Welfare Reform Bill

Public Bill Committee, 3 May 2011.

James Gray (Conservative, North Wiltshire)

I welcome the Committee back to another abbreviated parliamentary week. The Committee will not need reminding that we are not sitting on Thursday.

Clause 50

Chris Grayling (Conservative, Epsom and Ewell)

I welcome everyone back, and if I may digress for a moment, I remind colleagues that, because we are not sitting on Thursday, we intend to go late this evening if we need to, although we will see how we go. It is certainly not our intention to keep people unnecessarily late, and we always intended to debate the personal independence clauses next week. I want to make hon. Members on both sides of the Committee aware of that. Should we get to that point, with the Chair’s good will, we will have a supper break at an appropriate time.

James Gray (Conservative, North Wiltshire)

We will have to see about that.

Chris Grayling (Conservative, Epsom and Ewell)

Clause 50 will amend a technical defect in section 1 of the Welfare Reform Act 2007, which provides that a person is not entitled to employment and support allowance if they are a member of a couple who are entitled to a joint-claim award of jobseeker’s allowance. The purpose of the joint-claims provision is to ensure that both members of a couple are subject to JSA conditionality. However, there are circumstances in which a member of a joint-claim couple is entitled to JSA without meeting all the conditions of entitlement—for example, where one member is unable to work due to ill heath or disability. The JSA regulations set out such circumstances.

The policy intention is that such a person should be entitled to claim contributory ESA, as well as joint-claim JSA, but the Department has realised that the current provisions do not work as intended owing to a defect in the primary powers. The clause will rectify that by ensuring that such people can claim contributory ESA, which, of course, is payable at a higher rate, while being a member of a couple who are entitled to a joint claim for JSA.

The clause makes provision for cases in which contributory ESA has been paid to a claimant in this type of case before the measure comes into force, to regularise such payments. It is simply a technical change that restores the original and absolutely right policy intention of the previous Government and puts awards of benefits already made to claimants in such cases on to a proper legal footing. I hope that provides sufficient explanation for the Committee.

Clause 51

Stephen Timms (Labour, East Ham)

I beg to move amendment 154, in clause 51, page 35, line 40, leave out ‘365 days’ and insert

‘a prescribed number of days, which must be at least 730,’.

James Gray (Conservative, North Wiltshire)

With this it will be convenient to discuss the following: amendment 155, in clause 51, page 35, line 40, after ‘period’, insert

‘since the person was last in the Support Group’.

Amendment 156, in clause 51, page 36, line 14, at end insert—

‘(c) does not include any days during the assessment phase, except in prescribed circumstances.’.

Amendment 157, in clause 51, page 36, line 11, leave out paragraph (a) and insert—

‘(a) does not include any days occurring before the coming into force of this section.’.

Amendment 160, in clause 51, page 36, line 14, at end insert—

‘(c) does not include days in which a claim in respect to Employment and Support Allowance is in the assessment phase.’.

Amendment 161, in clause 51, page 36, line 14, at end insert—

‘(4) The period of days referred to in subsection (1) shall restart following any period in which a person is a member of the Support Group.’.

Amendment 163, in clause 52, page 36, line 21, leave out subsections (1), (2) and (3).

Amendment 164, in clause 52, page 36, line 30, leave out ‘that condition’ and insert

‘the third condition set out in Part 1 of Schedule 1 to the Welfare Reform Act 2007 (youth)’.

Amendment 165, in clause 52, page 36, line 32, leave out ‘365 days’ and insert ‘a prescribed number of days, which must be at least 730’.

Amendment 166, in clause 52, page 36, line 32, after ‘days’, insert

‘since the person was last in the Support Group’.

Amendment 167, in clause 52, page 36, line 34, leave out paragraph (a) and insert—

‘(a) does not include any days occurring before the coming into force of this section;’.

Amendment 168, in clause 52, page 36, line 38, at end insert—

‘(c) does not include any days during the assessment phase, except in prescribed circumstances.’.

Stephen Timms (Labour, East Ham)

I, too, welcome you, Mr Gray, back to the chairmanship of our Committee. I hope that you have enjoyed some street parties and festivities, or you might have attended a May day rally, I do not know.

The key amendment of the group is amendment 154, which, with amendment 165, addresses the limitation of contributory employment and support allowance to one year for people in the work-related activities group. The other amendments raise two important related issues, and I welcome the two amendments in the group that the hon. Member for Cardiff Central tabled to address the same issues.

Time-limiting contributory ESA is a major change to how the benefit’s system works—no one should be under any illusion about that. The Government expect to save billions of pounds. This morning, I received a written answer from the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke, which said that they will save more than £1 billion a year by 2014, as a result of the change. It was always assumed that national insurance meant that, if someone fell ill and was unable to work, they would receive their contributory benefit until they were better, but not anymore. Under the Bill, they will receive contributory benefits for a year and that is it. It is a very big change indeed.

Let me summarise the case that I want to put to the Committee. First, as with jobseeker’s allowance, to be justified, any time limit should be greater than most people need to get off the benefit. Secondly, only a small minority of those who enter the work-related activity group leave ESA within a year. The Government have yet to tell us how many, but I suspect that the figure is probably less than 20%, so it is a small minority. Thirdly, as an absolute minimum, the Government should make the time limit amendable by regulations, rather than writing “365 days” in the Bill.

With amendments 154 and 165, I am not opposing the principle of time-limiting. The principle governing the design of ESA was work for those who are able to work and support for those who are not. When we introduced ESA—I was the responsible Minister when ESA came into effect—it distinguished for the first time between people who could reasonably be expected to get back to work, who were placed in the work-related activity group, and those who could not, who were placed in the support group. The latter will continue to receive contributory ESA for as long as they are incapable of work, if necessary until they receive their state pension. The change will not affect them, but it will affect people in the work-related activity group.

I agree that there is a persuasive logic in the case for people in the work-related activity group not being paid contributory benefits indefinitely. Since the 1980s, contributory jobseeker’s allowance has not been paid indefinitely. JSA is paid for only six months, by which time we know that the vast majority of people find new jobs. I have rarely heard complaints that that arrangement is unreasonable.

Too many people have been stuck on incapacity benefit when they could have been working and whose health would be a lot better today if they had been working. I particularly enjoyed meeting a number of people who returned to work through the previous Government’s pathways to work programme after long periods. One or two of them had been out of work on health grounds for 10 years, and some had been out of work for longer than that. Their enthusiasm for the improvement in their circumstances, particularly their health and general well-being, as a result of being in work was a tonic.

This has a long history. In the 1980s, as unemployment rose inexorably to 3 million on two separate occasions, the then Government were desperate to get the headline numbers down. Jobcentre staff were given points for stopping people from getting on to unemployment benefits. I have spoken to people who worked in jobcentres at the time, and they told me how it worked. They earned those points if people went on to incapacity benefit. So large numbers of people whose health problems were not insuperable were dumped on to incapacity benefit and abandoned. Some of them are still on incapacity benefit, and even more stayed on incapacity benefit until they reached state pension age at some point between then and now. That was the period when the numbers on incapacity benefit mushroomed. It was a scandalous episode in the history of the welfare system.

Someone pointed out to me a particularly tendentious press release on the Conservative party website in the Minister’s name. It claims that the new Government elected in 1997 did nothing about the issue. That is completely untrue. Pilots of the new deal for disabled people, which was the first attempt by any UK Government to help people on incapacity benefit into work, started in 1998, not long after the commencement of the new deal for young people. I know because I was the Minister responsible. It was a new area of endeavour for the state. Before that, the previous Government had made no effort at all.

Chris Grayling (Conservative, Epsom and Ewell)

I have two questions for the right hon. Gentleman. First, will he confirm to the Committee that the total number of people claiming incapacity benefit barely changed over the 13 years that Labour was in office and certainly over the period before the introduction of ESA? Secondly, will he confirm that during those 13 years, while he introduced assessment for new claimants, no assessment was carried out of those people who were existing incapacity benefit claimants, with a view to undertaking the return-to-work process that was carried out subsequently for new claimants?

James Gray (Conservative, North Wiltshire)

Order. That question ranges wide of the amendments, and perhaps in responding to it, the shadow Minister will bear that in mind.

Stephen Timms (Labour, East Ham)

I am grateful. I will respond briefly: the period in which the huge increase took place was, of course, during the previous Conservative Administration. I think the Minister is implicitly acknowledging that the number fell by a small amount under the previous Government. It was rising sharply in 1997 and then started to come down, thanks to the changes that we made. We built on the new deal for young people with pathways to work and with the creation of ESA. The result was a very dramatic improvement on the previous Government’s record. The Minister is right that it took some time. It had not been tried at all before 1997 to help people out of work for health reasons. It took some experimentation to find out how to do it, and we therefore learned how to help those people. This Government have rightly attempted to build on that in setting up the Work programme.

I want to suggest to the Committee that, for people who can reasonably be expected, notwithstanding their health problems, to look for a job—of course, the work capability assessment for placing people in the work-related activity group needs to be right, and we do not seem to be quite there yet, although I welcome Professor Harrington’s recommendation—it is perfectly reasonable, by analogy with contributory JSA, to limit the period for which contributory ESA is paid. The crucial question is the length of that period. The argument for time-limiting JSA has always been that the vast majority of job seekers return to work within six months of losing their job. To justify a time limit in ESA, we need to be satisfied that it is reasonable to expect people to return to work within that period and that most people will be able to do so.

What should the period be? One possibility is that contributory ESA should be paid for just six months, as with contributory JSA. I agree with the Government’s decision not to do that. It would be quite wrong to allow only the same period in which contributory JSA is payable. ESA was designed to strike the right balance between providing adequate support on the one hand, recognising the significant barriers to work faced by many people with health problems, and on the other hand having high but realistic expectations of those who can plan for a return to work.

People with health problems often face very serious barriers to work, not only in doing a job but also in securing one in the first place, and it is right that we give people additional support in recognition of that. It would be completely unrealistic to build a system that expected people with health problems to get back to work within six months in the same way that jobseekers without health problems are expected to do.

I am glad that the Government are not expecting such people to return to work within six months, but I also want to suggest to the Committee that a year is not the right period either. That is crystal clear. If we are going to set a time limit to ESA, it is very important to set it at a duration that is fair, drawing on the evidence about what is a reasonable period in which people with health impairments can be expected to get back to work. The crucial question is whether it is reasonable to expect people in the work-related activity group to return to work within one year, and my answer is that it is not.

In a written parliamentary question, I asked

“the Secretary of State for Work and Pensions what the evidential basis is for his proposal that 12 months should be the maximum period for claimants in the work-related activity group to receive contributory employment and support allowance”.

I received an answer from the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke:

“The period of 12 months was chosen because it strikes the best balance between allowing people with longer-term conditions to adjust to their health condition and providing a level of access that is appropriate for contributory benefits. Around 60% of all those claiming ESA already come off this benefit within a year”.—[Official Report, 31 January 2011; Vol. 522, c. 585-86W.]

That is an interesting statistic—60% of people back in work within a year. If it were true that the majority in the work-related activity group are back in work within a year, I would agree that that would give some kind of rationale for limiting contributory entitlement to a year. The Minister’s claim, however, appears to be based on data on the Department for Work and Pensions website, which show that around 40% of those who were receiving ESA in May 2009 were still receiving it in May 2010—60%, therefore, were not. However, that includes people in the assessment phase, most of whose applications for ESA are unsuccessful. While in the assessment phase, people receive the JSA rate of benefit. If their application is unsuccessful, they will never go on to the higher rate of ESA, which is payable in either the work-related activity group, or the slightly higher one again, which is payable in the support group. In other words, such people never made it on to ESA, because they stayed on the JSA rate—while in the assessment period, they receive benefit at the JSA rate, and they never make it on to the higher rate payable to people who satisfy the work capability assessment. According to my calculations, in May 2010, about 60% of the total number of active ESA claims were in the assessment phase.

The proposals before us today will affect neither people in the assessment phase, nor in the support group; they will affect only those in the work-related activity group. The question that we need to answer, therefore, is not what proportion of those who applied for ESA are not receiving it 12 months later. The question must be what proportion of ESA claimants, who make it into the work-related activity group, leave the benefit and move into work within a year. After receiving the initial answer, I asked that question instead, and I received the following response from the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell:

“The information requested on those leaving employment support allowance (ESA) and moving into work is not available.”—[Official Report, 17 March 2011; Vol. 525, c. 572W.]

I also tried asking what proportion of those people the Minister expected to enter work within a year. The response was:

“The Department does not forecast the number of people who we expect to find work.”—[Official Report, 2 February 2011; Vol. 522, c. 831W.]

Therefore, the Minister is telling the House that he does not know how many of those who will be affected by this dramatic change can, in fact, be expected to be back in work within a year. If he has any further information to give to the Committee today, however, I would welcome it .

In order to work out for myself roughly how many claimants in the work-related activity group remained on the benefit after one year—recognising the limitations of the data that are available, given that this was only introduced in October 2008—I asked another question to find out

“what proportion of employment and support allowance claimants were in (a) the work-related activity group and (b) the support group in (i) February and (ii) May 2009.”—[Official Report, 26 April 2011; Vol. 527, c. 232W.]

The answer, from the Under-Secretary this time, was:

“Information on the number and proportion of employment and support allowance (ESA) claimants by Phase/Stage of claim is not available for the periods February 2009 and May 2009.”

The Minister, therefore, cannot tell us how many people will be affected by this change.

In such circumstances, I suggest to the Committee that we need to tread very carefully. Given the scale of the proposed change, we need to proceed with care and on the basis of evidence, and the evidence to support this change is simply not available. The data from pathways to work show that between 2005 and 2009 the annual proportion of Jobcentre Plus pathways customers who found work within one year ranged from 13% to 18%. In 2008-09, the proportion of provider-led pathways customers who found work within one year was 14%, and many of those people would have been on the benefit for a significant period before they got into pathways. The Government will no doubt tell us that the Work programme will be more successful, and I hope that it will. The opportunity is there to learn from, and build on, what happened in pathways.

If we look with great care at the assumptions that are built into the invitations to tender for the Work programme, we find an optimistic but not wholly unreasonable assumption for the rate of job conversion of people who are on ESA in the work-related activity group. That figure—I am grateful to those who dug this out from the Government’s spreadsheets, which, I gather, required some technical cleverness—is 22%. The assumed job conversion rate for former incapacity benefit claimants who are in the work-related activity group is only 9%. The proportion of people in the work-related activity group, going on to the Work programme, whom the Government expect to be back at work within one year is 9% for some and 22% for others. It is certainly not the majority; it is a small proportion.

Incidentally, the Work programme can last for longer than one year. If the benefit’s duration is limited to a year, as the Bill proposes, many people will find that it stops while they are still on the Work programme. The DWP impact assessment also suggests that a high proportion of claimants are currently on the benefit for longer than a year:

“It is estimated that around 90 per cent of contributory ESA customers of duration greater than 3 months and in the work-related activity group will be affected by a one-year time limit.”

According to the Government’s own assessment, therefore, more than 90% will be affected. Interestingly, table 1 in the impact assessment is based on the average annual difference in the ESA contributory case load with and without time limiting. I have tabled a written question asking for the former as a percentage of the latter, and I have not yet received an answer.

We do not know for sure how many people in the work-related activity group enter work within one year. It is certainly not 60%, which is the figure in the written answer that I received, because that includes the large number of people who never really make it on to ESA at all. I have noted, for example, the figures from Macmillan:

“Three quarters (75%) of people with cancer placed in the ESA Work-Related Activity Group are still claiming ESA 12 months later. Almost two thirds (61%) still need the benefit 18 months after first claiming it.”

There are particular worries about the effect of a one-year time limit on people who are recovering from cancer, and the Committee needs to weigh this issue carefully. Those worries are the reason why the chief executives of 30 cancer charities wrote an open letter to the Secretary of State last month, which stated that:

“proposals that ESA claimants who are expected to carry out work-focused activities will only receive the benefit for one year, without being means-tested, will hit cancer patients particularly hard…this proposal, rather than creating an incentive to work, will lead to many cancer patients losing their ESA simply because they have not recovered quickly enough.”

Perhaps the Minister, in winding up the debate, will tell us how the Secretary of State has replied to those strongly worded pleas on the part of that large number of cancer charities.

In its briefing to the Committee, Macmillan Cancer Support addresses the following question:

“Why do cancer patients generally take longer than 12 months to get back to work?”

No one in the Committee will be surprised that its answer is that they

“can experience debilitating physical and psychological effects from cancer and its treatment, including severe pain, fatigue, nausea, fever and diarrhoea”.

The briefing quotes the example of somebody called Chris from Worcester, who was diagnosed with lung cancer last June, and he said:

“My cancer has spread to my bones and I’m told it is incurable. I’ve had surgery and radiotherapy but have been told that to get ESA now I’ve got to do job focussed interviews to help get me back into work. I don’t need a work ethic, I’ve had one all my life. I’m still in constant pain and feel tired all the time. I’ve paid into the system all my working life but the Government seems to expect me to be fit after a year, and if I’m not, take away my support. I’ve never claimed in my life. I’ve savings so I’m not going to starve if they take the £90/week benefit away from me but it’ll make a hell of a difference…It’d really hurt if I lost this money, I’d be in the mire.”

He is speaking for a significant number of people recovering from cancer, who will find themselves in that position under the proposals. Macmillan also gives an example of a typical patient with breast cancer:

“Jane, 34, is diagnosed with breast cancer and is told by her oncologist that she must undergo surgery immediately. She has worked full time for 10 years in a care home, but is unable to return to work following a mastectomy, reconstructive surgery and surgery to remove her lymph nodes. She is married with no children. After surgery Jane has to wait two months before she is ready to start adjuvant chemotherapy, which lasts for six months. Following her course of chemotherapy Jane has to wait five weeks before she is ready to undergo a course of radiotherapy, which lasts for five weeks.

Jane requires hormone treatment for five years following her initial treatment to reduce the risk of cancer recurrence. During the first two years of this treatment Jane gets frequent hot flushes and sweats that happen anywhere between 5 - 20 times per day and often disturb her sleep.

As a result of the surgery, chemotherapy and radiotherapy treatment Jane experiences severe, ongoing fatigue following treatment. Following completion of radiotherapy treatment Jane develops lymphoedema, which can cause significant swelling in her arm and hand and restricts her movement and ability to use her hand or lift heavy objects. Shortly after this Jane is diagnosed with depression and anxiety and requires treatment for this following the end of her cancer treatment. For two years following surgery, chemotherapy and radiotherapy treatment Jane experiences physical and psychological problems that affect her return to work.”

That appears under the following heading:

“Example of how the proposal to time-limit contributory based ESA will affect someone with breast cancer”.

Are we really saying that somebody in that position should lose all their benefit within one year? That is what the Bill will do.

My best guess, based on the scant data available, is that the proportion of people returning to work from the ESA work-related activity group within one year is in fact less than 20%. Under the proposal in the Bill, everybody will lose their contributory benefit within a year. That means that more than 80% of those availing themselves of their national insurance benefit will lose it before they get back into work. JSA was designed so that the vast majority will be back in work before their contributory allowance expires. The Bill proposes that, for people with health problems, their contributory benefit will stop before the great majority are back at work. The Minister may be able to suggest a figure other than 20%, but it is certainly not much more than that.

George Hollingbery (Conservative, Meon Valley)

The right hon. Gentleman makes an extremely persuasive case with a great deal of emotion, which all of us are bound to feel. However, I am also bound to ask the following question. Have his sources—his data miners, his staff—managed to ascertain how many people in receipt of ESA who are in the work-related activity group would still be there after two years, which I think is the suggestion in his amendment?

Stephen Timms (Labour, East Ham)

That is a very good question. The answer is that we do not know. ESA has not been in place for much longer than two years so it is not surprising that those data are not available. The hon. Gentleman is right. That is a difficulty, which I think needs to be reflected in what we put into the Bill. It might be possible to separate people into a group for whom one period was appropriate and others for whom a longer period was appropriate and to say, for example, that people suffering from cancer received their contributory benefit for a longer period than others. The Bill as it stands rules out a differentiated approach, which would allow a greater level of support for people suffering from cancer or from mental health problems. We have talked about those in Committee, too. The amendment would allow that differentiated approach to be taken.

The Committee needs to weigh this with care. At present—the hon. Gentleman put his name to an amendment about this—people who receive oral chemotherapy or radiotherapy for treatment of cancer are placed in the work-related activity group. But there is no way that they would get back to work within a year and nobody on the Committee would argue that they should. Yet even if they have been paying their national insurance contributions absolutely consistently for many years before suddenly, and probably without any warning, being struck down by cancer, they will, on the basis of this proposal, lose their national insurance benefit after one year, right in the middle of their chemo or radiotherapy. For some that loss of income in the middle of their treatment will be a catastrophe. We should not legislate to do that kind of thing to people who are suffering from cancer and there are some other impairments that I put in the same category.

What about people who have a bout of serious mental health problems? Many of them will be placed in the work-related activity group but could not possibly be ready to return to work within a year. Yet they will lose their contributory benefit completely, which will in many cases substantially add to their worries and perhaps worsen their anxiety and mental health problems. Is that how members of the Committee really want the welfare system to work?

Harriett Baldwin (Conservative, West Worcestershire)

Is it the right hon. Gentleman’s understanding that those with a terminal illness, be that cancer or any other illness, will be assessed as going into the support group? Would he also agree that there are forms of cancer—I know this as there are members of my family who suffer from cancer—that are not terminal and can be completely under control?

Stephen Timms (Labour, East Ham)

The hon. Lady is absolutely right. Some cancers are officially designated as terminal. In the case that I mentioned earlier that Macmillan has drawn to our attention, the man called Chris, who described his cancer as incurable, is in the work-related activity group. He can realistically plan for a return to work on the basis that his cancer will be controlled. Cancer has a wide variety of effects on people and wide variety of severities. My point is that it is simply not plausible that many of those people can get back to work within a year, and the system should not be designed on the basis that they will.

The Government have not been able to say how many ESA claimants in the work-related activity group currently enter work within a year, but all the evidence that I have seen points in the same direction: one year is simply not long enough. If, as it appears, the vast majority of people cannot reasonably be expected to enter work within a year, it cannot be reasonable for us to penalise them for failing to do so, as the Bill currently proposes.

I am sure that Committee members have been heavily lobbied about these changes by disabled people, their families and friends, groups that support them and constituents. People have very serious concerns about this change, and there is a growing sense that the Government are not listening to them. I will read a few of the representations that I have received. The National Aids Trust said:

“To set a time limit on receipt of the main out of work benefit for those whose capacity for work is limited by their HIV will leave many at risk of poverty. Many people living with HIV who are found eligible will face significant barriers to work that cannot be overcome within 12 months.”

The Disability Benefits Consortium said:

“It is wrong to penalise disabled people, whose condition means they are not fit for work, for not getting back to work within a year. Disabled people take different lengths of time to prepare for and find work, depending on their impairment, the personal barriers they face, and the availability of suitable jobs in their area.”

The Kinship Care Alliance said:

“Reducing contributory employment and support allowance entitlement to one year will penalise older people who have worked and paid their contributions but suffer declining health in later years.”

The Committee must recognise that there are real concerns and that there is a real danger that if we get this wrong—I believe that the Bill currently does—many disadvantaged people with very serious health problems will suffer unfairly. It is our duty to ensure that any reform of ESA is consistent with the original aims of the benefit—both generous support and high expectations—rather than simply being a cost-cutting exercise.

Amendment 154 would remove the reference to time-limiting ESA to 365 days and state in its place that contributory ESA would be time-limited to a prescribed number of days, which should be at least 730. I hope that the hon. Member for Meon Valley will take the point that the amendment was deliberately designed to reflect the fact that we do not yet know precisely what the right period is.

I want to put a very serious request to the Minister: if there has been even an ounce of sincerity behind his oft-repeated homily about the books and bookcases, he must recognise that it is wrong for clause 51 to specify 365 days as the maximum period for receipt of contributory ESA. If he believes, as he has very frequently told us, that the right approach in the Bill is to include the framework in primary legislation and the detail in secondary legislation, he should at the very least remove clause 51(1) and clause 52(4), and replace the figure of 365 days with the power to make a regulation to set a limit.

I appeal directly to the Minister, solely on the basis of everything that he has told us in the past month about the basis for the Bill. Otherwise, it will take a new Act of Parliament to introduce an arrangement that reflects the evidence, as it develops, about what the right limit is. I suggest to him that not a single Committee member believes that someone in the middle of a course of cancer treatment after a year in the work-related activity group on ESA should lose their benefit just because they reach the end of the year.

There is no evidence to justify a one-year limit; it has been chosen simply as a cost-saving measure and is arbitrary. It was presumably dictated by the Treasury as a contribution to be taken from sick people towards over-hasty reduction of the deficit. The Minister could, however, at least keep faith with his own speeches if he imposed the one-year limit through secondary rather than primary legislation.

The Government have not yet been able to provide evidence about what the right maximum period is. To be fair to them, that is not too surprising, as the benefit has not been operating for very long. I do not think, however, that a limit could be justified unless we knew that a majority of those who enter the work-related activity group would be back in work within that period. Fewer than 25%, and probably fewer than 20%, of those who enter the work-related activity group can currently be expected to be back in work within a year.

The maximum period should not be less than two years. I expect that the majority of people who go into the work-related activity group will have a good chance of being back in work within two years, but, as the hon. Member for Meon Valley rightly pointed out, I do not have the data to substantiate that claim because they are not yet available. That is why amendment 154 would replace “365 days” with

“a prescribed number of days, which must be at least 730”.

Amendment 165 would make the same change for youth eligibility for contributory ESA.

It is worth being clear about the kinds of people who now find themselves in the work-related activity group. I have mentioned people on oral chemotherapy and radiotherapy and people with quite serious mental health impairments, both of which the Committee has talked about already.

I have an example from the casebook of Sense. The person in question is a middle-aged man who has lived with a hearing loss since childhood. Sense says:

“He attended mainstream school and worked in the construction industry. Several years ago he started to lose much more of his hearing and then started to lose his sight and is now registered blind with light perception only. [He] communicates with others through speech but others must communicate very clearly with him in a controlled environment. His sight loss limits his ability to carry out day to day tasks and get around. In order to overcome the emotional and practical impact of his dual sensory impairment, [he] has required very significant support and time in order to adapt to his new situation. [He] is placed in the work-related activity group, as although he faces very significant challenges to reintegrate into the labour market, the impact of his impairment is not considered severe enough for him to be placed in the support group. It would be unrealistic to expect him to take part in work-related activity, as well as adapt to his new situation, within a one year time-limit. In [his] case he would need to re-train as the type of work for which is qualified is no longer accessible to him. This training would most likely include learning how to use accessible computer technology and/or other equipment, as well as the more general training appropriate to the kind of role he is looking for.”

