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Jobseeker’s Allowance (Sanctions) (Amendment) Regulations 2012

Volume 739: debated on Monday 8 October 2012

Considered in Grand Committee

Moved by

That the Grand Committee do report to the House that it has considered the Jobseeker’s Allowance (Sanctions) (Amendment) Regulations 2012.

Relevant documents: 6th Report from the Joint Committee on Statutory Instruments, 9th Report from the Secondary Legislation Scrutiny Committee.

My Lords, this instrument was laid in draft before the House on 9 July this year. It is regarded as being compatible with the European Convention on Human Rights. This instrument provides for a more effective, more proportionate and clearer sanctions system, but it also preserves the important safeguards that are required to ensure a fair and balanced system.

I think that there is a general agreement that it is right to expect claimants who are able to look for or to prepare for work to do so. We provide people with financial support when they are out of work. In return for that financial support, we expect them to do everything they reasonably can to get back into work. We know that active job search and engagement with advisers increases the chances that people find work more quickly than they would otherwise.

Most people who find themselves out of work and in receipt of jobseeker’s allowance are doing everything they can to get back into work and are complying with the conditions associated with this benefit. But not everyone is, and for those people, a more effective sanctions regime is needed. A sanctions regime should be clear and proportionate, and should fully encourage claimants to meet the requirements that will support them back to work.

The current sanctions regime is not achieving those objectives as well as it might. Let me offer a little more detail on the limitations of the current regime and how these new regulations will address those. First, some of the existing sanctions are simply not tough enough, and there is little to deter claimants from repeatedly failing to apply for a job or look for work. For example, if someone fails to meet one of the most important requirements, such as refusing a suitable job offer without good reason, they may be sanctioned for as little as one week. These regulations introduce escalating sanctions periods so that in relation to these most serious failures, the sanction periods will be 13 weeks for the first failure, 26 weeks for a second failure within a year of the previous one, and 156 weeks, or three years, for a third or further failure within a year of a previous failure which resulted in a 26 or 156-week sanction. So sanctions will be tougher for those who repeatedly fail to meet their requirements and repeatedly fail to change their behaviour.

Three-year sanctions will apply only in the most extreme cases where claimants have serially and deliberately breached their most important requirements. For these claimants, previous sanctions of 13 weeks and 26 weeks have unfortunately not provided sufficient deterrent to change their behaviour. We anticipate that very few claimants will be subject to this length of sanction, but we believe that such a sanction is necessary to act as a deterrent and to ensure compliance with the requirements that are critical to helping claimants move back into work.

We cannot expect sanctions to act as a deterrent unless the sanctions themselves are clear. Currently they are not. A sanction for failing to apply for a job could be anything between one and 26 weeks. Under the new regime, claimants will be able to understand upfront exactly how their benefit will be affected. They will know that the first time they refuse a job offer without a good reason they will get a 13-week sanction.

There is also a lack of clarity in relation to sanctions for failure to comply with the requirement designed to improve a claimant’s chances of finding or preparing for work. Currently there is a complex range of sanctions for these types of failure, including one or two-week sanctions for failing to attend an interview at a jobcentre, two and four-week sanctions for other failures such as failing to carry out a direction from an adviser and 26-week sanctions for some claimants in the work programme. Under these regulations, the sanction for not meeting such requirements will be set at a clear and simple period of four weeks for a first failure and 13 weeks for a second or subsequent failure within a year of the previous failure.

Another feature of the current system is that in some circumstances there are only limited consequences for failing to be available for work or failing to actively seek work. Not meeting these basic conditions of entitlement generally leads to disentitlement from jobseeker’s allowance. But currently those who are disentitled for these reasons can reclaim straightaway and in some cases lose only one or two days’ benefit. It is not right that claimants can fail to meet the fundamental requirements of claiming benefit and yet face little consequence. Therefore, those who reapply for benefit following disentitlement for these reasons will be subject to the new sanction of up to four weeks for a first disentitlement and up to 13 weeks for a second or subsequent disentitlement within a year of the latest one.

We want to introduce into the sanction regime some recognition for claimants who do the right thing. Therefore, as a new incentive for claimants to return to sustained work, if they work for six months before they become re-entitled to jobseeker’s allowance, the balance of any outstanding sanction is lifted. Under this regime, some things will not change and important safeguards will remain in place. We will continue to tailor requirements to suit claimant circumstances, for example to allow for caring responsibilities and to take account of mental or physical health conditions. Claimants will have the opportunity to explain why they have not complied with a requirement. Just as now, if they provide a good reason a sanction will not be imposed.

Claimants will still be able to request further information about the sanction decision, request a reconsideration and appeal against the decision. If claimants have concerns about whether the correspondence address they have given us is secure, we will arrange for letters and notifications to go to an alternative address or to be picked up from the jobcentre.

These regulations will broadly align the jobseeker’s allowance sanctions regime with that for universal credit. As well as providing the clarity and proportionate consequences described earlier, this change will ease the transition to universal credit for both claimants and Jobcentre Plus staff.

In conclusion, these changes are intended to better drive the behaviour that maximises a claimant’s chances of finding suitable work. I commend them to the Committee.

My Lords, I thank the Minister for introducing these regulations. I welcome the noble Baroness, Lady Stowell of Beeston, to her first appearance at the Dispatch Box on DWP matters. We hope that there will be many more such appearances and that this is not just an operational response to the absence of the noble Lord, Lord Freud, who drew the short straw and had to go to the party conference.

