Welfare Reform Bill

Public Bill Committee, 31 October 2006.

Standing Committee A

Clause 14

Tim Boswell (Conservative, Daventry)

Good morning, Mr. Amess. It is a lovely morning and I think that we can make progress today. However, as ever, it is important that we at least question some of the small print.

When I see the word “directions” in a Bill, instinctively I smell a rat—if that is not an inappropriate thing to say—and at least want to question Ministers about why they use that word. In the spirit of making progress, I shall indulge the Committee with a brief anecdote: as a Minister, I remember having to make final decisions on whether schools should shut and saying to my private secretary, “Stalin died in about 1952. Some 40 years have now passed”—at that time—“and here I am, a Conservative Under-Secretary, being required by fiat to strike out with a pen the existence of a school”, albeit after a lot of consultation.

That was merely the preliminary to a substantive point, which is that Ministers and their officers and officials, as they know, need to act in accordance with the principles of judicial review and in a reasonable manner at all times. However, I am not saying that the Secretary of State or his officials should have no powers to issue directions in certain cases and, to be fair, the rationale for what is envisaged is set out in the explanatory notes.

In effect, the clause provides for the power to strike out a work-related activity if it is thought to be inappropriate for a person’s circumstances. However, I suspect that by the time that happened, relations between the personal adviser and the claimant or customer would have deteriorated badly, if the claimant had not been prepared to listen or were acting in ill-faith—a matter that we explored earlier—and went wild, as it were, or refused to do what was suggested. It is appropriate that Ministers take a moment or two to explain to the Committee the circumstances in which they envisage such a situation arising.

Will the Under-Secretary explain the relationship between that and an action plan? The purpose of the iterative process of interview is to establish capacity for work and the employment allowance. If unable to work, the person would attend a health assessment for work-related activity and an action plan would be drawn up. It would be useful if she could share with the Committee Ministers’ thinking on how divergences might arise, be monitored and then acted on under the terms of the clause.

I have some other administrative points to raisewith the Under-Secretary. First, I take it that the requirements would not apply to persons receiving the support allowance. I think that that is clear in the text because it is tied to clause 12, which I do not think applies to the support allowance, but it would be useful if she could clarify that. My second point is on the relationship with the payment of benefit. In effect, any direction under the clause would be saying, “Whatever the claimant is doing is not appropriate and does not count”. In normal circumstances, we cannot order people to stop what they are doing, but clearly the implied threat is the withdrawal of benefit. I am not clear on whether that would kick in retrospectively or only from the date of the notice.

Finally, in the spirit of my opening remarks, it is fairly clear that if that set of circumstances were to arise, relations already would have broken down. A formal notice of a decision by an officer on behalf of the Secretary of State would be a severe sanction in itself. It is quite important that if that then jolts people back to a sensible path forward, there is provision for advancing in a more constructive way. I presume that it would be possible at that point to rewrite the action plan or for the individual claimant to be able to make alternative proposals. I hope that, in normal circumstances, those will be considered in good faith and acted upon as soon as possible.

In conclusion, we have no absolute opposition to the principle of the provision; it may be necessary. It will, I suspect, be confined to a small number of cases, but it is important that any action taken under the clause is taken fairly. It should be properly documented and accompanied by the necessary input from the personal adviser into revising the action plan and involving the claimant in what they should be doing, as opposed to what is deemed to be inappropriate. However, the claimant should be able to make representations if they have not already done so and should be treated fairly throughout the process. I suspect that this can be done through regulations. Clearly it needs to be and we look forward to the Under-Secretary’s response.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

It is good to be in Committee again, Mr. Amess. In the spirit of the remarks of the hon. Member for Daventry (Mr. Boswell), I hope that we can make some progress today. I certainly will be working to achieve that. I am sad to say that once again, while the weather in London may be clement, the weather in the highlands is rather inclement, as it has been over the weekend. I am not sure whether that has much bearing on our proceedings, but I thought that it was worth starting with that observation.

I shall be brief. The clause gives Ministers the power to direct that certain activity does not count as work-related activity. Presumably such a direction would have to be issued retrospectively. In other words, someone would be carrying out a certain activity and the personal adviser would, for whatever reason, decide that it was not work related.

Tim Boswell (Conservative, Daventry)

I am sure that the hon. Gentleman is right in his interpretation, although we must wait for the Under-Secretary’s confirmation. One would hope that there was something of an iterative process in which the personal adviser rang up and said, “Are you sure that that is the right thing for you to be doing?” There would then be something of a dialogue and this directive procedure would be used very much as the last resort.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

That is the burden of the point that I was coming to. Clearly, the process of engagement that is set out in this Bill involves work-focused interviews, action plans being drawn up and a great deal of conversation and engagement with the claimant. The circumstances in which a direction would have to be issued to an individual—presumably such directions would be issued only in individual cases rather than generically, stating that a certain class of activity would not count as work-related activity—suggest that the previous steps in the process, for whatever reason, had not worked. There had been a breakdown in communication, a misunderstanding or the personal adviser or the contracted-out organisation would simply have chosen to issue such a direction. It would be helpful if the Under-Secretary could set out in a wee bit more detail the circumstances in which she foresees this power being used.

I would also welcome clarification on what rightsthe claimant has in response to such a direction. Presumably if someone has engaged in something that they consider to be work-related activity, made it clear to the officials that they regard it as work-related activity and are then told that the Secretary of State does not consider it to be work-related activity, they will have to do something else. In passing, I note that it seems that the powers here in relation to directions are quite different from the directions under the jobseeker’s allowance. Under the jobseeker’s allowance, directions can be made that the claimant must do something specific, whereas this direction is only to say that they must not do something specific, or if they do, it is not to count as work-related activity. I should be grateful if the Under-Secretary could clarify that.

There is thus the question about a claimant’s right of appeal or how they can challenge such a decision. Presumably if a claimant has carried on in good faith in the belief that such an activity is work-related, there must be a process by which they can engage in a discussion about the reasoning behind a decision notice being issued and the consequences of it. I look forward to the Under-Secretary’s response.

Adam Afriyie (Conservative, Windsor)

I have three or four brief points to raise with the Under-Secretary, which relate to the mandatory nature of work-related activity. The notes on the Bill state that when mandatory work-related activity is introduced, it will apply to most claimants in the work-related activity group. I want reassurance that we are not returning to the days of the workhouse when people were instructed to undertake certain types of work-related activity. I would be concerned about the state of mind of people in that position, especially those in vulnerable groups who have mental health challenges but who are not in the long-term support group.

My second concern is that the requirements placed on claimants will be further developed in the light of the pathways to work experience. Without the final report on that programme, which I think will be published next year, how confident can we be that the interim results will deliver the right types of new requirements that will be suitable for people in the work-related group?

Thirdly, I seek clarification on clause 14(3), which seems to allow the Secretary of State to vary or revoke retrospectively a determination of what is a work-related activity. I am always slightly wary of retrospective directions or determinations and I hope that the Under-Secretary will be able to reassure me in that respect or perhaps give an example of why the clause is in the Bill.

Tim Boswell (Conservative, Daventry)

My hon. Friend has healthy instincts about the arbitrary exercise of powers by Ministers. Does he also agree that officers or officials acting on behalf of the Secretary of State also need to be very competent in making those judgments and to seek the advice of others, including medical specialists, before jumping to conclusions?

Adam Afriyie (Conservative, Windsor)

My hon. Friend makes the point very well indeed that if a retrospective decision is made and it concerns a health-related matter, the experience and skill of the person making that judgment, which may be outsourced to a third party, must be considered very closely.

My final query relates to the last line of the notes, which states that it is envisaged that the proposal would be used only in very limited circumstances where a given activity was wholly inappropriate to the claimant. Could the Under-Secretary give an example from the existing pathways to work pilots of what those very limited circumstances may be, and what she would consider to be wholly inappropriate for the claimant?

Anne McGuire (Labour, Stirling)

I am pleased to be here again on a Tuesday morning under your chairmanship, Mr. Amess.

I can reassure hon. Members on all the points that they have raised in the debate. I was fascinated to hear that when the hon. Member for Daventry was a Minister, he immediately thought of Stalin; socialists tend not to think of Stalin.

Tim Boswell (Conservative, Daventry)

We could have a very interesting discussion outside the Committee on the psychology of whether people really found Stalin warm, caring and generally supportive. For the purposes of this argument, I need to put on the record that being a Stalinist was not in my view a term of approbation and certainly not for any Conservative Minister of the Crown and, I dare say, not for any Labour Minister of the Crown either, which is the point of my remark.

Anne McGuire (Labour, Stirling)

I am so glad I raised that point, so that we heard that explanation. It was a fascinating image and it sits at odds with the hon. Gentleman’s image, both in and outside this Committee.

I hope I can give hon. Members comfort on the points that they have raised because the clause permits personal advisers to rule that certain kinds of activity do not count as work-related activity in circumstances that will be set out in the regulations, when they are published. Those regulations will be subject to a separate vote in the House.

May I give the hon. Member for Windsor (Adam Afriyie) definite reassurance that we are not inventing either the workhouse mentality or the ethic of the workhouse? We cannot and will not direct a claimant to do a specific type of work-related activity. It is about getting the right support in place for the individual and, while I am sure Victorians may have thought they were providing the right support for those who went to the workhouse, I am sure many of us would agree that that was not the case.

I also reassure the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) that it is not a generic instruction. It is not about taking out of the equation a whole range of activities. It is very specifically related to an individual. I will come to some of the circumstances in order to give an indication of the sort of examples we think the clause may need to cope with.

We do not anticipate that the provision will be widely used or widely needed. As my hon. Friend the Minister for Employment and Welfare Reform and I have indicated throughout the Committee proceedings, and has been accepted by the Committee, we are seeking to take a collaborative and consensual approach with the claimant. We have proved through our pathways approach that by working with people we get more out of them in terms of the support they are willing not just to accept but to relate to. I think that that is very important.

The hon. Members for Windsor and for Daventry raised the issue of retrospection. I can confirm that subsection (3) of the clause enables a direction to be revoked or changed so that an activity that was designated as not being a work-related activity can subsequently be so designated. It is a positive subsection that is designed to recognise that work-related activity will be part of the action plan that will be agreed between the personal adviser and the customer. It may well be, however, that the customer does something outside the action plan that meets the requirement. It would be unfair to not give the credit for that work-related activity. The direction is separate.

Under what circumstances can the power be used? As I have said, we anticipate that the use of directions in practice will be rare. To give an example, a graduate in English may decide that a work-related requirement could be a basic English skills course. That would be totally inappropriate for someone with that level of qualification. It would perhaps have more to do with attempting to tick a box than to embrace work-related activity. Somebody may decide that they want to become a personal trainer. Again, given the individual circumstances, their qualifications and so on, that may not be appropriate and may be a recreational view of work-related activity. This is what I mean when I say that it is very specific to the individual and it is not about excluding all sorts of activity. I also confirm to the hon. Member for Daventry that clause 14 will not apply to the support group and I am pleased to put that on the record.

Many interim reports have been published on the pathways evaluation. We are learning all the time about pathways, but the predominant message we get from them is that if we work with individuals as individuals, we get a greater response rate, which means getting more people into work. The pathways approach may require some tweaking as the evaluations are produced, but it is recognised as an individual-focused support for people who are long-term unemployed or who may never have been employed at all.

Jeremy Hunt (Conservative, South West Surrey)

We all agree that there are circumstances in which the work-related activity programme needs to be varied, but I do not understand why it cannot be varied under the regulations in clause 12(1). Will the Under-Secretary provide specific examples of situations in which work-related activity could not be varied under clause 12, thus making clause 14 necessary?

Anne McGuire (Labour, Stirling)

I hoped that I indicated that clause 14 should act as a backstop in situations where people are not prepared to engage in activities that are supportive of their search for employment. Clause 12 deals with all sorts of other circumstances. Clause 14 will allow us to deal with specific and, I hope, very rare situations: I gave the example of someone with an English degree thinking that they could tick the box by doing a work-related activity that would not be appropriate for them, although it may be for another individual.

Various hon. Members asked for reassurance on directions and whether there will be a right of appeal. I can confirm that any directions made under the clause will be subject to an independent right of appeal. Furthermore, if a customer were sanctioned for undertaking an activity that was not treated as a work-related activity under clause 14, they would have a separate right of appeal under clause 12.

Clause 14 is necessary to ensure that there is flexibility on the ground to deal with customers undertaking inappropriate activity. It is not intended to force people into a specific activity, but rather to retain the right to deem a particular activity non-work-related, due to the circumstances of the individual and his or her action plan.

Adam Afriyie (Conservative, Windsor)

On a point of clarification, does the hon. Lady have an example from the pathways to work pilot of something that would have been outlawed or was determined as a non-work-related activity?

Anne McGuire (Labour, Stirling)

The hon. Gentleman may have to be patient until we have seen some of the final evaluations of the pilot. If I come across an example during our proceedings that would meet his requirements, I will advise him of it. I hope that I have indicated the type of example that we would expect to occur. I reiterate that we do not anticipate using the clause to a great extent, but it is important to deal with any situation that may arise, although we hope that it will not.

Tim Boswell (Conservative, Daventry)

I am grateful to the Under-Secretary for her response; its spirit is impeccable. Just as my hon. Friend the Member for Bury St. Edmunds banished the term “scroungers” from the Committee, we may thank her for encouraging us to banish the term “Stalinism”. We will put them in the same category.

There are two points that I would like to come back to. The first is supportive of the Under-Secretary and relates to the helpful exchange that she had with the hon. Member for Inverness, Nairn, Badenoch and Strathspey. It is important that officers are qualified to take decisions and offer advice where appropriate. She did not mention advice but I will take it as being implicit—I see that she is nodding. However, officers must not fetter their discretion in any particular case.

The Under-Secretary gave the example of an English graduate. It might be regarded as inappropriate if such a person decides that they must do an English foundation course. However, I can imagine a circumstance in which such actions might be entirely appropriate, such as if, say, the person had suffered a stroke and needed to recover. That is the kind of flexibility that we need. We are not arguing about that.

One specific issue that the Under-Secretary did not cover—I do not want to press her into making an immediate decision—relates to the interaction between clauses 12 and 14. Clause 14 is, as it were, dependent on clause 12. If a person were deemed not to have been carrying out work-related activity, and then a direction was issued, would that person’s benefit be impaired for any time before formal notification? A person may have been acting in good faith. The personal adviser may even feel that what is being done is harmful to the interests of the individual and that it ought to stop as soon as possible. Assuming that there is not some dumb insolence at work, it seems to me that there is a potential disadvantage in somebody suddenly getting a note slammed on their desk saying, “What you are doing is inappropriate, and you have lost your benefit from the start.” Bad relations with the personal adviser may further complicate such a case.

My reading of clause 12(1) is that it relates to “continuing to be entitled” to benefit “to the full amount”, and that before a direction is issued, it would therefore be impossible to dock that benefit retrospectively, although that may happen after the event. However, the Under-Secretary will need to pay attention to that matter before the regulations are defined.

Anne McGuire (Labour, Stirling)

I obviously recognise the point made by the hon. Gentleman. In many respects, he answered his own question by referring to the development of the regulations, which will be subject to a vote in Parliament.

I also thank the hon. Gentleman for his supportive comments. The example that he used finessed mine. He pointed out circumstances in which it would be wholly appropriate for an individual to take on a work-related activity that may not, on paper, appear to be so. However, through the approach of the personal adviser, such a course of action could be deemed wholly appropriate.

Clause 15

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I beg to move amendment No. 40, in clause 15, page 12, line 38, leave out paragraph (c).

The amendment relates directly to the previous debate on the powers proposed in clause 14. The amendment—a probing amendment designed to elicit more details about the Government’s intentions—seeks to delete the provision that allows contracted-out parties to carry out functions under the clause in making the sort of directions discussed previously.

By way of a preamble, let me say that I welcome the Government’s general approach to contracting out. There is an enormous amount of evidence, from a variety of organisations. I have mentioned them before, but I do not apologise for mentioning them again. There is the SHIRLIE project in my constituency, right the way through to national providers. I have visited the Working Links project in the Parkhead ward, Glasgow, a tremendous neighbourhood scheme not only for people on incapacity benefit, but for a range of people who find themselves excluded from the labour market.

The Government’s approach is absolutely right: it makes use of skills and experience in the private and voluntary sectors to deliver the kind of back-to-work help that the Bill proposes. I must say, in passing, that it is a shame that the Government have not gone further. In our previous sitting, we discussed the fact that although 60 per cent. of pathways areas have been led by contracted-out parties, 40 per cent. are still led by Jobcentre Plus. I hope that Ministers may review that split in a few years’ time, once the schemes have been rolled out and have been seen to work. Such a review could be conducted on the basis not of the views of Jobcentre Plus staff about their own performance, but of an objective assessment of the performance of different contracted-out parties.

The area of controversy in this clause is the degree to which the powers in earlier clauses, particularly those relating to conditionality, should also be given to the contracted-out parties, the voluntary and private sector organisations that carry out this work. Later amendments will draw particular attention to the powers that relate to sanctioning, so I will not burden the Committee with them at the moment. The powers in clause 14 allow the Minister to make directions about what may or may not be counted as work-related activity. We want to probe the Government’s intentions on the provision that would allow contracted-out partners to make those same directions. Contracted-out organisations could make directions to individuals about what should or should not count as work-related activity.

Can the Minister clarify the circumstances under which private and voluntary sector organisations will use that power? What mechanisms of accountability will be in place to ensure that people can complain or appeal if necessary against such directions? Will that complaint or appeal be to the organisation to which that work is contracted out, or will they have a right of redress to Jobcentre Plus or another Government body? The Bill allows for powers to be exercised differently in different localities. The city strategy was mentioned by the Minister in previous debates. Will the claimants who have been subjected to a direction under clause 14 by a contracted-out party, which may be different from a similar direction issued in another area of the country, have the power to appeal? We have already had a debate on the powers and I look forward to the Minister’s response.

Jim Murphy (Labour, East Renfrewshire)

I am delighted to see you in your place again on this warm and sunny morning, Mr. Amess. The hon. Member for Inverness, Nairn, Badenoch and Strathspey has already alluded to the weather; we seem to have a running commentary on London’s weather in this Committee. I am comfortable with that. If he ever wishes to move away from carrying the burden single-handedly of his whole party in this Committee, he may apply for the job of BBC weatherman. I note that on Thursday morning when talking about looking forward to going home to Inverness he said:

“I will be confronting storms, snow, ice and all sorts of other things when I return to my constituency this evening”—[Official Report, Standing Committee A, 26 October 2006; c. 233.]

Anyone who lives in the northern part of this kingdom and saw the TV coverage over the weekend will know that that was an understatement.

It is a bright and happy morning for another reason. The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Stirling (Mrs. McGuire), has reason to celebrate because she became a grandmother for the first time over the weekend. She is a very young grandmother to a baby girl called Orla. I congratulate her on that fantastic news.

Tim Boswell (Conservative, Daventry)

May I relay a message from the Opposition to say that those of us who already have the privilege of being grandparents welcome the Under-Secretary of State to the club? It is one in which all parties may join with equal delight. The only amazement in my mind is that she could possibly have qualified for it.

Sir David Amess (Conservative, Southend West)

Order. Perhaps I might be allowed, on behalf of the whole Committee, to express our pleasure that the Under-Secretary of State has become a grandmother.

Jim Murphy (Labour, East Renfrewshire)

I did not think that I could be outdone in my obsequiousness to my hon. Friend. I am sure that young Orla, as she grows up, will be given a transcript of these proceedings as a keepsake. I hope that it does not have too much of an impact on her in later life.

I shall deal with the points raised in the probing amendment, but first I thank the hon. Member for Inverness, Nairn, Badenoch and Strathspey for his comments about the Government’s general approach to contracting out, which we will have an opportunity to discuss in more detail later in the clause. He is right in saying that it is important that we harness the creativity, skill and experience in the private and voluntary sectors as we roll out pathways and other labour market interventions and welfare to work services. It is increasingly important that we utilise the capacity in the private and voluntary sectors.

On the probing amendment, we believe that, in the contracting out of such services, private and voluntary sector organisations should be given the full range of tools available to help and encourage people into the right kinds of training and support. Through the experience of Jobcentre Plus and Jobcentre Plus-led pathways, we know that personal advisers can strike up a close working relationship with the customers that they advise.

It is important that we retain the power in clause 15 because the detailed knowledge of customers’ circumstances and support needs and other inside information that the personal advisers can obtain and reflect on, puts them in a strong position to make a decision on whether a particular work-focused activity would be ineffective or inappropriate for their customer. That applies whether the personal adviser works within the Jobcentre Plus or private and voluntary sector pathways.

The decision to apply a direction in itself will not lead to sanctions. It is important to put that on the record and I think that my hon. Friend the Under-Secretary of State alluded to it earlier. The decision to apply a direction is completely separate and has separate appeal rights. Removing the ability of personal advisers employed by contractors to apply directions would place an administrative burden on the contractor and Jobcentre Plus requiring further complicated hand-offs and transfers of information, which would delay decision making and increase the chances of mistakes. So it is important that we have that consistent process from end to end.

Of course, we will need to ensure that such directions are applied consistently and fairly and we will work with providers to ensure that that is indeed the case. Furthermore, regulations will set out clearly exactly when directions can be used, but it is in the best interests of claimants that directions be applied by the organisation that has day-to-day dealings with them.

We note the hon. Gentleman’s comments on the right mix of Jobcentre Plus and private and voluntary sector provision of pathways. That is part of a continuing conversation on the right mix between public sector-led and private and voluntary sector-led employment programmes. We do not have a dogmatic approach and will review the evidence on the most effective ways in which to support people to enable them to return to the labour market. Jobcentre Plus-led pathways have been successful. We anticipate that roll out in the private and voluntary sectors will use available capacity and that could be even more successful.

Tim Boswell (Conservative, Daventry)

Without prejudice to the Minister’s remarks, or indeed to the views of my colleagues, will he reassure the Committee that if, for some reason, there were a deficiency in the private sector provision—I am not talking so much about the quality of the provision, but actioning the applicants who come forward—the Government would introduce those programmes throughout the country, if necessary by additional public provision? For the avoidance of doubt, I am not canvassing that, but talking about a fall-back power if 100 per cent. coverage were not possible.

Jim Murphy (Labour, East Renfrewshire)

The hon. Gentleman raises a reasonable point. Jobcentre Plus would also be there as the last resort to manage market failure, but it would genuinely have to be the last resort, because we anticipate that a more appropriate first, second and third line of management would be through stringent contract management, continuous assessment of management information, penalties that can be built into the contracts, and terminating contracts and awarding them to others. The situation that he outlined is a possibility as a final and last resort, but only if everything else has been tried.