He is someone in the work-related activity group, and I do not complain about that. If he can realistically expect to return to work, it is right that he should be helped to do so, but that case raises an important point that I have not yet touched on.

For a significant number of those who enter the work-related activity group, getting back into work will require some retraining. By the time many of them have embarked on and completed a course, there is no way that they can be back at work within a year. Here is an example from Mind:

“Tom suffers from Obsessive Compulsive Disorder… and depression, and is almost entirely housebound. His condition leads him to perform daily rituals in which he constantly checks that electronic appliances are turned off and doors and windows are shut and locked. He is compelled to clean the surfaces in his home time and time again. These rituals take up several hours of his day and keep him up for most of the night. As a result he has very poor sleeping habits and a number of related health problems. Tom experiences extreme anxiety when he has to meet new people, particularly if he has to meet them outside of his home. This”—

understandably—

“makes attending benefit appointments, back-to-work programme appointments, and other appointments almost impossible, and he will not be able to work until he has overcome his condition. Tom currently receives support from his local Community Mental Health Team 3 times a week in his home. Although he is making progress, he is aware that a full time job in a location that he is unfamiliar with is quite some way in the future.”

He will not be there within a year.

If I understand the provision, people who have already been on contributory benefit for a year or more will have their benefit taken away immediately because the one-year maximum period will have already been spent. There is no transitional protection.

Chris Grayling (Conservative, Epsom and Ewell)

Will the right hon. Gentleman tell the Committee the overall household income in the case that he has just read out?

Stephen Timms (Labour, East Ham)

I do not know the answer.

Chris Grayling (Conservative, Epsom and Ewell)

Will the right hon. Gentleman give way?

Stephen Timms (Labour, East Ham)

I will come directly to respond to that point, because Tom will possibly be entitled to a means-related benefit. I will gladly give way to the Minister.

Chris Grayling (Conservative, Epsom and Ewell)

I simply wanted to ask the right hon. Gentleman whether he can be certain that he is not describing someone with a partner on a substantial income.

Stephen Timms (Labour, East Ham)

I cannot be certain of that at all because I do not have that information. As I read on, the next paragraph of my speech says, right on cue, that it could be suggested that I am exaggerating the problems that will be caused to people losing their contributory benefit, because if they have no other resources, they will still get their means-tested benefit. The Disability Benefits Consortium points out:

“The impact of the Government’s current proposals will be devastating. Any person whose partner earns as little as £149 per week, or whose partner works just 24 hours or more per week, will lose all of their ESA despite having worked and paid into the system before becoming ill.”

Therefore, the Minister is right; Tom might have a very well-paid partner and be in comfortable circumstances, so he will have no worries, but he might equally have a partner earning £149 per week. If so, he will lose everything—all his support—one year after entering the work-related activity group.

Kate Green (Labour, Stretford and Urmston)

Does my right hon. Friend agree that this is another example of a couple penalty built into the Government’s welfare reform proposals?

Stephen Timms (Labour, East Ham)

My hon. Friend is right. It is surprising when the Conservative party told us so frequently before the election that they did not agree with couple penalties, but here yet another one is being introduced. We might add that anybody with £16,000 in the bank will also get nothing once their contributory benefit stops.

Many people run into health problems having done the right thing—worked and paid into the national insurance fund for many years, and perhaps saved conscientiously as well. Under the proposals, a significant number of people who suffered a health catastrophe a year ago, such as being struck down with cancer or mental illness, will be hit by a financial catastrophe, which is quite likely to be slap bang in the middle of their course of treatment. To lose all income because your partner brings in £7,500 a year or because your family has savings of £16,000 before there has been a realistic chance of getting back to work will mean financial catastrophe for many. We should not pass legislation that has that effect.

When I asked the Secretary of State how many pathways to work participants entered work within two years, the Minister, the right hon. Member for Epsom and Ewell, responded that the available data made it very difficult to answer the question:

“jobs are counted only where they start within 91 days of a customer’s last contact with JCP. Jobs occurring after this period are not counted…The mandatory activity takes on average around nine months from Pathways start. This means that the majority of jobs recorded within this data are obtained within one year and therefore the average time it takes a Pathways customer to find work may appear lower than would otherwise be expected.”—[Official Report, 4 February 2011; Vol. 522, c. 1021W.]

Our information shows that one year is not enough time and, as the hon. Member for Meon Valley correctly points out, does not allow us to say with certainty that two years is enough. That is why amendment 158, which is in the next group, calls for independent annual monitoring of how the picture unfolds. If we were in government, we would not want a limit of less than two years on contributory ESA, but we would certainly want to monitor the impact of the policy very carefully. We would be open to extending it, if, once the evidence became available, it was clear that two years was not enough. The reference in the amendment to a prescribed period is to allow us to extend the time limit easily if necessary without a fresh Act of Parliament, which will be required under the Bill.

Amendments 155 and 166 specify that time limit should apply only

“since the last person was in the support group”.

The purpose of that is to ensure that people with fluctuating conditions are protected properly. Amendment 155 has the same effect as amendment 161, tabled by the hon. Member for Cardiff Central. I welcome that amendment, too.

The time limit proposed by the Government will have severe consequences for people with fluctuating conditions. As the Bill stands, any time will count towards the 12-month limit, regardless of whether it is continuous. A good example would be somebody with cancer who spends 10 months in the work-related activity group and then moves into the support group as a result of a deterioration in their condition, which would not be a particularly unusual development. If they then recover and re-enter the work-related activity group they will have just two months to find work before having their benefit cut.

Priti Patel (Conservative, Witham)

I am interested in the right hon. Gentleman’s points, particularly about the one-year and two-year time limits. Clearly, there would be some significant costs to this policy. Does he have the cost total of the policy? Where would the money come from?

Stephen Timms (Labour, East Ham)

I do indeed have those figures. I have them because the Minister answered a question from me this morning. Sadly, I do not think I have them to hand, but I will get to them before I sit down. The hon. Lady makes a perfectly fair point about how all this will be paid for. I now have the figures in front of me, so perhaps I should read them into the record. The Government expect to save £1.1 billion in 2014-15 as a result of placing a one-year time limit on contributory employment and support allowance. With a two-year limit the saving would be £650 million, a difference of £450 million. That is the saving that would not accrue under our proposal.

However, the Government should not legislate to take that money away from people who could not possibly have expected to get back to work within a year of entering the work-related activity group. Of course the Government can take money away from sick people. They can take money away from poor people. They can take money away from people in very, very difficult circumstances. I suggest to the hon. Lady that one group they should not take money away from are people who are in the middle of their cancer treatment.

Priti Patel (Conservative, Witham)

I thank the right hon. Gentleman for that response. May I reiterate my question? If he were in the Minister’s shoes right now, where would that money come from?

Stephen Timms (Labour, East Ham)

If I were in the Minister’s shoes now and we had a Labour Government, we would not be reducing the deficit at the pace and on the scale of this Government. It is too far and too fast. I am afraid that people suffering from cancer are among the victims of the policy that the Government have adopted.

George Hollingbery (Conservative, Meon Valley)

Coming at the same problem from a different angle, apart from the amount and how affordable it is, I have never quite got to grips as a new Member, or even as a politician at all, with the contributory principle. I understand insurance and I understand exactly how that pays out and the terms of the contract I am entering into. At the risk of angering my Whip slightly, could I ask the shadow Minister to take me briefly through where he thinks it is reasonable for contributions to start and stop, for what they should and should not pay, and how long these things can last?

Stephen Timms (Labour, East Ham)

I think that some of my hon. Friends might want to contribute to the discussion that the hon. Gentleman has started. It is an important issue that is right at the heart of the Bill’s approach. I suggest, if I can narrow the context slightly to this part of the Bill—

James Gray (Conservative, North Wiltshire)

That is a good idea.

Stephen Timms (Labour, East Ham)

Indeed. Someone who paid their national insurance contributions should expect to be able to receive their contributory benefit for a period within which it would be reasonable to expect them to return to work. I do not argue that they should expect to carry on receiving benefit for ever. That is how incapacity benefit has worked, and I am not suggesting we should stick with that. However, if the contributory principle means anything, they should receive their contributory allowance for a long enough period for it to be reasonable to expect them to get back to work. That is rather how it works with JSA. They get contributory JSA for six months—I think that more than 90% of people who receive it are back at work within that period. I am not suggesting that the figure should even necessarily be 90%, but most people should surely be expected to be back in work before the contributory benefit ends.

George Hollingbery (Conservative, Meon Valley)

The reason why I bring up that clearly very wide issue is to focus it back on the amendment. The right hon. Gentleman characterises the policy as taking £640 million away from people who can ill afford it. However, a good proportion of those people can afford it. That is the source of the tension between the contributory principle, the assets and what people currently have.

Stephen Timms (Labour, East Ham)

I can see that there is a tension there, but I want to stand firmly behind the contributory principle. If people have paid their contributions conscientiously, in many cases, for many years, they should be entitled to expect the system to support them for at least long enough for them to have a reasonable chance to get back into work. Of course, it is perfectly possible to take an entirely different view and say that only those who are destitute should get any money. As we have said, under the proposal, people whose partner earns £7,500 a year will get absolutely nothing as a result of their incapacity through ill health. That is not how the system should work. If they have paid in, they should be able to expect the system to support them for a reasonable period, which must be long enough for the majority to get back into work.

There may be a philosophical difference here across the Committee. When I was first in the Minister’s shoes, Conservative Members used to press me about standing by the contributory principle. A school that has long been present in the Conservative party takes the view that if one has paid in, one should be able to expect support. I do not know how big that school is these days, but if we are now in a world where Conservative Members think that people should get money only if they are destitute, I regret that. I much preferred the one-nation Conservatism about which we used to hear a good deal.

George Hollingbery (Conservative, Meon Valley)

I absolutely agree that that school of thought still exists and I hope that many of us share those views. However, the right hon. Gentleman portrays what I am saying in a slightly evil light. I agree that a year is perfectly acceptable, but I am slightly less sure about two years. That is the point that I am probing.

Stephen Timms (Labour, East Ham)

The hon. Gentleman has lost me. Is he saying that he does not support one year?

George Hollingbery (Conservative, Meon Valley)

No, I apologise—I did indeed confuse the Committee. I am saying that I am very comfortable with the year, and I would love to imagine that we could afford two years. I am interested in probing the right balance between the two. The right hon. Gentleman makes a very persuasive case about how long it takes to get back into employment and I understand that. However, that is not quite enough for me. There is a contract between the state and the individual, which I do not quite understand—that is why I asked my original question.

Stephen Timms (Labour, East Ham)

I wonder whether the hon. Gentleman would accept that somebody in the middle of their cancer treatment a year into their receipt of contributory ESA should not suddenly find themselves having that financial support withdrawn. That is surely unreasonable. I simply ask members of the Committee to weigh up what in reality we are doing in this clause. I think that he and many other members of the Committee will find themselves very uncomfortable about the consequences of what he will shortly no doubt vote through.

At this point, I particularly want to draw attention to the worry about people with fluctuating conditions. If somebody who is in the work-related activity group goes into the support group, because the first period that they spent in the work-related activity group will count against them, when they come out, they will have only a couple of months to find work before their benefit is cut. I sense that the hon. Member for Meon Valley is not the only Government Member who is uncomfortable about legislating to have that effect on people with cancer.

Amendments 157 and 167 specify that the time limit will begin only after the section has come into force. As the Bill stands, anybody who was placed in the work-related activity group last month or earlier, and who stays on the benefit continuously, will lose their contributory benefit as soon as the legislation comes into effect in April 2012, because their year will by then have been used up. Surely, it is important that people are at least given enough time and information to prepare for losing such a large amount of money. The Disability Benefits Consortium makes a helpful point in its contribution:

“The proposal to time-limit contributory based ESA will require a comprehensive and detailed communication plan to explain the changes to disabled people. This will be very difficult to implement clearly and effectively before the Bill has received Royal Assent.”

However, by the time Royal Assent is obtained, which I think will be in the autumn, it will be only a few months before people start to lose their money. The amendment helps to prevent that alarming and worrying state of affairs. If the Minister does not agree with our proposal, we need to be told how the Department will ensure that claimants are aware of the changes in good time before they take effect in April next year.

Amendments 156 and 168 specify that the period of the time limit should

“not include any days during the assessment phase, except in prescribed circumstances.”

The assessment period is the initial 13 weeks of the claim, before the claimant knows whether their application will be successful or whether they will be placed in the support group. As we know, most applicants will be unsuccessful. I am pleased that amendment 160, which the hon. Member for Cardiff Central tabled, has the same effect as ours.

There are several reasons why those days should not be included in the time-limited period. First, the claimant will not know, at that point, what requirements will be placed on them and whether a time limit will apply. They may well expect, at that stage, to be placed in the support group rather than in the work-related activity group. To be told after three months in assessment that they will receive only nine months of contributory benefit would be unreasonable even if we took the view that a year was a reasonable period. People should at least be given the full period, rather than a reduced period to secure employment.

Secondly, during this period claimants receive a reduced amount of ESA rather than the full amount—it is equivalent, I believe, to the rate of JSA for that period—so without the amendment, they will not even get the full amount of ESA for a full year. It will start only after the assessment has finished, and will last only until 12 months after the application for benefit was made.

Thirdly, I would welcome some explanation from the Government about how the limit will apply to people who are placed in the work-related activity group only after appeal. At the moment, people who appeal remain in the assessment phase while their case is being considered. If they win the appeal, will they be entitled to receive ESA for the full period of the time limit? If somebody wins their appeal after 10 months in the assessment phase, for example—we know that appeals are taking a long time in many such circumstances—it does not seem fair that they should be given only two months at the full rate, during which time they would be expected to secure a job. Perhaps I have misunderstood the Government’s intentions—I hope I have—but if the Minister could explain to us how people who go through an appeal process are going to be treated under this arrangement, I would be grateful.

All the amendments that I have outlined so far apply to both adult contributory ESA and youth contributory ESA. The final couple of amendments in this group are intended to remove the abolition of contributory ESA for young people. I must say that I am shocked and dismayed to find clause 52 in the Bill. It is possible that I have missed something, and if I have I would be grateful if the Minister could point it out, but we all understand that contributory benefit depends on the payment of national insurance contributions—a discussion that I have just had with the hon. Member for Meon Valley. That is quite right, but it has long been accepted by Governments of both parties that there should be one significant exception: young people who have been disabled from birth or have had heath problems from childhood, and who, as a result, have never had the opportunity to work, pay contributions, and obtain contributory benefit in the conventional way.

The ESA maintained the long-established rule that applies to incapacity benefit—a rule that, as far as I know, dates back to the establishment of the benefit by the previous Conservative Government—that children disabled from birth can qualify for contributory benefit on the basis of the condition relating to youth to which clause 52 refers, rather than by paying contributions, which they clearly cannot do if their disability means that they cannot work.

Clause 52, however, summarily abolishes that provision. That greatly undermines a long-established arrangement that was entirely uncontentious, as far as I was aware. When I took Welfare Reform Bills through the House, no one ever said to me that we should remove the arrangements for supporting adults who have been disabled since birth or childhood. The clause abolishes the provision that the system has long made for young people who are disabled or incapacitated from birth or childhood. I find it very hard to understand what justification there could be for that attack on the incomes of those who are surely—we would all agree—among the most disadvantaged of all, as it is literally impossible for them to work.

People who have been disabled since birth, or early in life, should not be penalised for having been unable to make national insurance contributions, and should not be unable to receive contributory ESA. The Child Poverty Action Group has set out examples of how youth ESA currently assists

“young disabled people who have been temporarily in and out of local authority care or moved areas, as it provides a secure, independent income”.

It also assists

“young disabled people who have built up savings to be used for an adapted car, disability equipment, deposit on a property or future care needs”,

and

“young disabled people who may be vulnerable to forming unsuitable relationships, or may avoid forming a suitable relationship due to fears about losing an independent income”.

I find it very hard to understand the Government’s justification for abolishing ESA for those people. It would be unreasonably punitive. I hope that they will not do so, and will agree to the amendments.

I have taken some time in speaking to the amendments, but I think it is right for the Committee to weigh them very carefully before proceeding. As it stands, the Bill will add financial catastrophe to the hardships endured by cancer sufferers who are receiving treatment, people overcoming mental health problems and their families, and others. Those are people who have always worked hard, paid their dues, and done the right thing in the belief that national insurance would protect them if things went wrong. The Bill will mean that in future, that protection will be there for just 365 days. I press the Minister, in particular, to reflect on all the speeches that he has given the Committee about books and bookcases. At the very least, as a matter of good faith, I urge him to take the maximum period for receipt of contributory ESA out of the Bill and to make that a matter for regulation.

Jennifer Willott (Liberal Democrat, Cardiff Central)

As the right hon. Gentleman has said, there are two amendments in my name. They are both probing amendments and I do not intend to press them to a Division, but they make important points and I would be grateful for the Minister’s response. Amendment 161 is about restarting the time period for the limit on contributory ESA each time somebody goes into the support group, and amendment 160 is about excluding the assessment period from that time limit. Many of the arguments have been made by the right hon. Member for East Ham, so I do not intend to keep the Committee long.

I would like the assessment period to be removed from the time limit. For that 13-week period—when it is 13 weeks—the amount of benefit that an individual receives is significantly lower than the amount that they would receive in the work-related activity group. At that point, they do not know whether they will go into the work-related activity group or into the support group, so it seems unfair to count that time towards their time limit if they move into the work-related activity group later on. Excluding the assessment period from the calculation would, as the right hon. Gentleman has said, make the issue of people who appeal a decision when they do not get passed to enter the work-related activity group much clearer.

It can take an extremely long time for an appeal to take place, and people are on a very low rate of benefit while they wait for that to happen, as the right hon. Gentleman mentioned. About three weeks ago, a constituent came to see me who, for a number of reasons, has been waiting for his appeal for over a year. For the whole of that period, he has been receiving the assessment-phase rate of employment support allowance. There are a number of concerns. If the measures were implemented, he would, if he was moved into the work-related activity group on appeal, effectively never have received the work-related activity group rate, and by then, he would no longer be eligible for it; the whole period would have been spent on the assessment-phase rate, which is significantly lower. He would not have benefited at all from the fact that he has paid his contributions—he would not have received that extra amount.

There are other questions, too. Would my constituent have to pay back anything that he received after 12 months, should it take longer than that to have his appeal granted? Although such issues will probably affect only a small number of people, they are worrying for them, and I would be grateful if the Minister would let us know whether the Department has looked at ways to ensure that the assessment period is removed.

I understand that there are concerns about deducting the period from the beginning, because people might abuse the system by moving in and out of an assessment phase to enable them to keep their contributory benefit for longer. However, it may be possible to add at the end of the period the time that people spent in the assessment period at the beginning. If there was three months spent in the assessment period, the time-limited period could be extended by three months, so people would effectively get 12 months on the benefit. There are ways to limit the amount of potential abuse, if that is something that the Department is concerned about, and it would make the system fairer for those affected. Otherwise, people might feel that the system is treating them extremely unfairly.

My second amendment is about restarting the limit whenever somebody went into the support group. As the right hon. Gentleman said, that would be fairer to those with fluctuating conditions. I understand why the Government do not want to make it possible for someone to move on to jobseeker’s allowance or something similar for a period of time in order to restart their one-year contributory ESA payments—I see that the Government are trying to get around that issue. However, for somebody who is moving into the support group from the work-related activity group, the scenario is completely different.

To go into the support group, a person must have a very serious medical condition, and such a person is clearly in a different position from somebody who is moving on to jobseeker’s allowance and then back into the work-related activity group. As the right hon. Gentleman highlighted, somebody with a fluctuating condition that is periodically getting worse could move into the support group, and when they finally recover and move back into the work-related activity group, they could have little or none of their allocation left. They could, therefore, end up losing all their benefits just when they are starting to recover.

We acknowledge that those who have just come out of the support group and into the work-related activity group are not yet work-ready, but are working towards being work-ready. However, if people lose their benefits within a short period of leaving the support group, it could put their recovery back and make it more difficult to return to work. By definition, the fact that they have recently been in a support group means that they are the furthest away from the job market, and have a long distance to go before they are well enough to find work. Resetting the time period whenever somebody goes into the support group would be fairer to the most vulnerable who have severe medical conditions and need that extra protection.

I hope that the Minister can take those points into account when looking at the proposals. I am not a big fan of the proposal to time-limit ESA, but there are ways that we could make it a fairer system, so that we do not penalise those who have the most serious medical need and ensure that those who are stuck in an appeals process, for example, do not end up being penalised as well. The measures will be controversial: people do not like the prospect of the time limit. There are ways that the Government could make it fairer, and I hope that the Minister will take them into account.

Sheila Gilmore (Labour, Edinburgh East)

One question we have to ask is: what sort of people are harmed by the proposals? What effect do they have on households? It is easy to raise the straw man of the person with the rich spouse, and to suggest that it is somehow unfair for such people to get benefits for extended periods. However, most of those who would be affected by the measures are not unduly well off. They are most likely to be the kind of people who have worked and contributed, often for many years, and who are likely to be older, given the age prevalence of many illnesses. It is older people in their 40s and 50s who have had the most opportunity to be a couple in dual employment. Perhaps the child-caring partner has gone back to work at a later stage in life, or perhaps they were able to build up savings. Those savings may not be hugely extensive.

I do not consider savings of £6,000-plus—that is the amount at which we begin to eliminate any means-tested ESA—as being particularly excessive. Many people have built up those savings to give them some protection against things that can happen—to the home, for instance. I live in a city of many old, stone-built buildings. The council wants to keep them in good repair and has a system of slapping statutory notices on buildings from time to time to ensure that they are. I have constituents who have received bills for such repairs ranging from £5,000 to £26,000 in the year that I have been in this House. That is the sort of contingency for which people may have wanted to save. Other reasons for saving are retirement or to guard against future illness. I would contend that the people whom we are talking about are not necessarily particularly well off; they have been careful and have made savings, or they are a couple who have both worked, but are not necessarily on high earnings.

Harriett Baldwin (Conservative, West Worcestershire)

I am fascinated by the hon. Lady’s examples, but in the case of means-testing, is it her understanding that the rate of withdrawal is £1 a week for every £250 of savings over £6,000? Does she agree that that would work out as a £52 return on £250, which is an interest rate of 20.8%? Does she know anywhere where we could get such a good rate of return on our investments?

Sheila Gilmore (Labour, Edinburgh East)

A lot of people who are currently losing various benefits because of savings are finding that the opposite is the case. We have to think about people who, in the case that we are considering, are ill. Most people would accept that accidents and illness produce additional costs. They also mean the end, at least for a period—perhaps not forever—to some of the ways of making future provision. When people lose their employment because they are unfit to work, they lose not just their earnings, which may be significant, but the opportunity to contribute to a pension scheme or a savings scheme that they may have set up. At the same time, expenses may increase.

The expenses may relate directly to the illness; people may have to use their heating system more, because instead of being out at work for much of the day, they are at home recuperating. Many people remark on how much their energy bills go up by when they retire, but it is a serious consideration when people are unwell, too. There may be attendances at a hospital that is at some distance. There may be special diets. There is a host of additional expenses that can be incurred, as well as the loss of earnings. It is a double whammy—a loss of earnings and of the potential to build up savings, together with additional expenses. Before people have had the opportunity to fully recover, the loss of the benefit kicks in because of their savings or their partner’s income.

People may have savings, and that is why they are ineligible for the income-related benefits, but the important point is that if they use up those savings during that period when things are very expensive, their future is badly affected. It is not just that they are using up that money in the here and now; those future savings that they might have had to assist them through later life will simply not be there. That may mean that they have to make greater claims in future.

The day-to-day costs of people who are out of work due to illness will not necessarily be reduced. I suggest that they will increase. Such people will almost certainly still be paying rent or a mortgage or have other household outgoings like that. If they had thought they were going to be ill, those outgoings might have been lower, but having undertaken those commitments, they still have to meet them when illness strikes. If they cannot, they may have even further problems. Do they borrow further to meet those commitments? Do they exhaust their savings to do that?

We are talking about people at a particularly vulnerable time in their lives. None of us knows when illness might strike. Those of us who have been fortunate tend to think that it will never happen to us. I have met many constituents who made exactly that point: “I never expected it to happen to me, and here I am in this situation.” I do not have the figures on this, and the number of people affected in different age groups, but I suspect that many will be older, and their opportunity to rebuild savings that are exhausted while they are recovering from illness will be much more limited than those for younger people.

Some of this strikes at the heart of the differences. I pick up, and it may go beyond the scope of the amendments—

James Gray (Conservative, North Wiltshire)

I would not do that if I were you.

Sheila Gilmore (Labour, Edinburgh East)

The points have already been touched on. It is worth considering what benefits are about, what a contributory system is about and how one gets buy-in from a community to a system. There is a great danger in going down a road which says, over and over again, “Well, if people have a bit of money, they shouldn’t be eligible for benefit, because they don’t need it.” Where do we go from there? If we are rich enough, we do not need the health service. If we are rich enough, we do not need schools. Lo and behold, we could be on a very different road.

There are profound differences between members of the Committee about how they view social security benefits. I hope that we will continue to have that debate, and we will no doubt resume it on Third Reading.

Chris Grayling (Conservative, Epsom and Ewell)

I have listened carefully to the contributions, and I will make specific responses to some of the issues raised in a moment. However, we spent the past few minutes with an elephant in the room, which has received virtually no attention. While I have the highest regard for the right hon. Member for East Ham, he cannot entirely escape responsibility for that elephant, because, under the previous Administration, he spent a period as Chief Secretary to the Treasury, who is responsible for establishing levels of public spending.

If one were a Martian, coming down and listening to this debate, one would not appreciate the nature of the financial inheritance that the Government received a year ago. There was the biggest deficit in our peacetime history. There was a Budget plan that, had we implemented it, would have led to national debt continuing to rise by the end of this Parliament—it did not even seek to bring that rise under control—and to the debt being passed to the next generation. It was not by choice that we made changes to child benefit. It was not by choice that we have made changes—

James Gray (Conservative, North Wiltshire)

Order. The Minister has made the general point about the deficit, which he believes that he inherited. It may now be sensible to return to the amendments that we are discussing this morning.

Chris Grayling (Conservative, Epsom and Ewell)

I will not list further the difficult decisions that we have had to take except to say that, most fundamentally, this is one of the difficult decisions that we have to take as a result of the need to get to grips with the deficit.

Stephen Timms (Labour, East Ham)

If the measure is for deficit reduction, and therefore temporary, why is 365 days written in the Bill, rather than a regulation?

