---

Employment and Support Allowance Regulations 2008

My Lords, I am sorry to find myself debating the regulations today because, at the end of our lengthy debates on what is now the Welfare Reform Act, I thought that we had reached a balance between the Government’s policy aims of moving more people off benefit and into work and the concerns of disabled people and their organisations about the changes that would be made to their entitlement to benefit. I have to say that significant concerns have been raised about numerous aspects of the regulations. The Disability Benefits Consortium, the Child Poverty Action Group, the Disability Alliance and Leonard Cheshire Disability have all written to the Select Committee on the Merits of Statutory Instruments about them. In case noble Lords think that these are just the usual suspects where disability benefits are concerned, the list also includes Citizens Advice and the Chartered Institute of Taxation, both eminently reputable and objective organisations—not to say that the others are not, but noble Lords know what I mean. I cannot help but feel that this situation could have been avoided. During the passage of the Welfare Reform Bill, to their credit, Ministers were responsive to the criticisms made and gave reassurances both in your Lordships’ House and the other place that met the concerns of disabled people and their organisations. It is greatly to be regretted, therefore, that disabled people now feel that in these regulations the Government have gone back on those assurances. In particular, I say that with regard to the rates of the two components of the new benefit. Ministers in both Houses gave clear assurances that the rates of benefit for both components would be above the current long-term rate for incapacity benefit. When questioned about the rates at which ESA would be paid, the noble Lord, Lord McKenzie, who is with us today, said that, "““the basic allowance for someone on the contributory benefit or for a single person on the income-related benefit plus the work-related activity component will be higher than the current long-term rate of incapacity benefit, and those in the support group will receive a higher amount””.—[Official Report, 20/2/07; col. GC5.]" Yet from the regulations it is clear that the basic main phase rate of ESA for single claimants in the work-related activity group, at £84.50 per week, is exactly the same as the current long-term rate of incapacity benefit, not higher. If that is compared to the equivalent rates of benefit currently payable with income support with a disability premium, the rate is in fact £1.85 per week less for a single person on income-related ESA. The DWP told the Merits Committee that the Government did not accept that the rates that had been announced were incompatible with statements made to Parliament. It said: "““The rate of £84.50 for those in the work-related activity component is above the rate of long-term incapacity benefit, £81.35 per week, at the time the statements were made””." That is casuistry of the worst order. The operative words in that sentence are ““at the time the statements were made””. The important point to note is that the long-term incapacity benefit rate will have risen to £84.50 at the time the new allowance is introduced, and then there is the possibility of £1.85 on top. It is conservatively estimated that this will adversely affect 1 million people out of the 1.65 million currently receiving incapacity benefit. Those on contributory ESA will lose entitlement to age additions and additions for spouses. For example, under the current system, someone who became sick under the age of 35 on the long-term rate of incapacity benefit would receive £102.25. Under the new system, they will receive £89.50, a drop of £12.75. The losses for couples are even greater. A couple where the claimant became sick under the age of 45 on long-term incapacity benefit would receive £143.95. Contributory ESA will pay the same couple a maximum of £123.95, if the claimant is in the support group. But the vast majority will be in the work-related activity group and receive only £118.95. For the most severely disabled claimants, who have worked and paid NI contributions, the maximum payable under ESA is a good £20 or £25 a week less than under incapacity benefit. As the noble Lord, Lord Kirkwood, has told us, the Explanatory Notes to the regulations clearly state on page 9 that the new work capability assessment will be a tighter gateway than the present personal capability assessment, so that fewer people will become eligible for ESA, and the Government estimate that more than 90 per cent of ESA claimants will be in the work-related activity group. That will represent a significant saving to the benefits bill. Yet Ministers gave repeated assurances that the introduction of the ESA was not about saving money from the benefits budget. There are other serious concerns about related benefit entitlements for claimants on the contributory benefit. Citizens Advice has set out in great detail how claimants on a contribution-based ESA with no other income will lose out in terms of being passported to housing benefit, council tax benefit, free prescriptions and other health benefits, free school meals and much more. That is of great concern. Many organisations, including the RNIB—I declare an interest in that I am its chairman—welcomed the changes to incapacity benefit. Indeed, the RNIB welcomed the ending of registered blind people’s automatic entitlement to incapacity benefit. We welcomed it because we believe that, with the right help and support, blind people are eminently capable of working. However, we adopted that position on the basis that the Government would ensure that new claimants and current claimants in future moving from incapacity benefit to employment and support allowance would not be financially disadvantaged. I am now greatly concerned that blind and other disabled people will face a reduction in their income, even though they will be expected to take part in work-related activity. Again on this issue, I quote Jim Murphy MP, the then Minister of State for Employment and Welfare Reform in the other place, who responded to a Written Question from the honourable Member for Inverness, Nairn, Badenoch and Strathspey. That sounds like a row of old malt whiskies. He said: "““In the main phase of the benefit, the rate will be higher than the current rate of long-term incapacity benefit and the most severely disabled people will receive a higher rate still””.—[Official Report, Commons, 30/11/06; col. 863W.]" The Government speak of rights and responsibilities and of striking the right balance between duties on claimants and their right to a secure income that means they are free from poverty and able to meet their needs, but in these regulations the Government have failed to meet their responsibilities to provide claimants with a realistic income in return for new obligations to engage in work-related activity. They have a good record in extending the civil rights of disabled people, so it is a great shame that this record could now be damaged by regulations that will lower the income of disabled people who face significant extra costs because of their impairment, as well as some of the greatest challenges to gaining and retaining work. The income drop for some may appear small at around £1.85 per week, but for disabled people on fixed incomes, who face rapidly increasing food and energy costs, even a small drop in income can have a profound and serious impact and lead to poverty. I do not see how such a move can be compatible with the Government’s public service agreement targets, particularly Agreement 15, which covers disadvantage experienced by disabled people. I am also concerned that Agreement 9 on halving child poverty will also have a significant impact. It is known that, before housing costs are taken into account, 25 per cent of all children living in poverty are living with disabled parents. Removing income, however small, from disabled parents cannot make sense if the Government wish to meet their poverty targets. Lastly, I am concerned about the treatment of disabled students. The regulations stipulate that only students claiming the income-related ESA who also receive disability living allowance will be able to study full time. Again, this goes counter to assurances given during the passage of the Bill that current income support rules would continue to apply, with no additional requirement to be in receipt of the DLA. I hope that the Government will listen to concerns about these important issues and take the opportunity to reconsider the serious and justified concerns that have been expressed in many quarters. As the Select Committee on the Merits of Statutory Instruments says: "““The Regulations are complex and claimants may find it difficult to understand the operation of this allowance. The Government need to do more to explain how this system will work and to address the concerns of interest groups that are in a position to offer significant assistance in helping claimants understand the new system””."