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Lord Higgins: My Lords, as was the case with the previous regulations, I found the note prepared for the Joint Committee extremely helpful. As a result, I have very few points to make. I am grateful to the Minister for responding earlier to my points about those documents. I was slightly surprised that they did not appear to be in the Printed Paper Office, as I would have expected.

This is an optimistic and ambitious project, involving stimulating people to set up their own business, which is clearly a much more risky operation than simply finding a job. I understand why the Minister said that it may not affect many people. If I may express a personal view, the idea of test trading has something to commend it. However, what, roughly, does the Minister expect the cost to be per job, given that the risks involved are considerable? If the Minister does not have that figure, perhaps she can tell me the likely total expenditure on the operation.

Lord Addington: My Lords, I too have few points to make on these regulations. One concerns the incapacity pilot regulations. We welcome the

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recognition that there is an intermediate state between people who are totally incapable of working and those who are able to work. We thank the Government for that.

However, we feel that the IS limit on earnings which allows earnings without loss of benefit is far too low. The limit has not been updated since 1988; if it had been, it would be nearly £28. I hope that the Minister will bear that in mind for the future.

The Government said that they are determined to help people avoid the poverty trap. However, it would appear that the person who earns £15 while on incapacity benefit keeps it; but if that person earns £16 a week, they keep none of it. Surely that is an error in the nature of the regulations. I hope the Minister will be able to assist with an explanation.

Baroness Hollis of Heigham: My Lords, again I shall do my best to reply to the points raised. First, we are talking about the New Deal pilots for those over 25, not the IB regulations. Perhaps I have misunderstood the point of the noble Lord, Lord Addington.

Lord Addington: My Lords, I shall make a small admission. I am speaking on behalf of my noble friend Lord Russell. I may well have got that point wrong, and if so I shall withdraw it.

Baroness Hollis of Heigham: My Lords, it is an easy mistake to make at this time of the night when there are so many regulations. But the noble Lord's points were pertinent to the set of regulations rather than to specific ones.

The noble Lord, Lord Higgins, made the point--as we all accept--that self-employment is risky. As I say, some of the examples coming from young people--one became a tree surgeon--are very impressive. But my statistics indicate that 2 per cent. of the young people on the New Deal have gone into self-employment. I was asked what we might expect to see in similar circumstances. It may be double that, given the extra human capital of skills that older people, by definition, would employ. But the noble Lord is right; it is the niche market. However, for those for whom it is appropriate, it can be extremely rewarding.

We therefore do not have workings as costs per job as different people will be working for different periods. They will come off benefit earlier. Some will springboard off benefit for ever by going into work; others will come back in. We have allocated £129 million on the New Deal pilots for those over 25, but we will only be able to work out effective cost for a person in employment, without them going back on to benefit, when the scheme is well under way.

I believe those were the points raised. Again, if I have missed any, I shall write to noble Lords. I commend the regulations to the House.

On Question, Motion agreed to.

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Social Security (Incapacity, Earnings and Work Trials) Pilot Schemes Regulations 1999

11.47 p.m.

Baroness Hollis of Heigham rose to move, That the draft regulations laid before the House on 10th March be approved [12th Report from the Joint Committee].

The noble Baroness said: My Lords, the purpose of these regulations is to test two measures aimed at helping people with a disability or a long-term illness to try out work while remaining entitled to benefit payable on the grounds of incapacity.

These are the first regulations to be made using Section 77 of the Social Security Act 1998. This power allows beneficial changes to be made on a pilot basis which will give us the ability to test different measures to determine which are the most effective in helping people with a disability or long-term illness who wish to move towards the world of work. It allows us to learn from pilots what works and what does not and therefore offers us a learning loop which is denied us when we start out with the roll-out of the national scheme.

The regulations form part of a package of pilot changes which includes a £200 Jobfinders Grant and a £50 a week jobmatch payment--independent research suggested that those were two of the most effective measures in helping people back to work in terms of value for money. They were brought in using powers in the Employment and Training Act 1973.

Regulation 1 provides for the way in which the regulations are to be described and the period for which, subject to parliamentary approval, they are to have effect--namely, from April 1999 to April 2000--and interpretation of terms used in the regulations. I could describe what is meant by "pilot scheme", "pilot scheme period" or "pilot scheme area", but bearing in mind the lateness of the hour I shall not do so unless your Lordships request it.

Regulation 2 provides that the regulations will apply to people living in a pilot scheme who are receiving a benefit on grounds of incapacity from one of the pilot offices. Regulation 3 sets out the people to whom the regulations apply. Regulation 4 sets out the conditions for the first pilot we wish to test, the incapacity earnings provision. The current benefits system has been built on the principle that a person is entitled to benefit on the grounds of incapacity if they are, or are treated as, incapable of work. At the moment someone on incapacity benefit is not allowed to do any work at all unless it falls within one of the exceptional permitted work categories such as therapeutic earnings. This creates a considerable barrier to re-entering the labour market, making it a very big step for people to take up work. We want to test allowing people to do a small amount of work while receiving an incapacity benefit, so that they can take a more modest first step if they wish.

Under this pilot a person receiving an incapacity benefit will be able to do any work subject to a limit of £15 a week without losing benefit. The kind of situation we have in mind is where someone with a substantial learning difficulty may only want, or be able to work, two or three hours a week. As a result of this regulation such a person

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would be able to keep all of the earnings--unless he or she is paid extremely generously--up to £15 without it affecting their benefit. Whereas DWA rules kick in at, say, the 16-hour limit, we are talking about people who may be working for small periods of time and therefore for quite modest sums which nonetheless they will be allowed to keep under the £15 a week rule.

Regulation 5 provides for the second change to the benefit system that we wish to test. Under this proposal, a person will be able to undertake a work trial without losing benefit. Work trials are run under an existing Employment Service programme that allows employers to offer vacancies to clients on an unpaid basis for up to three weeks. This allows a client to see whether the job is suitable and allows the employer to evaluate the suitability of the jobseeker. During the trial the client remains on benefit and both they and the employer take part without obligation. Work trials are used for real, full-time vacancies where the job is expected to last at least six months. We know that there is a rather high success rate with these trials and that people are kept on.

Regulation 6 makes provision for people who, for whatever reason, move out of a pilot scheme area but who continue to do the work started under the pilot. In some cases it would have been unfair if they were forced to give up the work they had started. This regulation therefore allows for geographical mobility.

Regulation 7 provides that on expiry of these regulations a person can continue to benefit from the pilot measures for six more months. That allows for sensible planning of an end to the work if a person decides not to continue with it.

These two measures which I believe are entirely beneficial and which I believe will be widely welcomed are designed to give people claiming an incapacity benefit the opportunity to try out work without risking their position. We hope that for some people with a disability these measures will represent a real opportunity to take the first steps in moving from benefit into work. I hope your Lordships will support these regulations. I beg to move.

Moved, That the draft regulations laid before the House on 10th March be approved [12th Report from the Joint Committee].--(Baroness Hollis of Heigham.)

Lord Higgins: My Lords, I have only one point to make as there is something I do not quite understand. As I understand it, the programme allows employers to offer vacancies to jobseekers on an unpaid basis for up to 15 working days. I say 15, but the noble Baroness mentioned three weeks, and I am not sure which is the correct figure. No doubt she will tell us.

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