Welfare Reform Bill

Public Bill Committee, 26 April 2011.

Chris Grayling (Conservative, Epsom and Ewell)

On a point of order, Mr Gray. Out of courtesy, I draw the Committee’s attention to the written statement issued by the Secretary of State for Work and Pensions this morning on additional investment in the development of IT for universal credit. As the Committee has already agreed to the clauses on universal credit, there is clearly support on both sides of the House for what we are doing.

James Gray (Conservative, North Wiltshire)

Although the Committee is no doubt grateful for all such information, the Minister knows that that is not a point of order. None the less, we are grateful to him for that information.

It may be convenient if I advise the Committee that amendments to be considered next Tuesday, 3 May, must be tabled by the rise of the House today.

Clause 26

James Gray (Conservative, North Wiltshire)

I remind the Committee that with this we are discussing the following: amendment 40, in clause 26, page 13, line 8, at end insert—

‘(9) Regulations may provide for the appeal process which will apply when a Claimant has been informed that they will face sanctions in the event of a failure by the Claimant which is sanctionable under this section or section 27.’.

Amendment 80, in clause 26, page 13, line 8, at end insert—

‘(9) Where a claimant is sanctioned under this section, the claimant must be provided with a written explanation of the terms of the reduction, the reasons the reduction has been made and the claimant’s right to appeal.’.

Amendment 55, in clause 26, page 13, line 8, at end insert—

‘(9) Regulations will provide for an appeal mechanism.’.

Amendment 56, in clause 27, page 14, line 4, at end insert—

‘(10) Regulations will provide for an appeal mechanism.’.

Amendment 83, in clause 27, page 14, line 4, at end insert—

‘(10) Where a claimant is sanctioned under this section, the claimant must be provided with a written explanation of the terms of the reduction, the reasons the reduction has been made and the claimant’s right to appeal.’.

Anas Sarwar (Labour, Glasgow Central)

I hope that you had an enjoyable recess, Mr Gray, and I hope that the rest of the Committee did so, too.

I know that, because of a commitment during our previous sitting, the Minister wants to address some of the points in more detail later. I have a further point on the amendment, but it is also relevant to the next amendment, so I will raise it then.

I beg to ask leave to withdraw the amendment.

Anas Sarwar (Labour, Glasgow Central)

I beg to move amendment 41, in clause 26, page 12, line 12, at end insert—

‘(1A) It is not a failure sanctionable under this section if a Claimant falling within section 22 does not have guaranteed and predictable access to high quality, flexible and affordable child care acceptable to the parent and child or children.’.

Many of these issues have already been clarified by the Minister, but I want to raise a child care issue that is specific to Scotland. I want the Government specifically to ensure that the welfare reforms take into account the lack of high-quality, flexible and affordable child care in Scotland.

In Scotland, local authorities do not have a statutory duty to provide the child care required by working parents, which has consequences for Scottish lone parents in terms of conditionality. That child care gap was recognised by Tony McNulty, the then Minister responsible for employment and welfare reform, on the Second Reading of the previous welfare reform legislation:

“I take on board what many of my Scottish friends have said about the paucity of child care provision in some areas of Scotland, not least Glasgow.”—[Official Report, 27 January 2009; Vol. 487, c. 268.]

The statutory frameworks in England and Wales are different from Scotland, so different levels of child care may be available. There is no UK-wide equivalent of the Childcare Act 2006, which places a duty on local authorities in England and Wales to secure, as far as is practicable, sufficient child care to meet the needs of working parents.

Do the Government acknowledge that the statutory frameworks in England and Wales are different from those in Scotland and, therefore, that differing levels of child care are available to claimants in Scotland? What additional support will there be for claimants to take account of such regional differences?

Kate Green (Labour, Stretford and Urmston)

I wish to speak to amendment 41, which would ensure that suitable and affordable child care is in place before a parent is required to comply with requirements in their claimant commitment. The amendment states that such child care should be

“acceptable to the parent and child or children.”

I have repeatedly argued that the well-being of children must be a paramount consideration in determining appropriate child care arrangements, rather than simply the convenience of enabling parents to go out to work.

We are all committed to the provision of excellent child care, particularly to the most disadvantaged children, who would especially benefit from good-quality child care settings. We all welcome the Government’s ongoing commitment to ensure that such child care is in place, but child care is something that different children respond to differently in terms of their social and emotional development, their family experiences and what is going on in the home. Even if affordable child care was available at the right time so that the parent could work, it would seem quite wrong to put a child into child care if it was not in their social, emotional and educational interests. I have long argued that the person who is best able to make that assessment is the parent of that child. They spend their time with the child. They are responsible for that child’s emotional development and well-being.

It is crucially important, especially for younger children, that the parent’s understanding of the appropriateness of the child care setting is taken into account. It may seem that, if that acknowledgment is made, parents will be reluctant to place their children into child care, but that is not my experience. In most cases, parents welcome access to good-quality child care. They want their children to attend good-quality child care, and difficulties arise largely when the credibility of the provision is not very high. It is important that parents have a say in determining whether child care is acceptable. It would be good to see that important recognition of parents’ rights in relation to the best interests of their children reflected in welfare reform provisions.

Older children will want to have a say in child care arrangements. They will probably take exception to the term “child care” for a start. It is important that they can confirm that the nature of the out-of-school provision adequately meets their needs, in a setting in which they feel comfortable. They may have concerns, for example, about bullying and personal safety. Those need to be listened to and taken into account.

We should recognise that such an experience is very important for children and child development and not simply a route, important though that is, to enable parents to get into work. There is a long-standing tension about what child care is for, and I am very clear that the interests and well-being of children are vital aspects. I particularly support the element of amendment 41 that would enable both the child and the parent to have a say in whether those best interests are being met.

