HL Deb 23 May 1995 vol 564 cc922-30

3.8 p.m.

Read a third time.

Clause 1 [The jobseeker's allowance]:

Baroness Hollis of Heigham moved Amendment No. 1:

Page 1, line 9, at end insert ("but until such tune as a jobseeker's allowance is payable in accordance with the provisions of this Act, nothing in this Act or in any regulations made under it shall reduce the period of payment for unemployment benefit calculated in accordance with section 26 of the Benefits Act.").

The noble Baroness said: My Lords, at the Report stage the Minister caught us somewhat by surprise when he made an announcement to the House of a change in the Government's policy. He said: the Government have decided that the jobseeker's allowance should be introduced in October 1996"—— not, as originally planned, in April 1996. He continued: The transitional arrangements for JSA will be such that the duration of an unemployed claimant's entitlement to unemployment benefit will, from April 1996, be the same as it would have been had JSA been introduced on that date".—[Official Report, 16/5/95; col. 418.] That was not a written statement, we did not have the advantage of the words in front of us. It was an announcement made by the Government, perfectly correctly, and inserted into an answer on an entirely different amendment. We were unclear then and remain unclear what will be the full import of the Minister's statement. For that reason we tabled this amendment to seek to understand what the Government have in mind by slip-starting the JSA from the April 1996 original date to October 1996.

None of us, certainly on this side of the House, quarrels with delaying the introduction of this new arrangement. It is right that when two benefits are amalgamated—in this case unemployment benefit and income support, which is what the jobseeker's allowance represents—the process should proceed as smoothly as possible, employment officers should be fully trained, and the computer systems should function smoothly. Frankly, this is such a nasty Bill that any delay is very welcome—except in so far as that may not be quite what we shall get.

The Government have persistently—and I believe honourably—told us that the jobseeker's allowance represents a package of measures. Perhaps I may quote the Minister's words at Second Reading in this House: The jobseeker's allowance is part of a much larger package"— I emphasise the words "package"— of incentives announced in the last Budget and social security statement. The package of measures included in jobseeker's allowance legislation underpins the Government's determination to remove barriers to finding work and helping every unemployed person to find a job quickly".—[Official Report, 3/4/95; col. 14.] Later in the same speech, at col. 15, the Minister talked of, a package of measures which will provide an approved means of delivering benefit to unemployed people".

A few days later, in Committee, the Minister stated: We are closely monitoring progress towards implementation … to ensure that all the necessary arrangements are put in place … If … there is an unacceptable risk that things might go wrong … one of the alternatives would be to delay the date of introduction. One of the objectives of the jobseeker's allowance is to improve the service we offer to jobseekers. We certainly do not intend to put that at risk".—[Official Report, 20/4/95; col. 590.] That approach is entirely correct.

The emphasis throughout has been that the Jobseekers Bill offers a package, one that consists of the "carrot" of jobseeker measures such as the jobseeker's agreement, the national insurance holiday for employers and the run of housing benefit and council benefit. Back-to-work benefit was only ever to have been introduced from October. Those were among the incentives to get people back to work. The other side of the package—the "stick"—was the cut in contributory benefit from 12 months to six months. Thereafter people were to go on to means-tested benefit and, in the process, if a person claimed for a dependant or was under 25 he or she would immediately suffer a reduction in benefit.

What does the Minister's announcement mean in this context? What has happened to that package? From the Minister's statement and from, I have to say, an extremely opaque letter I received today, it seems that the carrot part of the package is to be delayed until October but the stick part is to be introduced six months before that—in April. So much for the package. The cuts in benefit start in April, but the so-called goodies that were mentioned in the winding-up speech of the Minister in the other place are not to start for another six months. When it suits the Government, the concept of a package appears to be ripped apart. The Bill is transparently clear in what it seeks to do; namely, to cut benefits first and only as an afterthought seek to encourage people to find work.

What makes matters almost even worse is that this cut is not the result of a new benefit being introduced; namely the jobseeker's allowance. What the Minister appears to be doing is cutting an existing benefit, unemployment benefit. So this measure is as harsh as the new JSA, but without any of the attendant advantages that the Minister claims for JSA.

