A very warm welcome to the final evidence session in the Pathways to Work inquiry. It is a pleasure to welcome the right honourable Sir Stephen Timms, Minister for Social Security and Disability, and his colleagues Katherine Pateman and Shaun Pateman. Katherine and Shaun, would you like to introduce yourselves?

I am Katherine Pateman. I am Deputy Director for Disability Benefits in the Policy Group at the Department for Work and Pensions.

I am Shaun Butcher. I am Deputy Director and Lead Analyst covering disability benefits in the Department for Work and Pensions.

Thank you. I will kick off. Minister, we will continue from our exchange at DWP orals on Monday. I asked you, if you recall, about the anticipated impacts of Pathways to Work and particularly thinking about the health impacts. The last time you were here we took evidence from you about safeguarding vulnerable claimants. You will be aware of the recommendations from the report specifically about making sure that we consider the health impacts of the policies that we develop and a safeguarding approach to that. We talked about the role of the Chief Medical Adviser’s team in assessing that. Are you able to talk further on what you have assessed as the impacts of the Pathways to Work inquiry, specifically its relationship to the Bill that is coming to the House on Tuesday?

Thank you very much, Chair, for the opportunity to come before the Committee. The background to all of this is the position, which I think is pretty clear, that the current system does not work. As you know, uniquely in the G7, our employment rate is still less than it was just before the pandemic. Every other country has got back to where it was before and we have not. I think it is clear that the system here is a big part of the reason for that and that a very large number, hundreds of thousands, of people are being trapped needlessly out of work, in low income and inactivity because of what the system is doing. We are determined to fix that and make sure that people have the opportunity of employment, a large number of people not having that at the moment. We will be responding fully to the Committee’s inquiry on safeguarding. Thank you very much to everybody for the work that went into that. We are also, in the Green Paper, consulting on our safeguarding approach. I can certainly talk about, if you want me to, where we might be heading with that but the consultation runs until Monday—it is not closed. It will take a bit of time to reflect on the consultation responses before we finalise our proposals for safeguarding, but the Committee’s input to that has been extremely helpful. On the health impacts of the Green Paper proposals, I think they will be positive because it is clear that a lot of people have an adverse effect of being out of work for a long time when that is not needed. I saw a figure the other day that suggested that of those who are out of work on ill health and disability grounds, 86% report a mental health impairment, not necessarily their primary impairment but it is a big factor for them. We know that being in good work is extremely positive for mental health. We will need to take these proposals forward, recognising the health gains that will result but also safeguarding those who may be at risk. I think that the strategy on safeguarding will be well in place in time for the changes that we are proposing.

Can I take you back to the examples that I mentioned on Monday? I referred to the 2010 changes in the employment support allowance, which is an incapacity benefit. You will remember I raised the figure of an additional 600 suicides because there had not been in place at the time the jobs that you have—and I know there are a lot of really positive things about the Pathways to Work programme. There is Charlie Mayfield’s review to try to ensure that we do something to address the appalling disability employment gap, which has remained more or less flatlined for 10-plus years.

Fifteen years, I think.

We know there is the right to work, and lots of positive things, but as it stands, these jobs are not in place. You may have seen the JRF paper yesterday that shows there basically are not the jobs for disabled people to go into, particularly in deprived areas. I also think that overall there will be lots of positive outcomes, but as they are sequenced and as the Committee has been looking at specifically the cuts in support to disabled people before these jobs are there—before the employment support is set up as from next April—there will be adverse things. As I say, there were 600 additional suicides during the reforms from 2010, and 130,000 additional new-onset mental health cases for the 2017 changes to the work-related activity component. What are we going to do to make sure that we can line these up so the labour market is fixed and people have jobs to go to, employment support is in place to enable this to happen and there are opportunities for people to avail themselves of?

I think that sequencing point is a very important one. As you say, the changes we are proposing will start from next April on universal credit.

As in the cuts to individuals.

I don’t think anyone will see a cut next April. I think new claimants from April will have a lower rate of universal credit health premium, but nobody will experience a cut in that sense in April. In November, the changes to the personal independence payment will start and there will then be some people from November onwards who have been receiving personal independence payment who will not receive it, as you know. Our expectation is that about 90% of those who are claiming personal independence payment next November will still be having it by 2029-30. That is based on the Office for Budget Responsibility assessment. The change to the individual will only happen at their next award review after November 2026, so this will build up over some time, typically three years between award reviews. The three years after November 2026 will be the key years for that. You are right, we need to make sure that employment support is in place in time for that, that health and care support is there for that and also that the very important announcements made at the spending review about investment in infrastructure and jobs particularly in some of the more disadvantaged areas are coming into place by then as well. We are proposing on all of those fronts that we will be seeing the progress that we need. We have to look at all of these things in parallel. I don’t think it would be a viable option to say we are not going to do anything about the health and disability benefits for a few years and see how things go. We have to make all of these things happen and, as you say, the sequencing is key.

Could you explain why there was no consultation on the provisions within the Bill?

Essentially because of the urgency of the changes that needed to be made. If you look at personal independence payment, the year before the pandemic in current prices PIP cost the then Government £12 billion, last year it cost the Government £22 billion and the cost of it went up by £2.8 billion per year last year alone. That is not a sustainable trajectory. There was a need for urgency with the changes.

Minister, do you accept as we had evidence from, for example, Professor Ben Geiger, that spending for working age support has remained at 5% of GDP for the last 10-plus years? I appreciate that for disability benefits as a whole that has increased, but we also know that for people who are not in work or non-disabled people that has gone down. Overall it has been 5% of GDP for the last 10-plus years and that is the important figure to relate to. Do you also accept that DWP’s own papers have shown that an increase in PIP cases has been as a result of demographic changes, poor health, and also an increase in state pension age?

I completely accept much of what you say. Indeed, the Resolution Foundation has set out quite helpfully that working age social security spending as a percentage of GDP is not much more now than it was before the 2008 to 2010 recession, but as you say the share on disability and incapacity benefits is very substantially up. That was 1.1% of GDP in 2007-08 and it is 1.8% in 2024-25 and almost all of that increase is in the last six years. I think it is clear it requires the Government to address that and that is what we are doing. The second part of your question was about PIP numbers. Yes, the evidence suggests that the incidence of disability has gone up by about 17% since just before the pandemic. The incidence of benefit claiming has gone up by 34%. It is clear that it is not just the factors that you have referred to that are driving this. That is certainly part of it, but there has been a much greater propensity to claim benefits and that is what is driving that very steep increase in GDP accounted for by health and disability benefits.

