HL Deb 10 June 1996 vol 572 cc1539-49

6.15 p.m.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish) rose to move, That the draft regulations laid before the House on 28th March be approved [16th Report from the Joint Committee].

The noble Lord said: My Lords, I am sure that it is for the convenience of the House that we also deal with the Jobseeker's Allowance and Income Support (General) (Amendment) Regulations and the Social Security (Adjudication) Amendment Regulations at the same time.

The jobseeker's allowance provides a new and very different way of giving help to unemployed people. It replaces an outdated, confusing and fragmented system which contained disincentives to job seeking.

We know that the majority of unemployed people want to work. The focus of JSA is therefore firmly and properly on motivating and helping jobseekers to get into employment within a framework which will provide a better and more streamlined service.

JSA will be implemented from 7th October this year. There are still a number of areas in the framework of secondary legislation to be completed before JSA is introduced, and so the Government are bringing these regulations, which have been debated and approved in another place, before your Lordships' House for your approval today.

The main set of jobseeker's allowance regulations was considered by this House in January. During the debate on the principal regulations, we made it clear that it was likely that the Government would need to come back to the House with further regulations, including amending regulations, before JSA was introduced.

My department constantly reviews benefit policy. It is important that the benefits that we pay to people keep up with changes in modern life and reflect the Government's policy intentions and that the public funds to which we all contribute are spent wisely. Scrutiny of income support and changes to that benefit form part of this process and it is right they should do so. A number of changes have therefore been made to income support since the principal JSA regulations were introduced. Because income-based JSA is broadly aligned with income support, we now need to amend the original jobseeker's allowance regulations to mirror these recent changes in income support.

The original JSA regulations are an intricate and extensive set of regulations and it is right that they should be so. It is in the interests of JSA claimants that the rules under which their benefit is paid to them should be fully laid out in law to ensure that they are treated fairly. These amending regulations put right some minor errors in the original regulations, which detailed scrutiny has revealed.

Many of the most important and complex decisions on JSA claims are taken by adjudication officers who are independent of the Department of Social Security and the Department for Education and Employment and who use adjudication guidance prepared by the Central Adjudication Service to aid them in their work. It is important that that guidance is correctly drafted to ensure that claimants receive the high standard of adjudication they deserve. Preparation of this guidance has thrown up some areas of possible ambiguity in the original regulations. So we have taken the opportunity to clarify certain regulations so as to put their interpretation beyond doubt.

I turn first to the Jobseeker's Allowance (Amendment) Regulations 1996, which were laid before this House on 28th March. They make the type of minor amendments which I described earlier. Your Lordships may like to take particular note of one or two.

Regulation 10 introduces new provisions into the jobseeker's allowance regulations covering persons from abroad and asylum seekers. Your Lordships may recall that the equivalent income support regulations have already been the subject of a full debate both in this House and in another place. These JSA provisions do no more than bring JSA into line with income support and they will ensure that only genuine asylum seekers who have permission to work will be supported by taxpayers' funds while they look for work.

Regulation 11 also follows changes in income support. People on income support who are in residential care, nursing homes or certain other types of residential accommodation will be able to have £16,000 of capital before they lose their entitlement to benefit, and up to £10,000 will be wholly disregarded when calculating the amount of benefit they will receive. These regulations amend the JSA rules to bring them into line with the income support rules. Only a small number of people on JSA will be affected but it is important that they are treated in the same way as recipients of income support.

The Jobseeker's Allowance and Income Support (General)(Amendment) Regulations were laid on 30th April. Again, these regulations are mainly concerned with clarification and with keeping JSA aligned with income support. However, I should like to draw attention to two provisions of particular interest.

The Disability Alliance pointed out to us that the rules governing the ability to restrict the hours for which a claimant can be available for work due to part-time study, voluntary work or temporary lay-off did not link up with the provisions which allowed a claimant to restrict their availability hours due to their mental or physical condition. I am grateful to the Disability Alliance for drawing that matter to our attention, and I am glad to be able to correct the situation with the amendments in Regulations 3 and 4.