My reading may be incorrect. I gave the Minister brief notice of the questions that I wanted to ask, but I received the Minister's reply only today and therefore could not give him earlier notice. Will he clarify, for example, what happens if someone becomes unemployed on, let us say, 1st February 1996? Is it the case now, as it was before the Minister made the statement, that such people will receive unemployment benefit up until April 1996 and will thereafter continue to receive unemployment benefit only up to October 1996—in other words, as they would have done under the old unemployment and JSA arrangements? What happens to those who are under 25? The under-25s who are on unemployment benefit receive the same rate of benefit as those who are over 25. Under JSA they receive a lower rate. What happens now? What now happens to adult benefits, to dependants and their benefits—for example, to the spouse who looks after children? Such people were entitled to unemployment benefit as part of contributory benefit. Under JSA, they are not. Will the Minister help us to clarify the situation? On the basis of his explanation we may wish to seek the opinion of the House. But, first, let us ask the Minister whether what we fear is the case; namely, that he is cutting benefit as of April 1996 but introducing the "carrots" only from October 1996 and that therefore all the talk of a package goes out of the window when it suits the Minister's computer system? I beg to move.

3.15 p.m.

Lord Campbell of Alloway

My Lords, I listened with great attention to all the questions put by the noble Baroness. I wonder if she can help me. Is it the concept of this clause, as I read it, that if unemployment benefit under Section 26 of the benefits Act is currently received, it continues until the jobseeker's allowance is paid but not thereafter? If that is so, I ask the question only because the use of the phrase, It shall reduce the period of payment for unemployment benefit calculated", left matters somewhat open as to whether the intention was that there should be, as it were, a hangover. I am very grateful to the noble Baroness for indicating that that is so.

What worries me is whether this amendment relates to the essential transitional provisions expressly dealt with in Clause 40(2) of the Bill. I shall not quote the clause at length because that would be to waste time. The clause states: Regulations under this section may in particular make provision … for the termination or cancellation of awards of unemployment benefit or income support". I ask, with respect to the noble Baroness: is this not the part of the Bill under which transitional provisions need to be dealt with, rather than under Clause 1. The amendment relates this matter to Clause 1, which is primarily concerned with entitlement.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)

My Lords, the noble Baroness, Lady Hollis, indicated that she simply wished for clarification of the statement I made to the House at the beginning of Report stage on 16th May. At that point I announced that, in the light of our review of the project, we had decided that the implementation of JSA should be deferred until October 1996. Perhaps I may try to answer the questions that she put, which, if my recollection is correct, related to the second paragraph of my statement and the position regarding unemployment benefit.

There is a common misconception that entitlement to unemployment benefit automatically lasts for up to a year. In fact, unemployment benefit is awarded on a daily basis for each day on which the claimant meets the necessary conditions—one of which is that the claimant has not already received the benefit for 312 days in the period of interruption of his employment. Unemployment benefit will continue to be awarded on this basis, subject to its normal rules and conditions, until JSA is introduced.

When the Jobseekers Bill comes into effect in October 1996, the relevant parts of the contributions and benefits Act will be repealed. Furthermore, existing awards of unemployment benefit and income support will be terminated under powers in Clause 40(2) of the Bill. Thus unemployment. benefit will cease to exist and nobody will have any entitlement to it. Instead, all eligible claimants will be able to claim JSA in accordance with the conditions set out in this Bill, including those in Clause 5(1) which limit entitlement to contribution-based benefit to a total of 182 days.

However, Clause 40(2) (b) of the Bill provides powers for those on benefit at the point of change to be subject to transitional provisions which will themselves be set out in regulations. We intend to use these powers, and those in Clause 40(2) (g) and (h), to provide that days of unemployment prior to October 1996 should count towards the 182 days' maximum entitlement to contribution-based jobseeker's allowance.

The noble Baroness will no doubt accuse the Government of cutting unemployment benefit—

Baroness Hollis of Heigham

That is exactly right.

