Bill seems to have been drawn up by bureaucrats isolated from reality. Unfortunately, it has been given the imprimatur of government Ministers. Disabled people cannot be forced to work, nor can employers be forced to employ them. When disablement strikes, there has to be a sensitive process of readjustment and rehabilitation. It is not an all-or-nothing situation. There needs to be a proper, partial incapacity benefit and not the means tested DWA. I hope that the Government will heed the voices of the disability organisations and respond to the anxieties and dismay of disabled people themselves.

I have an apology to make. Because of a previous engagement, I must leave the Chamber now. It is a gross discourtesy to the House and I apologise for it but it is inescapable. I shall read the proceedings with very great interest and especially the speech of my noble friend Lady Turner and the response of the noble Viscount, Lord Astor. I apologise to them for being unable to stay. I hope that my words will at least be considered by the Government.

4.20 p.m.

Baroness Turner of Camden

My Lords, this is another unpleasant Bill from this Government. Many noble Lords have already expressed their concern about it and, as has already been said, only one noble Lord spoke in its support. I do not want to repeat a great deal of what has been said.

As we know, the intention is to replace current sickness and invalidity benefit with a new benefit, incapacity benefit, from April 1995. The Government have been frank about it: one of the objectives is to save money. If it were simply an exercise to simplify benefit structures we might perhaps be disposed to look at it in a rather different light. It is further alleged that it will encourage employers to improve the motivation and health of employees. In that respect it somewhat resembles the recent Bill considered by your Lordships—the Statutory Sick Pay Bill. Indeed, the Secretary of State in the other place made it clear that the two measures are all part of the same social security package. Both are intended to cut social security expenditure and both will undoubtedly have the effect, when fully in operation, of denying benefits to those who really should receive them.

At the root of both Bills is the belief, voiced to some extent by the Prime Minister, that a lot of people are now receiving IVB when they are simply swinging the lead. Indeed, in a debate in the other place, as my noble friend Lady Hollis said, the Prime Minister actually said that it beggared belief that so many more people have suddenly become invalids, especially at a time when the health of the population has improved. He said that he made no apologies for looking at this area of expenditure, and the clear implication is that people are receiving IVB who should not be receiving it.

Everyone would agree—certainly on this side of the House —that it is the duty of government to ensure that there is a review from time to time of social security expenditure and the benefit structure with a view to ensuring that changing needs are being properly met. Of course governments have a duty to consider whether all taxpayers' money—I stress "all"—and not just social security expenditure is being wisely spent.

Our quarrel with the Government is that the reviews they conduct always seem to result in the poorest and most vulnerable becoming even worse off. An example of that was their decision to do away with wages councils, where there is evidence that even low wages council rates have been cut by unscrupulous employers now that they no longer have to pay a statutory limit.

I know that the Government commissioned studies by the Department of Social Security and by independent research establishments. They were referred to by the Minister and by my noble friend Lady Hollis. But it appears that the studies reveal that the reasons for the growth in claims are multifactorial. There have been demographic changes so that there are now more elderly people. Many of them have been made redundant in the shake-outs that have taken place in industry and commerce over the past 10 years. It is difficult for a man over the age of 50 to obtain work in many areas. That fact itself has a bad effect on health.

The Disability Income Group takes the view that the evidence shows that demographic and other changes have had a significant impact on the growth in numbers of IVB recipients and that the increase is largely a consequence of a lack of realistic work opportunities. If it is the Government's intention to get as many people as possible currently receiving IVB back into employment of some kind, perhaps they should look at other ways of achieving that desirable object.

Is it sensible to keep loading social costs on to employers? The Statutory Sick Pay Act is a case in point. Et is not likely to cause employers to take risks with applicants with poor sickness records or with people who have been on IVB. Then again there are the new access to work measures under which employers are to pay 50 per cent. of the cost of equipment that enables disabled people to work. If the Government were to look again at their policies in those areas, I may be inclined to take more seriously their claim that the benefit changes proposed in the Bill are intended to take people off benefit and put them back into work; in other words. that they are benevolently inclined.

Moreover, there is no doubt at all that the new benefit will mean substantial losses to people who are not well off in the first place. The Disability Income Group produced figures showing what those losses may be for various sections of people. The biggest cut of all is in the 29 to 52-week period when a married man of 40 with two children could lose as much as £1,095.60 in a year. A married man of 50 with no children would lose £1,132.80 a year. Prose are astronomical figures when one looks at what people are receiving anyway—and they are people who are not well off by any reckoning.