Regulation 33 is an amendment to the income support regulations. It is to ensure that there is no break in the eligibility for income support for a claimant caring for someone with disabilities. At present, a carer is entitled to income support if the person they are looking after has claimed attendance allowance or the higher or middle rate of disability living allowance and is awaiting a decision or is being paid either of those benefits. From 7th October carers will also be entitled to income support in cases where the person they care for has had a decision but payment is not due until a future date because they have not yet completed the qualifying period for attendance allowance or disability living allowance.

The final set of regulations, the Social Security (Adjudication) Amendment Regulations, consist mainly of amendments consequential on the introduction of JSA. In many cases the amendments simply bring forward to JSA principles which apply to the adjudication of income support. However, the regulations contain two new adjudication provisions which are needed for JSA. Regulation 56A enables an adjudication officer to decided a JSA claim in the jobseeker's favour and for JSA to be paid while the adjudication officer is still considering a separate question of whether a sanction should be applied. That fulfils our commitments during the passage of the Jobseekers Bill that JSA would continue to be paid in full in advance of any sanction decision. Regulation 56B provides that where a claimant or his partner switches to JSA from income support or vice versa, the existing claim can be terminated where the adjudication officer is satisfied that entitlement will exist to the alternative benefit. In addition, it provides that they will not have to serve the three waiting days for new claims to JSA.

When I introduced the Bill to bring JSA into being, I indicated that the Bill and JSA, when it comes in in October, will provide more help to the unemployed in their search for work. It will be targeted at those most in need and will provide better value for money for the taxpayer. It will offer a better service for the unemployed and will be both easier to understand and simpler to run.

As I recall, the noble Baroness did not completely agree with my views on JSA. Indeed, on 3rd April 1995 at Second Reading, she said: the core of this Bill we believe to be nasty and pernicious…it takes as a starting point the blaming of the unemployed for their unemployment and therefore seeks to make life on unemployment benefit, to coin a cliché"—

unusual for the noble Baroness— mean, nasty, solitary, brutish and short… We have nothing but contempt for [the Bill]".—[Official Report, 3/4/95; col. 47.]

Those were her words on 3rd April. Her colleague, Mr. McCartney, in another place, on 17th January 1996 said, We reject the JSA and all it stands for".—[Official Report, Commons, 17/1/96; col. 765.]

It therefore puzzles me when poor Mr. Meacher writes an article in Red Pepper—a magazine of which I had not heard until he wrote the article but which is probably compulsory reading for the party opposite—repeating those assurances. At least, I felt that he repeated them, and he obviously thought so too when he said that the Jobseeker's allowance is unacceptable and that Labour will abolish it. However, poor Mr. Meacher had to swallow his words and say that it was the fault of his researcher, Mr. Ian Willmore, who made a drafting error. So it was a drafting error to say that it was unacceptable and that the Labour Party would abolish it.

Furthermore, on the detail, I understand that a few weeks ago Mr. Brown, the shadow Chancellor, vetoed attempts to extend the payment under JSA from six months to one year. As I recall, that was a matter which the noble Baroness particularly thought was "mean, nasty, brutish" and so forth.

I should like to know, as well as hearing a welcome from the noble Baroness for the regulations, exactly what is the updated position of the party opposite on JSA. Were the noble Baroness and Mr. McCartney correct? Was Mr. Meacher's assistant correct when he wrote the article? Or have the headmasters who summoned Mr. Meacher to their study and reprimanded him suggested that JSA is after all a splendid idea which should be backed and encouraged?

With those few thoughts on the wider scene, I commend the regulations to the House.

Moved, That the draft regulations laid before the House on 28th March be approved [16th Report from the Joint Committee].—(Lord Mackay of Ardbrecknish.)

6.30 p.m.

Baroness Hollis of Heigham

My Lords, I was about to thank the Minister for explaining the regulations. But given, first, that he entered into territory that is clearly unfamiliar to him when he talked about Red Pepper and, secondly, territory that was equally unfamiliar to him when he appeared not to be au fait with the reference to Hobbes and his assessment on the nasty state that currently surrounds us in the body politic of Britain, I have crossed out, rightly, my welcome thanks to him.

