23 January 2009

Rt Hon James Purnell MP

Secretary of State for Work and Pensions

Welfare Reform 2nd Reading

House of Commons

Friday, 23h January 2009

[Check against delivery]

I beg to move, that the Bill be now read a second time.

I want to welcome the Right Honourable Lady and the Honourable member to their new roles – or back to his old role in the case of the Honourable member.  I know their scrutiny will improve this important Bill. 

In the debates ahead of us, we’ll hear much jargon.  Talk of conditionality, contribution and control.  Of taper rates and disregards.

But we should never forget what this Bill is about. It’s about changing lives.

• Changing the lives of people who have been trapped on Incapacity Benefit for too long
• Changing the lives of lone parents who would be in work if they knew about the support that’s available to them
• Changing the lives of millions of disabled people by giving them control over the services they receive

This Bill is based on a simple idea: that support should be matched with responsibility.  This isn’t the government’s idea – nor indeed that of the Party opposite. 

It was Beveridge’s idea, one of the three founding principles of his report, that in his words,

“social security must be achieved by co-operation between the State and the individual. The State should offer security for service and contribution. The State in organising security should not stifle incentive, opportunity, responsibility… “

We want to renew that partnership between the state and the individual, by ensuring that virtually everyone on benefits is preparing for work, so that support is indeed matched with responsibility.  We will support them – but they must support themselves in return. 

Mr Speaker, some people ask why we are doing this now?  The answer is simple – because it would be wrong to abandon people, whatever their difficulties in finding work. This is precisely the mistake that was made in the recessions of the 80s and 90s, and we will not repeat it.

Governments have a choice – investing millions in support now or billions in the future on people who can’t get back into work.  We have a choice between an ambitious welfare state, that lifts people out of dependency and a passive one that traps them there

In the 80s and 90s there was a passive welfare state where people weren’t required to do anything in return for their benefits, where incapacity benefit went up by millions, without either support available or the expectation that people would take it up.

Without investment, we would write off the people who find it most difficult to get jobs: disabled people, those lacking skills, single parents. We are ambitious for the welfare state.  We want an active system that will give people control over their lives.

How can we do this?

First, by giving children a fair start in life so they can have a fair chance in life. That’s why the government is committed to abolishing child poverty, and will enshrine that commitment in legislation in this session.

But it’s also why we are committed to supporting families. Child maintenance already helps around 100,000 children out of relative poverty. If all parents paid what they owed, this number would double- 100,000 more children escaping the disadvantage of growing up poor.

The state can’t stop parents from separating.  But too often separation causes poverty, with the poverty rate of separating wives almost three times that of husbands.

So we want to make sure that fathers live up to their responsibilities and that we improve the incentive to make maintenance payments by disregarding them entirely in benefit calculations. 

And for the minority of fathers who are determined not to pay for their children, we will take powers to remove their driving licences or passports until they pay up.

The use of such powers has been particularly effective in both the United States and Australia. In the state of Maine, for example, the removal of driving licenses has helped collect an additional $89 million since 1993.

We want to balance that responsibility with recognition of the father’s important role.  So this Bill will ensure that they are normally registered on the birth certificate.

At the moment, a married father is automatically named on his child’s birth certificate, but there are approximately 45,000 births to unmarried couples each year where the father is not.

We will make it easier for both parents to register in this case, but of course allow the mother to register alone where she feels that contacting the father would be a threat to her or the child.

Second, this Bill will create a right to control. 

Britain is at the cutting edge of rights for disabled people.  But there are still too many who feel the system controls them and holds them back.

The way to change that is to give the power to the individual.  Yesterday, in Barnsley, I met a man called Patrick who had learning disabilities.  He’d been stuck in a residential home for years, only able to go out when the staff had time. 

But then he and two of his friends got individual budgets.  Now they rent their home together and employ their support workers. 

Another man there Geoff, talked about how his carers used to think of him as a body that needed to be looked after, but now he’s a person who is in charge. 

This Bill takes that idea of individual budgets and widens it to more funding streams.

This right to control breaks new ground. If people are happy with the service they are getting, fine. But if not, they should be able to agree with the public authority how the service is delivered to them, or take the money as a direct payment.

The Bill takes powers which we will test with trailblazing public authorities before rolling them out nationally. This is the beginning of a fundamental change- the often difficult struggle to manage a disability should not be compounded by a struggle to get the right support.

Third this Bill will give people more control over their lives by helping them in to work.

A decade ago, there was too little by way of support for people to get back in to work and too little expectation that people should take up that support. The New Deal started to put that right.   We merged job centres and benefit agencies so that you couldn’t sign on for benefits without signing up to look for work.  We helped lone parents back in to jobs through their New Deal and people with health conditions and disabled people through Pathways to Work.

