Finance Bill – New Clause 12 – 1st July 2014
Nigel Mills: I think we went through this in the Finance Bill Committee last year. It would be somewhat iniquitous to have a higher penalty for a scheme that complied with the letter of the law but was subsequently ruled out of order by the GAAR than for one that was blatantly outside the law in the first place. I think we should stick to the standard penalties that apply for under-declaring tax on a tax return.
Shabana Mahmood MP (Shadow Minister (Treasury); Birmingham, Ladywood, Labour): That may be the hon. Gentleman’s view, but I am simply pointing out that in order to fall foul of the GAAR someone has to have engaged in the most egregious form of abuse. It seems odd to me that falling foul of the GAAR will not therefore attract any additional penalty on top of the tax that is in dispute.
Nigel Mills:
I will not vote for new clause 12, and I will briefly explain why.
A year ago, we enacted the general anti-abuse rule. One argument that Mr Aaronson made when he reviewed that idea was that it would allow us to have fewer of these complicated, focused anti-avoidance rules in Finance Bills and to avoid cluttering up the tax regime with more complexity because we would be able to rely on the general rule. I look forward to seeing that, rather than another huge, thick Finance Bill next year.
Subsection (1) of new clause 12 speaks of
“tax arrangements that are abusive.”
Surely those come within the general anti-abuse rule and can therefore be challenged, even if they are technically legal. Given that, we will not need to come back and assess the three items that are set out, because they will already have been tackled and there will be no further revenue to raise.
I racked my brains and did a bit of googling to try to find methods of tax avoidance using dormant companies. I struggled to think of one, because once a dormant company does something, it ceases to be dormant and therefore cannot be used to avoid tax. If what is meant is that companies are pretending to be dormant, but are actually active and are not filing returns that they know full well are due, that is tax evasion and should be clobbered severely using the existing rules. We probably do not need to create a huge compliance burden for every innocent dormant company out there. There might be sensible reasons for maintaining those companies, such as to protect a name or previous transactions, or simply that the cost and hassle of striking them off are greater than they ought to be. That would be an unreasonable compliance burden to impose.
We should be a bit careful about the language that we use about eurobonds. I have some sympathy with the view that when they were created 40 or 50 years ago and the exemption was passed, Parliament probably did not intend for intra-group loans to be traded randomly on Channel Island stock exchanges but never actually traded, just held by the same third party throughout the period. I see the temptation to remove the exemption and it was right that the Government proposed some sensible ways of doing so two years ago. However, if the Government consult on something and look into the detail, but then decide that it would not raise as much money as they thought and that it would act as a big disincentive to investment, it is unwise to come back to it so quickly. We should learn the lessons from that and just accept that if we want the UK to be attractive to investment and the hub of the private equity industry, which many small businesses in all our constituencies benefit from, it is foolish to risk putting up the cost of borrowing for that industry and adding complexity for it by revising the rules again.
I think that the new clause is superfluous and I will not vote for it.
Department for Work and Pensions – Universal Credit – 7th July 2014
Nigel Mills:
It is a pleasure to follow Debbie Abrahams in what seems to have become a very large meeting of the Select Committee. We will see whether that changes by the end of the debate. It is a pleasure to be in the Chamber talking about universal credit again. I forget how many times in the past year we have done so in the course of ministerial statements, urgent questions or other debates on the same topic. We may have spent more hours debating it than people have spent claiming it, but I hope that will not continue to be the case.
When my hon. Friend Anne Marie Morris spoke, she confirmed that there is still general support for the principle of universal credit. I took issue with the Chair of the Select Committee in a debate last week when she rightly set out how hard welfare reform is, but we have to bite the bullet. We cannot keep tweaking and expanding over-complex systems. At some stage we need to start again with a new system that meets modern needs. We must accept that the existing architecture will not last much longer without falling over in an awful heap. We need to find a new welfare system that works for the people who claim from it, works for the taxpayer and achieves the outcomes that we want.
