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Lord Henley) 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 should also like to speak to the draft Income Support (Pilot Scheme) Regulations 1996.

The Government are seeking powers to test a new approach to help unemployed people back to work. The regulations are made under powers in Section 29 of the Jobseekers Act. That allows pilots of changes to benefit regulations to be set up:

That is precisely the aim of the project work pilots.

The pilots will be operated by the Employment Service in two locations: the Hull and Medway and Maidstone travel-to-work areas. They will apply to all people aged 18 to 50 in those areas who have been claiming unemployment benefits for two years or more. We expect around 8,000 to 9,000 people in total to fall into that group.

Let me say a little about how they will work. When people in the client group attend their first six-monthly Restart interview in the pilot, they enter the first part of the pilot, which lasts for 13 weeks. The main aim will be to place people in suitable jobs. But other help will be available for those who need it. They may be referred to jobclubs for further help in looking for jobs, or to

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training for work to improve their skills. A jobfinder's grant of between £100 and £400 will also be available to help overcome financial problems in taking work.

We will, in addition, aim to put unemployed people in direct touch with employers through trial periods, during which they can demonstrate their abilities in a job while remaining on benefit. Employers who recruit people from the pilot will be able to claim a Workstart subsidy of up to £1,500.

For some people the intensive voluntary help which I have just described has already begun. The first project work Restart interviews took place on 9th April.

If, after that period of intensive help, people are still claiming unemployment benefits, they will be allocated a place on a work experience programme, which will last for a further 13 weeks.

The work experience element of project work will be provided under contract and will involve projects of value to the community. In most cases people will carry out 18 hours of work experience each week and, in addition, three hours of supervised job search activity.

We expect the vast majority of people will welcome the opportunity to take part in work experience. However, if an unemployed person refused to participate without good cause, his benefit would be disallowed for up to 14 days in the first instance, and for periods of up to 28 days beyond that.

The pilots are designed specifically to tackle the main problems which face people after a long spell of unemployment. Intensive help is provided to make jobsearch more effective. Work trials, Workstart and the work experience itself tackle the prejudice which people often face from employers. The requirement to attend a programme of structured help or advice can remotivate people and be the galvanising factor for those who have lost hope and motivation.

The requirement to attend work experience in project work also helps to reinforce a view which has gained considerable ground in recent years: if someone has been out of work for a long time, while the Government have an obligation to provide financial support to them, the taxpayer has a right to expect that they will take positive steps to improve their own prospects of finding work. I have no doubt that the vast majority of unemployed people want to work. But for the few who have no intention of seeking a job or who are claiming fraudulently, I would expect project work to offer a deterrent. As the House will see, the project work process is intensive and contains many different elements of help for unemployed people.

The regulations we are discussing today concern one important aspect of the pilots: to make people who fail to attend the work experience element subject to benefit sanctions. The regulations would provide that power under the income support legislation, which will apply until October this year, and the jobseeker's allowance once that is implemented.

The income support regulations were sent to the Social Security Advisory Committee in December, immediately following the announcement of the pilots. SSAC decided not to consult in late February, and the income support

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regulations and JSA pilot regulations were laid before the House in March. They were approved by committee in the other place on 25th April. The first referrals to the work experience element of the pilots, for which the regulations are needed, will happen in July.

Both sets of regulations make similar provisions. People who fail to attend the work experience element will be subject to benefit disallowance for up to 14 days on the first occasion and up to 28 days in subsequent instances. We have designed the regulations so that they match as far as possible the general sanctions regime that will apply under JSA.

We have built in a number of important safeguards. First, written notice must be given of the requirement to attend; and sanctions cannot apply unless there is a place available on work experience. Secondly, the normal rules for access to hardship payments will apply both under income support and JSA. Thirdly, those who can show good cause for not attending project work will not be subject to sanction. In addition to a number of specific examples of good cause--including that of caring responsibilities--there is also a general "good cause" provision to cover unforeseen circumstances. Decisions will of course be taken by independent adjudication officers.