Could an alternative explanation be that the people who are claiming are financially constrained and with PIP it is around extra costs?

I think you are absolutely right. I am sure that the cost of living challenges are a very big factor in what has happened. People who may well have always been eligible but have not in the past claimed benefit are now doing so and that has driven this very substantial increase. As I say, the current trajectory is not a sustainable one. It is not in the interests of people who depend on PIP for it to be on a financially unsustainable trajectory, and we need to deal with that.

Minister, I want to touch on the elephant in the room. You have got your Second Reading of the welfare Bill due to come before Parliament on Tuesday. Is it still your intention to bring that Bill forward for Second Reading on Tuesday?

It is. I am looking forward to the debate.

Thank you very much. On to questions for today. Over the last number of years, particularly in recent years, there has been an increase in working age health-related benefits. That has increased quite substantially while working age non-health-related benefits have dropped off. There is a suggestion that you touched on in your answer to the Chair a moment ago that this is as a result of people claiming because of cost of living pressures, covid and those things, after the last number of years. How has that been factored into your decision making particularly since the freeze in the standard allowance since 2015?

As I was explaining, the fact that the cost of health and disability benefits has risen so sharply, especially over the last six years, has been a big factor in our thinking and has driven the need for these changes. I think part of the problem has been the very low value of the universal credit standard allowance, that as a result of the freezes and things that you referred to, the headline rate of benefit fell to the lowest real terms value for 40 years, I think. You have to go back to Margaret Thatcher who lifted it above the level that it has been at of late, and the previous Government reduced it back down to that very low level. All sorts of problems have arisen from that, and one of them is a very big incentive for people to claim the LCWRA, the universal credit health top-up, because of the huge gulf now between universal credit standard allowance and the health top-up rate. We have announced, as you know—and the Bill that you referred to being debated on Tuesday includes—the first real terms increase in the headline rate of benefit since the 1970s. It is quite a dramatic change of course in public policy that we are saying that the headline rate of benefit was too low. That is partly what has driven these problems that we are talking about this morning. An important step in fixing this problem is to raise the universal credit standard allowance rate, as we are doing. Another problem arising from the historically low level of the standard allowance rate, and this is a point that was made in evidence to this Committee by the think tank Bright Blue—Chair, you might remember this—is that the headline rate was so low that people have been forced to rush into the first job they can come across even if it is not the right job. Bright Blue argues that has contributed to the UK’s long-standing productivity problems because people are being forced into the wrong jobs by the very low rate of universal credit standard allowance. Fixing that and raising it is an important part of dealing with the problems that we are focusing on this morning.

I think colleagues have some questions later on getting people into the right jobs. Going back to health, particularly mental health, over recent years we had the pandemic and we have had a lot of upheaval in the country, and there has been a marked increase in those with mental health problems claiming these types of benefits and support. What is your view on that? Has mental health got worse in the country over that time; is it an issue of diagnosis; is it that people are more willing to use mental health now as a reason for claiming this benefit? What are your views on that?

I think there is fairly clear evidence that there has been a worsening of mental health since the pandemic, particularly among young people. That is where the evidence is most striking. If you look at what is driving the increase in the PIP caseload that we have talked about, mental health problems are a large and growing part of the picture. Yet we know that particularly for young people the most positive thing that can happen to support good mental health is being able to move into good work. That is an important part of the motivation for what we are doing to make sure that young people get that chance. We have the youth guarantee that we announced in the Get Britain Working White Paper in November. We want every young person to be learning or earning. There has been a big rise, particularly in mental health problems among young people, and this package is designed in part to deal with that and help people move on from the difficulties that they have got into, perhaps around the pandemic in particular.

I may come back later on the issue of getting people back into work. Thank you.

Thank you, Minister, for joining us this morning. Moving to personal independence payments, PIP provisions in the Bill that was published last week provide for a 13-week transitional protection period for those who lose their entitlement at their next award review as a result of not scoring four points in at least one activity. Do you think that transitional period will allay the concerns of the people who are affected by that?

I think it will certainly help. Obviously we have been listening to what everybody has been saying about these proposals over the last few months. The 13-week run-on will allow us to deliver the support that we refer to in the Green Paper—the employment support, personalised employment support and also the support to make sure that people’s health and care needs are met. We will be able to deliver both of those in that 13-week run-on period before benefit ends. That will certainly help. It is historically a very long run-on if you compare it with run-ons that have been added to comparable changes in the past, but we think it is important. In particular, it gives us the opportunity to guarantee that the support that people will be offered will be provided for them before their benefit ends.

It is obviously quite a challenge to deliver that within a 13-week period, but reflecting on the answer that you have given—and Ministers often talk about the need to help disabled people into work—I appreciate why that is a priority, but can you understand why that might give some people the impression that the Government don’t realise that PIP is not an incapacity benefit? There are many people who are in work receiving PIP to allow them to continue to work. Are you trying to incentivise work by restricting access to PIP?

No. As you say, PIP is a contribution to the costs imposed on people by their disability or health impairment. It is a contribution towards those costs and the person receiving it can be in work or out of work. The benefit does not have anything to do with work. About one in six, 17%, of those who claim PIP are in work. We would love it to be a lot more and we are putting in place the employment support rising to an additional £1 billion a year by the end of the Parliament. I am hoping that will give many more PIP claimants the opportunity to be in work, fulfil their aspirations and have the same choices and chances that everybody else takes for granted. The benefit is not work-related and I think it is important that people should be able to continue in work if they are on PIP. Those who are in work will be offered the personalised employment support that I have referred to, which will be offered to those who are out of work as well.

What assessment has the DWP made of the potential for the loss of benefit to affect the ability of people who are in work to stay in work—that 17% that you are talking about? A lot of people come to us, as constituency MPs, saying, “I am in work but I only able to stay in work because of the PIP that I receive”.