I hope the Government will press on with universal credit. I hope they can find a smoother path than there has been so far, but the direction of travel is right. I hope we can reach the end position more quickly than we fear. It is worth reiterating what we are trying to replace. The NAO report set out that we are trying to replace six different benefit systems that have about 13 million annual claims and pay out about £67 billion a year. Those are huge amounts of money and huge complexity that we are trying to sort out.
For the investment of £2.4 billion—perhaps the Minister could clarify whether we are expecting a higher cost for universal credit than the original estimate—we are expecting
£38 billion worth of savings by 2023. The Government response quoted a £35 billion benefit; I assume that that is the net of those two numbers, and not that the estimated saving has drifted down a bit. Again, it would be helpful to understand what savings we think there will be over the period. I think there is to be an annual saving of £7 billion, so there is a huge prize for making the system work. It should be better for claimants, who will understand what they will get, and better for the people administering UC, who will understand what they should be giving out. I think that we have all been in that awful situation of hearing someone ask, “Am I better off in work or on benefits?” That is not a simple calculation. It is hugely complex to work out the answer, but we need to be able to answer that clearly.
I agree with what my hon. Friend Mike Freer said when we went to see UC at work in the north-west. What sticks in my memory is the genuine enthusiasm on the part of everyone who was working with UC for the system, the ideas and the changes. However, I also remember the horribly clunky and complex IT systems that we saw, which did not seem able to talk to each other, and which required a lot of manual interventions to make the processes work. I am looking forward to going to Hammersmith in October to see the latest iteration of how UC works, and to see whether we have managed to get a much slicker and smoother system. I certainly hope that we have.
There have been two benefits from this change. We hear that the claimant commitment, which has been rolled out in my constituency, is bringing about real changes in behaviour. The contract part of that helps to make it clear to people what they are expected to do; that is working. The other area where we have seen real advantages is in the use of real-time information. Many of us perhaps wrongly and cynically feared that that would be the bit of the process that would fall over; we feared that Her Majesty’s Revenue and Customs would struggle to make it work, and that trying to add it to its complex systems might be a bit too much. That has actually worked fine; the data seem to work, and there are even more enhancements that we can make to the use of that in the meantime, before we get to see the whole UC in action. So there have been some positive steps so far.
Only about 7,000 people are claiming UC. We have to be honest: that is a long way short of where the Government, the Committee, and indeed everyone, were hoping the UC would be. We have to accept that that is disappointing, but it is far better than rushing on with the system only to have it completely fall over, and creating a tax credits-type fiasco of the kind that we all remember from a decade or so ago. I do not remember the person who headed the Department responsible for tax credits, or the responsible Minister, having to resign. I do not remember the then Chancellor holding his hands up and saying, “I think I’ll resign in embarrassment at this farce.” It is a bit rich to call for the Secretary of State to resign when these implementation mistakes were not his fault; as I understand it, he spotted what was going wrong and sorted it out. There is no call for him to resign at all; that was a cheap and unnecessary shot.
I agree with the concerns expressed about the engagement with the Select Committee; that was a bit of a disappointment to us. Clearly, there had been a long period in which it was known that there were issues with UC. A lot of money had been wasted, and there had been lots of changes to the programme; the Committee was just not aware of that. I accept that the National Audit Office was involved, and that the Public Accounts Committee had various runs around this, but it would have felt a lot better for us, when we were trying to scrutinise the Department’s performance and finances, and the programme as a whole from a policy perspective, if we had had some kind of understanding that there were pretty major issues that will make the project look a lot different from how it was meant to look. That would have been a slightly more respectful way to treat the Committee. I do not expect daily updates on everything that is happening, but we are talking about something fundamental. That could have been handled a little better. Perhaps we would then have had a slightly less tense meeting with the Secretary of State earlier this year. I personally do not recall finding him offensive or unhelpful; the meeting was a little bad-tempered, but I suppose that when one is scrutinising someone, it can be a little difficult. I suspect that there was fault on all sides in that very long meeting.
