Welfare Reform Bill

Public Bill Committee, 22 March 2011.

James Gray (Conservative, North Wiltshire)

I welcome hon. Members to what looks to be a fairly substantial marathon of sittings lasting until 24 May. With 140 clauses and 13 schedules, it will be a magnificent effort. It is nice to see such a tiny Committee ready to deal with it.

To deal with a couple of housekeeping points before we begin, I take a rather old-fashioned view of dress sense. If people are uncomfortable, they may of course make a point of order and ask to remove their jackets, but otherwise I think that we should maintain the same dress sense in Committee that we do in the main Chamber, if that is all right by everyone. Mobile phones and pagers must be turned off, and other electronic devices may not be used, pending Thursday’s report by the Procedure Committee, which might or might not change that view. For the moment, electronic devices—apart from mobile phones, and pagers, on silent mode—should not be used in Committee.

On amendments, as a general rule, we do not intend to call starred amendments that have not been tabled with adequate notice. The required notice period for Public Bill Committees is three working days between tabling and the sitting, so amendments should be tabled by the rise of the House on Monday for consideration on Thursday and by the rise of the House on Thursday for consideration on Tuesday. Any less notice will not be acceptable.

Not everyone is familiar with the process of taking oral evidence in Public Bill Committees, which is what we are doing today, so I will explain briefly how we intend to proceed. First—I suspect that this will be largely formal, although we will see—the Committee will be asked to consider the programme motion discussed in the Programming Sub-Committee last Thursday, which is on the Order Paper with one amendment. Debate is permitted, if anyone wants to do so, and may last for up to half an hour. If not, we will proceed to a motion to report written evidence and then a motion to permit the Committee to deliberate in private before the oral sessions. That will happen shortly, and we will ask the public to leave and for the TV cameras to be switched off.

Assuming that the programme motion is agreed to, we will then move into a private session, in which Committee members can discuss how we intend to proceed with the evidence-gathering part of our work, after which the witnesses and public will be invited back into the room. We will then spend this morning and afternoon, and indeed Thursday morning and afternoon, taking oral evidence before moving on to the more formal part of our deliberations, starting from next Tuesday.

Chris Grayling (Conservative, Epsom and Ewell)

I beg to move an amendment, after the entry for Carers UK, insert in the table

James Gray (Conservative, North Wiltshire)

Copies of memorandums that the Committee receives will be made available in the Committee Room.

Written evidence to be reported to the House

WR 01 Marilyn Bernard

WR 02 Residential Landlords Association

WR 03 Ron Ferguson

WR 04 Mohammed Mahmood

WR 05 Neil Foss

WR 06 Joan Lewis

WR 07 Jeff Page

WR 08 MENCAP

WR 09 National AIDS Trust

WR 10 John Andrew Davis

WR 11 Councillor Jonathan Bishop

WR 12 National Housing Federation

WR 13 Marsland Nash Associates

WR 16 Association of Disabled Professionals

WR 17 Centre for Social Justice

WR 18 Building and Social Housing Federation

WR 19 Save the Children

James Gray (Conservative, North Wiltshire)

I welcome you all to this, the first oral evidence session of the Welfare Reform Bill Committee. I particularly thank our witnesses, who are from the Policy Exchange, the Centre for Social Justice, the Institute for Fiscal Studies, the university of York and Reform, for kindly agreeing to give evidence to the Committee. I start by asking all five of you to introduce yourselves briefly.

James Gray (Conservative, North Wiltshire)

We have agreed that one member of the Committee will look after each broad area of questioning, but we may range more widely than that, so be prepared to take intelligent questions from all if necessary.

Paul Uppal (Conservative, Wolverhampton South West)

Thank you all for coming along today. I start with a fairly broad question. Part 1 of the Welfare Reform Bill provides the legislative framework for the universal credit, but much of the detail is to be set out in regulations. I would be very interested in your views on how you think the proposals will work in terms of the stated aims of simplifying the system and making work pay? I address that to Matt Oakley first.

James Gray (Conservative, North Wiltshire)

Witnesses are not required to answer every question, but if you would like to contribute to any of the questions, you should do so.

Stephen Timms (Labour, East Ham)

I have a question for Professor Sainsbury on the extent to which the change will make the system simpler. In the note that you have provided to the Committee, you make the point that it is even possible that universal credit will be perceived and experienced as more complex than its predecessors. Will you tell us a bit more about your concerns?

Priti Patel (Conservative, Witham)

I am interested to hear the panel’s views on whether simplification in the system will ultimately lead to behaviour change in those who are currently on benefits. Will it be more positive in encouraging them not only to get back into work, but to lead on to the social policy side of behavioural change?

Kate Green (Labour, Stretford and Urmston)

Dr Nolan, you have rightly said that this benefit does not incentivise second earners to move into employment, yet we know that a very important factor in levels of in-work poverty is having only one earner in the household. I am interested in suggestions from the panel as to how the benefit might improve levels of in-work poverty, given that it does not seem well designed to do so through encouraging second earners.

John Glen (Conservative, Salisbury)

I would like to come back to Professor Sainsbury, following on from Stephen Timms’s question about the issues around complexity. You seem to be making some assertions about the benefits that might not accrue from this, but is this not really just a matter—

John Glen (Conservative, Salisbury)

In terms of the complexity of the evaluation process—meaning it might not make it massively better than what we have at the moment—is that not just a general comment about all change? Obviously if you are going to change a benefit system there will be some transitional tensions, but there are no specific reasons why this would be worse than any other set of changes when you are trying to fully evaluate people’s needs. You are making a generic comment that could be applicable to any change in benefits, are you not?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I have a couple of questions on transitional protection when the benefit is introduced. First, I want to ask Mike Brewer a couple of questions. Mr Brewer, you said to the Work and Pensions Select Committee that transitional protection will not last that long for most families, because family circumstances change quite frequently. Will you expand on that a little?

Jennifer Willott (Liberal Democrat, Cardiff Central)

The other thing that you said in the notes that you sent to the Committee was that, after transitional protection ends, couples with children will gain and lone parents will lose. Will you expand on that and say why and how much?