I hope I have reassured the hon. Member for Inverness, Nairn, Badenoch and Strathspey and that he will therefore ask leave to withdraw his probing amendment.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

The Minister has amply clarified the Government’s intentions and I beg to ask leave to withdraw the amendment.

John Penrose (Conservative, Weston-Super-Mare)

I beg to move amendment No. 243, in clause 15, page 12, line 38, at end insert—

‘(1A) No person may be authorised to exercise the functions specified under subsection (1) unless he has demonstrated such understanding of disabilities or health conditions, and of the employment support needs of persons whose capability for work is limited by their physical or mental condition, as the Secretary of State shall by regulation require.’.

I start by not living up to the tradition of the Committee and making an observation on the London weather. In my constituency, Weston-super-Mare, the sea is always clear and blue and so is the sky, and if anyone would like to visit for a holiday they will be very welcome.

David Ruffley (Conservative, Bury St Edmunds)

That is his local press release.

John Penrose (Conservative, Weston-Super-Mare)

There we are; I’ve been spotted.

The purpose of the amendment is clarify the proposal and, most importantly, to emphasise the importance of the quality of the individuals and organisations that will have contracts with the Government, and to probe how the Government plan to contract with those organisations to ensure that there are enough individuals and organisations of sufficient quality—a proper supply—with whom to enter into contracts. How the Government behave in their commissioning process will have an enormous effect, either constructive or destructive, on the availability of people who have the necessary skills and qualities to deliver the services we are discussing.

It is worth while pausing to reflect on how complicated that commissioning job will be if there are to be enough people of sufficient quality to deliver the services. For a start, the range of conditions that have to be catered for is enormous: it varies from people with mental health conditions to those with severe physical disabilities and everything in between; geographical variations throughout the country also have to be dealt with. The local employment market in Weston-super-Mare may be hugely different from that in Glasgow, Doncaster and elsewhere, so the ability to find suitable work-related activity for people in each area will also vary enormously.

The variety of organisations that have to be contracted with is enormous, too, which makesit even more difficult. It varies at one end of the spectrum from large private organisations such asReed in Partnership and WorkDirections, through comparatively large and extremely successful third-sector organisations such as the Shaw Trust, right down to myriad highly successful, very small local organisations that often focus on a particular niche in a local employment market.

Adam Afriyie (Conservative, Windsor)

Does my hon. Friend, who, like me has experience of the private and voluntary sectors, share my anxiety about what would happen if one of the service providers were to get into difficulty? There may be hundreds if not thousands of claimants dependent upon that organisation. My concern is what the Government and the Secretary of State would do in response to such a failure when the well-being of thousands of people is at stake.

John Penrose (Conservative, Weston-Super-Mare)

That is a fair and cogent point. There are powers elsewhere in the proposal to deal with some of those issues in extremis if necessary. I am sure that the Minister will respond to the point as he is nodding at me, which will prevent me from having to ask the same question.

The range and complexity of the supply market is great. That makes clear the difficulty faced by any commissioning organisation run by the Government in stitching together a full range of high-quality supply in all areas of the country to satisfy all the different employment local markets and to cope with all the different incapacity problems and conditions which have to be dealt with as part of this Bill.

A year ago this was proving so difficult that it was extremely problematic. I know the Minister will tell us that things have improved significantly since then but I think it is worth while pausing to note some of the comments made by some of the organisations with which the DWP was contracting. A number of them came to give evidence to the Select Committee on Work and Pensions on 18 January and I would like to put on record a couple of the comments that give a flavour of the scale of the problem between the Government and the organisations they were contracting with just a year ago.

For example, the representative of the Association of Chief Executives of Voluntary Organisations, Stephen Budd, said to the Select Committee:

“The good news is that the procurement process is so bad that even small changes would be very effective.”

He went on to say:

“The effective price is not based on full cost recovery. There is excessive bureaucracy and the contract is almost always one year.”

“Those contracts are not effective so it costs the taxpayer money. They are not efficient in terms of their outcomes and, if you changed the contracts, you could get better quality outcomes. They are a nightmare for organisations to operate and also excessive bureaucracy has a cost back on the Civil Service.”

Jeremy Hunt (Conservative, South West Surrey)

Does my hon. Friend agree that one of the most critical problems in these contracts has been their length? If we have short contracts, for example, a one-year contract, the management of the private or voluntary sector organisation have to spend most of their time and most of their effort trying to re-secure the contract for subsequent years, which is where all their money is coming from. Will he join me in urging the Minister to listen to the feedback about the length of contracts, so that we have more realistic periods of time?

John Penrose (Conservative, Weston-Super-Mare)

I agree with my hon. Friend’s characterisation of the problem. However, that has an impact not just on the contracted organisation, but on the commissioning organisation, which has to spend an enormous amount of time dealing with the yearly rollovers as well. It is, therefore, a problem on both sides of the fence.

To illustrate the last point, Mr Budd went on to reveal some results from a poll of members of his organisation who were involved in DWP contracts. They were asked whether contracts were fairly priced and 62 per cent said no. They were asked whether the contracts involved a fair sharing of risks between the Government and the contracting organisation and 92 per cent said no. They were asked whether there was excessive bureaucracy and 93 per cent said yes. To answer my hon. Friend’s last point, they were asked whether the contracts were long enough and 71 per cent said no.

The killer was the final question about the number of people of sufficient quality for the Government to contract with. Those organisations were asked whether they had to close some services in the past two years as a result of contracting with the DWP. Two thirds said they had to do that.

There was also the Centre for Economic and Social Inclusion, whose representative, Dave Simmons, said on the same day to the Select Committee:

“There was a general, almost institutional, lack of trust between Job Centre Plus and its providers. This was exemplified in an almost over-specification of ‘this is exactly what you must do at this time’.”

He went on to say:

“Job Centre Plus needs to step back from that command and control mentality and they need to start thinking about who their supply chain is and not take them for granted. If a big company treated Job Centre Plus customers in the same way, there would be all hell to pay.”

His final comment was:

“I think Job Centre Plus and other funding bodies have yet to realise the strength of these organisations and that they should be using them in partnership and not in a directive way.”

That illustrates the difficulties that have obtained. I know the Minister is going to give examples of changes that have improved the situation, but it is instructive to realise that, for the reasons I have given, the commissioning job is extremely complicated and will require a great deal of care and attention in order to deliver the universal services, varied for people across the country, that will be required.

Tim Boswell (Conservative, Daventry)

I have been very taken by the examples my hon. Friend has quoted and the evidence given to his Committee. It would be helpful if the Minister could say a word or two about the way in which the procurement function in his Department has been changed—there is a director of procurement who seems to have cleaned things up to some extent—but particularly in relation to contracting with the private sector, which is cardinal for the whole success of the policy?

John Penrose (Conservative, Weston-Super-Mare)

I thank my hon. Friend for giving me a great lead into my next points. It is vital to look at how things need to change and what best practice should be. I hope that the Minister can give us examples both of what has happened since the period to which those quotes referred and what he expects to happen in future. We are dealing with a complicated situation, yet we have a series of commissioning decisions and activity that, at their worst, seem to be better suited to a commodity market, where things are primarily decided on price, rather than on the quality of the service and the variety of the service being provided. It also seems better suited to a series of large providers which can cope with the bureaucratic demands that are being made upon them and are big enough and serious enough to be able to stand toe to toe and eyeball to eyeball with an organisation of the scale of the Government in a contracting negotiation.

Clearly that is not the sort of organisation that we have—I have just described some of them. Many are led by inspirational individuals, employ five or six people and focus on, for example, dealing with the employment problems of people who are partially sighted in Doncaster. That set of behaviours has to change if the Government are to achieve their central aim of developing capacity and the ability of the organisations that are providing those services to grow and to provide yet more services in future.

The Government have already accepted the notion that there is not sufficient capacity out there atthe moment. They have said that they will have the equivalent of a mixed economy in that they are expecting to provide some services in future via contracting and contracted-out organisations. At least to start off with, a proportion of the services will be provided by public sector employees in the same way as the pathways to work pilots have been. That is an acceptance of reality and makes enormous sense.

If the Government want to expand the amount of contracting at any point in future, they cannot do so unless they have taken the necessary steps to improve their commissioning to build the capacity of those other organisations. That will mean satisfying some of the proposals contained in a report from Oxford Economic Forecasting in late 2005 commissioned by the Employment Related Services Association. It made several recommendations. It said that, when contracting with people, the DWP should avoid overly short small contracts and protracted decision making, that it should allow sufficient time for implementation and that it needs to rebalance the risk between procurers and providers. I would add that it is probably vital, if we are to grow capacity, that contracts are priced fairly. We are talking about public sector money and we have to get value for money. Care needs to be taken that we are not pricing things at the marginal cost. They need to be at full cost if we expect any of these organisations to grow successfully.

David Ruffley (Conservative, Bury St Edmunds)

I am enjoying my hon. Friend’sspeech. The Oxford Economic Forecasting report commissioned by ERSA and others made one other startling observation which concerns the public sector procurement process. It gives examples where a contract is put out to tender and once it has been accepted contractually the terms are changed. Quite often these are small, not-for-profit organisations or charities that accept the conditions from Jobcentre Plus. Because of Jobcentre Plus’s monopoly position, they have no choice but to accept what is a contractual variation after they have accepted a bid. Does my hon. Friend agree that that kind of nonsense must be stamped out in order to protect small private and voluntary sector bodies?

John Penrose (Conservative, Weston-Super-Mare)

My hon. Friend is absolutely right. That illustrates the perils of changing contract terms after the contract has been signed and the problems of dealing with a fragmented supply base that includes some larger organisations capable of negotiating with the Government and saying, “That is not an acceptable way to behave and we will not put up with it”. They can do that because they are large enough to cope with a negotiation of equals, but a small organisation led by one or two charismatic and highly able people in a particular local market is not able to do so and ultimately we will be driving them out of business. We will all be the poorer for it.

Tim Boswell (Conservative, Daventry)

In support of my hon. Friend’s point, does he not agree that it is not in the interests of the public department involved, whether the Department for Work and Pensions, Jobcentre Plus or any other, to set up an equivocal contracting process? In fact, those bidding for a position for contracts, including the larger sophisticated organisations, will have to factor a very substantial premium into their bidding to cover the contractual risk.

John Penrose (Conservative, Weston-Super-Mare)

That is another good example of the problems that the industry was facing just a year ago.

I hope that the Minister is going to tell us that a number of things have been done already or are about to be, such as longer contracts, more careful sharing of risks and rewards between the Department and the people being contracted with, a specification not of process, but of required outcomes and stability of contract. Those sorts of things are essential.

I understand that steps have been taken to put some of those things in place. For example, when giving evidence to the Select Committee, the permanent secretary, Mr. Lee Lewis, said that he felt that the Department was creating a new cadre of specially trained commissioners with the specific skills required to achieve such things. He was good enough to accept that the skills required for buying or commissioning are not ones that perhaps are traditionally found in the civil service, that it is a departure needing a new set of skills and that the Department was having to develop that.

Mr. Lewis mentioned also prime contractors, which are potentially an extremely effective way in which to simplify some of the difficulties created by the fragmentation of the organisations that have to be contracted with. A prime contractor can subcontract specific types of condition that need to be dealt with or entire geographical areas to other people and smaller organisations in an attempt to get the right mix and variety of provision.

Jeremy Hunt (Conservative, South West Surrey)

Does my hon. Friend agree that one of the problems with the contracts issued by the public sector and the DWP is that inevitably there is a huge focus on price? That is absolutely scientific and therefore the people issuing the contracts have to pay attention to that and worry that, if they give a contract to someone who is not the lowest-priced provider, their decision could be questioned. On the other hand, in the business world, businesses have greater flexibility to give contracts to those that might not be the cheapest, but are the best. Sometimes, public sector contracting processes do not reflect the flexibility in the business world.

John Penrose (Conservative, Weston-Super-Mare)

I agree completely with my hon. Friend. That goes back to the point that I made about the necessity of not behaving as though this is a commodity market between large consolidated suppliers providing something on the basis of lowest price. We are talking about hugely varied organisations providing hugely varied services. Quality is key and if we do not have the highest possible quality of service, the results will not follow.

Prime contractors will potentially simplify the contracting process dramatically and allow some of the smaller contractors to live with the deal done with an enormous Government Department and to develop their ability to provide those services over time. The danger is that in moving to prime contractors—simplifying the commissioning process and having the ability to stitch together a universal set of varied provision in different parts of the country, taking account of all the relevant conditions—we will shift from a public sector local monopoly to a private or a third-sector local monopoly. Can the Minister reassure us that that will not happen? Will he also please tell us how the Government plan to ensure that there is sufficient accountability and tracking of results, so that we do not end up with monopoly provision and supply in those areas?

Where the Department for Work and Pensions is operating the mixed economy and public sector employees and third-sector or private sector organisations are delivering some of these services, perhaps next door to each other, it is important to know that the different organisations will be treated equally. There should be a level playing field for public sector organisations and private or third-sector organisation providers. If that is not the case, the contractors cannot be sure that they will be given a fair crack of the whip relative to the public sector organisations that will also provide the services. It will be extremely difficult to persuade them to step up and enter into these contracts if they feel that they are the least-favoured organisations and that there is a preferable in-house deal that others will get. It is vital that we have reassurance from the Minister on that point.

I shall now return to the point about pricing made earlier by my hon. Friends: how can we be sure that we obtain not just the best-value price, because we are dealing with public sector money, but that we provide enough of a price for these organisations, many of which are extremely small, to grow and to provide effective services across a wider range of areas, building on their existing geographical base? How can we be sure that they will get enough money to develop in that way rather than being asked to set a marginal price or have the terms of their contracts changed, and therefore have resources sucked into unproductive work instead?

We seek clarification and reassurance from the Minister because if these things are done properly, there will be many more high-quality organisations to contract with. The people who are being helped through work-focused activities do not care whether something is done by a public sector employee, a private sector employee or a third-sector employee; they just want to know that the service they get, by whatever route and whoever delivers it, is of the best possible quality and stands the best chance of getting them closer to the world of work.

David Ruffley (Conservative, Bury St Edmunds)

I will avoid any meteorological references in welcoming you to the Chair, Mr. Amess. I want to focus on the meat of amendment No. 243, the purpose of which is to ensure that contracts for the delivery of assessments and work-focused interviews, among other things, are awarded only on condition that the contractors, whomsoever they may be, have relevant knowledge of disabilities and health conditions that may affect the customer and the general employment support needs of the client groups. The interests of the work-related activity group and the support group must be protected and the amendment goes some way to delivering that objective.

Without the safeguard in the guts of the amendment, some contractors delivering key elements of the Bill might not have as much expertise in disability, health or employment support as the Committee, Ministers and customers would wish. The amendment would ensure that potential contractors would have to demonstrate, at the phase of tendering for the contracts that are the subject of the clause, an awareness of, and expertise in, the issues to which we have referred—both employment and health and disability. The Government would use that knowledge to come to the best decision as to who should be given the contract. Unless we get that right, it will not just be bad public policy and bad for the taxpayer but, worst of all, it will be bad for the customers.

We must ensure that the contractors are of the very highest quality. They will all be coming to the process wanting to deliver a good service for the Government, and not to fail commercially. However, it is not clear to me, after all the negotiations and discussions that I have had with the private and voluntary sector, that the contractors are of uniformly high quality. The amendment would raise the bar.

My hon. Friend gave some of the commercial issues behind the thrust of the clause a good airing, but can the Minister explain how his officials, when they award the contracts in the pathways roll-out and beyond, will ensure that the expertise in health and employment support is there? I do not think that it is good enough to say that the market will decide.

The market is a powerful mechanism to ensure that those who are not much use at doing things fail, and that those who are good at what they do succeed. However, I would not take a risk with the lives of customers who are looking for support and help to get back into work. To put it bluntly, there might be some cowboys out there. The procurement process will clearly weed out quite a lot of the weaker brethren in the private and voluntary sector, who are weaker in the sense that they do not have enough expertise in particular conditions. Obviously, that is what Ministers will want to achieve, but I do not see anywhere here how to tackle the problem of procurement, which the amendment tries to do.

We heard a lot from my hon. Friend the Memberfor Weston-super-Mare (John Penrose) about the inadequacies of procurement, and I do not blame the Ministers full-square for that, because DWP officials and Ministers are undertaking a learning process. They are to be congratulated on the proposition that there should be more contracting out to not-for-profit organisations. It is done now, but we are talking about a huge expansion in for-profit and not-for-profit organisations delivering services. We welcome that, but it is not immediately clear that the safeguards are there, In that spirit of honest probing, can the Minister say something about how specific expertise is going to be built into the tendering process, so that we can all have comfort that the market will not run riot, and that the interests of those most in need of protection are safe?

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

It is a particular pleasure to follow the hon. Member for Weston-super-Mare, who made an intelligent and thoughtful contribution to the debate. I wish to add a few points to those that he made. The hon. Member for Bury St. Edmunds (Mr. Ruffley) made it clear that the amendment would ensure that people who come forward, wishing to provide services through the contracts that may be issued by the Department, would have a sufficient level of knowledge and expertise in the subject that they are being asked to deal with. However, it is equally the case that the willingness of such people to come forward to offer themselves to carry out the contracts will depend, to some extent, on the issues aired in the contribution of the hon. Member for Weston-super-Mare. Those included the structure of the contracts and their length of time, as well as—I do not think that this point has been raised and I wonder whether the Minister could address it, given that we are talking about contracts—the extent to which he sees contracts focusing specifically on job and other outcomes related to different stages in the process, and how organisations dealing with people requiring assistance for a very long time will get paid for carrying out that work.

I have visited a number of organisations in the private and voluntary sectors carrying out the sorts of functions that we are debating and I have observed that those with a number of funding sources and contacts with a number of organisations have a great deal more flexibility in carrying out their functions and therefore, in many cases, get better results than those subject to a single contact with the DWP, which lays down very specific and often quite onerous obligations. That limits the freedom of action for the private and voluntary sectors to contribute.

In the Minister’s remarks on an earlier amendment, he rightly made the point that the Government wish to capture the innovation, imagination and dynamism of many of the best private and voluntary sector providers. It is important therefore, in order to encourage the best people to come forward and deliver the services, that the contracts are structured in a way that allows that spirit of innovation and imagination to flourish and does not restrict it through specific obligations in the contracts. That is an additional point to the one made earlier.

I was interested also in the points that the hon. Member for Weston-super-Mare made on prime contractors and subcontracting. That is particularly important because, in many communities, local organisations are best placed to deliver such services, rather than the generic national providers who might move into an area. I hope that the Minister will say something about how those who are best qualified for the work will be encouraged through the subcontracting process and about the steps that he will take to ensure that smaller organisations with the expertise referred to in the amendment will come forward to take part.

Adam Afriyie (Conservative, Windsor)

Does the hon. Gentleman share my concern that, as well as competition for provision of services to claimants, there will be competition in the market for suitably qualified staff? Does he share my concern also that staff might be poached from Jobcentre Plus to work in the voluntary and private sectors, which could create additional pressures on the system?

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

This debate elicits some remarkable comments and I think that that counts as one of them. The hon. Gentleman, who sits on the Conservative Benches, seems very concerned about the implications of competition. Although an unanticipated intervention, it is welcome because it was an important point. Of course, it is important that an individual can work for any organisation and if a better job turns up, they should be free to apply for it. Indeed, if a private or voluntary organisation is delivering services more effectively than Jobcentre Plus, I hope that the best people would go and work for that organisation, rather than for Jobcentre Plus. I hope that the contracting methodology would allow the Minister or the Department to look at Jobcentre Plus-led areas to determine whether it is doing the job properly and ask whether we wish to use the powers in the clause to invite private and voluntary sector organisations to come forward if we think that they might do a better job.

Adam Afriyie (Conservative, Windsor)

There is absolutely no question about that; people should be free to work where they choose. However, let us say that Jobcentre Plus is offering better terms and conditions than the voluntary sector, which begins to lose staff to Jobcentre Plus because of an uneven playing field in the recruitment and terms and conditions market due to the former’s greater resources. That is my concern. In the set-up phase of a national roll-out, there would be concern about staff movement. Will they move so quickly that services to claimants, about whom we care, are affected?

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I am grateful for that intervention and, with your indulgence, Mr. Amess, it is a point worth developing. I have visited a number of private and voluntary sector organisations and also Jobcentre Plus, and it is not my experience that Jobcentre Plus offers more advantageous terms and conditions for personal advisers than, for example, private and voluntary sector providers. In fact, I think that is not usually the case. [Interruption.] I think that the hon. Member for Daventry says from a sedentary position that £12,000 a year is the starting salary for a personal adviser. Perhaps the Minister can confirm if that is correct.

Tim Boswell (Conservative, Daventry)

I was muttering that and I am glad that the hon. Gentleman has brought that point to the attention of the Committee. Does he not agree that it would advance the sum of our deliberations if we slightly got away from the model in which everything was absolutely in the public sector or absolutely in the private sector by conceding that it is perfectly possible within the existing business model for Jobcentre Plus in its pathways or their derivatives to incorporate large chunks of private sector expertise and even private sector activity within its overall framework. Conversely, there may be occasions where the private contractor needs to buy in to the specialist services available in the public service—for example, NHS occupational therapists.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

The hon. Gentleman makes the good point that the mix may be different in different areas, according to individual circumstances. That is a very important point and I hope it is one the Minister will reflect on in his remarks. I suspect, however, that the hon. Member for Daventry may, in his characteristic fashion, have expressed a view that the Minister might himself have chosen to express.

I hope that the Minister will deal with the question of subcontracting as that is also an important point. It is important to spell out to what extent multiple organisations might be involved in a particular part of the country and whether individual claimants might have a degree of choice about where they go. In employment zones, there has been piloting of multiple provider areas as well as single provider areas. The intention behind this amendment is to get the best-trained people to deal with individuals according to their individual health condition or impairment. Given the vast range of particular circumstances that we are talking about, I would welcome more information from the Minister about the Government’s intentions in view of the fact that claimants might be able to choose which provider is best able to meet their requirements.

Adam Afriyie (Conservative, Windsor)

Clause 15 is to be welcomed as it provides a mixed provision of service to claimants who have not been that well served in the past. The Bill is to be welcomed as it is a fairly bold one and it certainly shifts the balance of rights and responsibilities.