Chris Grayling (Conservative, Epsom and Ewell)

I hope that the Committee has had an enjoyable break, as we return to our toils for a few more weeks. Let me start by setting the record straight on child care. The Committee should believe me when I say that this is a matter of concern to all hon. Members, particularly those of us who are parents and understand the challenges and pressures of child care, including those that come from the children themselves. I want to talk about the safeguards in the system for claimants with child care responsibilities. I hope in doing so to allay the concerns of the hon. Member for Glasgow Central who has rightly highlighted the situation in Scotland.

First, it is important to make it clear that lone parents or nominated carers in couples with a child under the age of five will not be subject to the requirements sanctionable under clause 26. Until their child is at school, parents have no job search requirements that could lead to a sanction under the clause. Where a child is under the age of five, we only ask parents to attend work-focused interviews. A couple with a child or children under five will be able to nominate one parent who will be treated in the way that I have just described. Children can perfectly well go along with their parents to the work-focused interview; anyone who visits a jobcentre will see pushchairs alongside the desk, as the child sits there while the parent goes through what is at that stage in life a relatively infrequent process of simply keeping in contact with the system. Once the child is at school, the parent will be expected to consider opportunities to get back into the workplace.

Secondly, work-related requirements are drawn up by an adviser as part of a dialogue with the claimant, which includes a discussion of any child care commitments and their impact on the claimant’s ability to fulfil work-related requirements. Any action that a claimant is required to undertake must always be reasonable, including those requirements that could lead to a higher-level sanction if they are not met. Advisers must take all relevant matters, including child care, into account when setting the action. Those matters include an individual’s personal circumstances, capability and child care needs. For example, where a lone parent or nominated carer has a child above five years old but under the age of 13, the claimant can restrict their availability for work to jobs that operate around school hours. We do not expect lone parents with primary school kids to work night shifts, and the system and definition of what is reasonable are designed to work around the needs of those children. The claimant could not be subject to a sanction for refusing a job in such circumstances.

The amendment stresses that child care must be acceptable to the parent and the child, which is a principle that we agree with. However, where an adviser is of the view that appropriate child care is available, a requirement can still be imposed. A failure to meet that requirement—for example, to take up a job offer—may result in a reference to a decision maker to consider a sanction.

Karen Buck (Labour, Westminster North)

May I ask two quick questions? No doubt, we will discuss this later, but for the record, will the Minister confirm that he is talking only about the capacity to obtain formal child care? He is not talking about a requirement by Jobcentre Plus staff for informal child care to be used in such circumstances, is he?

Chris Grayling (Conservative, Epsom and Ewell)

By definition, one could not do that, because Jobcentre Plus cannot instruct a grandparent to look after a child. We recognise the importance of informal child care—in many family situations, it may be the best option available—but Jobcentre Plus cannot require a third-party adult to provide unpaid, informal child care. The issue is purely about the availability of conventional child care through a nursery or a child minder.

We think that the balance is right. If plenty of local, affordable nurseries are available, but a parent says, “Well, I don’t like any of them,” there must be a point at which someone in the system says, “No, I’m afraid that’s not good enough.” Broadly speaking, we are sensitive to the needs of parents and the child. We have very consciously sought to offer discretion to front-line advisers, and any sanction is subject to an independent reference internally to a decision maker. I stress, however, that there are no circumstances in which the state will oblige a parent to place a child with a particular child minder.

Kate Green (Labour, Stretford and Urmston)

I am grateful to the Minister for his explanation. Will he inform the Committee to what degree adequate and suitable training will be provided for Jobcentre Plus decision makers in assessing suitable child care, particularly in relation to the points about child well-being that I raised a moment ago?

Chris Grayling (Conservative, Epsom and Ewell)

Our decision makers receive extensive training on the issues that they should consider in relation to sanction decisions, but this is also a question of professional common sense. They will have a pretty clear idea of when someone is being reasonable and when they are not. There will always be a degree of discretion in such matters, but decision makers are given comprehensive training about the different issues that they are likely to address in their jobs, in an attempt to ensure that they make the best possible decisions.

Where a claimant fails to meet a requirement sanctionable under clause 26, a sanction will be imposed only if the claimant does not have good reason for failure. In considering whether there is good reason, we have to consider any relevant matter, which can include the availability of suitable child care, raised by the claimant. I will give an example to illustrate how that might work in practice. If the child care costs that result from taking up a new job amount to an unreasonably high proportion of a claimant’s pay, they can cite good reason for not accepting or applying for a job. If the claimant were found to have good reason, the sanction would not be imposed.

I should emphasis the key point, however, that when the child is at school, the parent is only expected to do a job that fits around school hours. There are many safeguards in the system. In policy terms, we have not really made changes to the way that this operated under the previous Government. It is a matter for common sense, and we have taken the same view as the previous Government; we want lone parents to have the earliest sensible opportunity to get back into the workplace.

At the same time, however, the system has to treat them reasonably. They cannot be expected to take on roles that are totally incompatible with being a parent of a child at school. Equally, there has to be a balance the other way. They cannot be able to unreasonably refuse to take an offer, as and when there is one, if it is reasonably consistent with the life of a lone parent in school. I hope that that provides the reassurance that the hon. Member for Glasgow Central requires: in his constituency and in other parts of Scotland, because there is no obligation to accept a job when one has a child under school age, or one that is inconsistent with school hours, the availability of affordable good child care is clearly an issue. We as an administration and he as a local MP and others will continue to push this issue forward, because it is to the advantage of us all that good, high-quality child care is available and that the safeguards exist to ensure that his constituents do not suffer from the situation that he described locally. On that basis, I hope that he will feel free to withdraw the amendment.

