The
Parliamentary Under-Secretary of State for Work and Pensions
(Mrs. Anne McGuire): I am delighted to see you
back in your Chair, Mr. Hood. I have missed you.
I can allay the fears of the
hon. Member for Inverness, Nairn, Badenoch and Strathspey, who is in
danger of confusing two issues. One is voluntary work, and we have said
more than once that volunteering is a stepping stone along the pathway
to work. There is a major difference if someone is working in a
commercial environment and appears not to be declaring any income from
that job. As a Member of Parliament I have known circumstances in which
someone has worked full-time in a business and has been astonished to
find out that the DWP thought they might be earning some money when
they were also claiming benefit. That scenario will be covered rather
than the type that the hon. Gentleman
painted. On capital,
perhaps I can highlight another scenario. To circumvent the capital
limits, a person might put all their capital in the name of a trusted
friend—it would need to be a pretty trusted friend—or a
family member. They might effectively dispose of capital so as to come
under the threshold. The clause will deal with such
scenarios.
Mr.
Boswell: Is it fair to summarise the
Under-Secretary’s comments as being that the clause is primarily
dedicated to dealing with abuse and deliberate attempts to frustrate
the system, rather than dealing with people with entirely legitimate
activities who might get caught in the fire? Will she at least assure
us that that is what she is trying to do in the
regulations?
Mrs.
McGuire: The hon. Gentleman puts his finger on the nub of
the matter. We have increased the capital limits—we doubled them
in April 2000—and there is now a limit of between £6,000
and £16,000. For older
people in residential care the limit is around £10,000. The
clause will essentially allow us to deal with those who seek to
circumvent the rules. They are the same rules as currently exist for
income support, and they should be translated into the new
legislation.
Danny
Alexander: It was the specific assurance on voluntary work
that I wanted. Having received it, I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Question
proposed, That the clause stand part of the
Bill.
The
Chairman: With this it will be convenient to discuss new
clause 13— Earnings disregard
level— ‘(1) The
Secretary of State may make regulations that the level of earnings
disregard for claimants of Employment and Support Allowance shall be
set at a level that he shall by
determine. (2) In determining
the level of earnings disregard under subsection (1) the Secretary of
State shall have regard to labour market conditions including the
National Minimum Wageas defined under section 1 of the
National Minimum WageAct 1998 (c.
39).’.
Mr.
Hunt: I, too, welcome you back to the Chair,
Mr. Hood. We are trying to make progress. We know that that
must be the case because we have not heard the weather forecast for
Inverness, Nairn, Badenoch and Strathspey. I regret that slightly,
because rather like “The Archers”, I am beginning to
follow that forecast and I am a bit curious as to how it might be this
afternoon. I thank you
for selecting new clause 13 with clause stand part, Mr.
Hood, because it is only loosely related to the clause. It deals with
the income of claimants, and there is not really anywhere else in the
Bill that is suitable to discuss that. Before speaking to the new
clause, I have a question for the Under-Secretary. Clause 16(3)(b)
gives the Secretary of State the power to disregard the capital or
income that a person possesses. Will she confirm that she might be
prepared to do that if a disabled person is asked to take part in a
consultation on Government policy and is given travel expenses? She and
I both spoke at the annual general meeting of the British Council of
Disabled People recently. One of that organisation’s great
concerns is that it is often asked to participate in consultations
about policy, but often gets little or no remuneration for it. It is
particularly concerned that if its members receive any
remuneration—even travel expenses—it could count as
income towards their earnings disregard. Will that be one occasion on
which the Secretary of State could show a bit of
latitude? 5
pm
Mr.
Boswell: Does my hon. Friend agree that this may apply to
certain people who may receive expenses or honoraria, or may decline to
claim them in relation to anything that they are required to do in
connection with user consultations under social care legislation?
Parliament encourages consultation with service users, so it would be
unfortunate if it appeared to subvert the position of users through the
earnings disregard.
Mr.