JSA replaces income support and unemployment benefit for those in the labour market. Last January we spent almost two-and-a-half hours discussing the JSA regulations—not the Bill but the regulations—that is, 160 pages, 10,000 lines and three times longer than the original Bill. At the time we reminded the House that, as a result of the regulations, 250,000 people were made poorer. Instead of having national insurance cover for 12 months, it was slashed to six. If one was under 25 one received a lower rate even so and after six months it was means tested which meant that if there was a spouse in work he or she would lose pound for pound.

Let us assume that it is the woman in part-time work. It is not surprising therefore that the only women who can afford to work are those who already have a husband in work. That accentuates the work-rich/work-poor divide that is such a problem in today's society. It equally affects the older man with a redundancy package which may exceed the capital rules and denies him benefit for which he has paid national insurance all his life.

We made the point then and make it tonight that a means test to JSA is a tax on a working wife. It is a tax on savings, and it also encourages dependency. If neither party is working they need more housing benefit and more council tax benefit rather than less; therefore, the partner on JSA will have to earn even more to spring both of them off dependency. He cannot, so he will not. Means-tested JSA locks people onto benefit because it costs too much to get off it. As the Social Security Select Committee recently said, JSA, like other means-tested benefits, may therefore be an additional incentive to fraud.

Last January we debated 160 pages of 172 regulations. Some months later we find ourselves debating amendments to 40 of those 172 regulations; in other words, the Government have found nearly a quarter of their regulations to be defective. The Government say that they need to bring the amendments forward because of what "detailed scrutiny" has revealed. That was the phrase the Minister used; it was used also by the Minister in the other place.

This House has a right to know why detailed scrutiny follows the introduction of regulations rather then precedes it, which is what this House has a right to expect. Therefore, we are having to amend regulations on such important matters as sanctions against young people, payment of training allowances, voluntary redundancy, hardship payments, volunteers, part-time students, short-time working, sickness periods, housing costs and occupational pensions, all to bring JSA and income support into line with each other. Talk about competence in drafting! The Government are giving a new meaning to the phrase "learning on the job". It is a pity about the unemployed who are at the receiving end of the Government's work experience programme.

We have seen exactly the same pattern with the Child Support Agency—it is not a new phenomenon—in which the Government pass a Bill, reject most of the amendments from the Opposition Benches, then six months later pass regulations and then spend the next two years amending the regulations and the legislation because they got it wrong as they were too arrogant to listen to the views from the Opposition Benches in the first place. Therefore, they have had to smuggle back in as regulations and amendments to legislation the very selfsame amendments that the Opposition moved in the first place.

Even the Treasury now admits that it has got it wrong in a wide swathe of social security matters. It has abandoned all considerations other than the narrowly financial. Therefore, the Government, the taxpayer and families have been paying the Treasury bill. The Treasury admits getting it wrong with the CSA and with incapacity benefit, and we now find that disabled people are actually dying before they receive the benefit moneys owed to them by the Benefits Agency. The Government are now getting it wrong on JSA, as these amendments, which represent one quarter of all the effective regulations, show. It is remarkable that after nearly 18 years in office the Government still cannot get their social security legislation right, their drafting or regulations, let alone their policies. They are all deeply flawed.

The Government are no more competent in getting their sums right. Savings to the Treasury were originally going to be £410 million in the years 1996–1998. That figure then fell to £320 million. Meanwhile, the costs of introducing JSA have soared to £280 million, to be spent on new computers, additional training and nearly £11 million on consultancy fees. That figure has soared also. So obviously the savings target has been cut and cut again. The Minister was very silent on this matter. Will he tell us that the computer problems have now been resolved and that the JSA computers and the income support computers are now talking to each other? Or is it true that we now have two systems which are going to run in tandem for a further 15 months? What sort of chaos will that produce?

We now experience error rates on income support of 22 per cent. Nearly one-quarter of all income support payments are erroneous—not fraudulent—but erroneous from the Government's side. According to the National Audit Office, they have either underpaid or overpaid 22 per cent. of income support. What estimate of error do the Government now anticipate on JSA when they cannot even get their computers talking to each other over income support? Do they estimate a 25 per cent. error rate, or 30 or 35 per cent.? We are talking about taxpayers' money. This inability to deliver the system smoothly is frightening.