Chris Grayling (Conservative, Epsom and Ewell)

With respect to the right hon. Gentleman, it is necessary to bring down public spending on a sustained basis. It is not a one-year programme. We are dealing with an unsustainable level of public spending in this country. It must be brought down to a lower level. We have had to take difficult, challenging and ongoing decisions about how we bring down the level of spending to one that we can afford, and this is one of them.

Kate Green (Labour, Stretford and Urmston)

Does the Minister accept that, in terms of long-term spending on people on employment and support allowance, the other measures that the Government are introducing around the Work programme, for example, and the ongoing implementation of a better work capability assessment will themselves bring down that public spending over time?

James Gray (Conservative, North Wiltshire)

Order. We are ranging very wide here. Will the Minister restrain himself to discussing the amendments?

Chris Grayling (Conservative, Epsom and Ewell)

Indeed I will. The argument about the time limit and what the amendments seek to do is important. I accept that the right hon. Member for East Ham has acknowledged the need for a time limit. He is aware that the reason why we have made the 12-month decision certainly has a strong financial dimension to it. Part of the reason is to do with the fact that we have a huge financial challenge to deal with. The difference between the provisions in the amendments and those that we have introduced in the Bill and in the spending review, which took place last year, is approximately £1.2 billion over the spending review period. That is the difference between the 12-month and two-year time limits. There is also an additional £200 million cost in the spending review period for some of the other measures that the right hon. Gentleman proposes in the amendments.

The right hon. Gentleman says—as he is entitled to do, although we challenge his view—that the previous Government would simply not have reduced the deficit at the same rate. I do not think that that is a valid or acceptable argument, and it would not have left us in a position to restore the credibility that we need in the financial markets. His proposals will, of course, be scrutinised in the context of the external scrutiny that will take place over the course of this Parliament as to whether his party is fit to return to office again. I know my own view on that subject.

James Gray (Conservative, North Wiltshire)

But not in the context of amendment 154.

Chris Grayling (Conservative, Epsom and Ewell)

In our view, it is extremely important that we hold the line on this difficult issue and do not accept the right hon. Gentleman’s amendments. We do not believe that financially we can do so. We also believe that his approach in the amendments is misguided in the overall financial context that the nation faces.

The right hon. Gentleman has made an extensive argument for the 12-month time limit and about health conditions. I start from a different perspective. We have time limits in the contributory system—currently, we have a six-month time limit on contributory jobseeker’s allowance—because we are dealing here with people who have an alternative means of support, either through their savings or the income of another person in the household. It is a long-standing principle of our contributory system and the JSA system that we allow those who have paid in to draw back out money for a period of time, but that there is a limit to the amount that they can draw out again. There has been an enormous inconsistency between JSA and ESA and its predecessors, in that somebody who manages to get themselves on to our sickness benefits is there indefinitely, whereas somebody who is on JSA is there only temporarily. That creates a perverse incentive in the system.

Guto Bebb (Conservative, Aberconwy)

My right hon. Friend makes extremely important points at this juncture, but why have we gone for a year? Is there any evidence from the Department that could reassure me that that is based on the issues facing the claimants, or is it purely a financial demand?

Chris Grayling (Conservative, Epsom and Ewell)

We have not made a decision on the basis of an estimate of the amount of time that it takes an individual to recover from a health condition. That is not, in my view, the principle on which the system is based. We are paying support, and will continue to do so, to those who have no other financial means of it. However, if they have an alternative financial means of support, there will be a limit to the amount of time that they can draw extra funding from their contributions. In reality, we estimate that about 60% of those caught up by the new time limit will continue to receive ESA on an income-related basis. Of course, that support is there, and many people will receive other forms of support as well, through universal credit, the housing element, and some of the disability support that is in place. If they have a partner working full time, working tax credit may be paid in addition because of the changes to the household income. There is a variety of different ways in which people on low income can receive financial support from the state. However, we are saying that in principle there should be a time limit for the receipt of ESA.

We could simply have taken the view that the six-month time limit is an accepted part of the jobseeker’s system and that it should be replicated across the benefit system. That is effectively a pay back. When people pay their national insurance contributions, they pay towards a variety of different support that they may receive. The national insurance system will provide people with ongoing support if they find themselves with no further means of it. For our income-related benefits, that support will always be there. People also contribute, of course, to the money that they receive through the state pension after they retire. With JSA, we say that people who have paid contributions are entitled to support even if they have other means of it, such as substantial amounts of money in the bank or a partner earning a good income. They will receive for six months a series of support payments in recognition of contributions that they have made.

We could equally have said that that is an appropriate length of time for ESA. This is not a question about how long it takes people to recover and get into a job. The hon. Gentleman made reference to a training course. It is not the case that our benefits system is there to support people where there are extended training courses. That has never been the case.

Stephen Timms (Labour, East Ham)

Surely the Minister accepts that it is appropriate for people whose circumstances have changed because they have a health problem to seek retraining to help them to get back into work, and that it is reasonable for people to look to the welfare system to support them while they do so?

Chris Grayling (Conservative, Epsom and Ewell)

The right hon. Gentleman knows that that has never been the case. Why would it be any different for someone who has been in work in a particular profession for 25 years, has lost their job and cannot get a job in the same area? He knows that the welfare state does not make extended benefit payments to people undertaking a long-term training course. It provides for people who receive short-term training support during their job search; it does not provide long-term ongoing support for an extended training course.

Stephen Timms (Labour, East Ham)

Can the Minister tell the Committee what proportion of those who go into the work-related activity group he expects to be back in work within one year?

Chris Grayling (Conservative, Epsom and Ewell)

At the moment, we do not have a specific answer to that, but I return to the point that this is not about recovery times. It is not about a decision that 12 months is an appropriate time for recovery. These are people who have other means of financial support, so what we have sought to do in difficult times financially, and by taking tough decisions, is to say, “Right, we need to start to replicate in the ESA system the kind of approach we take in the JSA system.” We have decided to set a 12-month time limit rather than a six-month time limit in recognition of the fact that if people face a health challenge it make take longer to sort out their affairs and may even take longer than the two year period. This is one of the tough decisions we need to take in government. We form a view and try to achieve a sensible balance. It is not based on an estimate of a typical recovery time, but on the principle that these are people who have other means of financial support. In around 60% of cases we expect people to need additional financial support through the income-based system, which they will of course receive.

However, the 40% who fall outside the support mechanism that would exist for their equivalent on JSA are expected, as the system has always provided, to live off their other means. They may not qualify for income-related JSA if, for example, they have capital of £16,000 or more. I would say to the hon. Member for Edinburgh East that of course people put aside money for a rainy day, to deal with challenges to their lives or with the unexpected. It is surely not unreasonable for the state to expect people to use some of that money when faced with that kind of challenge. If they have a partner who works full time—the definition is for 24 hours a week or more—they are expected to live off that alternative income. However, that is not necessarily the only income they will receive. Depending on their circumstances, they may be eligible for support for mortgage interest, for housing benefit, for working tax credit, and for other forms of state support.

Had we listened to the right hon. Gentleman, we might imagine that these are people for whom state support will disappear in a puff of smoke: there will be no other alternative. The answer is that of course there are other alternatives. We provide support for people on low household incomes in various different ways. We will improve the system with the introduction of universal credit. However, the reality is that these are people who have alternative means of support. We have made a decision to mirror the situation for JSA, but in recognition of the fact that people with health issues need longer to sort out their affairs, we have given a 12-month rather than a six-month time limit. This is not related to recovery times or to estimates of how long it takes to get over cancer. It is about the individual and the household’s financial circumstances and whether they have other means to support themselves.

A range of support will be provided to people who are in the work-related activity group. For example, one of the early decisions we made in designing the Work programme was that there is a danger that some people in the WRAG will fall through the net of the Work programme because they will move off ESA(C), and there will not be a corresponding benefit saving to enable us to fund the AME/DEL switch in the Work programme. We have made specific provision in the budgeting for the Work programme for those people to volunteer if they choose to do so and continue to receive the specialist support through the Work programme that they would not otherwise receive because of the introduction of this measure.

We will continue to provide support for people in the work-related activity group through Jobcentre Plus. There is no reason why anybody should fall through the net of back-to-work support as a result of the measure, and we have been careful to ensure that that does not happen. The right hon. Gentleman made a number of other points. He and my hon. Friend the Member for Cardiff Central mentioned the assessment phase. The work capability assessment typically takes place after 13 weeks and determines whether someone is entitled to ESA and, if so, to which group they are allocated.

We have to be careful. I am genuinely concerned about the way in which the assessment phase is being used. Having looked over the shoulder of Jobcentre Plus employees to see the work they are doing with people at that stage, I have seen one or two highly suspect claims. Now that the Work programme contracting is out of the way and we have started the ESA migration, one of the things I intend to do is look carefully at the way in which we operate those first 13 weeks. As my hon. Friend will have seen in the figures published last week, a disturbing number of cases, almost 40% of claims, stop just before—

Sheila Gilmore (Labour, Edinburgh East)

Has the Minister been able to provide a detailed follow-up, or does he plan to provide one, on what happens to the often quoted 40% of people? The implication in many press releases and statements is that all such people are cheats who have withdrawn their claim at the last minute because they realise that they are about to be rumbled. That might be the case, I do not know. There is no clear follow-up. Some people may have genuinely recovered and gone back to work.

Chris Grayling (Conservative, Epsom and Ewell)

Let us be fair. I do not regard all of those people as cheats by a long chalk. Some claims in that mix, however, are questionable. We need to do a lot of work on that, and I intend that work to be done over the next few months. So there will be more information for the hon. Lady in due course.

I want to look carefully at the assessment phase. I do not intend to make changes to the provisions in the Bill, but many aspects of the process will be made through regulations. I intend to look carefully at how the assessment phase works. I do not want to create a perverse incentive to claim and reclaim so that people can stay in the assessment phase.

My hon. Friend the Member for Cardiff Central made a sensible point about appeals. Even with the time limit, there is no question of anyone losing financially. If their appeal is successful they will receive a backdated payment to cover the whole period. If the appeal takes more than 12 months—heaven forbid that that should continue to be the case—there will be a full back payment; if it is midway through the 12 month process, there will be a payment in arrears and a payment going forward, so nobody who appeals successfully will lose out financially.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I understand the Minister’s concern about the assessment period, but if the entitlement period starts at the end of the assessment period, it would not affect a claim made by someone who is reapplying over and over again. It would not matter if it is a bogus claim and they are not entitled to ESA, because they would never reach the work-related activity group.

James Gray (Conservative, North Wiltshire)

Interventions are meant to be brief.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Whether or not someone keeps reapplying, that is different from whether it is fair for the assessment phase to be included in the time limit.

Chris Grayling (Conservative, Epsom and Ewell)

I will look again at the issues that my hon. Friend has raised. She has made some sensible points and I will get back to her.

Likewise, my starting point is that I do not want people moving into and out of the support group, because the implication would be that we have got the decision-making process wrong. Professor Harrington’s work on fluctuating conditions will create a stronger and more robust system.

On the issues raised by my hon. Friend, my worry is that her amendments would create an incentive to try to get back into the support group, which would move people in the wrong way. Somebody in the WRAG will have a financial incentive to try to get back into the support group, whereas we want to help them to move back towards the workplace. I am happy to make a commitment to go away and look at the issue that she has raised and to come back to her. She has made some thoughtful contributions, and we should take the time to look closely at what she is suggesting. There is certainly time to see if the points that she has raised have any implications for the way in which the Bill is put together. I am happy to give her an undertaking to do so. Some of those points were raised by the right hon. Gentleman.

Stephen Timms (Labour, East Ham)

Indeed they were. The Minister has referred to regulations, which brings us back to the point about books and bookcases. Why is the figure of 365 days written into this clause?

Chris Grayling (Conservative, Epsom and Ewell)

I was coming to that. This is the way in which our contributory system has worked. The six-month limit for JSA is written into the Jobseekers Act 1995, and we are simply replicating that situation in this Bill for ESA provision. It is standard practice, and it is the right thing to do. This is a clear, long-term decision by this Government, which we do not intend to vary. A future Government may choose to reverse the decision, but it is absolutely consistent with the way in which the other half of our contributory system works. It is clearly open to a future Government to adopt a different view, but whereas in most cases we need the flexibility to adjust, this is a clear, long-term decision about how we should operate our contributory system.

I want to address the other point that the right hon. Gentleman has raised, which concerned young people. It seems to be an oddity that a young person with a disability or a health challenge, regardless of their circumstances, should automatically be able to migrate to contributory ESA even if they have never worked. This may not have been debated hotly in the past, but it is strange if somebody who reaches the age of 18 can simply enter the contributory system without ever having contributed. Such young people have access to income-based ESA, which provides them with the same level of support as contributory ESA, so we are not telling them that there is no support for them.

Across the board, for those who need financial support, none of these measures takes away that financial support. It is important to stress and to restress that. In all the cases that the right hon. Gentleman has set out, and in all the cases that have been brought to us, if those people have no other means of financial support, the support that we provide them will continue. That is the case for those young people.

We estimate that about 90% of the young people who can currently migrate to contributory benefit are entitled to receive an income-based benefit instead, so their situation will not change. It is only in the case of those who have alternative financial means in their household that the automatic passporting will not continue. That does no more than extend the principles that we are applying across the contributory system to that group of young people. It is not at all apparent why somebody who reaches the age of 18 should simply be able to receive a contribution-based benefit. We provide the safety net of the income-based system, which will continue; this measure does not change that. We want a simplified, streamlined system that provides support where we think it is necessary, which is why we are making this change.

The right hon. Gentleman disagrees with us about this proposal, and I know that he would have chosen not to make the reduction. We may disagree about the emphasis that is required to deal with the deficit, but we have taken what we think is the fairest possible approach in the context of these financially difficult times. It is a tough decision, which we might not have wished to be in a position to take, but this Government faces many such decisions. In the context of those difficult decisions, we think that this is a sensible measure; it is a sensible step forward, which achieves a proper balance in a system that already includes time limits for people who are out of work. On that basis, I urge the Committee to reject the amendment.

Stephen Timms (Labour, East Ham)

That was a desperately inadequate response, and I find it deeply depressing that the Minister’s only justification for this provision is that saving money is a good thing. He has offered us no evidence at all that one year is an adequate period. Indeed, he has told us frankly that he does not know or care whether people can be expected to get back to work in that period. This is purely a cost-saving measure, and on that basis, I suppose, anything goes. I presume it is a question of the shortest period of time the Government can get away with, and that is reflected in the Bill.

The Minister did not mention the position of people with cancer, or those who will lose their benefit in the middle of cancer treatment—the hon. Member for Meon Valley was certainly discomfited by that, and even if the Minister does not feel any awkwardness about it, many who follow our proceedings will. He did not mention the position of people with mental health problems, although he has attempted to be understanding of such issues in the past. The Minister has responsibility for the future of the welfare system and for providing a system that is coherent and can be explained and defended. It is not simply about finding the cheapest system which we can get away with, although that appears to be the approach to the clause. I am afraid I am fairly despondent.

John Glen (Conservative, Salisbury)

It is also incumbent on the Opposition to propose a well-costed and reasonable alternative. The costings of the amendment may have been provided in the answer this morning, but we have not received an adequate response about where that money will come from. Many on the Government side will be anxious about some of the decisions that have to be made, but that is the responsibility of governing. As someone who was hugely respected in the previous Government, does the right hon. Gentleman not feel lacking in integrity as a result of failing to come to the Committee with a proper costing for the alternative spending plans that would be needed to justify the cost of the amendment?

Stephen Timms (Labour, East Ham)

First, I am pleased that another Government Member has at least indicated a degree of discomfort about where this measure is taking us. I have given the costing. The hon. Member for Cardiff Central asked me for it earlier, and I was able to provide it on the basis of a question that I received today. The hon. Gentleman is right: I did not bring a full spending programme to present to the Committee, and I do not think it would be pleased if I had done so. Let me make it clear, however, that the amendment has the full authority of my party’s leadership and it is the right thing to do. What is being done in this legislation is wrong.

Chris Grayling (Conservative, Epsom and Ewell)

Will the right hon. Gentleman confirm two things to the Committee? First, will he confirm that he did not know how much the measures in his amendment would cost before he tabled it, and secondly that according to his proposals he would have to increase public borrowing to fund it?

Stephen Timms (Labour, East Ham)

It is true that the answer I cited arrived only this morning, but other costs were published earlier by the Government. Lord Freud wrote to the Committee a few days ago to point out that the costings had all changed. I had evidence and information about the costs of the amendment when it was tabled, but the Government changed the situation. I do not criticise that; no doubt there was some difficulty for the Government in establishing what the provision will amount to. That is why the figures I gave this morning are different—although not significantly different—from those I had in mind when I tabled the amendment. The Government changed their mind.

Even if the Minister does not feel that he has responsibility for delivering a welfare system that is capable of being defended, the Committee certainly does. I urge members of the Committee to support the amendment.

Stephen Timms (Labour, East Ham)

I beg to move amendment 158, in clause 51, page 36, line 19, at end insert—

‘(3) The Secretary of State shall ensure that the impact of subsection (1) is independently monitored and reported on annually, for at least the five years following its implementation, in order to review their impact on specific groups of people.’.

The amendment would require the Secretary of State to put in place a system to monitor independently the effect of time limiting contributory ESA. The Minister has been frank with us; he does not know how many people will be affected. Slightly more surprisingly, he indicated that he does not really care how long people will take to get back to work. He said that that is not a matter of concern for him.

This is a major change and there is clearly strong disagreement in the Committee about it. Those on the Government Benches argue that the decision to limit ESA to one year will be fair and will not push people into unnecessary hardship, but we cannot agree. All the evidence indicates that one year is not enough for the majority of people who lose their jobs through ill health to expect to get back into work. That seems to be the only basis on which one can judge whether a year is the right period. The Minister indicated that he does not think that it is a significant consideration, but it seems to me that it is.

We are dealing with many unknowns. We do not know how long it currently takes people in the work-related activity group to enter work, although it clearly seems to be more than a year. We do not know the full extent of the barriers that people currently on incapacity benefit will face, particularly if they received the benefit for many years. They will go through the work capability assessment and on to ESA and the Work programme, and we do not know how successful the Work programme will be in supporting those individuals back into work. The assumption in the tender documents for the Work programme seems to be that 9% of people on incapacity benefit will get back into work within a year, but we do not know what it will prove to be.

Time limiting will have far-reaching effects on the lives of many people. I would prefer the response to the unknowns to have been a more careful and cautious approach, but at the very least we should ensure that we can review the impact of the policy properly in future, because policy making should be based on evidence and reflect the position of the individuals whom it will affect. If we had legislated for a two-year time limit, we would have put in place a proper review to ensure that we could respond in future as new information became available. That is why we argued for the length of the time limit to be determined through regulations. We all know the effect of a six-month time limit on contributory JSA; we do not know the effect of a one-year time limit on ESA, so I do not accept the Minister’s argument that because it was done in that way for JSA, it is all right to do it for ESA. Had the evidence suggested that two years was too short—as the hon. Member for Meon Valley suggested it might be—we should certainly have wanted the flexibility to extend the period.

The amendment would require the Secretary of State to implement a review process. I hope that the Minister will see the attractions of that, and I like to think he might support it. I will quickly run through the characteristics of the review process that the amendment suggests. First, it should be independent. All Committee members will have received representations on behalf of disabled people and people with health impairments who are very anxious about the Government’s proposals. It is important that they have confidence in the review process if, as I hope, we have one. I have in mind something along the lines of the review of the work capability assessment that Professor Harrington carried out for the Government, which the Minister welcomed, endorsed, and supported, as did groups supporting disabled people. I do not want to be too prescriptive, but it may be that some other form of review—such as through official statistics—might be appropriate, but it must be independent.

Secondly, the review should report annually, though, depending on the design of the review process, it may be that it should report more frequently. I think that it should report at least annually, and should continue for at least five years. The Government intend to set a very short period of eligibility for contributory ESA. People will be affected by the changes very quickly, and we will need information and data about those effects. We have already established that, although ESA has been in place for almost three years, there are some very important statistics about its effects that we do not know, so the amendment calls for the review to report for at least five years, by which time we can be confident that the necessary information will be available. We will then be able to assess the effectiveness of this change beyond the initial transition period.

Thirdly, the amendment calls for the review to monitor the impact on specific groups of people. I have in mind the impact on different types of disability and health impairment. It may well be that the time limit is particularly inappropriate for people with certain conditions, and if there is—as I suspect—a good case for extending the time limit for people suffering from specific conditions then we need to know, and the review must tell us. The Committee is sharply divided on the merits of those provisions as they stand, but I hope that we all agree that policy making should be based on evidence, and that it is right for us to take steps to obtain the crucial evidence required to evaluate the change and its future effects.

Chris Grayling (Conservative, Epsom and Ewell)

First, I completely agree with the right hon. Gentleman on the need to monitor the impact of policy and understand the effect of the changes that we make. In reality, however, I do not believe that it is necessary to put the kind of complex process he describes—with all the inevitable costs—in place for a change such as this. As a matter of routine, we monitor the impact of all our policies, as he did when he held his position in the Department. We use evidence on the experiences and outcomes of the affected groups from several sources. All that information is published very openly, and can accessed by the right hon. Gentleman and his colleagues, or by independent groups looking at these issues.

We use administrative datasets to monitor trends in the ESA case loads and in the level and distribution of benefit entitlement. We use survey data, such as the family resources and labour force survey, to assess trends in the incomes of those affected. We will use qualitative research and feedback from stakeholder groups to assess whether there are unintended consequences and whether the policy results in adverse consequences for particular groups. We will also use feedback from departmental employee networks and internal management information. So, for example, we will monitor the level of appeals and complaints in order to assess the broader impact of the policy.

In the Work programme, we will have clear understanding of those people who come through on an ESA(C) basis because they fall under a specific category within the contracting of the Work programme. We will draw on broader DWP research work, where appropriate, as well as any research commissioned specifically as part of the evaluation of the measure. We collect all that data and if we were to find the resources to pay for a separate, independent assessment process, it would cost a few hundred thousand pounds. That is the equivalent of a handful of jobs in Jobcentre Plus. Right now my goal has been to keep the monitoring process to the level that is necessary to deliver the information that we need, but not to over-engineer, because over-engineering in reality means job cuts elsewhere in the organisation—the jobs of those who could otherwise provide real support to people on benefits and those we want to help move back into the workplace.

I am therefore afraid that I cannot accept the right hon. Gentleman’s amendment. There is no question but that we will monitor the impact of these changes. We will know and understand their consequences. However, let me take him back. He talks about the need to have a structured system around specific conditions. Clearly, those people in the support group will continue to receive support. There has never been any question about that. However, for the work-related activity group, the issue is what the alternative financial resources available to the household are, not the nature of the condition. That is the basis on which we have approached this and it will continue to be so.

Stephen Timms (Labour, East Ham)

Many of us feel that a time limit on ESA needs to be justified on the basis that most people can expect to be back in work before it expires. The Minister has suggested that he would favour the shortest period he can get away with. Many of us would not agree with that and feel that analysis and evidence is needed. However, the Minister has given us some modest encouragement that the Government will monitor the effects of this change, so I will not press the amendment to a vote. I beg to ask leave to withdraw the amendment.

Clause 57

Kate Green (Labour, Stretford and Urmston)

I beg to move amendment 172, in clause 57, page 45, line 28, at end insert

‘except where that lone parent can demonstrate that they are enrolled in a course of education or training, in which case the age of the child shall be 7.’.

James Gray (Conservative, North Wiltshire)

With this it will be convenient to discuss amendment 173, in clause 57, page 45, line 31, at end insert

‘except where that lone parent can demonstrate that they are enrolled in a course of education or training, in which case the age of the child shall be 7.’.

Kate Green (Labour, Stretford and Urmston)

The amendments relate to lone parents in receipt of income support and the age of their youngest child in terms of the requirements placed on them under the new conditionality regime. After I had tabled the amendments, I received a helpful briefing from the Department about lone parents on training courses, but it would be useful if we could have some clarity from the Minister about exactly what is intended.

It is extremely difficult for a lone parent on day one of their child starting school to put everything in place so that they can participate fully in work preparation activities, go out to employment or undertake a course of education or training. However, we know that undertaking relevant and effective programmes of education or training significantly improves the propensity of lone parents to secure and remain in sustainable employment that genuinely lifts them and their children out of poverty. I think that Members on both sides of the House feel very strongly and positively about the difference that can be made to families, in terms of employment outcomes and long-term prosperity, if lone parents access good-quality education and training that leads them into work, rather than that is undertaken for the sake of it.

Obviously, when a lone parent has a child who is too young to go to school, their attention is likely to be predominantly towards child care. That is why the Government’s proposals on conditionality for lone parents kick in when the youngest child reaches the age of five. I say in passing that I am worried that a lone parent is expected to do a lot on day one when her child starts school. Most of us would be very reluctant to start a new job on the same day that our child went to school for the first time. There would be a lot to organise to put in place child care and to ensure that the child was happy and settled while one’s own attention was on one’s new employment. I am sure, however, that there will be in practice a more flexible and imaginative approach to the expectations placed on lone parents on the day that their youngest child turns five, although I would be pleased to hear the Minister’s assurances about that.

It is quite likely that a lone parent will want to embark on the steps towards work at the moment her youngest child is in full-time school. Indeed, that is very much the grain of the Government’s proposals. It is likely that many lone parents will use the first period in which their youngest child begins school to start refreshing their skills, which could be seriously out of date if they have had a long period out of the workplace while caring for children, and preparing to return to the workplace, perhaps by trying to achieve the qualifications that would be more likely to lead them into good prospects and sustainable work. The amendments would allow for that period of preparing for work through undertaking good-quality education or training, thereby offering the lone parent a realistic opportunity to undertake such education or training that would make a meaningful difference.

The amendments suggest that two years would a period during which educational training would enable a lone parent properly to be competitive and attractive in the labour market so that she could secure the kind of good job that would lift her family out of poverty. Rather than requiring a lone parent who is undertaking education or training to be subject to full conditionality when her youngest child turns five, I propose that there should be a period during which she may successfully and effectively complete that training before she is subject to the fuller conditionality that the Government intend to introduce.

I am aware that we have had a helpful briefing note from the Department in the last few days setting out the Government’s intentions regarding lone parents on income support who are in education or training. It would be useful to understand whether that will apply to lone parents who are currently in education or training, or whether it is to be read across in the long run. I would be grateful to hear the Minister’s views on whether there is an expectation that lone parents will undertake education or training in the first couple of years after their youngest child turns five, given that we all recognise the importance of good-quality education or training and the significant benefits that it can bring.

The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller) rose—

James Gray (Conservative, North Wiltshire)

My mind has gone completely blank—[Hon. Members: “Maria Miller.”] I call Maria Miller; I beg your pardon.