Therefore, in addition to the worries consequent upon ill health, people are to be further stressed by the loss of a substantial amount of income which they might have received had the present system continued. As we know, there will be a new definition of "incapacity for work" which is being established by a panel of experts. A number of noble Lords mentioned the problems in regard to the new definition. It was pointed out by the organisations involved with the disabled that loss of functional ability does not necessarily equate with incapacity for work. A so-called purely medical test of incapacity for work may fail to take account of the realities of life for the disabled. My noble friend Lord Ashley dealt with that point at some length based on his own unrivalled experience.

The test of incapacity for work associated with invalidity benefit has taken account of many factors, including age, education, experience, state of health and other personal factors, including the likelihood of obtaining employment. All those factors are to be excluded from the new test. There is a fear that many people who are not able to do full-time work will fail the new test. Indeed, as has already been said, the aim would appear to be to exclude around 20 per cent. of the people currently eligible for IVB. If that is so, many more claimants will be found capable of work, even though they have a disability or illness which substantially restricts their work capacity and therefore their employability.

What will happen to such people? Will they suddenly become unemployment statistics once again as they start claiming unemployment benefit? There is a fear that some people may fall between two benefits, so to speak. They may not be fit enough to qualify for the jobseeker's allowance but too fit for incapacity benefit. They simply may not be fit enough to go out to look for work in a way that claimants will be expected to do in order to qualify as a jobseeker.

It is therefore another nasty Bill. The intention clearly is to save money and to do so at the expense of people who can ill afford to make so substantial a contribution to public funds as envisaged in the savings here. Over the years the Government have foolishly cut the Treasury provision to the National Insurance Fund and provided national insurance rebates to persuade people to leave SERPS and occupational pension schemes who would have been better off not doing so. Thus the Treasury has forgone income it might otherwise have had. We should not now be looking to make savings from the poor and the sick. We do not oppose Bills at Second Reading in this Chamber. But we must do our best in Committee and at Report to ameliorate to some degree this quite awful Bill.

4.27 p.m.

Viscount Astor

My Lords, the Bill that we are considering today is integral to the evolution of the welfare state. It is not simply a cuts exercise. The benefit system needs to be targeted and sustainable. The Bill addresses the changing needs of the welfare state ensuring that benefits are paid to those who genuinely need them at a level that the country—the taxpayer—can afford.

The noble Baroness, Lady Hollis, said that it was an attack on the disabled. It is not. She said that it is not the disabled who are abusing the system. I agree with her. It is those who are not disabled who are abusing the system. The noble Baroness quoted some of our research figures and in doing so proved why the Bill is so necessary. Of course, as always, when we look at these Bills, the Labour Party offers no alternative policy. It contracted out responsibility for its policy development to the Social Justice Commission—a form of privatisation, I suppose. It concedes the need for reform but has not yet offered alternatives of its own. In order to make sure that I am entirely fair to your Lordships, I should point out to the noble Earl, Lord Russell, that his party does not even have the excuse that it contracted out to an independent body. However, I shall now turn to the Bill.

Your Lordships are concerned about the medical test. I appreciate those anxieties, which are understandable. In another place while the Bill was going through Parliament the Government offered the Committee an opportunity for a briefing by my department's medical advisers and officials on some of the detailed aspects of the test. As in another place, I am happy to make that offer to those of your Lordships who have spoken today and who will find it useful, perhaps before the Committee stage. I intend to write to your Lordships who have spoken to offer that opportunity at a time and date when we come back after the recess, if any of your Lordships find it useful. The medical test is complicated and it is a departure; it is a new test. I will today attempt to answer as many questions on it as I am able.

General practitioners are placed in an unacceptable position in their role as gate-keeper to the invalidity benefit. Not only can that role upset the doctor-patient relationship, but it can also impact on a GP's earnings if a patient decides to leave the practice when the GP refuses to issue a medical certificate. In a recent independent survey, two-thirds of GPs interviewed said that they had issued certificates to people who were either not sick at all or were not sick enough to be incapable of work. The new arrangements for long-term incapacity benefit will relieve the GP of the burden of issuing medical certificates to claimants who are long-term sick. Incapacity benefit is intended for those who are medically incapable of work. The test must focus on the effects of the medical condition. We are taking the greatest care in the development of the test. I have already outlined the degree of consultation and evaluation that we are undertaking. Moreover, personal input from the claimant, the GP and the Benefits Agency doctor will ensure that each case is looked at on an individual basis and assessed accordingly.