Clause 15 authorises the Secretary of State to outsource, to delegate and to authorise other third parties to provide services on the Secretary of State’s behalf, such as work-focused interviews, pathways action plans and also some decision-making powers. It is a bold clause because it appears that the Government are effectively—I shall use a strong word initially—“privatising” the benefits system. That seems clear. If we do not like the word “privatisation” or the introduction of a private element to the provision of welfare, perhaps we could say the Government are introducing a market for claimants in claiming welfare and getting back to work. This may be slightly more acceptable, but let us be clear that there is a privatising element here and that is part of the Government’s objective.

With markets, with privatisation and with competition comes failure and this is the point that I want to explore. By outsourcing functions the Government must be willing to accept some failure in the market that they are enabling. If, for example, a particular private firm gets into difficulty, it may well be that the firm will fail. Perhaps it is not providing services—

Sir David Amess (Conservative, Southend West)

Order. I am listening very carefully to the hon. Gentleman’s argument, and I know that it is of interest to the Committee. However, I cannot see that it is specifically concerned with the amendment. It seems that we are going on to a clause stand part debate, so would he consider tying his remarks closely to the amendment?

Adam Afriyie (Conservative, Windsor)

I thank you, Mr. Amess, for enabling me to bring my remarks back to the specifics of the clause.

The reason that the issue of competition is relevant to amendment No. 243 is that if there is a requirement on third parties to have properly qualified staff in place, it will impact on their cost base, the type of staff that they employ and the outsourcing contract. However, I will restrict my points more specifically to the amendment.

If the Secretary of State outsources or contracts out his responsibilities, it must surely be right for there to be a requirement on the providers of the services to be appropriately qualified. Using his knowledge and experience of the pathways to work schemes, will the Minister give a few examples of where the Government have learned lessons from those schemes about the qualifications of people employed by voluntary organisations and in the private sector?

Clause 15 also proposes to outsource decision making. The Minister said that it would be difficultor bureaucratically inefficient to keep passing responsibility for decision making on sanctions back to the Secretary of State or the Department. Will he explain why he thinks it will be workable if a third party has decision making on sanctions outsourced to them? Referring to the Green Paper, on 3 July the Public and Commercial Services Union warned that

“the private and voluntary sector in the provision of public services will mean a step back to a model of pre-war...provision.”

Does the Minister share that view? If not, can he explain why not, based on his experiences of the pathways to work scheme?

My support for the amendment is based on the fact that it is absolutely essential for the welfare of people with mental or physical health conditions that the contracts—the requirements placed on third parties—make it absolutely clear that staff must be properly qualified and skilled in order to make decisions that will make a fundamental difference to the lives of claimants.

Jim Murphy (Labour, East Renfrewshire)

Thank you, Mr. Amess. The Committee is indebted to you for allowing a clause stand part debate by proxy, though perhaps the Vice-Chamberlain of Her Majesty's Household, my hon. Friend the Member for Nottingham, East (Mr. Heppell) is less enamoured.

I shall try to make progress on the amendment. However, if it is your wish, Mr. Amess, to allow a clause stand part debate, we can respond to some of the wider points.

I shall address a couple of issues that have arisen on the matter of contracts. The hon. Member for Weston-super-Mare enlightened the Committee in his first substantive contribution to the debate. The experience he gained as a member of the Select Committee on Work and Pensions shone through, showing his knowledge of the issues. Obviously, I will not have time to respond to all his 30 or 40 questions—I have not kept a tally—in the discussion on the amendment or even in a clause stand part debate. Suffice it to say that we have heard the comments from Stephen Bubb and others on contract length. As the hon. Gentleman knows, three-year contracts will be the norm for the pathways to work schemes.

On the capacity of the market, it may be helpful for the Committee to be aware that we currently have more than 1,000 providers contracted with the Department for Work and Pensions; that is the scale of the market. The Committee will be pleased to hear that between 10 and 20 providers have been bidding in each of the areas in which we are rolling out private and voluntary sector-led pathways, which shows dynamism, determination and the capacity of the market to participate in and support such work.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey asked about choice. It is important that people have choice in public services, regardless of their economic background. The question of how further to empower those who are furthest from the levers of power runs through much of our public service reform. As far as I am concerned, that is about how we extend choice into poorer communities and poorer families.

The hon. Member for Weston-super-Mare conveyed some disappointment that a number of contractors lose their contracts. We have had a conversation about Stalin and comments about Marx, although we have not yet mentioned Lenin. I am sure that Conservative Members do not need any lessons in market economy; its nature is such that we have contracts for a set period. At the end of those contracts, some firms are assessed as not having lived up to the mark: they have not provided the expected outcomes, and they have failed to serve the people whom they were contracted to serve. As a consequence, such firms do not have their contracts renewed.

John Penrose (Conservative, Weston-Super-Mare)

I thank the Minister for his remarks. The point that I was trying to make did not relate to firms that lose their contracts because they fail to live up to expectations; we all accept that that should happen. I was concerned that firms were backing away from contracts because they found them impossible to deliver, not because of the outcomes required, but due to the demanding nature of the bureaucracy and support costs.

Jim Murphy (Labour, East Renfrewshire)

That is another fair assessment from the hon. Gentleman, who thus far has joined the Daventry school of probing. Perhaps, by the end of our deliberations, I will think of the hon. Member for Weston-super-Mare in the same way as I do the hon. Member for Daventry. That is meant as a compliment.

I have no evidence of what the hon. Member for Weston-super-Mare suggests. We have learned through the procurement process. The roll-out of pathways is a black box, as we would term it in the market sense, allowing flexibility for providers to suggest innovations that are most appropriate to the customers and the area that they support. I reassure him that performance information will be reviewed monthly by the contract manager. The first review must take place within26 weeks of the start of the contract, at which point we will identify any problems with support for customers as the contracts roll out.

It might be helpful to make available on the Department for Work and Pensions website some of the documentation regarding contracting, as long as it is not commercially confidential. The answers to a lot of the questions that have been asked are contained in that documentation; it includes information about the contracts sent to potential private and voluntary sector providers, specifically on protection for customers and the approach of those providers.

I accept that I am the only person with a copy of the documentation, so other members of the Committee are at a slight disadvantage. Private and voluntary sector organisations have been sent the documents; they are the basis on which organisations are applying for contracts.

David Ruffley (Conservative, Bury St Edmunds)

I do not wish to interrupt the Minister’s flow. Will he clarify how widely available the documents will be? He is reading into the record elements of them, so will it be possible to have copies placed in the Library?

Jim Murphy (Labour, East Renfrewshire)

I hope to place the documents on the internet, and putting them in the Library would be much less ambitious. That is what I intend to do, on the basis that they are not commercially confidential.

An organisation would have to be accredited, and page 13 of the invitation to tender pack details the necessary compliance with statutory requirements, including the Disability Discrimination Act 1995, and with equality and diversity requirements, and the need for financial viability.

Jeremy Hunt (Conservative, South West Surrey)

As the Minister has one of the contracts in his hand, will he tell us the length of its period? That is important for private and voluntary sector providers.

Jim Murphy (Labour, East Renfrewshire)

I am sure that the Committee will thank me for not reading out all the documentation, but the contracts will be for three years with the opportunity to run for longer. I mentioned that in response to the hon. Member for Weston-super-Mare, but I am happy to say it a second time to the hon. Member for South-West Surrey.

On protections and staff training, the necessary level of support is made clear in the method statementfor private and voluntary sector organisations. The documentation clearly sets out that providers must show evidence of being able to address the specific needs and barriers of all customers. hat is important to bear in mind when discussing the ability of people in the support group to volunteer. On human resources under the pathways initiative, the same documentation makes it clear that those who wish to bid must state their

“existing and additional staffing requirements”,

including staff of their partners and sub-contractors. That is important. They must also attach job titles and descriptions of the qualifications and experience required for each post. The form also states a requirement to

“provide details of your training arrangements, both for new and for existing staff”

to deliver pathways and to

“describe your contingency plans for dealing with fluctuating customer numbers and staff turnover/absences.”

I shall not go through the whole process, but the issues in question are covered in great detail in the contract, under which 10 to 20 organisations in each area are considering offering services.

John Penrose (Conservative, Weston-Super-Mare)

On ensuring a level playing field between private sector, third sector and public sector organisations, are those requirements also levelled at other organisations—for instance, if a particular sector of the Department bids? Does such an organisation have to go through the same bureaucratic hoops to ensure that it is of sufficient quality, or is that assumed to be a fact?

Jim Murphy (Labour, East Renfrewshire)

I was not in this role at the start of the roll-out of pathways, but there was no private sector comparator in the challenge function, so no comparison could be made between public sector-led pathways and an alternative. However, I am certain that there was a challenge function involving the Department, lobby organisations, Parliament and Select Committees, as has been the case throughout the process, to see what more we could get from the public sector provision of pathways. It would have been in a different format, because such a contract would not have been signed between the Department and Jobcentre Plus, but there would have been a challenge function and an accountability function.

I hope that my remarks have been tightly linked to the amendment. Many other comments have been on much wider points. There are protections and challenges in the documentation on contracts. As long as there is no issue of commercial confidentiality, I would be happy to place the documentation in the Library and on the Department’s website.

Amendment No. 243 would put in regulation something that will happen through contracts and contract management. To include the need to adjust the training qualifications, skills and approach of every private or voluntary sector provider would be bureaucratic and inflexible, and it would not enable us to adjust to changing customer needs and the evolution of the welfare market. I hope that I can reassure the hon. Gentleman that as a result of our contracting and procurement process, the amendment is unnecessary. The documentation that I will provide will ensure that his legitimate and well-intentioned concerns will be met. It is unnecessary to be as prescriptive as he suggests by placing such a requirement in the Bill.

David Ruffley (Conservative, Bury St Edmunds)

Before I allow my hon. Friend the Member for Weston-super-Mare to wind up for the Conservatives, I must say that although I am grateful for the Minister’s undertakings, I am puzzled by his reference to what he has published on the website.The safeguards that he discusses do not need to be in the Bill if they are publicly available. I have had the advantage of conferring with the hon. Member for Inverness, Nairn, Badenoch and Strathspey, the spokesman for the Liberal Democrats, who suggested to me a few minutes ago that they were not aware that there had been publications on the website, and my team would confirm such a view.

The Opposition parties might have been saved a bit of time if answers had been given to our questions about the safeguards. The Minister assures us that they are in the documentation from which he was reading and which he will place in the Library. In the interests of transparency, it is important to know when the documentation was made publicly available, and, in particular, whether what has been on the web and will be placed in the Library is a full, unexpurgated version.

I say that for one particular reason. I do not doubt the Minister’s bona fides, but the Liberal Democrats and I have been the victims of a lack of transparency from another part of his Department in respect of Post Office card accounts. It took considerable effort, involving references to “Erskine May”, Back Benchers piling in and much else, to get the original POCA contract, dated 2003, placed in the Library. That was the subject of much controversy, and there were removals and excisions the first time the documentation was put in the Library. The Minister has tried to be helpful, but when did the information go on the web and is it a full and unexpurgated version of the contractual documentation?

Jim Murphy (Labour, East Renfrewshire)

I do not know whether my accent is causing difficulties today. It has not changed from last week; if anything it has become even softer—another couple of days in London does that to a Glaswegian accent. The hon. Gentleman said that he had the advantage of conferring with the spokesman for the Liberal Democrats, which is an unusual phrase for a Conservative Front-Bench spokesman to use. I said, as I am sure the record will show, that I “would” place—not I “had” placed—the documentation on the DWP website and, by extension, in the House of Commons Library. As some of it might be commercially confidential, I will ensure that I give clear guidance to Committee members at the time of publication as to whether or not it has been published in full. The caveat is commercial confidentiality.

I think that the hon. Gentleman would accept that that is a reasonable approach, because the alternative would have been to say, “Don’t worry. It has all been taken care of. It is all in the contracts.” I seek to continue the tone that we have had in this Committee. Therefore, if it is possible, notwithstanding commercial confidentiality, we will publish all the documentation on the website, and therefore in the Library, to enable a continuing conversation on the types of things about which Opposition Members, and my hon. Friends, have concerns, wish to probe and wish to be reassured. That is entirely reasonable; it is the proper way to proceed.

John Penrose (Conservative, Weston-Super-Mare)

I thank the Minister for his reply, which contained a series of things that reassured many Conservative Committee members, particularly the reference that he twice made to three-year contracts. He also mentioned that there seems to have been adequate capacity so far in terms of the number of organisations bidding for each contract. As the expansion of contracting continues—it is inherent in the notion of rolling out the pathways project with contracting out—we will have to wait to see whether, as we hope, there will be sufficient capacity in future. Whatever has been achieved so far in expanding the capacity of service providers will need to continue on quite some scale if he is to continue to enjoy 10 or 20 offers for each tender.

I was particularly encouraged by the Minister’s use of the phrase “black box” when talking about creating and encouraging innovation. If the Department is no longer specifying the required process and activities, but the outcomes, which I think is what he was driving at—he is nodding—I am particularly reassured because it answers many of the criticisms made in the past year. I was encouraged to hear also that there will be regular reviews of the performance of each organisation during the contract term.

Probably the best news and the thing that is most reassuring, which will lead us to withdraw the amendment, was the Minister’s promise to put copies of the contract out for public view, within the limits of commercial confidentiality. That is important because it will allow us to see the progress made so far in instilling new commissioning skills in his Department. I hope, pray and expect that that skills growth will continue and that the contracts will be improved and refined still further. I beg to ask leave to withdraw the amendment.

John Penrose (Conservative, Weston-Super-Mare)

I beg to move amendment No. 262, in clause 15, page 12, line 44, leave out paragraph (b).

This is a straightforward probing amendment to ascertain how far the contracting-out process might go. In the debate on the preceding amendment, we talked about a number of different services being provided, but one of the key and ultimately core decisions that must be taken is the gateway decision for access to the benefit itself. That is probably one of the most difficult and ticklish things if the Government do intend to outsource, although I suspect that it is probably one of the last things they would get to—they would want to outsource a lot of other easier things first.

We want to ascertain how far the Government intend to go in outsourcing and whether they genuinely intend to outsource all or part of the gateway decision-making process. We have discussed the way in which the decision-making process is going to alter, and people’s benefits might be sanctioned during work-focused interviews and in other parts of the new arrangements. However, it is important to understand exactly which bits of the decision will come to rest where, because at the moment there is somebody called a decision maker in most Jobcentre Plus offices. Will their job be smaller and split up? If so, who will do it in the future?

Paragraph 99 of the explanatory notes on clause 15 states:

“Subsection (2)...would allow private and voluntary providers to take responsibility for related decision-making activity regarding sanctions and safeguards.”

We would like some more detail on that. I shall give examples of what might be meant by that, some of which would cause us concern and some not.

If the decision-making authority was outsourced to the same person undertaking work-focused interviews, that person would be involved with the client in helping them to get closer to the employment market. He would also have the power to sanction that client’s benefit. It would be potentially difficult and dangerous to make that delicate relationship work for a couple of reasons if the client knows, as he sits in his work-focused interview, that the person interviewing and supposedly helping him can ultimately say,“I intend to sanction your benefit. That is my decision and that is it.” First, we all hope and expect that the frequency of sanctioning will be very low and that it will not happen often. The probability is that sanctions will be discussed only when the relationship between the person running the work-focused interviews and providing the service and the client has degraded and probably broken down badly. In that case, we would be asking that person, in sanctioning a person’s benefit, to be both judge and jury in a case that they are part of already. I think that that is dangerous and potentially leaves the way open to both injustice and appeals against such decisions.

Secondly, and equally dangerously, that situation would create a problem, because if the client talks to someone who is supposed to help them get closer to the world of work, and they know that that person may decide to sanction their benefit, it will be difficult to create the right relationship of trust and support, which has been an essential plank of the pathways pilots, making them so productive and effectivethus far.

Tim Boswell (Conservative, Daventry)

Does my hon. Friend agree that there is a world of difference between a large Department, which has established protocols and draws a distinction between a personal adviser and a separate decision maker who could be independent, and a private contractor, who is not bound by those rules and practices, and whose functions may reside in the same person without the necessary transparency? Is that my hon. Friend’s concern?

John Penrose (Conservative, Weston-Super-Mare)

That is precisely my point. We have discussed examples of small local organisations that provide an excellent service. Within them, it will be difficult to separate people who may have decision-making powers from people who may support people as they get closer to work. The crucial question is whether there will be single or dual capacity. In the Government’s contracting decisions, will people be asked to take on sanctioning power and provide services, or will the sanctioning power always be separate from the people who provide services?

It is important to pick up on the point that my hon. Friend the Member for Daventry made. The safeguards for the decision-making, sanctioning power are different from the skills and supportive ambience that one tries to create when offering the services that people need as they get closer to work. For the decision-making power, one needs clarity, transparency, a strong culture and clear guidelines to ensure that decisions are taken correctly. The requirements are different for someone attempting to befriend and support a client who is a long way from work and trying to get closer.

Will there be single or dual capacity? Will a large organisation such as Shaw Trust, Reed in Partnership or WorkDirections, have dual capacity? Parts of their organisations might be involved in sanctions and decision making, and other, separate parts might be involved in delivering contracted services. To what extent will they be contracted out? Will there be Chinese walls between people providing services and people making decisions? Is the whole system a step too far? Do the Government not in fact want to contract out, but keep the ultimate say about a decision in the public sector? Will the contractors merely provide recommendations and factual reports to a public sector decision maker? Those crucial questions must be unpicked and explored in more detail, so that we and the organisations that might bid for the contracts understand what they are asked to sign up to.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I shall follow the remarks of the hon. Member for Weston-super-Mare. The provision is about the potential contracting out of benefit sanctions to third parties who will also be given the power to carry out the welfare-to-work activities and work-focused interviews. This troubles me greatly, and clarification would be useful. It troubles me particularly, because talking to voluntary and private sector providers I have found that they are able to achieve better results than the public sector because of the strength of relationship that they form with their clients, customers or claimants—however we may wish to describe them. In at least some cases, those organisations have a fear—they are being genuine about that—that if the claimant believes, knows and understands that that organisation not only will go about building that relationship positively, carrying out the work and support to enable that person to get into the labour market and, one hopes, back to work, but potentially has the power directly to sanction that person’s benefits, that could act as an disincentive to the claimant to engage in a positive way with the organisation, as claimants currently do. That may be the brief of some of the providers.

The separation of benefit award and benefit sanctioning power from what I shall call in shorthand the welfare-to-work help has been of great assistance to those private and voluntary organisations to which I have spoken in delivering services. In some cases, those organisations believe that that separation is one of the reasons why their success rates are significantly better than some in the public sector. It is important that the Minister spells out a clear rationale, first of all, for including that power in the Bill. Page 32 of the supporting material, the draft regulations, states:

“The intention behind such a change would be to allow the organisations that come into face to face contact with claimants to conduct the end to end process.”

I can see what is being argued for there from an administrative efficiency point of view, and perhaps that is what the Minister has in mind. However, I would strongly counsel against taking any steps that may help to improve administrative efficiency if there is any risk whatever that they will reduce the outcomes and success rates and reduce the ability of claimants to interact with private and voluntary sector contractors in a way that leads to a greater chance of success. I hope that the Minister can clarify that.

Perhaps the Minister can clarify something else. The draft regulations state:

“We have no current plans to contract out sanctions decision making when ESA is first implemented.”

Given the concerns that I have expressed, the Minister will not be too surprised to know that I welcome that. However, it is important that he spells out in some detail the sorts of circumstances in which he might consider using the power that is contained in the part of the Bill to which the amendment relates. The supporting material also makes the point:

“We will...work with providers to establish whether they would be interested in undertaking this function and whether it would deliver an improvement in efficient service.”

The Minister made it clear in a previous debate that there would be considerable contact with a large number of voluntary and private sector providers in the course of the contracting process. Will he tell the Committee whether any of those organisations have expressed any interest in being given the power of benefit sanction as well as the positive side of the equation? Has anyone expressed an interest in that? Has there been any interest whatever? On the basis of my experience, I would be surprised if many had expressed an interest in carrying out that function. I hope that the Minister will take that as a guide when considering whether he will ever want to implement those powers at all. I look forward to his response on what I consider to be a sensitive part of the clause.

Tim Boswell (Conservative, Daventry)

Briefly, it is always healthy when a Committee holds its hand up to a Minister and asks, “Are you quite sure that you need these powers? Have you thought them through, and are they fair?” The concerns that have already been expressed showthe emphasis that Conservative members of the Committee are putting on being fair to the claimant, or meeting the rules of natural justice. I hasten to say that, as a lay person, I do not use that term in a precise context, but the Minister will know what we are all driving at.

There are also some related issues about what I might term the status of public officials, or those who are standing in for public officials, and I shall say a little about that in my brief remarks. Playing my usual trick of anticipating the Minister’s remarks, I think that he will always want to say to the Committee that this is all really exactly the same, and that we are not going to allow it to be anything other than seamless. If for administrative reasons, which are at least arguable, the process is smoother, work-related interviews are not disputed and interview number one by Department for Work and Pensions officials is not different in status from later interviews because that forms an ensemble, I understand the practical case for doing that. I even understand why contractors might want to have control of the whole process and not to feel subverted by officials coming in and taking part of it away from them. On the other hand, it must be done fairly and in accordance with the broad approach to natural justice. In the real world and for the practical reasons that my hon. Friend the Member for Weston-super-Mare adduced, there are concerns about that, not least because the Department has a tradition, it has scope, and access to legal advice and enough officials to adopt different and independent functions to discharge the duties, none of which may be available by custom and practice, or in reality, to smaller or less experienced private contractors.

My first concern about the practical role is the extent to which the Department, if it is inclined to devolve the functions, will be able to instruct and advise decision makers who, under the clause, will still make decisions on behalf of the Secretary of State on the protocol of those decisions to ensure that there is commonality, for example, between the pathways to work area of Jobcentre Plus and the various private contractors doing their own part in the contracted sector. It is important that, at least in practice, they operate in the same way.

I am equally concerned about the redress available to individuals. I understand—perhaps the Minister will confirm this—that the normal nature of social security decisions is that an individual who is aggrieved by a decision made by a public official has the opportunity to have that decision reviewed and, if there is a substantive issue, it may be referred to the social security tribunal. The Minister is nodding at my understanding of that. Equally, if there is an issue of law or the conduct of public officials that goes beyond the individual case—an issue concerning not whether it was right or wrong in the particular case, but whether the Minister or his officials behaved in a way that no reasonable Minister would contemplate, such as if an edict were rebarbative or objectionable—there is ultimately a separate sanction of judicial review. I would like the Minister to tell the Committee that that battery of redress for individuals dealing with Jobcentre Plus or the public sector will be available in the case of private decision making. I hope that he can reassure us on that.