Lord Mackay of Ardbrecknish

There is nothing new in the Government's proposals. We have always made clear that contribution-based benefit would be limited to six months for people who claimed from April 1996. Therefore, those people will not be any worse off than they would have been if JSA had been implemented as originally planned. They will continue to be eligible for benefit at rates equivalent to unemployment benefit, including adult dependency increases, provided that they have not exceeded the 312-day maximum period without requalifying. We also intend that the current unemployment benefit earnings rules should continue to apply to all those who make their claims before JSA is introduced.

I should emphasise that the duration of benefit for those who claim before April will not be affected. Regulations will also provide that where a person's period of unemployment began before April 1996, he may still qualify for up to 12 months' contributory entitlement. That transitional protection will end in April 1997.

Perhaps I may answer the questions that the noble Baroness indicated that she had given me, which might illustrate what will happen. She asked me first when the clock would start to run for the 182 days. The answer is that it will start to run when JSA starts on 7th October. However, days of unemployment from 8th April will count towards the 182-day entitlement after 7th October.

The noble Baroness asked about the position of under-25s and the position of dependants. Those changes will not come in until October with JSA implementation. She also asked me about what she called the "carrots"—the NICs holiday and the housing benefit run-on. Both are still planned for April. We also still intend, as she rightly said, to start the in-work benefit pilot from October and the back-to-work bonus from October, as was always the intention.

Perhaps I may deal with someone who becomes unemployed on 1st October this year. He will have 12 months' unemployment benefit. Somebody becoming unemployed on 1st February 1996 will have eight months' unemployment benefit followed by, from October, four months of contributory based JSA. It will be transitional. I think it was the noble Baroness who asked me about 1st April. On 1st April it will be six months and six months. In fact, the key date is 8th April. So somebody first of all becoming unemployed on 7th April will have six months and six months. That will not change. But somebody becoming unemployed on 8th April will have, as we always intended, only six months' unemployment benefit. Thereafter, for example, on 31st July, he will have two months' unemployment benefit and then four months on the contribution based JSA. So nothing will be different from what we had originally intended so far as unemployment benefit is concerned.

I have tried to answer the questions asked by the noble Baroness. It may not satisfy her that the Government's policy is right but I hope that it at least explains what will actually happen to people who register on those four or five dates about which she specifically asked me. I am happy to make clear what we intend to do. We shall not be making any changes to legal entitlement prior to October 1996. We shall be laying the regulations that I mentioned before April 1996, so that everybody will be clear, although, as I said, the position will not change until October 1996 so far as concerns the points that I have made.

I hope that that will satisfy the noble Baroness, at least as an explanation. I realise that she still does not approve of the policy. If she decides to put it to the test, I hope that my noble friends will support me.

Baroness Hollis of Heigham

My Lords, I regret very much that we are at Third Reading. Were we in Committee or at Report stage, I should very much have liked to press the Minister on the implications of some of the details of his answers to me, had the Chamber given me consent. Given that the questions are quite elaborate and the Minister's reply requires some detailed attention, particularly as we both misquoted dates at various stages in our replies, it is not entirely clear what are all the intentions.

What I gather to be the effect is that nonetheless somebody on unemployment benefit will from 7th or 8th April be eligible for only six months' contributory benefit before going on to means tested benefit. So when JSA comes into effect as of October, he will be immediately onto means tested benefit. However, I also understand from the Minister that the situation of dependent spouses will continue as under the unemployment rules between April and October. The under-25s will also continue under unemployment benefit between April and October. The Minister nods his head to confirm that that is the case. So it is in the record.

Nevertheless, perhaps I may first comment on the helpful intervention of the noble Lord, Lord Campbell of Alloway. I apologise to the House if I was not clear when introducing the amendment. What he said was indeed the case. The thrust of the amendment is that if the Government are to delay the introduction of the jobseeker's allowance to October, there should be a clean, clear and transparent introduction of that benefit at once, as a package. It is the very package that the Minister, through Second Reading, and Committee and Report stages, has told us that JSA was supposed to produce. It was tougher on benefits but at the same time, so the Minister believes, the jobseeker's agreement and other associated aspects of JSA nonetheless will actively help people back into work. It was a package.