We cannot support these regulations. That should be clear to the Minister from the debate in the other place. That is not to say that we oppose every aspect of them, nor do we oppose the principle of sanctions. Properly constructed and fairly applied, they have an important place in the benefits system. They encourage compliance with claimant obligations. We also support regulation for a clearer relationship between the length of a sanction and how that relates to the failure to comply with the particular obligations.

What concerns us in particular, however, is the three-year sanction, which we consider to be excessive and, indeed, counterproductive. As was spelt out in the other place, the concern over the three-year sanction is not only that it will inevitably create hardship but that it will create an extended period where there is a weak connection with the labour market. Will the Minister clarify what ongoing obligations an individual has during the period of the sanction and what entitlements the individual has during that period; for example, their access to the Work Programme? Would failure to meet any obligations during a period of sanctions itself be further sanctionable?

In considering these regulations and the JSA regulations, we need to be mindful of what is happening at the moment with all the reassessments, the flawed application of the WCA and the fact that many people were being pushed on to that benefit from ESA and IB. I would be grateful if the Minister would also clarify the circumstances where someone subject to a sanction gets a job and ceases to be eligible for JSA. What precisely is the position on their reclaiming? Paragraph 7.7 of the Explanatory Memorandum suggests that there is a disentitlement of four or 13 weeks where the original disentitlement was related to,

“not being available or actively seeking work”.

However, does this replace any unexpired portion of the original sanction or is it additional to it? What is the position of somebody who is subject to a 26-week sanction for refusing work but who gets a job for two weeks after, say, one month and then reverts to JSA? They would have been without JSA for six weeks. Do they have a further seven weeks of sanctions to go?

I have some more specific questions. Can we have an update relating to the numbers of sanctions and disentitlements? When we debated this during the Welfare Reform Bill it was noted that there was an alarming increase in 2010-11 in comparison with the previous year and a 42% increase between July and September 2010 in comparison with the comparable preceding period. Can we be given the numbers for the subsequent year, please? We have previously been assured that there is no question of the DWP having formal or informal targets for sanctions and that the previous overzealous misinterpretation of instructions has now been corrected. Will the Minister confirm that this is the case? Can we be told what management statistics will be collected on a routine basis and the use to which they will be put? While not being a target, what provision is made as regards the budgets for reductions in benefit arising from the application of sanctions for the current year, and what is the split between pre and post-October 2012 data?

Under the current arrangements, the days of a sanction period count towards any 182-day entitlement to contribution-based JSA. Will that change? Under the existing regime, we have the saving of just cause relating to leaving a job voluntarily and good cause for neglecting to avail oneself of a job opportunity. These terms have been developed in regulations and, it is understood, from time to time in commissioners’ decisions. The Explanatory Memorandum sets out that these concepts are to be subsumed into a new good reason concept, the interpretation of which is left to decision-makers. Does this mean that all existing precedents and guidance are to be disregarded? For example, a person is currently treated as having good cause if they do not accept a job that is vacant because of a trade dispute: that is, they are not required to be a strike breaker. Will this protection still operate under the new sanctions? Currently, if there is no automatic good cause, the decision-maker must nevertheless take certain circumstances into account. These include where a particular job or carrying out of a jobseeker’s direction would be likely to cause excessive physical or mental stress. What will happen to this requirement under the new regime and, similarly, the requirement for decision-makers to take religious and conscientious objections into account? Is there to be any guidance on this issue in the new world of sanctions? How will the consistency of approach to these matters be assured and, indeed, monitored within the department? The proposed penalty regime escalates—13 weeks; 26 weeks; three years—and the escalation is determined by the number of prior failures. At its point of introduction, what account is taken of any sanctionable failures prior to that date? Is the slate wiped clean at that point?

So far as the existing hardship provisions are concerned, it would appear that they are currently being carried forward as now, but perhaps the Minister will confirm, particularly, that the recovery of hardship payments is not yet in contemplation in respect of these sanctions and also that suggestions about calibrating hardship payments by some sort of analysis of claimant expenditure have not been slipped into these regulations. I note that there has been a non-statutory referral to SSAC. Perhaps the Minister can relay the thrust of its comments.

The Explanatory Memorandum repeats what we have been told previously: that universal credit will be phased in through pathfinders from April 2013 and nationwide from October 2013. Can the Minister confirm that that is still the time line, given the increasing speculation over this timetable during the summer period? Can it be confirmed that, although designed to be in alignment with universal credit, the JSA sanction regimes we are considering are designed to continue notwithstanding the fact that the timetable for universal credit appears to be slipping?

We have supported much of the thrust of the Government’s welfare reforms and the broad architecture of the universal credit, but we have seen how these reforms include aspects that have no credible policy outcomes. They have a political objective: being seen to be tough on welfare. Indeed, we heard that directly earlier. The three-year sanction is, in our view, one such measure, which is why we oppose it.

My Lords, I rise to support my noble friend in relation to these regulations. They are extremely complicated and it is not surprising that the Government have thought it necessary to include a long Explanatory Memorandum. At a time when sometimes, in certain areas of the country, there are 50 applicants for every vacancy, it seems pretty impossible to introduce such complicated regulations. I think the Government should not be moved by a lot of the media coverage about scroungers. In fact, in my view, people on benefits are mostly not scroungers and would be very happy to have work if it were possible to find it. It is often very difficult indeed to do so.