I will come back to the Committee’s recommendation on how many IT systems we should be working on. My hon. Friend David Mowat may have clarified something, but I am not sure that we can say that the new digital end-state solution is an enhancement of the current one. I think that we have always understood that a twin-track approach was being taken; we were working on two different systems at the same time, one of which would succeed the other. There are reports that the Cabinet Office recommended moving to the end-state solution earlier this year, rather than staying with the twin-track approach.
There is a fundamental question here: if we are working on two different systems, one of which will succeed the other, and there are only 7,000 or so people claiming on the first one, is it better to focus all resources on the final end-state system, and divert people, money and time to that, rather than trying to work on both at the same time, even if that means a slightly longer implementation period, and a slight further delay? Perhaps testing just one system may get us to the right position; I do not know. It may be that to make this work, we have to go through the first system before we can move on to the second. The answers that we have had on that are not clear. It looks to quite a lot of people as though there may be a more cost-effective way of achieving this, given the timetable that we are on.
I reiterate my view that this is a great reform; everyone should want to see it work. I ask the Government to press on and make it work.
Oral Answers to Questions – Department for Work and Pensions – 9th July 2014
Nigel Mills MP: The Secretary of State has me convinced about the benefits of universal credit, but will he consider publishing the business case so that the House and the public outside can see the full benefits?
Iain Duncan Smith MP (The Secretary of State for Work and Pensions; Chingford and Woodford Green, Conservative): I am quite happy to deal with that. I have also said to the Chair of the Work and Pensions Committee that we are happy to talk through that. We have an invitation from the Committee to come in and discuss it.
Debate of Select Committee Report – Jobcentre Plus
Nigel Mills: Does the hon. Lady agree that that would also tie in with the way we assess the Work programme providers and make much more sense in the world of universal credit, assuming that it is fully rolled out? Under universal credit, people will not be coming off benefit. Their level of benefit will perhaps decline based on how much work they are doing, but their level of work could fluctuate from week to week or month to month, so the measurement would be largely meaningless.
Anne Begg MP (Aberdeen South, Labour): Indeed; that was one of the things we pointed out in our report. We drew particular attention to it in our more recent report on the implementation of universal credit, which was debated in the Chamber on Monday—that is two reports in a week, showing that we are a really busy Committee. Although we might be sceptical of how far universal credit is being rolled out, there is no doubt that, as my friend the hon. Gentleman pointed out—he is my friend because he is on the Select Committee—its introduction provides an opportunity for the Government to think differently about how to measure the real success of Jobcentre Plus.
Nigel Mills MP:
That is exactly the problem—how we motivate engagement on both sides, which we will need with universal credit and any in-work conditionality. We have to find a way of gathering reliable data. It is similar to a high-level instinct, or perhaps real-time information will provide something. Perhaps the RTI feed will show that the person is still in employment or even at the same employer—if we wanted to track the data that far back—but that looks to be a pretty clunky and limited way of checking things. Unless there are flags that show when employment has stopped, flagging it back to the jobcentre, we would not know that people had ceased to be in sustained employment, perhaps meeting the 12 or 26-week target, or whatever was set in that situation. I am not sure that there is an easy solution to anything, but for us to find a set of targets and work routes that work in such a situation will be important to how the jobcentre role develops.
The next area that I want to touch on is one that was topical last summer, when we started the inquiry: what happens to people when their two years on the Work programme finishes and they become the jobcentre’s responsibility again. This time last year, I remember speaking to the staff at my local jobcentre and they were not entirely sure what they were going to be doing with people in that situation when the first Work programme cohorts finished. Jobcentres have an important role to play, because we are talking about people who have not got a job in their first year of unemployment and who then got through the Work programme for two years and not found sustained work. We could expect them to need some intensive support, but it is a little hard to see that jobcentres would be geared up for that, having not been doing it for people in that key two-year period previously. So what would we do with them?