Anas Sarwar (Labour, Glasgow Central)

I thank the Minister for that detailed reply. Many child care circumstances will be relevant to the Scottish Government, and certain representations will have to be made to them and to local authorities. I beg to ask leave to withdraw the amendment.

Stephen Timms (Labour, East Ham)

I beg to move amendment 79, in clause 26, page 12, line 12, at end insert—

‘(1A) Any reduction under this section must affect only the standard allowance component of an award of universal credit.’.

James Gray (Conservative, North Wiltshire)

With this it will be convenient to discuss the following:

Amendment 46, in clause 26, page 13, line 8, at end insert—

‘(9) No regulations made under this section shall allow for the amount of universal credit received in respect of a child or qualifying young person to be reduced.’

Amendment 82, in clause 27, page 13, line 12, at end insert—

‘(1A) Any reduction under this Clause must affect only the standard allowance component of an award of universal credit.’

Amendment 47, in clause 27, page 14, line 4, at end insert—

‘(10) No regulations made under this section shall allow for the amount of universal credit received in respect of a child or qualifying young person to be reduced.’

Stephen Timms (Labour, East Ham)

I offer you a warm welcome back to the Committee after the Easter break, Mr Gray, and also extend warm wishes to the Committee.

It is worth reminding ourselves that, in clause 26, we are dealing with potentially far-reaching sanctions on people’s benefit that can last up to three years. I was struck by a note that appeared in a newspaper article, which we will discuss later on, about the effects of sanctions on an individual. It is worth reading an extract to the Committee from the case study of John Robson, aged 53, from South Shields. He says:

“It never seems to go away. Every day you’re thinking: “I haven’t got a letter today, so obviously there isn’t a sanction going against me. Another day there’s a brown envelope from the DWP and you think, “What’s this for?” There’s always that cloud hanging over you.”

Mr Robson was made redundant from his job as a delivery driver 13 months ago. He says:

“I was 17 when I started work so I’ve been working for 35 years. I’m not Jack the lad who’s never been in a job and is trying to con the Government. I want to work, I just can’t get a job. You try your best, and the minute you do something wrong, they’re on you like a ton of bricks.”

Mr Robson has been sanctioned three times. First, he was ill and missed a jobcentre appointment; he was sanctioned for that. Next, he was sanctioned for not applying for one job. He says:

“I was sure I had applied for it, but I couldn’t find evidence that I had. If you apply for job after job after job, and you get nowhere with it, you can lose track.”

Mr Robson turned to Citizens Advice for help and won the appeal, but his financial situation remains precarious. He said,

“It reached the point where I’d visit my mother and sit there for hours just to get warm, use her shower and cooker, because I couldn’t afford the gas and electricity. … So many things go wrong when you’re unemployed, and you just get so disheartened. It’s actually quite frightening being out there. And nobody seems to care. It’s like a lot of things in life—things are set in place by people who don’t actually experience it themselves.”

That is a graphic account from one person’s point of view of the impact of sanctions. As we go through the amendments to the clause, including those in this group, we need to be aware that we are talking about things which to many people can seem very unfair.

I tabled amendments 79 and 82 to raise an important point. The White Paper on universal credit stated:

“as now, sanctions will not apply to…Housing Benefit.”

I hope that the Minister will confirm that that is indeed the Government’s intention, because the Bill does not say that—it does not exclude sanctions on the housing part of universal credit, which as I understand it, and certainly according to the White Paper, was the Government’s intention.

The amendments are intended to ensure that sanctions can be taken only from the standard allowance component of universal credit, thus in particular protecting support for housing costs, as well as additional allowances such as support for children. My hon. Friends have tabled amendments that refer specifically to such support, which have been grouped with amendments 79 and 82. I hope that the Minister will confirm that it is the Government’s intention that the sanctions, which can lead, as clause 26 makes clear, to loss of benefit for three full years, will be taken only from the standard allowance and not from the other elements of an individual’s universal credit.

I draw the Committee’s attention to the comments of the Child Poverty Action Group about the whole framework of sanctions:

“Universal Credit as currently proposed will create an unprecedented increase in conditionality. At present neither tax credits nor housing benefit are subject to any conditionality at all. The conditionality regime envisioned in the Bill imposes work related requirements on virtually all adult claimants, is within a more dictatorial structure and has much stiffer penalties.”

It is important that the Committee recognises that the proposals represent a significant increase in the conditionality to which benefit recipients are subject. There may be good reasons for that, but the Committee should not overlook the scale of the changes. The Child Poverty Action Group makes the point that the

“DWP does have research evidence to suggest that the most vulnerable claimants are the most likely to be sanctioned. We are therefore concerned that there is no provision in the bill to protect the wellbeing of vulnerable claimants and their children from financial sanctions.”

I hope that the Minister will be able to provide an element of reassurance that these pretty draconian sanctions, which may apply for up to three years, will be taken only from the standard allowance component of universal credit. The note on regulation-making powers that the Department for Work and Pensions has sent us offers some encouragement that that is the Government’s intention. The note on clause 26 regulation states that

“Universal Credit may continue to be paid during a period of a sanction, but at a reduced rate because the claimant’s full award amount will be reduced by an amount broadly equivalent to the JSA personal amount.”

That implies that only a standard element equivalent to the current JSA personal amount can be sanctioned, rather than the benefit as a whole, but the Bill does not actually state that. If the Minister confirms that that is the Government’s intention, that will provide at least an element of reassurance to those who are considering the effects of these pretty far-reaching changes.