Jennifer Willott (Liberal Democrat, Cardiff Central)

There will be questions later about disregards, but I have a final question. When transitional protection is lost because of a change in circumstance, there have been some concerns raised that that would count as a work disincentive. Has anyone looked into whether there need to be linking rules, as in some of the current benefits, or what could be done to ensure that the universal credit does not act as a disincentive when it is introduced?

Jennifer Willott (Liberal Democrat, Cardiff Central)

So your entitlement would be frozen at a particular point in time until the credit effectively reached that point?

Charlie Elphicke (Conservative, Dover)

Professor Sainsbury, I was fascinated by your discussion about how often circumstances can change. Does that have a bearing on the winners and losers debate? In one month you can be a loser and in the next month you can be a winner. Is that not an important thing to factor in to that discussion about winners and losers?

James Gray (Conservative, North Wiltshire)

We have a fair bit of work to get through, so I ask colleagues and our kind witnesses to be as crisp and helpful as possible in their questions and answers.

Karen Buck (Labour, Westminster North)

I would like to start with Mr Brewer, although possibly others will come in on this. In a way, we are linking the issue of transitional protection with tapers, and there will be later questions on disregards. I think that the Institute for Fiscal Studies estimate was that the total gain of the gainers from universal credit would be £3.6 billion and the total loss of the losers would be £1.9 billion. I am assuming that tapers and disregards are one of the critical ways that will determine whether people are in that category. Could you start by telling us a little about the key characteristics of the group of gainers and the key characteristics of the group of losers?

Karen Buck (Labour, Westminster North)

In two sentences—no pressure.

Karen Buck (Labour, Westminster North)

Can we broaden this out to the taper? Obviously, one of the central elements of the universal credit, and a welcome one, is that it reduces the rate of taper—the marginal rate of reduction—to 65%. What is your view, as a group, of the extent to which that in itself, taking out integration, simplification and other factors, will impact on decisions to go into work?

Karen Buck (Labour, Westminster North)

I do not want you to be the only one to answer the question, but again, your submission suggests that 350,000 claimants will face a higher taper than is currently the case. Can you explain that to us?

Karen Buck (Labour, Westminster North)

My last question, if I may, Mr Gray, is for Mr Oakley, in particular. Council tax benefit is obviously moving in the opposite direction from universal credit, and you mentioned in your submission that that seems to contradict the aim of integrating tapers. Can you explain why you think it is being done and what the impact will be?

Guto Bebb (Conservative, Aberconwy)

On the 65% taper rate, the Government have stated that it is an issue of affordability. Is there a magic number? Should the percentage taper rates be lower to ensure that there are more winners than losers in the system? The marginal tax rate is an issue I am very aware of, and I would like your comments on the fact that 65% has been mentioned as a choice made on affordability levels.

Kate Green (Labour, Stretford and Urmston)

I would like to pursue a couple more questions on disregards. Patrick Nolan has just explained to us that one consequence could be that they discourage second earners and couples from entering the labour market. To what extent is that because the benefit is designed as a household benefit? Could that be addressed by assessing each member of a couple individually?

Kate Green (Labour, Stretford and Urmston)

My second question about disregards is to ask about the impact of removing the earnings disregard from people under the age of 25. Does any of the panel have any comments on that?

Kate Green (Labour, Stretford and Urmston)

I found absolutely fascinating the answers on second earners and on women’s financial independence being balanced against a benefit that can incentivise people just to get them into work. If I may ask one final question, will panel members clarify the point about disregards and the interaction with housing costs, because there is a 150% impact on disregards if you are in receipt of housing benefit? Will the panel comment on the consequences of that?

George Hollingbery (Conservative, Meon Valley)

Mr Ghelani, you mentioned that in the research the CSJ had identified a very considerable cost to individual disregards. Do you have those numbers to hand or could you supply them to the Committee?

Stephen Timms (Labour, East Ham)

I want to ask some questions about the effect of extending the long-established means-testing rules in out-of-work benefits into in-work benefits in universal credit. First, on the savings cap, people who are in work with £16,000 in the bank will not be able to receive any universal credit in future. I will ask Mike Brewer first. How many people does the IFS estimate to be affected by that? The Social Market Foundation said 400,000. On Second Reading, the Secretary of State said 100,000. Has the IFS formed a view about how many is the right answer?

Stephen Timms (Labour, East Ham)

Is it a specifically difficult thing to work out?

Stephen Timms (Labour, East Ham)

I tabled a question to the Government about how much they were going to save by this measure. The Minister answered that the DWP’s estimate was that it was going to save £70 million. If it is the case that only 100,000 people lose all their benefits because of this measure, given that average tax credit payments are £4,000 or £5,000 a year, the £70 million figure seems a very small one. Have you any comment on what the Government might be saving by such a measure?

Stephen Timms (Labour, East Ham)

May I ask an historical question? Professor Sainsbury, you mentioned family credit earlier. Was it the case in family credit that there was a savings cap such as this? It certainly wasn’t present in the tax credit system, but I wonder whether it harks back to—

Stephen Timms (Labour, East Ham)

May I ask Mr Ghelani a question? In its report, the Centre for Social Justice was critical of the effect of the savings cap in means-tested benefits currently. The Government decided to reject your advice on this and to extend the cap into in-work benefits. Can you tell the Committee more about the problems that you think that will cause?

Stephen Timms (Labour, East Ham)

I have one final question. Another aspect of the extension of the means-tested rules into in-work benefits is the effect on unearned non-investment income, and the IFS preliminary analysis picks that out. Could you tell us what kinds of income will be treated less generously under universal credit than under the current tax credit system? You mention in your analysis widows pensions, private pensions and maintenance payments.

Julie Elliott (Labour, Sunderland Central)

We do not yet know how child care costs will be treated under universal credit. Parents could in some cases face very high marginal deduction rates, of possibly greater than 100%. I am interested to know what your view is on how that might be addressed.

Julie Elliott (Labour, Sunderland Central)

At the moment, if you are paid £1, the cost of being paid that pound is that you sometimes lose double that amount in benefits. It is not explained in the Bill, and the Work and Pensions Committee found that this area was a problem; there is no answer to it at the moment.

Margaret Curran (Labour, Glasgow East)

May I ask a brief question? In principle, do you think that it is proper that the state offers some support for families seeking child care to help them to work?