Maria Miller (Conservative, Basingstoke)

It is good to be able to make an active contribution to our proceedings, which my right hon. Friend the Minister of State has conducted so well up to this point. The hon. Member for Stretford and Urmston has made some extremely important points, and there is a great deal of shared ground on the importance of work for lone and coupled parents. I am glad that she has found the Department’s briefing notes for Opposition Members so helpful.

Amendment 172 would enable lone parents with a youngest child between the ages of five and seven to remain entitled to income support if they are undertaking education or training. Amendment 173 relates to mandatory work-related activity for certain lone parents whose youngest child is under seven.

The hon. Lady set out well what the amendments would achieve. She will be aware that transitional protection was applied to the regulations that were introduced progressively to reduce the age of the youngest child that enabled lone parents to be entitled to income support. Such protection applied to full-time students or those following a full-time course of study arranged by Jobcentre Plus prior to that change, meaning that they could remain on income support. I assure the hon. Lady and other members of the Committee that when the new changes are introduced and we lower the age threshold to five, a similar arrangement will apply. A lone parent whose youngest child turns five will remain entitled to income support if they are undertaking such activity until their youngest child is seven or their course finishes, whichever comes first. Lone parents whose youngest child is five or older who want to claim benefit after the transitional protection ends will have to claim JSA if they are capable of work, or ESA if they have limited work capability, in the same way as other lone parents with children of school age.

That does not mean that lone parents cannot access training—far from it. We are keen to give all the support that is required to update skills and to ensure that training is in place for lone parents who are in receipt of ESA, JSA or income support. If, after discussion with their personal advisers at Jobcentre Plus, it is identified that access to work-related training could improve lone parents’ employability, they will be able to apply from day one. That is really important. For those claiming JSA and ESA, the support will be available via Jobcentre Plus contracted provision or, if they are eligible, through the Work programme.

As the hon. Lady will be aware, lone parents who are in receipt of income support are required to attend work-focused interviews. Their personal adviser will encourage them to access work-related training to improve their job prospects in readiness for them to move on to JSA or, it is hoped, into employment. That allows the lone parent to think about work early on, and it is consistent with the previous Government’s intentions in the area. JSA is not available to people undertaking full-time education that is not work-related, although it possible for claimants to undertake part-time training and education if they are still able to show that they are actively seeking and available for work. Jobseekers may also undertake up to two weeks’ full-time training in any 12-month period with the agreement of their personal adviser.

With regard to amendment 173, the provision to allow for work-related activity for lone parents with children whose youngest child is three was put on the statute book by the previous Government. While we are not intending to use that legislation at the moment, we can see a virtue in retaining it as a way of future-proofing employment support for this group. The hon. Lady’s intentions are similar to those we discussed with regard to amendment 172: to provide that lone parents who have a child under seven and are on training courses should be exempt from the requirement to undertake activities and to look or prepare for work.

The protection that the hon. Lady proposes for this group is unnecessary for a number of reasons. If the requirement were ever to be introduced, we would ensure that there was sufficient flexibility to accommodate lone parents’ individual circumstances with regard to work-related training and other activities. That would cover any training that they were undertaking. If that were not the case, we could not achieve our objective of enabling lone parents to update their skills in a way that helps them to find employment. That said, it is possible to imagine circumstances in which an existing course has no prospect of improving someone’s employability. In such cases, I imagine there would need to be negotiations between the lone parent and their adviser to examine such things as the remaining duration of the course and its effect on their job search. We will gain more experience through the work being undertaken on the Work programme by my right hon. Friend the Minister of State, through which certain people claiming ESA will undertake mandatory work-related activity.

Lone parents with young children face different circumstances. Such barriers relate to caring rather than health, but there will be common elements from which we can learn. We will include such learning in the support materials and regulations that will be brought forward when dealing with previous welfare provisions.

I hope that I have reassured the hon. Lady that we have the shared intention of supporting lone parents to stay close to the workplace by ensuring that they have the right support. If they are undertaking training at the time, they can have the sort of protection for which she is asking. Having received my reassurances, I hope that she will withdraw the amendment.

Kate Green (Labour, Stretford and Urmston)

I am grateful to the Minister for those helpful and encouraging assurances on lone parents’ education and training, and their requirement to be available for work. It is welcome that the Minister strongly shares our belief in the value of good-quality employment-related education and training in improving lone parents’ long-term prospects. It was good to hear her say that she does not envisage activating existing provisions on lone parents with much younger children. On the basis of those welcome assurances and what the Minister calls a shared understanding of what we wish to achieve, particularly on education and training for lone parents, I beg to ask leave to withdraw the amendment.

Clause 59

James Gray (Conservative, North Wiltshire)

Order. Before the Minister speaks, perhaps I should apologise for not recognising her swiftly earlier in our proceedings. She will take some comfort from the Hansard report of a debate in 2006 that I was reading at the weekend. In that debate, the Chairman intended to call the right hon. Member for Witney (Mr Cameron) but inadvertently shouted out, “Mr George Osborne,” so a great future lies ahead of her.

Maria Miller (Conservative, Basingstoke)

I assure you, Mr Gray, that I took no offence whatsoever.

I wish briefly—I stress that I will be brief—to set out the reason why clause 59 is in the Bill. It repeals provisions introduced under the Welfare Reform Act 2009 relating to JSA and ESA claimants who are dependent on drugs if their dependency affects their prospects of obtaining or remaining in work. As constituency Members, we all know about drug and alcohol addiction problems; there are 400,000 problem drug users and 630,000 severe alcoholics. The problem is still growing, and an effective action strategy is a priority for the Government.

The provisions that we are repealing allowed regulations to be made to expect Jobcentre Plus advisers to question individuals about drug use and mandated claimants to undertake activities that included assessments and even drug testing. Any failure to comply would have led to sanctions. Drug users who refused to take up treatment would have been subject to mandatory rehabilitation programmes, and the provisions included powers to deal similarly with alcohol problems.

That approach was heavily criticised by medical professionals and experts in drug rehabilitation because it put Jobcentre Plus advisers in the role of medics, and we would all be concerned about mandatory rehabilitation. The previous Government planned to pilot regulations under the 2009 Act that would have applied to heroin and crack cocaine users in five locations in England. Last summer, we reviewed those plans and decided that the pilots did not meet our aims and ambitions. They were too narrowly focused, impractical and expensive.

We all agree that drug and alcohol addictions are among the most damaging roots of poverty. They cause untold harm and misery for individuals and their families, and for communities. The difference is that this Government are committed to helping people who are trapped on benefits by their addiction to recover and to find employment. Many ex-addicts say that getting a job was a key factor in sustaining their recovery. In our drugs strategy, which we published last December, we outlined our first steps to ensure that the benefit system supports effective engagement with recovery services, which is more successful than coercion. When substance misuse is a barrier to work, claimants will be offered a choice. If they go into structured treatment, they will be able to get their benefit conditions tailored to allow them time and space to focus on their treatment and recovery. We are aware that benefit conditionality, particularly in the jobseeker’s regime, can sometimes hinder that process, and we want the benefit system to support the individual to stick to their treatment plan and strive for full recovery, rather than to distract them from it. However, if they do not take up treatment, they will be expected to sign up to the normal rules to receive benefits. Under the new approach, the effects of substance misuse will not be accepted as an excuse for any failure to meet the rules.

We will be introducing the new arrangements in jobseeker’s allowance and ESA by making regulations under other existing powers. The provisions in the 2009 Act are inappropriate for that purpose and will not be used, which is why we are repealing them. We will also make similar arrangements in the universal credit, so Parliament will have the opportunity to consider the details. We felt that it was important to set out why we were repealing these particular provisions and to underline the Government’s commitment in this area so that people have clarity on our approach.

Clause 60

Kate Green (Labour, Stretford and Urmston)

My remarks will also relate to clauses 61 and 62 as we consider the proposal to take away entitlement to benefits from people whose immigration status does not allow them to work.

The intention behind the provisions is to prevent illegal workers from claiming contributory benefits—benefits for which entitlement is based on national insurance contributions paid in past tax years—and employment-related benefits. I draw that conclusion from the impact assessment that the Government published in February. My concern is that the measures would not achieve that intention. Instead of disqualifying people who are working illegally—in other words those who, at the point of paying national insurance contributions, did not have the right to work—they in fact disqualify people who do not have the right to work at the point that they are claiming benefit.

One understands why the Government have framed the provisions in such a way. It would seem that Her Majesty’s Revenue and Customs would not be able to identify whether people were illegal workers at the time they were paying national insurance contributions. The option of excluding people who do not have the right to work while they are actually working was necessarily discounted, but I understand that the provisions will have an impact on people who have worked completely legally and paid national insurance legitimately in the past because they will be denied benefit. Such people might be asylum seekers who were given a right to work because of a delay in deciding their application, although I understand that the Department is considering the possibility of exceptions and that it might make regulations for that group. The situation might apply to people who had the right to work for a particular employer but then either left or lost that employment and were applying to change employment. It might apply to people who were applying for their leave to remain to be renewed or their status to be changed, which could arise in all sorts of circumstances. People who have worked legally and paid contributions in the past could, under the Bill, be left with no source of support while they wait for a UK Border Agency decision in relation to their application.

Kate Green (Labour, Stretford and Urmston)

I welcome you to the Chair this afternoon, Mr Weir. Perhaps I should repeat what I said on clause 60 this morning. Clauses 60 to 62 deal with the same issue but in relation to different benefits, so I am sure, Mr Weir, that you would prefer me to speak once, at this point, about all the benefits encompassed in those clauses.

This morning, I was explaining my concern about the situation in which someone has made national insurance contributions in an earlier period of legitimate employment but is not entitled to work at the time the benefit claim is made. Under the clauses, they would be penalised, despite having legitimately and correctly been in work in an earlier period and made financial national insurance contributions. There is a clear injustice inherent in the clauses, because they remove the limited entitlement to benefit built up through contributions made when working and paying national insurance contributions and tax. We can confidently expect to see families suffering considerable financial hardship because of the removal of that entitlement.

Currently, persons subject to immigration control who have a no-recourse-to-public-funds requirement as a condition of leave to enter or remain in the UK are not usually able to claim means-tested benefits should they lose their job, become unable to work due to illness or injury, or need to take leave because of caring responsibilities for a new child, and their sole protection is often entitlement to non-means-tested benefits and statutory payments, such as the maternity payments covered in clause 62, based on their work history and their contributions to the national insurance fund and UK taxes. That protection itself is currently limited. In the case of contribution-based jobseeker’s allowance, it is paid for a maximum of only six months, and the limits vary between 28 and 39 weeks for the statutory payments, offering cover for only basic living costs and no provision to meet housing and other needs that arise due to illness or to having a new child.

Clauses 60 and 61 would add additional conditions, for entitlement to JSA in the case of the former, and for entitlement to employment and support allowance based on the right to be employed in the UK in the case of the latter. People whose leave to remain in the UK is dependent on having employment or on working for a particular employer, and people whose leave has run out and has not been renewed during the period of the claim, would no longer be entitled to receive the benefits, despite their contribution history. Although regulations could prescribe exceptions, the explanatory notes suggest that it is not the Government’s intention to use such a power, and as such the clauses appear to undermine the principle of entitlement based on contributions and to remove the incentive to regularise employment.

It would probably make more sense, Mr Weir, if I addressed as part of this debate a couple of extra points in relation to clause 62, rather than coming in again in a couple of clauses’ time. Would you like me to do that?

Michael Weir (Scottish National Party, Angus)

That would be acceptable, bearing in mind that we would not allow you to then raise them again under clause 62.

Kate Green (Labour, Stretford and Urmston)

I can assure you, Mr Weir, that I have absolutely no wish to cover the ground again, but the points, in relation to the benefits encapsulated in the different clauses, are very similar.

Clause 62 links entitlement to maternity allowance, statutory maternity and paternity payments, statutory sick pay and statutory adoption pay to the right to be employed in the UK in the prescribed relevant week before the expected childbirth, date of adoption or start of sickness, as appropriate. The clause seems unnecessary, given that someone needs to be working legally in the UK for an employer who is liable to pay income tax for them in order for them to benefit from the payments, except for maternity allowance, which can be paid to the self-employed or to people with interrupted periods of employment. However, the insertion of subsections allowing for variation by regulation from those conditions into each relevant section of the Social Security Contributions and Benefits Act 1992, and the intention indicated in the accompanying explanatory notes, suggest undermining the statutory rights even for those who remain employees and especially for those who are self-employed or erratically employed, as might be the case with maternity allowance claimants. The clause is either unnecessary, as it does not change the position regarding legal employment, or it undermines the principle of employees’ rights and entitlements based on earlier contributions through the national insurance fund for those who are vulnerable as a result of childbirth, adoption or illness.

Although one can understand, if not necessarily support, the Government’s intention of preventing people from claiming on the basis of contributions during working periods that were themselves illegitimate at an earlier period, the problem with the clauses is that that is not in fact what they penalise. They penalise people who work legitimately and have made legitimate contributions at an earlier stage of employment, but are now not legally entitled to work. That does not seem fair, and it undermines the contribution principle. Because those in such a situation would not necessarily be able to access means-tested benefits, it risks leaving at least some people destitute.

Charlie Elphicke (Conservative, Dover)

I have been listening carefully to the hon. Lady’s argument. If people are no longer entitled to work, it may be because they are no longer entitled to be here at all. Is her case that those who have made contributions and are here illegally should receive payment of some kind?

Kate Green (Labour, Stretford and Urmston)

That is not the point at all. It is about people who might be making a further claim for leave to remain, who might be entitled to be here but not to work here any longer, or who might have arrived here in a relationship before the spouse or partner left or deserted them but are still legally here in their own right. I would be grateful for clarification from the Minister on that point in particular. It is not right to assume that they have no right to be here at all. The issue is simply that they are not entitled to means-tested benefits at the time of making a claim for benefits, but they would have been entitled to contribution-based benefits because they made contributions legitimately at an earlier stage of employment. It is an unjust undermining of the contribution principle that someone pays in legitimately but then cannot withdraw what they have contributed to, and that is the point I would like the Minister to address.

Chris Grayling (Conservative, Epsom and Ewell)

Let me start by providing a little reassurance to the hon. Lady before providing her with much less. She suggested that the clauses could have an adverse impact on those who were applying for a renewal visa, but I can assure her that that is not the case. If somebody applies for a renewal visa, the previous visa criteria continue to apply until a renewal decision is taken by the UK Border Agency. If they had a previous entitlement to work, had built up the contribution entitlement and sought permission to renew their visa to stay in the UK, if it was a bona fide original visa, their status would be treated as ongoing pending the visa renewal decision. Therefore, it will not be a problem for them.

Let us be clear on what clause 60 is really all about. Current legislation already ensures that someone subject to immigration control cannot qualify for means-tested, non-contributory benefits. The existing conditions of entitlement for contribution JSA do not explicitly specify that a claimant must be entitled to work in the UK and the existing conditions for contributory ESA, maternity allowance and other statutory payments do not prevent people who are working or who have worked illegally from qualifying for the benefits or measures of earnings replacement. It is entirely feasible under the current rules that a claimant who has worked illegally and paid national insurance contributions—we know that national insurance numbers were issued to illegal immigrants under the previous Government—could be entitled to contributory benefits, maternity allowance and other statutory payments. Similarly, individuals could have worked legally, but made a claim for one of those benefits or statutory payments when they were no longer entitled to work in the UK. We think that it is not right that a person who has no current entitlement to work in this country might be able to receive work-related benefits. This clause and those which follow close the loophole in the social security system once and for all to achieve these required policy intentions.

The hon. Lady said that these clauses will impact upon those who have paid into the system while working legally, but whose immigration status has since changed, leaving them with no call upon the contributions they have made. That is true. I know that there are many new Members on this Committee. On many occasions over the years, people have come to see me with a clear ruling from the UK Border Agency that they do not have a right to stay in the UK. You would be surprised, Mr Weir—or you probably would not be surprised from your own experience—how frequently those people pop up again two or three years later with a further issue. Despite the fact that they have been told that they have no further right to stay in the UK and that they need to make arrangements to leave the country, they are still here.

We do not believe that somebody in that position should be entitled to receive contribution-based benefits, whether or not they were legally employed when they first made those contributions. If they are not legally in the country, they should not be able to receive those benefits.

There is nothing unusual about that. It is common with the treatment of other existing entitlement provisions. Anybody who does not meet any of the other required entitlement conditions to a contributory benefit would be refused, irrespective of previous payments of national insurance contributions. In particular, we are talking about people who are overstayers. We do not want to send a message that people can overstay a visa, get away with it and subsequently receive money from the state.

I am clear that this is a loophole that needs to be closed. I hope that the hon. Lady feels reassured that somebody whose status has changed—somebody who entered the country perfectly legally under a spouse visa, who had been working previously but whose partner had left—can re-apply and maintain their existing visa status. I think that that is right. However, somebody who has simply ignored a UK Border Agency decision, has been to appeal, has had their appeal turned down, yet has still managed to stay in the country, should not be able to pop up a few years later and say, “I want contribution-based benefits based on what I paid when I was legally here”, when they are currently illegally here. That is what we are seeking to do with these changes.

Clause 63

Margaret Curran (Labour, Glasgow East)

It is a pleasure to be back under your chairmanship, Mr Weir. Just for clarification, I have some questions about the clauses that the Government have introduced under the heading of industrial injuries. I am far from an expert on industrial injuries law, but this seems to make some degree of sense. It looks as if it is pegging up the legislation, and it would appear that the clauses in relation to trainees and under-18s give new rights to those groups of workers. That is to be welcomed.

May I ask the Minister one or two questions for reassurance? First, it is indicated in the legislation that there are different regimes in different parts of the UK, particularly in relation to skills and training. Have the implications of the legislation for the devolved Administrations been fully addressed? Have discussions with the devolved Administrations taken place to ensure that the rights of trainees have been properly addressed and are consonant across the different Administrations in the UK?

More significantly perhaps, perhaps what we are looking for most in this legislation is clarification that there is no loss of rights for workers suffering accident or injury during the course of their work. I can see the argument for moving on from the declaration of accident and the status that that special declaration gives. I would like reassurance that that abolition does not involve any loss of rights for workers who suffer injury in future.

Chris Grayling (Conservative, Epsom and Ewell)

Let me reassure the Committee, the hon. Lady, and indeed those in receipt of compensation payments under these schemes that this is very much a tidying-up measure. It repeals the legislation that maintains the existence of two separate schemes for providing state no-fault compensation for work injuries occurring before 1948. These schemes have been in place for many years. When this provision comes into force, existing payments and claims for state no-fault compensation for work injuries will be dealt with as claims under the main industrial injuries disablement benefits scheme, regardless of when the disease or accident occurred.

To be absolutely clear, the Government are committed to providing support for those people who find themselves in this kind of very difficult situation. We believe that everyone injured through their work should be treated equally, which is one reason for abolishing the pre-1948 schemes and transferring responsibility to the main industrial injuries disablement benefits scheme. The provision simplifies and rationalises the scheme, reducing the complexity caused by multiple schemes and making it easier for everyone, claimants and staff alike. Most particularly, it is important to say that no one loses out financially. In fact, the opposite is true; there are 120 people who will be £5 a week better off as a result of these changes. New claims under the pre-1948 schemes are now extremely unlikely, and there will be a slightly higher rate for some existing claimants.

In terms of the devolved Administrations, yes, we have had those conversations. One of the benefits of these changes, if I may trespass ahead Mr Weir, is that clause 65 abolishes the separate trainee status, meaning that young people are treated as adult workers. In my view that is the right thing to do; if one suffers a long-term injury it really does not matter whether one is 19 or 25. It is sensible to have a similar status for everyone. The trainee status is there for historic reasons that we do not believe apply anymore, so that anomaly is also tidied up. We end up with a streamlined system that has been discussed across the United Kingdom with all the devolved Administrations, where no one loses—in fact, a few people gain—and that is simpler, cleaner, and easier for everyone involved. On that basis I commend the clause to the Committee.

Clause 68

Karen Buck (Labour, Westminster North)

I beg to move amendment 174, in clause 68, page 52, line 19, at end add—

‘(4) In section 176 of the Social Security Contributions and Benefits Act 1992 in subsection 1(a) (regulations subject to the affirmative resolution procedure), after ‘section 118;’ add ‘section 130A’.’.

I apologise pre-emptively for the return to the vexed issue of housing. We discussed its treatment in respect of the universal credit, and now refer to some of those measures as they apply to the transitional period. The Committee will be relieved to hear that I do not intend to revisit the important points of principle that we discussed, but there are certainly some outstanding questions that the Minister should answer.

The amendment is relatively brief, and simply asks the Minister to deal with the regulations that will follow under clause 68 under the affirmative resolution procedure. I ask because we have now seen a note on the regulation powers, received a few days ago. The side and a half note, although helpful in giving us a few pieces of information that we were not absolutely sure about, begs so many important questions that it is crucial that we can have a full debate when these issues come before us again.

We know that the Government’s intention is to subject some 720,000 households to a penalty for under-occupying their socially rented homes, with a reduction of 13% of total housing benefit entitlement if they are one bedroom under-occupied, or 23% if two bedrooms or more are under-occupied. The principle on which that will be based is the same as applies in the private rented sector with the local housing allowance, which the Government also intend to uprate in line with the consumer prices index.

That aside, the sheer scale of the numbers involved in the benefit cuts and the amount of money being cut off the budget—2 million or so people will be affected one way or another—require a much clearer idea of the regulations and how the Government intend to proceed in the coming months. We want to know that we will have an opportunity to discuss those regulations through the affirmative procedure.

Some of the things we do not know include why the Department for Work and Pensions is applying a definition of under-occupation that does not exist as far as the Department for Communities and Local Government is concerned. For social housing, we have a whole mechanism for determining under-occupation, but the DCLG simply does not recognise that as applying in the private rented sector. It does not have that level of definition. I am interested to know why the Government are applying different definitions.

I asked the DCLG a question about what definition it used to determine under-occupancy. The Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell), said:

“For the purposes of English Housing Survey a household is considered to be under-occupying if they have two or more bedrooms more than they need”.—[Official Report, 16 February 2011; Vol. 523, c. 836W.]

That is not the measure applied by the DWP, and it is important that we have a chance to discuss that and to know why.

We do not have any real sense of the scale of under-occupation, given that the social landlords concerned do not recognise it—they do not have their own definition and are not able to measure it. We do not yet have any idea how landlords will be able to respond, given their limited options.

In a year’s time, in April 2012, when we expect the regulations, the landlords will have even less time in which to prepare for a radical—unprecedentedly radical—change to the social rented sector. We do not know how many categories of tenants will be covered. We do not know how people who are legally sub-letting, students, pensioners who are not the lead tenant or their partners will be treated. The Government have told us that pensioner tenants, or pensioner tenants’ partners, will be excluded from the measures, but they have said nothing about any other pensioner members of the household. A great many people share their properties with one elderly parent or more, and provide care.

We do not know the maximum that any tenant might lose. We know the average impact on different household sizes, but in response to another question the Department was unable to tell me the maximum level of loss. We are, therefore, approaching the regulations with little information. We do not know what assessment the Department has made of the capacity in the sector to meet the legitimate need for downsizing, or whether any transitional arrangements will be made. For example, two children of different genders who are under 10 have been placed, quite legitimately, in a property by their social landlord, each with their own room. At the moment, such a household would be deemed to be under-occupying for the purposes of the benefit cut by the Department. In a year’s time, one of those children will turn 10, and they will cease to be under-occupying. In the meantime, ludicrously, they will either be required to move for 10 or 12 months, or their parent—perhaps a lone parent on a minimal income—will be required to lose we do not know how much, but on average in the region of £20 a week.

We do not know what measures the Department intends to take to ensure that at least 30% of the private rented market is available, in line with the 30th percentile being adopted for that measure. We do not know what measures will be taken to ensure that that level of property is available for people in the private rented sector. I am quite shocked by the thinness of the briefing on the regulations. Three quarters of a million households will be affected in the social rented sector alone, and 1 million in the private rented sector. That we are approaching regulations of such complexity, where there is so great a level of need, without knowing that there will be the opportunity to discuss them through the affirmative procedure in both Houses of Parliament is extremely unfortunate. I hope that the Minister will reassure me that she will be sympathetic to ensuring that such an opportunity is afforded by the affirmative procedure.

Sheila Gilmore (Labour, Edinburgh East)

I understand why people might not want us to reiterate previous arguments on this issue, but it is important to put on the record again why we think that the measure is a complex and perhaps misguided attempt to make changes. It is not clear whether it is an attempt to do something about housing allocation policy and housing shortage, or an attempt to deal with benefits. If that is not clear at the outset, any regulations made are likely to have harmful consequences that were not obvious at the outset.

From my experience as chair of a housing committee in a city with a great housing shortage, I know that the capacity for people to move around is extremely limited. The outcome for many of the groups affected will be a loss of income. Even if people are willing to move, the properties are not there for them to move to because of the mismatch that exists.

Charlie Elphicke (Conservative, Dover)

I understand that the length of tenure in social housing is much longer than in owner-occupied housing. Surely that is a defect of the system, as it harms social mobility. People need to be able to move more easily, and too often that is difficult with social housing.

Sheila Gilmore (Labour, Edinburgh East)

I am disappointed by that intervention. Security of tenure for council tenants was introduced in 1981 by the Conservative Government under Margaret Thatcher. She presumably understood that security of tenure is important to tenants. Prior to that, in theory councils had the power of life, death and eviction over their tenants, although I do not think that many operated in such a way. Tenants’ groups fought hard for security of tenure. If length of tenure is longer in the council and housing association sector—although I think that is variable—that is often because of people’s financial circumstances and their inability to find anything else or move on. Many people in the owner-occupied sector will be able to move on and climb the housing ladder that everybody is talking about.

In the ward that I used to represent, and in many parts of my constituency, there is a huge mismatch in house size, and most of the small homes are in either high-rise blocks or sheltered housing. It would clearly be counter-productive to say, “As pensioners will not be affected by the measure, we will put other people or families into the small, sheltered houses, because those are the only small houses we have.” High-rise housing is often seen by people as a step backwards. Far from being on a housing ladder, in many respects people would be put on a housing snake if they were forced to move. That would be highly regrettable.

Charlie Elphicke (Conservative, Dover)

The hon. Lady paints a particular picture, but that is not what happens in real life. In my constituency, there are a lot of elderly people rattling around in big houses, while children live in overcrowded homes. The number has risen since 2000, when there were 1 million children living in overcrowded conditions—there are now about 1.8 million. Surely that is the real problem that we should be tackling.

Sheila Gilmore (Labour, Edinburgh East)

We are told that the provision will specifically not apply to elderly people—unless people under pension age who are over 40, or whatever, are to be automatically classified as elderly. Many of us in this room might feel upset by that suggestion. The people whom the hon. Gentleman talks about will not be affected by the measure.