The consultation document that was published last year set out detailed proposals for the medical test. The test is complex, and it is right that we consult widely to ensure that the final proposals are an effective assessment of incapacity for work. In addition to consultation process, we are undertaking a formal evaluation of the test. The objectives of the evaluation are to test the validity of the method of assessment, the effectiveness of the questionnaire and other documentation, and the consistency of the medical decision making and the new adjudication arrangements. The evaluation exercise has three stages: pilot, main stage and follow-up. Before the regulations are made, we shall produce a report that summarises the findings of the consultation and evaluation, setting out in detail the new test.

The noble Baroness, Lady Hollis, made the point that surely the GP was the best person to know whether his patient was fit for work. A GP is not an occupational physician and cannot be expected to be able to assess his patient's abilities in the job market as a whole. Some feel that they have to try to make assessments from a poor knowledge base; others feel that this type of assessment is outside the jurisdiction of GPs. Perhaps I may quote from part of a programme of research carried out by the department to examine the factors that have led to a growth in those receiving IVB. One of the GPs interviewed for the report said: you're ultimately deciding whether someone's going to get some money or something … and it's better in many ways, if there's someone, an independent person, a third person … I do wish it didn't rest with us". The Government have never said that they think GPs are to blame for the growth in IVB or that they have acted in any way improperly in issuing certificates. The Government have listened to what GPs have said about how they feel as the gate-keeper for social security benefits.

The noble Baroness, Lady Hollis, offered some bizarre examples of jobs. I share the anxieties of the noble Baroness. Presently, where an adjudication officer decides that a person is incapable of his normal occupation but is capable of alternative work, case law requires that he specifies the type of work that that person may do. The jobs do not have to be available. The test is: if such work was available, could the person do it? That is why under the new test there will be no such requirement. The new medical test gets away from the method of assigning people to particular jobs and looks at the physical, mental and sensory capabilities required to do work, and by consensus will set a threshold at or above which capacity for work is substantially reduced.

It would not be right to continue to pay incapacity benefit to people who are not incapable of work. Unemployment benefits are available to people who are not incapable but are available for work. Unemployment services provide a range of programmes to help people back to work according to their particular needs. This ranges from help with fares to get to interviews to retraining for a new occupation. Those people who have been out of work for a long time are given priority.

The noble Earl, Lord Russell, asked about mental health difficulties. We are taking steps to ensure that the particular needs of people with mental health problems are addressed. A special procedure is being developed for people with severe mental illness. There will be questions in the questionnaire designed to provide information in cases of mild to moderate mental illness. In all such cases, a departmental doctor will consider the matter before a decision on entitlement is made.

The noble Earl asked about the purpose of the mental health questionnaire. The purpose is to provide a scored assessment of the effect of mild to moderate mental health problems on a person's capacity for work. It is aimed at the borderline between those people who can be considered fit enough to return to work and those who are still unfit. It is not a diagnostic test of any mental condition, but provides information on the features of mental health problems that affect incapacity for work. Members of the assessment panel are working on the questionnaire to derive a threshold at or above which capacity for work is reduced by the existence of mental health problems.

In all cases where there has been a certified diagnosis of mental illness, the matter will be referred for advice to Benefits Agency doctors after 28 weeks. Information will be sought from the person's GP about the severity of the condition, including details about clinical findings and whether the person requires secure accommodation or is capable of independent living. In severe cases no questionnaire will be issued. The Benefits Agency doctor will return the case to the adjudication officer with the relevant information.

The noble Countess, Lady Mar, asked about Benefits Agency doctors being capable of assessing functional limitations and medical conditions and giving advice. Those doctors have long experience of, and skills in, the assessment of disabilities. They will be fully conversant with the requirements of legislation and trained in the application of the new test. They will be able to provide independent advice without the constraints of the doctor-patient relationship which many GPs feel frustrate their ability to give an objective opinion.

Benefits Agency doctors will be involved in various ways. They will offer immediate advice to adjudication officers on the consistency between the information provided by the claimant on his or her functional limitations and the diagnosis and statement of main disabling conditions by the GP. They will obtain factual medical information from GPs or hospitals and carry out a functional assessment following a medical examination. The assessment will include the confirmation of diagnosis and the main disabling condition, a functional assessment of the person's ability to carry out the activities included in the test, a record of the person's functional limitations, including an explanation of any differences in the customer's questionnaire, and a recommendation as to whether or not further reviews should take place, if at all.

The noble Earl, Lord Russell, asked about the questionnaire and whether it was an objective medical test. The questionnaire is the first step in the gathering of evidence to determine the claimant's incapacity. It continues the emphasis on the greater involvement of claimants in the decision-making process. The questionnaire focuses on capacity in terms that a lay person can understand. The proposed scheme will provide a comprehensive system that will give a full and fair service to all claimants.