I am particularly concerned about the effect on disabled people because I understand that assessments of people who are currently on DLA have already begun. A number have been in touch with me because they are concerned about what will happen if it is ruled that they are capable of some work when they feel that they are not. There is an appeals mechanism, which they then put into operation, and it often results in a change in the decision, but there is a long gap before the appeal can be heard, so what happens to people who are caught between two benefits? There is the DLA, which they want to remain on, and the jobseeker’s allowance, to which they will be transferred if they lose their appeal on DLA. This is a cause of a great deal of worry among people who are already very vulnerable and very concerned. I am not certain what consultation has taken place in relation to these regulations as far as the Government are concerned, but they are far too complicated. They do not give any indication about appeals. I am not quite certain how people will appeal if they are told that they are to be dealt with under various articles. Can they appeal it and, if so, what are the arrangements?

Secondly, I feel that people ought to have a much clearer idea of what is involved regarding sanctions and what is meant by “hardship”. The hardship point has already been raised by my noble friend. What actually is hardship? Many of the people on the benefits already feel that they are subject to hardship. Of course, even under the present circumstances, the regulations do not allow for what might be described as anything that is not hardship. In fact, everything possible is done to encourage people to look for work, and many people are only too happy to have work if they are capable of doing it and if they can get it. Unfortunately, we are not in that happy situation. In these circumstances, I really do think that the Government should take these sanctions regulations away and rethink the situation; otherwise, a lot of vulnerable people are going to get hurt when they should not be.

My Lords, this set of regulations applies to changes that came out of the Welfare Reform Bill and the prospect of universal credit. I should like to explore three issues with your Lordships this afternoon. The first relates to proportionality, the second relates to clarity and the third relates to the timetable for bringing together the various parts of the sanctions regimes which now exist and the prospective sanctions regime for universal credit.

There have obviously been concerns about proportionality and about the three-year sanction, which clearly is very extensive. The Explanatory Memorandum says that it will be used only in the most extreme circumstances but can my noble friend, whom I welcome to the Dispatch Box today, give us an example of the type of case that would attract a three-year sanction of that sort?

I understand that clarity is needed, and this is the second issue. However, having read the documentation that accompanies these regulations, as well as the Explanatory Memorandum, I do not think that anyone under the threat of the sanction would instantly know precisely where the sanction would fall. There is clarity regarding 13, 26 and 156 weeks, but if noble Lords look at paragraph 7.6 of the Explanatory Memorandum, they will see that a certain degree of mathematical skill is required to be able to balance the variety of options. I do not object to that but can my noble friend tell us whether this whole sanctions regime could be set out in a chart on a single piece of paper, which would allow the people whom it might affect to truly understand it? That would be very helpful in aiding people to understand it.

In my view, the problem with clarity is where it leads in terms of direction to Jobcentre Plus staff, who make the decisions based on interpreting these regulations. On many occasions in relation to other aspects of assessment by Jobcentre Plus assessors and decision-makers, we have asked what the current regime is for allowing those decisions to be made more accurately. In response, both in the Chamber and in correspondence, the Government have told me that stress is laid on the importance of empowerment—empowering officials to make decisions and giving them discretion. Empowerment and discretion can sometimes conflict with clarity if the decision is so laid down and so restricted that there is no room for a decision in a particular circumstance.

Therefore, can my noble friend tell us whether the discretion that will be offered to Jobcentre Plus staff and their empowerment—which is the watchword, with which I entirely agree—in making decisions will sit comfortably with the clarity regime that has been outlined to us today? Will that be in some form of guidance? We have already heard from the noble Lord about the “good reason” concept. I could interpret “good reason” and I hope that I would do it effectively. However, I am not so certain that that would be without some form of interpretation and guidance, which would be a concept well understood to apply in these circumstances. A “good reason” has been a phrase used very commonly for making decisions. If it is still the intention that that allows discretion for Jobcentre Plus staff to be able to make decisions, perhaps that would be sufficient on its own if it was a well enough understood concept. Would my noble friend like to comment on that?

The third area that I would like to explore is the joining together of the three parts of the sanctions regime—the ESA regime, the jobseeker’s allowance regime and the universal credit regime that is to come—given that all three will be overlapping and running alongside each other during the course of the coming years until universal credit finally takes over. If this is an interim step, is it the one that is describing what will happen under universal credit? I wonder why we have not been able to do the same for employment and support allowance and why that has not been brought before us at the same time. Am I correct in understanding that that will be brought before us by a negative procedure in another set of regulations, which we will perhaps have to examine against this set of regulations? Perhaps it would have been more advisable to bring them both together.

However, it seems that the crucial issue is whether this actually lays down a pathway for what will be the regime applied under universal credit or whether we are to treat this as an interim regime, in which case we would be moving forward to another set of changes in the years to come as we apply universal credit. How far can we go along that road? It seems to me that an interim situation would be inadvisable but that a situation which was as close as possible to universal credit would be advisable.

Finally, having got from the Printed Paper Office before the Summer Recess a copy of the Explanatory Memorandum, I read paragraph 7.7 with interest until I got to the last sentence, which read:

“Under the revised regime claimants who re-apply for benefit following disentitlement for not being available for or actively seeking work will be subject to a”—

at which point the paragraph ended. I was so pleased on coming into the Room today to see that the Printed Paper Office has now completed the sentence with the words,

“loss of benefit period of 4 weeks”,

so that I do not need to ask about that. However, it would be helpful if either the authorities in this House or in the DWP were to make sure that when we have a lengthy Summer Recess before us, we can read the documents as they should be rather than as they should not.