Last week, I was pleased to meet a new subcontractor, Acorn, which is in Derbyshire dealing with what I think are now called community work placements, a new set of rolled-out private sector providers offering a different type of Work programme service that is not the Work programme and does something subtly different. I confess that the procurement of the service and how we chose the providers has passed me by, but in the east midlands, for example, we have G4S. Luckily for the east midlands in some ways, it is not one of the Work programme providers, because we have a completely separate, third firm in Derbyshire to do things. We have, however, found a sensible programme of community placements that are not meant to be free labour for unscrupulous private sector operators, but are meant to be getting people who have gone through three years of support
finding something that at least gets them used to working normal working hours and some skills on their CV, making them more employable.
Sheila Gilmore MP (Edinburgh East, Labour): Obviously, it is early days to know how the post-Work programme arrangements are working, but a complaint of many of my constituents about the Work programme was that it was not particularly intensive. If anything, it was very light touch—“Come in every seven or eight weeks”, and sometimes the only contact was by phone. It seemed to concentrate everything on CV writing and applying for jobs. If the more intensive approach is important, should it not be starting much earlier than three years into unemployment?
Nigel Mills:
I agree. I was trying to explore with G4S when I had that meeting with it and Acorn exactly what the financial remuneration was for successful outcomes under the community work placement, and how that compared with the rewards under the Work programme for some of the harder-to-deal-with people who are further from the labour market. I was trying to work out whether we could expect Work programme providers to do such work placements if they had someone whom they were struggling with on the Work programme. Is there a need to tweak the contracts or to change the incentives slightly? We could try to get such support provided during the two years, not after the two years. For some reason, they were not totally inclined to give me a clear answer on those numbers. Perhaps it was the wrong time to ask them.
It is always about the sequencing of things—how do we step up the intensity of support at the right time? I am sure that we want a system in which if somebody really needs the most intensive support, they get it early in the process, rather than one in which we see how long we can demoralise them before we give them what they probably needed in the first place.
It is intriguing. When looking at the role of the jobcentre we thought, perhaps slightly competitively, that we had a real chance to prove that where a Work programme provider has failed the jobcentre can help people and sort the situation out. But we have ended up with another outsourced programme. Does that suggest that in many ways we do not feel that the jobcentre’s role is to provide any intensive support to people—that its role is enforcement plus some coaching in the early days and some relatively light-touch support? I am not saying that that is my view, but it appears now that for every situation we come across we find a different outsourced programme.
Finally I want to touch on Universal Jobmatch and the role of IT. I see Universal Jobmatch as a great success. I played with the old job search system in jobcentres and looking at the new one it is clearly much easier to use—for example, people can work it at home—and looks like the right direction of travel. I share the hope that Monster has managed to fix the problem of the artificial, unethical or non-existent job placements that had been going on to Jobmatch, to try to make it as effective a system as possible. I suspect that there is no way that these things can be perfect, and that people will always be able to get through any filters to put rogue ones on, so it is a matter of how effectively we can monitor the service and get those taken off once they are found. But clearly the problem should not have been on the scale that it got to.
As for IT, having enough computers in jobcentres—and enough staff to support people using them—is quite important, especially when we are requiring IT job searches and will sanction people who do not do them. The library in Heanor, a town in my seat, had to close for reasons of maintenance—or the lack of it—and we lost the IT provision in the town centre. It then became quite hard for claimants who did not have IT access at home and had lost their library. Trying to convince the jobcentre that it needed to find at least some temporary solution to get IT provision back into the town and to support people while the library was finding an alternative site was not as easy as I might have liked it to be.
I suspect the vision for modern jobcentres is for them to have lots of computer terminals so that IT job searches are perfectly possible. I know that one of the jobcentres in my seat was down for an early upgrade to get extra IT, but we need to make sure that every jobcentre has IT provision. If we are expecting people to use the service themselves and will sanction them if they do not, we have to make IT facilities available to them.
We can do more with the Universal Jobmatch system, as the Chair of the Select Committee remarked earlier. We ought to be looking to see whether we can make all the data on it flow two ways. Surely it can be a great tool. If someone has put their CV on it and has applied for 100 jobs but has never, ever been put forward into the best 50 applicants—or whatever number get prioritised—for the employer to see, that must surely say to somebody that that person’s CV is not good enough and they either need to produce a better one, or they need to have some training urgently to get more skills to put on it, or they are applying for completely the wrong jobs.