I have had one or two of those conversations. I think sometimes that is around the cost of travel to work, and of course we have the Access to Work programme that delivers help for that kind of cost. There are some long delays at the moment in Access to Work because of the very big increase in demand for it over the last year or two, so we are consulting on how we should reform access to work, but that may be the answer for people to meet their travel costs if those are a result of ill health or disability. Some people make the point that they use their PIP for therapy of some kind and that enables them to stay in work. We have said and I have mentioned that we want to make sure that people’s health and care needs are met. We are talking to the Department of Health and Social Care about how that will be delivered. It may be, for example, there could be a referral in the health and care support conversation to WorkWell, which is available in 15 of the 40-something integrated care board areas. That is an important part of the things that need to be done in parallel to all of this. The NHS may be able to meet those needs in the future. It depends what PIP is being used for and seeing whether we can meet that need in a different way, but I certainly don’t want anyone who is in work at the moment having to give up their job because of these changes.

I appreciate that you have said that you hope that people’s health and care needs would be met and everyone who loses PIP should have those health and care needs met by different parts of the system. Given that the Government inherited an NHS that was on its knees, given the pressures on access to work, how do you think that all of these health and care needs would be met within a 13-week transitional period, given the pressures that are on the current system?

I am pleased to say we are fixing the NHS, as you know.

It takes time to do that.

It does take time, and it will take time before these changes come in as well. That is the point I was making earlier about the need to make progress on all of these tracks in parallel, including fixing the NHS. It will be November next year, getting on for 16 months, before the changes to PIP start to take effect, so we have over a year there, and we need to make progress in getting the NHS working properly. We have made a very big financial commitment to the NHS this year to make those changes. If you look at what is happening in the NHS, there are some quite encouraging signs like progress on waiting lists, the 2 million appointments pledge has been exceeded and there is good progress. We will need to maintain it and in all these areas we have to keep making progress, but I think we are on track for being able to deliver what we need.

Yes, so no pressure. Also I make the point that that is the NHS in England. The same can’t be said for the situation in Scotland where the responsibility for the NHS lies with the Government in Holyrood and waiting lists are getting longer rather than shorter. Moving on to my last question, concerns have been expressed about the impact on older PIP recipients, including those who are above state pension age. The Bill provides the Secretary of State the power to make different provision for persons of different ages. Will you use that provision to protect older PIP recipients and, if so, above what age?

People above state pension age by and large will not be affected by these changes. The reason for that is that they are on what are known as ongoing awards with a light touch review that happens once every 10 years or so. The light touch review does not involve a reassessment for those who are over state pension age. The only circumstances in which things might change are that if people reported a change—if their condition improved and they asked for a reassessment or something—they would be assessed on the new basis with the four-point threshold, but people who are just carrying on as normal will not be affected by the changes because they will not have a reassessment.

Good morning. You recently launched a PIP review. Can you give us a progress report, an update, and perhaps any ideas about the line of thought that you are minded to take, and ideas that you might follow?

We are looking at the moment at the terms of reference for the PIP review. The background to it is that it is a long time now since PIP was introduced. It was introduced in 2013, 12 years ago—the Chair and I will certainly remember that happening—and it is being looked at. Paul Gray carried out a couple of reviews in 2014, 2015, but he was looking at whether the criteria were being properly applied. We think now 12 years on it is time to have a fuller look at this, not to make savings or anything, just to make sure that the assessment is the right one for the current circumstances. There have been a lot of changes and health incidents, which we have been talking about, in the last 12 years and we think it is a good idea to take a look at the assessment from that perspective. The other thing that is happening is that we will be using the assessment in a different way in the future with this four-point threshold being introduced. We want to take the opportunity to look at it from that perspective as well. We are looking at what the terms of reference should be. I am talking to a lot of organisations and individuals. I talked to a group of local authorities yesterday. I hope we will be able to come forward with the terms of reference before the summer recess and publish those so that everybody can see what we envisage.

You have said that the incapacity benefit system focuses too much on what people cannot do rather than what they can do, and that is one reason you are looking at removing the work capability assessment. However, the same could be said or is true of the PIP assessment process at the moment. Are you looking at how the PIP assessment could also be refocused on what people can do rather than what they cannot?

I think for the time being the PIP assessment process will continue to look pretty much as it does now, but there are people who are arguing—you mentioned Ben Geiger earlier—that we should be looking, for example, not just at the functional assessment but at environmental factors. That would be a very big change and it would take a long time and lots of thought and planning to start moving in that direction, but I think we ought to have that conversation within this review. There may well be some changes that we want to make in the fairly short term, but I would like us also to have conversations about how the assessment for this benefit should look longer-term. If there are some ideas behind your question that you think we should consider then I would be very interested to hear those.

Nothing particularly for today. As part of the review, are you considering what changes need to be made specifically to reflect the PIP assessment’s future role? It can be the means by which eligibility for UC health will be determined.

Yes. As I said, the changed role for this assessment is certainly an important factor in the background to the review.

Following up on an answer you gave in the House a couple of days ago to my question, as far as PIP claimants specifically are concerned, so excluding the wider UC claimant base, do you agree that there will be far more net losers than net gainers by the changes you are making? I mean the current claimants of PIP and also those who might have been able to claim but will not be able to claim in the future because of these changes. Do you agree there are far more net losers than gainers?

You have said if we exclude other people, so allow me just to make the point that of course overall there are more gainers than losers from the changes that are being made in the Bill because of the increase in universal credit standard allowance received by a lot more people.

That is what you said, yes.

That is the wider picture. On PIP, I have made the point that the current trajectory for spending on PIP is not sustainable and so the changes we are making are intended to make it sustainable, but the spending on PIP will continue to rise in real terms. The number of people receiving PIP we expect to continue to increase every year, but not at the unsustainable rate it has been increasing at over the last few years. Yes, there certainly will be fewer people receiving PIP in a few years’ time than there would have been if no change had been made.

So it is a correct statement that there will be far more net losers than net gainers?

I am not sure far fewer. We anticipate that by 2029-30 the estimate is 370,000 people who will be receiving PIP in November next year will not be receiving PIP by the end of the decade. That will be a number of people whose income is lower. Of course I would love for many of those to be able to move into work, and we are going to be providing the employment support to make that ambition realistic for people in a way that it has not been in the past.