My Lords, the report from the Secondary Legislation Scrutiny Committee says:

“This instrument is drawn to the special attention of the House on the grounds that it gives rise to issues of public policy likely to be of interest to the House”.

In addition, part of that public policy focus would take into account the threat made by the Chancellor at today’s Conservative Party conference: that he intends to further reduce the welfare budget by £10 billion, added to the already £15 billion taken from some of the poorest people in this country. I join those who welcome the noble Baroness, Lady Stowell, to the Dispatch Box but for slightly different reasons from those of my more diplomatic noble friend Lord McKenzie of Luton. I welcome her appearance on this—it is not personal—because I, along with others, intend to highlight the consequences of the Welfare Reform Act. We are now down to the nitty-gritty from the Labour Front Bench and from some very knowledgeable people in other parts of the House as to what is happening here.

I listened very carefully to the noble Baroness and when she was speaking, it seemed like an appeal to the average Sun reader, with phrases such as “not tough enough”, “we require” and “there will be fewer claimants in the whole structure”. There was very little about the consequences on the people affected.

Perhaps the noble Baroness can take a note of this and answer it. Nothing was mentioned about the administration costs of implementing the policy—the extra staff who will presumably be required—or about the monitoring of the implementation of this draconian policy and attitude towards poorer people. I do not know whether that language is a bit robust for this place, but there we go. Millions of people outside need to be heard here today. I wonder how many people here or elsewhere on the Conservative Benches should declare an interest, as the millionaires among them gain a £40,000 tax cut every year for the next few years which goes to the wealthiest people in this country. That is coming straight from the people who will be suffering from these cuts. The Liberal Democrats should look at themselves as well. I am not sure how many millionaires they have, but they certainly marched through the Lobby in support of the Act—with a few honourable exceptions.

I do not think that those in the government ranks realise how draconian the three-year policy is. What research is there to justify it? Those affected are imperfect people who will make mistakes and will not be mentally fit to deal with the situation. I echo what my noble friend on the Front Bench said: I am no sort of social liberal when it comes to benefit fraudsters and anyone fiddling their benefit. Please do not paint me as a softie or as someone who wears rose-tinted glasses. It is said that only a few claimants will be caught by the policy. I do not see any research; I see justification for a hard-nosed policy which is politically desirable to the sort of people who think that everybody on benefits is a fraudster, when they are not.

To their credit, the Government have a policy of trying to get people with mental illness of various kinds to come forward to get help but, at the same time, how many people who are suffering from undeclared mental disorders will be caught up in this draconian policy? It is a horrible fact of life that some people may die because they are deprived of money for three years. They will sink into the gutter, homeless, and will be driven there through the policies of this Government. There is a strategy here of stigmatising benefit claimants. Again, I refer to the fact that I am not a social liberal on such issues.

There was a lively debate in the other place on this. I compliment my honourable friend Mrs Anne McGuire for the salient and powerful points that she made. I am glad that we opposed there, as we do now, the three-year sanction. It is a disgrace and should be reconsidered. There are things in the regulations that we support, but the price of that support in getting consensus to tackle reform of the welfare system should surely be some recognition of those draconian aspects.

Going back to what I said about people with a mental disorder, it was stated that plenty of people within the department were trained to spot that and deal with it. How many people are employed specifically for that task? Are any of them employed by private, outside agencies, such as the department’s pride and joy, Atos, making mistakes and penalising people all along the line? We need to clarify how many people are professionally trained to spot people who, bearing in mind the background of this country, are naturally reluctant to demonstrate or admit to—and even then they are not using that word—some kind of mental disorder.

Therefore, there is a whole series of questions about how the department is going to handle that. I should like to hear some answers and I may come back on this issue, depending on the content of the answers.

My Lords, it is a pleasure to follow the noble Lord, Lord McAvoy, who has been a good friend and colleague over many years. I plead guilty to being a softie but I am not a millionaire. I just want to make that clear. I do not mind being characterised as soft but I am not rich.

I should declare an interest. Noble Lords probably know this but I continue to be a non-executive, non-remunerated director of the Wise Group in Glasgow. The Wise Group is an intermediate labour market provider and has been in that business for 25 years. It is a privilege for me to work with the group and it gives me an insight into some of the implications of the important regulations that we are debating this afternoon.

As I said during the main body of the debate on the Welfare Reform Bill, as it then was, language is very important in all this. If anyone doubts that, they have only to look at the headline in the tabloid press today—I think it is the Express—which declares that the Government are declaring war on the workshy. I do not think that that is helpful language for anyone. I do not necessarily accuse Ministers of doing it but I think that the Government could do more to stop that kind of stigmatisation. The noble Lord, Lord McAvoy, talked about people who are workless. I understand that the public have a perception that it is right to crack down on benefits but I believe that it is a wholly mistaken view based on very little background information and detail. If the real facts were known to the wider general public, I think that public opinion would be different.

In passing, I want to contrast that with fraud. I think that the policy contained in these regulations will be counterproductive—it is a policy objection that I have more than anything else—and that it will make things worse rather than better. I draw a clear distinction between handling sanctions and conditionality and fraud, which the Government have to attend to with more vigour and energy. To be fair to the noble Lord, Lord Freud, I think that he is aware of that and that he is doing more to try to deal with the problem. However, here we are dealing with regulations which will take people out of benefit if the sanctions are applied to the extreme for three years.