There ought to be a way of using the system to spot that some individual jobseekers need that kind of support—a better CV or some more skills—or perhaps even to spot that, say, there have been no jobs within a 20-mile radius that match the skills on a person’s CV in the last year, so there is no point in them keeping on applying for things that they are not going to get. That could then create a flag back to their jobcentre adviser, to say, “Something needs to happen with this person.” If we can find innovative ways of using the system to provide extra support—rather than just forcing people to go on it and mandating them to do so many job applications, some of which they are not too enthused about anyway—we might get a far better result for the investment we have made than if it is used purely as a job search tool.
Overall, the conclusion of the report is clearly that jobcentres do great work and have an important role. To share my own experience, when I have held jobs fairs in my seat the two jobcentres have been extremely helpful in getting employers and jobseekers there. They are working practically to try to tackle the problem, which is a pleasure to see in my seat.
Nigel Mills: I apologise to the right hon. Gentleman, Dame Anne Begg and you, Mr Amess, because I need to leave for a constituency engagement shortly, but on the point that the right hon. Gentleman raises, will he therefore join me in regretting the fact that when the unions came to give evidence to us in this inquiry, they did not support sanctions having any part in the benefits system?
Stephen Timms MP (Shadow Minister (Work and Pensions); East Ham, Labour): In the discussions that I have had with trade union members about this issue, the point has not been put to me that there should not be any sanctions. Sanctions have been part of the benefits system ever since the system was invented; there is nothing new about sanctions. I have not heard a case that sanctions should be entirely scrapped, but I do think that there is justified concern, partly expressed in this debate and certainly expressed by trade unions and others, including citizens advice bureaux and disability organisations, about the way in which the system is working at the moment.
We heard a good deal in the debate, and I was very interested to hear the contributions about what hon. Members have been told by whistleblowers because I have had a similar experience. One of my constituents, who works at a jobcentre, raised with me very similar concerns to the ones that we have heard about what is
going on. I was very concerned by that. I forwarded her concerns to the Minister. The Minister responded, for which my constituent and I were grateful, and my constituent subsequently wrote to the Minister directly and copied me into what she said. I will quote from her letter, which said that
“staff at the Jobcentre are actively encouraged to impose benefit sanctions and are threatened with PIPs”—
I was not sure what they were, but I gather from my hon. Friend Debbie Abrahams that they are performance improvement programmes—
“if they fail to get certain numbers of people off benefit per week…all too often it is the more vulnerable in society it is affecting, and probably not the customers who are too smart to be caught out by the sanctions. The large increase in people using the food banks is mainly due to the unfair benefit sanctions being imposed upon customers. I know the food bank in Hoxton has actually had to ask the JCP in Hackney to stop making so many referrals to them as they are unable to cope with the numbers”.
My constituent goes on to say that staff
“have never experienced working conditions like they have in the last few years…people who have worked so hard implementing the unpopular policies have been treated in an awful manner.”
My hon. Friend the Member for Edinburgh East raised the concerns that people have repeatedly drawn attention to that staff in jobcentres are being given targets. There have been the odd, well documented examples of where that has been the case, although in those instances Ministers have stepped in to make it absolutely clear that there are no formal targets, but it is the case, as I understand it, that in regular staff appraisals—this was confirmed, I think, in a written parliamentary answer—the number of sanctions that an adviser has issued is one of the bits of data on the table for the appraisal. Staff understand that, understandably and probably rightly, as indicating that they are, in part, being evaluated by how many sanctions they have issued—not whether those sanctions were accurate or appropriate, but whether there are enough of them. I think that it is clear that a culture has been developed in which staff are under pressure to issue more sanctions. My constituent talked about the awful working conditions. Let us be frank: that is part of the background to the industrial action taking place today.