Before we move on to Frank McNally, the Minister probably recalls that there was a bit of a controversy, I think in 2018, when it was announced that the previous PIP reviewers—both of them, so Paul Gray and then we cannot remember the previous one—were not provided with information about, for example, the IPRs that were undertaken on people who had gone through PIP. Can you reassure the Committee that the terms of reference for data on deaths associated with assessments will be made available to whoever is undertaking the review?

I will be undertaking the review so, yes, the information will be available to me. Not least thanks to your work, Chair, we are being much more open about all this now than was the case in the past, so information is being published in the annual review of the Department. We want people to see what is going on. There is not any benefit for the Department in hiding these things. They were hidden too often in the past. I think that is one reason why the trust in the Department deteriorated so badly because people could see that things were being covered up and hidden and it should not have been happening. I am determined that it will not happen in the future.

Good morning, Minister. It is nice to see you and thanks for joining us today. Can I dig a little further into John Milne’s point around the wider PIP review? We know the Green Paper chapter 2, section 2, highlights the level of work that the Department will undertake for the way they do the PIP review. I think that is to be welcomed because we all recognise that that needs to take place. In response to the previous question, you suggested that that would have a short-term direction but also the potential for a much longer-term direction. Is it your expectation that any outcomes arising from those exercises will be implemented by the time we come to the change in PIP eligibility in November 2026?

The shorter-term ones will be on a track for implementation around that time. Practically I do not think it will be possible to make those changes by November 2026 but we can make them shortly afterward. I will ask Katherine Pateman to say a little bit more about that. Then the longer-term changes could be much longer-term and what the nature of those is would determine how long it might take. On the timescale for short-term changes, Katherine?

It will depend upon a range of factors including the Department’s ability to implement those changes, depending on the nature of the changes, whether we would need to consult again and factoring that in. That is why it is difficult to give a precise time, and obviously we need to determine what we are looking at to give a clearer timeframe.

I think that is what generates some of the concerns that members have been touching on. I may come back to that in a couple of minutes. On the wider assessment exercise, the Green Paper states, “To make sure we get this right”, which is the critical aspect of this, “we will bring together a range of experts, stakeholders and people with lived experience to consider how best to do this”. Given the criticism that has been levelled from a number of key stakeholders, a number of people with lived experience and a number of experts, many of whom have presented to this Committee about some of the proposals that are contained in the Green Paper, surely it is probable or more than possible that the points that will be highlighted to the Department as part of that exercise will be contradictory to the new PIP eligibility and put us in a difficult place where we have an assessment that is perhaps suggesting that the eligibility criteria that we put in place at this stage are not fit for purpose.

If we decide to make some short-term changes, we will be able to implement those perhaps not quite by November next year but not long afterwards. They will be in place for the great bulk at least of the reassessments that occur after November next year, so that will be post the review or that part of the review. That should work okay, I think.

You do not think if you are engaging with stakeholders as part of that wider exercise into PIP assessments that they will not have criticisms of the current eligibility that we are putting in place potentially from next week?

We can make some short-term changes relatively quickly. If there was to be a more fundamental change to the nature of the PIP assessment, for example in bringing in environmental factors rather than just functional factors, I think everybody recognises that would take quite a long time. You would have to come up with ideas, consult on them and test them. That is quite a long-term exercise and I think people recognise that a big change of that kind would take some time to get right. I think stakeholders would recognise that.

I think that is a fair point, and ultimately I suppose that brings us to a core concern that we have perhaps put the cart before the horse in the sense that we are undertaking or are about to undertake what could be a comprehensive exercise into all aspects of PIP but we will be doing so after making changes to the eligibility criteria for that. Do you understand and do you have reflections on that argument that the Government have perhaps put the cart before the horse on this?

No. I understand the argument but I do not agree with it. I think the need for the funding for PIP to be on a sustainable basis is clear—and we have talked about that—and urgent, and the Government have needed to work on that. It is a benefit that has been in place for 12 years. It is appropriate to think about whether in the future it should look rather different but I do not agree that we should not do anything until we have sorted that out. It could be some years, I think. If there was a view taken that we ought to adopt a different approach to assessing eligibility for this benefit that inevitably will take some time, but I do not agree that the Government ought not to do things in the meantime, because the sustainability point needs to be addressed.

The Bill just published provides for a rebalancing of UC rates that you set out in the Green Paper, and it includes a significant reduction for new claimants after 2026. The justification is that it will incentivise people to find work, but we have been told that it may have the opposite effect and that has happened in the past when similar cuts to welfare have been introduced. Why do you think it will be different this time around after previous experiences?

Partly this goes back to the discussion we were having earlier that at the moment there is a very big incentive for people claiming universal credit to seek to be classified as LCWRA, an appalling phraseology, because if they are classified as LCWRA then they get a premium, which is worth more than the universal credit standard allowance. That is unavoidably a massive magnet for people. I see this in the correspondence that comes across my desk. One letter from somebody who had written to their MP made the point, “I am classified as LCW”, which means they get the ordinary universal credit rate, and the letter said, “If only you classified me as LCWRA then I would be paid £400 per month more and I would be comfortable”. This is a serious flaw in the current system, that it presents the LCWRA status as something to aim for—“If only I could get to that I would be comfortable”—when the system should not be doing that to people. That is a very bad feature of the current system. What the system should be doing is encouraging people to aspire to work and providing the support to make work possible and feasible. Yes, we do want to substantially reduce that incentive, and in part it is by raising the level of the universal credit standard allowance, which as you were saying earlier has been driven down to this much too low level up until now.

Is there not a case for arguing that if you press down on one benefit it simply in the end comes up in another benefit? That is why the overall level of benefits has remained quite constant over a long time, as Debbie said at the start, and that this is likely to happen again. People were driven into PIP because they lost access or their needs were not being met by another benefit, so what we should be doing is concentrating on needs first, Treasury second. I feel that we are doing Treasury first and needs second.