We disagree with the JSA and the principles of it. But my amendment seeks to ensure that if JSA is introduced, it should be introduced cleanly, clearly, comprehensively and comprehensibly to claimants and staff together as an integrated package—that is what the Minister has always led us to believe—as at October. It means therefore that unemployment benefit on the one hand and income support would remain as they are until October. We should not have a splintered package with overlapping benefits, transitional arrangements, some income support, some UB, some under-25s, some over-25s and some dependent spouses—all that utter confusion.

The Minister and those of us on these Benches who have been dealing with the Bill for two months now are still confused and trying to understand it. If we are confused, what do the Government expect the people out there to be? What hope do they have of understanding the intentions? Is it fair? The Government, for their convenience—not as a result of our amendment—have delayed by six months the introduction of the jobseeker's allowance. That is not because we asked for it, although we should have liked it, but because it suited the Government so to do.

It seems only fair that if the Government are to delay the introduction until October, they should delay the entire package until October, so that everyone knows where they stand. Unemployment benefit and income support should run through to October and thereafter the new benefit would start cleanly, crisply and clearly for all concerned. We should not have the confusion that exists even today between two overlapping benefits and transitional arrangements.

In all fairness to the claimants, and because the Government at the very last moment have changed their policy in this respect, I ask the House to support us in clearing up the mess and confusion that will otherwise follow. I seek the opinion of the House.

3.28 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 112; Not-Contents, 152.