Kate Green (Labour, Stretford and Urmston)

I rise to speak in support of amendment 79 and the amendments grouped with it. My right hon. Friend has already mentioned that we are especially concerned about the sanctioning of the element of universal credit that is received in respect of children. I hope that the Minister will assure us this morning that that element of universal credit will not be subject to sanction.

The difficulty arises because universal credit, in integrating payments that are currently made from different pots and by different agencies into a single credit, means that the existing arrangements, which leave some of the payments for children completely outside the current Jobcentre Plus sanctioning regime, will be affected. In particular, I refer to child tax credit, which is now paid by Her Majesty’s Revenue and Customs and is therefore not a sanctionable benefit under the span of authority of Jobcentre Plus. The child tax credit will be folded into universal credit as a payment in relation to children, which is a new element, and it seems particularly important that that payment is not subject to sanction. It is not now, because it is paid by HMRC, and I would welcome an assurance from the Minister that the current position will be read across into universal credit. As on the housing element, as my right hon. Friend the Member for East Ham has pointed out, the Bill is not clear.

Let me outline what will happen if payments in relation to children are sanctionable and what that could mean for child well-being and the way that money is spent on children in a household. There is already international evidence that where parents are subject to financial sanctions, the impact on children’s health and well-being can be quite significant. In the US, for example, it has been shown that children growing up in households where parents experience financial sanctions are more likely to be admitted to accident and emergency care. Clearly, there are concerns about whether parents will have adequate income to be able to afford some of the essentials for their children such as a healthy diet, the opportunity to participate fully in their education and development and so on.

I want clarity from the Minister about how, if more than simply the standard element were to be sanctioned, the claimant would understand what was being sanctioned, in what proportion and why. If the intention is that any element of universal credit could be subject to a sanction, will claimants know, for example, to what degree the financial support that they receive for rent might attract a sanction? If that is the case, it is essential that they understand that, because that will obviously inform any discussions that they then have to have with the landlord of the property that they occupy.

We already know from considerable research evidence that claimants are often quite confused about sanctions. In many cases, they do not understand that they have been sanctioned; they simply think that their benefit has gone down a bit in a particular week and they do not make the connection that that is the result of a sanction. Where different elements are bound together within universal credit, it is all the more important that there is absolutely transparency and clarity for claimants about which elements of their benefit are being sanctioned and why. That is because the purpose of sanctions should be to effect a change in behaviour. If the sanction appears to be completely disconnected from the behaviour that is being questioned or punished, it will clearly have a less motivating effect than if it were well targeted on bringing about the desired change in behaviour.

If elements of the benefit other than the standard allowance will be subject to sanction, it is important that we have a running order in which such sanctions would be applied. The Opposition certainly do not advocate that: we are of the view that the standard element only should be subject to sanction, but if that is not the case we need to understand the approach that will be taken to sanctioning different elements of universal credit and the order in which benefits might attract a sanction.

There is real concern about where Ministers are going with the proposals; the amendments are designed to elicit assurances to allay that concern. We hope to hear an assurance this morning that only the standard element of universal credit will be subject to sanction. That would be analogous to the present position, where the adult benefits administered by Jobcentre Plus can be sanctioned, but the other benefits paid for children, housing and so on, are left outside the sanction provision.

Sheila Gilmore (Labour, Edinburgh East)

If the Minister intends this sanctions regime to apply only to the equivalent of the standard jobseeker’s allowance, I hope that it could be put on the face of the Bill in the way that we suggest. It would greatly reassure claimants and their families that what is said in words will be carried out in deed. The difficulty in dealing with many people in a system that uses sanctions—whether they are long or short-term unemployed—is what we do about children, and how we ensure that their welfare is provided for.

It is very easy to make statements—they are sometimes made in the media, by constituents and politicians—that in some sense it is wrong that people do not work, or that certain types of claimant should not receive benefits, for example people with drug or alcohol problems. The problem always arises when it comes to children. When I have that discussion with people one to one and we start to unwrap that kind of statement, I find that virtually everyone agrees that whatever line is taken with the adult—whatever use is made of carrots, sticks or both, to try to get people into work or to try work, particularly those who have not worked for a long time—the needs of the children must still be looked after. They do not go away, and we have to look to those children’s futures.

I think that that is well and widely accepted, even among those who perhaps have fairly strong views about how a sanctions regime should operate. In that context, I hope that the Minister will not merely give us reassurance, but actually agree that it is right that this be clearly stated. As ever, our difficulty is that at this stage we have not seen the regulations that might be proposed.

Chris Grayling (Conservative, Epsom and Ewell)

I hope that I can reassure hon. Members about our intentions. Indeed, the shadow Minister referred to the notes that have been circulated to Committee members. It is not our intention to change the position significantly for those who are currently out of work and might face conditionality relating to their job search, but of course the nature of universal credit makes it a little more complicated.

I shall start by setting out the position for the maximum amount for somebody who has applied for universal credit, is receiving the standard amount and amounts for children and housing. To be clear, in almost all circumstances, though there is one exception to which I will return in a moment, it is not our intention to use the sanctions system to reduce the entitlement to universal credit to a level below that of the housing and child-related elements. That very much mirrors the current situation, whereby the amounts paid in housing benefit and child tax credits are not sanctionable in the same way as other out-of-work benefits. So in that respect we do not intend to change the current situation.