The House will recognise that these regulations come forward to bring into effect a process that has been designed with care. It is based on considerable practical experience of helping long-term unemployed people to find work. The regulations have been considered by the Social Security Advisory Committee, and we have taken on board its comments.

We shall, of course, monitor and evaluate the results most carefully. We shall be looking to see how far the approach helps unemployed people to find work when otherwise they would have remained on benefit. We shall consider what new light project work throws on the problems that people who have been out of work for a long time have in getting a job and we shall take that fully into account in considering further measures to help such people.

All the evidence of the past suggests that people unfortunate enough to be out of work for two years or more may be left behind by the recovery unless we make a special effort to assist them. By approving these regulations, the House will enable the Government to test a carefully devised programme of intensive help to people who need it most in the improving labour market. I beg to move.

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

6.47 p.m.

Baroness Hollis of Heigham: My Lords, I am sure that we all thank the Minister for repeating the statement made in another place. We all agree that the long-term unemployed find it especially difficult to re-enter the labour market. We accept that their skills, their motivation and, above all, the employer's attitude work against them. It is always easier to get a job if you already have one.

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We also welcome the principle of pilot schemes. Too often social security initiatives have been thwarted because of the all-or-nothing, the national-or-not-at-all approach. As a result, we have not been able to learn from the mistakes or the successes. We have not been able to look in at a learning process.

However, a number of worries remain. I shall raise five of them. First, there is the content of the programme itself. Despite the Minister's reference to skills in his opening remarks--which I entirely share--it is clear, so far as we can see, that the content of the programme is almost entirely about motivation and penalties, with nothing about skills. For example, would a positive outcome allow someone to go to a local FE college and take a course for three months in IT, advanced HGV (heavy goods vehicle) driving or to refresh catering skills? What guarantee is there that training is embedded in the work experience schemes?

The second question is about whom the scheme affects. As the Minister said, the scheme covers those between 18 and 50 years of age claiming benefit for two years or more. Whom within that age group does the department expect the employment service to target? My belief is that many of the older men who experience longer term unemployment may have a health problem. For example, they may have been on invalidity benefit but have failed the new incapacity test because they have not enough points, even though they continue to have genuine physical or mental health problems. What is the Government's view? Will they push such men into project work, knowing not only about the health problems but, more to the point, being aware that employers in future will be exceedingly unlikely to employ someone who comes with a poor health record in preference to someone who is fit. How are such older men affected by the programme? Even if such training placements do not worsen their health, the possibility of their re-entering the labour market is slender.

For example, where someone has been on invalidity benefit and fails now to qualify but nonetheless has some points, is it possible that he might come on to such project work only if he wished to do so rather than face a benefit sanction? I believe that the Government would seriously improve the success factor of the schemes were the Minister to accept such a qualification for people who either received invalidity benefit in the past or, in applying for incapacity benefit, have received points, though not sufficient, to qualify them for incapacity benefit. They are very often the people who are long-term unemployed but who cannot for reasons of health and employers' attitudes re-enter the labour market.

My third point is about providers. Which employers does the Minister have in mind? We all accept that the best chance for that person is to continue to work for the employer who has given him the work placement as the goodwill and motivation exist on both sides to make it work. Who are those the Government have in mind? Placing a person with an employer who is unlikely ever to employ him ensures, as we know all too well from Restart and YTS, that he is churned onto yet another training scheme when the present one finishes.

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The problem is that the Government are introducing the scheme without the background of a rising job market. Twelve people are chasing every vacancy. If this scheme adds a thirteenth person to chase that job vacancy, one is merely displacing someone else from the interview or the job. One is merely churning. The best prospect of expanding the job market is if the employer realises that the trainee represents value for money. In other words, the scheme would work if employers just as much as trainees were given counselling and support to extend their job opportunities. We welcome the Workstart bonus of £1,500. But what else is being done to counsel employers to help them take on additional trainees?