A good deal of the external interest in this report has focused on the question of sanctions. There is no doubt that the dramatic increase both in the number of sanctions and in the amount of money taken off people—the duration of sanctions, which my hon. Friend the Member for Oldham East and Saddleworth also talked about—has been a big factor in the growth of food banks. Dr Whiteford is absolutely right to say that no one should hide their head in the sand about that. I had not quite twigged it, but my hon. Friend the Member for Oldham East and Saddleworth made this telling point. Will people who have been sanctioned for a period of months, a year or even three years carry on signing on every fortnight just so that they appear in the claimant count? Of course they will not, and undoubtedly the claimant count is being depressed as a result.
Of course, all these reports, from whistleblowers, charities and food banks, can be and sometimes are dismissed as anecdotal. However, the pretty distressing picture that staff whistleblowers are painting is consistent with what a lot of jobseekers say. A few weeks ago, I
was invited by Tesco to visit a new store with its HR director. Through the impressive regeneration model that Tesco has developed in partnership with the Union of Shop, Distributive and Allied Workers, the company had been very careful to recruit and train a large number of staff at the new store who had previously been unemployed. Tesco put them through an eight-week training course before the store opened. I was introduced to four of the staff who had been recruited in that way, and we talked about their experience. I asked them about their experience with Jobcentre Plus, and all four said that the main aim of the jobcentre had seemingly been not to help them but to catch them out and sanction their benefits. I think it is a real tragedy how badly the reputation of Jobcentre Plus has been damaged by the aggressive approach to sanctioning that has been introduced. It will take a lot to repair that damage.
In its briefing for the debate, Crisis told us about somebody called Billy
“who was sanctioned for turning up to a meeting that turned out to be cancelled and then failing to attend another appointment he knew nothing about because the letter arrived six days after the date of the interview”.
We have heard several such stories during the debate. I draw attention to the website “A Selection of Especially Stupid Benefit Sanctions”, which has pages of this stuff:
“You get a job interview. It’s at the same time as your job centre appointment, so you reschedule the job centre. You attend your rearranged appointment and then get a letter saying your benefits will be stopped because going to a job interview isn’t a good enough reason to miss an appointment.”
That one came from the Daily Mail.
“Your gran dies during the night. The next morning your partner calls the job centre and asks if you can come in the following day instead. The centre agrees, and you sign in the next day. Then you get a letter stating that you failed to sign in and would be sanctioned if you don’t reply within seven days. You reply, explaining the situation. The job centre gives you a six-week sanction for not replying.”
That one came from NetMums.
“You get a job that starts in two weeks time. You don’t look for work while you are waiting for the job to start. You’re sanctioned.”
That was from The Guardian.
“You apply for three jobs one week and three jobs the following Sunday and Monday. Because the job centre week starts on a Tuesday it treats this as applying for six jobs in one week and none the following week. You are sanctioned for 13 weeks for failing to apply for three jobs each week.”
That was from the Pontefract and Castleford Express.
“You have a job interview which overruns so you arrive at your job centre appointment 9 minutes late. You get sanctioned for a month.”
That one was from Consumer Action. As I say, there are pages and pages more on the website. Of course, those are anecdotal, but the jobcentre network now has that reputation and it will take a great deal to repair the damage that has been done.
A number of references have been made during the debate to the report that the Government commissioned. It is rather rare for the Opposition to be able to force the Government to do anything, but we were able, because the Government needed legislation quite quickly, to force Ministers to set up the review on sanctions, which was carried out by Matthew Oakley. Like everyone else,
I am eagerly awaiting the report, which we thought would be published by the end of May but which has still not been published. I asked the Minister about that in a written answer the other day, and characteristically—of Ministers in the previous Government as well as in this one—the reply came back that it would be published “in due course.” Can the Minister give us any more detail? If she can, it would be welcome.
As we have heard, the Minister appeared to agree in her evidence to the Work and Pensions Committee that there should be a further review to consider not only Work programme or employment programme sanctions, but sanctions more generally. It was a disappointment to everybody that that commitment was not reflected in the Government response to the report, and I hope that the Minister might reaffirm the view that she expressed to the Committee.
