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Lord Mackay of Ardbrecknish: My Lords, the amendment seeks an annual review of the maximum amount payable under the back-to-work bonus, which we intend will be up to £1,000. The maximum will be £1,000 but the bonus will be up to £1,000 depending on what the claimant has accumulated.

If I understood it correctly the first question of the noble Earl, Lord Russell, was: will the claimant decide to stay in benefit in order to accumulate the bonus? Perhaps I was wrong, but I had the impression that the noble Earl was under a misapprehension that either £1,000 could be claimed, or nothing at all. Since the bonus is up to £1,000, if a claimant has accumulated a bonus of, let us say, £400 on returning to work, that £400 is the amount that he will receive. The £1,000 figure is a maximum.

To turn to the interesting knock-about of the noble Lord, Lord McCarthy, one of the serious questions was: how will a claimant know how much he has banked, so to speak? I can tell the noble Lord that we shall be sending claimants regular quarterly statements of their position. I do not want to go into the matter in detail on this amendment, but I believe that it is an important part of encouraging people back to work. Interestingly enough, many people do declare their earnings. It is not true, as the noble Lord seems to think, that most people do not declare. Many do and will therefore be eligible. Even more might be encouraged to declare. But even without the additional number declaring, those who do will be eligible for the back-to-work bonus. That helps in this problem, which we all accepted and debated recently, although I was not able to give way to the

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noble Baroness in her desires to uprate the £5 disregard. It also helps the other problem of the bridge between being out of work and returning to work and the additional costs that someone can often come up against in making that move. Also, an amount of up to £1,000 may give people a little more confidence in making that move. I should like to think that everybody thinks that at least the objectives behind the Government's move on this matter are well-judged, and I would like the proposal itself to be approved by your Lordships.

On the annual uprating question, so far as I can recall, the last time I had to do an annual uprating statement there seemed to be just about every figure imaginable on the piece of paper I had. Perhaps I may look at what the noble Earl had to say and write to him about the specific points that he raised. As I said, I did not have the impression from my brief—certainly I did not realise—that there quite so many different benefits, payments and so on, which either had to be up-rated annually or for which, in the case of many of them, Ministers were able to consider and decide whether or not to up-rate them.

The back-to-work bonus is designed to encourage people back to work. I trust that the payments will be seen as attractive for those participating in this particular scheme. We believe that the £1,000 is substantial. We do not have any proposals currently to up-rate the maximum limit on a regular basis, as suggested by the amendment. However, in line with our policy, as I explained briefly to the noble Earl, on a range of financial limits within the benefit system—for example, the earnings disregards—we keep the amount under review. The decision not to up-rate the maximum will not, in our view, devalue the incentive effect in any significant way, as up-rating the amount would be of a minor cash value, particularly while inflation is so low. It would not add anything to the particular attractions of this benefit for me to accept the noble Lord's amendment, but it has given me the opportunity to say a few words about the back-to-work bonus, which I regret has not received the attention that I believe it merits in your Lordships' House.

Lord McCarthy: My Lords, as I understand it, the Minister is saying two things. First, he is saying that he has no proposals to up-rate the bonus, even the maximum £1,000; and, secondly, he will meanwhile be sending out regular notices telling people periodically how much they have in the kitty.

I wonder whether he can give any estimate of how many that will be? They will be part-time workers who are in receipt of income support, earn more than £5 and declare it to the Employment Service. I do not think that it will cost much money, but does he know how much?

Lord Mackay of Ardbrecknish: My Lords, I thought that the noble Lord was asking one question, but then, towards the end of his remarks, I thought that he was asking me another. Perhaps he might repeat the question.

Lord McCarthy: My Lords, I asked how much it will cost to send out and how many there will be. The one precise thing that the Minister is telling me in

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answer to my question "How will they know how much they have in the kitty?" is that he will send them regular notices telling them how much. I wonder whether he has any idea of how many people will be covered and will have to have that information. Unless we know how many people are in that position, we have no idea, even in principle, of how useful the bonus might be.

Lord Mackay of Ardbrecknish: My Lords, with the leave of the House, I am happy to help the noble Lord. We expect that 150,000 bonuses will be paid in a full year to JSA claimants. We have no estimate of the administrative costs.

Lord McCarthy: My Lords, I shall not continue. The figure is 150,000 on the assumption that they will all declare it. However, at this time of night, I shall withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 [Employment of long-term unemployed: deductions by employers]:

Lord Swinfen moved Amendment No. 98:


Page 21, line 43, at end insert ("or would qualify for disability working allowance upon taking up employment").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 99 and 100. All three amendments seek to extend the employers' national insurance contributions holiday to disabled people.