You are certainly right, and there are examples where cuts in one area have led to increases in another. A classic example of that is the rate in universal credit for LCW, limited capability for work, because when ESA was introduced and the work capability assessment was introduced in 2008—and I ought to come clean to the Committee to say that I was the Minister responsible at the time—there were three levels that the work capability assessment evaluated for. If you were fit for work you received the ordinary benefit rate. If you were limited capability for work you received a bit more and if you were LCWRA—that is limited capability for work but also not able to undertake work-related activity—you received a higher amount still. There were three levels. In 2015 the then Government scrapped that middle rate, the LCW rate, and people in the LCW category since then have just received the ordinary level of universal credit. The Office for Budget Responsibility has made the point in its 2024 welfare review that what happened was not that people in the LCW group had a lower income but very large numbers of them went into the LCWRA group and once they were there, yes, they did get some extra money but they received no help at all. There was no support for them to get into work. The system abandoned them. That is a very clear textbook example of exactly the problem that you have described. We are aware of that and we have designed our changes in the light of that problem. We have seen this big increase particularly over the last six years in spending on health and disability benefits. We do not think that is inevitable.

Needs first not Treasury first. It feels like you are saying Treasury first.

I think it is about needs first. We are saying we need to focus on supporting people to move into work, to fulfil their ambitions and aspirations, to have the same choices and chances that everyone else takes for granted and not hear from the system what they hear now, which is, “You are not capable of working”. That is what the system is telling them and it is just not true.

One last question. We have also been told that the bigger problem is not so much the disparity between the standard allowance and UC health as the inadequacy of the standard allowance, and we have talked a bit about that already. The Bill requires the Secretary of State to increase the standard allowance by at least the amounts set out in it, and in the Green Paper you talked of starting to improve the basic adequacy. Does that suggest that you are looking at increases beyond the ones that have already been set out so far?

Let us see how we get on. We have announced those increases and they are in the Bill being debated next week. Beyond that I am not able to say but of course there are certainly aspirations around. I think everybody will have heard of the essentials guarantee idea. There is a case to be made, but let us see how we get on.

Thank you for coming to speak to us this morning, Sir Stephen. I am going to move over to the individuals who are in the severe condition claimant criteria. First, one of the things I want to raise is the huge amount of uncertainty that disabled people are feeling at the moment. That causes a huge amount of stress. In light of the work that we have been doing on the safeguarding of vulnerable claimants, how have you balanced that uncertainty and the risk on those individuals who are very poorly? How are you managing that in the Department at the moment?

I recognise that that is a very significant issue and that there is a good deal of anxiety around. Of course change does sometimes need to be made, and we must do it in a way that is as helpful and supportive as possible. The changes particularly to PIP, as I said, are not going to start until November next year and not until each individual’s award review after November next year, so it is still some time away. I accept there is always some uncertainty because people are reassessed for PIP from time to time. The basis next time will be a bit different but reassessment is always a feature of the system and therefore uncertainty. I do not think there is a way of avoiding that. We are taking very seriously the need for the Department to do better on safeguarding. As I have said, I very much welcome the Committee’s work on this. We are consulting in the Green Paper. The consultation is open until Monday and we are keen to get more responses. We have had around 40,000 so far but we are eager to have as many as possible, to hear from people about how they think we should do that part of our job. Once we have been able to go through those consultation responses we will come forward with our proposals.

Thank you. I wanted to establish that point before we went on to those individuals with severe condition criteria claimants.

It is an important point.

They will continue to receive UC health rate beyond 2026 and never have to undergo a reassessment. The decision about whether somebody qualifies will depend on the result of a work capability assessment but the work capability assessment is to be abolished. How will all that work?

The work capability assessment will be in use for some time yet, I think another three years or so. The severe conditions criteria and whether somebody fulfils those criteria comes out of the current assessment, but once the WCA has gone we will obviously need another way of establishing that and that requires some serious work and planning. All of this will be set out, our detailed proposals on this, in the White Paper that we intend to publish in the autumn. I hope that we will be able to publish it at the time of the autumn Budget. There are quite a lot of issues, the results of the consultation closing on Monday, our assessment and a response to that consultation, this particular point and other points as well that we will need to set out in that White Paper in the autumn and there will then need to be further legislation to follow.

That is helpful. The Secretary of State in a recent letter referred to the protection of those who would never be able to work and said she would provide those details. I am assuming that is where those details will come.

That is a very important part of the system that we will need for the future.

Hugely so. Lovely. How will you protect those who will never be able to work again in the future? What are your thoughts around that?

What we have said is that they will be able to receive the higher frozen rate of the universal credit health element and in addition we will assure them that they will not need to go through universal credit reassessments in the future. Those are the two key things that we envisage.

Sorry, you said they will receive the higher rate, which will be frozen. How does that protect somebody who is on a lifelong support because they are unable to work? How does that protect them if their financial position is frozen at a point where costs are going up?

For somebody who is receiving the universal credit health premium, their income will typically consist of the universal credit standard allowance and the universal credit health premium. The latter will be frozen in cash terms. The universal credit standard allowance is being increased by more than inflation. If you add up those two things, it is not quite the whole income going up in line with inflation, and it depends a little bit what inflation proves to be over the next couple of years, but it is broadly protected. It is certainly protected compared with other incomes for people who are not in this category, for example. I think by the end of the decade the last figure I saw suggested that people’s income might be a couple of percentage points lower than it would have been if the system had just carried on as it is at the moment, but that depends on exactly what happens to inflation.

In broad terms overall their income will fall below inflation because there is a frozen element and an increasing element and that over time their incomes will fall in real terms?

Yes, depending on exactly what inflation turns out to be. It may be that the total income does not quite keep track with inflation.

I want to ask about the additional premium that is also in the Bill that we are voting on, on Tuesday. Who will this be for, how much will it be, when will it be introduced and how do people get it?

This is the universal credit health premium that we have just been talking about?

The additional premium.

That is the universal credit health premium that will be payable to people who are in the LCWRA group currently and will keep it over the coming years and also others. We have talked about people meeting the severe conditions criteria.

When will they get that, Minister?

For those who are receiving LCWRA now it will carry on. That will just continue with the universal credit health premium. Then others who are newly eligible will receive it as they apply for it and are assessed.

Can I ask specifically a question I did not get a chance to ask before? What are the intentions, as we committed to during the general election, to co-produce policy with disabled people and their organisations? How are we going to make sure that is embedded in the development of policy?

