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Lord Skelmersdale: My Lords, I know that I accused myself earlier this afternoon of putting words into the mouths of other noble Lords, but I did not put those words into the mouth of the noble Earl.

Earl Russell: My Lords, what I said was a paraphrase. If it was an inaccurate one, I apologise.

4.36 p.m.

Baroness Hollis of Heigham: My Lords, these regulations comprise 160 pages and are 10,000 lines long--three times longer than the original Bill. I trust therefore that your Lordships will understand if, instead of picking away at some of the quite serious misprints to which the Minister drew our attention in Regulations 150 and 151, or the inconsistencies between Regulations 9 and 16, to which the noble Baroness, Lady Williams of Crosby, drew our attention, I instead seek to revisit some of the principal issues that are detailed here and made explicit for the first time. In that process I hope to persuade the Minister, even at this late stage, of how profoundly wrong are both the Act and these regulations.

We accept that some regulations are indeed welcome; for example, the rollover of housing and council tax benefits. We wait to see the effect of other regulations, such as the back-to-work bonus. Let us recall that what the regulations make explicit is how the Government propose to integrate, to bring together, unemployment benefit (the contributory national insurance benefit) and income support (the means-tested benefit for the unemployed) into one jobseeker's benefit.

Two hundred and fifty thousand people will be worse off as a result of the regulations. People who have paid their national insurance contribution, who have seen the contribution go up by 50 per cent. (it was 6.5 per cent. in 1979 and is now 10 per cent.) and who kept their side of the national insurance contract, now find that the contributory unemployment benefit time period has been halved. After six months, not 12 months, it will be means tested. If they claim for a wife or an adult dependant, it will be means tested from the very start, as though they had never paid any national insurance contributions at all for that purpose. Had any private employer, insurer or pension provider tried to do the same, they may have found themselves being taken to court.

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In addition, as we see from the regulations, not only is the insured benefit cut, but the conditions of receiving it have been made more stringent and arduous. Regulation 79 relates to young people under 25. Though they pay the same national insurance contribution as everyone else, their benefit will be reduced--not because they need less than the rest, but merely because they are younger than the rest.

As regards Regulation 107, any older men leaving with redundancy payments of £3,000 or more when their employment folds, will now find after, say, six months, that that may well make them ineligible for JSA until they have lived off and eaten up their redundancy payment as it takes them above the capital limit. Any claimant who has a partner working more than 24 hours a week, however little that partner may earn, will, after six months, find himself ineligible for JSA.

Regulation 13 affects the chronically sick and disabled. Of that group 250,000 have been removed from invalidity benefit and are being told to apply for the jobseeker's allowance. They may find themselves not disabled enough to claim incapacity benefit, but insufficiently fit to claim the jobseeker's allowance. I do not doubt that the Minister will assure us that that will not happen. We hope he is right, but if he is wrong, I can promise him that he will know about it. Anyone who has learning difficulties; anyone for whom English is a second language, and anyone less than competent to cope with the benefits system, is at risk of being assessed as not actively seeking work and losing his or her benefit.

Why are the Government doing this? Basically, we have been offered two reasons. The first is to create a flexible labour market, as the Minister told us today. The second, as the Minister has told us on other occasions, is to end welfare dependency. If those are the Government's objectives, their strategy is profoundly wrong.

As regards a flexible labour market, the Government have always insisted that if people were flexible about their wages--in other words, were prepared to accept poverty wages--they would somehow price themselves into jobs. Jobs will appear by magic out of the woodwork. Even now the Director-General of the CBI does not believe that. Pay has fallen: over 1 million people now earn less than £2.50 an hour and one-third of a million people earn less than £1.50 an hour. People have accepted poverty wages. If the Government were right, that would generate more jobs. But has it? On the contrary, when the minimum wages set by the wages councils were abolished, pay fell by up to one-quarter, while at the same time about 18,000 jobs in the industries covered by the wages councils were lost.

No, poverty pay does not increase employment. It simply pays poverty wages for the same work. What it does do--and this was touched on by previous speakers--is increase the social security bill so that family credit, housing benefit and council tax are needed to turn a poverty wage into a living wage. The number of people on family credit in the past five years has doubled; the bill has trebled. Every pound sliced off the wages bill under the pressure of JSA could add an extra

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70p or 80p in the pound to the social security bill. The result is a soaring social security budget, and the Government then complain about the rise in costs that they themselves have engineered.

The Government tell us that registered unemployment has fallen. They are right and we welcome that. But labour market research suggests that that is not so much because more jobs have been created, but because, in addition to the factors mentioned by my noble friend Lord Desai, fewer young people are leaving school and a higher proportion of them are going into further and higher education. Demography rather than a strengthened economy is the reason. I suggest that much more significantly, since the Prime Minister took office five years ago, unemployment has grown by 32 per cent. and long-term unemployment by 70 per cent. In Britain male unemployment in the age group 25 to 54--a group about which I believe we are all especially concerned--is nearly 15 per cent.; in the United States of America and Germany it is 12 per cent.; and in France it is 9 per cent. If the Government count that as success, what do they suggest would count as failure? So the first argument that the Government have adduced for these regulations is a flexible labour market to push down wages and to create more jobs. They have certainly pushed down wages, but they have not created more jobs. They have added to the social security bill.