Margaret Curran (Labour, Glasgow East)

You all agree with it in principle, so there has to be some degree of funding within this system. I take your general point that none the less, the social security system can play a part in helping people fund child care to enable them to work. I thought that maybe you were saying something different.

Julie Elliott (Labour, Sunderland Central)

Some benefits have been brought in to try to get people with children back into work, but detail of how any of that works is glaringly missing at the moment. Going from what you are saying, if we do not get this right, could the end result be that more people with children will end up not working, therefore being a greater burden on the state than if they are given some help to go to work and be able to contribute to the state? That seems to be what you are saying.

Sheila Gilmore (Labour, Edinburgh East)

This is a question for Deven Ghelani. You made a statement—I do not know on what evidence—that child care is particularly expensive in the UK. In what respect do you think it is so? What do you think can be done about it to make it possible for people to work?

Harriett Baldwin (Conservative, West Worcestershire)

I want to turn to the subject of passported benefits. There is a range of passported benefits such as prescription glasses, prescriptions generally, concessionary travel in some areas, possibly help with university tuition and, very importantly, free school meals. Does anyone on the panel have a recommendation for the Government as to how they can design a system for passported benefits under the universal credit that is fair, does not create disincentives and is simple to administer?

Sheila Gilmore (Labour, Edinburgh East)

Even if they are worse off.

Sorry, I listened to what you said there and what you seem to be suggesting is that people should go to work even if, because of things like passported benefits and child care costs, that would make them worse off.

Sheila Gilmore (Labour, Edinburgh East)

Well, you kind of said that should fall outside of it.

Guto Bebb (Conservative, Aberconwy)

On free school meals, that is a crucial point in terms of the affordability of going back to work. I speak as someone who pays £48 a week for school meals, because I have so many children perhaps. It is a crucial issue because, quite often, the money comes from the mother. The whole thrust of the Bill is to make work affordable, so the act of physical transfer of money at the end of the week is an important issue.

I have a second point on passported benefits that I would like you all to comment on. In Wales, we have a devolved Administration responsible for the payment and administration of free school meals. It is imperative that, in an area such as Wales where there is such a dependency on the welfare state, any system brought into play takes into account the difference from a devolved system’s point of view. Is there any evidence to show that free school meals are an important issue when people make decisions about whether to work?

Guto Bebb (Conservative, Aberconwy)

Just to follow on in specific terms, I have also come across the issue in relation to people thinking of starting their own businesses, and the contribution at that point is crucial. It has been mentioned that when starting a business it is very difficult to get finance together, so free school meals at that point are important—that is anecdotal. Is there any evidence on that?

Paul Uppal (Conservative, Wolverhampton South West)

I was interested in some of the remarks that you, Dr Nolan, and actually the whole panel, made about how far the Bill can go in providing a carrot and a stick. There has to be a line in the sand on these things. This is quite a subjective question and I appreciate that you might not be able to answer it. Obviously, the current system is not perfect, and there might be flaws in what is proposed, but do you feel that there is a signal in this in terms of the tacit understanding that many people have with the current benefits system? Fundamentally, at its core it is trying to give the ethos that, regardless of whether people are worse off or better off, it is to everybody’s benefit—not only the individual’s, but society’s—that work should pay. I appreciate that I am asking you to respond from your own subjective view of tackling these issues and taking it head on.

Charlie Elphicke (Conservative, Dover)

I turn to the issues of fraud and error. The bill of £5.2 billion or so a year seems to be one-third fraud, one-third official error and one-third benefit recipient error. What do you think of the Government’s claim that this is likely to achieve savings of £1 billion in fraud and error and £500 million in administration costs?

Yvonne Fovargue (Labour, Makerfield)

Have any studies been done on the impact of the proposed changes to legal aid that will take welfare benefits out of scope and make cuts to advice agencies? That may impact on claimant error. At the moment, the benefit is complex and people require help claiming. Professor Sainsbury, you said the forms will be even thicker. Have any studies been done on the impact of that?

Sarah Newton (Conservative, Truro and Falmouth)

Could you expand on your views on conditionality and the savings regime within the universal credit? You have already said this morning that you have some reservations about the financial incentives, but do you think that some of the conditionality in the sanctions mechanisms in the Bill will provide encouragement for people to seek employment?

James Gray (Conservative, North Wiltshire)

Order. I am sorry, Professor Sainsbury, but the rules of the House insist that at 12 o’clock precisely I have to interrupt you in mid-flow, which is very rude, so forgive me. On behalf of the Committee, I thank all five of you. It has been an extremely useful session. I think we have given you quite a grilling, but I hope you have enjoyed it as much as we have. Thank you. I now call on our next panel of witnesses to join us.

James Gray (Conservative, North Wiltshire)

Order. If we are all settled comfortably, I welcome the second panel of witnesses. For the record, I ask you all to introduce yourselves briefly.

James Gray (Conservative, North Wiltshire)

By agreement of the Committee, I understand that you, Mr Rickell, have kindly slotted into this session, even though your particular expertise does not come under precisely what we are discussing. Therefore, by leave of the Committee, we are going to address our questions to you first.

Maria Miller (Conservative, Basingstoke)

I want to turn the attention of the Committee to something other than universal credit. There are major provisions in the Bill about disability living allowance and I want to take the opportunity to focus on the new assessment that we are looking at. Disability living allowance currently relies on self-assessment of an individual of their own condition. That has led, by necessity, to a very complex assessment form.

I know, Andy, that you have been involved in how that might be improved in future. Vicki might also want to contribute. How have you been able to look at the assessment; how might it be improved; how have disabled people been involved in the process; and how might they be involved in future? After all, they are the people most affected by the provisions we are making in the Bill.

Maria Miller (Conservative, Basingstoke)

May I press you on the involvement of disabled people?

Maria Miller (Conservative, Basingstoke)

May I follow on from that idea of how the assessment works in practice? Ms Nash, at the moment, how do you and Mind feel about how DLA currently works to assess people with mental health conditions? What do you think we could usefully take forward from the Harrington review to help inform our future assessment process?

Maria Miller (Conservative, Basingstoke)

But are you happy with the way DLA assesses mental health at the moment?