That support worked – almost 600 thousand lone parents have moved into work.  IB claimants who go through Pathways are 25% more likely to work.

So we know this support works. But at the moment where this support remains voluntary, we know that not enough people take it up. This Bill changes that, to bring the support that we know works to those who need it to work for them.

The current system is effective for those who are seeking employment.    People have to accept any reasonable job or lose their benefits.  We will clarify the sanctions regime and make sure it is speedy and effective.

We are also toughening our regime to deter more people from committing benefit fraud. In future those who abuse the system will lose their right to support from that system following their first offence.

Being on benefits should not be a way of life. This is why we are taking the powers to require full time activity for those claiming JSA for over 2 years. This will help teach basic work skills, give people the work habit and deter those who are playing the system. 

We want to make the system as effective for those who are sick and disabled or workless parents of younger children. 

As recommended by the Gregg review, we now want to create a new category in the welfare state: those who are not required to take work immediately, but who should be preparing for a return to work when it is right for them.  

The real crime of the Incapacity Benefit trap wasn’t so much that people were pushed there.  It’s that they were left there. 

Until we introduced the New Deal for Disable Peopled and Pathways, incapacity benefit claimants got no help.  And being out of a job made people ill and depressed.

We need to turn that approach on its head – doing everything we can to stop people falling out of work, and everything we can, as soon as we can, to help them prepare for work.

So, we will retest everyone currently on incapacity benefits to see which benefit they should be on.

Those with the greatest needs will get higher benefits and be able to volunteer for the support we offer.

Everyone else will be required to do more.  At the moment, IB claimants have to turn up for Work Focused interviews.  But they don’t have to carry out the actions they agree with their adviser.  We will change that. 

Claimants will work together with their personal adviser to develop an action plan that suits their own needs, and moves them back towards work at their own pace.  We expect that the majority of claimants will carry out their action plans – we know that around 90% of new IB customers expect to work again at some stage.

However, in the few cases where they don’t, we will take the power to require people to take specific steps to prepare for work. What this will mean will depend on their circumstances, but could include improving essential skills, managing debt problems or help with childcare. What it will not include is requiring people to apply for, or take up, jobs.

To support claimants moving towards work, we are investing around £1billion in Pathways to Work between 2008 and 2011. But we know that people who have been on IB for years will require patient, in-depth help. It is much better for them if we invest up front and then save money when they get back in to work.

So, to fund that, we will implement the innovative Invest to Save approach recommended by David Freud.  We will start with 5 pathfinders in the spring of 2011, testing the approach as he recommended, and at the pace he recommended, before rolling this out.

We also believe the progression to work approach will benefit workless parents.  At the moment, the majority of the partners of benefit claimants need do very little in return for the couple rate they receive.  That means a lone parent whose youngest child is 7 or over will be having to look for work from 2010, but a partnered parent would not.  We will change that so couples are treated the same as single parents.

Our plans are to require workless parents to look for work from when their youngest child is seven. That requirement will also extend to partners who are childless. We will, however, make exceptions to these rules, for example in the case of carers.

But we think it would be wrong to do nothing to help parents prepare for work before that.  Lone parents with younger children already have to attend work focused interviews.  We will build on that by requiring parents to develop an action plan about how they will prepare for work. Again this could involve improving literacy and numeracy skills for example, or help with handling finances. 

We think that most workless parents will want to complete the plan.  But we think it is reasonable, once the youngest child is three, for the adviser to be able to require the parent to put their action plan in to practice.  Not to force them to take a job, but to require them to improve their skills for example and help them prepare for a move into work. To make sure that a minor problem is not left un-addressed for years so it becomes a major barrier to work.

Single parents, like all families, need money to look after their kids. They can get that through government giving them more money or government giving them more help to get back to work to earn that money. We are doing both.
Our plans will reduce child poverty while being flexible to parents freedom to choose how to bring up their children.

Around a third of a million people are on drugs and on benefit.  We want them to take up treatment that will help them stabilise their lives and secure a regular job, so that paying benefits is a short term support not a long term trap. We want to break the cycle of crime and worklessness and make sure that taxpayers’ benefit money does not line the pockets of drug dealers.

So, this Bill will transform lives.  It will give children a better start in life.  It will give disabled people control over the services they receive. It will require almost everyone to do something in return for their benefits so that we can give them all the best chance of returning to work when appropriate.

And this Bill will take further steps towards overcoming the final barrier to control, namely the complexity and irrationality of many of our benefits. It will ensure people with similar barriers receive the same support, and those with the greatest needs receive the most.

Mr Speaker, this Government is serious about welfare reform because we have seen how their failures wrecked our communities, and we will not make those mistakes again.  We are ambitious about welfare reform. This bill will transform lives and I commend it to the House.