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Baroness Ludford: I, too, warmly welcome the announcement by the Minister and have nothing but warm words to say about the decision. I certainly have no intention of making any party political point. Like the noble Lord, Lord Higgins, I am grateful to the considerable range of organisations which have

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provided such expert and comprehensive briefing. Like the noble Lord, Lord Ashley, I have had to undergo a complete change of mind and scrap what was a very angry speech. Members from all parts of the Committee felt that Clause 72 was a measure which went too far and that it really would deprive some of the poorest people. I am absolutely delighted that the Government have recognised that fact. There is no need for me to speak at length because I am absolutely overjoyed.

However, perhaps the Minister could provide me with some clarification. I understood her to say that Clause 72 is being withdrawn entirely and that there is no intention to return with an alternative provision; in other words, the backdating provisions will remain as they are at present. I believe that to be particularly sensible because I understand that the Government's comprehensive spending reviews will be announced in the autumn. One of the points that I had intended to make was that this provision was a false economy because the costs would merely be incurred elsewhere--for example, by local authorities. As I said, I believe that it is entirely sensible for the Government to take such an approach.

Baroness Turner of Camden: I should also like to thank my noble friend the Minister. With some heart searching I attached my name to the list of those wishing to oppose the Question that Clause 72 should stand part of the Bill. My noble friend was well aware of my feelings about the clause because I had made them known to her. I am deeply grateful for the fact that the Government have been prepared to think again on the matter.

Although I fully agree that there ought to be a strategy in place to ensure that people claim their entitlement when it is due, I felt that it was not right to put in place such a clause before the strategy had been developed to ensure that benefits were claimed on time. Nevertheless, I am most grateful for what has been said. I look forward to hearing further from my noble friend the Minister as to the method that the Government have for carrying forward their plans on welfare reform, which I believe are badly needed. However, I hope that we shall not have a clause such as Clause 72 before those plans are in place. Indeed, if that clause had been put into practice, it would have damaged a great many vulnerable people.

Lord Newton of Braintree: When I spoke on Second Reading it was, as some Members of the Committee will recall, my first speech in this Chamber. I indicated then, in what was intended, quite properly, to be a non-controversial speech, that I had a number of reservations about aspects of the Bill regardless of their provenance. The one upon which I made clear I felt most strongly was this backdating clause which, quite frankly, I flatly opposed. Therefore, like others on all sides of the Committee, I am most grateful for what the Minister announced this afternoon.

There has been some reference to a Parliamentary Question that I tabled--indeed, my noble friend Lord Higgins, referred to it--about the breakdown of such

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savings. I should like to place it firmly on record that the Answer to that Question revealed that, of an estimated £58 million of savings in about a year's time and thereafter, no less than £42 million would come from the elderly, the long-term sick and disabled, carers and lone parents. I do not wish to labour the point further.

While I entirely appreciate that the Minister's speech focused a good deal on reviewing the matter in the light of a variety of other considerations, which is probably what I would have said if I got into the same mess--which, happily, I do not recall doing, but it can happen to any of us in social security matters--I should tell her that I quite understand why there was this camouflage. However, whatever the Minister does about take-up and all the other matters that she mentioned, I very much doubt that she will arrive at a situation in which she can re-introduce a variant of this proposal without similarly hitting those same groups of people on a large scale. I hope that it is indeed camouflage and that the noble Baroness will now stay firmly underneath it.

5.45 p.m.

Baroness Pitkeathley: I have had many happy moments since I came into this Chamber, but I believe that this ranks as one of the happiest. I should like to add my thanks to those already expressed and also those of millions of disabled people and their carers for this proof that the Government do listen. I hope that I may also add my personal thanks to my noble friend the Minister, who has put such time, effort and commitment into the matter.