However, I must make two qualifications. The first relates to the introduction of the capital element. If there is a situation whereby somebody’s overall entitlement to universal credit—which might include the standard amount, and amounts for housing and children—is reduced because they have savings and an income from them, it is theoretically possible that a sanction could reduce the amount that they receive to below the combined cost of housing and children. However, at the same time, they will, of course, receive a matching income from those savings. That is a technical circumstance in which an award of the housing and child elements together could be reduced to below those combined levels as a result of a sanction, but only if the recipients have money in the bank and are receiving an investment income from that money according to the rules we discussed for the capital provisions that exist in relation to universal credit.

Stephen Timms (Labour, East Ham)

I think I understand the Minister’s point. When we discussed the capital limit on universal credit, it became clear that those with £16,000 in savings would not get any universal credit and £16,000 will not generate anything like enough of an income to make up for child allowance, plus housing benefit, plus other parts of universal credit. Is he simply making the point that those with more than £16,000 in the bank will get no universal credit full stop, or is something slightly more subtle happening? That does not sound to me like a sanction as meant by clause 26.

Chris Grayling (Conservative, Epsom and Ewell)

The right hon. Gentleman needs to bear in mind that there is effectively a taper for people who have between £6,000 and £16,000 of capital in the amount of support that they receive. Let us imagine a situation whereby someone receives the basic amount, an amount for children and an amount for housing, and an element of that is reduced because they have £8,000 in the bank. If they were then sanctioned to the equivalent of the standard amount, the amount they received for the other two elements might be slightly lower than the maximum because that capital element is taken into account. That is the only circumstance in which somebody in receipt of the maximum amount would have a reduction in the amount they receive below the child and housing element. That is only because they have and are deemed to have income coming in from the capital that they have in the bank.

Sheila Gilmore (Labour, Edinburgh East)

One of the problems with that capital rule, which has existed for some time, is that the imputed income from capital is often, particularly in current circumstances where interest rates are low, considerably higher than the actual income. In the scenario that the Minister paints here, people will see a real reduction in those elements, not just one that can be balanced up through an accountancy procedure.

Chris Grayling (Conservative, Epsom and Ewell)

I am not sure the hon. Lady has totally understood the way in which the capital element works. There is an expectation in the system that existed under Conservative and Labour Governments that people will draw down on their capital until they reach a certain amount. They will use that money to support themselves at least in part until they reach the bottom end threshold, which is £6,000, below which they are not expected to draw on their capital any further, and they will receive the full amount from the state. My point is that, while they continue to do that, in a small number of cases, the overall universal credit they receive, if they face a sanction for the equivalent of the standard amount, may be slightly less than the total they would otherwise have received from housing and child elements until they reach the point when that capital is exhausted. At that point, the maximum amount by which they can be sanctioned would simply reduce them to the housing and child element of the universal credit. I hope that that reassures Opposition Members about the impact on those in receipt of the maximum universal credit payment.

The situation becomes much more complicated when somebody is in work part of the time, when they may be subject to an in-work sanction for reasons that we will debate elsewhere. At that point, once the universal credit starts to taper away, it becomes much more difficult to work out what the different elements are. It may be possible to quantify the total amount of a sanction in terms of a proportion of universal credit. Someone may receive half the universal credit entitlement that they would have received because they are working part time, have refused to go into full-time work and are subject to a sanction. I cannot give Members a breakdown of what the equivalent elements would be at that point because universal credit has tapered away and people are not receiving the maximum amount.

Kate Green (Labour, Stretford and Urmston)

This may be a rather stupid question and perhaps the Minister is ahead of me in his thinking on this: would it not be possible in that scenario at least to protect elements of universal credit from sanction and concentrate the sanction only on the element that was effectively the standard allowance, leaving the housing and child components untouched?

Chris Grayling (Conservative, Epsom and Ewell)

We are continuing to look at the best way to deal with the detail in such a situation. I cannot write rules into primary legislation today, which is what we are talking about. I cannot give the hon. Lady an assurance that in all circumstances the standard amount today—the lower rate of JSA is £67 a week—the proportions of a sanction will relate to the proportions of overall initial universal credit of £67 a week plus the housing element and the child care section. We will taper each of those elements individually.

I assure the hon. Lady that somebody who is out of work and looking for a job will not be subject to a sanction that reduces the universal credit that they receive to below the child and housing element, except in cases when they have savings in the bank that they are expected to draw down. That is the core point raised by the hon. Lady and her colleagues. It is not possible to set an equivalent amount in primary legislation and to say that those three elements will remain intact, because as the universal credit tapers away, the amounts will change. When sanctioning someone through the universal credit, we do not intend to disadvantage them in terms of the housing and child elements.

Kate Green (Labour, Stretford and Urmston)

Will the Minister confirm, for the sake of clarity, that each component of the universal credit will be calculated separately for claimants both in work and out of work? Will it be possible, including for claimants in work, to see how much money is received through universal credit in relation to the low hours they are working and their income below the threshold, and how much of that is for children and how much for housing? Will it be possible at least to identify the way in which the total is made up of those different elements?

Chris Grayling (Conservative, Epsom and Ewell)

After the initial establishment of a universal credit entitlement, we do not intend to continue to break down the different elements. The universal credit will taper away. People will receive an initial assessment that will contain the three elements that have been discussed, but we do not intend to continue to map out as they go on through employment the different elements of the universal credit. It would be far too complicated to do that.

Kate Green (Labour, Stretford and Urmston)

Will the Minister confirm what will happen in that situation if housing costs change?

Chris Grayling (Conservative, Epsom and Ewell)

If a person’s circumstances change, they may apply to be reassessed for universal credit, as they would now. If someone moves house, for example, they might need to claim housing benefit. It will be the same as happens today. If someone moves to a different location, they have to reapply and be reassessed based on their new circumstances.