A converse, complex and somewhat ambiguous situation might arise if the Minister when setting his contracts or his officials in the procurement department took on a private contractor and that private contractor in discharging a quasi-public function erred and incurred damages against the Department. Who would pick up those damages? Would the Minister, as the contractor, indemnify an individual who took on a contract as a party to that contract, or would the Government say, “You got it wrong and it is your fault, so you pay for it.”? If so, would that constitute a deterrent?

That is a theoretical point, but it shows that we are moving into deep waters: people with particular expertise in alcoholism, mental health or whatever who are pleased to be called in by the Department to help with a particular function might suddenly find themselves in the middle of a legal maelstrom about whether they conducted sanctioning functions on behalf of the Department. That worries all of us and I shall not go on about it.

The Minister must consider two specific points inherent in the position of a decision maker in the public sector if that is to be devolved outside. One is in relation to the new disability duty which will bite on public authorities in just over a month’s time. Will contractors be bound by those provisions when carrying out their contracts more generally, let alone when there is any dispute about their contract? They are not in the public sector. They may be receiving money from the public sector, but what is their status in relation to the disability duty?

Linked to that is my second concern in relationto the human rights legislation. For example, notwithstanding the fact that many of its residents are being paid for at the public expense, if a care home is run by a private contractor rather than the local authority, the obligations under the Human Rights Act 1998 and the disability duty obligations do not currently apply. The Minister should clarify whether contractors buying into this process would be so bound by their contracts. If they would not, the defences both in law and in practice available to the individual claimant would be lower in status or less well protected than those within a conventional pathways situation.

I fully understand that this is not a situation that is likely to arise often in practice. Nor is it the Minister’s intention to create a two-tier economy. Neither he nor any of us want that or to resile from the principle of sensible contractorisation. That is not the issue. But we need to be assured that the defences are equivalent and that this has been properly considered. We certainly need to be clear about that before any move towards the implementation of these detailed provisions is made.

Wayne David (Labour, Caerphilly)

I apologise to the Committee for not being here for the earlier part of the discussion. I wanted to raise an issue that is pertinent to the point that has been made, but is also relevant to the clause generally. It is the issue of contracts and subcontracting. There is some concern about whether the legislation allows for a private and voluntary contractor to put forward a bid and to include in that bid some subcontracting to other organisations. If so, how will that be assessed by the Department? Alternatively, if a bid put in by a private or voluntary organisation was accepted and the contract was signed, and then during the course of implementation of that contract it was found that to fulfil the criteria it was necessary to subcontract and bring in other organisations, would the Department allow that and if so how would it assess the matter?

David Ruffley (Conservative, Bury St Edmunds)

I endorse what my hon. Friends have said. I wish to be absolutely clear about the thrust of the amendment. It deletes subsection (2)(b) because we are not quite sure what it is doing there. If my cross-referencing of the legislation to section 8(1)(c) of the Social Security Act 1998 is correct—

Jim Murphy (Labour, East Renfrewshire)

Congratulations.

David Ruffley (Conservative, Bury St Edmunds)

The Minister congratulates me, but I was rather disappointed not to find in the explanatory notes a description of what 8(1)(c) is about. It is not really surprising that they do not tell us that because it is essentially about subcontracting. It is not about WFIs or service provision but about something fundamental to the British welfare state—the decision-making power and the power to sanction that is currently in the hands of Jobcentre Plus. It is not in the hands of anybody else.

Why is the Minister contemplating that? Not many outside bodies in the private and voluntary sector have any interest in taking over the decision-making function. For example, the Royal National Institute for Deaf People told the Select Committee in evidence earlier this year:

“We would be reluctant to involve ourselves in regulating benefit, and we do not see that as part of our job.”

Examples are legion of private and voluntary sector bodies saying that they do not want to touch sanctioning with a bargepole. They do not want the decision-making role anywhere near them.

Adam Afriyie (Conservative, Windsor)

It seems to me that that is a big difference between pathways to work, with the delegated powers that were given during the project, which was successful on many levels, and the new scheme that is proposed under the Bill.

David Ruffley (Conservative, Bury St Edmunds)

My hon. Friend is right. Mr. Chris Melvin of the Employment Related Services Association has reminded us that in employment zones private sector providers have the power to pay benefit. However, the Minister cannot therefore tell us, “This is happening in employment zones”. It is not, because there is a massive difference between the paying of benefit, as happens in employment zones, and the sanctioning power. Mr. Melvin gave evidence to the Select Committee on behalf of ERSA and said:

“If they”—

the customers in employment zones—

“are not engaging it is our responsibility to put together a case for decision making and appeals to then decide whether they have breached their benefit regulations. We”—

the private sector providers in employment zones—

“are not doing the sanctioning there. It is decision making and appeals”

that are doing it.

“All we are doing is providing that body with the evidence that they require in order to make their decision.”

That is the state of play so far and that is why the power that our probing amendment would delete is ground-breaking.

As to the merits of the idea of contracting the function to the private and voluntary sector at some future date, should the Secretary of State exercise the power, I am—when I say that I have an open mind—staggered that Ministers even contemplate it. So I should be most grateful for the Minister’s specific answer to my question about how the power is likely to be used.

Finally—I do not mean this in a partisan way—[Interruption.] The Minister knows that I am an honest seeker after truth in this Committee, as elsewhere. Has he had any representations from any public sector union about what the clause might mean? If one wanted to speculate, one might think that the power was a precursor to the breaking up of Jobcentre Plus. If the Minister wants to deny that, I shall be happy to hear the denial. Why else, however, should the power be in the Bill? Why, in short, give any future Secretary of State, whoever that might be, the power to contract out the decision-making function?

Jim Murphy (Labour, East Renfrewshire)

Thank you, Mr. Amess, for another broad debate on this narrow amendment. Of course you will guide us if I wander on to the subject of the Disability Discrimination Act 2005, which is a discussion for a future amendment.

I want to set out the position clearly for the Committee this afternoon. The power taken under the clause is about dealing with the possibility that in future it may become desirable to move the decision-making function closer to the front line and into the organisations that deal with customers daily, particularly as we extend work-related activity and conditionality. Allowing providers to undertake the end-to-end process, to which I have alluded, would make the decision making more efficient and would help link rights and responsibilities much more closely in the minds of customers and others. It is therefore important that we have the option in the Bill. It is not an option or a policy that we currently intend to implement. We think that as employment and support allowance, work-focused interviews and work-related activity evolve, and we successfully roll out the private and voluntary sector provision of pathways, the power may be a useful additional measure.

Tim Boswell (Conservative, Daventry)

Can the Minister solve something that is puzzling me? When we last met, he declined my freely-made offer of greater flexibility in the sanctions for those who did not turn up. Now he wants to take powers, when all Conservative Committee members have expressed considerable concerns about the propriety of devolving such powers to the public sector, while reassuring the Committee that he does not need to use them.

Jim Murphy (Labour, East Renfrewshire)

I am trying to set out accurately what we seek to achieve. The hon. Gentleman is right thatwe did not want his blank cheque of taking either passports or driving licences, or the suggestion made by the hon. Member for Windsor of compelling customers to undertake medical treatment. Such was the conversation last Thursday. We did not wish to take those powers.

We seek to identify where, as we successfully roll out the private and voluntary sector provision of pathways, the decision maker should physically be located. I should just say a word or two more on that. As I did in the supporting information that was sent to Committee members, I make it clear that decision making leading to sanctions would not be contracted out at the point of the ESA’s implementation in 2008. It is prudent to allow the successful roll-out of pathways and to allow the ESA to be thoroughly embedded before we embark on further changes and to take time to consult with providers and others to ensure that, should we contract out decision making, it is done properly and with the support of stakeholders.

I can make other clear commitments in respect of the points raised by Conservative Members and by my hon. Friend the Member for Caerphilly (Mr. David). We will go into the specific point about the Disability Discrimination Act in more detail later. In the invitation to tender and the contracting process, the private and voluntary sector will operate on behalf of the Secretary of State, so the responsibility of adhering to that Act is clear. It will be the responsibility of the primary contractors to ensure that subcontractors adhere to their statutory responsibility in respect of that Act. Failure to adhere could, in some instances, lead to the termination of contracts.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

It appears from the Minister’s remarks that he has moved on from describing the rationale behind the taking of this power. I want to probe him on it one further time. He mentioned that the Government might want to take this power in future but that they did not intend to do so now.For the Committee’s benefit, will he describe the circumstances in which he envisages that the Government would take the power?

Jim Murphy (Labour, East Renfrewshire)

The reason why I went off at that little tangent was that I caught sight of my hon. Friend the Member for Caerphilly out of the corner of my eye and thought that it would be good manners to respond to his point at that moment. On the specific questions that have been raised—

Tim Boswell (Conservative, Daventry)

I may have misheard the Minister, but I understood that he just said that, without prejudice to the decision-making power, any activity by contractors in relation to the Bill would be covered by the Disability Discrimination Act and the Human Rights Act. He went on to say that any subcontractors would be bound by their contract also to fulfil those obligations. Will he confirm that understanding of mine? I do not want to confuse the issue in respect of the decision making, but would contractors be carrying out a public function and would they be bound by those two bits of legislation?

Jim Murphy (Labour, East Renfrewshire)

I provided that confirmation just a moment ago and in an earlier debate on where responsibility for enforcing the DDA lies. I do not wish to tempt your patience, Mr. Amess—this relates to the next amendment—but private and voluntary sector organisations could act on the Secretary of State’s behalf and those contractors would have to adhere to the DDA. Subcontractors would be held to account by the primary contractors should they fail to comply with the DDA. Primary contractors would be held responsible by the Secretary of State for their adherence to the DDA and for that of the subcontractors to their statutory requirements. It would be a matter between the Secretary of State and the prime contractors.

I am going to try and make some progress because we said at the start of proceedings that that is what we would do. There are issues around whether it would be appropriate to contract out certain responsibilities; in no scenario would we wish to contract out responsibility for decisions made under clauses 8 and 9 regarding limited capability for work and limited capability for work-related activity, which would remain the responsibility of Jobcentre Plus. We have debated that already.

Jobcentre Plus would also retain the responsibility for the first work-focused interview at eight weeks and we would not wish to subcontract that out to the private and voluntary sectors, although there was a legitimate debate about whether that should happen. We settled on the view that Jobcentre Plus should retain that work-focused interview. Furthermore, although the return-to-work credit is not strictly a benefit, it is part of the package, and we would not seek to contract it out.

Those are some important circumstances in which we would not wish to apply the powers in the clause. Some have suggested that the provisions are a precursor to further changes to Jobcentre Plus. The Public and Commercial Services Union, which represents Jobcentre Plus, is a highly effective and professional organisation that carries out its work on behalf of its members effectively, as it is entitled to do. However, not even it has put on the record anything that goes as far as what the hon. Member for BurySt. Edmunds suggested, which is that the power in the clause is a precursor to the break-up of Jobcentre Plus. As I have said already, the responsibility for the first work-focused interview and payment of return-to-work credit will be with Jobcentre Plus.

David Ruffley (Conservative, Bury St Edmunds)

I do not think that anyone is disputing the fact that some parts of the Bill relating to the roll-out of pathways and beyond will not be susceptible to subcontracting.

Returning to the amendment before us, will the Minister tell us whether a

“function conferred or imposed on the Secretary of State by virtue of the application in relation to such regulations of section 8(1)(c) of the Social Security Act 1998”

is a function of decision making? If so, in what possible circumstances would he consider contracting out that decision-making function? My question is not about anything except the decision-making role.

Jim Murphy (Labour, East Renfrewshire)

I shall seek to respond to the hon. Gentleman’s point.

On the responsibility for the decision making, the power in the clause will not change the role of a personal adviser. Opposition Members have spoken eloquently and effectively on the nature of the trust in the relationship between the personal adviser and the customer. Sanctions have been tested in the Jobcentre Plus-led pathways. In those cases, personal advisers can say whether customers, whom they meet on a regular basis, have fulfilled their obligations. If a personal adviser feels that the customer has not met his or her responsibility, the personal adviser can refer the case to a decision maker. We are discussing the location of the decision maker, not the relationship, responsibility or skills of the personal adviser.

John Penrose (Conservative, Weston-Super-Mare)

Is the Minister therefore saying that we should have a dual-capacity model—in other words, that the personal adviser, contracted out or not, should not be the decision maker but should make a recommendation to somebody else? Should that somebody else be in the same organisation or an entirely separate one?

Jim Murphy (Labour, East Renfrewshire)

The hon. Gentleman’s question is entirely fair. Our intention is that the personal adviser will not be doing the sanctioning under any feasible roll-out of the power contained in the clause. He will remain a personal adviser and will not become the decision maker. I know that the hon. Gentleman is following this, because he has great knowledge of the details. The power in the clause will potentially move a decision to a private or voluntary sector organisation—not to the same person, but to the same organisation. As we consult with stakeholders, the private and voluntary sector, Parliament and others on how that can feasibly be delivered, we will seek to structure a system whereby there is a clear separation of the personal adviser and the decision maker. I apologise to hon. Members if they got the impression that we were trying to expand the personal adviser into a quasi-personal adviser/decision maker. We are seeking to maintain the system under the Jobcentre Plus-led pathways whereby a personal adviser makes an assessment and refers it to a decision maker, who makes a judgment. That is the model that the power in clause 15 is intended to create.

Tim Boswell (Conservative, Daventry)

Will the Minister also confirm that no clause in the contract with a private sector contractor will be likely to influence either the recommendations of a personal adviser or the decision of a decision maker? It troubles me slightly to think that there might be a performance situation whereby a decision taken by a private sector organisation might be distorted bythe terms of the contract that it holds with the Department.

Jim Murphy (Labour, East Renfrewshire)

I can give some relief to the hon. Gentleman by saying that we will not incentivise private and voluntary sector organisations to sanction anyone. We will not provide a financial incentive framework that would make it in an organisation’s interests to do so.

Jeremy Hunt (Conservative, South West Surrey)

Following on from the point about financial incentives, the concern expressed by private and voluntary sector organisations to us, and I am sure to Ministers, is that it is fundamentally against their ethos to be judges. They want to support and help someone who is trying to engage in the world of work. If they have to take on the role of administering sanctions, it will be a fundamentally different role. Will the Minister confirm that the Government will not use the contracts, through which they will exercise considerable power over the actions of private and voluntary sector providers, to make it impossible for private and voluntary sector providers to say that they do not wish to be involved in the administration of sanctions?

Jim Murphy (Labour, East Renfrewshire)

Even in the scenario empowered by clause 15, the private and voluntary sector will not be administering sanctions. Sanctions will be related to the payment of benefit, which is in the public sector. The location of a decision maker will change. To be fair to Opposition Members, I do not believe that even in their darkest days they would have sought to set targets for sanctions on the customers whom we are considering.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I am still a bit confused by the Minister’s position. He has set out clear and precise ideas about how the power in the clause will work in practice, but he seems unwilling to tell the Committee anything about the circumstances in which he might seek to use it, which seems odd. Perhaps I am misunderstanding him, or maybe there is more to the matter than meets the eye. Will he tell us more about his intentions? Under what circumstances will Ministers seek to give the private and voluntary sector the power to make decisions about whether someone’s benefit should be sanctioned?

Jim Murphy (Labour, East Renfrewshire)

I have already set out the conditions. They are when the ESA is introduced, pathways are introduced nationally and the delivery is successfully embedded, the capacities of the private and voluntary sectors evolve, and after consultation with Parliament, stakeholders and the relevant Select Committees. The conditions are based not on a customer’s medical ailment, but on the successful roll-out of pathways.

The hon. Member for Daventry raised concerns about the protections. If the location of the decision maker were changed, all protections allowed or enabled under Jobcentre Plus would be in place, including appeals to the social security appeals tribunal, and in some cases, to the social security commissioners.

Clause 15 will not be able to apply the functions under clauses 8 and 9. We would consider changing the location of the benefit-entitlement decision maker on the basis of, for example, whether there was adherence to and attendance at work-focused interviews, whether there was good cause for non-attendance and whether someone had fulfilled his or her responsibility in respect of work-related activity.

It is important to retain the power in the Bill for future introduction as welfare provision evolves throughout the country, and as pathways and ESA are successfully implemented. From Opposition Members’ comments and from the nature of our debate today, before introduction, we are aware that we would need to conduct detailed conversation with the private and voluntary sector organisations. Some welcome it: Shaw Trust and Working Links have confirmed that they would be interested in having such responsibility. However, we would need to take part in detailed conversations about contracts and protections as the provisions are introduced. It is important to include the power in the Bill, so that it can be introduced if appropriate in the future.

John Penrose (Conservative, Weston-Super-Mare)

We got there in the end. I think I heard the Minister say that he expects—in the future, not immediately—to contract out the decision-making function to third parties, be they private or third sector organisations, with the strict proviso that there is a clear distinction between the personal adviser role and the decision maker role, and that he intends, in consultation with all stakeholders, to build a high Chinese wall between those functions. That is vital. Now that that is clear, the debate has been revealing, and I am sure that everybody listening will want to return to it.

Adam Afriyie (Conservative, Windsor)

Paragraph (b) represents a large power-grab. Does my hon. Friend agree that even if it were agreed to in Committee, the Lords would identify it as a significant provision whose powers needed to be curtailed?

John Penrose (Conservative, Weston-Super-Mare)

I am sure that my hon. Friend is right. Everybody listening to the debate, in another place and among the public, will want to return to the issue in detail. We will happily withdraw the amendment, but this is a topic that will run and run. I beg to ask leave to withdraw the amendment.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I beg to move amendment No. 160, in clause 15, page 13, line 33, after ‘relates’, insert—

‘(d) shall be subject to the requirements of the Disability Discrimination Act 1995 (c.50) and the Human Rights Act 1998(c.42)’.

I am not sure that I have much time on this one. Many of its points were addressed in the previous debate, but I wish to raise a couple of points in relation to the Human Rights Act and the Disability Discrimination Act.

Standing Committee A

Clause 15

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

It is a pleasure to welcome you to the Chair again, Mr. Hood. I look forward to serving under your chairmanship in what promises to be a lengthy but engagingly good-tempered sitting. I shall be brief, as much of what I wanted to raise was mentioned in the previous debate.

This is a probing amendment to ensure that the requirements of the Disability Discrimination Act 1995 and the Human Rights Act 1998 will be taken into account in the Department’s contracting with private and voluntary organisations that are to be engaged to deliver much of the work involved in rolling out pathways to work, and so on.

As he did during our sitting on 19 October, in his reply to the previous debate the Minister gave some welcome reassurances on the Disability Discrimination Act and the disability equality duty, which comes into force later next month and which providers in the private and voluntary sector will have to take into account.

I ask the Minister to say something in this debate about the Human Rights Act, because much of what we are discussing has implications under that Act, not least in respect of benefit sanctions, but in other areas, too. What consideration has the Minister’s Department given to the human rights implications of the contracting out of public functions under clause 15?

In respect of the sanctions, the Minister made it clear that the Government have no immediate intention of giving providers the power to sanction that the clause allows for. That may well come about in due course in the circumstances that the Minister tried to describe in the previous debate—if not to my satisfaction, at least to his.

Will the Minister give an undertaking that an assessment will be made of the policy’s impact on human rights, on child poverty and on disability equality, so that the potential adverse impacts of giving those powers to contracted-out providers are taken into account before any decision is made on contracting out sanctions? I got the impression from the Minister’s remarks in the previous debate that he is keen to enter a substantial number of caveats before any decision is made to contract out benefit sanction or decision-making powers. Before any decision is made, a wide range of factors must be taken into account and I will add them to his list: human rights, child poverty, disability equality. I look forward to the hon. Gentleman’s response.

Jim Murphy (Labour, East Renfrewshire)

It is great to see you in your place, Mr. Hood. We have made substantial progress since you last refereed our proceedings. A cursory look at the Hansard record shows that we have made progress via Marx, Stalin and the Jacobites’ visit to Derby. To understand where they fit in you will have to read the record carefully, Mr. Hood.

I shall be brief so that we can make progress. I can confirm to the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) that child poverty has been established as the No. 1 priority of the Department for Work and Pensions. We are reviewing all our employment and welfare programmes to ensure that they have the maximum impact on child poverty and we will examine not just this Bill and the transition of existing customers, but every proposal to discover their impact on child poverty and their likely outcome.

I confirm again for the purposes of the record the assurances that I gave on 19 October, to which the hon. Gentleman alluded, about the protections of the Disability Discrimination Act and the Human Rights Act.

The effect of clause 15 is to allow the Secretary of State to authorise providers to carry out certain functions of his relating to conditionality. It does not transfer those functions to the providers. Where a contractor is exercising functions by virtue of clause 15, subsection (7) provides that in most cases any act or omission of the contractors in carrying out these functions is to be treated for all purposes as an act done or omitted by the Secretary of State. For the purposes of the Disability Discrimination Act or the Human Rights Act, anything done by a contractor would be regarded as done by the Secretary of State. That means that the Secretary of State remains responsible for ensuring that those functions are carried out in away that is compatible with both the Disability Discrimination Act and the Human Rights Act. I hope that that reassures the hon. Member for Inverness, Nairn, Badenoch and Strathspey and my hon. Friend the Member for Caerphilly (Mr. David), who also raised the matter in an earlier contribution to our proceedings.

Tim Boswell (Conservative, Daventry)

I am grateful that I am able to intervene on the amendment, although I do not need to do so, particularly after the extremely helpful response that the Minister has given. However, will he concede two things? First, will he concede that it is important, as indicated in the earlier amendment, that any contractor, whether contracted for services, let alone for decision making, is well apprised of the requirements of the legislation and trained on it? Secondly—this is a wider issue—will he confirm that, as a matter of good practice, both the pathways to work Jobcentre Plus providers, and the other providers of contracted services, should be encouraged to get together from time to time to share best practice in this and in other more operational areas?

Jim Murphy (Labour, East Renfrewshire)

I will give a very brief response. On the contractors, I made that position clear in respect of the Disability Discrimination Act and the Human rights Act, but it also captures what happens with subcontractors. That is the important point. Contracts under the clause will be drawn up so that providers are required to carry out their functions with proper regard to the needs of disabled people. For example, pathways contracts will have clauses that prohibit discrimination and harassment on the ground of disability. Providers will also have to provide reasonable adjustments so that customers can participate in conditionality, and promote equality of opportunity. A cursory reading of the contracts and the paperwork concerning the contracts—I made a commitment in our earlier proceedings to place that in the public domain—will show that the potential contractors in the private and voluntary sector will be under no illusions about their statutory responsibility in terms of the legislation. With those comments, and that reassurance, I invite the hon. Gentleman to consider withdrawing his amendment.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

As has been mostly been the case over the past few days, the Minister’s response on the amendments has been reassuring.