Hunt: As ever, my hon. Friend makes an important point. A
specific example of what he is talking about would be the pilots
concerning individual budgets, where it is vital to get service
users’ views if programmes are to be rolled out effectively and
successfully. I am sure that the Government do not intend to put off
disabled people from participating in such consultations, so it would
be great if the Minister could reassure the
Committee. Moving
on to new clause 13, I understand that the real intention of the Bill
is to tackle the barriers to work faced by many people with a limited
capability for work. It is encouraging that the Bill rolls out various
proactive support measures that could help people make the difficult
transition and engage in the world of work. However, I tabled the new
clause because I am concerned that the Bill fails to deal with a
structural problem that is a huge barrier to people re-engaging or
engaging for the first
time—[Interruption.]
The
Chairman: Order. May I ask the hon. Member for North-East
Derbyshire (Natascha Engel) to resume her
seat?
Mr.
Hunt: I am grateful, Mr. Hood. I am hoping that
the hon. Lady will intervene later, because she made some interesting
interventions earlier when we were talking about Tunbridge Wells Tim
and Derbyshire Dave. I
am concerned that built-in disincentives, including the strict rules
about how much money can count towards the earnings disregard, strongly
discourage people from engaging in the world of work. If we remove the
structural problems with the earnings disregard, we will have far
greater success with the proactive support measures advanced under the
Bill as part of the pathways
roll-out. On
the DWP website, which I viewed last night, under a heading of
“Working while claiming
benefit”—
Mr.
Ruffley: You should get out
more.
Mr.
Hunt: We return to my activities last night, which
included looking at the DWP website, which I am proud to have done
because it was important for our debate
today.
The
Chairman: Order. The hon. Gentleman has only himself to
blame.
Mr.
Hunt: Thank you, Mr. Hood. As a new Member of
Parliament, I shall take very seriously your advice about not getting
things transcribed things on to the record that are best left
untranscribed. The DWP
website
says: “You
cannot usually work while you are getting Incapacity Benefit, Severe
Disablement Allowance, National Insurance Credits or Income Support
because of illness or disability. You may be able to do the following
types of work but you should check with your local Jobcentre, Jobcentre
Plus or social security office before you start.”
Then it talks about those types of work.
Neither the Bill nor the explanatory notes make it clear
howthe dual structure works in this regard. I hope that the
Minister is able to enlighten the Committee about ESA and the dual
structure that exists at the moment, where people on income support
only have a £20 earnings disregard, but those on incapacity
benefit have the permitted work higher limit of £81 a week. The
Bill does not make it clear whether the Government intend that dual
structure to
continue. I am sure
that it will not have escaped the Minister’s notice that,
curiously, there is a much lower earnings disregard for those likely to
be the poorest people involved in the programme. Will the Minister
clarify whether she thinks that it is appropriate to have two levels of
earnings disregard given that part of the benefit of introducing new
welfare reform legislation is a move towards simplicity and
transparency, where possible? Having complicated rules dependent on the
individual claimant for earnings disregard would not appear to do
that. The earnings
disregard for people on income support has not changed since its
introduction, but the labour market conditions have. Disability
Alliance told the Select Committee on Work and Pensions that until
October 2005 those on income support could work for up to four hours on
the minimum wage, but since then increases to the minimum wage to
£5.35 mean that they can work for just over three hours. It
asked whether it was not incongruous that a person can work for a
certain number of hours one year, but not the next. I put it to the
Committee that that is against the spirit of the Bill—a spirit
that the Opposition
welcome. The Select
Committee recommended that the earnings disregard be set at four hours
at minimum wage and uprated annually. New clause 13 is actually weaker
than that and would allow, but not compel, the Secretary of State to
uprate the earnings disregard in line with the minimum wage and require
him or her to take account of other labour market conditions, not just
the minimum wage—other conditions need to be factored
in. I put it to the
Minister that it is not necessarily the case that increasing the
disregard would amount to an increase in public spending. If people did
not think that it was going to affect their benefits package, they
would feel more encouraged to engage in the world of work—in
many cases they are not because of the earnings disregard—and to
take those first few halting steps. In that case, in the long run, the
Bill would be more successful in getting people off employment and
support allowance and back into
work. The Minister
gave an interesting example from her constituency surgery when she met
someone working for a commercial organisation who did not understand
why that might be incompatible with claiming benefits. The concern is
that if the earnings disregard rules are too generous, everybody doing
a part-time job might think, “I will sign on and claim benefits
at the same time as earning a wage from my part-time
job”.