The noble Earl was also worried about whether the test was just a limited look at someone's illness. It will not be a snapshot of medical assessment but will involve the completion of a questionnaire by the claimant, a statement of diagnosis from the claimant's GP, a list of principal disabling conditions and, when required, referral to a departmental doctor for report and examination. Departmental doctors who examine claimants will take account of the variability of the conditions over a period of time. Thus the assessment will create an overall picture of the effect of the medical condition on the person's ability to carry out a range of work-related activities and hence their capacity to work.

We are developing a test which assesses specifically the effects of a claimant's medical condition on their capacity to work. The test is not looking at the overall ability to get and retain a job. Where a person is disadvantaged in the labour market because of factors such as age and qualifications, other forms of help are available to them. Our original intention is to introduce a test which is based on the effects of medical conditions. Many people have said that factors such as, experience and qualifications should be taken into account. These are not medical factors. The ability to travel to work is, however, different and its inclusion into the consideration would not necessarily invalidate the test. We have recently initiated a further validation exercise whereby we shall be considering this further.

My noble friend Lord Dean of Harp tree, asked about people who fail the test. It would be wrong to continue paying incapacity benefit to people who are assessed as capable of work. Those who fail the test will be able to register as unemployed and claim unemployment benefit and income support if they are unable to find work. Those who find a job within two months of leaving incapacity benefit will be able to claim disability working allowance.

My noble friend also asked about protection and how long it will last. Existing IVB claimants will transfer to incapacity benefit at IVB rates so long as they remain incapable of work. The rates of benefit will be up-rated annually except for the additional pension which will be frozen at the April 1995 rates.

Much of the debate has focused on helping sick and disabled people to get back to work. Many people who receive incapacity benefits do indeed want to work. We are making important changes to provide help for those who wish to go back to work. Benefits for the disabled have undergone massive and effective change in the past two years with the introduction of the disability living allowance and the disability working allowance. The disability working allowance in particular strives to provide assistance for those disabled people who wish to work and also provides a very important link back to the higher rates of incapacity benefits should the individual's attempt at work fail. Although take-up has been disappointingly slow, we must remember that the benefit is still quite new and I hope that take-up will improve in the future.

We are making a number of improvements to disability working allowance. The recipients will qualify for remission of prescriptions and dental charges from April 1995. We are introducing a disregard from October this year for up to £40 worth of childcare costs. This will be worth up to £28 per week for DWA recipients who wish to return to work with children under 11 years of age.

Recognising that many sick and disabled people wish to undergo training before starting work in future, they will be allowed to attend training courses between their final payment of incapacity benefit and starting work, and will still qualify for DWA. This is yet another step towards ensuring that those people who wish to work will receive a comprehensive package of support that will enable them to re-enter the labour force.

In addition, the Secretary of State for Employment will be examining very carefully the circumstances of those who will become unemployed after being disallowed incapacity benefit; the intention here is to enable them to get back to work.

We are also carrying forward existing arrangements to allow some of the work and earnings of members of disability appeal tribunals to be disregarded when determining entitlement to existing incapacity benefit. We shall go further by introducing arrangements for Disability Living Allowance Advisory Board members. This, like the arrangements for voluntary work has been widely welcomed.

The noble Earl, Lord Russell, was anxious about the powers to make delegated legislation. I hope that your Lordships will see in this case that the powers are being properly sought. Secondary legislation is appropriate for the medical tests for three reasons. First, there will be a lot of detail to put into legislation which will needlessly add to the ever larger volume of statute law. Secondly, defining incapacity for work is a difficult process. Amendments may need to be made quickly to the medical test. Finally, making provision for delegated legislation allows for both the new arrangements to be brought in in 1995 and a wide-ranging consultation and evaluation exercise. Transitional issues too are complex. Regulations will allow a degree of flexibility if change is necessary in the light of operational experience. I hope that that provides an assurance to your Lordships. The regulations will be subject to the affirmative procedure if made within three years of Royal Assent.

The noble Baroness, Lady Hollis, spoke about IVB rates compared with unemployment and sickness benefit rates. The average amount of IVB currently in payment is about £90 a week. The earnings related additional pension can be up to £70 a week on top of that. IVB is paid without regard to financial need, occupational pension or the savings which the individual may have. That compares to the current rate of unemployment benefit of £45 a week. In future, the basic rate of long-term (highest) incapacity benefit will still be about 25 per cent. higher than the rate of unemployment benefit.

The noble Baroness also asked about the additions paid for child dependants. The increase will be paid with the highest rate of incapacity benefit for each of the dependants.