Last week, I noticed that there was an identity theft fraud case in which £90,000 had been fraudulently taken out of the benefits system by someone who had stolen 13 identities. He got two years in prison. Here is a criminal defrauding the benefits system of £90,000 and he gets to stay at Her Majesty’s pleasure for two years, whereas somebody who falls foul of the sanctions regime gets no money for three years. You begin to ask yourself, “Is that balance correct?”. I leave that question hanging but I have a very clear idea about it. If we are going to be tougher, we need to be tougher on fraud. We need to stop talking about fraud and error in the same sentence and in the same way, because in my view they are entirely different. I am with the Minister—I welcome her to the Dispatch Box and wish her many happy hours there in the future—but I think that we need to drill into and make better progress on the whole question of how we deal with stigmatisation and fraud.

From my association with the Wise Group, I am very clear that you need three things to get people into fulfilling long-term work pathways. You need to have trust between the claimant and the adviser—the person doing the coaching, steering and supporting—and the trust needs to be both ways. The claimant needs to be aware that the person on the other side of the desk is on their side. That sometimes takes time and is difficult to achieve, because some of the claimants are a long way away from the labour market. You also need to motivate the claimant and need to persuade him or her that they are in control of their own pathway back into work.

I have said this many times before. The Paul Gregg report that was done for the previous Labour Government in 2009 made perfect sense to me. It was a positive case for conditionality. But the essential condition that he applied was that the claimant had to be in control of the pathway. The destiny of the pathway had to be felt by the claimant to be something that he or she wanted to do. If they offend against the jobseeker’s agreement in that context, once you have established the trust, then conditionality is necessary because some people need a wake-up call—even I know that. We have all learnt that from our American friends. But only a tiny percentage of people should be in that situation and should be considered for conditionality.

As the noble Lord, Lord McKenzie, said, some of the figures that are beginning to emerge from 2010 are deeply frightening. They will get worse if we are not careful. You need a trusted adviser relationship. You need the person to feel that they are in control of what is being done to them and you need employers who understand all that and are willing to come to the table and say, “Okay we will be part of this process to get this individual back into gainful, full-time employment”. All of those elements need to be present for this important public policy to work, and I support it.

But conditionality wrecks the relationship between the adviser and the claimant. The trust goes out of the window because people are being told what is good for them. They start to think that the system is against them and then they go AWOL. After they go AWOL, the system ignores them, in the main. Nobody follows them wherever they go—to a life of working in the grey economy, crime, drugs or anything at all. Nobody follows them and nobody has a responsibility to ask, particularly over a three-year period, where have they gone? Our American friends got a real fright about the number of people who disappeared off the rolls. In terms of three-year sanctions in the future, we will have a real problem in trying to get back the relationship once these sanctions are applied to the extent that we are talking about today. Sanctions are a punishment. They are counterproductive. They may be necessary, but they should be used with great discretion and in very specific circumstances.

I have a number of questions. The noble Lords, Lord McKenzie and Lord McAvoy, and my noble friend are keen to pursue this. When the policy is rolled out in the pilot areas it needs to be absolutely monitored to death in terms of what is working and not working. I do not believe that it will get people into work. It will get people off benefits: I can see that. It is stark staring clear that you can get people off benefits by sanctioning them, but does it get them into work? That is the important question. Some people in the Committee may think that getting them off benefits is enough, but not me. The policy is deficient in the second half of the necessity of supporting people and getting them into fulfilling long-term work.

If I had more time, I could develop the point about the difficulties facing single parents, people in rural areas and in destroyed labour market areas, who have no real prospect of finding work because the labour market is so difficult in different parts of the United Kingdom. People with disabilities will obviously also find it difficult and will struggle.

I am in favour of clarity. The current policy is deficient in that most people do not know why they are being sanctioned, and that is not just those who have a mental illness, because the system is so confusing. I am in favour of conditionality, but I think that this is overdone. I believe that in the fullness of time it will not work. If I am wrong, I will be the first to admit that. I want answers to some of these important questions, even if they are in a letter, because I do not think the Minister has a realistic chance of answering them all in detail. I want an undertaking that the sanctions applied during the pilot phase will be analysed and followed through by the department to see what is actually happening and how they work out in practice. If I am right, these conditionality requirements will make things worse. That is not in anyone’s interests—not in the interests of the claimant, the Government or anyone else. So we need to be cautious about how we roll out this policy.

My Lords, I join other noble Lords in welcoming the noble Baroness to her job and I hope she will leave this sitting with the benefit of the wise words of the noble Lord, Lord Kirkwood of Kirkhope. He made an important point that there is a distinction between fraud and error. When I served on the Public Accounts Committee in the House of Commons, the Department for Work and Pensions never seemed to make that distinction. Error was always considered to be fraud—that was always the general tenor of its evidence. It is important, especially with the changes proposed by the Government, that people are given the benefit of the doubt if there is a genuine error.

I would like to start where the noble Lord, Lord German, ended. At the end of his remarks, he referred to bringing together the sanctions regime for jobseeker’s allowance, the employment and support allowance and universal credit. What concerns me, and perhaps the Minister can answer this, is whether this realignment of the sanctions will involve the major IT project that is being prepared for universal credit. A number of us are concerned about the IT project for universal credit. Will this alignment mean that more people will have to claim their benefit online? Can the noble Baroness also tell us how many people presently claim JSA online?

