Welfare Reform Bill

moved Amendment No. 68A: 68A: Schedule 4 , page 76, line 13, leave out paragraph (b) The noble Lord said: My Lords, the amendments that we have just agreed to might be technical but I do not intend to let them go through on the nod. Although they have already gone through, I wish to address them none the less. In speaking to them, the Minister referred to the Government’s intention to move people on to employment and support allowance with income protection. It is the question of protection that I wish to address. The Government have made it clear that they intend incapacity benefit and income support claimants to move over to employment and support allowance following its introduction in October 2008. I understand that they intend to begin this migration with the most recent claimants and those with dependent children because the quicker a claimant engages in work-related activity the more likely they are to move off benefit and into work. Helping parents off benefits and into work will also have a positive impact on the drive to reduce child poverty. This is a probing amendment designed to enable me to raise three issues on migration, which I would be grateful if the Minister would be kind enough to address. First, will there be a loss of income for claimants being migrated, as and when that occurs? Secondly, there is a real danger that many current incapacity benefit claimants will not meet the requirements of the new personal capability assessment and will fail to qualify for the employment and support allowance and therefore be moved on to JSA. Lastly, what will happen to residual, transitional protection for claimants of invalidity benefit and severe disablement allowance, which are both now abolished? First, on the loss of income for those migrating to the employment and support allowance, the Government have stated that claimants migrating across from incapacity benefit will have their income protected to ensure that they do not suffer any financial loss. Concerns have been raised with me by organisations outside this House that rates of employment and support allowance payable will be significantly lower than those currently paid through incapacity benefit or income support. Those shortfalls will arise because, in the first place, age, adult- and child-dependant additions, currently payable on top of the long-term rate of incapacity benefit, are to be abolished. Secondly, the average rate of incapacity benefit that has been paid is about £20 a week higher than the standard long-term rate, which is the level of protected income on which claimants will be moved across to employment and support allowance. The average rate of incapacity benefit in payment at August 2006 was £91.12 a week, against the standard long-term rate at that time of £70.05 a week. Those figures are drawn from DWP statistics. In addition, any protection of income levels when a claimant is migrated across will last only while that person remains eligible for ESA. It is the position of claimants losing entitlement to ESA under the new personal capability assessment, which is in the process of being revised or transformed, to which I will now turn. Under the new assessment procedure, the three-point descriptors are being removed, which will mean that existing incapacity benefit and income support claimants, especially those with physical health problems, will find it much more difficult to establish entitlement to benefit once they are migrated. Anyone migrated across to ESA who fails to establish entitlement under the new PCA will lose all income protection and will instead have to claim jobseeker’s allowance at £57.45 a week. As well as the substantial loss of weekly income, those claimants will be denied the personalised and individualised support promised for ESA claimants. Claimants who are migrated across to ESA with income protection and who establish entitlement under the revised PCA will also suffer financially in the longer term, because the income protection effectively acts as a freeze on benefit income levels. On an annual uprating basis, any increase to the rates of ESA will be subtracted from the amount of income protection received, so the Government will effectively be giving with one hand and taking with the other. The overall income will remain unchanged. That will have two effects: first, a person will be driven more deeply into absolute as well as relative poverty, as he will have a static income over a five-year period, while prices, earnings and inflation will all continue to rise throughout the period; and, secondly, it will create complexity of administration and bureaucracy that will be difficult for both the claimant and the DWP to understand in any meaningful way. Finally I wish to consider the position of those who at present enjoy transitional income: former invalidity benefit and severe disablement allowance recipients who enjoy transitional protection. In addition to the issues to which I have drawn attention, a number of claimants have residual transitional protection in relation to old claims for invalidity benefit and severe disablement allowance, both now abolished. Invalidity benefit was abolished in 1995 and claimants were subsequently moved to incapacity benefit. Invalidity benefit claimants were given transitional protection, which means that their benefit payments are not subject to income tax; they have an entitlement to dependency additions and they do not have any deductions made with respect to private pensions. Severe disablement allowance was abolished in 2001 and SDA claimants were moved to incapacity benefit. SDA was paid to claimants who had not paid national insurance contributions but had established an 80 per cent level of disability. Those claimants were given transitional protection to enable them to continue to receive benefit even though they failed to meet the entitlement conditions for the new system. SDA has a number of different rules regarding payment rates, earnings rules, entitlement to premiums and so on. What do the Government intend will happen to those claimants, who were guaranteed protection when the respective benefits were abolished? I beg to move.