There is a lot that needs to be done arising from the changes that we are making. As an example, we will be setting up a disability advisory panel to work with us on the proposals in the Get Britain Working White Paper around employment support and also collaboration committees, which are shorter term, more focused groups looking at exactly how the employment support that we are committing to can best be delivered. I think that will be a very important part of co-production of policy because we made this big commitment rising to £1 billion a year on employment support by the end of the Parliament. It is absolutely vital that we use that funding in the best possible way to support disabled people and we need to work with disabled people on how we are going to do it. I met recently with the Disability Charities Consortium, Scope, Mencap, Sense and the others and they are very excited about the opportunities that this £1 billion a year commitment opens up for the people they are supporting. We will be working closely with them and with people with lived experience of disability as well to design the support that will be in place.

Stephen, you said earlier that you are going to press ahead with the Bill next week. At the moment you do not have a majority to get it through the House of Commons unless the Conservatives support the Bill. Would you like us to and will you press ahead if you can only do it with Conservative support?

I would be delighted to have support from across the entire House for the excellent proposals that we are bringing forward, and I am looking forward to the debate on Tuesday.

Good. Okay, well to get our support we would need to have confidence that we are going to see genuine long-term reductions in the overall spending on welfare, which we do not believe will happen under the current proposals on their own, and to see genuine support on the labour market side. At the moment we are seeing jobs being destroyed through the actions of the Government to pass their unemployment Bill, leaving aside the national insurance rises that jobcentre workers that I have spoken to say is devastating the work they are trying to do to support people into employment. On its own it does not feel to me that this Bill, which is not really a reform Bill, it is just a cuts Bill, will even achieve significant welfare savings. I am basing this on evidence from Citizens Advice, the Resolution Foundation and others. I completely agree, by the way, with what you said earlier, which is that for many younger people, particularly those with mental health conditions, the best thing for them would be to be supported into employment, and I agree with you on that ambition. Nevertheless, the proposals in the Bill—the cuts, the benefit reductions—will fall disproportionately on older people and those with physical health conditions rather than on younger people with mental health conditions who will continue to be parked on benefits. Do you accept that is the likely effect of the reforms, that it will be older people who are more likely to lose their PIP?

No. I have not seen an assessment along those lines. We will be offering employment support to everybody who loses their PIP whatever their age and we would like to see many more people in work. There are 2.8 million people at the moment out of work on health and disability grounds, economically inactive, and 200,000 of them say they would like to be in a job now and think they could be in a job if only they had the support to get into work. We are determined to provide that support and that will extend across the entire age range. We certainly want to support young people for the reasons that we have talked about and that you have recognised but we want to support older people as well.

The Resolution Foundation says that the likely impact of the PIP changes is that older claimants are more likely to be impacted than younger claimants. They are also less amenable to the incentives so it is harder for them to respond to a reduction in benefit income by seeking work or more work, whereas younger people are more likely, naturally enough, to respond to those incentives. I am concerned that you are targeting older people who are less likely to respond in the way that we all want.

We will be offering support to older people as well as younger.

Although that support is not going to come in for another couple of years.

No, the support is being rolled out now. The Connect to Work programme is being rolled out across the entire country, the whole of England and Wales, by the end of this year and that next year is funded to support 100,000 people. The support is coming into place now. It is building up.

It is starting but it is starting slowly—100,000 people, when we are talking about—

We are building up to £1 billion a year by the end of the Parliament but we are on track now.

We are talking about millions of people currently parked on benefits, and you are only proposing to support 100,000 who will not all necessarily succeed in getting into one.

No, that is not the case. There are 100,000 on Connect to Work but there are lots of other things going on, with inactivity trailblazers and this growing programme that I have referred to building up to an additional £1 billion a year by the end of the Parliament. There is going to be a huge amount going on. The scale of this is unprecedented. This has never been done on this scale before. If I remember the new deal for disabled people, which was quite experimental when it started in 1998, it steadily reduced the disability employment gap between 1998 and 2010 and then in 2010 it was all scrapped and the disability employment gap has hardly shrunk at all since then. We want to get back on to the trajectory of providing proper employment support to the very large number of people who at the moment are out of work on health and disability grounds, needlessly. They could be in work. We must give them the help to make sure they can.

Indeed. Let me just turn to universal credit health. As we have said, that is now essentially being merged with the PIP regime. It is not clear to what extent this is now a disability benefit rather than an incapacity one and we look forward to seeing the product of the assessment review. The proposal is to cut in half the UC health premium for new claimants. That still leaves a £50 a week roughly uplift in people’s income if they manage to get on to the LCWRA cohort, which is less than £100 per week but still 50% more than they would be getting otherwise. You are suggesting that the increase in the standard allowance will somehow reduce demand for the UC health component. That is a £5 a week uplift whereas there is a £50 a week prize if you get on to LCWRA. Do you really think that we are going to see a significant reduction in UC health claims as a result of the reduction in the entitlement, especially as you have just acknowledged that overall it is unlikely that this will outstrip inflation anyway, so people are still going to be incentivised to seek the UC health component? Even if the spending reduces the numbers of people in receipt of that, surely it will continue to rise unsustainably.

First, and maybe Shaun will tell me, the increase in the universal credit standard allowance by the end of the period we are talking about is somewhat higher I think than the figure you mentioned.

In real terms it will be £5 a week, won’t it?

It is £265 a year, so that will be about £5 a week in real terms.

The key thing is, yes, we are reducing the incentive but we are also providing support. That is the key part of the jigsaw that has been absent in the past. There must be proper employment support. It is not just a question of reducing the level of the premium but providing the support that people need.

There is still no conditionality to seek that support or to take it?

Conditionality is an interesting topic. If we are moving on to that I would be very interested to talk about it.

The health component.

I think the evidence is pretty clear that the best kind of employment support for people out of work on health and disability grounds is voluntary support where people have chosen to seek that support. We need to think more about conditionality in this area and certainly it is my view that it is perfectly reasonable for the Department to expect to at least have a conversation with people about their work aspirations and how they are going about getting the support that they need. The key target for us at this stage is the 200,000 people who want to be in a job today, who think they could be in a job today, to make sure that they have the support to enable them.

I suggest we try to create jobs and well-paid jobs for them.

As we are doing.

As I know you want to do, but you are going about it in a very perverse manner, in my view.