Previous amendments have sought to include incapacity benefits as benefits which count towards qualifying for the employers' national insurance contributions holiday. At Committee stage in the other place the response from the Minister was that of cost. In this House, at the Committee stage, my noble friend the Minister intimated that disabled people were the wrong target. The holiday was,


    "aimed at helping back into work people who have been capable of work but have not been able to find it rather than those who have been incapable of work"—[Official Report; 27/4/95; col. 1139.]

Amendment No. 98 addresses the point made by the Minister; that is, that the holiday should target employers recruiting people who are capable of work. Disability working allowance is payable to people working more than 16 hours a week but who are disadvantaged in obtaining a job because of disability. It will enable a NIC holiday to be claimed by employers recruiting someone who would qualify for disability working allowance when taking up such employment.

Amendment No. 99 includes a period when someone is claiming disability working allowance towards the two years continuous receipt of jobseeker's allowance. Amendment No. 100 enables people to count periods of benefit, like incapacity benefit, towards the two years on jobseeker's allowance required in order to count as a qualifying employee for the NIC holiday. That could help some of the 150,000 disabled people expected to move from incapacity benefit onto jobseeker's allowance in 1996-97, many of whom may have been on incapacity benefit for over two years. It would enable such people to count a period on other benefits towards the qualifying two years on jobseeker's allowance.

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Extending the NIC holiday could result in savings to the state as well as to the employer. For instance, someone moving from unemployment benefit to an average wage of £352 a week could attract a national insurance holiday for an employer of £1,869 a year, and save the Government over £10,000 a year in benefits and increased revenue. I beg to move.

Lord Carter: My Lords, these amendments are good for disabled people, good for employers and good for the Government. It will be interesting to see what contortions the Minister gets into in order to reject them.

Lord Mackay of Ardbrecknish: My Lords, perhaps I can look first at Amendments Nos. 98 and 99 without contortions. It will come as no surprise to the House that the amendments are technically unnecessary because, as I have explained previously, the clause already contains a power to extend by regulations the scope of the national insurance holiday to other groups of people.

We have proposed a well-targeted and affordable package of work incentive measures to help people back into work. This includes incentives both for the individual and for the employers. It is the national insurance holiday which provides an incentive to employers by encouraging them to offer job opportunities to the long-term unemployed. As I have said before to the House, it is aimed at helping people back into work who have been capable of work but have not been able to find it, rather than those who have been incapable of work. It is about helping people who are in and have been in the labour market for two years or more but have been unable to find work. It would not be appropriate to accept that periods of disability working allowance during which the person must be in work should count towards satisfying the two-year qualifying condition.

Disabled people, whom this amendment seeks to assist, receive other help in returning to work. Disability working allowance is available at a more generous rate than family credit to increase the income of some disabled people in work. Housing benefit and council tax benefit contain extra premiums for disability which again increase the amount of benefits they receive. I recognise that these benefits provide help for disabled people themselves and not to prospective employers, but extending the holiday to this group would go beyond our aim of helping those who have been in the market for a long time without being able to find work. This is where we consider that the need is greatest and where we should target the resources we have at our disposal.

What I can say to my noble friend is that we shall of course be carefully monitoring and evaluating the success of the scheme and would not rule out extending it further in some way if it became clear that there was value in doing so. For now we need to introduce the scheme within the cost constraints which apply and that means focusing the help essentially on the long-term unemployed.

In Amendment No. 100, my noble friend seeks to widen the scope of the holiday so that people who have been sick during the two-year qualifying period would also satisfy the qualifying conditions. We recognise that it might be appropriate to provide for some latitude in

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the qualifying period so that, for example, small periods of sickness could be ignored. That is why we have taken a power at subsections (6) (a) and (b) to treat people who would not otherwise satisfy the principal conditions as satisfying them.

At this stage we have not decided to what extent the qualifying conditions should be modified under this provision. My noble friend will, no doubt, continue to press me to include people who have been sick throughout the two-year qualifying period. It will come as no surprise to my noble friend that I cannot agree that we should extend the qualifying conditions for the holiday to that extent. This would go beyond our aim of helping those who have been in the labour market for a long time without being able to find work. This is where we consider that the need is greatest and where we should target resources.

As I said, we will be carefully monitoring and evaluating the success of the scheme and I have mentioned to my noble friend that that would not rule out extending it further in some way if it became clear that there was clear value in doing so.

With that explanation of why we want to concentrate on the long-term unemployed, and with just a little look into the future and the fact that our minds are not closed to it and to making changes, I hope that my noble friend will withdraw his amendment.

11.30 p.m.

Lord Swinfen: My Lords, my noble friend offered me a mixed bag of sweeties, some of which I like and others I do not particularly like. But at this hour of the night I shall reserve my position on these amendments. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 28 [Pilot schemes]:


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