It is particularly disappointing, although not surprising, that the Government have rejected recommendation 17 on page 47 of the report about recording the number of people who are signposted to food banks. There is no doubt that the increase in sanctions has played a big part in the remarkable growth of food banks over the past few years. The Committee recommended, as we have heard, that the Department should
“take urgent steps to monitor the extent of financial hardship caused by benefit sanctions, including by collecting, collating and publishing data on the number of claimants ‘signposted’ to food aid by Jobcentres and the reasons for claimants’ need for assistance in these cases.”
The way in which the Government have dealt with the Trussell Trust has been pretty disgraceful. When the Secretary of State was appointed, he rightly took a good deal of pride in announcing that he was lifting a ban on jobcentres referring people to food banks if they were in hardship and did not have enough money to buy food. I was the Minister for employment for a while, and I did not know that there was a ban on referring people to food banks, but apparently there was. The Secretary of State rightly said that that was wrong, and lifted the ban. The problem was that food banks started counting the number of people who were being referred from jobcentres and the reasons why they were being referred, which became far too embarrassing, so the Secretary of State reintroduced the ban on jobcentres referring people to food banks, although he said that it was all right to “signpost” people. I believe that the difference between signposting and referring is that when someone is signposted by a jobcentre to a food bank, they are not allowed to fill in the piece of paper issued by the food bank that states why they are being referred. The former approach enabled the Trussell Trust to collect data on how many people were being referred to food banks because they had been the victim of sanctions, benefit delays or other problems at the jobcentre, and the whole thing became too embarrassing for the Secretary of State so he said that he did not want it to continue.
It is a great shame that the Secretary of State has refused to meet the Trussell Trust and talk about the matter, because it has a number of sensible ideas about how the system could be made to work better, which would not cost the Government anything. The Secretary of State has accused the trust of having a political agenda simply, as far as I can tell, on the basis that it insists on publishing numbers about how many people go to food banks. That is a completely innocuous and
public-spirited thing to do, but because the trust refuses to stop publishing that information, the Secretary of State accuses it of having a political agenda and being opposed to welfare reform.
Given that the Secretary of State has not been willing to meet the Trussell Trust, a couple of months ago I asked the Prime Minister if he would be willing to do so. He said that he would, and I am pleased to say that that meeting has taken place and the discussion was constructive and useful. Why on earth the Secretary of State is not willing to meet the trust for a similar discussion is a mystery to me, and I still hope that he might change his mind. I share the despair expressed by my hon. Friend Pamela Nash about the extent of the reliance on food banks nowadays. The Trussell Trust makes it absolutely clear that it expects the need for food banks to continue. The scale of the dependence—a million people over the past 12 months—and the rate at which it is growing are causing the trust great concern and prompting questions about whether it can cope with the demand.
I want to mention two other points that my hon. Friend Dame Anne Begg has highlighted as the main recommendations in the report. Recommendation 21 on page 48 argues for
“the formulation of JCP performance indicators which promote and measure sustained job outcomes and better reflect the changing role of JCP consequent on the implementation of universal credit”.
The Committee makes the point—it is often suggested, and I think it is right—that the current measure incentivises behaviour that nobody wants. For example, if somebody goes in and out of claiming benefit—they do a couple of weeks’ work, then go back on benefit because the job fails, then do a couple of weeks’ work somewhere else, then go back on benefit—it makes a big positive contribution to benefit off-flow, because that person is coming off benefit a lot and the fact that they go back on benefit straight away is not picked up in the statistics. Of course nobody would regard that as a success in any meaningful sense of the word. It is certainly not what Ministers want to happen in jobcentres.
The Government’s response to that recommendation says:
“The current JCP performance metrics, focussing on off-flows, make best use of the data currently available to the Department, but do not track people once they leave benefit, as this is not cost-effective.”
That is the bit that I want to query. I do not understand why the Government are suggesting that it is not cost-effective to track what happens to people after they go off benefit, because the Government require Work programme providers to do exactly that. Work programme providers are remunerated entirely on the basis of whether somebody is in sustained work. Clearly, the Department has taken the view that it is cost-effective to require Work programme providers to find out that information, so why is it not cost-effective for Jobcentre Plus to do so? That seems to make no sense, and the Committee is right to highlight it in a recommendation. I hope that the change will be made before too long.