For example, would the employment service allow voluntary organisations to provide placements for long-term unemployed people and for that to be counted as a positive outcome? It always saddens me that most of those volunteering are employed. The benefits structure locks those who have the time to volunteer out of the community. They are excluded. A voluntary organisation approved for the purpose of these regulations, such as the National Trust, mimics the labour market in terms of the work skills it provides; is socially useful in the work performed; and is socially inclusive in that the unemployed who receive benefit also benefit society. The long-term unemployed are motivated because the volunteers are given a sense of self-worth, and, in very hard-headed terms, such voluntary organisations have an excellent record of preparing their volunteers for the world of waged work. That is one of the few ways of improving skills, motivation and experience in a situation where there is no rising job market and where, therefore, one employed person may replace another.

But that does not meet the Government's other objective, which is to cut the benefits bill. I was much struck that the Minister here and the Minister in the other place referred not to those who have been unemployed for two years but to those who have been receiving unemployment benefit for two years. That brings me to my fourth point--finance. Will the Minister confirm that the scheme is to cost about £12 million? Will he tell us where that money will come from? In another place my honourable friend Mr. McCartney asserted that the Government were cutting and in some cases closing down community action programmes in other towns to fund this pilot project. The Minister in the other place did not deny that. What is the point of that? Why this restless swishing of money around the system, taking from one group of unemployed in one town to give it to another group of unemployed in another town? Am I right in my fears that 40,000 people may be excluded from community action programme schemes in order to fund 9,000 people on project work? If I am right, it sounds like a lousy deal.

That brings me to my final point. How will the Minister assess the project? What percentage of jobs does he expect his 9,000 people to find? Will he net that against the loss of jobs, if that is what happens, among those cut out from the community action programmes? Will he know who is doing the project assessment?

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Unless it is properly assessed, both in terms of gross and net job gains, it is not worth doing the project at all. Compulsory schemes or quasi-compulsory schemes such as Workwise, jobplan or Restart have an extremely poor success rate. Usually around one in three have a positive outcome. But that mostly means shuffling that person onto yet another government scheme. Only one person in 25--about 4 per cent.--actually ends up with a job as a result of all this.

We share the Minister's concern about the situation in which the long-term unemployed find themselves. We welcome the use of pilot schemes. We are pleased also that the regulations seem to show a decent respect for the complicated situation in which many long-term unemployed find themselves--with regard to good cause for not taking up a placement, the rights of appeal, forfeit of benefit and so on. It would be helpful if the Minister could allay our other fears on the schemes' finance; if he could be supportive of those coming off invalidity benefit or who have poor mental or physical health but who do not yet qualify for incapacity benefit. It would be helpful also if he would accept that going on to an approved voluntary scheme would be an acceptable outcome.

At the moment it is very clear that all the department's research shows that over the past four years the problem for the long-term unemployed is not motivation but lack of jobs. The average unemployed person receives barely one job offer a year. The long-term unemployed receive fewer than that. Unless we introduce such schemes against a rising job market, all we do is add to the number of people chasing the vacancies without having added one iota to human happiness.

6.57 p.m.

Earl Russell: My Lords, I thank the Minister for a long and helpful letter about these regulations and I agree with the noble Baroness, Lady Hollis of Heigham, about the importance of finance.

These regulations do not look like something especially big but it used to be one of the particular political skills of King James VI and I that when he wanted to do something to which his opponents were likely to take the most intense objection he did it in a long series of small stages, each one so small that his opponents would have looked absurd if they had chosen to make a fight of it. My noble kinsman the Minister may perhaps remember introducing the regulations about Restart courses which were the beginning of the road which has led on to here, in each case bringing in a small extra measure of compulsion to be used on the unemployed. For we must be clear that benefit sanctions on the scale we are now discussing are a form of compulsion. These appear to me to be leading on very slowly by a series of Jacobean small stages towards something which is beginning to look remarkably like peacetime conscription. That is a change of very great magnitude, of the kind we ought not to be discussing on a series of small regulations.