Earl Russell: As I was very briefly out of the Chamber at the moment when the announcement was made, I hope that I may, nevertheless, be allowed to join in with the general welcome. Indeed, it seems to me to be a model of this place acting as it should as a revising Chamber. Perhaps I may also be forgiven for making one suggestion. Whatever backdating limits are ultimately arrived at, I presume that there will be some provision for exceptions as has been the case in the past. Will the Minister consider the possibility of allowing exception for "good cause" as used to be done, rather than attempting a total enumeration by regulation? The noble Baroness knows my arguments in that respect, so I will not dwell upon them.

Baroness Hollis of Heigham: I shall be very brief. I am pleased that Members of the Committee are satisfied that the response to my noble friend's amendment was to withdraw the entire clause, rather than accept the amendment. We believe that the backdating situation is confusing. We also believe that in the longer term it needs to be reviewed and sorted out. We wish to do so within the context of a more streamlined service and the kind of considerations that I have mentioned. Despite what the noble Lord said, it is not camouflage. As the noble Baroness, Lady Ludford, said, we have two measures simultaneously in progress at present. First, there is the development within the DSS of efforts to produce an active and modern service--for example, our initiatives to use

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information technology for data matching so that we can achieve the automaticity of benefits; and, secondly, we want to encourage take-up and review gateways. Real and important discussions are taking place in that respect.

The second point made by the noble Baroness, was, again, absolutely right. We are part, perhaps most, of the way through main reviews of major benefit areas. It seems sensible that any review of backdating should take place after the shape and contours of those benefits--especially housing benefits, incapacity benefit, and the rest--have been reviewed. Indeed, if I may put it this way, it is a second order question and should, therefore, come in second place. We should not anticipate where we may seek to go and what we may need to change.

The issue of backdating remains a real one and one which, I suspect, will have to be addressed by the Government in due course. There is no intention to return to it in this Bill. Therefore, like Members of the Committee, I shall be saying "Not content" when the Question is put.

On Question, clause negatived.

Baroness Hollis of Heigham moved Amendment No. 126A:

Before Clause 75, insert the following new clause--

Pilot schemes

(".--(1) Any regulations to which this subsection applies may be made so as to have effect for a specified period not exceeding 12 months.
(2) Any regulations which, by virtue of subsection (1) above, are to have effect for a limited period are referred to in this section as "a pilot scheme".
(3) A pilot scheme may provide that its provisions are to apply only in relation to--
(a) one or more specified areas or localities;
(b) one or more specified classes of person;
(c) persons selected--
(i) by reference to prescribed criteria; or
(ii) on a sampling basis.
(4) A pilot scheme may make consequential or transitional provision with respect to the cessation of the scheme on the expiry of the specified period.
(5) A pilot scheme ("the previous scheme") may be replaced by a further pilot scheme making the same, or similar, provision (apart from the specified period) to that made by the previous scheme.
(6) In so far as a pilot scheme would, apart from this subsection, have the effect of--
(a) treating as capable of work any person who would not otherwise be so treated; or
(b) reducing the total amount of benefit that would otherwise be payable to any person,
it shall not apply in relation to that person.
(7) Subsection (1) above applies to--
(a) regulations made under section 171D of the Contributions and Benefits Act (incapacity for work: persons treated as incapable of work); and
(b) in so far as they are consequential on or supplementary to any such regulations, regulations made under any of the provisions mentioned in subsection (8) below.
(8) The provisions are--

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(a) subsection (5)(a) of section 22 of the Contributions and Benefits Act (earnings factors);
(b) section 30C of that Act (incapacity benefit);
(c) sections 68 and 69 of that Act (severe disablement allowance);
(d) subsection (1)(e) of section 124 of that Act (income support) and, so far as relating to income support, subsection (1) of section 135 of that Act (the applicable amount);
(e) Part XIIA of that Act (incapacity for work);
(f) section 61A of the Administration Act and section 31 above (incapacity for work).
(9) A statutory instrument containing (whether alone or with other provisions) a pilot scheme shall not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of each House of Parliament.").