The second proposition offered to us behind these regulations is the need to end welfare dependency. The assumption seems to be that if only people searched harder and accepted lower wages, they would find work, but instead benefits have made life too cosy and comfortable; that the unemployed need to be "braced" by benefit cuts into entering the real world of zero-hour contracts; namely, "Hang around for 40 hours so that I can employ you for any 15 of them" or of temporary work, or portfolios of fragments of jobs, with no pension, no sick pay, no holiday entitlement and no security.

What evidence is there that the benefit system discourages people from seeking and taking up work? The answer is, none. All the evidence, much of it commissioned by government, runs the other way. Benefit levels in Britain, relative to wages, are among the lowest in Europe and in the OECD. When people go on benefit most find their income halved. Most people would return to work if their wage passed the benefit level by only modest amounts. Men and women in Britain are on benefit not because they are idle and will not work, which is the assumption of the JSA and these regulations, but because they are unemployed and cannot find work.

There are 12 people in Britain today chasing every single registered vacancy. There are 20 people in London today chasing every single registered vacancy. Recently 700 men queued for one job as a van driver. That is why men and women are dependent on benefit. They are demoralised by the Government's mismanagement of the economy and not by their own lack of moral fibre. The JSA will cut the benefit bill, certainly, by taking money away from the unemployed on which they need to live.

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What shred of evidence do the Government have that the harshness of JSA and these regulations will create even one extra job? Instead of 12 people chasing each registered vacancy today, let us say that JSA dragoons one extra person and 13 people chase the registered vacancies, each and every day. How will that create one single extra job? Only when the Government can point to jobs paying an adequate wage, left unfilled by men and women who choose instead to remain on benefit, will the Government be entitled to talk about welfare dependency. Meanwhile the government strategy is indeed creating welfare dependency--that of the employer on the welfare system to subsidise his wages bill. In that respect our employers are among the most subsidised and our unemployed among the least supported anywhere in the OECD. It is perverse. Every regulation in this document makes the situation worse.

What does the Government's own research tell us is the best way back to work and to expand the labour market? As the Government know, the first is to educate and skill yourself. For example, recent research into lone parents shows that those left behind when their children go to school and who wish to re-enter the labour market, are precisely those with no educational qualifications. What do the Government do in these regulations? They promptly cut the number of hours from 21 to 16 for which one may study and still retain benefit. Any other country would encourage the unemployed to train, to study and to build up qualifications. Only in Britain do we penalise the unemployed by removing benefit. It is quite perverse.

Secondly, we know that the only really effective way to get a job is to have somebody in the family with a job and, through them, to remain attached to the labour market. All the research shows that what helps someone into the labour market is who the family knows. So, a wise government would be doing everything possible to keep at least one member of a family in work in order to help the others back into the labour market. But what do the regulations do? They construct a benefit system which, by means-testing, penalises the partner who is in work by removing benefit pound for pound from the one who is unemployed. Not surprisingly, therefore, any partner who has part-time work will leave that work and both partners will drop out of the labour market. Again, that is perverse.

Thirdly, we also know that it makes sense to share out what work there is. We know that it is work that floats people out of poverty. Yet 20 per cent. of all households of working age do not have an adult in work, while some 60 per cent. of such households have two people in work. We have work-rich and work-poor families. The divide is getting worse and the regulations will make it even worse. Why? Because JSA and the deduction of benefit pound for pound means that only the wives of men in full-time work can afford to work part-time without losing benefit. If a man works full-time, his wife can work; otherwise she cannot afford to take work and both are trapped. That too is perverse.

Fourthly, we also know--the noble Lord, Lord Chorley, reminded us of this--that if people cannot obtain waged work, the next best thing is to mimic the labour market with unwaged work and to volunteer. Any

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sensible strategy would encourage volunteering and would regard placements with training in an approved voluntary organisation as a positive outcome to the JSA agreement. Everyone knows that the alternative, the Government's training programmes, have a reputation for being pretty disastrous in many cases. Only three people in every 200 get a job as a result of the Government's Restart programme--that is only 1.5 per cent. By contrast, as the noble Lord, Lord Chorley, told us, the majority of National Trust volunteers obtain full-time work having completed their stint. Let us hope that Regulation 18/3/g bears the interpretation which the noble Lord put on it; nevertheless is it still not the case that volunteers are expected to give up their voluntary work with only 48 hours' notice, although that volunteering could equip them for a proper job, and instead have to accept a dead-end temporary job or lose their benefit?