Actually, the Government could
be a lot bolder with earnings disregard because of the structure of the
pathways to work programme. In reality, people have to go through a
process before being considered for ESA and talk to a personal adviser
who has much more detailed knowledge of their personal situation than
has
been the case before. In that situation, with that knowledge of
individual claimants, it ought to be possible to be a lot more generous
with the earnings
disregard. I thank you
again, Mr. Hood, for allowing this new clause to be debated.
To wrap up, I remind the Minister that Capability Scotland said that 50
per cent. of working-age disabled people in Scotland did not want to
engage in the world of work because they were worried that it would
threaten their benefits package. Let me remind her also that the
Secretary of State himself has talked frequently, in the House and the
media, about the relationship between poverty and worklessness. Is it
possible that by accepting the new clause we could turn the spotlight
on the barriers created by permitted hours and the earnings disregard?
Will she consider supporting the new clause as a step in the right
direction to dealing with that
issue?
Danny
Alexander: I would like to add a few remarks to those of
the hon. Member for South-West Surrey on earnings disregard. It is an
important issue to raise at this stage. I shall not comment on his
nocturnal activities, but I do think that his amendment has drawn
attention to an important issue. The situation is worse than he
described because he dwelt only on the permitted working rules in
relation to incapacity benefit and earnings disregard in relation to
income support. But of course there are also earnings disregard that
apply to housing benefit. In relation to incentives to work and the
agenda to make work pay, is it worth someone going to work, as the Bill
tries to encourage people to do? Do people feel that when they go to
work, they receive a reasonable amount of the money that they
earn? The question of
earnings disregards is important. The earnings disregard is set at
£20, which means that someone can carry out less than four hours
work on the minimum wage before they start losing benefits. Depending
on which benefit they receive, they may lose it quickly, too. Recent
figures suggest that as a result of those tapers, people can then lose
their benefit at the rate of 70p to 90p in the pound of new wages
earned. If one were to suggest such rates for people at the top of the
income scale, there would be squeals of pain from the City and
elsewhere; however, the Government consider it acceptable for people at
the lowest end of the scale.
The earnings disregard will
allow a proportion of income to be earned before the clawback starts.
It will be critical to people who want to try out not just work-related
activity, but a few hours of work a week, or to people who have a
fluctuating condition and are able to work less than 16 hours a week.
Tax credits that help people make their work more worthwhile do not
kick in until 16 hours have been worked.
It would be useful if the
Under-Secretary were to address not only the earnings disregard for
employment and support allowance, but the interaction between the
different earnings disregards for different benefits. After all,
someone in receipt of ESA is likely—although not
certain—to be in receipt of housing and other benefits, as the
hon. Member for
South-West Surrey said. All earnings disregards will have a substantial
impact on the financial incentives for people to return to
work. I would be
grateful if the Minister were to explain both the Government’s
thinking on earnings disregards, and her discussions and thoughts on
the idea of higher earnings disregards to help get people off benefits
and back to work and to help a range of other claimants who face
substantial disincentives. That includes high marginal withdrawal rates
of benefits. A higher earnings disregard could help someone move higher
up the ladder towards work, before that person’s benefits
started being taken away. What we do about marginal reduction rates of
benefits is a matter for a separate debate, although it is important.
We could start by establishing earnings disregards at a sufficiently
generous rate that allowed people to try out work, and for work to be
financially worthwhile.
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