What changes do the Government expect in the way that people will claim online when universal credit is fully rolled out in October 2013? The present chairman of the Public Accounts Committee, Margaret Hodge, has said that universal credit is,

“a train crash waiting to happen”.

In my experience serving on the Public Accounts Committee in the Commons, every major government IT project in the past 20 years has gone pear-shaped because of the failure of the IT systems. I think that these changes should be resisted but if the Government insist on pushing them forward, the last thing we want is the most vulnerable people having their benefits stopped because of some failure in the Government’s IT programme. The Minister should make it clear how much this will depend on the new IT system for universal credit. In response to my noble friend Lord McKenzie, perhaps she can tell us if the universal credit programme is likely to slip. We are told that the pathfinders will be introduced in April 2013 and the full scheme in October. We need to know this as it will affect the lives of many vulnerable people. Those of us who have sat in the House of Commons or other devolved Administrations in the United Kingdom have constantly had people come to them in their surgeries with problems where the system has let them down.

When I have taken up issues—I am sure this is not uncommon with other noble Lords who have served as elected representatives in the House of Commons and the devolved Administrations—I have been told, “Sorry, X falls through the net”. Who created the net? We created the net and if we are not careful with the way we are changing this net a lot of vulnerable people will be adversely affected. So I hope the Minister can give us answers to these important questions.

I am grateful for the contributions that have been made in the debate today. A number of points of detail have been raised which I will do my best to go through before I conclude my responses. I will try to cover these points in groups rather than going through every individual one systematically, as I feel that it is important to cover some of the general points made by noble Lords that fall under several headings.

I am grateful to the noble Lord, Lord McKenzie, for welcoming me warmly to the Dispatch Box, but of course I am disappointed that he does not feel able to support these regulations. I have listened carefully to all the points that have been made today, and most of them have been questions about the regulations and concerns expressed about them. In answering them, however, I can go a long way to addressing them.

The people I think about most when I consider what we are doing today is those who find themselves suddenly out of work through no fault of their own, and who are desperate to get back into work and are doing everything that they possibly can to do so. When they go on to jobseeker’s allowance, or in due course when they are receiving an element of benefits that will apply under the universal credit, people will want to know that while the rest of us are fortunate to be in work at that time, a regime is in place that respects those who are doing everything that they can while penalising clearly and appropriately those who do not. They will want to know that they are entering into a regime that is properly labelled and properly reflects that they are trying their best to do what they can for themselves, and we will not do them any service by putting in place a regime that is not clear.

The noble Baroness, Lady Turner of Camden, used some colourful language that she may have been trying to ascribe to those of us in government regarding what we are doing. I assure her that we are not saying that.

There were concerns about what will happen if people find themselves affected by the sanctions and not in receipt of benefits. Let us not forget that the reason why people are entitled to jobseeker’s allowance is that they are fit and able to look for work. Because they are fit and able to work but are not able to find work at that time, the payment is made to them. If they are not doing what is required of them to entitle them to the benefit, then it is only right that they should be sanctioned; there should be a clear deterrent in order that they should comply with the expectations placed upon them. If they are sanctioned, then what they lose is the jobseeker’s allowance—they do not lose any of the other benefits that they may be entitled to, such as a hardship payment or housing benefit. While this measure may look very severe, it is important to bear it in mind that this is about jobseeker’s allowance; it is not about all benefits over a period of time. I will come back to the politics to which the noble Lord, Lord McAvoy, referred, because they are worth addressing, but not until I have dealt with some other matters.

Several noble Lords, including the noble Baroness, asked when a three-year sanction will apply and how it will be communicated. The new system will be explained to claimants. It would apply where a claimant has three times failed to apply for suitable job offers for work which they are capable of doing. The regulations are not designed to leave people in hardship, as I said, but to be a deterrent. Claimants will still be able to claim a hardship payment of up to 80% of JSA for the length of the sanction. They still have access to passported benefits such as housing benefit, free school meals and free prescriptions.

I know that there is a lot of concern about those who may face a three-year sanction. It is important to say that we do not expect many people to end up being sanctioned for three years. If the system is to work properly, the deterrent should be strong enough for us to avoid that. However, during a three-year sanction, a person is still entitled to JSA although it is not paid. They may receive hardship payments, but to do so will still need to meet conditionality, and their adviser will still work with them to help them to find work during the sanction period—a point made by the noble Lord, Lord Kirkwood. In response to him, I repeat that we must be clear that JSA is a benefit for people who are deemed to be fit for work and not confuse JSA with other benefits of which they may be in receipt.

The noble Baroness, Lady Turner of Camden, asked: how can people who are sanctioned find work when there are no jobs to be had? I refute that point. At any one time, there are about half a million unfilled vacancies in the economy, but that is only a snapshot that hides the dynamism of the job market in which most vacancies are filled quickly and new ones are coming up for people to move into. It is worth noting that of those who come on to jobseeker’s allowance, about 50% leave within three months and 75% within six months.

Several noble Lords—the noble Lord, Lord McAvoy, in particular—asked about the evidence to support the introduction of the sanctions and what research had been done. Evidence from the UK and internationally shows that sanctions motivate claimants to engage with job search and other labour market requirements. For example, the DWP research suggests that more than half of claimants say that they are more likely to look for work because of the threat of sanctions.

Last summer, I spent about three days visiting jobcentres and spending time with advisers who were interviewing claimants as they came in. It was notable to me during those sessions how sanctions were a topic very much discussed and how once they became a possibility, some people who might not otherwise have done so changed their behaviour. Many noble Lords asked whether people under sanction would be supported by the jobcentre. I have already covered that; that is clear.