Maria Miller (Conservative, Basingstoke)

Thank you for both those contributions. It is really helpful to get them on the table. Perhaps I could just clarify that obviously the budgets we are talking about are keeping expenditure at the same level as last year, and the reduction in expenditure is about a reduction in the growth of expenditure. It is really important that the Committee understands that.

Margaret Curran (Labour, Glasgow East)

I am sure we’ll have more time in this Committee to explore, but I’m frustrated because I can’t possibly ask as much as I would like to. I want to ask both of you a couple of questions. One is that DLA, warts and all—many improvements are required—is still a valued and important benefit. It is well understood, and people know its purpose. It is important to understand that.

The second point, particularly to you Andy, is about the assessment process. One thing disabled people tell me is that they are worried about the term “greatest need” in the context of cuts, particularly in relation to mental health, because they worry that the benefit will be targeted at people with noticeable disabilities, and that there will be a hierarchy of disability, and only those with the most noticeable disabilities will attract the benefits. There could be difficult cuts, and the assessment process might be the means to do that. Are you conscious that there is an awareness, particularly when looking at people with mental health problems, of disabled people’s concerns about the potential difficulties in the assessment process?

James Gray (Conservative, North Wiltshire)

Thank you, Mr Rickell. I am keen not to go too much into our time for discussing the universal credit, so if colleagues will forgive me I think we ought to move on to the main topic. Thank you for your contribution.

John Glen (Conservative, Salisbury)

Looking at the universal credit, as an initial question I would be very interested to hear your assessment of the impact that it will have on in-work and out-of-work poverty. When giving us your observations, perhaps you could explain the basis for them—what data you are using and the reasoning behind it—so that we have a basis for further questions. Perhaps Paul can answer first.

James Gray (Conservative, North Wiltshire)

Mr Goulden, did you have something to say?

John Glen (Conservative, Salisbury)

Can you say more about that sort of work—that qualitative research, the number of people, and so on—so that we can get a picture of how valid that assertion is?

John Glen (Conservative, Salisbury)

It would help if you explained how representative it is and where it comes from, because it is a bold statement to make.

Karen Buck (Labour, Westminster North)

May I start with a question to Mr Bivand? I do not know whether you were here earlier, but we heard, particularly from the Institute for Fiscal Studies, about the potential winners and losers from the universal credit—who they are, and what their characteristics are. I believe that you have done some research, and I wonder whether you could tell us a little about your analysis of who will gain and who will lose.

Karen Buck (Labour, Westminster North)

May I ask a quick question of Kate Wareing or Mr Goulden? Substantial cuts worth some £18 billion in various social security benefits are working their way through the system. Some of those cuts, including in housing and possibly child care, could have the perverse consequence of making the tapers better, because they will not be included in the calculations, but they could leave people with a larger cost and, therefore, potentially push them into poverty. Is that something that we should be concerned about and are there ways of monitoring it more closely or finding a way round it?

James Gray (Conservative, North Wiltshire)

Ms Nash, have you something to add to that?

Charlie Elphicke (Conservative, Dover)

A lot of the comments that have been made on poverty seem to be long on emotion and short on figures. Have any of the witnesses conducted any analysis of the DWP’s universal credit impact assessment? In particular, it looks as though the two bottom deciles will have an increase in entitlement to £5.40 a week. According to the impact assessment, universal credit is sharply focused on the least-owning deciles. The losers seem to be rich people beyond decile 6. Will you comment on that and base your comments on detailed evidence and numbers, rather than on pure emotion?

Jane Ellison (Conservative, Battersea)

This is a quick but more general question: I would be interested to know whether any of you believes that poverty is ever linked to the choices that people make in life.

Jane Ellison (Conservative, Battersea)

No. In a couple of the submissions, there is almost a sense that poverty is something that happens externally and that poverty is not the result of the choices that people make. When you were making the point about low pay and summing up some of the issues around the things that lead to it, you did not mention education and the link between poor performance in education and ending up in low-paid work, which surprised me. I am interested to explore the extent to which you see choices as part of the process.

Priti Patel (Conservative, Witham)

This is almost a follow-up, in terms of choices and the impact of poverty and welfare. Do you all have a view on whether the universal credit will tackle welfare dependency to the extent that it will actually address the whole issue of intergenerational dependency on benefits and welfare?

Sheila Gilmore (Labour, Edinburgh East)

I want to follow up on the impact of getting into work and poverty. There seems to be an assumption—several panellists have talked about people being able to get up a career ladder—when the reality for many people is that the available jobs are not career-ladder jobs. They are jobs in local shops or whatever, where you are on the cash desk and you will be on the cash desk for a long time. Do you think that there is any benefit, as a reciprocation for conditionality, in part of the contract being to assist people with training and skills; otherwise they will be in those jobs for a long, long time?

James Gray (Conservative, North Wiltshire)

Keeping an eye on the clock, I am keen to move on swiftly.

Ian Paisley Jnr (DUP, North Antrim)

In terms of the evidence basis for the decisions that the decision maker will make on assessments, is there not a risk that we might create an inaccurate measurement that gives a snapshot of a claimant at a time and place, as opposed to an assessment based on the long-term measurement of a claimant’s needs, condition and highs and lows? The person best placed to make such assessments and draw that sort of evidence is the claimant’s GP. Would you agree with that?

Ian Paisley Jnr (DUP, North Antrim)

I am worried that you are indicting about 80% of GPs across the country. In my experience, GPs are quite good at those sorts of assessments, but you are right to say there are gaps.

Ian Paisley Jnr (DUP, North Antrim)

Is that not about training the person who is making the long-term assessment? Again, I stress that that will probably be the GP who sees a person regularly, repeatedly over a period of time, and knows the claimant best.

James Gray (Conservative, North Wiltshire)

We will not get through all the issues in the 14 minutes or so available to us, so perhaps I can ask that both questions and answers be swift and to the point.

Anas Sarwar (Labour, Glasgow Central)

Universal credit will change the way that benefits are claimed and paid, and I wonder if you can outline what you think some of the key advantages will be, and some of the potential pitfalls.

James Gray (Conservative, North Wiltshire)

Thank you.

