Welfare Reform Bill

Baroness Hollis of Heigham Excerpts

Thursday 10th November 2011 Grand Committee

[The Earl of Listowel]

My Lords, before the Minister replies, can I say that I am very disappointed to hear that lone parents with a child of six or seven who cannot find a job except one that occupies them during the school holidays as well, will be obliged to take a job under the new arrangement. That was not my understanding from my reading on this and it seems very disappointing that that is the situation. I would appreciate if the Minister would double check to be very clear on this particular matter. If he has done so, and he is clear on it, then in that case I suppose I will have to read Hansard again.

The other matter is about transitions in school. A point that is always emphasised to me is that the transitions into primary school and from primary into secondary school are key to the success of a child’s education. We need to ensure that we do not do anything to make those transitions more difficult. If there is research there that we can identify, maybe the Minister might be able to help with that, or perhaps he could undertake to look very carefully at this particular area. It would be helpful if he could see whether there is any adverse impact caused by the changes in terms of the transitions of children into primary school.

[Baroness Hollis of Heigham]

My Lords, could I also ask a question, which is to turn the comments and questions made by the noble Baroness, Lady Sherlock, around the other way? If a lone parent has found a job as a dinner lady, precisely because her hours fit those of her young children, and she is therefore not being paid and not working over the holiday periods, is she at all exposed to the issue of work conditionality?

The second issue is on transition. Again, speaking from personal experience—and we all brought our children through school—many children sail through and love that first year of school. However, many children who suddenly go into what they regard as “big school” can find it very stressful. They revert to bed-wetting, have disturbed nights, are fearful, actually hide under the table when the school bus comes, and so on. In those situations, the lone parent needs to be on hand and available to go into the school if necessary, to collect the child from the school, during that first year of settling down. Most of us can talk from personal experience in that respect. The noble Lord would be very wise to listen to the point about transition—whether it is for one year, or ideally for two years, before the full conditionality comes in.

[Lord Freud]

My Lords, on the first question on whether the child happens not to be in school on their fifth birthday, there will be a small number of lone parents that we are aware of whose youngest child is aged five but who has not yet started school. We are therefore going to expand the existing flexibilities within jobseeker’s allowance to support these lone parents through the short period of time until their child enters school or reaches compulsory school age, whichever comes sooner.

On the question raised by the noble Baroness, Lady Hollis, about the dinner lady—people who are employed through the school year—where the dinner lady is presumably on a contract through the process then clearly she has a job and would escape conditionality in holiday periods because she would be working in a long-term job. As one gets to short term fillings-in I expect that it becomes a bit more detailed and dependent on particular circumstances. The broad position, however, would be that they would be within the job for that period.

[Baroness Hollis of Heigham]

Thank you, I am very grateful for that. If I understand the Minister rightly, that means that through the period of the school holidays, for example, the dinner lady will go up the ladder—or down, whichever way you want to put it—to increase the amount of universal credit during that period, to compensate her for lack of income, and it would then be readjusted when she goes back to being a dinner lady in the school term.

[Lord Freud]

Yes, the noble Baroness is way ahead of us, as usual, as we structure how we do the universal credit. We are currently looking at that very closely in terms of how we do it. We have not settled this, but my view is to look at it in fairly cash-in-the-month terms, as she is implying. That is where I would come from as we started to devise it. However, I cannot give a commitment or go further than say how we would do that. I am not keen to elaborate averaging-out processes because I think that gets overcomplicated.

--- Later in debate ---

[Baroness Sherlock]

My Lords, I understand that. The fact is that the noble Lord is not trying to make people want to work but telling them that they have to work. The evidence may be complicated. For me, the point of the objective is simple. I do not think that the state should be substituting its judgment for that of a parent of a young child as to when it is better to go out to work. That should be left to the parent.

[Baroness Hollis of Heigham]

Perhaps I could reinforce a point. We know from all the research, going beyond Jane Millar right back to the American research, that a lone parent who goes out to work and retains that work, if it is sustainable, benefits from the lift out of poverty. I entirely accept that that is important for the family as well as for role models. However, that is possible if and only if she has childcare that she trusts. Very often that childcare is from a family member, who is often a grandparent. The grandparent can address the problems of the child in the transition period and so on. Yet time and again we are doing nothing to recognise the role that grandparents may play and instead we are going to impose in-work conditionality on them, taking them out of the caring function that they would voluntarily and willingly embrace for everyone’s benefit. We will expect two generations to work and for the child to be somewhere out there.