The Minister is dealing with a series of complicated matters, but I seek clarification. In the other place, Mrs Anne McGuire said:

“It is important to remember that a person who is sanctioned will cease to receive their £71 per week in jobseeker’s allowance or the universal credit standard allowance”.

How does that fit in with what the Minister says? It was not contradicted by the Minister in the other place.

I do not see any sign that Ms Baldwin rejected this. My right honourable friend said:

“It is important to remember that a person who is sanctioned will cease to receive their £71 per week in jobseeker’s allowance or the universal credit standard allowance”—[Official Report, Commons, Eight Delegated Legislation Committee, 11/9/12; col. 6.]

Is that the case, or has the situation changed?

That is the case. That is what I have explained. If you are sanctioned, you are not in receipt of jobseeker’s allowance. There may be other benefits that you are entitled to, such as housing benefit. I think it is the use of the word “entitled” that is confusing matters, and I must apologise if I am confusing the Committee.

If somebody receives a sanction which leads to them not receiving their jobseeker’s allowance, that does not mean that they are not entitled to jobseeker’s allowance; it just means that they are not in receipt of it because they have not done something that is required of them in order to be entitled to receive that allowance. To be disentitled means that you have to stop being—I forget what the precise language is—available and able to carry out work. I think I have used imprecise language, and I apologise.

The noble Lord, Lord McKenzie of Luton—

I shall pick up the point the noble Baroness has made. I apologise for interrupting. If somebody has been sanctioned for three years and the local job market is such that the prospects of getting employment for six months look pretty grim yet nevertheless they are still, at least in theory, subject to JSA conditionality, what will encourage them to undertake those obligations? It seems to me that if you have a three-year period when this persists, people will drift from that support. There is nothing that encourages them to engage. If they do not engage, does that mean that they could be further sanctioned during that period?

I think this is a point that the noble Lord raised earlier, and I was coming to it. I repeat that I think the number of people who will be sanctioned for a three-year period will be very small. However, during any sanction period somebody who is in receipt of a sanction will still be required to go into the jobcentre and receive support from the staff to help them get back into work. That aspect of the support that is available to somebody out of work would not be removed.

The noble Lord, Lord McKenzie of Luton, asked what measures we are putting in place to monitor the new sanctions to see whether they have the intended effect. There is a process in place. The department will consider undertaking further analysis once the findings suggest further lines of inquiry. There is a process that will monitor the process.

I think it was the noble Lord, Lord Kirkwood, who asked about pilots, which may have been in the same ballpark. On that matter, these regulations make changes to the JSA regime for a temporary period. It is the universal credit regime that will be tested in pilot, not these interim changes.

The noble Lord, Lord McKenzie, asked whether a sanction would still apply if someone who is sanctioned finds work, so the claim ends, and then reclaims. I am sure that he will clarify this for me if I have misunderstood, but he perhaps meant to go back to my misuse of language around sanction and disentitlement or entitlement. A 13-week sanction would apply only to a new claim after a disentitlement for failure to meet the jobseeking conditions. If someone had a sanction and then found work so that their claim ends, on a reclaim the unexpired portion of the previous sanction would apply, as now.

There were quite a few questions from various noble Lords about the process of decision-making and definitions of “good reason”. The noble Lord, Lord German, asked about this and why examples of good reason have been removed from regulations. Under the revised regime, we want the decision-maker to take into consideration all the facts and evidence presented by the claimant. We think that the regulations were perhaps a little too prescriptive. We would much rather that the decision-maker were in a better place to make that change.

The noble Lord, Lord McKenzie, asked why we are replacing “good cause” with “good reason”. This is just a simplification of language; it makes no substantial change. As now, if claimants can show good reason for failing to meet requirements, they will not receive a sanction. The noble Lord asked how well the “good reason” provision will work in practice. Notwithstanding what I said about regulations, examples of possible factors that might count as “good reason” include a sincere religious or conscientious objection, caring responsibilities, emergency duties, and so on, but this is not an exhaustive list.

The noble Lord, Lord McKenzie, certainly asked some specific questions about protections and whether trade disputes or a religion would still exist in referring decisions about whether somebody should apply for a job vacancy. Advisers can continue to agree restrictions on the type of job that a person is willing to take. These relate to the type of employment for which that person is available, the terms of employment and the locality. That would include those with religious or conscientious convictions, who may not wish to undertake certain types of work. For example, they may not be willing to work with animal products or for a company associated with live animal exports. No claimant will be expected to take a job that was vacant as a result of a trade dispute.

I thank the Minister for a lot of the detail that she is providing to us this afternoon. Can she just clarify the position? At the moment we have “just cause” and “good cause”, which have been reflected in some particular regulations and certainly in some guidance. I think that there are some commissioners’ decisions which flesh out the meaning of those terms. Are all of those precedents going to be swept away and not applied, or are they going to stay in being and be used to support the concept of “good reason”?

Yes, they still apply.

The noble Lord, Lord McKenzie, also asked about people with health conditions. These regulations do not change the requirements that are on claimants as of now. Through Jobcentre Plus and the work programme, we will provide claimants with health conditions with the personalised support that they need to overcome their barriers to employment. All requirements will take their health into account to ensure that they are not asked to do something which would be unreasonable.