Priti Patel (Conservative, Witham)

We spoke earlier with our previous panel about error and administration in the current system. We would welcome some views from you all about, for example, overpayments of tax credits and whether you think that the universal credit will avoid that.

Priti Patel (Conservative, Witham)

May I just put across to the panel that as Members of Parliament many of us deal with the whole issue of overpayments relating to tax credit, which has been in casework and which shows a system failure as well in the administrative path? Do you specifically think that universal credit will help to address some of those problems?

Sarah Newton (Conservative, Truro and Falmouth)

I am very interested in some of the comments on conditionality. First of all, Kate, I think that I speak for everyone here in saying that none of us wants to see people destitute in the way that you described and I cannot accept that increased destitution will be a consequence of these reforms. Chris, you mentioned conditionality in a more positive way. You think that there could be some advantages to it. Could you elaborate on that?

Margaret Curran (Labour, Glasgow East)

May I ask about the disability element of universal credit? The Government are working up a system to look at how disability premiums—or whatever they will be called—fit into that universal credit. Do you have views about that? What would you recommend to the Government as they look at this issue?

Margaret Curran (Labour, Glasgow East)

Are you worried about the potential loss of the severe disablement allowance? Have you got evidence or case studies of where you think people might be winners or losers, depending on what the Government do with this?

Harriett Baldwin (Conservative, West Worcestershire)

A lot of benefits are passported, for example prescriptions, spectacles, concessionary travel in some areas, potentially help with university tuition fees, and free school meals, which is a very important benefit as it also triggers the pupil premium. Do the members of the panel have any suggestions about how the Government can design a system for passported benefits under the universal credit that is fair, that does not create disincentives and that is very simple to administer?

James Gray (Conservative, North Wiltshire)

Very briefly, Mr Bivand, because we are running out of time.

Sheila Gilmore (Labour, Edinburgh East)

In the brief time that we have left, are there any comments on the proposals for the social fund and how it will be transferred from central Government to local government? How will that impact on families?

Jane Ellison (Conservative, Battersea)

A quick question: do you agree with the principle of a benefits cap and linking it to the average weekly earnings of a low-income working household?

James Gray (Conservative, North Wiltshire)

As we approach 1 o’clock, we have satisfactorily reached the end of a particularly useful evidence session. I apologise to those people whom I have not been able to call. I thank the panel in particular for your extremely useful and enlightening evidence—it really has been exceptionally helpful—and I am most grateful to you for taking the time and the trouble to come to Parliament to give it.

James Gray (Conservative, North Wiltshire)

We move on to the second evidence session in our consideration of the Bill. I am delighted to welcome two people to give evidence to the Committee: Anne Spaight, formerly chair of the Disability Living Allowance Advisory Board, and the Essex Coalition of Disabled People.

Sorry, Mr Adams, I missed your name out. Perhaps you would both like to introduce yourselves for the record.

Paul Uppal (Conservative, Wolverhampton South West)

Thank you both for coming today. I wanted to ask something about the objectives. The Minister with us today—if I may quote her and then perhaps broaden the question—recently said that she wanted to ensure that disability living allowance reflects the needs of disabled people better today than in the 1990s. DLA enables support to be targeted on those with the greatest need. I was going to ask, initially, whether you supported these objectives and if the proposals were met in the Bill.

However, I wanted to broaden the question out and get more specific views and thoughts. DLA was introduced in 1992; since then, we have had a great deal of change in the legislation, in the support at work, in aids and adaptations, and in a broadening of our understanding of disability. Specifically, what changes would you like to make to DLA to bring it up to date?

Harriett Baldwin (Conservative, West Worcestershire)

According to the Library research document, which is available publicly, just under 2 million people were claiming DLA in 1997, but there were 3.2 million cases by 2010. Do you have any explanation for why the number of cases has grown over that period, I think more than people would have expected?

Harriett Baldwin (Conservative, West Worcestershire)

Is it, therefore, because the benefit has become better known that there has been an increase in case load?

Harriett Baldwin (Conservative, West Worcestershire)

I am also not sure whether you will have seen the written evidence that we have received. One is labelled WR04 and is a submission from Mohammed Mahmood. At the moment, he goes to work in a motability car, but he is worried—I have heard this from others as well—that he is going to lose it. My understanding, however, is that there is nothing in the Bill that would threaten that. Is that correct?

Harriett Baldwin (Conservative, West Worcestershire)

It worries me that some of the evidence reflects concerns about impacts on people that are not at all outlined in the Bill. What should we do about that?

Harriett Baldwin (Conservative, West Worcestershire)

Similarly, if Mr Gray will permit me one last question, the savings by 2014-15 of £1 billion a year are savings relative to growth towards 2014-15. In other words, the level of spending will be very similar to the level of spending in the last fiscal year. What could be done to help people understand the savings in that kind of context?

Margaret Curran (Labour, Glasgow East)

May I ask a short question? We were talking about the recent rise in DLA and seeing the figures increase. One can anticipate that those figures could increase as more and more people become aware of it. More and more people are perhaps living with disabilities now. There is more awareness and a broader definition of disability, so if we cap the rise there could be a problem. Part of the need to cap that rise is an implication perhaps that some people are getting DLA inappropriately, or misclaiming DLA. Do you have any evidence that there are people currently receiving DLA who should not be receiving it? The 20% cut in caseload was one of the figures that the Government mentioned.

Margaret Curran (Labour, Glasgow East)

So we have no basis on which to determine a 20% cut, if we are just looking at an objective assessment.

Charlie Elphicke (Conservative, Dover)

If you look at the explosion in the number of claimants in the past 10 years, from around 2 million to 3.2 million today, is it simply a question of awareness or is it possible that some people, if you like, recover, get better and no longer need to claim it, but that there has been no assessment machinery? I think that 127,000 or 140,000 claimants have not been seen since DLA was set up in 1992. Do you think that the issue of people recovering and getting better could account for why there are potential savings to be made in proper targeting?

Stephen Timms (Labour, East Ham)

You were expressing concern earlier that people might have been unnecessarily alarmed by what they have heard about the Bill. Do you acknowledge that clause 83 states that in future people in residential care would not receive the mobility component. If they are in residential care at the moment and have a motability vehicle then they are right to be concerned.