These regulations are as malign and as perverse as the Act which fathered them. Essentially, they blame the unemployed for their unemployment. The unemployed will be required, on pain of forfeiting their benefit, to make themselves endlessly available to search for jobs that do not exist in a labour market that is overstocked. I repeat that 12 people go after every registered job vacancy today. If the harshness of JSA dragoons one extra person into the labour market so that 13 people are pursuing each vacancy, what have we achieved? What single extra job have we created? Why are we doing this? I ask the Minister to tell me why. Until the Minister can show that the regulations will generate one additional job (other than any extra jobs in social security offices), we on these Benches are utterly opposed to them.

4.54 p.m.

Lord Mackay of Ardbrecknish: My Lords, we have had an interesting debate. In fact, I think that we have had two debates. The majority of noble Lords spoke about the regulations, and their comments clearly indicated that they had read the regulations--or at least part of them. We then had almost another debate, which seemed to be a rerun of the Second Reading of the Jobseekers Act. Without seeking to be unfair to the noble Baroness, Lady Hollis, I think that that is what we had in the past 17 minutes. I believe that I answered most of the points that she raised while the Bill was proceeding through your Lordships' House and that I did so to the satisfaction of the House, just as my right honourable and honourable friends in another place answered such points to the satisfaction of their House so that the Bill became an Act.

I do not intend to go over all the points of principle that we discussed then. I should rather turn my attention to the questions that I have been asked about the detail of the regulations. I do not know whether I dare say this to the noble Baroness, but many of the details are necessary for the running of any system involving social security, unemployment benefit, income support or whatever name she may decide to give it. Therefore, to say that all the provisions are malign is to overstate the case by about a million miles.

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However, I was grateful to the noble Baroness for indicating her welcome for the roll-over of housing benefit and council tax benefit. I believe that she also indicated a welcome for the back-to-work bonus although I suspect that she qualified that welcome when she said that she would wait to see whether it actually worked. I shall take that as being as near a welcome as I am likely to get from the noble Baroness.

My noble friend Lord Skelmersdale was a great deal more forthcoming and I am grateful to him for the positive welcome that he gave to the back-to-work bonus and to a number of other provisions in the package of regulations. My noble friend made a valid point which was echoed by the noble Earl, Lord Russell, about a claimant's guide. I am happy to be able to tell them that leaflets for jobseekers will be available at Jobcentres from early March. The first leaflet will give basic guidance to help to alert claimants to the changes that will come about in October. A second leaflet will give more detail and will invite claimants to speak to Jobcentre staff if they would like further guidance. That leaflet will be given to claimants from July onwards. At the same time they will also be given a brief explanation of the changes. The chief adjudication officer's guide, which gives guidance on all the benefit entitlement decisions to be made under JSA, will also be in the "public domain" to use the modern jargon. I must try to think of a better phrase than that. I assure the noble Earl that the public domain appears to include the Library of your Lordships' House, so I shall keep him to his word that he will not bother me quite so much on the detail if that report is placed in the Library.

Perhaps I may turn to a number of the points that have been raised. I shall try to answer them as quickly as I can. If that means "shorthanding" the question, I hope that the noble Lord who asked that question will appreciate that the answer is directed at him. Perhaps I may start with the noble Earl, Lord Russell, who mentioned the Income Support (General) (Jobseeker's Allowance Consequential Amendments) Regulations--not the main regulations--and who asked a question about the over-50s. I do not want to get into a debate about this, but I must advise the noble Earl--I thought this when I answered the question--that he makes the assumption that all those people over 50 but below retirement age who have not been in paid employment during the past 10 years are necessarily seeking paid employment. I am afraid that that is not necessarily the case. That group will include people who have retired early, as well as non-working wives and a variety of other categories. I do not think that we can assume that all those people will be looking for work. I give the noble Earl that slight warning in case he wants to use those figures again.

Perhaps I may turn to the regulations about which the noble Baronesses, Lady Williams and Lady Seear, asked a number of questions. Perhaps I should advise the noble Baroness, Lady Seear, who intervened in the gap in the speakers' list, that I have had a great deal of experience of listening to "gap" speakers and that that experience has enabled me to listen to the speaker while having an intelligent conversation with the colleague to my right at the same time. I had better be careful in case I meet

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one of those speakers, but I think that I can safely say that I have never heard a speaker quite as stimulating as the noble Baroness--and certainly not one who does not use notes. As I recall, many of my lecturers seemed even more hidebound by their notes than I sometimes feel I am.

The noble Baronesses, Lady Seear and Lady Williams, and one or two other noble Lords, mentioned the issue of 48 hours. The point made was that 48 hours was not long enough to allow carers to rearrange their caring responsibilities when they received an offer of employment. As I said during the Bill's passage, people with caring responsibilities who want to participate in the labour market will need to plan in advance the best way of arranging their caring responsibilities if and when they receive a job offer.

We recognise that it would be unreasonable to expect people with caring responsibilities to be available for employment immediately. That is why we have extended the current concession, which is 24 hours, to 48 hours. With advance planning, we believe that 48 hours' notice should be adequate for carers to rearrange their caring responsibilities and be available for employment or an interview.


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