The key point is that we do not intend to remove the housing and child elements of universal credit when someone receives a sanction. The principle of the sanction system applies to people on out-of-work benefits: it applies to those out-of-work benefits, and today it applies most particularly to JSA. We do not intend that that situation should materially change when universal credit is introduced. We intend to table draft regulations on the sanctionable amounts by the summer of 2011, but we intend to protect the housing and child elements.

Karen Buck (Labour, Westminster North)

It is important that we get to the bottom of this. I think I am right in saying that at the moment a tenant whose rent increases—a local authority rent, for example—does not have to apply for a complete reassessment of their benefit. Under the new system, would they have to apply for a reassessment, or would a normal rent increase or normal alteration in housing costs simply be factored in without a reapplication?

Chris Grayling (Conservative, Epsom and Ewell)

We certainly do not intend anyone to reapply if they experience a routine increase. We will not extend it to that. But if somebody moves house or moves into different circumstances, clearly they would have to reapply and be reassessed on the basis of those new circumstances.

A change in the housing element would result in a change to the maximum amount of universal credit to which a claimant is entitled. That will be calculated and a taper applied to give an amount payable. If somebody’s housing costs increase, we will simply reassess their maximum amount for universal credit—everyone has a maximum amount that depends on whether they are working—and then the amount that they receive tapers away as a result of that.

Kate Green (Labour, Stretford and Urmston)

Will that not require the Department to understand the current level of housing costs in order to understand the amount by which they have increased? It will be the case, therefore, that it will always be possible to know the amount of the different components of universal credit, not just at the time of initial payment.

Chris Grayling (Conservative, Epsom and Ewell)

The hon. Lady is trying to write into primary legislation a maximum amount that can be sanctionable and a set format for the relationship between the different sanction elements. As I have said to her, with the standard amount for universal credit, which is the amount that each individual will be set at the start when they apply—the maximum that they can receive under universal credit—we do not intend to sanction, unless people have capital, above the amount that is equivalent to the standard amount at the moment. However, we do not intend to taper away sanctions rates as people return to work over a period of time. This may help to clarify: we intend to specify a cash amount for a sanction. We do not intend to taper away sanctions rates if people are working part time. The sanctions rate will remain constant all the way through. We do not intend to reduce the component amount as the overall entitlement to universal credit tapers away.

Margaret Curran (Labour, Glasgow East)

I understand the Minister’s argument, and, to follow his logic, I heard him say that there will be no sanctions on the child element or the housing component, but he went on to say that, as entitlement moves on, those elements cannot be separated. How, in principle, can the Minister say that some components will not be sanctioned if the components are not identified?

Chris Grayling (Conservative, Epsom and Ewell)

What we are saying—very straightforwardly—is that the maximum amount that any individual can receive under universal credit, if we take a case where somebody has children and housing needs, includes the standard amount, the housing amount and the child amount. At that point—the maximum entitlement level—we do not intend to set a sanctionable amount that is higher than the standard amount, which is effectively where we stand at the moment with the £67 a week for JSA. However, we do not intend to taper away that sanctionable amount. If a claimant breaks their conditionality and does not do what they have agreed to do, the sanctionable amount will not taper away. That sanctionable amount will remain constant. At the basic level, if a claimant is unemployed, we do not intend to sanction them at a rate that impacts upon their housing and child elements unless they have money in the bank. If the claimant is back in work and if they are some way down the taper, and they face a sanction because they have broken their conditionality, it is still our intention to sanction them at the equivalent of the standard amount. We will not vary the sanctionable amount.

I hope that that makes where we stand clear to Opposition Members. I certainly cannot accept the principle that we would write the elements that the right hon. Member for East Ham has suggested into primary legislation. I hope that he accepts that. My sense is that this was a probing amendment anyway. It is not our intention to take away housing or child costs from parents or from claimants who are out of work. Once we are into the universal credit system, we intend to sustain the level of sanction at that set amount from the start.

Lilian Greenwood (Labour, Nottingham South)

May I clarify that the implication of what the Minister has just said is that if someone is in work, but in receipt of universal benefit, and they are sanctioned, and if that is kept at the same as it would have been when they were out of work, that will inevitably impact on the payments that they receive for the care of children and for housing? Is that correct?

Chris Grayling (Conservative, Epsom and Ewell)

If someone is sanctioned and if they are receiving a lower level of universal credit, the sanction amount will stay the same. That is our intention.

Stephen Timms (Labour, East Ham)

The Minister has given us some helpful reassurances, but I am still puzzled. I do not quite understand why he is saying that the components cannot be maintained once they have been calculated. If somebody is in work, and if their universal credit has been worked out on the basis of standard allowance, housing and other elements, there is a well-defined figure that corresponds to the standard allowance as it affects that person’s universal credit. Can that not be protected if someone is then sanctioned?

Chris Grayling (Conservative, Epsom and Ewell)

The standard amount will be protected. In today’s example—I am not saying that this is the final figure—if we take the current JSA sanction rate of £67 a week, someone sanctioned for a breach of their conditionality would be sanctioned to the degree of £67 a week. That would not change, regardless of someone’s position on the universal credit ladder. That means that for someone who is unemployed and breaches their conditionality we do not touch the housing or child elements.

As people progress through the universal credit system, they may have a part-time job and agree to look for a full-time job, only to turn around and say, “Well, I am not willing to look for a full-time job—I refuse to do so.” If Jobcentre Plus’s request that they look for a full-time job is reasonable, they will continue to be sanctioned to the set amount. Otherwise we would be in a position where the amount of the sanction would drop as universal credit tapered away, and there would be lesser consequences for refusing to do what they had previously agreed. We should bear in mind that these are things that the claimants themselves have agreed to do: “I will do a part-time job for six months, and I will then agree to look for a full-time job.” After six months they are turning around and saying that they will not do it.