The other recommendation that I will mention was highlighted by the Chair of the Committee, and I agree with it. It is about segmentation. Recommendation 4 on page 44 of the report says that the DWP should
“continue to work to develop a ‘segmentation’ tool, to be conducted by Jobcentre advisers face-to-face with claimants, to allocate
claimants to separate work streams according to their distance from the labour market and relative need for intensive employment support.”
I know that it is a long-held view among numerous people, including senior Jobcentre Plus staff, that segmentation is a rather illusory thing—my hon. Friend the Member for Aberdeen South used the term “holy grail”—that everybody would like to be able to do: “We would like to be able to tell how much help a person will need to get back into work, but it is unachievable in practice.” However, like my hon. Friend, I am mystified as to why it can be done in Australia but not in the UK.
I know that that point has been made to Jobcentre Plus staff, who respond by saying that Australia and the UK are different, but they are not that different. I visited Australia last September to, among other things, see how the jobseeker classification instrument worked. Nobody is claiming that it is infallible. In Australia, if someone is placed in one stream and it subsequently turns out that they need a different level of support, they can change. It is not a completely inflexible, wooden instrument, and it is certainly helpful. It means that people are more likely to get the right amount of help than if there were no segmentation. Even the length of time that someone has been out of work, which is easy to establish, is a big indicator of how much help they will need.
Of course, we already have segmentation in the UK. In the Work programme, customers are placed in different payment groups, based not on the kind of segmentation for which the Committee rightly calls but on which benefit they receive—jobseeker’s allowance or employment and support allowance. That does not necessarily tell us anything about how much help someone needs to get back to work, and in practice, as I think is pretty widely recognised, it has proved hopeless.
That is one reason why people a long way from the labour market have been so badly let down by the Work programme, as the National Audit Office pointed out last week. Among claimants of employment and support allowance who spend two years on the Work programme, the latest data suggest that the rate of failure to achieve sustained job outcomes is 93%: only 7% of those attached to the Work programme achieve a sustained job outcome.
In an earlier intervention, I asked my hon. Friend about the Government’s statement, in their response to the report, that their efforts to develop a tool have produced only 70% success. Of course it would be great if we could do better than 70%, but given that it is possible for people to change their stream after they have been streamed initially and that 70% success is certainly better than streaming people simply on the basis of what benefit they have been on, it seems to me that it strengthens the case for the Committee’s argument that it would be a worthwhile thing to do.
It would be the intention of a Labour Government, should one be elected next spring, to implement a segmentation tool as the Select Committee recommends. We would like to see it in place, again as the Committee recommends, in time for the commissioning of the Work programme’s successor. It will be possible, in designing that tool, to draw on the fantastic data that providers have gathered during their experience of the Work programme. There are now numerous rich data
sets giving useful evidence about how much help individuals in a variety of circumstances need in order to get into work.
I welcome the report. The Committee has done the House and the cause of employment support a great service by providing it to us. Along with everyone here, I look forward to hearing the Minister’s response.
Hallam Review – 17th July 2014
Nigel Mills: In her statement, the Secretary of State said that we needed a process that is “transparent, accountable and balanced”. I hope that she would agree that this scheme was none of those. We have an open justice system and we generally know who is being arrested, charged, prosecuted and acquitted. It is not clear to me why we should not know who felt the need to seek one of those letters. If we believe in a transparent system, we should be able to find out who has received one.
Theresa Villiers MP (The Secretary of State for Northern Ireland; Chipping Barnet, Conservative): I understand my hon. Friend’s perspective. There are probably many reasons why people put their names forward. Something that comes across clearly in the report is that a number of the individuals concerned were not known to the PSNI at all. I will reflect on what he has said, but I continue to believe that it would not be helpful to name the individuals who were processed through the scheme. In all other respects, however, we need to be as transparent as we can about the steps we will take to remedy the serious errors identified by Heather Hallett, and we need to do all we can to learn from them.