David Ruffley (Conservative, Bury St Edmunds)

We have had a good debate about the preceding amendments, but I should like to say one or two things about the importance of the involvement of the private sector and the voluntary sector, and why Conservative Members support, with some reservations, the proposition contained in the clause. The Employment Related Services Association—ERSA—which gave evidence to the Select Committee earlier this year, rather punchily suggested this about the advantages of private and voluntary sector, non-state-employed personal advisers being involved in the roll-out to pathways to work:

“Rightly or wrongly, individuals are often uneasy dealing with Jobcentre Plus officials. These officials are sometimes viewed as ‘agents’ of the state, put in place to judge, and determine whether or not an individual is actively seeking employment.”

Those are not my words, and that might be stretching a point. Incapacity benefit personal advisers and the other officials at Jobcentre Plus are dedicated professionals who are there to help people, not to catch them out wilfully or with malice aforethought.

What ERSA is driving at, however, is this. In seeking support, claimants will often show a willingness to take part in training or condition management programmes, or they will say that they want to get better. However, they know that the Jobcentre Plus official to whom they are speaking will be wondering how ill or disabled they are, and outside groups get the sense that claimants feel that they might compromise their right to benefit by disclosing too much. Again, those are not my layman’s perceptions, but the thoughts that were expressed time and time again in the evidence to the Select Committee. There can be an element of trust and a special bond between a personal adviser in a charitable body and the person whom the personal adviser is helping to get back into work, and it is important that we compare that with the relationship that a person will have with someone who is working for the state.

There is a second issue on which we must reflect when discussing increased contracting out to the private and voluntary sector. It is an issue about which sector must have confidence in bidding for contracts, but we have not yet discussed it, which is why my comments will be very apposite to the clause stand debate. Working Links is a public-private sector body and does not belong purely to one sector or the other. I have had many discussions with its representatives and visited various of its projects over the past months. As the Select Committee notes, Working Links believes that the current approach taken by Jobcentre Plus and some pilots has

“promoted unnecessary complexity in providing employment support to benefit claimants”.

That is the result of the perceived complexity of the administration process and the form filling. Working Links said that that did not happen to the same extent in employment zones, which are private sector led, as we all know.

The argument for the employment zone model was supported by the Centre for Economic and Social Inclusion and Reed in Partnership, which, according to the Select Committee, suggested that

“a national roll-out of Pathways based upon the pilots would not be as effective as one based upon Employment Zones which allow greater freedom and flexibility to service providers”

to test different approaches free from too much form filling. The Secretary of State for Work and Pensions acknowledged that in evidence to the Committee, saying that

“in the Employment Zones, for example, the private and voluntary sector providers have a very good track record in improving outcomes for Incapacity Benefit claimants and Jobseeker’s Allowance claimants. I think their performance”—

that of the private and voluntary sector—

“actually exceeds Jobcentre Plus in a number of very important respects.”

The principle of contracting out is therefore a good one, but—there is a but—there is a demand for safeguards. We need to understand that, as the Minister will when he oversees the contract design, which will be an iterative process. As the Disability Rights Consortium said,

“The impact of using private and voluntary sector providers to deliver Pathways in new areas without having to replicate existing provision will need to be closely evaluated as support may vary”

under the contracts

“by locality, provider or individual adviser. Identifying the impact on employment rates by different impairment groups will be important.”

Is that point reflected in the way the Minister is designing the contracts, looking at the effect of these contracts in different areas with different providers on the employment rates of different impairment groups? I imagine that he has thought of this, but is there any mechanism by which that will be measured as the roll-out goes forward?

I turn to another area where safeguards are clearly required. The Opposition do not believe in red in tooth and claw, free market provision; in particular we are not keen on widespread, so-called cherry picking or creaming. Some claimants, whether for employment and support allowance or incapacity benefit, by definition have different disabilities. Some will find it easier to find employment than others. Those with severe learning disabilities, mental health conditions, autistic spectrum disorders as well as those with severe physical disabilities will require more support and take longer to find sustained employment than those with less serious conditions.

Contractors should not be allowed to cherry-pick just those claimants who are easiest to place. Contractors must be able to meet their targets by getting more people back into work so that the Government can hit their target of 1 million men and women off the IB rolls by 2016. But it must not be a simple, bog standard form of target hitting by helping the easiest first. I am not asking for specimen contracts, but will the Minister share his thoughts on this and give us assurances that the contract design process is looking at how cherry picking can be minimised? It will never be eliminated and it would be quite unrealistic to think that it could be.

The Minister referred to proposals first mentioned by my hon. Friend the Member for Runnymede and Weybridge (Mr. Philip Hammond) on Second Reading about payment by results. I do not want to have a second reading debate now about what Opposition policy is. I know that you, Mr. Hood, being a stern and disciplined chairman, will not want anyone to be tempted down that route. But the Minister mentioned it on the first day of these proceedings and he said that he might want to raise it later on the Bill. I have a sneaking suspicion that this clause stand part debate is the right time.

For the record and so there is no ambiguity, the Government proposals and the briefing that they have given to the outside organisations are to the effect that payment by results, the outcome-based part of the new regime that the Bill introduces and to which this clause relates, will involve roughly a 30 per cent. upfront fee to the private and voluntary sector providers and 70 per cent. will be payment by results: put crudely, if a job or training is delivered by the contractor who will be able to do the roll-out for ESA if the Bill goes through. It will be done anyway as part of the national roll-out of pathways before ESA comes in.

The Minister referred to a Conservative proposal for the payment by results not being 70 per cent. purely outcome based and 30 per cent. upfront fee, but being 100 per cent. payment by results. That is not true in relation to all the new claimants who will be subject to the Bill. New claimants going on to ESA will be helped by contractors who will get 30 per cent. upfront and70 per cent. payment by results.

The Minister will be pleased to hear that we are not in dispute with that proposition. Our point is slightly different. The Minister has said correctly that, if someone is on incapacity benefit for two years, they are more likely to die or retire than to ever find a job. He then went on to say:

“as a priority we will focus on those who are newest to incapacity benefit or employment support allowance.”

In the same vein, the Government Green Paper said, in the roll-out of pathways to existing claimants: it will be only “as resources allow”. That got my hon. Friend the Member for Runnymede and Weybridge, my hon. Friends on the Opposition Front Bench here today and me, together with other outside groups, thinking how we could get a better deal for existing claimants than just what resources allow. We know the phrase “as resources allow” is Treasury speak for “we’ll see what we can do on the public spending round, but maybe they’ll get more money and we’ll let them have more support, but only dependent on what the Treasury can find”.

We were concerned, as were outside bodies, about what is a resource constraint. Under the Bill, not enough support will be given to existing claimants when they come on to ESA, nor will requisite support be given to existing claimants on IB before ESA kicks in.

We all know that the Department works under cash constraints. An example of how that works is that the National Audit Office has identified anecdotal evidence of creaming within the new deal for disabled people. Contracts out to tender for the NDDP were based on price, encouraging a large number of low unit price and low volume contracts offering services. Low numbers were also targeted by the programme because Jobcentre Plus was allocated only enough funds for around 4 per cent of the total IB population in an area. This is not something I say critically of Ministers, but we have to acknowledge, as the National Audit Office have acknowledged and the Government in replies have occasionally acknowledged, that the numbers of people who are the subject of help in, for instance, the new deal for disabled—it would also apply in similar programmes—is 4 per cent. This is a very small figure and we have to ask ourselves why it is only 4 per cent. It is not because Jobcentre Plus only wants to help 4 per cent; it is due to public spending constraints.

Let me give one example. Ministers will be aware of this and I do not think they are any more happy about this than we are. The Sure Trust, among many others—I could also name the Patwith Trust—say that there can be a contract to get, for the sake of argument, 500 people into work who have physical disabilities and who have been on benefit for, say, two or three years. If the contract is to get 500 people into work in Birmingham, for example, the organisation has a yearly contract to hit that 500 target.

The organisation may hit the 500 target after three months. It has done very well. Having reached the target nine months ahead of schedule, it goes back to Jobcentre Plus and says, “We have done in three months what the contract says we can do in 12 months. We are on a roll here. We are doing terribly well. Can you give us more money so that in the next nine months we can get more people back to work?” The answer is no because of the spending constraint at the Department. The departmental budget for that cannot be exceeded.

We know this is not an anecdotal example, it happens all the time.

Adam Afriyie (Conservative, Windsor)

Is my hon. Friend suggesting that the policy of the Department for Work and Pensions or the policy of the Treasury could be holding back the speed of roll-out and take-up of ESA?

David Ruffley (Conservative, Bury St Edmunds)

My hon. Friend is there. The Minister is saying—we are all saying it—that existing claimants will only receive the support in the roll-out process before 2008, when ESA kicks off, and after ESAis introduced “as resources allow”. If I have misunderstood the meaning of “as resources allow”, no doubt the Minister will put me right when he replies. It seems that priority will be given to those closest to the labour market. There is nothing wrong with that; they have to be given support to get back to work. The Minister said:

“As a priority, we will focus on those who are newest to incapacity benefit or employment support allowance”.—[Official Report, 10 July 2006; Vol. 448, c. 1093.]

The Green Paper says that the roll out of pathways to existing claimants will happen only “as resources allow”. That is not the same regime as that for new entrants coming on to incapacity benefit in the roll-out period, or new claimants for ESA. If we are wrong about that, I should be grateful if the Minister could point to where he has changed his view about the statement “as resources allow”. I want a constructive debate because the point about existing claimants was not invented by Her Majesty’s Opposition. Nor was it an hallucination on the part of experienced private and voluntary sector providers. It is fact. If there were a new policy that the Government have announced about existing claimants that none of us has heard about, we should be grateful to be put right.

My final question relates to the pathways to work roll-out, which is essential to the proper functioning of the ESA contracting regime under the clause. The contracting regime for ESA will be the same as that for the roll-out to pathways. The Minister said in his letter of 4 July to Members of Parliament that the phase that will begin in October 2007, the start of the roll-out of the pathways service to the remaining 60 per cent. of new IB claimants and repeat IB customers, will be

“mainly via private and voluntary sector partners”.

That will roll on until April 2008.

I do not wish to be known or thought of as a politician who likes dancing on the head of a pin when it comes to language, but will the Minister quantify “mainly” in that context? Does it mean 90 per cent.-plus private and voluntary sector providers getting that business? Is it 60 per cent., or somewhere in between?

Jim Murphy (Labour, East Renfrewshire)

Again, I would not wish to test the patience of the Committee by going into every detail of all the substantial questions that the hon. Gentleman asked. They have all been fair, and I acknowledge the legitimate issues that have been raised by others. I am not accusing him of dancing on the head of a pin and, with my size 13 feet, there is no pin big enough to dance on. I was not about to raise the issue of the 100 per cent. incentivisation on outcomes, although I have had the details of it with me at each sitting. The hon. Gentleman is right; on Second Reading, the shadow Secretary of State for Work and Pensions, the hon. Member for Runnymede and Weybridge, pressed the Government on such matters. He said

“A payment of 30 per cent. of the fee up front is precisely what creates the resource constraint which is constantly referred to as a reason for not rolling out the programmes more quickly. Why not utilise the private and voluntary sectors’ appetite for risk...on a genuine no win, no fee basis...paying them only when they have not only placed someone in work but maintained them in work”.—[Official Report, 24 July 2006; Vol. 449, c.636-7.]

David Ruffley (Conservative, Bury St Edmunds)

The full quote would be nice.

Jim Murphy (Labour, East Renfrewshire)

I will read the whole lot if the hon. Gentleman wishes. The quote can be found at column 636 of Hansard. I make the point not to dance on the head of a pin, but to say that we simply do not believe that constructing the contracts in terms of 100 per cent. outcomes is the right way to progress.

David Ruffley (Conservative, Bury St Edmunds)

My hon. Friend the Member for Runnymede and Weybridge was talking about existing claimants. The proposal would enable a much faster and deeper roll-out of pathways to work to include existing claimants. Our proposition is only in relation to existing claimants who would not otherwise get the full support because, as resources allow, it is a constraint. I repeat that we do not dispute the 30 per cent. up-freeze, 70 per cent. outcome model that the Minister proposes for new entrants.

Jim Murphy (Labour, East Renfrewshire)

Uncharacteristically, the hon. Gentleman has not grasped the detail of what we seek to achieve. I say that that is uncharacteristic, because I think that all members of the Committee will acknowledge that he has taken great care to understand the detail of the proposals, as they all have. However, I shall respond to the specific points that he raised. The 100 per cent. outcome funding model is not attractive for existing or future customers in terms of the national roll-out of pathways and any future contracting.

In answer to the question about how existing customers will be treated in provider-led pathways, I return to my earlier comments. In the key criteria document, which we will place in the public domain, subject to commercial confidentiality, section 1 asks potential contractors to address the specific needs of and barriers to all customers, so there will be no distinction or creaming. The hon. Gentleman quite fairly raised this issue on behalf of himself and others, and we all share his concern that contracts should be constructed in such a way as to ensure that opportunities for creaming are minimal.

My assertion that we should help the newest IB claimants as a matter of priority is based on the lessons learned and experience gained from pathways, and on the information that the hon. Gentleman rightly gave us about people who are on IB for two years or longer being more likely to die or retire than ever work again. Three quarters of current IB claimants fall into that category. What I am saying is that, at the point of migration, my personal priority would be to move the newest claimants across first. That is the distinction I am making about supporting the newest claimants over and above anyone else.

We are happy to learn from the experiences gained as pathways is rolled out elsewhere in the country, but the current approach is that the newest claimants and those with dependent children will be first. That is the distinction that I seek to make today and will seek to make in the future and as we migrate people on to ESA, and that is the point that the hon. Gentleman seems not to have grasped. I do not say that in any negative way—

Jeremy Hunt (Conservative, South West Surrey)

Say it gently.

Jim Murphy (Labour, East Renfrewshire)

I will say it gently, rather than Ruffley, of course. I have been making that joke throughout the Committee, but it has taken hon. Members until now to realise.

Current customers on IB are able to access the support available in pathways in 40 per cent. of the country. As it is rolled out—before 2008 and before ESA is in existence—current IB customers will beable to access the support that is available in pathways. The distinction that the hon. Member for BurySt. Edmunds (Mr. Ruffley) reasonably raises as a concern, will not be there, because ESA is the benefit structure, and pathways, when it is on the ground across 100 per cent. of the United Kingdom, will be the enabling—

Natascha Engel (Labour, North East Derbyshire)

I am sorry not to let the Minister finish his sentence. On the issue of access, will he confirm, in light of yesterday’s announcement about the 0800 and 0845 numbers, that new claimants on ESA will use an 0800 number rather than an 0845 number?

Jim Murphy (Labour, East Renfrewshire)

My hon. Friend has raised this matter with me pretty doggedly. Earlier this week, we announced that in future all working age benefits information will be accessible through an 0800 number from landlines and telephone boxes, and of course we could examine how to enable that for pay-as-you-go mobiles. It is an important new announcement. That point of contact for Jobcentre Plus and working age benefits will help as regards access. Hon. Members might be interested to know that, when I had conversations with a small group of folk experiencing mental illness, one of the things that frustrated them was the complexity—the repeat phone calls, the additional cost. I do not want to overstate it, but in some instances that complexity was a barrier to accessing the support available, because they had not yet entered the system. I can confirm that, from 2008, ESA claimants will be able to access services through an 0800 number.

David Ruffley (Conservative, Bury St Edmunds)

If it is the case that existing claimants will get the same level of support as new claimants in the roll-out and post 2008 when ESA is up and running, why do existing claimants only have to volunteer? There is no mandatory requirement on them to attend WFIs.

Jim Murphy (Labour, East Renfrewshire)

I will come back to the sentence that I was halfway through, and then I will respond to that point. The national roll-out of pathways will enable progressive support—personal advisers and everything else—to back up the new employment and support allowance from 2008.

In respect of the conditionality that different groups will have to undertake, post 2008, new customers on ESA, depending on whether they are in the support group or the work-related activity group, will have to undertake work-focused interviews and, as we roll it out, work-related activity. Before the migration, existing customers on IB will continue to receive the six work-focused interviews. In different parts of the country, we are piloting to find the right mix of sanctions and conditionality in the pathways roll-out.

It is important to put on the record that we have made the policy decision, through the Green Paper process and elsewhere, that from 2008, as existing customers are migrated across, the conditionality will be in attending work-focused interviews on the basis, crudely put, that they signed up to IB as a certain benefit. We are changing aspects of that benefit, but we do not think that it would be right to force existing customers, at the point of migration to ESA, to undertake work-focused interviews and also work-related activity. The compulsion on work-related activity will be for new customers on ESA from 2008. That is the distinction. We can continue that legitimate debate, but that is what we have settled, as a matter of public policy, about where the burden of conditionality will lie.

I shall make some progress, if I may, on a couple of other matters. In terms of unnecessary administration, the hon. Member for Bury St. Edmunds makes a fair point. In determining what management information and reporting we require from providers—hopefully this will be reflected in people’s assessment of the paperwork that can be provided—we have tried to strike a balance between a genuinely black-box approach, which we discussed before our break, and ensuring proper contract management. He will recognise that it is an important and difficult balancing act to enable flexibility in the private and voluntary sector but also to maintain national standards, for example in condition management, to ensure a degree of quality.

On clause 15, all regulations, safeguards and appeals that apply to the process, such as work-focused interviews, will apply in the same way as they do in Jobcentre Plus. I think that the hon. Member for Inverness, Nairn, Badenoch and Strathspey asked about that.

I hope that I have reassured hon. Members. I had another excellently crafted, detailed speech to read out, and with the Committee’s permission and your indulgence, Mr. Hood, I will allow my noble Friend the Lord Hunt to read it out when the Bill reaches Committee in the House of Lords. That would save an awful lot of people drafting and crafting time.

There is real unanimity about the capacity of the private and voluntary sectors. Clause 15 enables that roll-out to those sectors. It is an important component and building block of the employment and support allowance from 2008.

Clause 16

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I beg to move amendmentNo. 198, in clause 16, page 14, line 21, leave out paragraph (a).

The purpose of the amendment is to probe the Government’s intentions for the rules on notional income and notional capital and the way in which those will be applied in the context of the employment and support allowance. As the Committee will no doubt know, the notional earnings rule—as it applies to income support—can be applied in certain cases in which people are not undertaking paid employment, such as voluntary or other work, and Jobcentre Plus does not think that it is reasonable to provide their services free of charge. That means that someone is treated as if they were in a paid job. For example, if someone works 10 hours a week on a voluntary basis, that can be regarded as 10 hours a week of actual employment.

The notional earnings rule means that the notional amount of money that someone is deemed to be earning can be taken into account and removed from income support on a pound-for-pound basis. In other words, people’s benefit can be reduced by an amount, even though they have not received it, because theyare doing an activity in the community, for example, which Jobcentre Plus deems, for whatever reason, appropriate. Likewise, earnings disregard rules—which are pretty ungenerous anyway—would also apply. In some cases, expenses when undertaking voluntary work can be counted as earnings. Therefore, someone who has had their travel expenses reimbursed could have those treated as earnings and therefore they would count towards the £20 earnings disregard limit.

Will the Under-Secretary clarify the Government’s intentions for provisions on the employment and support allowance? The notional earnings rule was invented to tackle the situation in which people may have forgone earnings to maximise their benefit situation. However, in the context of a Bill that deals with work-related activity and people undertaking activities that can help them get back into the labour market—this point has been made on both sides of the Committee during the course of our proceedings—activities such as voluntary work can and should be regarded as work-related activity as part of pathways to work or whatever.

How will those rules apply to employment and support allowance? If necessary, will the Under-Secretary consider a form of limited amendment to the notional earnings rules specifically in relation to the employment and support allowance so that people engaged in voluntary work, as part of the process of getting closer to the labour market, can do so without being penalised. I look forward to her response.

Tim Boswell (Conservative, Daventry)

I welcome you, Mr. Hood, back to the Committee. We are anxious to make progress and therefore I will not detain the Committee long.

Dealing with the generality of the clause—this is not a clause stand part debate, and I hope not to make a speech on that—we could interpret the amendment as being about the wording and the construction of the clause, as it would leave out one of its crucial subsections. We should probably impart one further dramatis persona to the Committee in the shape of Kafka, because the idea of prescribing something as capital or income that a person does not possess, or it is a disregard—income to be treated as capital, capital to be treated as income—is overtly in that vein. I would be more than delighted if I could make that particular case to Her Majesty’s Revenue and Customs, but I am more concerned that it might catch the habit and start interpreting my tax schedules along those lines.

The explanatory notes on the clause are long and particularly helpful. I shall make one other obiter remark. The Bill is constructed rather like Beethoven’s symphonies: the odd-numbered clauses are weighty and important, whereas the even-numbered ones are lighter but nevertheless perfectly delightful.

We have good meaty explanatory notes, so I simply ask the Under-Secretary to assure the Committee—I think it is clear from the explanatory notes that everything in the provision is precedented and will be tied down in regulations—that in connection with the treatment of capital and income, the provision will not be some kind of arbitrary game, as I jocularly suggested, and that it will be precedented in relationto other benefits and tied down to particular circumstances, such as the wilful evacuation of capital assets, with which we are fairly familiar in respect of other benefits.

Having worked on the pension credit legislation some years ago, I know that most people do not think that the tariff for income is particularly generous to the claimant. I shall not reopen that issue, but perhaps the Under-Secretary could give the important assurance that she would anticipate that, unless there is good reason to the contrary, the same approach would be taken in relation to all benefits. This is like jobseeker’s allowance, but the capital tariff, or the notional income, is treated as if it were more or less the same as pension credit. It would be unfortunate for the Department’s business if those got out of line.

I want to reinforce what the hon. Member for Inverness, Nairn, Badenoch and Strathspey said about voluntary work. It is an important pathway into employment, and it is important to encourage rather than discourage it. The level of notional income should be set with that in mind.

I have recently been in correspondence with the Princess Royal Trust for Carers about some exchanges that I had on other matters to do with the position of disabled people who have family responsibilities. I believe that currently nobody is treated as notionally in work because, notwithstanding their condition, they have some family caring responsibilities, although the Under-Secretary will be able to reassure the Committee on that. The issue has not been much mentioned.