Stephen Timms (Labour, East Ham)

The Minister has given very clear reassurances for people who do not have savings and are not in work. However, the position is worrying for people who are in work and will be sanctioned, perhaps because they are not doing enough to increase their hours. This is, of course, a whole new area of in-work conditionality that we have never had before, but it sounds as if the position of people in work is much more at risk than the position of people who are out of work. The Minister has given clear reassurances for those who are out of work, but can he give some assurance to people who are in work that they will not lose the support that they need to pay their rent, for example?

Chris Grayling (Conservative, Epsom and Ewell)

Let us be clear about what we are talking about, which is people refusing to do what they have agreed. We are discussing providing support to people who are back in work and, for example, have agreed to do a part-time job for a while before looking for a full-time job, but then refuse to do so. We are simply saying that there is a sanctionable amount that will remain constant and is a consequence of breaking the agreement that someone reaches with Jobcentre Plus. I think that that is a perfectly reasonable approach; it is perfectly reasonable for the state to say to people that if they receive money from the state we expect them to fulfil a number of conditions in return. Those conditions are agreed to, and if people then turn round and break them there is a financial consequence. That principle has always existed within the welfare state, and we intend to continue with it.

Kate Green (Labour, Stretford and Urmston)

Am I right therefore to draw the conclusion that people who are in work and suffer that flat rate sanction are disproportionately penalised compared with people who are out of work? An attack is being made—[ Interruption. ]—forgive the language. Inroads are being made into child and housing payments that would not occur for people who are completely out of work.

Chris Grayling (Conservative, Epsom and Ewell)

If someone is in that position, they have other income coming into the household. The whole point—and it may be a point of division between us—is that we are trying to create a clear system, which is a two-way contract between the claimant and the state. We will provide support, and a better system that tapers away, rather than having the cliff edge that we have at the moment, but in return it is not unreasonable to say, “We expect you to continue to work towards getting a full-time job at all stages in the receipt of the benefit,” up to the stage where they effectively move beyond the point where there is the scope to increase their hours, for example. That is what we are talking about.

There will be things that hold people back—for example lone parents with kids at primary school, where decisions will be entirely thoughtful and sensible with regard to the circumstances that they face. Our goal is very straightforward: to get people who are out of work back into work, into full-time jobs where their need for support from the state is ever-decreasing. At any stage, if those people are subject to conditions but turn around and say, “I’m not having that, I’m not being part of it, I don’t want to do it,” there is a consequence. We are simply saying that that consequence will stay constant in cash terms; it will not taper away as universal credit does.

Charlie Elphicke (Conservative, Dover)

Is not the central point that if we are going to roll back the benefits culture that has grown to excessive amounts over the past 10 years, we have to encourage people to take responsibility for their lives and encourage them back into work by making work pay?

Chris Grayling (Conservative, Epsom and Ewell)

Absolutely. I hope that this is not a point of difference between us. It is perfectly reasonable to have a sanction which remains constant. As universal credit tapers away, it does so only because people are bringing other income into their household. We are not disproportionately impacting on any individual compared with the situation they would be in when they were at work.

Kate Green (Labour, Stretford and Urmston)

r ose—

Chris Grayling (Conservative, Epsom and Ewell)

I will give way in a moment. Let me explain this point to the hon. Lady. If somebody is out of work, they are receiving money for the standard amount; they are receiving money for children and for housing. If they get back into work, once the earnings disregard is taken into account, that support tapers away. However, it does so because they have more money to fill the gap than is actually needed. Their household income is in fact increasing, so we are not disadvantaging anybody proportionately. We are taking away the same standard amount, the same proportion of everyone’s household income—in fact a slightly lower proportion of household income for those who are in work—because of the impact of universal credit. We are saying to those who have said, “I will take a part-time job, then get a full-time job if I can,” only to turn round and say that they are not in fact willing to look for a full-time job, that they will face a sanction. That is how we approach the issue of in-work conditionality.

Kate Green (Labour, Stretford and Urmston)

I understand that the Minister’s intention is that people who are in work should be able to produce good reasons for not being required to increase their hours of work. Will he tell us exactly what is meant by good reasons in such circumstances? Would it, for example, mean that somebody might want to reduce their working hours because they want to spend more time looking after a child who may be developing behaviour problems at school? Would that kind of thing be treated as a good reason for doing less work?

Chris Grayling (Conservative, Epsom and Ewell)

There are various reasons for a decision about what happens when somebody’s circumstances, and therefore the requirements that rest on their shoulders, change. It could involve the break-up of a relationship and somebody becoming a lone parent where previously they had not been a lone parent. It might be the illness of a child. There are many reasons, but the point is that we are seeking to give Jobcentre Plus advisers as much discretion as we can against a guideline of being reasonable and making sensible decisions about individuals, to make sure that we do not impose unfair conditionality. We want to impose fair conditionality, and will only sanction people who break that requirement. I hope that that is not a point of difference between us, because it is no different from the principle that has always existed in the management of our welfare state. We are simply seeking to extend that principle into universal credit.

Stephen Timms (Labour, East Ham)

The Minister is being generous in giving way. I want to ask one more question. Our difficulty is that we do not really know what this in-work conditionality is going to look like. Will the Minister tell us when some description will be published of when people will be expected to work for longer hours? As my hon. Friend the Minister for Stretford and Urmston said, what would count as a good reason for not being willing to work for longer hours? This whole scheme is new. Jobcentres have never done it before. Can the Minister tell us when we will have sight of what the overall scheme will be?