Many of the errors will be due to inadequate staff training and resources. The abolition of home visits has meant that inaccurate information is too often processed, so it is not surprising that inaccurate decisions come out the other end. What are the Government going to do about that as regards JSA? Every report we now receive from the National Audit Office, the Public Accounts Committee and from the Government's own annual reports, shows that the rate of error and fraud appears to be increasing rapidly. Any means-tested benefit risks high error and high fraud. JSA is a means-tested benefit and will carry with it a similar high likelihood of error and fraud.

We welcome Regulations Nos. 33 and 56A, and some of the adjustments for the disability benefits. But one regulation being introduced today is not an error in the sense that it is a deliberate piece of Government policy. It brings the treatment for asylum seekers for JSA in line with the changes already made to the asylum seekers and income support. When the Government were introducing those changes they claimed that they would save £200 million in denying benefits to people while they were seeking to establish their right to have support in this country. The Treasury might save £200 million, but we argued at the time that costs would be displaced elsewhere on to Churches, charities and local authorities. Will the Government now tell us what the balance sheet looks like? How much will be spent on reimbursing local authorities? Given that one-quarter of all the families have dependent children, how many such children do the Government expect to come within the Children Act 1989 and what do they expect the net overall savings will be?

It is a deeply wrong policy precisely because the Home Office cannot get its act together. Many asylum seekers are waiting a year or more to have their claims processed. The right way to deal with bogus claimants is to speed up the hearing and not to deny all claimants, other than those at the port of entry, benefit in the meantime whether they are bogus or not. Asylum seekers are losing their benefit not because they are not genuine—how can the DSS know that until the situation has been investigated? —but because the Home Office is not competent. That is unethical. If on top of that the Government do not know how many are affected, how much money will be saved and how many will come to local authorities for survival, they are adding administrative incompetence to deeply immoral policies and then wrapping the whole lot in Tory Party conference jingoism.

In his opening peroration I believe that the Minister said that the point of JSA was the motivating and enabling of unemployed people to move into work. Oh really? There are currently 12 people chasing every vacancy. Will the Minister tell us how, by turning JSA into a means-tested benefit and making it more penal, and by encouraging fraud and error in the process, that will add a single extra job to the labour market? I accept that instead of 12 people chasing every vacancy there may now be 13 doing that. Perhaps that 13th person will take away a job from the 12th person who might otherwise have got it. In what way does that create an extra job? Worse still, perhaps that 13th person would have got that job by being willing to undercut the wages of the other 12 jobseekers. If so, that will cost the taxpayer even more by adding to family credit or earnings top-up, if it is extended, because as we and the Minister know, in-work benefits are now the biggest growing expenditure sector within the DSS budget.

In what way does JSA, and these regulations, create a single extra job save for the private consultants on whom the Government have lavished £11 million? JSA is deeply flawed and we shall review it. As we see today, the Government cannot even yet get their drafting right. We shall have to take the job over.

Lord Mackay of Ardbrecknish

My Lords, I believe I heard at the tail end of the noble Baroness's speech the words "we shall review it". That is certainly a long way short of what I remember being assailed with day after day when we took the Bill through your Lordships' House. Indeed, "reviewing" seems to be the policy for everything as far as the party opposite is concerned. I notice that at least I have made some progress, which is more than my colleagues in the other place have managed to do, in that I have some kind of statement from the noble Baroness that the party opposite will review the jobseeker's allowance. Therefore, I am not surprised that poor Mr. Meacher was reprimanded for saying what he thought was party policy from last year's passage of the Bill and had to withdraw his statement that the party opposite would withdraw JSA.

Baroness Hollis of Heigham

My Lords, I apologise to the Minister for interrupting so early. Our difficulty is that all the evidence shows that the financial situation that the Labour government will inherit appears to be deteriorating by the day. Only when we see the books can we know what we can afford to do.