A number of tenants have approached me in the recent past to say that they are still living in a much larger house than they need. Their families have grown up and they have perhaps been widowed. They would like to move, but the practical problem is that what they want and need to move to is not necessarily available. Many want to live in the community that they are used to, where their social contacts are, where they may have family links and where they go to church or local clubs. They do not want to be moved willy-nilly to wherever there happens to be an available house. Unfortunately, that is often extremely difficult to deliver quickly. I was struck by the evidence given by David Orr to the Committee; he said that by using quite a complicated chain of moves and transfers, a landlord or housing provider could achieve some of those effects, but it is difficult. The really practical problem was not that the tenants did not want to move, but that there was no suitable housing for them in the area that they wanted. That is where the mismatch occurred.

Ian Swales (Liberal Democrat, Redcar)

The hon. Lady clearly has a lot of experience in this area. Does she recognise that there is an issue with the way that social housing providers operate? My constituent who lives alone in a three-bedroom house and wants to move to a smaller house is told that he will go to the bottom of the waiting list and is not guaranteed a property at all in the short term. That is another block in the system.

Sheila Gilmore (Labour, Edinburgh East)

I thank the hon. Gentleman for that intervention. I could wax lyrical about allocation policies for many hours, but I am sure that that would be outwith the remit of the amendment. I agree that there are things that need to be done in that respect. The great pressure in Scotland to prioritise, for good reasons, those who present as homeless has begun to squeeze out every other reason to move. There are perhaps grounds for going back to some of the previous arrangements, in which transfer tenants sometimes got priority in order to release a property and get the movement going. That is a matter of allocation policy, and things can be done about that. We should address that. I am not convinced that it will be addressed by simply reducing the amount of benefit that is paid to people who happen to need benefit because they are in a low-paid job or have lost their job—they may return to employment after a period.

Simply reducing benefit will not solve the housing issue. I rather suspect that the majority of people will simply take the hit on their income and make it up from some other place, perhaps with difficulty. Nevertheless, the reduction will be a loss of overall income, rather than a means of resolving very tricky problems—problems that have to be resolved with tact, sympathy and humanity, because these are people’s homes. We are talking about people living in the communities that they are used to, and it would be regrettable not to take all that into account. That is not to say that we should not look at some of those issues; I certainly think that we should.

I have argued with my local authority and others in the housing field about who we prioritise and why. Would it not be better to have two happy tenants when we make the sort of arrangement that the hon. Gentleman suggested, rather than only one person being housed and the other remaining unhappy for a long period? These are important changes, so it is particularly important that we have ample opportunity to scrutinise the details of the proposals in due course through the affirmative procedure.

Maria Miller (Conservative, Basingstoke)

I think that this is the first time that I have risen to respond to amendments under your chairmanship, Mr Weir. It is a delight to do so, and to start the discussions on housing benefit. The hon. Members for Westminster North, and for Edinburgh East, have highlighted the importance of scrutiny of all the measures in the Bill, and I agree with them about that.

The hon. Member for Edinburgh East said that she was a little unclear about our objectives in relation to housing benefit. Without straying too far from the amendment, I thought it would be useful to underline for her and other members of the Committee exactly what we are trying to do. It is not straightforward; we are trying to do something quite complex. We are trying to make better use of our housing stock, which all constituency MPs must want. I speak as a Hampshire MP with many thousands of people on a housing list. I understand the importance of making better use of our housing stock for those with the greatest need. We are also trying to strengthen work incentives, ensure that people in social housing can transfer into work, and ensure that they are not living in housing beyond their means without the subsidy that they currently receive.

Lastly, but by no means least, we aim to contain spiralling expenditure. As I am sure the hon. Member for Westminster North will know, housing expenditure spiralled over the past 10 years under the Labour Administration, from £11 billion to £21.5 billion a year. If we are to ensure that housing benefit is there for the future to support people who need it most, it is absolutely incumbent on us to create a sustainable situation for the future. We have to remember that housing benefit shapes the rental market. I do not need to remind Opposition Members that a report conducted by the FindaProperty website pointed out that between November 2008 and February 2010 private rental sector costs reduced by 5%, while the local housing allowance sector saw claims increase by 3%. There is a problem with the market being out of kilter, and that has to be addressed.

It is important to go into some of the details. I could answer in further detail the points raised by hon. Members, if the Chair allows, although it would be slightly beyond the remit of the amendment.

Michael Weir (Scottish National Party, Angus)

Order. We are straying from the remit of the amendment. If Members want a clause stand part debate, we should adhere as much as possible to the amendments.

Maria Miller (Conservative, Basingstoke)

I will, of course, take your guidance, Mr Weir. I shall rigorously address amendment 174, which would make the regulation-making provisions on appropriate maximum housing benefit subject to the affirmative procedure. As the Minister of State said earlier, housing benefit legislation is extensive, and deals with a significant amount of detail. As Opposition Members will know, it is amended frequently through regulations to ensure that procedures and customer service are the best that they can be and respond to the changes in housing provision. Housing benefit will need to provide support to a large number of people with very different needs. The system also needs to maintain flexibility so that changes can be made quickly without disproportionate demands on the legislature. That is why I think that the regulation-making powers should remain subject to the negative procedure.

As the Minister of State said earlier, we are not intransigent. We have said clearly that we would be willing to look at whether it would be appropriate to use the affirmative procedure in some circumstances, particularly early on, when new ideas are being discussed. However, that will be difficult in practice, particularly for housing benefit. We do not see housing benefit in the same light as some of the other examples that we have talked about. As Opposition Members will know, there are obvious ways that they can have the sort of debate that they seek, covering the issues that they highlighted: by praying against regulations that are subject to the negative resolution. We feel that it would be disproportionate at this point to make all these provisions for regulations subject to the affirmative procedure. I hope that the amendment will be withdrawn, as debate can be forced at any time through other procedures.

Karen Buck (Labour, Westminster North)

I am disappointed with that reply. I take the Minister’s point that there is already extensive regulation on housing benefit, but we are none the less dealing with changes that are unprecedented in their ferocity, particularly in the area of social housing under-occupation. Given the way in which the CPI uprating will impact on the local housing allowance, significant numbers—possibly hundreds of thousands—of people could, over a relatively short period, become unable to access any accommodation in large geographical areas. We certainly do not have the safeguards that we need.

Maria Miller (Conservative, Basingstoke)

The hon. Lady asserts that there would be large geographical areas in which people would not be able to access housing. From where did she draw that evidence? The evidence put forward by the Government suggests that there is nowhere in the country where an individual would be unable to find social housing. It is important that people have the facts rather than assertions.

Karen Buck (Labour, Westminster North)

I apologise to the Minister: I was not talking about social housing, although I think that what I said will be true of social housing. Research on the subject by the university of Cambridge was extensive, and warned of the longer-term implications of the application of CPI to the local housing allowance. I am sure that we would agree that there are areas where we would, wherever possible, want to bear down on rents in the private rented sector. Given the increasing importance of that sector to the Government’s housing policy, it is absolutely incumbent on Parliament to satisfy itself that there will be, in all broad areas of the country, a sufficiency of private rented accommodation that can be obtained by people on the local housing allowance. Academic research indicates that there are real concerns about whether that will happen. It is exactly for that reason, as well as because of the social housing implications, that I was seeking the affirmative procedure.

I am sure that the Minister is right: we will have to look at what happens when the regulations come forward, and find other means of pursuing the issues. I say to her again that time is of the essence. We are dangerously ill-prepared for the scale of change that we are about to see, particularly in the social rented sector. We do not intend to press the amendment to a Division now. I beg to ask leave to withdraw the amendment.

Karen Buck (Labour, Westminster North)

I beg to move amendment 175, in clause 68, page 52, line 19, at end add—

‘(4) In section 130A of the Social Security Contributions and Benefits Act 1992, after subsection (7) insert—

(7A) Regulations under this section shall not permit the AMHB to be less than the actual amount of the liability in a case where a person in the household is in receipt of any component of Disability Living Allowance.”’.

Michael Weir (Scottish National Party, Angus)

With this it will be convenient to discuss amendment 190, in clause 68, page 52, line 19, at end add—

‘(4) Regulations under this section shall not permit the AMHB to be less than the actual amount of the liability in a case where a person has provided the relevant authority with such certificates, documents, information or evidence as are sufficient to satisfy the authority that the person is disabled and is living in a property specially adapted or particularly suited to meet the needs of that person.’.

Karen Buck (Labour, Westminster North)

These amendments concern two aspects of the proposed penalty for social housing under-occupation as they apply to people with disabilities and to adapted accommodation. What we know from the Government’s own impact assessment is that, of the 750,000 or so households that face a loss on their housing benefit for having one or more bedrooms than is deemed necessary, there is a disproportionate impact on people who are disabled. Some 66% of all the claimants for housing benefit in the social rented sector affected by these cuts are deemed by the Government’s own admission to be disabled. That is quite an extraordinary thing to do—to bring forward a policy that is so disproportionate in its impact on older and disabled people. What we would expect, therefore, is for measures to be brought forward by the Government that would mitigate the impact on those disabled people.

Amendment 175 specifically looks at the extent to which those severely disabled people who are entitled to the disability living allowance might be protected from the worst implications of these cuts. Unfortunately, and this almost helps to prove the point that I made in discussing a previous amendment, the Government do not know how many people are on disability living allowance in the social rented sector. What will unravel so much of this measure is exactly how much the Government do not know.

I asked a parliamentary question seeking information about how many disability living allowance claimants will be affected by the changes. I was told that that information was not available and that, if new information becomes available, it is disproportionately expensive to analyse it and present it to Parliament. We are therefore in something of a dilemma in that we cannot answer a question to which I would have thought it absolutely essential the Government know the answer.

Under the public sector equality duty in the Equality Act 2010, there is a general principle that, where a negative impact is identified, measures should be put in place to mitigate that. However, the Department for Work and Pensions has not introduced any proposals to remedy the discrimination that the measures imply against people with a disability. As has been the case elsewhere, the only mitigation that is being brought forward by the Government is the reliance on the discretionary housing payment.

Discretionary housing payments have fast become the philosopher’s stone of the Government. In fact, to be honest, they make the loaves, the fishes and the feeding of the 5,000 seem like a positively unambitious model of social policy. Out of the £190 million total fund to be made available over the coming years, only an extra £40 million—it is better than nothing—will go into the discretionary housing payments pot. That money is expected somehow to fill a gap left by the nearly £1.8 billion of housing benefit that has been withdrawn in both the private rented and social rented sector. I hope that I am not misleading the Committee, but certainly in the impact assessments I have looked at, whenever a question is asked of the Government about the disproportionate impact of the measure, what will happen to protect people who are most vulnerable and what transitional measures might be available to help people, a reference is always made to the discretionary housing payment pot. Yet that pot appears to provide only 10p in the pound for every pound that is being lost.

Harriett Baldwin (Conservative, West Worcestershire)

Does the hon. Lady welcome the housing benefit provisions that will provide an additional room for a carer?

Karen Buck (Labour, Westminster North)

I absolutely welcome those measures and, of course, I am pleased to do so. That is a welcome step, but it applies to a very specific group: people who are deemed to require the services of a carer. That is excellent, but it will have no impact at all on the needs of people who are disabled and severely disabled. I am talking about people who, in some cases, have obtained their social rented accommodation precisely through the allocation procedures that rightly give a degree of priority to people with high levels of medical need. We know that, over the past decades, as social housing has become increasingly residualised, it has become increasingly difficult to get into social housing unless one falls into a needs category. Obviously, by definition, the proportion of people in social housing who have high levels of vulnerability including disability has gone up. That is exactly the case here.

We have an age profile of that particular group of people. Under-occupiers by definition are likely to be older people. The hon. Member for Dover commented on that issue and talked particularly about pensioners. Of course, by definition, people who are older are likely to be under-occupiers. They are people who, in many cases, got their accommodation when they had children. Sometimes, they are still in homes they have had for 30 or 40 years. As they get older, many of those people naturally and inevitably will have a degree of disability.

We know the level of disproportionality in terms of the impact of the policy and that the discretionary housing payment is wholly inadequate to this task. According to my calculator, the discretionary housing payment pot would not be adequate even to help a proportion—an assumed percentage—of people on disability living allowance in the social rented sector if that were all we were attempting to make it do. However, instead it has to be elastic enough to offset virtually everything that is happening in the private rented sector, as well as in the social rented sector. Anyway, the problem with the discretionary housing payment, which is being put forward by the Government as the panacea to the problem, is that it is time limited. The whole point of the discretionary housing payment is that it is meant only to be a short-term measure. That will not be good enough for people who have severe disabilities and live in homes that, in many cases, they have had for years and they are living in with the support of family and friends who live in their local communities.

George Hollingbery (Conservative, Meon Valley)

I am trying to read amendment 175 in conjunction with amendment 190. I understand the hon. Lady’s argument—it seems to relate more to amendment 190 than to 175—about the adaptations made and the infrastructure put in place, and I understand the logic behind saying that moving along under those circumstances may not make that much sense. Will she clear up how the disabled are a special group, other than if an adaptation already sits in a house? Those who need housing benefit and support for their rent need it whether they are disabled or not. Taking account of the adaptations in a house under amendment 190, what separates disabled people under amendment 175 from anybody else who needs help with their rent?

Karen Buck (Labour, Westminster North)

I am anxious not to stray into another amendment. According to everything that we know about people with a disability, particularly those in social rented sectors—we have a reasonable idea of their income profiles—often, they are the poorest. We know how many people the cut in housing benefit is going to affect, and we know from the Government that that includes 66% of households—about 400,000—with people with disabilities. Moreover, to stray into amendment 190, no one knows for sure whether the capacity exists—in fact, we doubt that it does—to move them to another property. We therefore know that the Government’s proposal will affect some 400,000 households with people with disabilities—including a significant but unknown number of people who are sufficiently severely disabled to qualify for DLA—who will not be able to move and who will, therefore, be required to top up their rent from their disability allowances or their other very low income. That will be difficult for very-low-income people, and to apply that penalty, which will in some cases be unavoidable, to people who are disabled is, frankly, disgraceful. I do not understand how it can be justified.

I have not talked particularly about adapted properties, but I will say a few words about them in a moment. I am talking about people who may be in properties that are not adapted, but that are, none the less, perfectly suitable for their needs. They may be ground-floor properties or small houses, and the people may have had cancer or a stroke, or they may have incurred some other disability or moved in with a particular disability. The property might not be adapted but, for the purposes of the amendment, those people are severely disabled and are entitled to DLA. I am asking the Government to make sure that those people are protected from the implications of this policy. Otherwise, they are asking the most vulnerable people, who are, in many cases, severely disabled, to pay a significant amount of money—sometimes £20 a week, possibly more—to subsidise their rent.

Charlie Elphicke (Conservative, Dover)

Will the hon. Lady clarify something? I believe that about 670,000 tenants would be affected by the measure. Is she is saying that 400,000 of those 670,000 are in receipt of DLA?

Karen Buck (Labour, Westminster North)

No. As I said earlier, no one knows how many people are on DLA. The Government do not know—I asked them but they were unable to provide an answer. We do not know for sure, but what we do know is that the Government will be required or will expect to know. I would be stunned and shocked if the Government did not know by the time they introduce the regulations. We know from the Government’s own impact assessment how many people will be affected overall by the measure. It rises to 720,000 according to the impact assessment. We know how many of those people are deemed to be disabled. We do not know for sure how many people will be on DLA, but I would expect the Government to identify those people who are living on it and to make sure that, at the very least, they are protected.

Amendment 190 seeks to ensure that those properties that have been adapted for specific use by disabled people are also protected from the measure. David Orr told us in his evidence that, according to the National Housing Federation, the key provider of social housing, there are

“108,000 working-age social-housing tenants in Britain claiming housing benefit who live in adapted homes with one or more spare rooms.”––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 145, Q281.]

That is 100,000 adapted properties in that category.

Charlie Elphicke (Conservative, Dover)

Does the hon. Lady know how many of those 100,000 properties are under-unoccupied?

Karen Buck (Labour, Westminster North)

I am sorry, but that is what I said. David Orr said in evidence to the Committee that an estimated 108,000 working-age social housing tenants who claim housing benefit live in adapted homes with one or more spare rooms. These are adapted homes, so if the tenants move adaptations will have to be made to many new properties. The average cost of a disabled facilities grant is in excess of £6,500; a ramp costs at least £500 and a level access shower costs about £3,500. The disabled facilities grant cost an average of £100 million a year in recent years, so we have an idea of how much money is being spent on bricks and mortar.

By definition, in the overwhelming majority of cases, the expenditure is not portable. The money is invested in property for specific individuals. However, as things stand, there is no indication that these properties will be exempted from the cuts. Severely disabled people, so severely disabled that the property has to be adapted, are left with a choice. The first is to move, but the provider, who may not be satisfactory for all sorts of other reasons, will have to incur the expenditure of adapting the property. The second is that severely disabled people, who are on low incomes and receiving housing benefit, will have to pay an average of £13 a week, or £21 a week in London. We do not know whether that will be the highest shortfall that people will face in the employment and support allowance or the disability living allowance in order to stay in their own property.

I do not believe that the Government intend for that to happen. When the Minister considered what was being proposed in last year’s Budget, I doubt whether she expected severely disabled people with properties adapted at public expense to be subject to either such a penalty or an enforced move. It is essential that she assures us that both categories of people and property will be protected in some way from the worst impact of the cuts in housing benefit.

Sheila Gilmore (Labour, Edinburgh East)

I shall take a few moments to expand slightly on the kind of people who could be affected by this provision.

It was said earlier that since there is recognition of the need for carers and that that should be covered by housing benefit, it might resolve the issue for many. However, many people require care on a fluctuating basis. They may not have a 24-hour, live-in carer, because one is not funded or because they do not need it, but sometimes, particularly when poorly, they may need a relative to stay with them. Many people have told me that that is exactly what happens: the daughter, the mother or the sister may visit, perhaps only for a night or so, to help at times of difficulty. However, if there is no bedroom for them, they have to sleep on the sofa or its equivalent, which is not particularly satisfactory.

Another problem that sometimes arises for people with disabilities is storage. Depending on the size of the house, it can be difficult to store the equipment needed. That may include such things as additional wheelchairs if different chairs are needed for different circumstances, or hoists and other facilities. Some of this equipment may not fit into certain rooms but have to be stored elsewhere, and many houses do not have extensive storage space, which makes it difficult. Indeed, I know of cases where people were allocated somewhere too big in recognition of that need, to make their lives a great deal easier. There are genuine circumstances in which it is helpful and correct that people have additional space. Indeed, going back to my earlier point, they are unlikely to move unless something is offered, but suitable property is not always available and they will suffer a reduction in income as a result.

There is also the issue of mismatch. If somebody needs ground-floor accommodation that is easily accessible—in my city there is ground-floor accommodation with a lot of steps to the front door, which is unsuitable—having got the property that suits that need, it may be extremely difficult to find something similarly suitable. Given that many with what, in my authority, we call gold priority—or top medical priority, as it was called—often wait for years for suitable properties, even when they have the highest level of priority offered by our housing provider, the problem is not that we cannot give them any higher priority, but that the suitable property is not available. Since that is the case already, if people have been successful and moved into a property which technically has an extra room, or a member of the family has moved away, it will be virtually impossible in many cases to find a speedy solution for people.

There are several circumstances, short of adaptations, in which people need additional space. Where they have such space—which may not have been brought about because of their illness or disability—the chance of getting them suitable property within the very limited social housing stock that many of us have in our areas would be very difficult. Regarding adaptations, it would certainly seem the opposite of making best use of property to move somebody from an already adapted property into one that requires adapting over again, and then to find somebody who needs those adaptations to move into the house that has been vacated.

There is a risk of shifting the cost from the housing benefit bill to another bill, which local authorities may have to pick up. The adaptations budget of my council for its tenanted homes, the budget it holds for adapting other sorts of property, and the budgets of housing associations in Scotland for adaptations are always over-stretched. There are always people waiting, and we must take that into account. Sometimes, when we look at savings and do not look at the bigger picture, we simply remove costs from one part of the public sector and impose them on another.

Maria Miller (Conservative, Basingstoke)

I thank the hon. Members for Westminster North and for Edinburgh East for their contributions. Hopefully, my comments will offer them a little reassurance about the Government’s approach. We have had many representations on the issue, as the hon. Member for Edinburgh East knows, and about how we deal with people who have particular needs, as she and the hon. Member for Westminster North outlined. I understand their arguments. When somebody has been in a property that has been adapted for their disability, does it make sense to move them to a different property and have more spent on another set of adaptations, particularly when the average cost of disabilities facilities grants are about £7,000, and there were about 44,000 of such grants made in 2009-10?

Many adaptations can be quite inexpensive: from knocking on many front doors recently—as I am sure the hon. Lady has—I have seen that many adaptations can be as simple as putting in a handrail or a ramp so that there is easier access. However, there are more extensive adaptations, particularly, for instance, to kitchens and bathrooms.

It is not the Government’s intention, as the hon. Member for Edinburgh East said, to shift the cost to another part of the budget. We want to make sure that there is a sensible approach. I can see the sense in the argument that has been presented, and we will explore the matter further. Indeed, the National Housing Federation estimated during our evidence session that around 108,000 housing benefit claimants are living in adapted accommodation and could be affected by the measure. The federation has kindly agreed to give us that data so that we may consider further what it is saying. Providing an exemption for all adapted accommodation would not be the right approach, because we must ensure that we understand the degree of adaptation necessary to ensure that, if an exemption is made, it is warranted and that it would be more expensive to adapt another property rather than allowing someone to stay where they are.

The adaptation may relate to a previous tenant—we can all think of examples of that—to previous members of the household, or to people who may no longer need it. A blanket exemption for adapted accommodation across the board could give rise to unintended consequences. We would not consider that broad-brush approach, but we will consider the matter further, and I assure the hon. Member for Westminster North that we will do so to gain a better understanding of the numbers and costs involved before the provision is finalised. We will talk to experts, and I hope that that reassures Committee members that the Government are in the same place as them.

The hon. Member for Westminster North picked up on a few other issues that I want to mention, including the impact of the measures on disabled people. She asserted that there is a disproportionate impact on them, but I want to take her to task on that. I am sure that she has read our equality impact assessment, and she will have seen that two thirds of those who may be affected by the measure could be considered disabled. She will also know that throughout the social rented sector, approximately two thirds of claimants are disabled.

We want to minimise any adverse effect on people who may be in accommodation that has been adapted, and we will look at ways of doing so, but not everyone who receives disability living allowance has had adaptations to their accommodation, and certainly it is not disproportionate for the Government to put in place a measure that reflects the make-up of those who are claiming rent in the social rented sector. Two thirds of the people in the sector have disabilities, but the impact on that group is not disproportionate. That is important. The Government take seriously their duties under the equalities legislation, and will ensure that it does not disproportionately affect individuals, particularly disabled people. I hope that that clarifies that not only is it not our intention, but it is also not the reality that the measure will affect disabled people disproportionately.

The hon. Lady also picked up on housing payments and said that discretionary housing payments were seen as a panacea. I understand her point, but they have been tripled to ensure that money is available for local authorities to deal with the changes. We do not underestimate them, and other changes are being made in the sector by my colleagues in other Departments. There is a lot of change, but we are trying to ensure that money is available locally for local authorities to deal with he circumstances, and I hope that that will ensure flexibility in the system to enable local authorities to respond accordingly.

The hon. Member for Edinburgh East picked up on some other points, including the needs of people with fluctuating conditions. I assure her that the measure on an additional room for carers, which will be introduced in April, will apply to social sector tenants. That will be helpful. When someone’s need for care and for equipment fluctuates—she outlined that situation graphically—local authorities may pragmatically use the discretionary housing payments to cover such costs so that they have the flexibility to respond to people’s needs.

I now wish to direct my comments to amendments 175 and 190 because, based on the contributions made by the hon. Member for Westminster North, I wonder whether the Opposition totally intended the amendments to be tabled as they have been. Some of the points that I made when I reviewed the amendments have not been picked up. The clause reflects the Government’s intention to use methods other than a local rent officer’s determination to restrict a person’s appropriate maximum housing benefit, and we intend to steer local housing allowance rates in a more appropriate direction and to take on the problems that we have with housing benefit costs in the social sector. That second intention is particularly important if we are to get the housing benefit bill down to a level that the country can realistically afford and are to support the most vulnerable groups—the people who really need social housing—in future.

Amendment 175 is curious because it would require us to base levels of housing benefit, for people living in households where any occupant is in receipt of disability living allowance, on actual rents paid, which would, in essence, force the taxpayer into an open-ended commitment to meet those claimants’ rental costs, no matter how high the rent or how exclusive the area they chose to live in. I am not sure if that was what the hon. Lady intended, but it could be the unintended consequence of the amendment. The amendment would also send a clear message to landlords that they could charge unlimited rents to certain claimants, safe in the knowledge that the taxpayer would always foot the bill. I do not think that that was the hon. Lady’s intention, but perhaps she could clarify that matter.

Karen Buck (Labour, Westminster North)

It would be helpful if the Minister could clarify for me whether it is the Government’s intention to exempt DLA from the overall benefit cap that we will discuss later. I thought that the point was to try to make those two policies consistent.

Maria Miller (Conservative, Basingstoke)

The hon. Lady knows that individuals in receipt of benefits will not be subject to the cap, but that is separate from the point that I am making, which is that the amendment would, to all intents and purposes, leave us open to an unlimited bill for rental costs, which I do not think is her intention. If it were, my next question would be: how does the Labour party intend to pay for that? The behavioural impact would be incalculable, but we estimate that, based on current contractual rents for non-housing benefit cases that would become eligible for support, there would be an annual cost of up to £650 million. Perhaps the hon. Lady wants to think about how her amendment needs to be amended to ensure that that was not the case.

We have had several representations on the issue that amendment 190 covers, and I hope that, having listened to what I have said, the hon. Lady and her colleagues will be content that it is not our intention to put in place something that would have a disproportionate impact on disabled people. If someone has had their property adapted because of their disability, it makes no sense to move them to a different property and spend more money on costly adaptations. Adaptations are tailored to the individual and it is important, therefore, to look at the issue locally. Many thousand such awards are made every year; many are minor and relatively small but some are not, and it is important to do further work to identify the latter and to ensure that we look at ways of handling the issue in the Bill.

A blanket exemption, as in the amendment, is not the approach that we would take, and I hope that the hon. Lady will think further about my comments and about how we can best target the help at people, while keeping in mind the practical difficulties of identifying whether, where accommodation has been adapted for someone, it is still absolutely necessary to meet their needs.