James Gray (Conservative, North Wiltshire)

As we move on, just in passing, you do not both need to answer everything. We are slightly short of time, if you keep an eye on the clock, so where you agree with each other a nod will be fine.

George Hollingbery (Conservative, Meon Valley)

Pushing ahead on that very issue of the mobility component, which a great many of us have had representations upon, when I have made representations to Ministers they have said, “Well, it’s our duty to look for overlap,” and indeed there is already overlap in that system: the care component of DLA is not paid to those in residential care. So first, is it right for Government to be looking for those overlaps? Secondly, do you agree with the Minister’s position that there is a huge inconsistency in how mobility is provided across the country—through local council contracts, residential care home contracts, and so on—and that some uniformity would be highly desirable?

George Hollingbery (Conservative, Meon Valley)

Can I draw from what you have just said that you acknowledge that in certain places in the residential care home landscape there is duplication or overlap between provision from homes and from the Government?

George Hollingbery (Conservative, Meon Valley)

The Government have made a proposition to me which I am trying to explore and tease out with you here. Are you saying that in some places there is overlap—where the mobility component might be paid to those in care, and a fee is paid by the county or whoever? That never happens?

John Glen (Conservative, Salisbury)

I am a bit confused, because I was under the impression that local authorities and residential care providers provided an element of mobility, and that the issue was the wide gap between some and others. I am surprised that you seem to be contradicting that. The issue that has been presented to me as a constituency MP is that the mobility component provided an added extra, but there was a basic level of provision. To be absolutely clear, are you saying that the basic provision is not currently there?

John Glen (Conservative, Salisbury)

That flatly contradicts what I have heard from constituents, who have said that they have that provision but it is nice to have the additional on top.

Maria Miller (Conservative, Basingstoke)

I want to turn attention to the assessment process and ask two quick questions. Mike, what does the current DLA application process feel like from the perspective of a disabled person —of a user?

Anne, support through DLA for individuals with cognitive impairments currently causes concern for some people—particularly mobility and higher rate mobility assessment. Is that something that you have looked at? Do the proposals in the Bill address that problem enough, or could more be done?

Sheila Gilmore (Labour, Edinburgh East)

I want to ask about aids and adaptations, which, perhaps, fit into that. The consultation paper certainly suggested that if people have aids and adaptations, that should be taken into account when deciding whether they need certain aspects of the new benefit. It was not clear precisely what that meant. It would be interesting to hear your comments on that, given that the need for aids and adaptations is one cost that is associated with disabilities.

Priti Patel (Conservative, Witham)

I want to move on to new penalties, and there will a new penalty for those who knowingly fail to report changes in circumstances. My direct question is whether, in your view, that new penalty will bring genuine integrity into the system? There have been a number of press reports about people claiming DLA by basically conducting fraud, and the DWP has estimated that some £220 million was overpaid due to fraud and error. In the light of some of the press reports that we have seen, it is clear that people are wrongly claiming DLA when they are actually fit and able.

Priti Patel (Conservative, Witham)

On that point, the whole purpose of the new penalty is actually to bring genuine integrity back into the system, because, in their eyes, the public feel that there is not enough confidence. They read press reports about people that are effectively claiming benefit and claiming that they are disabled when they are, in fact, not. We have had press reports in various newspapers this week to that effect.

James Gray (Conservative, North Wiltshire)

Many thanks indeed. We need to move on to our next set of witnesses. I thank you both very much for taking the time and trouble to come. It is most kind and much appreciated.

James Gray (Conservative, North Wiltshire)

I welcome Sue Bott and Andrew Lee. For the sake of the record, will you kindly start by introducing yourselves?

Charlie Elphicke (Conservative, Dover)

Do you have any estimates of the combined impact that these proposed welfare reform measures will have on disabled people?

Charlie Elphicke (Conservative, Dover)

Can you tell me where that estimate comes from?

James Gray (Conservative, North Wiltshire)

We will have to leave it there. We have only half an hour to get through quite a lot of business.

Margaret Curran (Labour, Glasgow East)

I absolutely take your point, but may I ask you about a specific aspect of the reforms, the proposals on universal credit? The Government are looking at what options there might be to offer a premium or extra cost allowance for the universal credit. Have you done any thinking about that? Do you have any proposals on that?

Stephen Timms (Labour, East Ham)

May I ask a question about employment and support allowance, which you have been touching on? One of the Government’s proposals is that contributory employment and support allowance will be time limited to one year. That means that some people who have already been on contributory benefit for some time will find that their contributory ESA will stop immediately once the change is introduced. What is the likely impact of that measure on disabled people and their families?

James Gray (Conservative, North Wiltshire)

If I can interrupt briefly, we are keeping a close eye on the clock, because we do not have all that much time, and I want to get through a specific number of topics that we have in front of us. Forgive me if I rudely interrupt. I am not trying to be rude; it just comes naturally to me.

Priti Patel (Conservative, Witham)

I would like to move on to the DLA mobility component for people in care homes. I would like your views specifically on whether you agree that there is a fair degree of overlap right now between DLA and other sources of funding, such as local authority funding. How can that be addressed?

Yvonne Fovargue (Labour, Makerfield)

Some organisations have criticised the extension of the waiting period for DLA, which is currently three months, to six months for the personal independence payment. There is some evidence that people who suffer a sudden catastrophic event, besides having to come to terms with that, also get into debt during the current waiting period. What are your views on that?

Sarah Newton (Conservative, Truro and Falmouth)

Most of my colleagues here are visiting people with disabilities every week who are very concerned about the new assessment arrangements. At the same time we are helping people, because the current system is so broken that it does not recognise a lot of disability. There is a lot of fear around this assessment process. What more could be done to overcome the fear that people have at the moment about the assessment process?

Sarah Newton (Conservative, Truro and Falmouth)

It seems to me that the current fear is a lot to do with the fact that the current system is broken and people have had so much difficulty. It has been lacking in that transparency, so that they have really lost faith in the whole system of assessment.

James Gray (Conservative, North Wiltshire)

We have two minutes left, literally. So, Jane Ellison—very briefly and swiftly.