Lord Mackay of Ardbrecknish

My Lords, that is a good try, but the books are clear. Every year we publish what is called, the Red Book. I commend the noble Baroness to read it where she will see the situation. It is the lamest of lame excuses that her party cannot make up their minds on policy until they win the election. That will not go down very well. Talk about buying a pig in a poke! As I was about to say, my recollection is that the noble Earl, Lord Russell, who is sorry that he cannot be here this evening, made it very clear that if his party were to gain power or to gain influence, it would abolish the jobseeker's allowance. I suspect that he retains that position. Anyway, we have had a commitment that the Opposition will review it. It does not sound as though they are as concerned about the jobseeker's allowance as some of their rhetoric might lead one to believe. However, I welcome that half-conversion that the scheme is so well founded that a review is all that will be necessary to keep it going.

Turning to the regulations, I have tried to explain why we need them. They are largely minor and, essentially, we need them for three reasons: first, to replicate recent income support changes in JSA. Those changes have occurred since we brought forward the JSA regulations. One of those changes is that mentioned by the noble Baroness and relates to persons from abroad and asylum-seekers. I shall come to that in a moment.

The second reason is that following the passage of the regulations, the Central Adjudication Service started work on them and has advised us that some amendments are necessary to ensure that there is no confusion over interpretation. I should have thought that that was a sensible way for government to proceed in the interests of both good administration and customer service.

The third reason is that a few typographical and cross-referencing errors occurred in the main regulations. Indeed, I recall pointing one out when we dealt with those regulations earlier this year. We have taken this opportunity to put right those errors. I think that those are perfectly reasonable reasons for bringing forward the regulations.

I turn now to implementation. We have always made it clear that it is our intention to implement JSA in October as planned and we are holding to the timetable. The noble Baroness will be happy to hear that trials are running successfully in 29 offices. Those trials are a valuable step in our preparations for the introduction of JSA as we seek to ensure that a high quality service continues and that staff are fully prepared when JSA is implemented in October. Training is a very important aspect of social security matters and is being delivered on schedule to all staff in response to their detailed training needs as analysed.

Work on the IT systems is continuing and is progressing on schedule. We have said for more than a year that we are retaining the other two systems—the National Unemployment Benefit System (NUBS2) and the Income Support Computer System (ISCS)—to reduce the risk which anybody who knows about computers is aware accompanies any large-scale new computer system. Existing claims on 7th October will remain on those systems. New claims will be handled on the new system (JSAPS). We shall move gradually from three computer payment systems to a single computer payment system by August 1997. However, there will be a seamless service for jobseekers who will certainly not be aware that three systems are in operation.

The noble Baroness drew your Lordships' attention to the error rate with income support. We are, indeed, concerned about that error rate and are looking at the reasons for it and at the ways in which we can improve upon that situation. It is exactly that which has led us to believe that the far-reaching change programme on which we have embarked in the Department of Social Security must play a key part in reducing that error rate. Frankly, our system is far too complex. It is often driven by the demands of various very small groups which want everything tailored to the very last dot and comma. That complexity alone leads to errors. We are looking for ways to simplify the whole system so that it is fair and can deliver benefits quickly, efficiently and correctly. I hope that, as the years progress, the noble Baroness will applaud our work on the change programme.

I turn now to persons from abroad. The amendments simply bring JSA into line with the changes introduced with regard to income support. If people from abroad apply for asylum at the port of entry, they will be eligible for income support, but naturally they will not have to consider JSA until they have been here for at least six months and until they have asked for and been granted leave to seek work. I suspect that very few will make that move.

On costs and the general point about asylum seekers, we are working with local authorities with regard to some of the costs that may arise for them initially because of the changes that we have made. Of course, there will be great savings to them when the number of people who come here seeking asylum and are proved to have no justifiable grounds for the granting of asylum or of exceptional leave to remain is reduced. There will be great savings for local authorities when that flow decreases, as it has done over the years for most of our European friends. When that flow decreases, which I hope will happen as quickly as it has increased over the past seven to eight years, not only will we be able to deal with applications much more speedily, including appeals, but local authorities will find that they save a great deal of money—

Baroness Seear

My Lords, can the Minister tell us who our "European friends" are?