I invite the Under-Secretary now or in response to a later clause, possibly in relation to private schemes, to reflect on the importance of disability employment advisers and personal advisers reviewing the situation not just of the person before them as the claimant but of their family. That will obviously influence how they are available for work, the kinds of things that theycan do, and the constraints that they are under. Understandably, and without prejudice to our earlier exchanges about work load, case load, box-ticking and the rest of it, people will often tend to consider the claimant’s situation without necessarily looking at the family in the round.

Several hon. Members properly raised the issue of child poverty. We will not unlock that problem unless the solutions for those now claiming the allowance are eased or accommodated as far as possible to meet their family circumstances. Having said that, the amendment is tabled in a certain spirit, and we are anxious to make progress. There is no essential difficulty with the clause, so I shall leave my hon. Friend the Member for South-West Surrey (Mr. Hunt) to discuss disregards in relation to a later amendment.

Anne McGuire (Labour, Stirling)

I am delighted to see you back in your Chair, Mr. Hood. I have missed you.

I can allay the fears of the hon. Member for Inverness, Nairn, Badenoch and Strathspey, who is in danger of confusing two issues. One is voluntary work, and we have said more than once that volunteering is a stepping stone along the pathway to work. There is a major difference if someone is working in a commercial environment and appears not to be declaring any income from that job. As a Member of Parliament I have known circumstances in which someone has worked full-time in a business and has been astonished to find out that the DWP thought they might be earning some money when they were also claiming benefit. That scenario will be covered rather than the type that the hon. Gentleman painted.

On capital, perhaps I can highlight another scenario. To circumvent the capital limits, a person might put all their capital in the name of a trusted friend—it would need to be a pretty trusted friend—or a family member. They might effectively dispose of capital so as to come under the threshold. The clause will deal with such scenarios.

Tim Boswell (Conservative, Daventry)

Is it fair to summarise the Under-Secretary’s comments as being that the clause is primarily dedicated to dealing with abuse and deliberate attempts to frustrate the system, rather than dealing with people with entirely legitimate activities who might get caught in the fire? Will she at least assure us that that is what she is trying to do in the regulations?

Anne McGuire (Labour, Stirling)

The hon. Gentleman puts his finger on the nub of the matter. We have increased the capital limits—we doubled them in April 2000—and there is now a limit of between £6,000 and £16,000. For older people in residential care the limit is around £10,000. The clause will essentially allow us to deal with those who seek to circumvent the rules. They are the same rules as currently exist for income support, and they should be translated into the new legislation.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

It was the specific assurance on voluntary work that I wanted. Having received it, I beg to ask leave to withdraw the amendment.

Jimmy Hood (Labour, Lanark and Hamilton East)

With this it will be convenient to discuss new clause 13—Earnings disregard level—

‘(1) The Secretary of State may make regulations that the level of earnings disregard for claimants of Employment and Support Allowance shall be set at a level that he shall by determine.

(2) In determining the level of earnings disregard under subsection (1) the Secretary of State shall have regard to labour market conditions including the National Minimum Wageas defined under section 1 of the National Minimum WageAct 1998 (c. 39).’.

Jeremy Hunt (Conservative, South West Surrey)

I, too, welcome you back to the Chair, Mr. Hood. We are trying to make progress. We know that that must be the case because we have not heard the weather forecast for Inverness, Nairn, Badenoch and Strathspey. I regret that slightly, because rather like “The Archers”, I am beginning to follow that forecast and I am a bit curious as to how it might be this afternoon.

I thank you for selecting new clause 13 with clause stand part, Mr. Hood, because it is only loosely related to the clause. It deals with the income of claimants, and there is not really anywhere else in the Bill that is suitable to discuss that. Before speaking to the new clause, I have a question for the Under-Secretary. Clause 16(3)(b) gives the Secretary of State the power to disregard the capital or income that a person possesses. Will she confirm that she might be prepared to do that if a disabled person is asked to take part in a consultation on Government policy and is given travel expenses? She and I both spoke at the annual general meeting of the British Council of Disabled People recently. One of that organisation’s great concerns is that it is often asked to participate in consultations about policy, but often gets little or no remuneration for it. It is particularly concerned that if its members receive any remuneration—even travel expenses—it could count as income towards their earnings disregard. Will that be one occasion on which the Secretary of State could show a bit of latitude?

Tim Boswell (Conservative, Daventry)

Does my hon. Friend agree that this may apply to certain people who may receive expenses or honoraria, or may decline to claim them in relation to anything that they are required to do in connection with user consultations under social care legislation? Parliament encourages consultation with service users, so it would be unfortunate if it appeared to subvert the position of users through the earnings disregard.

Jeremy Hunt (Conservative, South West Surrey)

As ever, my hon. Friend makes an important point. A specific example of what he is talking about would be the pilots concerning individual budgets, where it is vital to get service users’ views if programmes are to be rolled out effectively and successfully. I am sure that the Government do not intend to put off disabled people from participating in such consultations, so it would be great if the Minister could reassure the Committee.

Moving on to new clause 13, I understand that the real intention of the Bill is to tackle the barriers to work faced by many people with a limited capability for work. It is encouraging that the Bill rolls out various proactive support measures that could help people make the difficult transition and engage in the world of work. However, I tabled the new clause because I am concerned that the Bill fails to deal with a structural problem that is a huge barrier to people re-engaging or engaging for the first time—[Interruption.]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. May I ask the hon. Member for North-East Derbyshire (Natascha Engel) to resume her seat?

Jeremy Hunt (Conservative, South West Surrey)

I am grateful, Mr. Hood. I am hoping that the hon. Lady will intervene later, because she made some interesting interventions earlier when we were talking about Tunbridge Wells Tim and Derbyshire Dave.

I am concerned that built-in disincentives, including the strict rules about how much money can count towards the earnings disregard, strongly discourage people from engaging in the world of work. If we remove the structural problems with the earnings disregard, we will have far greater success with the proactive support measures advanced under the Bill as part of the pathways roll-out.

On the DWP website, which I viewed last night, under a heading of “Working while claiming benefit”—

David Ruffley (Conservative, Bury St Edmunds)

You should get out more.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order.

Jeremy Hunt (Conservative, South West Surrey)

We return to my activities last night, which included looking at the DWP website, which I am proud to have done because it was important for our debate today.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. The hon. Gentleman has only himself to blame.

Jeremy Hunt (Conservative, South West Surrey)

Thank you, Mr. Hood. As a new Member of Parliament, I shall take very seriously your advice about not getting things transcribed things on to the record that are best left untranscribed.

The DWP website says:

“You cannot usually work while you are getting Incapacity Benefit, Severe Disablement Allowance, National Insurance Credits or Income Support because of illness or disability. You may be able to do the following types of work but you should check with your local Jobcentre, Jobcentre Plus or social security office before you start.”

Then it talks about those types of work. Neither the Bill nor the explanatory notes make it clear howthe dual structure works in this regard. I hope that the Minister is able to enlighten the Committee about ESA and the dual structure that exists at the moment, where people on income support only have a £20 earnings disregard, but those on incapacity benefit have the permitted work higher limit of £81 a week. The Bill does not make it clear whether the Government intend that dual structure to continue.

I am sure that it will not have escaped the Minister’s notice that, curiously, there is a much lower earnings disregard for those likely to be the poorest people involved in the programme. Will the Minister clarify whether she thinks that it is appropriate to have two levels of earnings disregard given that part of the benefit of introducing new welfare reform legislation is a move towards simplicity and transparency, where possible? Having complicated rules dependent on the individual claimant for earnings disregard would not appear to do that.

The earnings disregard for people on income support has not changed since its introduction, but the labour market conditions have. Disability Alliance told the Select Committee on Work and Pensions that until October 2005 those on income support could work for up to four hours on the minimum wage, but since then increases to the minimum wage to £5.35 mean that they can work for just over three hours. It asked whether it was not incongruous that a person can work for a certain number of hours one year, but not the next. I put it to the Committee that that is against the spirit of the Bill—a spirit that the Opposition welcome.

The Select Committee recommended that the earnings disregard be set at four hours at minimum wage and uprated annually. New clause 13 is actually weaker than that and would allow, but not compel, the Secretary of State to uprate the earnings disregard in line with the minimum wage and require him or her to take account of other labour market conditions, not just the minimum wage—other conditions need to be factored in.

I put it to the Minister that it is not necessarily the case that increasing the disregard would amount to an increase in public spending. If people did not think that it was going to affect their benefits package, they would feel more encouraged to engage in the world of work—in many cases they are not because of the earnings disregard—and to take those first few halting steps. In that case, in the long run, the Bill would be more successful in getting people off employment and support allowance and back into work.

The Minister gave an interesting example from her constituency surgery when she met someone working for a commercial organisation who did not understand why that might be incompatible with claiming benefits. The concern is that if the earnings disregard rules are too generous, everybody doing a part-time job might think, “I will sign on and claim benefits at the same time as earning a wage from my part-time job”.

Actually, the Government could be a lot bolder with earnings disregard because of the structure of the pathways to work programme. In reality, people have to go through a process before being considered for ESA and talk to a personal adviser who has much more detailed knowledge of their personal situation than has been the case before. In that situation, with that knowledge of individual claimants, it ought to be possible to be a lot more generous with the earnings disregard.

I thank you again, Mr. Hood, for allowing this new clause to be debated. To wrap up, I remind the Minister that Capability Scotland said that 50 per cent. of working-age disabled people in Scotland did not want to engage in the world of work because they were worried that it would threaten their benefits package. Let me remind her also that the Secretary of State himself has talked frequently, in the House and the media, about the relationship between poverty and worklessness. Is it possible that by accepting the new clause we could turn the spotlight on the barriers created by permitted hours and the earnings disregard? Will she consider supporting the new clause as a step in the right direction to dealing with that issue?

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I would like to add a few remarks to those of the hon. Member for South-West Surrey on earnings disregard. It is an important issue to raise at this stage. I shall not comment on his nocturnal activities, but I do think that his amendment has drawn attention to an important issue. The situation is worse than he described because he dwelt only on the permitted working rules in relation to incapacity benefit and earnings disregard in relation to income support. But of course there are also earnings disregard that apply to housing benefit. In relation to incentives to work and the agenda to make work pay, is it worth someone going to work, as the Bill tries to encourage people to do? Do people feel that when they go to work, they receive a reasonable amount of the money that they earn?

The question of earnings disregards is important. The earnings disregard is set at £20, which means that someone can carry out less than four hours work on the minimum wage before they start losing benefits. Depending on which benefit they receive, they may lose it quickly, too. Recent figures suggest that as a result of those tapers, people can then lose their benefit at the rate of 70p to 90p in the pound of new wages earned. If one were to suggest such rates for people at the top of the income scale, there would be squeals of pain from the City and elsewhere; however, the Government consider it acceptable for people at the lowest end of the scale.

The earnings disregard will allow a proportion of income to be earned before the clawback starts. It will be critical to people who want to try out not just work-related activity, but a few hours of work a week, or to people who have a fluctuating condition and are able to work less than 16 hours a week. Tax credits that help people make their work more worthwhile do not kick in until 16 hours have been worked.

It would be useful if the Under-Secretary were to address not only the earnings disregard for employment and support allowance, but the interaction between the different earnings disregards for different benefits. After all, someone in receipt of ESA is likely—although not certain—to be in receipt of housing and other benefits, as the hon. Member for South-West Surrey said. All earnings disregards will have a substantial impact on the financial incentives for people to return to work.

I would be grateful if the Minister were to explain both the Government’s thinking on earnings disregards, and her discussions and thoughts on the idea of higher earnings disregards to help get people off benefits and back to work and to help a range of other claimants who face substantial disincentives. That includes high marginal withdrawal rates of benefits. A higher earnings disregard could help someone move higher up the ladder towards work, before that person’s benefits started being taken away. What we do about marginal reduction rates of benefits is a matter for a separate debate, although it is important. We could start by establishing earnings disregards at a sufficiently generous rate that allowed people to try out work, and for work to be financially worthwhile.

Anne McGuire (Labour, Stirling)

Mr. Hood, may I ask whether I will be replying to the debate on clause stand part as well as new clause 13?

Jimmy Hood (Labour, Lanark and Hamilton East)

Yes.

Anne McGuire (Labour, Stirling)

Thank you for that clarification, Mr. Hood.

I am delighted to have had this discussion, because as my hon. Friend the Minister said during the debate on clause 13, it is an important issue. He also said that

“regulations could, for example, state that it is paymentsafter deduction of expenses that are prescribed for the purposes of deduction.”—[Official Report, Standing Committee A,17 October 2006; c. 85.]

He was interested in the points made during that debate.

I shall clarify some other points. Under incapacity benefit, as the hon. Member for South-West Surrey said, permitted-work rules allow a person to continue receiving benefit while they work. We recognise the importance of work. There are two limits: the lower permitted one of £20 a week and the higher limit of £86 a week, which is available in limited circumstances and allows someone to start to make the move from part-time work into full-time work in a supported environment. We have tried to look at the spectrum of support that is needed.

There is no evidence to show that a blanket disregard on its own is effective in moving someone from worklessness or incapacity benefit into work. It is a matter not just of what income should be disregarded, but of the other mechanisms that need to be put in place. I have had discussions with Capability Scotland and other organisations on the confidence-building measures that we need to put in place, because the hon. Gentleman is right: if someone is sitting on benefit for a long time there is a security in knowing what income they have and in knowing that they have an entitlement to certain things. If a person is asked to leap into something that is perhaps beyond their recent experience we need to consider how to ensure that that person has the confidence to make the leap.

As we all agree in this Committee, the best way out of poverty is into work. That is why we have extended the linking rules so that someone who holds an entitlement to a benefit has the security of knowing that, subject to their meeting the criteria, they can move back on to that entitlement if they try work and it does not work out. It allows confidence to be built up with the security of knowing that they have not completely cut the cord between themselves and the benefit system. I think that that addresses some of the issues that were raised.

I appreciate that the hon. Gentleman wants us to give a commitment to raising the rate, but I say, gently, in the words of my hon. Friend the Minister for Employment and Welfare Reform, that we cannot just take the income disregard in isolation, as a series of measures needs to be put in place.

On the point raised by hon. Member for Inverness, Nairn, Badenoch and Strathspey, decisions on how housing benefit, council tax benefit and so on will interact with contributory employment and support allowance cannot, of course, be made until the structure of the ESA has been decided. Some of those issues will be considered further down the line and, as we have already given a commitment, will be subject to other debates.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I understand the legal reasons for the Minister’s point. She is right to say that a range of other factors have to be taken into account; earnings disregards cannot be treated in isolation. However, someone in receipt of housing and council tax benefit who starts earning more than £20 a week starts to lose benefits at the rate of 85p for every additional pound earned, which is a substantial disincentive to work. Will the Minister take that factor into account in thinking through how ESA should relate to the housing benefit issue?

Anne McGuire (Labour, Stirling)

I have heard what the hon. Gentleman said, but I have gone as far as I am prepared to go in today’s discussions.

Adam Afriyie (Conservative, Windsor)

Is the Minister saying that she is not prepared to link any disregards to the minimum wage, which was set by her Government as a benchmark for minimum earnings and for many other important things that underpin our society? Can the Minister make that absolutely clear to the Committee?

Anne McGuire (Labour, Stirling)

It is lovely to hear the minimum wage being embraced in such a wholehearted way by a party that made us sit through a long night when we used to have all-night sittings. My hon. Friend the Member for Dumfries and Galloway (Mr. Brown) remembers it well.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. We may be drifting away from the point.

Anne McGuire (Labour, Stirling)

I know, Mr. Hood, but it was worth a try.

David Ruffley (Conservative, Bury St Edmunds)

The Conservative party has moved on. Will the hon. Lady?

Anne McGuire (Labour, Stirling)

The proof of the pudding may be in the eating, but I hope that we do not have to eat it for a long time. I go to my earlier point. It is not specifically about the level of the disregard, although as my hon. Friend said earlier, it is an important issue and one that we will have to consider. That is probably as far as the hon. Gentleman will tempt me today.

The Government regularly review the level of disregards, taking into account a large range of relevant factors, one of which is the prevailing labour market conditions. We need to ensure that we do not undermine the incentives for people who move off benefits into full-time work if that is appropriate. It is about getting the balance right and not creating a situation where it is more acceptable for people to be on benefit plus a high disregard, which either the hon. Member for Inverness, Nairn, Badenoch and Strathspey or the hon. Member for South-West Surrey highlighted. We are currently working on how we can achieve that balance. We will be setting out the rules on permitted work and earnings disregards in the regulations that follow the Bill and those regulations will be subject to debate and discussion in the House.

I think that I have dealt with the specific points raised in the debate. The clause will allow us to prescribe when a customer can be treated as having income or capital which he no longer has, for example, where it has been disposed of deliberately; disregard certain capital and income, for example, the value of a customer’s house or personal possessions; and provide a capital limit so that those with capital over this amount are not entitled to benefit. Clause 16 is a crucial part of the Bill as it enables the value of income and capital to be treated in a way that is similar to existing benefits.

Jeremy Hunt (Conservative, South West Surrey)

I was informed by the Clerks that I needed to let you know, Mr. Hood, before the end of the debate on the clause whether we wanted to press new clause 13 to a vote. May I, in that spirit, briefly respond to the Minister and explain what our thinking on that is?

The Minister mentioned the minimum wage. This is central to this issue. I freely admit that I had concerns when the minimum wage was introduced that it would price some people out of the market. I was wrong. That has been demonstrated by what has happened subsequently. May I praise the Minister? The minimum wage is a brilliant mechanism to work in partnership with the pathways to work programme. Without a minimum wage there is obviously a real concern that employers might exploit the fact that the benefit system exists to pay lower and lower wages and hope that the state would fill the gap. With the minimum wage that is no longer possible.

Tim Boswell (Conservative, Daventry)

I felt I should declare an interest as some Members may recall that I had a certain degree of responsibility both for keeping them up all night on the minimum wage and, conversely, in receiving their attentions in Committee over two whole nights of debate. Whatever else one may say about that process, it was right to bring out the issues. I simply wonder whether my hon. Friend would reflect on the fact that the more the Government succeed in raising the acceptable level of the minimum wage, ipso facto, if they do not alter the provision for disregards, the proportion of time that is available within the rubric will be reduced.

Jeremy Hunt (Conservative, South West Surrey)

As ever, my hon. Friend makes an important point, and he does so in the Daventry style of debate, which we have got used to in the Committee. The problem, as he rightly says, is that people will be able to work for less and less under the earnings disregard as the minimum wage increases.

The Under-Secretary said that there is no evidence that a blanket earnings disregard on its own is effective and she is absolutely right that it must be part of a whole package of measures, including confidence-building measures. However, it is still a significant hurdle, and the evidence from Capability Scotland is just one indication of that. To take other, anecdotal evidence, disabled people who are out of work will say that their biggest fear is doing anything that could compromise their benefits package, which is important to them and will be part of their income for their whole lives.

The Under-Secretary also mentioned the linking rules, which are important, but they are not widely understood. If they are to play an important part in removing the barrier to returning to work, the Government must make much more progress in publicising how they work.

Finally, I ask the Under-Secretary to correct the Department’s website. She said that it was possible to earn £86 on the higher rate of incapacity benefit, but the website says £81. I am sure that she can ensure that her website is updated.

Anne McGuire (Labour, Stirling)

It is not my website.

Jeremy Hunt (Conservative, South West Surrey)

Well, her Department’s website.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. We said earlier that we wanted to make progress, but we will make a lot more if hon. Members listen to those who are on their feet and remain in order.

Jeremy Hunt (Conservative, South West Surrey)

I am grateful to you, Mr. Hood, but I do not need to try your patience any longer. On the basis of our discussion, Opposition Members will want to press new clause 13 to a vote at whatever point in our proceedings you consider appropriate.

Clause 17

Anne McGuire (Labour, Stirling)

I beg to move amendment No. 53, in clause 17, page 14, line 41, leave out ‘this section’ and insert ‘subsection (1)’.

Jimmy Hood (Labour, Lanark and Hamilton East)

With this it will be convenient to discuss Government amendment No. 54.

Anne McGuire (Labour, Stirling)

The amendments enable a person to be disqualified from receiving payment of a contributory employment and support allowance if they are absent from the UK or in prison, unless regulations provide otherwise. Although they will be disqualified from receiving payment, they will still be treated as being entitled to benefit, and we need to be clear about the difference between entitlement and payment. The flexibility to make exceptions in regulations would allow us to continue to pay someone a contributory allowance where they were, for example, absent from Great Britain only temporarily.

The clause and the regulations will allow people who are absent from Great Britain for short periods, and prisoners who receive short custodial sentences, to continue to be entitled to ESA while disqualified from payment of ESA, so they will keep the underlying entitlement. That will enable us not to stop and start claims unnecessarily, wasting the time and resources of claimants and staff. We intend to make provision through regulations to limit the period of disqualification to six weeks, after which a person will be treated as no longer being entitled to the benefit.

The policy intent for prisoners is clear: the state should not maintain someone who is in prison through benefits. The provision allows us to disqualify such people for payment purposes for short periods, rather than to disentitle them. In that way, we will not waste resources by stopping and starting claims when people serve only a short sentence. Where someone is in prison for longer, however, we will use powers in paragraph 1(a) of schedule 2 to remove their entitlement to benefit altogether.

Once the period of disqualification ends, as set out in regulations, entitlement to ESA will cease altogether if the claimant is still abroad or imprisoned. However, if they are no longer abroad or in prison, the provisions will enable benefit to resume without the need for a fresh claim. Exactly the same provision applies to incapacity benefit, and it has been a feature of the contributory benefits system for many years.

We strongly believe that the benefit system should not support people who are in prison or abroad, except in specific circumstances, as they should be supported by other means. The ability to disqualify the payment of benefit when entitlement is retained is important to protect public funds.

Tim Boswell (Conservative, Daventry)

I am sure that the Committee will be relieved to hear that I do not object to the principle of the amendments, and that I shall not advise my hon. Friends to oppose them. However, I would like a moment of the Under-Secretary’s time. First, I make the point that apparently, or overtly, the provision on prisoners has been omitted. That may have been purely a technical oversight, but she should acknowledge the role of my hon. Friend the Member for Runnymede and Weybridge in drawing attention to the fact that many of the issues involving prisoners and their benefits have been rather overlooked by the Department. It is obviously unacceptable for prisoners to receive benefits when they are in Her Majesty’s custody.