Jane Ellison (Conservative, Battersea)

On aids and adaptations, the Government’s proposal is that people’s successful use of aids and adaptations should be considered in looking at their ability to undertake daily tasks. Do you think that that is reasonable?

James Gray (Conservative, North Wiltshire)

I am sorry, Mrs Bott. I wonder if I can very rudely interrupt.

James Gray (Conservative, North Wiltshire)

No, you cannot be. I fear that the rules of the House are that it’s 5.15 pm and I can hear the Big Ben chimes—

James Gray (Conservative, North Wiltshire)

Thank you very much for coming along to give evidence to us. I am sorry to be rude. As I say, as Big Ben chimes we have to stop speaking. It is terrible, really, but thank you both very much indeed for your great kindness in taking the trouble to come and give evidence to the Committee. It is much appreciated.

James Gray (Conservative, North Wiltshire)

We will now take evidence from Macmillan, Scope, Community Links and the TUC. It will not be necessary for all four of you to answer all the questions that are put to you, so if you want to select them judiciously among yourselves, that would be very helpful to the Committee.

For the sake of the record, perhaps you could start by identifying yourselves.

Anas Sarwar (Labour, Glasgow Central)

Good afternoon and thanks for coming in to see us. Part 1 of the Welfare Reform Bill provides the legislative framework for the universal credit and much of the detail is to be set out in regulations. What are your views about whether the proposals will in fact achieve the stated policy aims of simplifying the system and making work pay?

Ian Swales (Liberal Democrat, Redcar)

There remains a depressing level of adult and child poverty in the country, and that can, of course, include people in work as well as out of work. What do you think the impact of universal credit will be on levels of poverty for both in and out-of-work people?

Paul Uppal (Conservative, Wolverhampton South West)

You mentioned one thing that I specifically want to highlight. In relation to housing allowance rates and the linkage to CPI, do you give much credence to the view that, in many ways, this could be an effective brake? You referred specifically to the private housing sector—I thought I heard you right on that. In the current circumstances, an unscrupulous landlord could manipulate the situation. Do you not see some actual positive benefits in trying to provide a brake on the market, which has ballooned over the past few years?

Charlie Elphicke (Conservative, Dover)

One of my concerns is that, in the five years between 2005 and 2010, child poverty exploded by several hundred thousand. Looking at universal credit, it seems to me, from the regulatory impact assessments, that the poorest decile, decile 1, and the second poorest decile benefit, respectively, by increases of £4.40 and £5.40 a week. Is it not welcome and right that we should concentrate benefits and help on those who most need them?

Charlie Elphicke (Conservative, Dover)

Yes.

Charlie Elphicke (Conservative, Dover)

It went up by 300,000.

Charlie Elphicke (Conservative, Dover)

How do you know though? The Bill is about framework—it depends on the level set, surely?

John Glen (Conservative, Salisbury)

Back to what Mr Elphicke said, given that it is a framework and that the detail and regulations are not there yet, that is an assumption. Surely it is scaremongering to suggest that the poorest will be worst impacted. There is so much supposition behind what you say. We have seen from the evidence in the previous session the impact that has on the most vulnerable people in our society. Surely it would be better to wait until you know the detail before you make those assumptions.

Harriett Baldwin (Conservative, West Worcestershire)

May I ask about the £18 billion that you just cited? As the Library document seems to indicate, is it the case that of that £18 billion, between £2.5 billion and £3.5 billion is the child benefit cut for higher rate taxpayers?

Kate Green (Labour, Stretford and Urmston)

May I ask Duleep and Marc which of the changes that we know about will have the greatest impact on disabled people?

Guto Bebb (Conservative, Aberconwy)

With the introduction of universal credit, how, in your view, should the Government design a system for passported benefit that would be obviously fair, not create a disincentive to work and be simple to administer?

Stephen Timms (Labour, East Ham)

You describe some of the complexities that people will face with the new system. They will need advice to get what they are entitled to under the arrangements. What do you think will be the likely availability of good advice when people get into the new system over the next couple of years?

Stephen Timms (Labour, East Ham)

As you are describing, universal credit is going to change the way in which benefits are claimed and paid in the future. What do you think are likely to be the potential benefits and advantages of those changes and the potential pitfalls?

Kate Green (Labour, Stretford and Urmston)

The Bill sets out a new conditionality and sanctions regime for universal credit. I should be grateful if you commented on the effectiveness of sanctions at getting people into work and out of poverty for the different client groups that you advocate for and on whether you agree with the Government’s proposals now that will toughen up elements of the sanctions regime. I am particularly interested to hear from Nicola and Maeve generally but from Marc about the implications for disabled people and people with long-term health conditions.

Kate Green (Labour, Stretford and Urmston)

But you are not suggesting a system in which there should be no sanctions. What do you consider is the right balance?

Lilian Greenwood (Labour, Nottingham South)

I want to go back to the overall scheme for universal credit. Do you feel that it deals sufficiently with arrangements for self-employed people?

Priti Patel (Conservative, Witham)

In the light of the amount of administrative errors and fraud that takes place in the benefit system, does the panel think that conditionality would restore some integrity into the system?

Priti Patel (Conservative, Witham)

So what would you think the appropriate manner is?

Stephen Timms (Labour, East Ham)

You have attached a lot of importance to self-employment as a route off welfare. What is your view on the proposal that people who are self-employed should be deemed to have earned at least the minimum wage for the hours in which they are working in self-employment? One of the witnesses in the next group that is coming to us—the Tax Reform Group—says they are worried that self-employed people will get a much worse deal than they currently do. I wonder whether you would agree with that. How do you think the new system looks?

Kate Green (Labour, Stretford and Urmston)

I should like to ask a couple of questions about disability benefits. Clause 52 abolishes the youth rules for contributory ESA. Does anyone have comments on that proposal?

Kate Green (Labour, Stretford and Urmston)

What is your argument for that?

Charlie Elphicke (Conservative, Dover)

Over the past decade, we saw huge social change. The contributory principle, which had been eroded for a long time, was largely finished off and replaced by means-tested benefits. Do you not think that saying, “Look, the reality is that the system has changed,” is the right way forward? The contributory principle has been substantially eroded and is therefore arguably not entirely relevant. Parallel to that, we seem to have a possible merger of income tax and national insurance, which, perhaps, recognises a reality that has been going on for some time.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The Bill introduces an overall benefit cap. Do you agree with the principle that the amount a household can earn on benefits should not exceed the amount that they could earn in a low-paid job?