[Lord McKenzie of Luton]

My Lords, I thought that this started off as a relatively straightforward debate, but I am delighted that it has expanded into a huge philosophical debate which is very important. I thank all noble Lords who have spoken at least in support of the opposition to the clause. I think that some would go quite a bit further but there are important issues around childcare, the time spent with children, the propensity of the mother to want to work and the quality of substitute childcare. In one way or another, each of those has been touched on by noble Lords. I think that it was the noble Baroness, Lady Lister, who expressed the view that she was not totally signed up to the concept of lone parents in work when their children are as young as five, and I acknowledge that.

--- Later in debate ---

[Baroness Hollis of Heigham]

My Lords, there has always been a tension within social security, as David Donnison spelled out many years ago when we had what was then called supplementary benefit, between standard, national, no-postcode-lottery funding and payments, and the need for discretion. The Social Fund as it has become has that element of discretion and flexibility, which is why it would be madness to go to a call centre and think that you can do the thing that most requires discretion by telephone. I entirely sympathise with the Government’s wish to move away from that procedure.

My noble friend Lady Lister and the noble Lord, Lord Kirkwood, have eloquently explained the need for the Social Fund. I do not want to rehearse that, although if I had my way I would treble the money going into it because of its value to people. Indeed, the people who need it are not there because of financial mismanagement, let alone scrounging. They are there for the most part because of absolute, desperate, grinding poverty, having come out of care, prison or a refuge. They are the ones we seek to help.

Instead, I want to talk about something more mundane: the process proposed for the handling of Social Fund moneys, particularly community care grants, in future. Where that money is going to a local authority that is a single-tier unitary authority, I have no reason to think that it will not be able to get its act together because housing, social services and advice services are integrated on one level. However, it will be catastrophic for the shire counties where there are two-tier structures. I shall explain.

I come from Norfolk, a county which is about 60 miles by about 40 miles. When I was a county councillor representing Norwich I was closing schools that I had never visited and putting yellow lines on roads I did not drive on, and we called it “local government”. I have to say that the Jobcentre in my district had more local knowledge than most county councillors had outside their immediate patch. Under this proposal the money will go to a county council that has no local experience or knowledge. I do not in any way mean to criticise social workers who are doing a heroic job, but the council has none of the local knowledge at councillor or policy-shaping level that is required.

A second problem is that in a county council like Norfolk, there are a number of rural districts within which there may be small pockets of acute rural deprivation—even though they may contain thatched cottages covered with roses—but there is also the deprivation of Great Yarmouth, King’s Lynn, Thetford and some of the poorest estates in the eastern region, in Norwich. If the county council decides to go on a format allocation, it may send money to rural districts that do not need it as their pockets of rural deprivation have been resolved because those people have voted with their feet—I know this to be the case—and have come into the nearest urban city area. I have known good social workers give them the bus fare to do so, and quite right too; I would do the same in their situation. So the first problem with sending the money over to the county council is that they do not have local knowledge, but the second problem is that there is a huge variety of circumstance in an area as large as Norfolk, and I have no confidence that that will be recognised in the use of that money by the county council.

The third issue is what we call ring-fencing. If I were a county councillor with this money and I was seriously worried, as most county councillors are in good faith and decency, about child abuse protection, I would regard this as a fund to plunder. I would regard other priorities as being of more urgent need. I am therefore not in any sense confident that that money will be spent where it should be.

For several reasons, I want to see instead, and I hope that this will happen, the money in two-tier authorities going to the local district council. First, the local district council should have much more intimate knowledge of its locality and local needs. If localism means anything, it does not mean distributing down to a county council, half of whose councillors have never visited the village or the area where the deprivation is concentrated. You might just as well have the money coming from London or indeed from Scotland. It has to go down to the local district council.

Secondly, over and beyond local knowledge, if we cannot have ring-fencing—I hope we do, but I will come back to that—then at least it should be integrated with the fact that it is those same lower-tier authorities, the housing authorities, that are going to be responsible for the discretionary housing allowance and for the development of this absurd structure of individualised council tax benefits. Okay, it is an absurd and foolish system but it looks as though we may be stuck with it for a while until better sense prevails and we can reintegrate council tax benefit into universal credit. This means, though, that district councils on the ground have to have the staff, the resources, the local knowledge and the detailed experience of those same client groups for discretionary housing awards and for council tax benefit. They should ally to that the grants and some of the loans of the Social Fund because often they are dealing with the same client group, and often for the same purpose.