Employment is up, inactivity is down since the election. We want to keep on that trajectory. There is a long way to go but we are on the right track.

Unemployment is up as well. It is a perverse set of contradictory stamps that we can trade with each other. Let me quickly finish, Chair, with a question.

I do not think they are contradictory. I think what is happening is that the inactive bit of the system, which is the reason that 2.8 million people at the moment are out of work on health and disability grounds, people are moving. People are moving into employment. People are moving into the active part of the system and, therefore, being counted as unemployed and there they are getting the help or starting to get the help they should have been getting years ago.

All right. Let me just ask you this again, following up my question to you in the Chamber yesterday about Motability. I understand you are not looking at the scheme. Why is that? There has been such an increase in expenditure on that scheme, a lot of people getting vehicles and only 5% of vehicles are adapted for physical disability, so a lot of people are getting vehicles who do not have a physical need for transport. It is £3 billion a year, way larger than it used to be. Do you not think that this is an area that you should be looking at?

I think the Motability scheme, the mobility component of PIP, has an important job to do. We were talking earlier about people being able to get to work and the mobility component is very important for many people with a health issue or a disability to enable them to stay in work.

Do you think the scheme is fine at the moment?

I have had concerns raised with me about some aspects of this and no doubt at some point we will want to have a look at it, but it is not part of the proposals that we are bringing forward at the moment.

Minister, there is a lot in the Green Paper, as you have just touched on with Danny and through the day, to be welcomed, especially for young people. I think I have been absolutely clear on that. However there has been a concern highlighted to us in evidence from stakeholders around the restriction of UC health to those under the age of 22. We had evidence from Dr Lucy Foulkes, who is a psychologist from the University of Oxford, and she highlighted that the move to delay access made no sense developmentally and would cut off support at a critical time in a young person’s life. Do you have a view on that? Could you talk us through some of the rationale behind it?

Yes, I would be glad to. Our concern is at the moment too many young people are being categorised as unable to work right at the start of their working lives and left with no engagement and no support. That means that they face the prospect of being trapped in long-term economic inactivity before their career has even begun. There are at the moment 150,000 16 to 24-year-olds in this LCWRA group who are not getting any support with work at all. We have announced our youth guarantee that we want every young person to be learning or earning, including young people in a universal credit health group. We want to be talking to them, we want to discuss their goals and ambitions with them, how we can help them to access the right support. Those conversations are certainly going to need to be tailored to the individual’s circumstances, including their health. I am sure we will not be able to have a conversation with some of those 150,000 people, but to say we are just going to leave the 150,000 where they are I don’t think makes sense. We are consulting on this proposal about not paying that group the universal credit health premium—we have not made a final decision on it. The consultation, as I have said, carries on until Monday and then once we have seen the responses we will take a view. The reason for proposing it is to make sure that for this group in particular, as they are moving from education into full-time work—and that transition is so important for their future prospects—there is not an unhelpful disincentive to work, that there is some additional funding available, because we use the proceeds of this to improve the support focused very specifically on that crucial group of young people. That is the argument, and we are consulting on it and we will see what everybody says in response.

A critical aspect of this, and it was touched on earlier, is the mental health crisis that we have now. There is a mental health crisis impacting young people. They are not immune to that. If I look at it in a Scottish context, the British Psychological Society recently highlighted the Scottish Government’s cuts to mental health services as creating a perfect storm. We have a three-year backlog for some areas of mental health support. There are equal challenges south of the border but you are right that the Secretary of State for Health and Social Care has taken action on that that we are not seeing in Scotland, so you have some cross-border differentiation. I want to ask you briefly on the relationship between the devolved context in Scotland and UC health. We are moving to adult disability payment in Scotland and we have UC health. How do you see that relationship forming? You could have some challenges here I expect. How do you plan to navigate that in the interests of people who are going to potentially qualify for adult disability payment but would potentially not qualify for PIP?

Finishing off the under-22 point, I agree with you about the importance of improving mental health support and I think that the Scottish Government should be following the lead that Wes Streeting and his colleagues are taking in England. Of course we know the best thing for somebody’s mental health, particularly at that crucial point in their development, is to be in good work. We want to pull out all the stops to make that possible for people. There are some quite significant issues around devolution and the universal credit health premium, as you say. The key one, clearly—and you are hinting at this I think—is that in England and Wales the gateway to the universal credit health premium will be through the personal independence payment and PIP is being replaced in Scotland by the adult disability payment. The question then is what will be the gateway to the universal credit health premium in Scotland? To some extent this depends on decisions in Scotland about whether the eligibility for ADP will be changed along the lines that we are changing eligibility for PIP. That is a decision for the Scottish Government and we will see what is decided. If the decision is to follow the direction, up until now ADP has been broadly in line with PIP, so if this was in place today I would be perfectly happy for ADP to be the gateway to the universal credit health premium. If in the future, however, there are large numbers of people who were eligible for ADP in Scotland who would not be eligible for PIP in England that presents a difficulty for us. That is something that we will need to work out. We are talking to the Scottish Government and I anticipate that we will be able to set out our solution in the White Paper in the autumn depending on the decisions the Scottish Government make.

Yes, there are people who at the moment are on LCWRA due to non-functional special circumstances, which I think is probably what you are referring to—people with cancer, for example, going through cancer treatment, people with high-risk pregnancy and also people classified as substantial risk at the moment. We recognise that we need to work out how we will protect those people in the future and the details of what we are proposing will be in the White Paper.

No, we do not. I always thought it was a slightly odd plan that the previous Government had, which was to abolish WCA but to make big changes to it for the last couple of years of its existence. We have made clear we will not make those changes to the WCA. We are going to abolish the WCA. We are not going to change that. There was a great deal of concern about the proposals to change, to tighten up the substantial risk criteria through those changes. We are not going ahead with those changes at all.

When do the Government plan to legislate for the right to try?

We will be bringing forward regulations and those regulations I shall be placing in the library of the House by Monday so they will be public ahead of the Second Reading of the Bill due to take place on Tuesday.

It does not give us much time to read them.

It is the start of a process. I have no doubt that once people have seen them people will have comments on them and no doubt between then and the regulations taking effect there will be some changes. We are doing it in parallel with the Bill.