That issue prompts a slightly more substantive point, because, as the Under-Secretary made clear when moving the amendments, we are talking about short periods of incarceration. What is the position regarding available support services and the pathways to work programme? Clearly such services are not geared towards people who are resident in prison and may not be extendable to people who are in prison, but there may be cases in which they could be used—for example, with someone who has a fluctuating, explosive condition, who has been put in the cells and charged with some public order offence. There may be sensible reasons, to do with rehabilitation, for the pathways programme to continue at that point. If the Under-Secretary cannot give me a pat answer, will she consider whether that should not be ruled out? I am interested in this not in relation to the moral approbation of a crime that has been committed, but as a realistic pathway to rehabilitation. Many of us are interested in prisoners in that wider context.

I pause on only one other matter now, although we may have some comments to make in the stand part debate, which is the reference to Great Britain. The hon. Member for Inverness, Nairn, Badenoch and Strathspey has tabled amendment No. 201 to schedule 2, which raises the same issue. As we will debate that amendment later, I do not wish to anticipate or rehearse any of the comments that he might make, but I am genuinely puzzled about one point.

This country is the United Kingdom, with Great Britain and Northern Ireland. We know, and clause 60 reminds us, that we are not legislating for Northern Ireland in the Bill. That may happen either by an Order in Council or through a procedure of the devolved Assembly if it is reconstituted and takes up its powers. I simply make the point that moving to another part of the United Kingdom is not the same as moving to a UK dependency such as the Isle of Man or Guernsey; it is not leaving the UK. It is odd, therefore, that the structure of devolved government, or otherwise, seems to preclude Northern Ireland. There may be a perfectly innocent explanation for that, but I am genuinely puzzled by it. I raise this issue only for completeness, and do not make any suggestion that I wish to oppose this particular amendment, which seems entirely sensible.

Anne McGuire (Labour, Stirling)

I shall deal first with the Northern Ireland issue. The hon. Gentleman may have helped the whole Committee by raising this point, because it can be confusing when we talk about Great Britain, the United Kingdom and Northern Ireland. He makes the point that we are a country of union, and that Northern Ireland, Scotland, Wales and England are all part of the United Kingdom. I thought, however, that he realised that for some significant years, Northern Ireland has had its own social security system, which often mirrors—if not exactly mirrors—the provisions of our own social security system. However, the actual powers have resided in Northern Ireland. I think that I am right in saying that we have a reciprocal agreement. I know that that sounds like peculiar terminology in the context of the United Kingdom, but that is just the way it is. We have had that agreement since 1976, so it is not something new or innovative that we are imposing in the Bill to link in with the current situation. I hope that that addresses some of the issues raised. It is long held in legislation that Northern Ireland has a slight separation, but the situation often mirrors, and may well exactly mirror—I do not want to be caught out on a technicality—the social security system in the rest of the UK.

Tim Boswell (Conservative, Daventry)

I am grateful to the Under-Secretaryfor that explanation. I suspected that it might be something along those lines, but the amendment is intended to maintain the entitlement to a benefit, not the actual payment of it, for the comparatively short period of six weeks, not least for administrative reasons. She has been slightly unclear as to what would happen if, perhaps for no more reason than taking a therapeutic holiday or staying with a sister in Northern Ireland, a claimant was to move over there. Would the benefit be maintained or lost? What would happen for the weeks spent in Northern Ireland? Would the claim not fall and be replaced with a Northern Ireland claim? We do not seek to trap the Under-Secretary, but she might like to reflect on that at length or at her leisure.

Anne McGuire (Labour, Stirling)

I reassure the hon. Gentleman that, because of the agreement between the social security system in Northern Ireland and that of the other parts of the UK, which I called a reciprocal agreement, people moving from one jurisdiction to the other do not lose out on any non-means-tested benefit. The situation is, in a peculiar way, unified in terms of the individual’s right to be protected.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I shall not detain the Committee long, but there are important questions to be answered about a number of the provisions of the clause. It is worth noting in passing that, under previous clauses, we have discussed a number of different rules. Failure to follow them will mean that people can have their benefit sanctioned. This clause makes provision for circumstances in which someone can be disqualified from receiving benefit at all. It mentions the power to disqualify someone from receiving employment and support allowance on the grounds of misconduct,

“the failure without good cause to follow medical advice”,

which is loose phrasing, or the failure without good cause

“to observe any prescribed rules of behaviour.”

That means that someone who has gone through the assessment process and been identified as having limited capability for work, and is therefore entitled to receive the employment and support allowance, could nonetheless be disqualified from receiving it and therefore receive no benefit at all for up to six weeks. That could happen to someone who had become of limited capability for work or who remained in that category, through their own misconduct.

The Under-Secretary has rightly made the point that provisions to disqualify someone from benefits already exist in incapacity benefit legislation. She said that the Government were seeking to repeat those provisions in the context of the Bill. I do not wish to be thought of as a pedant, but I should point out that under IB rules someone can be disqualified where

“he fails without good cause to attend for or submit himself to such medical or other treatment as may be required in accordance with the regulations”.

Clause 17 replaces that fuller wording with the term “medical advice”. Will the Under-Secretary spell out what is meant by “medical advice”? Does it mean that someone who has had a work-focused health-related assessment and refused to follow the suggestion to seek further medical help or condition management, or advice from their GP to go for a counselling session, could be disqualified for ESA?

The term “prescribed rules of behaviour” is also worryingly vague. What do the Government envisage by it? The matter was brought up in an earlier amendment. I hope that, in applying the clause, the Under-Secretary and the Government will take into account the possible effect of such rules on those with behavioural problems or other mental health conditions that might affect their behaviour. Any prescriptive sense that certain forms of behaviour are required in order to qualify for benefits could have worrying implications for people in those categories. I would welcome any further information that she could provide on that point.

There is a further question on the point about medical advice. If someone is to be disqualified for benefit for a failure without good cause to follow medical advice, to use the Bill’s language, what is likely to count as “good cause”? Who will provide the evidence that someone has failed to follow medical advice? Will it be their GP, or the doctor or other medical practitioner who is required to carry out the medical assessment?

Tim Boswell (Conservative, Daventry)

Would the hon. Gentleman not also like to reflect on the difficulty of what happens if the person’s GP and the doctor examining on behalf of the Department take a different view about the appropriate course of medical action?

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

The hon. Gentleman makes a pertinent point. There might be a disagreement about medical advice. We know from our earlier discussions about the clause on work-focused health-related assessments that the attendance at such an assessment could be subject to a sanction—in other words, someone’s failure to turn up could lead to their benefit being sanctioned.

It was made clear by the Secretary of State in a letter to me, and by other Ministers, that any particular course of medical action or treatment is not subject to a sanction, yet the Bill provides that simply failing to follow medical advice will potentially be grounds for disqualification from benefit altogether. We are not simply talking about someone having their work-related activity premium sanctioned, but about their being disqualified from benefit overall.

I am sure that the Government do not intend to reverse the undertaking given on work-focused health-related assessments in the context of this clause.None the less, the rather vague language used about the severe penalty of disqualification from benefit warrants a little more of the Committee’s attention, so I look forward to the Under-Secretary’s response.

Tim Boswell (Conservative, Daventry)

I think that the Under-Secretary will probably shortly be telling us that the clause is again about delinquency or a wilful refusal to follow the rules. In that, we can be sympathetic to the Government’s position. Equally, I find my notes on the clause in sympathy with the comments by the hon. Member for Inverness, Nairn, Badenoch and Strathspey. I suppose that the answer to both is that we need to strike the right balance with the right kind of consultation to ensure that the rules work.

I, too, have some points that I would like to emphasise. First, we should check the coverage because it appears that the disqualification rules are not confined to those on the employment component and could apply also to those on the support allowance. I think that Ministers might need to reflect on that because once somebody has limited capacity for work, they are within the frame, and if they are unable to participate in work-related activities, they would move on to the support component. I cannot see how that sensitive route is excluded by the clause.

My second concern relates to serial disqualification. The Minister has made it perfectly clear that the intention is to deal with a short-term situation, but as far as I can see, there is nothing in the clause to stop an officer taking the view that somebody should be disqualified and then disqualified again, as it were, indefinitely. Will she respond to that point?

Following on from that, I am concerned about the definition of misconduct, particularly if relations with the claimant are bad or, to be honest, if the official has a bee in their bonnet. It would be arguable, although I would think not in this Committee, that somebody with a condition induced by smoking or the misuse of drugs such as cannabis might well have a psychotic condition that has resulted in their limited capacity for work. We can all take different views about the balance between deploring or even trying to sanction such behaviour and being understanding, but the general spirit of the Committee is to try and take people as they are and to work with them to get them back into the labour market.

I am genuinely concerned that somebody might within the rubric of the clause be able to say, “It is your own fault that you have got yourself into this position of being unable to work”. Let us take obesity: “You are a very fat slob and should not be in that position, but now you cannot work.” I do not think that that is what the Under-Secretary is targeting in the clauses, but I would like her assurance that that is the case.

I shall move on to the underlying concerns of the hon. Member for Inverness, Nairn, Badenoch and Strathspey, which I too have flagged up. Let us consider people with conditions that are somewhere between the medical and the social. I am thinking about addictions, whether to alcohol or drugs, or—I make a distinction between these—mental health conditions that might well fluctuate. Those are certainly medically relevant conditions, but they concern the person’s behaviour as well as medical condition. It would be quite wrong to think about disqualifying, because of misconduct, people who had a serious drink or drugs problem and whom one is trying to help through pathways. The references to “medical advice” and “without good cause” might make that easier, although it is difficult to know how we tie that down or determine how far it is being complied with.

In all seriousness, the Under-Secretary will be aware that many people who have got into such a situation might lead pretty chaotic lives. In the great scheme of things, it might be their fault, or they might have contributed to their own difficulties. That might well be true and the origins or the pattern of difficult behaviour might go a very long way back, but to remove a benefit for six weeks because of misconduct might not be the most fruitful thing to do, or the fairest.

I hope that the Under-Secretary will reflect on that balance and respond to the concerns that have been expressed. In no sense does anyone here wish to subvert the intention to stop delinquency, but it is important that the provisions are tied down to that and not to wider considerations.

Anne McGuire (Labour, Stirling)

I am pleased that the issues have been aired, because that allows us to deal with some of the concerns that have been raised. I hope that I can, once again, give some comfort to Committee members.

The hon. Member for Daventry (Mr. Boswell) asked whether people with mental health conditions would feel as though they were being victimised by the clause. I reassure him, and other colleagues too, that we will not disqualify any claimant without taking into account all the relevant factors, such as the likely impact of an illness on their ability to understand and comply with advice and evidence from their own medical practitioner, or without giving them the opportunity to explain their position. I must reiterate the words “good cause”. Disqualification takes place where there is no “good cause”. I hope that the hon. Gentleman will have appreciated, as we have progressed through the Bill, that we recognise the seriousness of people’s fluctuating mental health conditions.

Medical advice and treatment has been a part of IB for many years. The IB legislation contained the words “medical treatment” and that has never caused any great concerns. I hope that hon. Members recognise that we would not anticipate using this power in any overwhelming way.

I think that the hon. Member for Daventry was backing up comments made by the hon. Member for Inverness, Nairn, Badenoch and Strathspey about whether people could be disqualified if they did not take advice to give up smoking or lose weight. If that were so, a lot of Committee members would not qualify for our jobs. No names, no pack drill. We are not anticipating using the power in that way; we would use it only where, for example, a claimant disregarded without good cause advice from their general practitioner or hospital specialist regarding generally accepted, reasonable and non-invasive treatment that would significantly improve their condition. The GP will determine the medical advice, although it will be an issue for Jobcentre Plus advisers to decide about whether there is good cause to disregard that advice.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I welcome that clarification. However, if someone failed to follow medical advice offered by a GP or another medical practitioner on a work-focused health related assessment, which is considered reasonable as Ministers have described it, would their GP then have to make an assessment? How would it work in those circumstances?

Anne McGuire (Labour, Stirling)

To a certain extent, perhaps we are talking at cross purposes. The powers under the clause are intended specifically to deal with those people who wilfully or intentionally try to get round the regulations relating to the new employment and support allowance by not following standard medical advice. For example, someone may not take their medication to manage their condition, which would put them in a worse medical condition than if they had followed standard advice.

Tim Boswell (Conservative, Daventry)

The Under-Secretary of State has made it clear that the basic responsibility for medical advice lies with the claimant’s GP. As I understand it—she will disabuse me if I am wrong—that advice is privileged between the GP and their patient who is, for this purpose, the claimant. Therefore the personal adviser, or the person who has conducted a work-related health-focused assessment, has no locus in the matter. It would be an entirely private matter if the GP said, “You should no longer take these drugs or you should take more of these drugs,” and the person failed todo it.

I fully understand the Minister’s assurance that this may be a precedence in IB and may never have given rise to any problems, but there is the potential of a confidentiality problem. Of course, if someone conducting an assessment on behalf of the Department sees an acute medical condition, they have a professional duty to draw that to the attention of any medical adviser in the patient/claimant’s best interests. There is at least a sensitivity there. The Minister may like to reflect on how this will be tied up and who best will carry it out.

Anne McGuire (Labour, Stirling)

I thank the hon. Gentleman for his comments. As usual, he makes an important point. I am please to be able to give him the reassurance that obviously there is an issue of confidentiality. There is the issue of customer consent to information. It has to be informed consent. I appreciate that that is one of the issues that I mentioned earlier about whether someone fully understands what they are giving consent to. It is for the general practitioner to send Jobcentre Plus the information relevant to the benefit entitlement, not some of the wider issues that may affect the individual. Just for the record, I point out that for the work-focused health-related assessment, non-participation is equated to a sanction, not a disqualification. It would be best to get the terminology right.

Adam Afriyie (Conservative, Windsor)

Will the Minister give way?

Anne McGuire (Labour, Stirling)

I had hoped to make slightly more progress.

Adam Afriyie (Conservative, Windsor)

I appreciate the Minister’s generosity in giving way. I seek reassurance on one small point. If a disqualification is forthcoming under the clause, is the claimant entitled to appeal and, if so, under which legislation?

Anne McGuire (Labour, Stirling)

I can reassure the Committee that where there is a sanction or a disqualification, there is always the right to an independent appeal. That is just the way the system operates. I should reiterate for the sake of clarity that this is about non-participation without good cause in the prevailing circumstances. The hon. Member for Inverness, Nairn, Badenoch and Strathspey was worried that if someone came in and was obstreperous or did not appear to be following the normal modes of behaviour that would somehow lead to a disqualification.

This is about misconduct that leads to an injury or refusal to follow health and safety advice, for example. That is what is intended under the clause. Although a number of organisations have expressed some concerns, I hope that the Committee will accept my reassurances that there will be adequate training for staff and safeguards will be put in place so that customers are always given the opportunity to explain their actions before any disqualification occurs.

We will use the power in the clause to disqualify benefit where a customer persistently fails to follow acceptable rules of behaviour, for example, where they fail to provide their address so a review of benefit entitlement cannot be undertaken. It has been a feature of incapacity benefit since 1996 when the incapacity benefit rules were initially drawn up. We want to maintain confidence in the system and protect it from abuse. The clause allows us to do that. I recognise the concerns and I hope that I have allayed some of the fears.

Clause 18

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I beg to move amendment No. 45, in clause 18, page 15, line 5, leave out ‘24’ and insert ‘60’.

I do not have a great deal to say about the amendment. It is designed simply to probe the Government’s intentions in respect of pilot schemes. I would like the Under-Secretary of State to explain her thinking on the amount of time to be allowed for those schemes. The Bill as drafted allows regulations for pilots not to exceed a specific period of 24 months. Will the hon. Lady spell out why she thinks that two years is the right period for a pilot, given that there is evidence that longer pilot schemes allow more time for the evaluation and understanding of their outcomes?

With those extremely brief words, I look forward to the Under-Secretary’s response.

Anne McGuire (Labour, Stirling)

I am not aware of any great evidence that we need longer than 24 months, but if the hon. Gentleman wishes to present such evidence we will be delighted to consider it.

Our experience has shown that 24 months is a suitable period to review the progress of pilots and to test new approaches to welfare. I am pleased that this is a probing amendment; if the period were 60 months, it would be not so much a pilot as a sentence.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I introduced the amendment very briefly as the Minister will have some well-prepared responses, but the Bill states “not exceeding 24 months”; “not exceeding 60 months” would give the Government more flexibility, which I am sure they would welcome.

Anne McGuire (Labour, Stirling)

The flexibility is built into the Bill because if we need to extend a pilot beyond the 24-month period, clause 18(7) allows for replacing one pilot with another, which would be dependent on Parliament’s approval. If it went up to five years it would stultify the pilot rather than encouraging us to learn from it. In the spirit in which the amendment was tabled, I ask the hon. Gentleman to withdraw it.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I beg to ask leave to withdraw the amendment.

David Ruffley (Conservative, Bury St Edmunds)

I beg to move amendment No. 244, in clause 18, page 15, line 15, at end insert—

‘(c) make it more likely that employers will recruit and retain such persons.’.

In the preceding debate we heard how long a pilot should be. In my calculation, the piloting of the new Labour party has been going on for nine years; perhaps that pilot will end next year when the Chancellor of the Exchequer takes over, but who knows?

In the clause and the amendment there are powers to pilot most of, but not all, the provisions in the Bill. The piloting provisions are intended to allow for different variations in the conditionality regime in order to understand what works best to help ESA claimants, and we all agree with that. As the Bill rightly focuses on the obligations of the individual as part of the rights and responsibility agenda, the amendment probes for more information on how employers will be engaged in the process of helping claimants get from welfare into work.

As well as the roll-out of pathways, the welfare reform Green Paper also refers to the piloting of a new initiative in cities—the so-called city strategy—to bring partners to work together to improve the chances of claimants getting into work. As the Green Paper pointed out on page 75, it will entail more effective engagement of local employers. The Disability Rights Commission’s response to the Green Paper suggested that employers in city strategy areas could recruit more people from IB through Jobcentre Plus and its providers promoting work trials more extensively, and through local government agencies using their procurement powers to extend the range of employers that recruit disabled people. In pushing the amendment, I ask the Under-Secretary what she understands by the city strategy agenda to get employers more involved, and how the piloting of new ways of taking people off IB will work.

Anne McGuire (Labour, Stirling)

The hon. Gentleman raises an interesting point, because there must be engagement with employers—the people who will provide the jobs. My hon. Friend the Minister for Employment and Welfare Reform and I have met employers not only in the proposed city strategy areas, but in other areas throughout the country, to discuss how they can play their part in making welfare reform work. For too long, the business community thought welfare reform was a social issue, and although it has a social dimension, it is also a serious economic issue. We are trying to engage employers to ensure that they feel part of the agenda, and my hon. Friend and I have met various employer organisations throughout the country.

The hon. Gentleman asked for information about the trials that we may consider. My hon. Friend the Member for North-East Derbyshire might be interested in my answer, because with Tesco and Jobcentre Plus we are trialling a scheme in which Tesco offers work tasters for up to one week to pathways to work participants whom a Jobcentre Plus adviser refers. Tesco will help with the application and interview.

One big difficulty for people who have not been in employment, and sometimes for people who have, is how to get past the interview. If one has not been in that situation before, it can be a real confidence shaker. It is bad enough for politicians standing up in front of a selection committee, and most of us have the gift of the gab. We are used to selling ourselves, but imagine going to an interview after a long period out of work. The support is necessary, and it will include a work-taster review with the participant, adviser and company—Tesco, in this case—to identify the further assistance that may be needed to succeed at an interview.

The scheme will build on many good factors that the voluntary sector has put in place for many years. Without going into my background too much, we would provide such support as a matter of course. The Government are determined to explore the range of avenues that might lead to better outcomes, and we are working hard with employers to ensure that they think of welfare reform as an economic as well as a social issue. The two are intertwined, and it is important that we ensure that employers, businesses and companies feel part of the process.

David Ruffley (Conservative, Bury St Edmunds)

The hon. Lady has given an informative reply and I beg to ask leave to withdraw the amendment.

David Ruffley (Conservative, Bury St Edmunds)

I beg to move amendment No. 245, in clause 18, page 15, line 27, leave out subsection (7) and insert—

‘(7) It shall be a duty on the Secretary of State to report to Parliament annually his evaluation of the pilot schemes.’.

Jimmy Hood (Labour, Lanark and Hamilton East)

With this it will be convenient to discuss the following: Amendment No. 195, in clause 22, page 17, line 19, at end insert—

‘(1A) The Secretary of State must, on an annual basis for the previous twelve months, prepare a report to Parliament on the exercise of the power to make regulations under this Part’.

New clause 5—Reports to Parliament (No. 2)—

‘The Secretary of State shall report annually to Parliament on the employment recruitment and employment retention practices of publicly-funded organisations in respect of current and previous claimants of employment and support allowance.’.

New clause 12—Duty to report on impact of Part I on older people and others—

‘(1) The Secretary of State shall annually lay before Parliament a report on the effects of Part One of this Act on recipients of the allowance, with respect to their employment opportunities and health.

(2) The report shall describe separately the impact on—

(a) people aged over 50,

(b) people with mental health conditions, and

(c) people who have been in receipt of the allowance for longer than 3 years.’.

New clause 4—Reports to Parliament—

‘The Secretary of State shall require the Social Security Advisory Committee to report annually to Parliament on the operation of this Act.’.

David Ruffley (Conservative, Bury St Edmunds)

Amendment No. 245 asks for there to be a requirement that the Secretary of State reports annually on the evaluation of pilot schemes. What lies behind the proposal is that, while we all celebrate the early successes of the pathways to work pilot, there is still a lot more information on how it has performed that is not available in the public arena. Opposition Members are not the only people to express worry that a full-on, all-singing, all-dancing cost-benefit analysis of pathways to work will not be available until next year. The pilots have been going for some time. I am not criticising in any way some of the early successes, but it is quite a job for all hon. Members to table written questions endlessly and diligently to tease out information.

It might be in the interests of a more transparent debate if we have as much information as possible in the public realm that has come from the evaluators at DWP and the research bodies that it commissions to evaluate pathways to work and other pilots. It would be useful in that context for there to be an annual evaluation of all pilot schemes, not only pathways to work and its successors, but the other schemes that will no doubt be put in place to test work-related health assessments and much else besides.