Chris Grayling (Conservative, Epsom and Ewell)

We will introduce further information on in-work conditionality through the course of this summer, but I can explain the basic principles to the right hon. Gentleman. They are relatively simple. Effectively, there is a requirement for people to increase the number of hours they work and the amounts that they earn, to try and get them beyond the point where they are dependent upon the state.

A case in point might be somebody who chooses to take the first steps back into the workplace. One of the benefits of universal credit, for example, for somebody with a disability, is that it enables them to do a few hours’ work to get back into the workplace and learn more about what they can do. After a period of time, once they are re-established in the workplace and have the potential to do more, it becomes reasonable to say, “Right, we now want you to try and take a step to the next level.” It is our intention to use in-work conditionality to encourage people in a whole variety of circumstances to take further steps back towards full-time employment. That is the goal. Of course, some people, such as a lone parent with a child at primary school, or a carer where only temporary respite care is available, will never be able to secure full-time employment for health or other reasons. They will never be able to do more than part-time work. Our goal should be to help people who are out of work take steps back towards full-time work. Part-time work and mini-jobs, as we have discussed, all provide a useful stepping stone, but they cannot be the end point. Our intention is simply to include in the claimant commitment a ladder or an agreement that people will take steps, where it is reasonably practicable and possible to do so, to move back towards full-time employment. If at any point they refuse to do so without good reason, in-work conditionality will apply. In-work conditionality will operate in a similar way to out-of-work conditionality.

Karen Buck (Labour, Westminster North)

Does the Minister envisage the possibility of jobcentre advisers encouraging people to take second part-time jobs? That would not be unreasonable in itself, but it would have implications for additional in-work costs, for example. How might that be factored into a general better-off guarantee?

Chris Grayling (Conservative, Epsom and Ewell)

It is possible. It is difficult to apply one-size-fits-all rules, certainly in legislative terms, to individual situations. If somebody has a part-time job on a Monday and a Tuesday, and they have the ability to work full time, it would not be unreasonable to ask them to apply for a job that required somebody on a Wednesday, Thursday and Friday. There are circumstances in which that could apply, but it is down to the individual adviser, the individual claimant and, where necessary, a decision maker to decide what is reasonable and what is not.

We will continue to apply the standards of reasonableness that have been applied by Governments of both persuasions over many years. It is not reasonable to expect people to do things that are completely out of kilter with the rest of their lives. It is not reasonable to expect a lone parent to work a night shift. It is not reasonable to expect somebody who has a health problem and can only work a few hours a week to march straight into a full-time job. This is all about helping people on the journey into work.

I return to the core point of the amendments. Somebody who is out of work, and who is receiving their full universal credit assessment, will be sanctioned only up to the maximum of the standard amount unless they have capital in the bank and, therefore, there is a degree of offsetting income. Where somebody is back in work and is subject to the taper—the rate of support that they receive falls off depending on the number of hours that they work, but the additional income that they receive has pushed their income above the total amount that they received while they were out of work—we do not intend to vary the amount of any sanction. It will stay at the same rate at all levels. I hope that that clarifies the situation. I do not know whether Opposition Members want to accept that or not, but that is the position that we intend to pursue.

Stephen Timms (Labour, East Ham)

This has been an illuminating debate, and I am grateful to the Minister for the information that he has given us. He has provided reassurances on some important points, specifically on the position of those who are out of work. He has given the reassurance that we were seeking, but he has opened up a whole new area of concern about those who are in work. It worries me that we have finished scrutinising that part of the Bill but we do not know what the position will be for people who are in work and find themselves subject to conditionality. Will they have to go down to the jobcentre every couple of weeks—presumably, they will—to report how many hours they are now working and to see whether the jobcentre adviser thinks that that is enough? Clearly there will have to be a requirement, and I understand why this is the case, on people who are in part-time work to seek longer hours. There seems to be a bit of a contradiction if the Government encourages mini-jobs, as we have discussed, but people with mini-jobs are told, “No, that isn’t enough; you should be working part time.”

Checking up on people who are in work and requiring them to work longer hours is a new area of activity for jobcentres. I hope that the Minister will tell us when he publishes the account that he has referred to—he suggested that that might be in the summer, and I imagine it will be after the debate on the Bill has finished—what the manpower implications are for Jobcentre Plus of doing all this extra work. To return to a question that I asked him before Easter, how will jobcentre advisers know how many hours people are doing, unless he expects people frequently to go back to the jobcentre to report what their hours are? The whole area of in-work conditionality is a worry, not least from the perspective of what sanctions will be used.

Nevertheless, I do not intend to press the amendment to a vote. The Minister has given clear assurances on the issues that we have raised about those who are out of work, and although a lot of people will be very concerned about what some of the proposals will mean for people who are moving back into work and have started jobs, I beg to ask leave to withdraw the amendment.

Stephen Timms (Labour, East Ham)

I beg to move amendment 53, in clause 26, page 12, line 12, at end insert—

‘(2) With respect to claimants who have disabilities, the Secretary of State shall not impose any sanctions without first consulting a Disability Employment Adviser.’.

James Gray (Conservative, North Wiltshire)

With this it will be convenient to discuss the following:

Amendment 54, in clause 27, page 13, line 12, at end insert—

‘(2) With respect to claimants who have disabilities, the Secretary of State shall not impose any sanctions without first consulting a Disability Employment Adviser.’.

Amendment 142, in clause 46, page 23, line 40, at end insert—