Many people fear losing their benefit if they try to work. The Green Paper says this is mostly because the rules are complex and people do not understand them but recent government research identifies a lack of understanding among claimants but also says that the main problem is a lack of trust in the DWP, which we have touched on previously. Do you agree that the main problem is not the lack of understanding in the system but lack of trust? If so, how will the Department rebuild trust, especially in light of the proposed cuts to PIP and UC health?

There are rules at the moment, and they have been in place for some time, to encourage working age people in receipt of health and disability benefits to try work. I do not think those rules are very well known but it may be, as you say, that even if they were, people would not really believe it and so it would not make very much difference. There is a lot of worry, as the Department’s research indicates, that engaging with employment support at all could lead to having to look for unsuitable work, could well trigger a reassessment, a WCA or a PIP award review, and that if they then did go into a job and it did not work out then they may struggle to get back on their benefit. All of those worries are quite big in people’s minds, so the fact that this will be on the statute book hopefully will reassure people that this is for real, that they will be able to try work and not risk losing their benefits if the job does not work out. Having legislation should help. I am hoping we can build up trust more generally but we are where we are.

You are right, the work capability assessment at the moment is used to determine the conditionality applied to a particular individual and somebody classed as unable to work, as LCWRA, they get no support or engagement at all. They are abandoned by the system. What we want instead is to be able to guarantee personalised employment support to anybody on out-of-work benefits, on ill health or disability grounds, who wants to work. That requires, and I think you are absolutely right, a new approach to conditionality. It needs some careful consideration. We want the views of others to help us work this out. We recognise that health impairments, disabilities, can be complex. Things can fluctuate and the support that an individual needs may well change over time and we need to acknowledge and recognise that. Conditionality needs to be tailored to an individual’s needs and capabilities. We are consulting on how to determine who is subject to a requirement only to participate in conversations, which would be one end of this, or in further work preparation activity, which would be another level, or then there is the stronger requirements in the current work search regime. All this needs to be thought about very carefully and we are expecting to bring forward our proposals once we have all the consultation responses assessed in the autumn.

I think the biggest changes would be for those who are currently in the LCWRA group who get absolutely nothing at all now. Our view is that it is reasonable to expect the great majority of people at least to talk to us about what their work ambitions are and about the support that we can provide to enable them to fulfil those ambitions. There will be some people who that would not be appropriate for at all, who should be exempt from the requirement to have conversations, but for the large number of people who are not getting anything at all now we want to have conversations with them. The evidence is increasingly clear that simply having a conversation with people about these matters, helping them to think through what the possibilities are has a very positive and significant impact on enabling people to move into work, including people the system has told for years that they cannot work.

On the whole, I think the right approach here is a voluntary approach, to offer people the support that is available and it is for them to decide whether to take it up. This is an early part of the conversation here and, as I say, we will have much more when we come forward with our White Paper. I think the principle that the support that we are offering should be taken up voluntarily by people is the right one but we want to make sure that at least we are talking to them about what the opportunities are.

We want to have in place a network of work coaches who have specifically been trained up to do this work among people out of work on health and disability grounds, the dedicated Pathways to Work advisers. I think we have 1,000 of those now in place, equivalent to two in every jobcentre. We have the academy for work coaches that will be training people up specifically for this work. It is important work and we recognise that those who are doing it need to have the training and the support to enable them to do a good job. Essentially it will be led by, at least initially, those advisers in jobcentres.

I am going to duck the question, and I will be glad to come back in the autumn once we have thought this through properly and talk more about how we see it all panning out.

I am conscious of time and there is one more member who wants to get in. I have two quick questions. You mentioned about conditionality. Do you envisage the uptake of employment support ever being a condition of a disabled claimant’s benefit? That is the first question. The second question follows on from Danny Kruger’s point earlier about the support you are going to be providing is not going to be fully rolled out until the end of the Parliament, that there is a lag between that support and the changes you are making. Do you accept that is going to leave a gap?

On the first point, I think the evidence is clear that a voluntary approach here is the most effective and that people are best supported when they have chosen for themselves to take up employment support. The motivation is there, they have been involved in deciding what to do and that works more effectively. Let us see how things pan out, but our focus to begin with is the 200,000 people who want to be in a job now and think they could be if they had the support they needed. Let us make sure we get them the support. I think primarily we are talking about a voluntary approach. It is true that the support that we are providing will build up over the next few years but, as I said earlier, Connect to Work is entirely new. That is going to be available across the whole of England and Wales by the end of this calendar year, so we are not hanging around on this. The number of people who are in the frame for support will build up over the next few years when the PIP changes take effect and so on and the support we are providing will build up as well. I think those two things will happen in sync so the support that is needed will be in place when it is needed.

I wanted to press the point about the time lag. A lot of the changes that you want to put forward are encouraging people to get into work but the key programmes do not come on stream until the back end of the Parliament so that does not really feel in sync. The other thing I wanted to reflect on about—

Can I just come in? That is not how I see it. As I say, the key programme will be in place this year. The changes we are talking about in the benefit system start from next year but the number of people affected by them will grow over time. I think the support that we are providing will be in place in line with the need for it.

Okay. I am not quite sure, but we will leave that one. The one thing that I get worried about is the point at which people fall out of work. How will you support those people who have disabilities and they see the loss of their income, which means that they cannot work any more? How are we going to do rapid support for those individuals? How are you going to prevent them from not feeling that they can work long term?

I think there are several points here. I talked about the employment support that we will guarantee to people during the 13 week run-on period, about a decision on benefit is made. I am confident we will be able to deliver that by the time all of this starts in November next year. I think there is more than that we need and Sir Charlie Mayfield’s Keep Britain Working review is important here. We are going to need employers to be more supportive of people who have a disability or a health problem. At the moment there are quite a lot of people who run into a health problem in the course of their work and feel they have no alternative but to leave work when, with quite modest changes, they could continue. There are some very good examples I have come across of employers who are providing that sort of help but a lot are not. I think that Sir Charlie Mayfield’s work will be important here, and I hope help us to change the culture among employers to make it much more likely that people can get a bit of flexibility or whatever is needed to enable them to stay in work or return to work.

Thank you so much, Minister and your officials. Thank you for coming to see us and providing evidence to this last session of the Pathways to Work inquiry.