With that in mind, I think that I have covered the points made on the hon. Ladies’ amendments. We obviously want to ensure that we consider all matters in full. We have committed to working with stakeholders over the next two years to ensure that we prepare for the changes before they are put in place. Although the hon. Member for Westminster North says that we do not have a great deal of time, two years is a considerable period to ensure that the changes are implemented in the best way, so that things make good sense both economically and as regards the well-being of the tenants involved. We want to ensure that we consider all matters fully, so that we understand the numbers of people involved and the cost of adaptations before considering whether an exemption would be appropriate.

We will put in place a comprehensive strategy to inform the detail of our secondary legislation. It is right to set our safeguard strategy out in that format, rather than through primary powers, so that we get it right and so that it is not rushed through. Returning to my right hon. Friend the Minister of State’s analogy of the bookcase, this is very much about building the structure before we add the detail. We have certainly not ruled out an approach that would put in place a safeguard for disabled people, as well as for other groups that may also require a safeguard. Detailed secondary legislation will be the place to sort that out, so, with those reassurances, I hope that the hon. Member for Westminster North feels able to withdraw her amendments.

Karen Buck (Labour, Westminster North)

I appreciate the Minister’s tone, and some of her reply. On the general thrust of the measure and its necessity, I would have a little more sympathy with her and the desire to bear down on housing benefit expenditure if it were not for the fact that the Department for Communities and Local Government, which is responsible for setting rents in the social rented sector, is currently rampaging down a route towards setting social housing rents at 80% of market value. That will add hundreds of millions of pounds to the benefit bill of the Department for Work and Pensions. I am sure that that is as difficult for the DWP as it is for us who observe it.

In the Minister’s remarks about the discretionary housing payment, I do not think that there was any demurring when it came to my concern about the extent to which the DHP is being asked to bear far too great a burden. She said, rightly, that Government investment in the discretionary housing payment had tripled, but she failed to remind us that that happened because the cuts to housing benefit in the social and private rented sectors total £1.8 billion. There is really no point in talking about additional investment in the DHP unless we talk about what it is being stretched to cover.

My hon. Friend the Member for Edinburgh East put some flesh on the bones of the points that I made by giving good examples of the nature of the property, whether adapted or not, that people with disabilities can live in, and I am grateful to her for raising those issues. I recognise and appreciate the Minister’s comments about the work that needs to be done to look at adapted properties. That is welcome, but it slightly worries me that it will require a massive assessment task. I wonder who the final arbiter will be when it comes to making a decision about what is, or is not, an appropriate property for a person who is disabled to live in.

Obviously, the example that my hon. Friend the Member for Edinburgh East gave of a property that was adapted for a previous tenant is simple, and cut and dried. I fear, however, that there may be a world of pain when it comes to social landlords. It would not actually be a social landlord who made the decisions about the adaptation. A different authority, such as a social services department or a contracted agency, would have made the decision about adapting the property in the first place. That prompts the question: who will decide whether the adaptation is of a scale that requires an exemption, or whether it can be easily moved to another property? I suspect that there will be a whole bureaucracy set up in the next year or two to try to deal with that particular problem.

I also take the Minister’s point about the nature of the amendment, and I do not wish to press the amendments to a Division. I would have expected a degree of consistency in Government approaches to the benefit cap and housing benefit expenditure, especially given that so much of the benefit cap, which we will discuss later, is driven by housing benefit expenditure. I am not sure that I can see much consistency there. I am also interested in her figures; perhaps she can write to the Committee about the £650 million expenditure figure that she quoted, because I wonder how she could come up with that when the Government cannot tell us how many people receive disability living allowance in particular accommodation sectors.

Maria Miller (Conservative, Basingstoke)

I want to get some clarity from the hon. Lady. Is she saying that it was her intention to ensure that people in receipt of DLA would have unlimited housing benefit available to them? I am not sure that I understand conflating the benefit cap with housing benefit; is she saying that the amount should be unlimited?

Karen Buck (Labour, Westminster North)

No, I was not. I was merely wondering how the Government were approaching these issues to ensure some degree of consistency across the piece, given that such a proportion of the benefit expenditure cap will be housing benefit. I was looking to the Minister to come up with some consistency. I accept that the amendment, as drafted, could potentially affect other members of the household; that was not my intention, which is why I am not pressing the amendment to a Division. However, these are important points of principle that try to establish the Government’s thinking and how they will overcome the problems. I welcome the implied concession, in terms of adapted property, but I remain extremely concerned. Probably everyone on this Committee will feel the bite in a year or so, when it is unlikely that people with severe disabilities on DLA will be exempted from the social housing under-occupation penalty, whether or not they are able to avoid it. That will cause people a great deal of difficulty.

Maria Miller (Conservative, Basingstoke)

Will the hon. Lady explain why she feels that receipt of DLA, in a blanket form, would be the most appropriate way to identify individuals who have physical adaptations made to their house? I would assert that the vast majority of people in receipt of DLA probably would not have had such adaptations made.

Karen Buck (Labour, Westminster North)

There are two different issues; one amendment addresses the issue of adapted properties, and the other addresses the issue of people on DLA as a proxy for severe disability. I contend that if the choice arises of either having to accept quite a large cut in one’s basic benefit entitlement or moving against one’s will, people who are highly vulnerable—by definition, because they are in receipt of DLA; that will include people with severe mental health problems and so on—will be particularly disadvantaged. I think that that will be extremely challenging for the Government.

George Hollingbery (Conservative, Meon Valley)

I want to re-emphasise what I tried to say rather inarticulately earlier, which is that I think that the hon. Lady is using DLA as a proxy for real hardship. I am not entirely comfortable that her amendment does a good job of identifying where hardship is. It uses severe disability as a proxy, which I do not think is terribly precise.

Karen Buck (Labour, Westminster North)

Well, we could get into an argument—I am sure that you would immediately intervene to cease it, Mr Weir—about whether people who are in receipt of DLA are severely disabled. I would argue, however, that if they are legitimately in receipt of DLA and ergo severely disabled, they are amongst the people that we would most seek to protect, either from a significant worsening of their living standards, or potentially—not in all cases, but in many—an enforced moved against their will away from their communities and networks to places where they may not have support. If we seek to protect anyone from the measures, although there is a sound economic case for looking at protection of properties that have been subject to adaptation, there is a clear moral case for those with severe disabilities being among the people whom we would most want to protect.

I accept the Minister’s good will on the adaptations issue, and the imperfection of drafting in the other amendment. We will, no doubt, return to the issue. I beg to ask leave to withdraw the amendment.

Karen Buck (Labour, Westminster North)

I beg to move amendment 176, in clause 68, page 52, line 19, at end add—

‘(4) In section 130A of the Social Security Contributions and Benefits Act 1992, after subsection (7) insert—

(7A) Regulations under this section shall not permit the AMHB to be less than the actual amount of the liability in a case where a person has no means of avoiding a housing benefit reduction for under-occupying a property let by a local housing authority or private registered provider of social housing because the person has no reasonable alternative offer.”’.

The amendment goes to the heart of the matter, picking up and, in a way, continuing the debate we have just had about the DLA, although it is also wider and more all-embracing. It offers the Government a sensible way out of the dilemma facing them.

The intentions of the policy set out by the Minister today and in the impact assessment are varied: to save money, which we all like to do where possible, and to tackle under-occupation in the social rented sector. Unfortunately, as we know, although I do not intend to repeat the discussion we had earlier, those two objectives are in creative tension. It is important for us to unpack that and to find a way of achieving the Government’s objectives without increasing hardship or making the allocation of housing an impossibility.

As set out in the note on the regulations, the Government intend to replicate in the social rented sector the strategies that apply for determining the entitlement to housing benefit in the private rented sector. They are doing so on the assumption that the social rented sector operates in the same way. Indeed, I suspect that the long-term, broader agenda across Government and the Departments is to remove the last vestiges of what makes social housing unique and a needs-based system. However, as things stand and will stand for some considerable time, the two sectors are fundamentally different, for reasons that everyone in Committee will understand: by and large, social housing is not a market.

As David Orr of the National Housing Federation told us in evidence to the Committee, social housing exists because of a market failure. It exists precisely because low-income, vulnerable households are unable to secure decent, affordable and secure accommodation through other sectors in the medium term. Given the inadequacy of social housing, which has always been there but has intensified since the 1980s, we have a sector that is inevitably residualised.

Charlie Elphicke (Conservative, Dover)

I hope the hon. Lady can help me: I do not understand why the number of housing association homes has fallen from 4.25 million to 4 million over the past 10 years. Is there a reason for that?

Karen Buck (Labour, Westminster North)

I do not have the figures in front of me, but given no extensive right to buy in the RSL sector, I am not sure about there having been a fall in the number of properties. I would like to check those figures before responding, given our little disagreement over the child care figures and others. I hope that the hon. Gentleman takes that in the spirit in which it is intended.

Without straying into the issue of wider housing policy, I completely accept that we did not build enough social housing under the previous Labour Government, although instead we spent billions of pounds on basic maintenance of existing social housing stock because it had fallen so far behind the decent homes standard. To be clear, the residualisation of social housing, which means that we need a complicated, needs-based allocation procedure, is rooted primarily in the right to buy and the failure to replace right-to-buy stock over three and a half decades. That is why we do not have enough accommodation.

Returning to the amendment, we have insufficient social rented accommodation for the number of people who need it. Obviously, we want to make the best possible use of the stock, but we understand that there are legally testable allocation procedures in place, which differ between local authorities, between registered social landlords and in the RSL sector, and there is a plethora of different allocation criteria to be accommodated.

We agree with tackling under-occupation. Interestingly, however, the Department for Communities and Local Government has a different perspective on the issue from that of the Department for Work and Pensions. A few weeks ago, the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell), was asked a question about under-occupation, and he replied that a £13 million programme will help under-occupying social tenants who wish to move. Importantly, he stated:

“While no tenant will be forced to move, many tenants welcome the offer of support to find a home that better suits their needs.”—[Official Report, 24 March 2011; Vol. 525, c. 1214W.]

Six months after the announcement in the June Budget of a £400 million cut in housing benefit for social tenants under the guise of reducing under-occupation, which it does not do, it is odd that the DCLG announcement on under-occupation does not mention that policy and suggests a completely different strategy for tackling the issue, which commits to nobody being forced to move. In reality, the cuts to housing benefit proposed by the DWP are a de facto enforced move. People on jobseeker’s allowance, employment and support allowance or disability living allowance will face having to survive on an income that could be £20 or more—we do not know the exact upper limit—less than the amount the Government say is the minimum that anybody should be required to live on.

This measure is different from some of the others we have discussed—for example, this morning, we debated employment and support allowance being time limited. In that discussion, the Minister responded by saying that people would have other forms of income, but in this case they will not. The benefits people receive are their income and the minimum amount the state says they need to live on. We are asking them to cut that amount by a quarter, or sometimes even a third. If that is not forcing people to move, what is?

In many cases, people are being forced to move. The next question is about where they are going to go. We know from David Orr, the excellent source of wisdom in this sector, and from others that accommodation to allow those who want to move to escape the penalty is simply not available. As he told the Committee, modelling has shown that 179,000 social tenants in England are under-occupying two-bedroom homes, but only 68,000 properties became available for letting in 2010. That is around one in three of the properties needed to meet the requirements of those who need—and will be forced because of the scale of the benefit cut—to move.

I will not restate our discussion on clause 11, when we spoke about geographical discrepancies and the availability of and demand for property. In some areas, particularly the north-east, the supply of smaller accommodation to allow people to downsize does not exist. In particular, the supply of one-bedroom accommodation for single people or couple households that seek to move from two or three-bedroom properties is not there, and will not be for years.

What makes matters worse—this goes back to the comments made by the hon. Member for Dover—is that the largest category of people who under-occupy social housing are pensioners, who, quite rightly, are exempt from this measure. Nobody wants to penalise pensioners who have lived in their homes for years. The consequence, catastrophically for the Government, will be that none of the pensioner voluntary downsizing will be possible, because every landlord will have to give priority to people who are forced to downsize because of housing benefit cuts and, therefore, the Government will be in a dilemma. They are going to lose the large supply of voluntary under-occupation and, therefore, they will put themselves in a difficult financial situation.

Charlie Elphicke (Conservative, Dover)

The hon. Lady refers to figures presented to the Committee by David Orr. I have a problem with those figures. The evidence shows that 70% to 80% of the accommodation built over the past decade by those housing associations that have been building has been one or two-bedroom units. Only about 30% or 20% has been three or four-bedroom units. I believe I am right to say that in the housing association sector there has been a massive expansion in smaller places, in anticipation of the high divorce rate and family breakdown. Here is an opportunity to use those units to avoid the disgraceful situation of three children being stuffed in a room together, which is what worries me.

Karen Buck (Labour, Westminster North)

The hon. Gentleman is right to be worried about overcrowding; it is a catastrophic problem. Why one would then seek to stop voluntary downsizing by pensioners to accommodate enforced downsizing by others is a moot point. Let us ignore David Orr’s wisdom and turn instead to the Government and the supply of one-bedroom properties available for general needs lettings. I received a parliamentary answer on 26 April giving the number of one-bedroom general needs lettings by region. It notes that in the north-west just 5,000 properties were available in the whole year; in the north-east 2,700; in London 5,800; and in England 31,300.

I do not have the figure in front of me to say exactly how many of the under-occupiers need the one-bedroom properties, but David Orr’s figure is that 179,000 people need to downsize to one bedroom. The Government are saying only 31,000, so the Government’s figures are significantly worse than those of the National Housing Federation.

Ian Swales (Liberal Democrat, Redcar)

I find this extremely interesting, particularly as an MP from the north-east, where there is a great shortage of one-bedroom accommodation. In fact, the social housing people are now boarding up pensioners’ one-bedroom bungalows near me to build two-bedroom ones, because they say that is what people want. I guess that, because of land prices and building costs, it is quite easy to do that in the north-east. I am worried that people are going to be caught in a trap. Lots of the pensioners who lived in the one-bedroom bungalows were perfectly happy, but they have been moved out under some grand redesign. I am interested in hearing more about the amendment. However, I have studied the wording and the last line refers to the person having “no reasonable alternative offer”. “Reasonable” is a very broad word. I am interested to know how the proposal would be implemented.

Karen Buck (Labour, Westminster North)

I thank the hon. Gentleman for his comments. He rightly draws attention to something important that is confirmed by the figures in the impact assessment: huge regional and sub-regional variations. We have one-bedroom properties being constructed in the south, partly due to grant and the cost of land. There is quite a different situation in other parts of the country. We have one-bedroom properties being built in the south of England and a need to move people from under-occupying two-bedroom places in the north-west. As I said when we were talking about this issue under clause 11, that raises the question of where people will move. On the figures, the flow has to be from the north of England to London. Meanwhile, the overcrowded people have to leave Dover and London to live in the north of England. That is not going to happen, for all kinds of reasons, some personal and some due to allocation. None of the allocation procedures is catching up with the demand that the DWP is putting on. I doubt it is going to work; such grand plans rarely do.

The gritty irony of all this is that the Government and the DWP do not need the measure to work because, as the impact assessment has made clear, the more it works the less they save. Therefore, it is essential for the Government to keep people in their under-occupied properties and to pay the shortfall, otherwise it does not save them money. This is a difficult position. That was explicitly set out in the amendment.

As stated in the impact assessment, I asked a parliamentary question to find out what modelling the Government had done of the possible savings if 10%, 20% and 30% of people downsized. Of course they were not able to tell me. Although the impact assessment says that they would not be saving money as people moved, those hard statistics do not appear to be available. That leaves the Government in a very difficult position. A desirable policy of matching under-occupation to need, which we all agree about, does not appear to save the money that the Government want to save, but saving the Government the money that they want to save does not tackle under-occupation and does nothing to contribute to the issues of wider housing policy.

That was hit upon and understood by those who gave evidence to us. Crisis told us:

“This measure is not saying, ‘You have been offered alternative accommodation to downsize and you are not taking it.’ It is just saying, ‘You are in accommodation that is too large, and we are going to cut it.’”––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 145, Q282.]

That is right. I do not believe that the Government want this to happen. I do not believe that they want hundreds of thousands of people, who are by definition poor—they are on the minimum income and are entitled to housing benefit, and are on JSA, ESA and disability allowance—to have to face a cut in their benefit of £20 and £30 a week. There is therefore only one way out.

I do not know, Mr Weir, whether you would allow me, if I gave a solemn and binding commitment, to draw in the comments on amendment 192 about phasing, because the two amendments go together. They are another way of tackling this problem. There simply is not the capacity, as these figures show, to be able in April 2013 to give everybody the choice. Therefore, some form of phasing by category is essential to avoid hitting the buffers. I hope that the Government will think it sensible to agree to the amendment. The way around this, which involves a degree of phasing, possibly by category, is to ensure that nobody is liable to a shortfall in their housing benefit payment until they have been made a reasonable offer of alternative accommodation.

I did not seek to be more specific than that because in some cases people will be quite content and might even actively want to seek a private tenancy. Overwhelmingly, people would prefer a social tenancy, because of the security of tenure as described by my hon. Friend the Member for Edinburgh East. People regard security of tenure as extremely important. These are, by and large, people in social rented housing who have secured that accommodation because of vulnerability. A degree of security is extremely important for their well-being. There is plenty of academic evidence to support that, but it will not be true in all cases.

If an offer could be made to everybody of appropriately sized accommodation for their household needs, which was on a comparable tenure and was reasonable and consistent with the application of the reasonableness test by local authorities in their current allocations procedures—which are subject to judicial review and challenge in some cases, so it is a fairly rigorous process—the Government could be on their way to tackling the under-occupation of the working-age population. If the Government believe that they will save money by doing so, they can trust their own judgment rather than the impact assessment. That would be fine. We want both those objectives, but we do not want one of them to be achieved at the expense of the other.

Ian Swales (Liberal Democrat, Redcar)

To clarify what I said earlier, who would define “reasonable” under the amendment? If it was the tenant, that would be a recipe for people to say, “I don’t want to move to the next street.”

Karen Buck (Labour, Westminster North)

At the moment, if people are being made an offer of accommodation because they are homeless or are being decanted for regeneration purposes, there would be a definition of reasonability in that context. Given my present amendment, I hesitate to say that this is something that we can deal with in regulations. Clearly, a lot of specific detail that would have to be legally watertight will be required to define exactly what reasonability is. The patience of the hon. Member for Redcar would have been worn thin had I come here with several pages of that kind of legal judgment today. I do not believe that it is beyond the wit of us to devise a text that is comparable to that currently used by local authorities to define what a reasonable offer is, provided that that reasonable offer gives, in the first instance, the opportunity for people to seek a social tenancy if that is what they so wish.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Does the hon. Lady share my concern that, when a homeless person is offered a house, the local authority appeals process can be quite time consuming and costly? Surely under her amendment the process would become far more drawn out, which would be extremely expensive for the local authorities and more bureaucratic for people to go through.

Karen Buck (Labour, Westminster North)

There was always a risk of that. I suspect that there may be some form of challenge to the policy as it is currently laid out. At the moment, we have a cut in people’s benefit entitlement, which reduces their minimum income, and that comes in now for everybody regardless of whether or not they have had any offer of alternative accommodation in two years. We also have a set of figures that shows that people who seek to downsize and avoid this benefit cut cannot do so because there is not sufficient property available. There are risks in this, but the risks of enacting this policy now without the safeguards are catastrophic. The Government will sleepwalk into a nasty surprise when this measure percolates out into the wider consciousness.

I appreciate that many Government Members, possibly with some exceptions, do not have constituencies with large numbers of people in social tenancies. Given that 720,000 households will be affected by this measure in 23 months’ time, we will have people coming up to us saying, “A quarter or a third of our total weekly disposable income is being removed and nobody is giving us any opportunity of escaping that penalty.” That will be something of an unpleasant shock for Members to cope with. I suspect that some emergency measures and mitigation will have to be brought in at that later stage.

All I am saying is that, while we have the time, before we get to crisis point, let us work out a sensible and thoughtful alternative. A reasonable offer of alternative accommodation, combined with a phasing in over a slightly longer period, taking into account various categories of need—people over 50, people who have been in their accommodation for a longer period and people with school-aged children—would be a way of managing that process and, potentially, achieving some of the objectives of the Government’s central policy, without all the downsides. I urge the Minister to regard the amendment sympathetically, because it is in all our interests for her to do so.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I will not keep the Committee long. When we debated clause 11 a few weeks ago, I said that there was one other issue with housing benefit about which I was concerned, which is under-occupancy. It is a difficult issue, which others have mentioned. I am sure that we all have constituents who live in hugely overcrowded homes, with lots of children in one bedroom, and we know the hardship and difficulty that it causes. At the same time, we have constituents living in properties that are too big for them. It is not an easy problem to solve and other Members have mentioned that the problem is different in different parts of the country, and in part depends on the local authority housing allocation policy, as the hon. Member for Westminster North mentioned.

I shall give two examples that were raised with me by Liberal Democrat colleagues who have particular concerns about the circumstances in their local areas. The first is from Edinburgh, and the hon. Member for Edinburgh East will probably know more about it than me, so she can intervene if I get the details wrong. The second is from Manchester. The problems are very different but they highlight issues that the Government will need to take into account when they implement the policy.

There are very few one-bedroom properties in Edinburgh, and therefore a lot of people who are entitled to one-bedroom properties have been put into two-bedroom ones because there simply are not enough one-bedroom properties available. If they are not available in the first place, when those tenants are asked to move, there is nowhere for them to go. The amendment mentions an appropriate alternative offer, but it is very difficult to know what offer would be an appropriate alternative. Many tenants do not have very much choice—there certainly is not enough choice in the social rented sector—so the only alternative is in the private rented sector, which a lot of people would not think was an appropriate alternative.

Manchester is very different in a lot of ways. There is a conscious policy of offering young and potentially growing families the choice of a larger property in less favourable areas of the city. Trying to ensure that there is a broad variety of different types of people living in the different areas of the city is a conscious part of the allocations policy. It also means that a lot of families, particularly those with younger children, are in houses that are too big for them now, but will probably not be too big for them in future because they are growing families, which is why they have chosen to live in those properties. The council has made those conscious decisions as part of its allocations policy, and those individuals who will find it very difficult to work around the situation in which they find themselves could be penalised.

The amendment is attractive in some ways, although it generates problems for local authorities in particular about who decides what is reasonable and how they enforce and measure that decision in the appeals process. In my area, it can take months and months for an appeal to go through the local authority process. Creating a whole new work load for local authorities by making them process these claims as well could set the system back a very long way and make it even more difficult for them to manage the process.

I have serious concerns about the amendment. I do not have a solution, and I am not sure that many people do. This has been an intractable problem for many years.

Sheila Gilmore (Labour, Edinburgh East)

I concede the point about appeals potentially adding bureaucracy. In the light of what the hon. Lady has said, one solution would be not to go ahead with the proposal as a means of resolving the problem. Would it not be better to deal with it through allocations policy, rather than this very crude attempt to penalise people through the benefit system?

Jennifer Willott (Liberal Democrat, Cardiff Central)

The hon. Lady has got ahead of my notes. I was going to ask the Minister what discussions the Government have had with local authorities. In many cases—although not in every case—it is the local authority’s allocations policy that has created what is seen to be a problem. As a result, the matter also needs to be handled at that level. Ministers need to work with local authorities and their colleagues in the Department for Communities and Local Government, which I am sure they are doing.

The issue needs to be handled extremely carefully because people’s homes are a fundamental part of who they are, their communities, how they live and so on. It cannot be an easy decision for people to move when they have been living somewhere for a very long time—perhaps decades—and their children have grown up and moved away. It is a very difficult decision for people and it needs to be handled carefully if we are to ensure that we do not create a problem, with people living in temporary accommodation and potentially facing homelessness or taking a financial hit and not being able to see a way out of that for the foreseeable future. I hope that the Minister will take those concerns on board and tell us a little more about what work is going on to make sure that the issue is tackled from that angle.

Maria Miller (Conservative, Basingstoke)

I thank the hon. Ladies for their contributions to the debate and welcome the support that Opposition Front Benchers are giving to our policy of tackling under-occupation. I will take that common ground as a starting point. All of us have been faced with a situation where there is overcrowding in one area and under-occupancy in another. It is important to try to sort that out because 7% of our properties are overcrowded and 11% are under-occupied. We can tackle that problem and we are absolutely committed to doing so but, as the hon. Member for Cardiff Central said, getting to the solution is not easy. I understand the sincerity of the comments made by the hon. Member for Westminster North, but she really needs to look at the reality of how the housing market is working. In her comments today, she has failed to do that. We need to make sure that we move beyond simply looking at the way the market is working now to addressing some of the failures that clearly have come to pass.

Karen Buck (Labour, Westminster North)

For clarification, can the Minister confirm the fact that there is not a market in social housing?

Maria Miller (Conservative, Basingstoke)

The hon. Lady fails to recognise that social housing drives the rental market in a way that she has not articulated in her comments today. Two thirds of social housing tenants are on housing benefits, and 30% to 40% of people in the private rental sector are. The level of housing benefit that we are talking about here and that works within the social housing market will affect how that market works. She needs to accept that.

Karen Buck (Labour, Westminster North)

For clarification, social housing rents are set on a formula. They have nothing to do with local housing allowance or private sector rents and are substantially below them. How on earth is it possible for rents that have no relationship to a market to have any influence upon what goes on in the private rental market?

Maria Miller (Conservative, Basingstoke)

The hon. Lady must accept that we absolutely have to get a grip of how the budget in this area has spiralled out of control in the past 10 years. If she does not accept that, this is yet another example of the Opposition simply failing to accept that they must put some sense into this area of expenditure.

Charlie Elphicke (Conservative, Dover)

The key point my hon. Friend is making is that, when we look at housing benefit costs, social housing provides a floor and the explosion of housing benefit claims and rising rents has meant that housing benefit has been driving up the rental market. Is it not key to bring down and rein in the excessive rises in housing benefit not just for the benefit of people in social housing and people who claim housing benefit in the private rented market, but for the benefit of private renters whose rent has in turn been pushed up by the crazy housing benefit increases we have seen?

Maria Miller (Conservative, Basingstoke)

I thank my hon. Friend for that intervention. I remind the Committee that, even after the changes that are currently taking place, it will still be possible for an individual to claim more than £20,000 a year in housing benefit for a four-bedroom property. An income of about £80,000 a year would be required to afford such a property.

Karen Buck (Labour, Westminster North)

There are debates that we have had, and can have again, about the private rented sector, but the assertions that the hon. Member for Dover has made are simply not factually correct. We are talking about the social rented sector, in which housing benefit has risen for only two reasons: first, Government rent setting policy, which is a formula determined by the Department for Communities and Local Government, and, secondly, the number of people who need housing benefit as a result of their income, which is driven by the recession. It is not market driven at all, and it has no relationship to anything in the private rented market.