We have heard that a high proportion of community grants are spent in securing rent access to the private rented sector. It means that discretionary housing allowance—two funds, in future on two tiers—will be doing the same thing for a local community. This is absurd. If we cannot have a ring-fenced fund, then at least the money should go to a district council which can see the best way of meeting the needs of young people coming out of care or of ex-offenders. It may be that more money should go into discretionary housing and less should go elsewhere, but you can meet the service in different ways. However, I agree with the noble Lord, Lord Kirkwood, that you then need to make sure that there is an effective reporting and monitoring regime so that local authorities at the district level are accountable for how they have spent the money. There is more than one way to meet a need, and that is why I am not always supportive of ring-fencing. Local authorities can often meet a need in a better and more effective way—you only have to see the difference between residential care and domiciliary services to realise that there is not just one way—but they have to have retrospective, so to speak, supervision and control by virtue of inspection and monitoring.

I am hoping that the Minister will respond positively to this and say that when dealing with two-tier authorities, the shire counties, where the document says that the money is going to the upper tier, he will give a commitment, as far as he can, that there will be a letter of guidance requiring county councils to distribute and allocate funds based on previous expenditure levels in the district council. Otherwise some rural districts may pocket the money to keep their council tax down while the urban areas that receive people from the rural districts who have voted with their feet will have an even heavier burden to bear on reduced funding. In addition, meeting need should be recognised as a part of a district council’s repertoire. If there is to be an assumption that a local connection should be required, I accept the need for special care, particularly for battered women. Actually, in practice that is the least of our problems because in my experience nearly all local authorities have a very decent arrangement of trading homes so that women coming out of a violent relationship can move on from a hostel to a half-way house and then into a permanent home in a different authority. That works pretty well on the ground, but there are many other groups that, if they can, rural authorities will encourage into urban areas so that their responsibilities are negated. I hope that in that case the money will follow the client. If it does, I have no problem with that at all.

When the Minister deals with the big policy issues raised by my noble friend and by the noble Lord, Lord Kirkwood, I ask him also to comment on the process point and at least give some of us some comfort that this will simply not be exploited, manipulated and abused in good faith by upper-tier authorities to do things that, because of their lack of local knowledge, they regard as more important than this and, as a result, strengthen the capacity of lower-tier authorities which are going to be dealing with discretionary housing allowance and council tax benefit. They will have an additional resource in order to meet the local need that they are best placed to address.

[The Earl of Listowel]

My Lords, I rise briefly to support the call by the noble Baroness, Lady Lister, and the noble Lord, Lord Kirkwood, to introduce ring-fencing or at least to allow ring-fencing for some time while we go through this huge transition with the introduction of this Bill. I do so for a number of reasons. Listening to the debate I am again reminded of the speech made by the right honourable Iain Duncan Smith at the Conservative Party Conference this year. He highlighted the great amount of debt that this country carries and, in particular, the debt of unsecured loans that people have taken upon themselves. Will the Minister say whether he is concerned that individuals who currently benefit from the Social Fund might turn to loan sharks or take out unsecured loans and expose themselves and their families to risk and threat because there is nowhere else where they can get the support they need?

I have been meeting chief executives, and indeed I recently met a deputy chief executive of a metropolitan authority. After spending the evening with him, what really struck me was the immense burden that he carried. He had to make choices with limited resources. I asked him whether he found himself having to cut back in the areas of child protection and child and family social workers. He said that he and his colleagues were definitely not taking money out of those pots. Then, on meeting a group of chief executives and directors of children’s services in the Palace of Westminster to discuss children’s centres, again we heard that the money was definitely not being taken out of children’s centres and they were really trying to support those as far as possible.

My point is that there are so many calls on the limited resources of chief executives and directors of children’s services in local authorities. The risk is that this money, as the noble Baroness, Lady Hollis, has said, will be diverted into other very important provision, but that those families who need this ultimate safety net will lose out under the new arrangements. I look for an assurance from the Minister that this will not be the case. I should say that Barnardo’s, which has so much experience in this area has raised these concerns with me. One should also pay tribute to the Conservative Administration that set this up in the first place and the noble Lord, Lord Newton of Braintree, because from what I have heard, it has made a very positive impact on the lives of some of our most vulnerable citizens and families.

The issue of accountability, of how this money is spent, has been aired and needs to be addressed. Should there be minimum standards that local authorities have to meet before they are allowed to use this money as they see fit? I look forward to the Minister’s response.

--- Later in debate ---

[Lord Freud]

I will make it absolutely clear that this is not a halving on an annualised basis when one considers the decline in trend. I would like that on the record as well.

I will take the question raised by the noble Baroness, Lady Lister, on the risk of high-cost lenders, or loan sharks as she referred to them. We recognise the danger that illegal and high-cost lenders pose to vulnerable people, who can become very dangerously indebted if they are driven to use such services. We are committed to continuing to provide an interest-free lending facility for those who are least likely to be able to access mainstream credit. We call the process “budgeting advances”. That is a national provision of payment on account that will replace Social Fund budgeting loans. The budgeting advance will be paid to those vulnerable people least likely to access mainstream lending, to help ensure that they are not driven to use illegal lenders. That process, when we put it into the universal credit, will have a much different feel to the paper-driven process that we have today. The two systems of budgeting advances will run in parallel while we introduce the universal credit.