The noble Baroness said: The welfare reform Green Paper, published just over a week ago, outlined eight key principles which guide our welfare reform programme. The first of these principles is that the new welfare state should help and encourage people of working age to work where they are capable of doing so. Thus, work is at the centre of our reform programme. For those able to undertake it, paid work is the surest route out of poverty and out of social exclusion.

A key element of our work-focused strategy is to tackle work disincentives. One group faces particular difficulties in a competitive job market, difficulties which include employer prejudice and physical access. I am, of course, talking about those with disabilities or who suffer from long-term illness. What is more, the benefit system often works in such a way that it discourages them from taking up work.

If we are to extend employment opportunities to disabled people we need to reduce the risk associated with taking a job; to reduce financial disincentives to make the move into work; and to offer practical help to those who want to take the first steps towards moving off benefit.

These are not just the views of the Government. We have consulted widely with disabled people and their representatives. Their aspirations are the same as ours. Many disabled people, given the right amount of encouragement and support, have the capacity to work. They have no wish to be consigned to a life of benefit dependency. Those who are capable of work want that option and they want a benefit system which supports them in that aim.

In his ground-breaking Budget earlier this month my right honourable friend the Chancellor of the Exchequer announced the Government's plans to bring forward a whole range of innovative measures to help people move from welfare into work and to make sure that work pays. This new clause supports that strategy and is one of the first steps towards our vision of a welfare state which extends opportunities to all. The clause deals with the circumstances in which a person is to be treated as capable or incapable of work. It introduces a new regulation-making power to allow for pilot schemes to be set up. These schemes will allow us to test the effect of less restrictive definitions of incapacity in order to improve opportunities for disabled people.

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At present if sick or disabled people do even a small amount of work or undertake work trials, they will normally lose entitlement to the incapacity benefits, making it more difficult for them to take the steps they want towards independence. This power will give us the ability to test different measures to determine which are the most effective in helping those sick and disabled people who wish to move towards the world of work to do so.

This is an entirely benevolent power which will enable pilots to extend benefits to those who might otherwise be excluded. It will not, however, allow trials which would have the effect of removing or reducing the benefit of those currently entitled. This important safeguard will ensure that the power can be used only in a beneficial manner.

It is our intention to use this pilot power to test out two work incentive measures from April of next year. The first will allow a disabled person to do a small amount of work and still retain entitlement to the incapacity benefits. We shall seek the views of disabled people as to what that level of benefit disregard will be. Our pilots will show us the effects of the limits we have set. However, it will be a modest figure. As I have said, we shall consult disabled people as regards how best to proceed.

The second pilot will allow for those participating in work trial schemes run by the Employment Service to continue to be treated as incapable of work. They would be able to work for a trial period of up to three weeks without leaving benefit.

These pilots will run alongside two further pilots to be set up under powers in the Employment and Training Act 1973. These will extend the jobmatch payments of £50 a week--which are payable for six months to those undertaking part-time work--and the jobfinder's grant of £200 to those on incapacity benefits. These initiatives--I believe they are important ones--are designed to encourage disabled people to do what work they can, even if that might be very little. They will also allow people to try a small amount of work as a stepping stone back into employment.

It is important to recognise that there is no question of compulsion in any of this. Every disabled person will continue to have a free choice as to whether he or she takes up part-time work or training to determine whether they can return to work without risk. What this clause will do is to ensure that, where a person decides to take advantage of these opportunities, the choice will be risk free. He or she can return to their previous benefit.

This measure is a modest but important part of the overall package of reforms to modernise the welfare state. It will enable us to test the effects of allowing people to undertake training or to try a small amount of work as preparation for a return to the labour market. It will allow us to assess the value of enabling those who will never be able to sustain regular full-time employment nevertheless to participate in the world of work.

Disabled people want the opportunity to work but the benefit system sometimes puts barriers in their way and puts the whole risk of moving into work onto their

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shoulders. This measure is part of our plans to break down those barriers and to remove those risks. I commend it wholeheartedly to the Committee. I beg to move.

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