Lord Mackay of Ardbrecknish

My Lords, the noble Baroness knows very well that our European friends are all those other members with which we share the European Union, as well as Norway and some other countries in Eastern Europe which are not yet members of the European Union, including Slovenia, which one day we hope to welcome. Many of those countries, with perhaps the exception of Germany, have seen a quite dramatic reduction in the number of their asylum-seekers, following the firm steps that they have had to take following considerable increases earlier.

I know that the noble Baroness will be more than delighted to learn that comparing month for month last year and this year we have seen a steady and gradual decrease in the number of asylum applications. Indeed, the figures for May show a reduction of 49.16 per cent. from 3,450 in May 1995 to 1,754 in May 1996. If that trend continues, what I said when I introduced the regulations on asylum-seekers will, indeed, come about. We shall be able to deal much more speedily with asylum-seekers' first applications with appeals also. Local authorities and others will be saved a great deal of money because they will no longer have to look after the large numbers of people who come here who have no justifiable grounds for the asylum that they seek.

It seems to me that the early figures are encouraging. As I have already explained to the House, most of those who come here are, understandably, economic migrants who see this country as a far better place in which to live than their country of origin.

Baroness Hollis of Heigham

My Lords, I wonder whether the Minister can answer another two questions about asylum-seekers. What is the Government's current estimate of the net saving and what percentage of asylum-seekers do the Government expect to fall within the local authorities' remit in terms of the Children Act 1989?

Lord Mackay of Ardbrecknish

My Lords, it is difficult to judge how many people will fall within that remit. If the decline that I have quoted from last year's May to this year's May continues, the number of people coming within the ambit of a local authority in that regard will fall considerably.

As I have said in this House—and as my right honourable friends have said down the corridor—we have promised that we shall help local authorities with unavoidable additional costs which, to be honest, have still to be seen. We have already agreed how that will be calculated with the local authorities. We shall have to see how much money we shall have to give local authorities in order to help them over the problem, as opposed to the £200 million which we estimate will be the benefit saving from not paying benefit to people who apply in-country, who are found not to be genuine asylum-seekers or not to justify the granting of exceptional leave to remain and who appeal. They are no longer eligible for benefit. Against that benefit saving of £200 million, social services and housing authorities will have to spend some money. We have been negotiating on that with the local authorities. We have made clear what we are prepared to pay. We shall have to see what it comes to, but it will certainly come to a great deal less than £200 million unless there are a lot of imaginary people around—

Baroness Hollis of Heigham

My Lords, the Government must have made some estimate of that figure for the Minister to be so confident that savings will result. What estimates have they made?

Lord Mackay of Ardbrecknish

My Lords, I do not have the figures to hand, but if your Lordships want an exercise in logic, perhaps I may say this: if we reduce the number of people who come here, obviously many fewer people will need the services of the local authorities for education for their children or for their social or housing needs, so a considerable amount of money will be saved. That is what we believe will happen. Once this begins to act properly, as it appears to be, local authorities will find that they are spending less money on asylum-seekers because there will be many fewer of them. I am sure that most people in the country welcome that.

On the general question of employment and whether or not the JSA will help people, one of the important elements is the agreement. There will be a pact between the employment service and the individual in order to try to get the individual back into work as quickly as possible. It is well worth pointing out that two-thirds of people are already back in work within six months of becoming unemployed. We have a number of schemes that are designed to help those who are in long term unemployment and are often very difficult to place in employment. We believe that the jobseeker's agreement along with other schemes that we have introduced will go a long way to help those people get back into work. Of course, we do this against the background of falling unemployment, in contrast to what is being experienced by our major European friends. Their unemployment levels are higher than ours, and rising. However, the Labour Party continues to harp on as if the United Kingdom were the only country in the world with high unemployment, oblivious to the fact that UK unemployment is lower than the average of our European friends and is falling while theirs is rising. I believe that JSA will add greatly to our raft of measures to help people back into work. I commend these regulations to the House.

On Question, Motion agreed to.