Baroness Hollis of Heigham

My Lords, perhaps I may help the Minister because this is a crucial point. We were talking about the higher rate for the short-term period which was between 26 weeks and 52 weeks when no child dependency allowances come into play. Therefore, a disabled man, married and with two teenage children, may find his incapacity award about £30 a week below what he would be getting in the same position on income support. Will the Minister confirm those figures, please?

Viscount Astor

My Lords, I was trying to point out to the noble Baroness that the child dependency increase will be paid at the highest rate of incapacity benefit for each child. I shall study what I said earlier and also what the noble Baroness said. If there are any differences, I shall perhaps write to the noble Baroness.

Incapacity benefit will continue to be paid even to those who have other income or savings. The benefit can be topped up by occupational pensions or income support for those who need it. The basic rate of incapacity benefit will be the same as the existing basic rate of invalidity benefit. Age additions will be payable to those whose incapacity begins early in their working life before they have been able to make their own private provision. Increases will continue to be paid to those who have a dependent spouse or dependent children. Even after the changes, about 70 per cent. of the new, long-term incapacity benefit recipients will have circumstances which will take them above income support entitlement.

The noble Baroness was also concerned about people who fail the incapacity test, but who are considered by the employment service as unfit to work and therefore will not qualify for any benefit. The employment service does not question the capability of those found fit to work by an adjudication officer. Those who are available for and are actively seeking work, will be eligible to claim unemployment-related benefits.

The Bill contains specific provision to ensure that a decision on incapacity benefit applies to other benefits. The noble Baroness was also concerned about disabled people being disadvantaged in the jobs market. All Employment Service and in Training, Enterprise and Educational Directorate programmes and services for unemployed people are open to unemployed people with disabilities, often with entry criteria being relaxed. In addition, there is a wide range of services and schemes for those who need special help.

The noble Earl, Lord Russell, was concerned also about this subject. A person who is either incapable of work or who is registered as unemployed, will qualify for national insurance contribution credits. The new more objective test of incapacity will apply across the social security system and will establish whether a person is medically capable of work. My officials are working closely with colleagues in the Department of Employment on the design of the new test. Any claimant found capable under the test who wants to receive benefit will need to make a claim for unemployment benefit.

Lord Richard

My Lords, perhaps I may ask the noble Viscount a simple question. Are we meant to hear what he is saying or is this just a conversation that he is having with himself?

Viscount Astor

My Lords, I am sorry if the noble Lord cannot hear what I am saying. I was trying, within the time available, to answer as many questions as I could. The noble Lord can study Hansard tomorrow so he will be able to read anything that he could not hear.

Lord Boyd-Carpenter

My Lords, is my noble friend aware that most of us have listened with very great interest to his careful and skilful analysis of some of the problems?

Viscount Astor

My Lords, I am grateful to my noble friend for pointing that out. Perhaps noble Lords opposite do not want to hear what really matters. Perhaps they want to hear only what suits their case—and nothing else. If their amplifiers are not working well, I am sure that noble Lord opposite can make appropriate noises in the right direction.

The Bill is a fundamental reform. It is backed up by the findings of an extensive research programme. I believe that it is a fair response to the conflicting pressures of making provision for sick and disabled people and ever-growing expenditure. I commend the Bill to the House.

Baroness Hollis of Heigham

My Lords, before the Minister sits down, perhaps I may first assure him that under the Bill, for six months disabled men with families will be worse off than family men on income support and without disabilities. If the Minister is surprised by that, perhaps we may hope that that is a good sign and that he will be willing to amend the legislation in Committee. Secondly, does the Minister agree with his own Permanent Secretary, Sir Michael Partridge, who told the Public Accounts Committee: The theory that increased numbers on invalidity benefit is due to fraud is not sustained by the research". Does the Minister agree with that? If he does agree, is it not the case that the medical test is being changed precisely because there is no fraud in the system—because if there were fraud, it could be rooted out in other ways?

Viscount Astor

My Lords, the noble Baroness is confused about what is and what is not fraud. I believe that the Permanent Secretary was entirely clear about what he regarded as fraud and what is something else. The noble Baroness is confusing the two issues totally. Fraud is not telling the Benefits Agency about one's entitlement or working when one is claiming benefit. That is a totally different matter from whether the test is objective and whether it is working. It has nothing at all to do with it.

Earl Russell

My Lords, before the noble Viscount sits down, perhaps I may ask him a purely procedural question. If it should be the wish of the House to approve the Bill but not to approve the medical test, by what procedural rule can the House pursue that objective?

Viscount Astor

My Lords, the regulations with regard to the medical test will be affirmative regulations and will come before your Lordships. Your Lordships will have a chance to debate those regulations, and the noble Earl can table a Motion against them.

On Question, Bill read a second time, and committed to a Committee of the Whole House.