The noble Baroness, Lady Turner of Camden, asked in her remarks about those disabled people who may be moving from DLA to JSA or a version of that under universal credit. Today, we are obviously concentrating on JSA, which is very different to DLA. However, I take on board the point that she makes about ensuring that people have a clear understanding of what is changing and how they are affected by those changes. That is certainly something which needs to be addressed.

I thank the Minister for that response, but what is the situation for appeals generally in relation to this legislation? People will miss out on benefits if they receive a decision stating that sanctions will apply to them? Is there any appeal mechanism here and, if so, what is it?

There is no change in the appeal measure. I will come on to sanctions in a moment and give more specific information on appeals but the short answer to the question is “no change”. Safeguards were raised by the noble Lords, Lord McKenzie and Lord McAvoy, and the noble Baroness. I do not want to take up the Committee’s time as I clearly spelt out the safeguards in my opening remarks. They will be very much as they are now. That area will not change.

The noble Lord, Lord McAvoy, asked about people with mental health issues. The decision-makers will receive in-depth training to ensure that they are able to make the decisions that are required of them as they affect people with mental health issues. The noble Lord, Lord McKenzie, asked whether a jobseeker’s period of sanction counting towards the 182 days contribution-based entitlement will be changed. No, because a person is still entitled to JSA during a sanction period. Therefore, entitlement continues for that 182 days, including any sanction.

I think that I have covered most of the points that have been made. The noble Lord, Lord McKenzie, asked whether Jobcentre Plus has any targets for sanction referrals. I can say categorically that it does not. The noble Baroness, Lady Turner, asked about the appeal process, as did other noble Lords. Claimants may appeal any decision to reduce or stop their benefits arising from the First-tier Tribunal within one month of being notified of their sanction or disentitlement. Claimants can also ask Jobcentre Plus to reconsider the decision to sanction or disentitle. Jobcentre Plus will reconsider all decisions before any appeal so that only unresolved disputes have to go to an appeal hearing. Of course, we will ensure that all new claimants receive clear information about the sanctions regime and the appeal process.

I think that the noble Lord, Lord German, asked about ESA and whether the measure aligned JSA with universal credit. That will be introduced by a separate statutory instrument through the negative resolution procedure. It is not part of the measure that we are discussing. I take on board the points he made about the Printed Paper Office. I think that—

I apologise for interrupting the Minister, who is responding well to some difficult technical questions. I have a very important question concerning the universal credit pilots. I am sorry if I have not made this point clearly enough. I know that they are universal credit pilots, not JSA pilots. When those pilots are in being, will the department not just look at the effect of sanctions in terms of taking people off benefit but also carry out work to establish what effect sanctions have in getting people back into sustainable jobs? I think the answer to the question is yes, but will the department look at that when the pilots on universal credit are eventually rolled out in the fullness of time? It is a very important question.

Yes, I can confirm that and I am pleased to be able to do so.

Before I conclude, I have some other small points to make. The noble Lord, Lord McAvoy, asked about admin costs and additional staff costs. They are of course part of an agreed budget, but I will certainly write to him with further details about that. He also asked whether the private sector would be able to impose sanctions, and the answer is no.

The noble Lord, Lord McKenzie, asked how many sanctions were applied each year and was looking for the latest figures. I can tell him that in 2011-12 there were 4.7 million active jobseeker’s allowance claims and, of those, about 495,000 sanctions were imposed and there were about 161,000 disentitlements.

Several noble Lords—and I know that this was reinforced by the noble Lord, Lord Touhig—raised the point about the importance of DWP drawing a clear distinction between fraud and error. That is an important point and I take it on board. He also asked about claiming online. There will be opportunities to discuss universal credit when those regulations are debated, but at the moment this question is not relevant to the regulations before us today. I take on board the point that he is making but I do not have an answer to provide to him today.

I am grateful to the Minister and I understand that she is trying to cover everyone’s points, but the particular question that I wanted to ask was whether the alignment—the secondary legislation scrutiny committee’s report talks about the alignment of the sanctions with the three benefits, including the new one to come in, universal credit—will involve a requirement for people to claim JSA online. If that is the case, how many people currently claim online, and how many people do the Government expect to claim online when the full changes come in October 2013?

I hope that this answers the noble Lord’s question: you can claim for JSA online but it is not a requirement to do so, whereas the universal credit will be a digitally based process so that will be a different arrangement. So we are not requiring anyone to go online at this time.

I know that I have taken a lot of time to go through everyone’s questions, and forgive me for being perhaps less fluent than my noble friend Lord Freud would have been if he had been here, but I was keen to ensure that I covered the many details that had been raised. I would like to pick up a couple of small points that were made at the beginning of the debate. As I say, from my perspective it is vital that we have a regime that is fair and balanced and properly recognises the efforts that people make when they find themselves in the dreadful and unfortunate position of being out of work. However, we owe it not just to them but to everyone else who is working hard to ensure that there is a regime for those who, sadly, need the threat of a sanction to lead them to co-operate with the requirements of this benefit.

I say to the noble Lord, Lord McAvoy, with regard to his comments about the tax regime, that, as my right honourable friend the Chancellor made clear in his speech today somewhere else, in every single year of this Parliament the rich will pay a greater share of our nation’s tax revenues than in every one of the 13 years for which Labour were in office. Forgive me for responding politically but I felt that it was only appropriate to do so, having had that point raised with me. I hope that the Committee feels able to support these regulations, and I commend them to the Committee.

Motion agreed.