Maria Miller (Conservative, Basingstoke)

The hon. Lady creates a false divide between the two, which does not bear much examination. Many people in the House are now aware that the relentless rise in housing benefit expenditure that occurred during the past 10 years—from about £11 billion to about £21.5 billion, which would continue to rise at an alarming pace if we did nothing about it—shows that we have to tackle the issue if we are to get some sense into this area of expenditure.

Sheila Gilmore (Labour, Edinburgh East)

Does the Minister agree that the way to resolve issues in the private rented sector is not to reduce benefit payments to people in the social sector who are under-occupying—forcing them either to move, with all the consequences that we have already mentioned, or to take a hit on their income—as that will do absolutely nothing to drive down rents in the private rented sector, and indeed may make the position worse if more people end up having to enter the private rented sector?

Maria Miller (Conservative, Basingstoke)

The hon. Lady must understand that we are trying to tackle a number of different problems. First, we are trying to tackle under-occupancy, because we want to try to achieve more efficient use of our housing. Secondly, we are trying to tackle a spiralling cost of housing benefit. Thirdly, we need to ensure that we do not create any disincentives to work. All those things added together drive forward the Government’s policy.

Our proposals are also about being fair. I have no doubt that the hon. Lady has found it difficult to explain to some of her constituents the level of housing benefit that some individuals will be able to claim, even after the changes that we are making—some £20,000 a year may be claimed, which is well in excess of what others might be able to afford if they were in work. It is not right that families on benefits have been able to live in homes that other families cannot afford. If families on benefits were simply to pay the full rents, that would make it difficult for them to move into work, which is the ultimate goal of our housing benefit reforms.

The changes are not about forcing people out of certain areas, and I take issue with the hon. Member for Westminster North on that. Even after the reforms, people on housing benefit will still be able to live in most areas in the country. Clause 68 is more than simply an exercise in saving taxpayers’ money. It reflects our intention to introduce alternative ways of ensuring that maximum housing benefit payments in the private and the social rented sectors are not simply continued or even reduced, but are better balanced in a way that will try to restore fairness in the state system of housing support across the private and the social sectors, encouraging all landlords and housing authorities to make better use of our existing housing stock, help to increase mobility for people in the social rented sector and encourage more people to seek regular employment. Those are two really important objectives.

Amendment 176 would be unlikely to have the intended effect of protecting claimants who were under-occupying accommodation in the social rented sector from any reduction in their housing benefit. The wording of the amendment leaves us guessing, as the hon. Member for Redcar said, about what a “reasonable alternative” might be. The wording is very loose and not particularly helpful in trying to identify exactly what that “reasonable alternative” might be. For example, it could include accommodation in the private rented sector. That could be the intention, but it is not clear from the amendment. What is the definition of “reasonable offer”? What is reasonable for one person may not be reasonable for another. We would end up needing significant arbitration, which could become complex.

It is certainly not the purpose to force people to move, but we would expect them to make similar choices about affordability as those not receiving housing benefit. The amendment seems to put the onus squarely on landlords and others to find alternative accommodation, with claimants having a passive role. That is not what the Government envisage. It is important that claimants take responsibility for their financial decisions, with support from others if necessary.

On that note, the changes to housing benefit will not happen in isolation. A number of measures in the Localism Bill will give local authorities greater control over waiting lists. That will start to address some of the issues touched on by the hon. Member for Cardiff Central to do with allocation policy and even the length of tenure in the social rented sector, all of which will help to increase mobility and create more opportunities for people to move.

As part of our implementation policy, we will of course explore the impact of clause 68 in different locations, so that we can fully understand what support and advice tenants and housing providers will need leading up to the changes. However, even if smaller properties are available in the social sector, we believe that many people affected by this measure will choose to remain where they are, meeting the shortfall in various ways. A blanket exemption on such a broad base is not a reasonable alternative, and it would not target those who would genuinely benefit.

It is important to examine in more detail the points made by the hon. Member for Westminster North. She spoke about a mismatch of supply in the sort of housing that people might be looking for. The average reduction for those under-occupying by only one bedroom—the vast majority of those affected by the measure—will be about £11 a week.

There are various ways in which individuals can choose to deal with that change. We would expect most people to choose to remain in the existing property, even if the option of a smaller one were available. That may be a legitimate choice for a family or individual to make, with them finding other ways to meet the shortfall. They will have time to consider ways in which to do that and appropriate advice will be available as part of our implementation strategy. In the long term, we need to ensure that we are using our housing stock better; it will be in the interest of landlords, social landlords and tenants to ensure a better match between our housing needs and the accommodation provided.

Individuals could choose other ways to meet the difference in cost, such as taking up additional work. We are investing in the largest ever back-to-work project, under the Work programme, to ensure that people have the right support to help them into work while we move out of recession and into recovery. We are keen to ensure that disabled people, who were the subject of a great deal of discussion under the previous group of amendments, have the same employment opportunities as everyone else. Indeed, they will receive support not only through the Work programme, but through Work Choice.

The hon. Member for Westminster North picked up also on the policy’s effect on pensioners downsizing their households, something that I have heard her refer to before. It is important to reiterate a comment that she has probably heard before. The measure will help to ensure that people are in suitably sized accommodation before becoming pensioners. That is obviously a long-term effect of the policy, but it is an important one. Our expectation is that the proportion of pensioners needing to downsize will be lower than it is now, allowing our housing stock to be used in a way that still meets the needs of social housing tenants.

The Localism Bill, led by the Department for Communities and Local Government, includes measures specifically aimed at helping pensioners to downsize, and will help to increase mobility for that group in the social rented sector. That will also be an important way to free up the sort of accommodation that accounts for some of the overcrowding problems.

Another comment from the hon. Lady, which she made during previous discussions, referred to people moving to the right size of accommodation and whether that would yield savings for the Government. It is true that if a significant number of tenants wanted to move and did so, that would reduce the direct savings, but indirect savings might offset that.

The Government are hoping to achieve greater mobility in the social rented sector not through this measure alone. The hon. Lady will be aware of the wider planned reforms, particularly in the Localism Bill, led by the Department for Communities and Local Government. It contains a raft of measures that will help local authorities to make better use of their housing stock and to increase mobility.

The hon. Member for Cardiff Central talked about how the allocations policy may have created some of the problems that we are trying to deal with today. The Localism Bill will make it easier for tenants in the social rented sector to move through the creation of national homes help schemes and changes to the allocations system so that those who want to move do not have to compete with potential new tenants. All those changes are important and welcome to many of our constituents who find the housing system difficult to navigate. Local authorities will be given more control over their housing waiting lists, and it has been shown in Portsmouth how that can cut waiting times, increase council revenues and reduce administration costs. Such innovations are welcome changes to a system that is groaning under the strain.

Karen Buck (Labour, Westminster North)

The Minister, in her opening comments, welcomed the support from Opposition Members for the commitment to tackle under-occupation. I welcome measures to tackle under-occupation, but her later comments show that the cat is firmly out of the bag. The policy is not about tackling under-occupation. As she said, she expects the majority of people to remain in their homes and ways will be found to meet the shortfall. We must be clear about that. It is not about under-occupation, but in so far as it is, it will provide downward pressure on tackling under-occupation elsewhere in the sector.

The policy is purely and simply to impose a cut on the income of some of the poorest people in this country from the minimum level on which they are expected to survive. The Minister referred to work incentives. I learned from a parliamentary answer that the cuts will apply to people who are in work, as well as to those who are out of work, so we know that this is not simply an attempt to encourage people into employment, as with the benefit cap, because those in employment will also be affected.

What about those in categories whereby they are not expected to seek work? They will still be subject to housing benefit cuts if they are in the support group. If they are on disability living allowance, they will be expected to meet the shortfall from their income. That is what the Government seem to want to happen, but it is not acceptable.

I do not believe that Government Members want severely disabled people, people who have been in their homes for 30 or 40 years and people in their family homes to be suddenly confronted with shortfalls of up to £21 a week or more. No one has yet told us what the maximum deduction will be, but the average will be £11 a week. The Minister makes light of these matters, saying £11 a week will be the average, but I am confident that if local government or a Labour Government proposed a tax rise of £11 a week, Conservative Members would shriek about it being an assault on the living standards of people with the lowest incomes. It is a lot of money to those on a very low income.

My amendment, imperfect though it is, would provide an opportunity to get round the problem by allowing at least one reasonable option of alternative accommodation to be offered to everyone before the penalty applied. That is the least we could do for disabled people, lone parents and others who, as things stand, have virtually no statistical chance of avoiding that penalty.

I take the point made by the hon. Member for Cardiff Central about the definition of what is a reasonable offer but, none the less, I repeat that a reasonable offer is recognised in current local government housing policy. Although it is sometimes open to challenge, I suspect that the alternative is a great deal worse. Drawing on the experience of housing providers to draft a watertight definition of reasonableness consistent with existing policy, which I have no doubt can be done, seems to be a good compromise, allowing people the opportunity—

Maria Miller (Conservative, Basingstoke)

Is this an intervention?

Karen Buck (Labour, Westminster North)

I am sorry. I thought that the Minister had finished, which is why I had begun my response.

Michael Weir (Scottish National Party, Angus)

Order. I, too, thought that the Minister had finished. I apologise.

Maria Miller (Conservative, Basingstoke)

I had let the hon. Lady intervene, but I was beginning to think that it was a pretty long intervention.

The Committee must be clear about how the policy is working and how the sector works at the moment. The sorts of choices that we are putting into the social rented sector are simply the choices that people in the private rented sector already have. The hon. Lady does not seem to want to look at the market as a whole—she wants to insist on different rules for different people—but it is time that we had the same choices in the social rented sector as in the private sector.

Sheila Gilmore (Labour, Edinburgh East)

Will the Minister give way?

Maria Miller (Conservative, Basingstoke)

Will the hon. Lady forgive me if I proceed with my comments for a couple more moments? We want to get through many more amendments today.

Hon. Members know from their own constituencies the sorts of real and tangible problems that they come across when ensuring that individuals have the right homes to live in. If we do not start to get a grip on how our social housing stock is used, we are not doing the right thing by our constituents, by some of the most vulnerable members of our community or by the taxpayers of this country. We must get a grip on how the social rented sector is working. We have to ensure that it is working in a way that is not driving up rents—which, again, the hon. Member for Westminster North is dismissing out of hand. All of the evidence suggests that she ought to take a much stronger look at it.

Karen Buck (Labour, Westminster North)

Will the Minister tell us or write to the Committee with the evidence for rents in the social rented sector exerting an upward pressure on rents in the private sector?

Maria Miller (Conservative, Basingstoke)

The hon. Lady might have caught the example that I gave earlier. The FindaProperty website has reported on a specific example of how rent in the private sector dropped by 5% between November ’08 and February ’10, while local housing allowance rates of payment and payments went up. That is clear evidence of a mismatch, which is what we are dealing with.

Another issue many colleagues are concerned about, which my hon. Friend the Member for Dover has mentioned, is availability of affordable homes and even of social housing, which deteriorated under the previous Administration. He will welcome the announcement from my right hon. Friend the Secretary of State for Communities and Local Government that our investment will be some £4.5 billion, delivering 150,000 new affordable homes over the next four years—just the sort of homes which many of our constituents will be pleased to see and which were so unforthcoming under the previous Administration.

I cannot accept the amendment, because a blanket exemption from the reduction on such a broad basis as a “reasonable alternative offer” of accommodation would not target the people most genuinely in need, or help us to use our limited resources to ensure that those who need help get it. I hope that the hon. Lady will feel it appropriate to withdraw the amendment, and that she will be able to move on in our discussion of the Bill.

Karen Buck (Labour, Westminster North)

Since I have had the luxury of making most of my concluding remarks already, I will not bore the Committee further, but I am disappointed by the Minister’s reply. There is, I think, confusion between private and social rent policy, and between private and social allocations policy and the role of choice in the social sector, which is simply not a reality. Regardless of what might be done in the future, other than within the purview of the Minister’s Department, on changing allocations procedures while protecting the vulnerable, the policy being introduced has nothing to do with that and is clearly designed, by the Minister’s own explicit admission, only to bring about a cut in the income of low-income people, rather than to encourage under-occupation. I think that there is a way out of that, and that we have a workable basis for a definition. The least we can do for people in that situation is to offer them the choice of an alternative home, and I intend, therefore, to press the amendment to a vote.

Sheila Gilmore (Labour, Edinburgh East)

I beg to move amendment 189, in clause 68, page 52, line 19, at end add—

‘(4) Insert new subsection (6A)—

(6A) Regulations are to provide for the Secretary of State for Work and Pensions and the Secretary of State for Communities and Local Government to review not less than annually the relationship between housing costs in the private rented sector and the liability mentioned in section 130(1)(a) where this liability is an amount other than the actual amount of that liability. Where a review under this subsection finds that the liability mentioned in section 130(1)(a) is an amount less than the amount of the rent at the 30th percentile of the list of rents in some or all localities the Secretary of State for Work and Pensions must amend the determination of the amount of the liability under section 130(1)(a) to correct this.”’.

The amendment seeks to provide an arrangement whereby there is an annual check on what is happening in relation to actual rents—the rents that people are being asked to pay in different parts of the country—and the level of the local housing allowance, which has been created out of two changes, one of which has been introduced and the other of which is forthcoming. The change that has already been made is that the local housing allowance will no longer be decided by reference to the median but by reference instead to the 30th percentile, with upratings linked to the consumer prices index rather than, as previously, to the local rent in the broad rental market area. There is considerable concern among those working in the field that the gap between the rents that people are going to be asked to pay in the private rented sector and the local housing allowance is going to widen as a result of this process.

The Minister has referred, twice at least, to a piece of work, not by housing researchers but a property-finder website, that showed that over a period between 2008 and 2010, local housing allowance rose faster than average rents. It is well researched and understood that, if one takes a longer and more representative period of what happens to rents, in most of the past decade, if not longer, average rents have risen faster than housing benefit. If the comments on that website are to be accepted, in the period from 2008 we were in recession, and it is potentially the case that rents have fallen. However, we are not seeing that in the private rented sector in Scotland, certainly not in Edinburgh. It would also appear not to be the case in London—at least, my London landlord does not seem to have heard about it; he thinks that 10% is the market increase in rents this year and was totally unwilling to negotiate, presumably on the basis that it would be easy to find new tenants at that rent. That is at least one landlord who has not got the message. That may change, as the new rules come in, if the Government are to be believed.

I contend that history shows that rents continued to rise much faster than inflation, whether of the RPI or of the CPI variety. As the local housing allowance has been reduced by linking it to the 30th percentile, there is a risk that year-on-year the gulf will open further. That is what the amendment seeks to address.

Harriett Baldwin (Conservative, West Worcestershire)

Is the hon. Lady aware that one of the recommendations of the Select Committee report into the issue, which was published just before Christmas, was along those lines? Broadly speaking, the Department has agreed to that kind of ongoing analysis.

Sheila Gilmore (Labour, Edinburgh East)

I am aware of the recommendation of the Select Committee and the undertaking to reviews given in the other place more recently. However, it is important to make this a specific provision, given the substantial problems that are going to arise for people if the gap opens up even further. It is not insignificant. Even with LHA at 50%—the median—in recent years many tenants in receipt of housing benefit have already been topping that up out of their other income. It is estimated by many of the housing charities working in the field that as many as 50% of tenants are already topping up payments in order to secure accommodation in the area where they live of the type that they need.

That is only going to get very much worse. If people really cannot afford that, they will come back to the public sector, no doubt presenting as homeless in due course, seeking temporary and other accommodation. It does not seem a particularly sensible way to resolve a problem. I have no doubt that it is not a sensible way to run a housing policy to use housing benefit as a way to fund housing. I would like to see strenuous efforts to transfer from subsidising people through housing benefit to subsidising rents and the bricks and mortar of housing—I argued for that before I was elected and I would argue for it with my party.

I want to see strenuous efforts to transfer from subsidising people through housing benefit to subsidising rent and the bricks and mortar of housing—I argued for that before I was elected and I would argue for it with my party. If these reductions were being recycled specifically into building homes, I would be more interested in what is being said. I would be more supportive of the measure, not necessarily of the detail but I would see some point in it.

The slippery slope started when it was considered right not to subsidise homes through a subsidy against the building cost, in order to push up rents in the council sector, although not as much as in other sectors. We are seeing that again. The solution to housing and building more houses seems not to be to put more money into building homes, but to put more money into the housing benefit system. If we fund new house building by charging higher rents to tenants as is suggested—fortunately that will not happen in Scotland in the foreseeable future—that will not mean more Government investment in new build. New grants are not going into housing; rents are being used to create new housing. That will put rents up, presumably to as much as 80% of the local average, which sounds higher than we want to fund things in the private rented sector. It is slightly unclear at the moment whether that rent will be paid in full, but if it is, the housing benefit bill will rise again. The measure seems to be completely in conflict with the direction in which we need to go.

We must address the fact that we have become too dependent on the private rented sector to solve what in many places is a severe housing crisis. In my city we increasingly use the private rented sector because there is little else, but that is not particularly sensible. One constituent asked me, “Why is the council paying rent for my home in an ex-council property, which is three times what my neighbour—a council tenant—pays, so as to keep me and my family in this house? Why is the council not building new houses?”

That constituent did not particularly want to be in private rented housing and he did not live in a mansion in the leafier parts of the city. It was an ex-council home in an estate that has some good parts and some that are not so good. In Edinburgh terms, it would probably be regarded as at the lower end of the pecking order. It was not a grand house; it had three bedrooms but he had four children. It was slightly larger than the average house, but it was not in a wonderful area. He thought that the system was bonkers and I had to explain that we are dealing with two different pots of money that do not communicate properly with one another. The council’s view is that, since it does not have the money to build homes, it can place someone such as my constituent in a house and have that paid for by housing benefit.

Sarah Newton (Conservative, Truro and Falmouth)

Please excuse my ignorance as I am not very knowledgeable about the devolved responsibilities, but I assume that Scotland will have the same opportunities through self-financing legislation as England and Wales. Could the hon. Lady not have told her constituent that through that self-financing, which will come in next year with the passage of the Localism Bill, the building of new council houses will at long last become a reality? I totally agree that we need to build more council housing. Certainly in Cornwall the settlement will enable all remaining council housing stock to be brought up to a decent standard and the building of new council houses to start.

Sheila Gilmore (Labour, Edinburgh East)

Building new council housing, or new housing association housing, is extremely important. In Scotland we have made a start on that by removing the borrowing controls on councils, and some have built housing in a way they could not do previously because there were controls on how much they could borrow. Under the prudential borrowing regime, which has been in existence since 2003, new council houses have been built. However, if we try to do that through borrowing when rents are already high, we will end up raising rents. In my own city, it has been proved difficult to do that, because we have high rents. Interestingly, a neighbouring authority where rents have been historically low—largely because it did not have to build a lot of new housing during the 1960s and ’70s, which is to do with the nature of the area—has been able to increase the rents of its existing tenants in order to build new homes. Again, we find an inexorable raising of rents.

Ian Swales (Liberal Democrat, Redcar)

Does the hon. Lady agree that this is another example of something that will lead to very different results throughout the country? In areas of high private rents, such as major cities or Cornwall, the policy may well deliver, but in other areas, such as the north-east of England, the 80% level will produce no money for new housing.

Sheila Gilmore (Labour, Edinburgh East)

I am grateful for that intervention. I am not steeped in the effects of that funding mechanism on an area. If it does not deliver new housing where there are difficulties, it will certainly have failed. Even if it can deliver new housing but does so at the expense of putting up rents, it will have an effect on the housing benefit bill.

On rents in the private rented sector, I agree that we have a problem that has been created over a number of years, whereby the shortage of affordable homes means that we are seeing an increasing number of people on low incomes entering the private rented sector. In my experience, they do not do so because they think, “Oh great, I can move to an area like this and it will be wonderful. I need never work again in my life and I shall live here a life of luxury.” They do so because there is little choice. That is certainly the case in Edinburgh. Many people want out of that situation, partly because of its insecurity. Landlords might roll on six-month lets, but people know that there is always a risk and insecurity in that. It is not their own home, and it is not somewhere they can necessarily expect to be in the future.

The other thing that is of concern for people and that they think about is the unaffordability in relation to working. Ironically, the people who most need the affordable rented sector—council and housing association houses—are those in work. They are not always the ones who end up being offered it, but they are certainly the ones who benefit most from it, because it helps them to be able to work. Constituents of mine when I was a councillor and since I have been in this place have told me, clearly, that they would love to get out of their homes in the private rented sector and into the public sector. It would be more affordable for them, because it would be more secure and give them a long-term future. It would not be a property that the landlord could decide at any time to withdraw from the sector and sell. Whatever the reason—he might decide that it was going to be a home for his son or daughter, or the family might want to move back in—there is no certainty in the private rented sector that someone will be there for an extended length of time.

Charlie Elphicke (Conservative, Dover)

I have a brief request for information on a matter on which the hon. Lady is an expert. Will she confirm whether her amendment and clause 68 as a whole apply fully to Scotland? These days, one is never quite sure what is devolved and what is not.

Sheila Gilmore (Labour, Edinburgh East)

The answer is yes, because housing benefit is a reserved matter, although its impact in terms of homes being built may be different. People face different housing pressures throughout Scotland and its local authorities. There are some marked differences in terms of historical rents and the availability, size and distribution of properties, particularly in places where housing pressures are greatest.

We all agree that we must tackle the over-dependence on the private rented sector. The fact is that rents in the private rented sector created a position in which housing benefit payments had to rise, and no one seeks to deny that. The crude measures in the Bill to deal with that are not necessarily going to do anything but make it more difficult for people who find themselves in this situation. I am not convinced that the measures will necessarily reduce the rents. We have talked a lot about whether landlords will respond to this. The measures will doubtlessly have an impact in places, such as Blackpool and other coastal towns, in which landlords heavily depend on the housing benefit market. However, in the inner cities, such as Edinburgh and many other places, where there is demand for the private rented sector across different segments of the population, landlords are more likely to decide that they do not want to deal with people on housing benefit than they are to reduce their rents in order to fill their properties.

Paul Uppal (Conservative, Wolverhampton South West)

I am interested in the hon. Lady’s long lament about the lack of investment in social housing by the previous Government in a time of comparative abundance. Just to come back to her specific point on the landlord issue, having come across landlords in my past life, I have to say that they are a fairly commercial lot. One thing that they covet more than anything else is security of income. The fact that housing benefit is a secure supply of income will invariably affect their commercial decisions. Is she not persuaded by the argument that a real check on housing benefit will provide a brake on rental levels? Her concerns about there being a disconnect between the housing benefit allowance and the rental market may actually shrink rather than expand.

Sheila Gilmore (Labour, Edinburgh East)

I am not convinced that that will be the case. We will argue this point theoretically over the next few months and we will see the proof as it comes through in the rents that are being charged in various places. I will certainly be closely watching the situation in Edinburgh. The local council, too, will be watching because it has concerns that, if people cannot source homes in the private rented sector because of the changes that have been made, the burden on the council will be greater. The existence of the private rented sector and the build-up of people moving into it who would otherwise be coming to the council as homeless has been a huge safety valve in Edinburgh and I suspect elsewhere for the system as a whole.

We have something like 1,500 properties in the city under the private leasing scheme. Not everyone who is homeless is in the private rented sector. The scheme was set up by the council to alleviate the problems associated with the numbers of people in temporary housing. Rather than take housing out of its mainstream stock to provide yet more temporary housing, which becomes self-defeating, it developed a scheme, which is also used in parts of London and elsewhere, whereby leases are offered to landlords on a long-term basis. Some landlords were keen to get involved in that, but the rents are still high, which means that there are work incentive issues. If people want to work, it can be difficult. Moreover, it means that the extent of real homelessness in the city is concealed. These people are not homeless because they have a roof over their head. They have a property in parts of the city in which there are no council or housing association houses.

Another element of the scheme is that it is confounding the position on homelessness because these people do not appear in the temporary housing statistics for the city. Quite a large number of people are living in that situation, which is yet another pressure on the housing benefit bill.

I am not prepared to accept that the Labour Government did nothing on affordable housing. They certainly did not do enough in my city. We were constantly arguing with the Scottish Government about the needs of the city, which is often seen as affluent but which also has a huge affordability problem. I would certainly have wanted to see more, but I saw an increased amount going into investing in building homes by housing associations in Edinburgh over those years. I hope that that will continue but I know that that is not the case in the coming year. The housing association movement in Scotland is very concerned about the reductions that there will be in housing investment.

It is not good enough to suggest that, had matters been different under the Labour Government, we would not have this problem and to say that we are where we are. It is not good enough particularly when it is suggested by those who not only enthusiastically espoused the right to buy and thought it the solution to housing problems, but who again want to create new affordable homes by putting up rents and passing the burden to the tenants, and indirectly to housing benefit, rather than providing investment in affordable housing.

The amendment would ensure that each year we investigated whether the gap had widened to ensure that people were not grossly disadvantaged in the way we suggest they will be. That would not be to anybody’s advantage in this situation. If those people remain in those homes where the gap widens, they will subsidise it from other parts of their already limited income or they will simply not be able to find those homes because they will not be there. Then they will have to find housing in some other way. I suggest that that will make things more expensive for the public purse. Even a brief period in temporary accommodation is extremely expensive. Periods of several months in temporary accommodation are very expensive.

Just last week, I was talking to a man who has been in bed and breakfast for eight months—six different bed and breakfasts in the city—and we all know how expensive such provision can be. He simply wants a home. If more people are unable to source accommodation in the private rented sector because of all these changes, that pressure will become even worse. He has no children and no overt health problem—he has some health problems, but they are perhaps not as great as those of some other people—so he does not have the highest priority, which is why he has already spent eight months in bed-and-breakfast accommodation. As far as he can see, that is likely to continue, which is expensive for the state and bad for the individual. If it worsens because of these changes, we will have more people in his situation.

I do not suggest that the people who are affected by these measures will necessarily be the ones who end up in bed and breakfast, but it becomes a bit of a pecking order. People move down that order and we will have more at that bottom end who cannot find anything other than wholly unsatisfactory temporary accommodation because the better temporary accommodation is being occupied by those who cannot find private rented accommodation and so on. After making such big changes, particularly tying the annual increase to the CPI, it is important to look at this situation annually and then, if necessary, amend the determination to correct it and ensure that people do not lose out in the way that they otherwise would.