Jennifer Willott (Liberal Democrat, Cardiff Central)

Would you like to see any benefits either excluded or specifically included in the cap to make the measure, in your eyes, more acceptable?

Jennifer Willott (Liberal Democrat, Cardiff Central)

But disability benefits would not be included.

Ian Swales (Liberal Democrat, Redcar)

I am interested in the issue of benefit levels for two single people as opposed to couples. In my constituency, there are 10% more women than men on the electoral role for one simple reason: in the benefits system, it pays to not declare that you are living as a couple. Do you think that the system we are putting in place will help us to deal with that issue? Or will it remain the same, or will it get worse?

James Gray (Conservative, North Wiltshire)

Unless any colleagues have further questions I think that exhausts our questions for this panel of witnesses. On the behalf of the Committee, I thank you very much for coming, and for taking the trouble to go through a fairly exhaustive series of questions. We are most grateful to you—thank you very much indeed.

James Gray (Conservative, North Wiltshire)

Welcome to the final panel of witnesses, coming respectively from CAB and the Low Incomes Tax Reform Group. If you would kindly introduce yourselves for the record, from my left?

Charlie Elphicke (Conservative, Dover)

Do you have any estimates of the combined impact on disabled people of the proposed welfare reform measures that we are discussing in the Bill?

Charlie Elphicke (Conservative, Dover)

Will you elucidate them for our general benefit and education?

Charlie Elphicke (Conservative, Dover)

A little more, but a quick overview would be really helpful, particularly on what you see as the points of pressure and tension that the Government need to consider most carefully.

Charlie Elphicke (Conservative, Dover)

I ought to stop you there, because other Members need to ask a question. Sorry, Mr Gray.

James Gray (Conservative, North Wiltshire)

Mr Williamson, it looked as if you wanted to intervene.

Margaret Curran (Labour, Glasgow East)

Thank you very much, Sue. That was very detailed, and I will just press you a bit more on those details. We will hopefully look at your work as well. There are many arguments for the universal credit and I know you see the arguments for it. If we are going to introduce it, we should try to make it as effective as possible, particularly for disabled persons, and to replicate the premium system. You have said how that would be done for people in the third category. Do you have any specific proposals on how we could do that for people in the first two categories?

Margaret Curran (Labour, Glasgow East)

Maintained?

Margaret Curran (Labour, Glasgow East)

For clarification, do you think that more people should be brought into the universal credit system and that there should be more emphasis on disability within it?

Stephen Timms (Labour, East Ham)

The introduction of universal credit is clearly going to change the way that benefits are claimed and paid. May I ask about two points raised in Mr Williamson’s written evidence to us? First, you expressed concern that there is an over-reliance in the new system on real-time information. Will you tell us what the pitfalls there might be? Secondly, you talked a moment ago about self-employed people, who clearly cannot be dealt with through real-time PAYE information. You said in your written evidence that you think that they might get a much worse deal under the new system. Is it clear to you how, in principle, self-employed people should be treated, given that it is hard to know what their income in any given four-week period is? Will you comment on those points? If CAB has comments as well, I would be interested.

Sheila Gilmore (Labour, Edinburgh East)

May I ask one small question? People have recently been having difficulties in getting a pension, perhaps because they have retired early but are still working. Matching laws up does not seem to happen. Some of those people could be in their 50s, and may still have dependent children. If these things are not being matched up, people are getting tax demands because the system does not recognise them. Does that not suggest that it will be quite difficult to match everything?

Yvonne Fovargue (Labour, Makerfield)

We heard in an earlier evidence session that applying for the benefit is still likely to be a complex process. Also, the Bill proposes a £50 civil penalty for claimant error. Given that, what assessment have you done, if any, on the need for advice when the process comes in? Also, given the Government’s proposals on legal aid and cuts to the advice sector, what is the likelihood of advice being available?

James Gray (Conservative, North Wiltshire)

We will move on swiftly, if we may. Priti Patel has a question on the subject of the mobility component. We are short of time.

Priti Patel (Conservative, Witham)

I wanted to ask for views on the degree of overlap between disability living allowance funding and other sources of funding. This is something that we have explored with other people who have come to the Committee, in particular local authority funding and DLA in care homes.

Priti Patel (Conservative, Witham)

On that point about local authority funding, may I ask whether that is a recent change, or has it always been the case?

Sarah Newton (Conservative, Truro and Falmouth)

This is for Liz and Sue. From what you said, there seems to be a great deal of concern that the new assessment, which focuses on those with the greatest need, will exclude many disabled people currently on the lowest rates of DLA. How do you feel that that could be addressed?

Sarah Newton (Conservative, Truro and Falmouth)

So your assumptions were based on the 20% cut, and your assumption, in the absence of any other information, is that that would be the case?

Sarah Newton (Conservative, Truro and Falmouth)

That is not based on any evidence other than your thinking about how you would tackle the 20% saving.

Jane Ellison (Conservative, Battersea)

Again, on the subject of disability and people being unable to work and to go about daily tasks, the Government are proposing that aids and adaptations are factored into that. Do you think that is reasonable?

James Gray (Conservative, North Wiltshire)

Finally, and very briefly I am afraid, Anas Sarwar.

Anas Sarwar (Labour, Glasgow Central)

We have 90 seconds to ask and answer this question. There will be a new penalty for those who knowingly fail to report a change in their circumstances. A concern has been raised on the impact of that change on people with multiple sclerosis or HIV, for example. What changes do you think are required in the Bill to ensure that there is fairness on that?

Anas Sarwar (Labour, Glasgow Central)

Yes.

James Gray (Conservative, North Wiltshire)

Order. I fear that that brings us to the end of the time allocated for this panel of witnesses. I apologise for interrupting you in mid-flow, but the rules of the House demand it, and otherwise I would be struck off or something. Thank you very much for your kind efforts, which have been much appreciated, in giving evidence to the Committee this afternoon.