New clause 5 seeks to flag up the importance of the employer in making welfare reform work. As the Under-Secretary of State said, that is a subject to which Ministers pay attention. I was encouraged to hear her remarks in the previous debate. New clause focuses on the requirement that we would like to see for the Secretary of State annually to report to Parliament on employment and recruitment, and employment retention practices of publicly funded employers in respect of claimants of ESA. I do not want to open up a long debate at this stage in that respect in Committee now because we must make progress. Moreover, access to work has been alluded to and will be touched on in a minute by my hon. Friend the Member for South-West Surrey. As an example of what the new clause would drill down into, I wish to remind the Committee of a DWP memo on the removal of access to work funding from central Government Departments from October 2006. It stated:

“Access to Work funding will be removed from central government departments ... from October 2006. Departments will be responsible for funding from their running costs the workplace adjustments required by their disabled staff. Central government departments can continue to use the advice and expertise of Jobcentre Plus staff. This is in line with practice in the DWP since 2003.

The ‘savings’ to the Access to Work budget resulting from this change will be kept within the programme. As a result of this change Jobcentre Plus will be able to re-focus support towards people who work for smaller employers.”

I am quoting the whole story, and I hope that the hon. Lady will give me credit for that. There is a rationale and a logic to the policy change, but it did concern Susan Scott-Parker, who asked the Secretary of State about it in a letter on 9 June. On new clause 5, how many disabled employees did the DWP support under the access-to-work arrangements until 2003? How many has it supported since 2003, when it changed its access-to-work funding regime? Could those questions be answered at the end of the debate?

Tim Boswell (Conservative, Daventry)

Does my hon. Friend not agree that his point was confirmed when it was made clear to me that no baseline transfer had taken place? Other Departments, which are critical to delivering the Government’s agenda and setting a good example through the public sector, would therefore have no additional funds and would face the invidious choice of reproviding access-to-work funds from their running costs or finding alternative provision. Is it not particularly important, therefore, that the effects of the change on what is, after all, 20 per cent. of total employment, should be evaluated to determine whether the issue has been dealt with or whether provision has withered on the vine, with fewer disabled people able to get work through the public sector route?

David Ruffley (Conservative, Bury St Edmunds)

I am grateful to my hon. Friend, who makes a typically powerful and eloquent point. I am sure that the Under-Secretary will want to respond to his point and mine, which are closely related.

New clause 12 would require that the

“Secretary of State shall annually lay before Parliament a report on the effects of Part One of this Act on recipients of the allowance”.

Subsection (2) suggests that the

“report shall describe separately the impact on...people aged over 50”—

older workers or potential workers—

“people with mental health conditions, and...people who have been in receipt of the allowance for longer than 3 years.”

Those groups are singled out for a reason. We must remind ourselves that the aim of the Green Paper was not merely—I say “merely”, but this is asking a lot—to get 1 million people off the incapacity benefit roll and bring it down to 1.7 million claimants by 2016. The Green Paper also set out two other noble objectives, which were not so time limited. One was to get1 million more older workers into employment, while the other was to get about one third of a million lone parents off benefits. The Bill is designed to achieve those important aims.

The reference in the new clause to people over 50 is important because most of us feel that not enough reference is made to older people. We must remind ourselves that just under half the existing stock—48 per cent.—are over 50 and below the age of retirement. They form quite a large proportion of the IB case load, and we must not forget them. I remark parenthetically that the interests of this large group of our fellow citizens have been flagged up in the past couple of weeks by the Leader of the Opposition, my right hon. Friend the Member for Witney (Mr. Cameron), in a well received and widely reported speech. I hope that Ministers will join us in highlighting the need to do even more to get more support for those people over the age of 50 so that, when they are able to, they can get back into work, as so many we know wish to do.

Age Concern, which we all agree does marvellous work in highlighting these issues, has reminded me of some important statistics of new claimants, around30 per cent. of which are by people who are over 50. That proportion has only declined slightly in the past decade. I make no party political point; I am sure that that figure was as disappointing at the end of the last Conservative Administration. It has certainly not been improving. Only 29 per cent. of over-50s come off incapacity benefit within six months compared to35 per cent. of under-50s. Under the pathways to work pilot, this measure has increased by 9 per cent. for those under the age of 50 but by only 4 per cent. for people over the age of 50.

These statistics show that pathways to work and the current regime are doing a better job for those under, rather than over, 50. This new clause therefore draws specific attention to the fact that reporting should be made by reference not just to all claims and to the way in which the Act and the new regime is helping them, but specifically to the people over 50, because there is a differential in the performance of pathways to work for those under and over 50.

I will not detain the Committee with statistics; the exact quantum might be disputed. However, statistics show that almost 1 million older people want to get back into paid work—part-time or full-time—and that this under-employment of older citizens costs the United Kingdom economy billions of pounds a year. I know that that is something that Ministers and officials will concede. The new clause seeks to focus with laser-like intensity when Ministers come to report to Parliament to talk specifically about the effect on those over 50.

The same arguments could be made in reference to subsection (2)(b) of the new clause, which refers to those with mental health conditions. Is the number of those with mental health conditions coming off the new allowance and getting into work higher or lower than the average? What about those who have been in receipt of the allowance for more than three years? How are those further away from the labour market performing compared with the average?

We need that information teased out in an annual report so that we can all see it in a handy and useable way. We can all go to the Vote Office and pick it up without the tedious preface of putting down large numbers of written questions. Such information should be openly available and I hope that any Government of any political persuasion would want the rays of transparency shone on this particular area.

We need to know not just what the new regime—that this Bill will usher in—will do for the general stock, but whether it will get 1 million people off the current stock of 2.7 million. What sorts of people will be coming off the stock and being helped? We need to disaggregate the off-flow. It is as simple as that and this new clause will achieve that.

New clause 4 is very much in tune with the preceding amendments to which I have spoken in that it would require the Secretary of State to procure a report to Parliament on the operation of this Act from the Social Security Advisory Committee. This new clause is slightly different in intent from the other new clause and amendments in the group, because it asks for a report from a body that is at one remove from the Secretary of State. We would like the Secretary of State to report, not because we do not trust his or her bona fides to produce good information but, as a belt-and-braces approach. Having the Social Security Advisory Committee report to Parliament as well as the Department seems to me a valuable safety net. By requesting the Government to provide reports or procure them from arm’s-length bodies, we want the evaluation to be transparent, whether it is of piloting or the general operation of the legislation.

Before I conclude, I shall give an example to flag up why we need to delve deeply into some of the evaluations that are likely to come out before 2008. Our old friend the Police Complaints Authority will be not so much piloted as subject to dummy and parallel runs. The Rethink organisation has rightly pointed out that Atos Origin will run the current and new tests side by side, and, more importantly, that it will be analysing customer satisfaction surveys in 2007. It sounds reasonable, on the face of it, that there should be an evaluation of how well the dummy runs are operating—we all have an interest in knowing how the assessments in clauses 8 to 10 will operate in practice—but as Rethink pointed out, not many claimants are likely to complete the surveys after spending time at an assessment centre. They might have other things on their minds. [Interruption.] The hon. Member for Glasgow, North-West (John Robertson) is speaking from a sedentary position. Does he wish to intervene?

It is suggested that such surveys are an inappropriate way to gather the views of many claimants, including those with learning disabilities, such as autistic spectrum disorder, and those with difficult mental health problems. People with literacy problems might also be excluded from participating efficaciously in the surveys, which we expect to form a key part of the evaluation. Some of us who have noted those observations think that there should be a more objective evaluation procedure. If that is put in place, we certainly want to know about it in the annual report, so that the annual reports to whichthe amendments refer explain exactly who has done the evaluation over what period and what the results are.

I sense that Government Members are getting a bit restless, but I hope that they have taken my observations on board. To sum up, we are calling for greater transparency and a greater call to accountability for Ministers, whoever they are, so that Parliament can access, in a more user-friendly way, information on exactly how these critically important proposals and the new regime will operate.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I shall speak briefly in support of amendment No. 195 and new clause 12. The amendments concern the public interest and the way in which the operation of the Bill and various aspects of it are monitored. They are not so much about the convenience of Members of Parliament, although that is significant, as about making information much more widely accessible to the general public. The publication of reports by the Department will provide an opportunity for members of the public to scrutinise the operation of the Bill much more carefully.

Amendment No. 195 requests a report to Parliament by the Secretary of State on the operation of the powers to make regulations under the Bill. It has been noted that there are a huge number of regulation-making powers in the Bill, covering a wide range of matters. We shall turn in a later clause to which of them will be subject to the affirmative resolution and which to the negative resolution procedure. Considering their vast range, an annual report to Parliament on their use would be a useful addition to the body of information available to Parliament and to the general public on the Bill’s important provisions. Draft regulations have not been available to the Committee in relation to many of the powers, so it has been hard to consider all of them in detail, although the Under-Secretary will agree that we have considered a number of them in considerable detail.

The hon. Member for Bury St. Edmunds made an important point on new clause 12 about reports on the scheme’s impact on older workers. Age Concern’s work is valuable in that respect and suggests that older workers have not benefited as much as other categories from pathways to work. The point has been made that a substantial part of the Government’s target of getting 1 million people off incapacity benefit in a 10-year period could be met simply by waiting for recipients of incapacity benefit and who are over 55 for men or 50 for women to reach retirement age. There are 1 million people in that category and when they reach retirement age, they will come off the benefit. The Department is therefore a long way towards meeting its target. It is not an onerous target, but thanks to the body of people on benefit, the Department is a lot closer to it than might be suggested. As the hon. Gentleman said, that should not lead to people over 50 being given less good access or less preferential treatment in pathways to work. Reporting to Parliament on that would be a useful way to ensure that the Government are regularly held to account.

New clause 12(2)(b) relates to reports on progress in relation to people with mental health conditions. It is important to remind the Committee that the evaluation of pathways to work carried out by the Institute for Fiscal Studies has found that, among people whose first reason for claiming benefit relates to mental health, there is no statistically significant difference in outcomes compared with what might otherwise have happened. That is an important point, because pathways to work is widely praised as being successful. Indeed, the evaluation shows that, for many categories of benefit recipients, it has been successful in achieving job outcomes. However, for people in the mental health category, it has not proved so successful. There might be a wide range of reasons for that, and the Under-Secretary has addressed them in previous remarks, but they should be addressed. It is not good enough to say that pathways generally works well, even though it does not for certain people, particularly considering that we are referring to the group that is the largest cause of new claims.

A specific annual report to Parliament on how welfare to work help is operating for people with mental health conditions would be a useful way to hold the Government to account for how the scheme is working for those for whom it has not been seen to be so successful. The point about longer-term claimants is relevant in that regard. I hope that the Under-Secretary will address the matter in her response, to which I look forward.

Jeremy Hunt (Conservative, South West Surrey)

I see in front of me a sea of weary faces, so I shall make my comments brief. I wish to make one comment on new clause 5. There is a huge opportunity—[Interruption.]

Jimmy Hood (Labour, Lanark and Hamilton East)

Order.

Jeremy Hunt (Conservative, South West Surrey)

There is a huge opportunity for the Government if we are trying in the Bill to change employers’ attitudes to employing disabled people. The Government are the biggest employer with 1.3 million employees in the NHS alone. Not only that, but they issue contracts worth £120 billion every year to private and voluntary sector providers. They have a real opportunity for an easy win by ensuring that they transform their recruitment policies. Their record has got better, but it is still not as good as it should be overall: 4.5 per cent. of civil servants are disabled, compared with 19 per cent. of the working-age population. That is an average figure and, in some Departments, the percentage is lower than that. In the Department of Health, for example, which one would think would understand such issues, the figure is only 3.3 per cent. In the Scotland Office, it is zero, but I do not know whether that is because it has a small number of employees and that the sample size is very small. The point is that there are some low percentages. Presenting a report annually to Parliament, as new clause 5 would require, would put pressure on Governments of all colours to ensure that they make progress in this important area.

I conclude by reminding the Under-Secretary of a response that I received from the Financial Secretary to the Treasury in reply to a parliamentary question on25 July. He said:

“Public procurement law includes a provision enabling contracting authorities to reserve contracts for supported businesses and factories employing more than 50 per cent. disabled people.”—[Official Report, 25 July 2006; Vol. 449,c. 1352W.]

There is an opportunity even under existing legislation for the Government to do a lot more and the proposal in new clause 5 that an annual report should be presented to Parliament would be the catalyst to make that happen. I commend the new clause to the Government.

Anne McGuire (Labour, Stirling)

Many questions have been raised and I will go through them, but first I want to pick up some general issues that have been alluded to.

I want to make it clear that when we are talking about the number of disabled workers in any organisation, we must recognise that disability is a voluntary declaration. Hon. Members will recognise that when we publish figures in response to parliamentary questions on the number of disabled members of staff, we always make it clear that that declaration is voluntary. For all sorts of reasons, we must recognise that people may not wish to declare themselves disabled. That is a particular issue, as the hon. Member for Daventry will recognise, for those with mental health conditions. I make that caveat at the beginning of my comments.

On access to work, I am glad that the hon. Member for Bury St. Edmunds gave me the opportunity to address some of the issues concerning access to work. The letter that he read out clarifies the position, but perhaps not quite in the way that he might have expected.

When the Prime Minister’s strategy unit reported in January 2005, it made a series of recommendations, one of which was that if disabled people are to be truly considered part of mainstream employment, we should look at opportunities and options for their employment cost to be part of mainstream employment costs. The DWP, as the hon. Gentleman graciously highlighted, has blazed a trail with that because we have absorbed the cost that would previously have been met bythe access-to-work scheme. We seriously think that Departments should assume the responsibility for access-to-work provision in their employment budgets. Saying that disabled people may have specific support requirements and that they should be considered as part of employment costs is a beacon to other parts of the employment market. It is to be applauded, not to be criticised.

Having said that, I recognise that concerns were raised about the recruitment and retention of disabled workers in the Government estate. The Office for Disability Issues has given a commitment to the major charities and players in the lobby to monitor and evaluate the impact that the withdrawal of access to work will have on employment and retention. We do that in the context of another element of Government legislation, which I know the Opposition support: disability equality schemes. We are not talking about something that has come from nowhere, but about something that was part of a well regarded and well respected Prime Minister’s strategy unit report that clearly highlighted the way to equality.

It is justifiable to expect an enormous Government employer across the board to take in some of those employment costs, because if we are truly to get disabled people recognised for what they can do and not for what they cannot do, we must start to think about how we support them in employment. Government can lead the way on that.

The other part of the equation is also important. Opposition Members and, indeed, some of my hon. Friends have made it clear that some of the challenging work in the employment of disabled people must be undertaken with small and medium-sized enterprises, where the majority of new jobs are. That is why we are clear that the access-to-work budget will be recycled into the system to support disabled people in SMEs— we are talking about £2.5 million or thereabouts—because that is where we need to make the breakthrough.

Mr. Boswellrose—

Anne McGuire (Labour, Stirling)

Before the hon. Member for Daventry comes in, may I clearly indicate to the Committee that since 1997 the access-to-work budget has quadrupled? It was £15 million in 1997 and is now £60 million.

Tim Boswell (Conservative, Daventry)

Can the Under-Secretary simply confirm that the evaluation of the performance of public sector schemes by the Office for Disability Issues will be published?

Anne McGuire (Labour, Stirling)

I can give the hon. Gentleman that assurance. The Office for Disability Issues publishes an annual report, and a first annual report has been published. The information will be in the public domain. I cannot say whether we will do an all-singing, all-dancing report, but it will be in the public domain, not least because part of my role as Minister with responsibility for disabled people is to meet regularly with representatives of the lobby. These are the very issues that came up as part of those discussions.

Danny Alexander (Liberal Democrat, Inverness, Nairn, Badenoch and Strathspey)

I want to obtain a brief point of clarification. The Under-Secretary made sensible remarks about pushing access to work out, particularly to SMEs. What steps do the Government plan to take to promote access to work to businesses in that category, given the relatively low level of awareness among many small businesses about access to work?

Anne McGuire (Labour, Stirling)

There is a bit of an urban myth that we somehow hide access to work under a DWP bushel somewhere. We do not, and it is well used. I think that about 35,000 people use access to work on a regular basis. That includes what might appear to be quite minimal support in the form of equipment through to support staff and all sorts of fairly sophisticated adaptations. If I had a pound for every time that access to work was mentioned at enormous gatherings, I would be quite a rich woman. It is not hidden away and we are pleased to be able to announce that access to work is in place.

The hon. Member for Bury St. Edmunds made great play of accountability and spoke passionately about ensuring that the figures are in the public domain. My hon. Friend the Minister looks forward to the third Wednesday of every month when the Office for National Statistics publishes exactly the sort of figures that the hon. Gentleman is looking for. There is no need for parliamentary questions on some of those figures because the ONS publishes them every month—both the off-flows and on-flows to incapacity benefits. The figures are not hidden; they are in the public domain. There might still be a need for parliamentary questions to tease out some background information, if that is what he wishes, but the ONS does that job and it does it with robust independence, as he will be aware from his days as an adviser in the Treasury. The figures are not ours. They are independently scrutinised and put in the public domain.

The hon. Gentleman made an important pointabout older workers. Earlier in October we introduced a new legislative framework aimed at ending age discrimination. It has opened up opportunities for older people and will progressively open up more. My hon. Friend said that over the last year, some 200,000 over-50-year-olds have moved into jobs. That is a significant change.

On disabled people moving into employment, I think that the figures show that we are on the right track. There is still a lot to do, hence we are keen to promote pathways to work with the voluntary sector. However, the inactivity rates for disabled people have reduced dramatically since 1998—they have come down by about 10 per cent. We are seeing the same trend again. Of course, there are areas in which we have a significant amount to do, not least among people with learning disabilities who fall way behind in employment opportunities.

I want to give a detailed rebuttal—I hope—of some of the points raised. By removing subsection (7) of clause 18, as proposed in amendment No. 245, we would prevent the extending of a pilot beyond the original 24-month period and replace it with a duty to report to Parliament. Although I understand the desire for scrutiny, as I have said, Standing Committees do not sit in isolation and there are various ways in which information and the activity of any Department can be scrutinised.

I am not convinced by the arguments of the hon. Member for Bury St. Edmunds about needing the Secretary of State to submit a separate annual report to Parliament. We have a Select Committee process and the Social Security Advisory Committee—also independent—which reports annually. Those arrangements work very well and I think that there would be a danger of over-reporting to no apparent end when we already have pretty good procedures in place. We often talk about over-regulation and overburdening the private sector, but dare I suggest that there is a danger that new clause 5 would increase the burdens on the public sector by asking for additional reports? I should highlight the fact that Departments will have to report annually on their progress under the disability equality schemes.

New clause 12 relates to the over-50s, those with a mental health condition and those who have been receiving benefit for more than three years. I repeat yet again that the Government are determined to ensure that the support on offer alongside ESA is relevant and useful to every individual, whatever their personal circumstances. We are clear that that is the philosophy underpinning the pathways-to-work approach; it is about looking at individuals as individuals, not as part of a group or a selection of statistics, as we did in the past. The results from pathways have vindicated that approach.

I ask Opposition Members to reconsider their provisions. All our regulations, all our work and all our statistics will be in the public domain. We have nothing to hide in terms of our approach and we welcome constructive criticisms about how we can improve. Indeed, we welcome the discussion in this Committee, which has been constructive not just for the most part, but almost exclusively.

We have reporting means in place, which have served us well. They are independent, and involve everyone from the ONS to the Social Security Advisory Committee. I therefore ask the hon. Gentleman not to press his provisions to a vote.

David Ruffley (Conservative, Bury St Edmunds)

I am grateful to the Under-Secretary for her comments. Although I do not accept for a minute her argument that the provisions would lead to information overload, I am prepared not to press the amendments and new clauses, save for new clause 12, which I understand can be voted on at a more appropriate point in our proceedings. On that basis, I beg to ask leave to withdraw the amendment.

Clause 19

Anne McGuire (Labour, Stirling)

I beg to move amendment No. 55, in clause 19, page 15, line 36, leave out ‘employment and support’.

Jimmy Hood (Labour, Lanark and Hamilton East)

With this it will be convenient to discuss Government amendments Nos. 56 to 62

Anne McGuire (Labour, Stirling)

I hope that we do not need to spend too much time on the amendments. They ensure that the description of the contributory employment and support allowance in the clause, which deals with the relationship between ESA and statutory payments made by employers, is consistent with the description in the rest of the Bill so that we avoid any possible confusion. They tidy up the drafting, and I hope that the Committee will accept them in that spirit.

Anne McGuire (Labour, Stirling)

I beg to move amendment No. 63, in clause 19, page 16, line 13, at end insert—

‘( ) Except as regulations may provide, a person who is entitled to additional statutory paternity pay is not entitled to a contributory allowance in respect of a day that falls within the additional paternity pay period.

( ) Regulations may provide that—

(a) an amount equal to a person’s additional statutory paternity pay for a period shall be deducted from a contributory allowance in respect of the same period,

(b) a person shall only be entitled to a contributory allowance if there is a balance after the deduction, and

(c) if there is such a balance, a person shall be entitled to a contributory allowance at a weekly rate equal to it.’.

Jimmy Hood (Labour, Lanark and Hamilton East)

With this it will be convenient to discuss Government amendments Nos. 64 and 65.

Anne McGuire (Labour, Stirling)

The purpose of the amendments is to ensure that the contributory and support allowance treats the additional statutory paternity pay in the same way as other similar statutory payments made by employers, such as statutory maternity and adoption pay. The amendments set out in detail the relationship between the contributory employment and support allowance and statutory payments.

The additional statutory paternity pay is a new statutory payment paid by employers to employees which was introduced by the Work and FamiliesAct 2006. A decision on when the new scheme will be introduced is yet to be made, but we need to ensure that the ESA can take account of that. The regulations that we will make under the clause will provide that where a claimant is receiving one such payment from their employer, it will be deducted from the contributory employment and support allowance under the overlapping benefit rules. Those arrangements arethe same as those for incapacity benefit. I therefore ask the Committee to accept the amendment.

John Robertson (Labour, Glasgow North West)

I beg to move amendment No. 141, in clause 19, page 16,line 18, at end insert—

‘(6A) In relation to a claim for an employment and support allowance, regulations under this section may make provision for—

(a) an assessment to be made to identify all statutory entitlements and allowances to which a claimant is entitled;

(b) notification to a claimant of their statutory entitlements;

(c) advice to a claimant on how statutory entitlements may be claimed.’.

I welcome you back to the Chair, Mr. Hood, as everyone else has. It is a pleasure to have you here. Considering the time, I am sure that everyone is feeling hungry; I noticed that some Opposition Members were getting a bit tetchy, which may not be surprising. I am afraid, however, that I shall speak to the amendment at some length, as I have a number of points to make. Perhaps I will get through my introduction before we break either for dinner or for a Division in the House.

The rest of the debate is in Hansard.