Division No. 1
Allen of Abbeydale, L. Holme of Cheltenham, L.
Annan, L. Howell, L.
Archer of Sandwell, L. Hughes, L.
Ashley of Stoke, L. Hutchinson of Lullington, L.
Avebury, L. Hylton, L.
Bancroft, L. Irvine of Lairg, L.
Barnett, L. Jay, L.
Beaumont of Whitley, L. Jay of Paddington, B.
Birk, B. Jeger, B.
Blackstone, B. Jenkins of Hillhead, L.
Brooks of Tremorfa, L. Jenkins of Putney, L.
Bruce of Donington, L. Judd, L.
Carmichael of Kelvingrove, L. Kilbracken, L.
Carter, L. Kinloss, Ly.
Cledwyn of Penrhos, L. Kintore, E.
Clinton-Davis, L. Lawrence, L.
Darcy (de Knayth), B. Lester of Herne Hill, L.
David, B. Lockwood, B.
Dean of Beswick, L. McCarthy, L.
Dean of Thornton-le-Fylde, B. McIntosh of Haringey, L.
Donaldson of Kingsbridge, L. Mackie of Benshie, L.
Donoughue, L. McNair, L.
Dormand of Easington, L. Mallalieu, B.
Ewing of Kirkford, L. Mar, C.
Falkender, B. Mar and Kellie, E.
Falkland, V. Mason of Barnsley, L.
Farrington of Ribbleton, B. Mayhew, L.
Gainsborough, E. Merlyn-Rees, L.
Gallacher, L. Merrivale, L.
Geraint, L. Meston, L.
Gould of Potternewton, B. Milner of Leeds, L.
Graham of Edmonton, L. [Teller.] Monkswell, L.
Moms of Castle Morris, L.
Grey, E. Nelson, E.
Halsbury, E. Nicol, B.
Hamwee, B. Ogmore, L.
Harris of Greenwich, L. Palmer, L.
Haskel, L. Peston, L.
Henderson of Brompton, L. Phillips of Ellesmere, L.
Hollis of Heigham, B. Prys-Davies, L.
Rea, L. Stallard, L.
Richard, L. Stedman, B.
Ritchie of Dundee, L. Stokes, L.
Robson of Kiddington, B. Strabolgi, L.
Rochester, L. Taylor of Blackburn, L.
Rodgers of Quarry Bank, L. Taylor of Gryfe, L.
Russell, E. [Teller.] Thomas of Walliswood, B.
Sainsbury, L. Thomson of Monifieth, L.
St. Edmundsbury and Ipswich, Bp. Turner of Camden, B.
Walpole, L.
Scanlon, L. Warnock, B.
Sefton of Garston, L. Whaddon, L.
Serota, B. Wharton, B.
Shaughnessy, L. White, B.
Shepherd, L. Wigoder, L.
Simon, V. Williams of Elvel, L.
Stafford, L. Williams of Mostyn, L.
Aberdare, L. Fraser of Kilmorack, L.
Addison, V. Gainford, L.
Alexander of Tunis, E. Geddes, L.
Allenby of Megiddo, V. Gibson-Watt, L.
Alport, L. Glenarthur, L.
Ampthill, L. Goschen, V.
Arran, E. Granard, E.
Astor, V. Grantchester, L.
Astor of Hever, L. Gray of Contin, L.
Balfour, E. Greenhill of Harrow, L.
Belhaven and Stenton, L. Gridley, L.
Blaker, L. Grimston of Westbury, L.
Blatch, B. Hailsham of Saint Marylebone, L.
Blyth, L.
Boardman, L. Hardinge of Penshurst, L.
Borthwick, L. Hardwicke, E.
Boyd-Carpenter, L. Henley, L.
Brabazon of Tara, L. Hertford, M.
Braine of Wheatley, L. Hives, L.
Bridgeman, V. Hogg, B.
Brougham and Vaux, L. HolmPatrick, L.
Burnham, L. Hood, V.
Butterworth, L. Howe, E.
Cadman, L. Inglewood, L.
Caithness, E. Ironside, L.
Campbell of Alloway, L. Kenilworth, L.
Campbell of Croy, L. Kimball, L.
Cawley, L. Kimberley, E.
Chelmsford, V. Knollys, V.
Chesham, L. Knutsford, V.
Clanwilliam, E. Lane of Horsell, L.
Clark of Kempston, L. Lauderdale, E.
Cochrane of Cults, L. Lindsay, E.
Cockfield, L. Long, V. [Teller.]
Coleridge, L. Lucas, L.
Colnbrook, L. Lucas of Chilworth, L.
Constantine of Stanmore, L. Lyell, L.
Courtown, E. McColl of Dulwich, L.
Cranborne, V. [Lord Privy Seal.] McConnell, L.
Mackay of Ardbrecknish, L.
Cross, V. Mackay of Clashfern, L. [Lord Chancellor.]
Cullen of Ashbourne, L.
Cumberlege, B. Macleod of Borve, B.
Davidson, V. Macpherson of Drumochter, L.
Dean of Harptree, L. Malmesbury, E.
Dixon-Smith, L. Manchester, D.
Dormer, L. Marlesford, L.
Downshire, M. Mersey, V.
Dundonald, E. Miller of Hendon, B.
Elibank, L. Milverton, L.
Ellenborough, L. Monk Bretton, L.
Elles, B. Morris, L.
Elliott of Morpeth, L. Mountevans, L.
Fanshawe of Richmond, L. Munster, E.
Father, B. Newall, L.
Foley, L. Norrie, L.
Northesk, E. Shaw of Northstead, L.
O'Brien of Lothbury, L. Shrewsbury, E.
O'Cathain, B. Slim, V.
Orkney, E. Stodart of Leaston, L.
Orr-Ewing, L. Strange, B.
Oxfuird, V. Strathcarron, L.
Pearson of Rannoch, L. Strathclyde, L. [Teller.]
Pender, L. Sudeley, L.
Prior, L. Suffolk and Berkshire, E.
Quinton, L. Swinton, E.
Radnor E. Terrington, L.
Rawlings B. Thomas of Gwydir, L.
Renfrew of Kaimsthorn, L. Trefgarne, L.
Trumpington, B.
Renton, L. Ullswater, V.
Renwick, L. Vaux of Harrowden, L.
St. Davids, V. Vivian, L.
St. John of Bletso, L. Whitelaw, V.
Salisbury, M. Wolfson, L.
Saltoun of Abernethy, Ly. Wyatt of Weeford, L.
Sandys, L. Wynford, L.
Sharples, B. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.