Having mentioned the Restart courses, where attendance was to be compelled by means of a benefit sanction, I shall repeat a question I asked my noble

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kinsman then which he could not answer at the time and I hope he can answer now. What happens to the people who are sanctioned? Do they thereafter do a Restart course? Are they sanctioned again for refusing again, or are they lost from sight? An answer to that question and to the equivalent question about those sanctioned under these regulations is an absolutely essential part of monitoring the scheme so that we can judge what its consequences really are. If that is not done, the scheme is not being monitored.

Despite the sanctions, I understand now that if one takes the Restart and the job plan programme together, refusals in 1994-95 were running at 75,000 a year. So there must be something pretty strong driving those people to refuse those courses. We want to know what it is and that it is not going to apply this time round. In some cases it is clearly the quality of the training. For example, we have one reported case of someone who had been trained for three years as a hairdresser. All she had done in that time was to sweep hair from the floor. That is not really what I understand by training. It is one possible reason for being dissatisfied with training and, since training, whoever provides it, is inevitably going to be of uneven quality, it is something to which we should pay attention. Is the Minister in a position today to say any more about who is providing this training and in any more detail what forms it will take?

I also have very great doubts about the underlying analysis which has led the Government to these regulations. It is surely as we have heard it many times before; namely, the belief that the unemployed are workshy and need to be, as the Minister put it today, "galvanised". There may be all sorts of other reasons for not taking part in a training programme, such as the very commonly stated belief that it does not increase the chances of getting a job, or the belief that the training itself is a waste of time. The whole thesis of welfare dependency on which many of these galvanising measures are based, rests on the assumption that we enjoy an exceptionally generous level of benefits. That is not now the case. Our welfare benefits are now among the lowest in Europe. A thesis which continues to depend on the myths of these exceptionally generous and attractive benefits is liable to be based on out-of-date information.

There are other reasons for which people may refuse training that may not necessarily deserve a sanction. Decisions on "good cause" may not always be correctly reached. There is no decision system which is correct in 100 per cent. of cases. The training may be totally unsuitable; for example, suppose being stone deaf I found myself being trained as a musician. I would regard that as a waste of my time and everybody else's. In general, I have quite profound misgivings about any system which treats people as if they were plasticine, to be forced into whatever shape those in charge of them think they ought to take.

When this scheme is monitored it will be done in the form of positive outcomes. Can the Minister say what will be taken as a positive outcome from these courses? Will referral to another government scheme be taken as a positive outcome or will only those who get a job be counted as having a positive outcome? I want to know

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a bit more also about the hardship. I take the point made by the noble Baroness, Lady Hollis, about the effect that these sanctions may have on people's health. Two weeks without benefit or even four weeks, are not likely to leave one in a fit state to take on heavy physical labour. I hope that the Minister can tell us something about the availability of hardship payments for those who receive these sanctions.

We already get cases under the old sanctions of people who are found not to have eaten for three days or those whose water has been disconnected. That is spreading the inconvenience by what it might be paradoxical to describe as a ripple effect. It affects other people as well as those sanctioned.

If we are to have any reliable monitoring of what these regulations are doing, we desperately need monitoring of what happens to those who are disentitled to benefit. What do they do? What is the behavioural effect? What is the health effect and, above all, when it is over, in what way, if any, has their behaviour been changed? If we cannot answer these questions we simply cannot decide whether the regulations and training are having the desired effect or not. It is essential for the Government to get that information.

We are told that the immediate form of payment is the benefit level plus £10. To know what that is worth we need to know--and this is a matter of some urgency--what happens to entitlement to passported benefits. Do people taking these forms of training get free school meals or free prescriptions? If not, £10, so far from being a carrot, will have very much the opposite effect.