Maria Miller (Conservative, Basingstoke)

I thank the hon. Lady for moving the amendment. She gave the Committee an interesting example to think about when it comes to price setting in the private rental market when she cited the example of her own landlord, who was proposing that 10% would be a sensible increase in rent. If the Independent Parliamentary Standards Authority were to hear about that and did not think it a sensible amount—I have no idea whether it would or not—and she could fulfil only a 5% rent increase, would her landlord summarily evict from the property? Alternatively, as my hon. Friend the Member for Wolverhampton South West said, that landlord might take a slightly pragmatic approach, perhaps just because he or she may have thought it possible—the hon. Lady is drawing her rent from a third-party source—that the increase did not matter. Perhaps that is a similar issue to the one we are dealing with here today.

Karen Buck (Labour, Westminster North)

The Minister makes a fair point. Does she agree that that depends on whether the landlord believes that they can find another tenant who can pay the market rent?

Maria Miller (Conservative, Basingstoke)

It depends on a few things. One is whether they think they can get another tenant and, indeed, whether they are happy to have their property standing empty for a month or two while that happens. I can say to the hon. Ladies on the Opposition Benches that we perhaps have a lot of common ground on the issue. We do not want to develop a system whereby the market becomes out of kilter. We are trying to get control of the costs within a market that is clearly spiralling out of control.

Before I go on, I want to touch on the issue of the sufficiency of social housing, which the hon. Member for Edinburgh East talked about at length. As my hon. Friend the Member for Wolverhampton South West clearly spelt out, if there are issues, the hon. Lady should look to her party’s 13-year stewardship of and investment in this area for an answer as to why more was not done to ensure a sufficiency of supply of affordable housing. I am sure that she will welcome our Government’s investment of some £4.5 billion and 150,000 new homes. If such investment had been going on previously, that would have helped the situation.

Sheila Gilmore (Labour, Edinburgh East)

That investment is predicated on rents rising. In other words, it is not an investment by the state in creating affordable housing; it is an investment by tenants in providing affordable housing. If those tenants cannot afford higher rents, the state will still provide for them through the housing benefit bill. Does the Minister agree that there is some sleight of hand involved in suggesting that this is a bigger investment in housing than might otherwise have been achieved?

Maria Miller (Conservative, Basingstoke)

I know who are delivering the 150,000 houses—our Government. If that had happened under the previous Administration, perhaps we would not be in this situation. The area of commonality here is that, across all parties, there is an understanding of the need to ensure that money is spent in the most effective way. We are trying to ensure that we take control of housing benefit costs.

The intention of the amendment is interesting. It is to probe the mechanism by which the Secretary of State will review local housing rates to ensure that they consider the changing patterns of rents, whether over time or in different areas. That is an important thing to be doing and it is not something we disagree with. I assure hon. Members that the Committee should find the amendment unnecessary. The Secretary of State will be able to adjust rates to ensure that the housing support available does not become completely out of kilter or out of touch with local rental markets. We will monitor the impact of these measures and make further adjustments if it is right to do so, either locally or more generally.

We have said that we will continue with that method of calculating local housing allowance rates only for as long as it makes sense to do so. The hon. Lady is absolutely right that it would not help anybody if things were to become heavily out of kilter. That is not our intention. We will do everything we can to ensure that that does not happen. I urge her to consider some of the facts at play in the debate because they shed an interesting light on what happened in the past. Since 2000, private sector housing benefit awards have grown by between 70% and 80%, while average earnings have grown by only 30% to 40% in nominal terms. Something other than increases in income is driving housing benefit upwards.

Kate Green (Labour, Stretford and Urmston)

Will the Minister clarify whether she is attributing that increase entirely to what has happened with local housing allowance or does she accept the explosion in house prices and rental levels over the period referred to?

Maria Miller (Conservative, Basingstoke)

The hon. Lady is right to suggest the combination of those two factors. I simply reiterate that the lack of control on the increase in housing benefits tends to suggest that something needs to be done to align them. Our main objective is to take control of benefit levels, which, without reform, would have risen to some £24 billion by 2014-15. Front Benchers would not want to embrace a policy that left them further problems in identifying how to make cuts in other areas, making up for the shortfall in housing policy.

I reiterate to the hon. Member for Edinburgh East that we take getting the policy right seriously. The measure will not be implemented until 2013. We have accounted for it lasting only two years, until the end of the spending review. Future Governments can then consider the position and, possibly, make a one-off adjustment.

In areas where rents rise faster than inflation, there should be no presumption that housing benefit will always pick up the bill. Otherwise, I fear we could have a self-fulfilling prophecy. The measure will ensure that housing benefit increases are more in line with rent increases that working families can afford, which is one of the driving forces of all the clauses in this part of the Bill.

On the fear voiced by Opposition Members of landlords leaving the market, a more realistic view ought to be taken. It is important that landlords understand their security of income and, yes, housing benefit recipients provide a very secure income stream. However, despite landlord reservations, more than 1 million claimants live in the private sector, being paid the local housing allowance, so there is a good relationship there. More than 400,000 new tenants are renting in the sector and have claimed housing benefit since November 2008. They are known to be a good set of tenants and to provide a secure income stream.

Given that housing benefit recipients account for such a large proportion of the social rented and private rented markets, I suggest to the hon. Lady that for landlords simply to walk away from such recipients would not be rational. However, we share her concern that the measure remain in touch with the realities of the market, and I hope that she finds that reassuring. I see that the amendment is probing, so I hope she finds my comments sufficient to enable her to withdraw it, given that the safeguards are in place.

Sheila Gilmore (Labour, Edinburgh East)

It is important to make it clear that it is not true to suggest that there were no controls on housing benefit levels. I agree absolutely that we cannot have an open-ended system, with some landlords taking advantage, but at all times there have been controls.

Before the local housing allowance, individual rents were assessed. When people wanted to apply for housing benefit on a private rented property, the rent had to be approved in what was also a bureaucratic process, which often held up people moving into their homes. One of the intentions behind the local housing allowance was to simplify the situation with a set figure for an area.

We could have an interesting debate on the degree to which the local housing allowance has been a successful method, on the pros and cons, and on whether the savings made by not having to assess every individual rent were outweighed by possible increases in the overall bill, but we have to have a proper debate.

Maria Miller (Conservative, Basingstoke)

I reiterate my point: does the hon. Lady consider the controls adequate, given the 70% to 80% increase in housing benefit awards in the sector?

Sheila Gilmore (Labour, Edinburgh East)

We have to look in depth at what has happened to housing costs and rents over the period. A number of factors operate here. One is the marked spike in housing benefit payments to people in the private rented sector since the recession. There is no doubt about it. It is at least arguable that it was due largely to the fact that many people lost employment and found themselves having to claim housing benefit as a result. Others are having to work shorter hours; we know that many people have avoided redundancy by making such arrangements, but that has brought them into a position where they can claim housing benefit to help them meet their housing costs.

It is undoubtedly the case that we have seen a spike, but not so much in the public sector. I suspect that many people in the council housing association sector are, for a number of reasons, already in receipt of housing benefit because they are predominantly unemployed or on very low incomes. The recession has caused a big increase in the number of people in the private rented sector who are claiming housing benefit. Whether it is a temporary spike remains to be seen. The recession is one factor. The overall rise in rents is the major factor. The explosion in the buy-to-let market in the last few years has made more private rented accommodation available. However, those who went into that market have to charge rents to cover their mortgage payments. The fact that house prices have risen will have an impact on those who rent such properties and claim benefit.

Charlie Elphicke (Conservative, Dover)

I put it to the hon. Lady that this is no time to be an apologist for the total failure to control the housing budget. In the last decade we have seen it rocket to £14.2 billion. We would have laughed if the country’s finances were marvellous and if our nation’s credit card had not been completely maxed out with reckless spending and reckless borrowing, but it is not possible. However, this is no time for hand wringing. The Government have to take action, and the Minister is right to take the tough decisions necessary to bring it under control.

Michael Weir (Scottish National Party, Angus)

Order. The debate is spiralling a bit away from the amendment. The amendment is specifically about a report, and I ask the Committee to stick to that.

Charlie Elphicke (Conservative, Dover)

With respect, Mr Weir, I should add that I hope that the report will include those particular observations.

Michael Weir (Scottish National Party, Angus)

Too late!

Sheila Gilmore (Labour, Edinburgh East)

It is important that the savings that have to be made do not impact disproportionately upon the most vulnerable. That is where I would disagree with hon. Gentleman.

We need to consider the private rented sector carefully. We need to research it properly, especially those factors that impact on rents. Research done in 2007-08 shows that until the recession, the prevalence of housing benefit claimants among tenants in the private rented sector was sitting at about 18%. I concede that it has risen since then. The figures would appear to suggest that it has gone up—that was the spike that I mentioned earlier—but it seems to have been very much the effect of the recession, and it may change.

If the Government want to deal with the rising housing benefit bill, I do not understand why it is not necessary to tackle the outrageous examples that we sometimes hear of. Yet the Government are introducing various reductions that will impact heavily on people all over the country who are not in fact paying these excessive rents, but whose housing benefit will be pushed down still further, or who will be required to find money out of their other income to top up their housing benefit payments. The amendment is about the need to monitor what is happening and to take steps to right that. I accept what the Minister is saying; I welcome the commitment to review the situation, and I hope that that leads to a willingness to change if it is proven that this has been a problem. I particularly regret that the Government felt it necessary not merely to reduce the local housing allowance to the 30th percentile, but to then suggest in advance that annual upratings would be in line with CPI. They did not wait to see the impact of one change before making another.

Maria Miller (Conservative, Basingstoke)

Would the hon. Lady welcome a situation in which the measures we are taking kept rents under control, not only for people on housing benefits but for people in the wider rental sector? People in my constituency who do not claim housing benefit are concerned that rents have gone up, and they would be even more concerned if they really understood the potential link between the previous Government’s housing benefit policy and the problems that they have in affording rent without the support of housing benefit.

Sheila Gilmore (Labour, Edinburgh East)

That presupposes that the assertion that high rents are a result of the housing benefit system is correct. I contend that the high housing benefit payments are a result of the high rents. Those are two different opinions about how the situation has been created. If the Minister is correct, and in the future we see that overall rents are brought down by the measures, I would certainly feel that the action had been a good thing. High rents are a problem for people regardless of whether they are in receipt of housing benefit. It is not helpful constantly to make the distinction between hard-working people who have to meet the rents, and others who are not working. We know that many people in work require housing benefit to meet the rents, and I therefore disagree with the assertion.

I welcome the Minister’s commitment to reviewing the situation and to being open to changing her mind on any widening gap, and on that basis I beg to ask leave to withdraw the amendment.

Karen Buck (Labour, Westminster North)

I beg to move amendment 192, in clause 68, page 52, line 19, at end add—

‘(4) Regulations under this section shall ensure that the measures in this section are phased in gradually over a five-year period, with certain groups of people, to be determined by regulations, offered transitional protection.’.

I shall be extremely brief, because many points that apply to this amendment also apply to one that I previously spoke to. The purpose of the amendment is to encourage the Government to look at the phasing in of the housing benefit cap in the social rented sector, and to consider categories of people who could be protected during the transition. The broad points about the availability of alternative accommodation and the predicament of people who would have no means of avoiding the cut have been outlined at some length, and all I want to add is to ask the Government, in considering the phasing in, whether categories of people are being considered as candidates for some form of protection.

At the moment we have a big bang, and in 23 months we will have some 650,000 households facing the cut or a demand to move, and we know that there will not be sufficient accommodation. I am interested to know whether the Government have thought about minimising the pain that will arise for people who are registered for a downsize, for example. There will be people submitting applications to cash incentive programmes, and applying to their local authorities or registered social landlords for a downsize, and they are exactly the people Ministers say they want to encourage in order to reach the objective of tackling under-occupation, which is stated—slightly disingenuously, I think—as an objective of the policy.

The simple and decent thing to do would be to protect people who are now registered for a move until the time when they can have one. Similarly, there are households who, before April 2013, would currently be deemed as under-occupying their property, but whose circumstances are likely to change, making them not under-occupy it. As an example, I will use a couple with two children aged nine and 10. At the moment, they would be deemed as under-occupying their property according to the criteria used by the Government, but obviously, in 10 months or a year, they would legitimately occupy such a property. It seems rather bad to apply a penalty that could, in London and the south-east, cost £1,000 or so for a family caught in that predicament.

I think it was either the hon. Member for Cardiff Central or my hon. Friend the Member for Edinburgh East who used the following example, although perhaps it was neither of the above. [Interruption.] It may have been the hon. Member for Redcar who talked about households that were placed by their landlords in property that would be technically under-occupied—where there was a deliberate policy. We know that there are social objectives to an allocations procedure that landlords have been pursuing. We also know that, in parts of the country such as the north of England, there are areas with a surplus of accommodation, and there has been an active policy by local authorities to seek to fill those properties. That is sometimes done through under-occupation, but it is no fault of the households concerned, and it is not even necessarily their choice.

I know of several households where either the local authority or the housing provider has agreed for a couple to have separate bedrooms. Such a situation is unusual, but it is because one person, or both people, have severe medical conditions which make it impossible for them to sleep in the same room. That is recognised by the allocations procedure, and there are, therefore, a number of different categories.

More broadly—I have alluded to this in the past—in our MPs’ surgeries we will soon find distressing cases of people who have been in their family home for 30 years, or who have been recently widowed, and who have immediately become liable for this very harsh housing penalty. There is a way of mitigating the damage, while still pursuing the aim of reducing under-occupation. I would have thought it entirely reasonable—in fact, I predict that this will eventually happen—for there to be a phasing in, or for there to be some form of transitional protection. I would welcome the Minister’s comments on that and on whether we can look, before we get to the detailed regulations, at some means of managing what I predict will be a policy car crash.

Maria Miller (Conservative, Basingstoke)

I thank the hon. Lady for explaining the intentions behind the amendment. Her examples were useful, valid cases, in which individual circumstances can vary so much. There may be an individual who, as the hon. Member for Edinburgh East pointed out, has a great deal of medical equipment associated with them; or there may be two people who, as the hon. Member for Westminster North explained, need separate rooms for legitimate reasons. It is exceptionally difficult for the Government to legislate for those situations. However, there are situations that we can legislate for. What we can do, as I said in response to a previous debate, is look in detail at how we can ensure that there are exemptions for individuals who are disabled, where their homes may have been subject to extensive adaptations to accommodate that. There are potential exemptions for groups there. It is much more difficult, however, to try to legislate for the very examples that the hon. Lady has talked about, which is why we took the clear decision to triple the discretionary housing payments. That would ensure that such flexibility is built into the system at a local level. The very examples given by the hon. Lady would be difficult for us to legislate for, but as she rightly said, they might need to be addressed at a local level. I hope she will be reassured to know that we will also be looking at the level of discretionary housing payment to ensure that it addresses such issues as she has raised.

It can come as no surprise that we are bringing in this measure, which was announced in the emergency Budget just after the general election. We made it clear that the changes would be introduced from April 2013, which is enough lead time in which to develop the detail of how the measures will operate and how to communicate them on the ground to those affected. We have a great deal of time in the system for us to be able to do that effectively, and a great deal of effort has already been put in by officials in our Department and local authorities.

Introducing the size criterion into a calculation of housing benefit is planned to save around £0.5 billion in the first year alone. The savings from the CPI measure will be around £140 million in the same year. Such changes are of huge importance in making the benefit affordable, and in addressing the country’s broader fiscal problems. If the official Opposition are proposing the amendment in a way that would put at risk those savings, I want to know how they would recoup that and whether the proposal has the endorsement of their leadership.

The amounts of money are pretty significant and, coupled with a number of the other elements suggested by the hon. Member for Westminster North and her colleagues today, would total some £1.5 billion of expenditure. They might have tabled their amendments in the best possible way and with the utmost integrity, but the Committee should be asking, given the magnitude of the money, where they would fund the measures from and what other things would be cut instead. The Opposition have simply not been forthcoming about such issues, which should concern many in the Committee, particularly Government Members.

We have looked carefully at the hon. Lady’s amendment. I assure her and you, Mr Weir, that we recognise the importance of not working in isolation. We will work with experts to ensure that we develop a clear implementation plan, so that we can provide certainty about the changes before they are introduced. As I have said, we are already meeting with social housing providers, experts in social housing, local authorities and others to ensure that the impact of the changes is well managed. We will shortly be establishing an implementation group, which will play a key role in working through the associated practical issues.

I hope that, in the light of such assurances, the hon. Lady can accept them and withdraw the amendment, so we can proceed with consideration of the Bill.

Karen Buck (Labour, Westminster North)

That poor discretionary housing benefit! The loaves and fishes are not only feeding the 5,000 but stretching to house the 650,000.

I am encouraged by the Minister’s indicating that the Government might look further at discretionary housing payments. I will be interested to know when that might happen, and what indication that gives us about the thinking on how a sufficient degree of discretion would be built in for local authorities to make any kind of variation to meet such circumstances as I outlined. Given what the discretionary housing benefit is being asked to carry in the private rented sector, to maintain people in employment and to prevent homelessness, there does not seem the remotest chance of it doing anything of any significance whatever in the types of cases I have outlined, and with which the Minister has expressed some sympathy.

On the question of the lead-in time, again, I fear a little for the optimism being expressed. Officials might well be working extremely hard—I do not doubt that they are—but they cannot do anything about putting five into one: five times more people would need to move in order to avoid the penalty, and the properties are simply not available. We are now into the 2011-12 financial year, and local authorities and housing associations have not changed their allocation criteria to allow people to have priority for downsizing. That means that, if a single person wishing to avoid the penalty it is to be assisted in doing so, the entire burden will fall on a single financial year, 2012-13. That is impossible—it is simply not going to happen. Only a tiny minority of people who wish to avoid the penalty would be able to do so.

We now know, however, from our previous amendment, that the measure is not about tackling under-occupation. This is a probing amendment and we all understand the financial pressures, but I am looking for a similar degree of candour from the Government. However, we are getting not candour but the explanation that this is about tackling under-occupation, when it is not. The measure is simply about a cut in income for vulnerable people, because it is the only way the Minister can make the savings that she has again stressed are the priority. To do so, I think I am correct in saying, for the first time we have a deliberate policy that will cut, and is intended to cut, below the minimum level of income that the state and her Government have deemed acceptable for people to live on.

When people have a legitimate claim to JSA, ESA, income support or the universal credit, the Government have decided the minimum that they have to live on. For the first time, we now have a policy explicitly setting out that they wish people to live substantially below that level. If the Government are not saying that—the Minister is shaking her head—we must give people an opportunity to avoid that situation, but we cannot. The properties that would allow people to move are simply not available. If they were, the Minister would not want it to happen because no money would be saved. She expressed that fairly clearly.

I thought of another way to mitigate the impact of the policy, but I will not press the amendment to a Division. We voted earlier on an amendment that would have allowed us the flexibility to meet the needs of such highly vulnerable people. Sadly, but confidently, I predict that Ministers will revisit the issue between now and 2013, because I still do not believe that Government Members have properly understood the sheer scale of what the Government are proposing and its impact. When it is revisited, there will be urgent need for some form of phase-in, transitional protection or mitigation to prevent some harsh and painful decisions being inflicted on some of the most vulnerable people in our country.

I beg to ask leave to withdraw the amendment.

Clause 69

Karen Buck (Labour, Westminster North)

I beg to move amendment 177, in clause 69, page 52, line 38, at end insert

‘providing that these amounts are ring-fenced for the purpose set out in that Act’.

I am grateful for the opportunity to introduce the first of two or three amendments on the social fund. All of us with an interest in the matter know that it is not easy to make an unqualified argument in favour of no change to the social fund. There have been many criticisms of it over the years with well-informed and powerful reports from the National Audit Office, the Public Accounts Committee and the DWP Committee. There is certainly nothing wrong with looking at ways of responding to some of the faults and failings in the system, and improving its delivery.

Unfortunately, what we have here is abolition of the discretionary social fund through localisation, leaving us with a system that will not have statutory force and will not, unless the Government see fit to accept my amendment, have a ring-fenced budget. Whatever criticism there has been of the system, both are systemic weaknesses in the Government’s proposal. It is unfortunate that we are having this discussion in Committee at a time when so much of the detail of the proposed reorganisation is still unclear, and the DWP’s consultation closed only on 15 April. It is unfortunate that we are having this discussion with so little information about exactly how the Government envisage the revised scheme operating, and most of my remarks will be questions to the Minister.

We know that the discretionary social fund, as it stands and with all its flaws, is a hugely important source of assistance for claimants at a time of acute need. In particular, it provides interest-free loans to meet intermittent expenses and immediate short-term needs with emergency grants for essential items such as cookers, beds, clothing and footwear, and for equipment for disabled people. The need for such assistance is likely to remain, and there seems no sign of its disappearing in the immediate future. If anything, there is a strong case for saying that demand is likely to increase in the coming years as the cuts in housing benefit that we have discussed this evening and elsewhere begin to bite. Overall, there will be significant reductions in benefits with £18 billion of reductions in welfare benefits between now and the introduction of universal credit. It is unlikely in the context of those cuts and the immediate economic environment, and with the continuing pressure on jobs that demand for emergency assistance will reduce.

The social fund provides an essential safety net for the poorest of the poor, and the most vulnerable and most deprived at a time when they are suffering the gravest hardship. That is why, despite the Government’s willingness to challenge the previous Government on the social fund, and for all their criticisms, their decision to abolish de facto the social fund has been so heavily challenged by the social welfare organisations. The Child Poverty Action Group, Gingerbread, Crisis, Homeless Link, Barnardo’s, Scope, the National Housing Federation, Save the Children, Citizens Advice, the Disability Benefits Consortium, Oxfam, Family Action, Community Links, and the Daycare Trust are just some of the organisations that have lined up to say that the Government are taking the social fund down the wrong path, and putting vulnerable people at risk.

The amendment aims specifically to ring-fence the budget, and I will explain why that is an essential safeguard for any form of localised delivery.The critical point is whether there will be enough money, and how we can safeguard any money that will be available through local authorities. We have been told repeatedly that the localisation of the social fund is not a cost-cutting exercise, and I am happy to accept that at face value. We shall return to some of those questions when we discuss later amendments, but this measure is designed, fairly explicitly, as a cost-containment exercise. We accept that there must be a degree of cost containment under any system, and we understand that the demand for social fund discretionary payments rose dramatically over the past few years, largely, although not exclusively, because of the recession. We must now look to see how the available resources can be protected so that at least a minimal safety net stands between people and destitution.

My amendment seeks to address two related problems. First, will any devolved grants and loans from the discretionary social fund be protected by the local authorities to which they are given? Secondly, what will those funds be? I accept that this is not a cost-cutting exercise, and we believe that the money now available through the social fund will be devolved to local government. Critically, what will those funds be in the light of recoverability? That question goes to the heart of the fund’s future in local government. We also want to test how the measure will work in the light of possible additional costs for local administration.

The Government have said that they have no intention of placing any statutory duty on local authorities to determine what kind of support and services they intend to provide—hence the decision not to ring-fence. Unfortunately, recent long-term experience, which is one of the reasons ring-fenced grants were popular with the previous Government, has shown a particular example that points the way and raises a large red flag. That example is what happened to the Supporting People programme. The Supporting People grant was ring-fenced for local authorities to provide support for vulnerable people such as the elderly and disabled. When that ring fence was removed, the Government cut the budget for Supporting People by 2.7%, a significant but not huge amount. However, local authorities also cut the services funded by Supporting People by an average of 13%. The cuts that local authorities made to services funded by a Supporting People grant were nearly fivefold worse after the ring fence was removed, and that is a matter of grave concern.

George Hollingbery (Conservative, Meon Valley)

Will the hon. Lady tell the Committee what evidence she has that services for vulnerable people have been cut, and whether the particular services that were mandated by Supporting People have been cut? There is a difference.

Karen Buck (Labour, Westminster North)

I am afraid there is no point in beating about the bush. I cannot tell the hon. Gentleman how those services have been cut, but I am confident that if he were to ask organisations such as Save the Children, Barnardo’s, Oxfam, Age UK or Mencap, which have been working on the front line, they will provide him with that information. As always, there will be a mixed picture and examples of where the hon. Gentleman’s point will be upheld. Regardless of whether any reduction in services could be justified, the fact remains that what we have seen is a fivefold worsening of the expenditure on Supporting People services compared with the size of the cut in grant.

Whatever the analysis of the service providers—and I am sure it would at least be a mixed picture—that is something to be concerned about. In this case, when it comes to social fund expenditure—the kind of discretionary payments through crisis loans and community care grants—by definition, as we heard extensively in evidence, they are front-line services at the point of destitution and the most critical hardship. Finding other ways of dealing with the problems that are presented by those clients is not easy. That is my first concern. Obviously, the Government are only a year into their mandate. We do not have that much experience to draw on yet to see what has happened in local authority spending, as ring-fencing has been removed from front-line local government services.

I can speak for my own local authority, as I suspect my hon. Friends can if they are in authorities that are Conservative or otherwise controlled. Unfortunately, it is often the services to very vulnerable people, not those that necessarily attract the mass demonstrations, which have been cut. I do not want to stray too far from the amendment but I can say that, for example, in my local authority 3,000 disabled people are being reviewed for the loss of their care services; a day centre for people with disabilities is being cut, and we have cuts in children’s services, youth services and many others. Those tend to be services used by a minority of people and therefore not ones that often manage to sway majority opinion.

Sarah Newton (Conservative, Truro and Falmouth)

I am grateful to the hon. Lady for giving way but I take exception to her huge sweeping generalisation. She has said that there are no data on the situation. I am sure each of us could talk about our own local authorities and what they are doing to ensure that the most vulnerable people are provided with a good range of services. I do not agree with the hon. Lady’s assertion at all.

Karen Buck (Labour, Westminster North)

I am a little puzzled because the assertion I made was in respect of my own local authority. I am not sure that the hon. Lady can differ with that, as it is a matter of fact. I am not saying that every local authority is doing that. I am delighted to hear that some are not. I know the experience of my own and neighbouring local authorities. We have the facts, the budgets, the outturns and the decisions on which we can make that judgment.

Sarah Newton (Conservative, Truro and Falmouth)

There is often confusion between the amount of money that is expended and the quality of services received. Through the process in my local authority, it has reviewed the services, so that not every organisation that previously got, for example, Supporting People funding, is getting exactly the same amount of funding. However, through that process, it has identified new, better and different ways to deliver services to the client group. Sometimes less is more.

Karen Buck (Labour, Westminster North)

Sometimes less is more and sometimes less is less. This is an important point to which I will come back. The 3,000 people with disabilities in my borough who face losing their entire care packages would not say that less is more. They would simply say that they were getting a service a few months ago; they are still disabled; they are not getting a service any more. The people with severe disabilities who attend the centre for independent living will no longer have that centre when it closes. They will not be saying less is more; they will say simply that they are losing a service.

The rest of the debate is in Hansard.