We on these Benches regard ourselves, in the light of the Resolution of the House of 20th October 1994, as being free to vote on regulations. The principle of these justifies the importance. The reasons why I am not going to do that tonight are first, that we voted on the principle of this on the Jobseeker's Bill and that, although not conclusive, is significant. Secondly, in the "good cause" provision; in the provision for travel over an unreasonable distance; and in the allowing of a good cause that we may not yet have foreseen, there are two very vital concessions which make good undertakings by the noble Lords, Lord Mackay of Ardbrecknish and Lord Inglewood.

I believe that I have already got all that I am going to achieve on this matter. That does not mean that I am satisfied, but I am grateful. The point about hardship is the one that remains. I repeat it--because I shall come back to it many times--we must know what happens to those who suffer these sanctions.

7.8 p.m.

Baroness Seear: My Lords, I wish to raise two points with the noble Lord. First, are the training programmes in any way linked with the NVQ qualifications to which the noble Lord's department is giving a great deal of support--indeed it is the sponsoring organisation? It is an opportunity to link the two together and that can only be advantageous. It will mean that people who have been trained, even if they got to level 1 of the

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appropriate NVQ, will have firm evidence to show to a prospective employer that they had made some substantial progress and reached some kind of a level. That will surely increase the opportunity of getting a job.

The second point concerns people who have been taking advantage of the 21-hour rule for studying while still drawing benefit. If I am wrong I shall not continue with what I am saying because it will only waste the time of the House. I understand that it is proposed to reduce the period to 16 hours. If that is correct, I want particularly to draw the attention of the noble Lord to a fact which is being felt by a large number of women who wish to return to the labour market and who wish to take training courses or study courses, or who have been doing so under the 21-hour rule. They are finding that the colleges believe that they cannot do an effective job with the students in 16 hours. I am informed that the colleges are thinking of cutting the courses because they do not believe that they will be able to get the numbers to undertake the studies if there is a reduction to under 21 hours. They believe that it will not be suitable to go ahead with the courses. I had this information passed to me only this morning. Quite a number of colleges are in a great state of confusion as to what they should be doing because at this time of the year they need to plan their courses for next year. If they believe that they are to be limited to women who can work only for 16 hours, that will substantially alter the programmes that they put forward.

It is a kind of indirect consequence which very easily becomes overlooked. We need clarity on the matter. The colleges need to know now what the position is. I know that the noble Lord understands. Now the courses are being planned and arrangements made. If the colleges cut back the courses in anticipation that the 16-hour rule will make it impossible for them to do the job that they want to do and for women to come forward, the ultimate effect may be very undesirable in a way which I know the noble Lord would not wish to see.

7.10 p.m.

Lord Henley: My Lords, the last point raised by the noble Baroness, Lady Seear, is not strictly relevant to what we are discussing, so I hope that the noble Baroness will accept my assurances that I shall write to her on it in great detail.

As ever, I was grateful for small mercies in that at least both the noble Baroness, Lady Hollis, and the noble Earl welcomed the concept of piloting a scheme of this sort. However, I completely reject the allegation from the noble Baroness that such a project will not create jobs but will merely displace others from their jobs--in other words, that it will move people around. The noble Baroness said that trying to do that when the job market was, as she implied, shrinking was not the right way forward. That is not my view and it is not the view of the Government. It is not for government to create jobs. It never has been and it never should be. The only way in which governments can create jobs is to build and create a strong economy. We are doing just

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that. The noble Baroness ought to know that employment has grown by some 730,000 over the past three years. The aim of project work is very much to help people to take advantage of that.

There has been much concern about the training element of project work. There seems to be considerable misunderstanding about the aim of project work and its work experience element. The noble Baroness, Lady Seear, asked whether NVQs could be made part of the training that is being provided. I should make it clear that the providers of project work placements are not required to provide vocational training leading to qualifications. People who take part in the pilot scheme who could benefit from such training will be eligible for training for work. That is the purpose behind training for work. We are looking here at providing appropriate work experience for the individuals at whom we are addressing the scheme. There is obviously an element of training in work experience, but work experience is not training in itself. If training is appropriate--

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