[Baroness Hollis of Heigham]

I note the Minister’s figures—which startled me—about what he thinks will happen to the crisis loan for general living expenses. Given that those are loans, does he expect there to be any virement? In other words, will the budgeting loans, the alignment process and the rise to 1,500 and so on meet some of the suppressed demand that will, in future, exist for crisis loans?

[Lord Freud]

My Lords, I am not sure that I got the point of the question. Would the noble Baroness repeat it?

[Baroness Hollis of Heigham]

Yes, by all means. Crisis loans are for general living expenses. There is therefore a close connection between them and general budgeting loans, which also deal with those expenses—unlike community care grants, which are in a different category altogether, and which can be completely ring-fenced. Do the Government expect any virement between the two funding headings? The depressed figure that was responded to by my noble friend Lady Sherlock, which appears to suggest that about £60 million was coming down to £30 million, would none the less be offset by an appropriate increase in the budgeting loans that he is talking about as payment on account.

[Lord Freud]

My Lords, the straightforward answer is that currently we are not seeing that alignment, based on the measures that we are taking.

[Baroness Hollis of Heigham]

Do you expect to see it?

[Lord Freud]

We are not expecting it.

--- Later in debate ---

[Lord Freud]

I will have to fall back on offering to write on that particular matter. I do not know exactly how we finance local disasters. In practice, the Social Fund has not been much used in that area. However, I will have to write on how funding for local disasters works.

[Baroness Hollis of Heigham]

Perhaps I may give the noble Lord an example. It may not be as extensive as flooding, but a not untypical example is a gas explosion in a high-rise block of flats that results in 80 or 100 families having to be rehoused and needing financial support to buy furniture and this, that and the other. Is it expected that that will come from this provision or will there be additional allocations?

[Lord Freud]

The obligations of the local authorities are centred on housing provision. There are a number of duties around what local authorities have to do to rehouse people according to their homelessness obligations. That is where some of the crises would be dealt with. Local authorities could look to provide the support using some of the Social Fund money that they have available. In practice it will be a more efficient use of money because we will have a one-stop shop for that kind of problem in the housing area.

--- Later in debate ---

[Lord Freud]

As I say, that is not a major use of the fund. Clearly, the local authority with its housing obligations is very well placed to manage that on a holistic basis. In the case of that example, there would be a better and more efficient use of funding than we have today.

The amendments in this group seek to place constraints on the changes to the discretionary Social Fund that would undermine the much-needed reforms and prevent the needs of vulnerable people being addressed in an effective way. In line with our commitment to localism, and to allow local authorities to make the best decisions for their respective areas based on their more detailed knowledge of local concerns and requirements, we do not propose to ring-fence the funding given to local authorities in England and in the devolved Administrations of Scotland and Wales. Local authorities have entered very positively into discussions with us and have come forward with interesting and innovative ideas on how support can be delivered. For example, one large rural authority is considering using some funding to pay the delivery fees charged by an existing provider to deliver free goods to the vulnerable people they need to reach.

The noble Baroness, Lady Hollis, asked whether the funding would go to the upper or lower tier. The funding will be allocated to upper-tier local authorities in order to provide the greatest possible flexibility to local areas. From our discussions with local authorities, we know that a range of delivery models is being considered. Some of these models will result in funding being devolved to lower-tier services such as housing. Decisions about the ultimate funding route for each area will be determined by a range of local factors, including the location and the nature of existing services and how these align with areas of deprivation and need, and the level of funding that will be devolved. In less deprived areas it may not be necessary or practical to operate a number of services.

[Baroness Hollis of Heigham]

I simply do not understand that answer. It will go to upper-tier authorities: then what?

[Lord Freud]

As I was trying to explain, the upper-tier authorities will then design their services in different ways. Some will decide that the most efficient thing to do is to give it to a group of lower-tier authorities; some will do it themselves; some will devolve it to the housing operations within lower tiers. What I am trying to say is that there will be various responses.

[Baroness Hollis of Heigham]

So it would be entirely up to the county council as to how they distribute this money, if they distribute it at all, and whether they actually use it for the services that are proposed.

[Lord Freud]

My Lords, on the argument between the upper and lower tiers, yes. I will come back to the issue around ring-fencing, where there has been some pretty powerful argumentation. That is what Amendment 86ZZZB seeks to ring-fence. At one level, that will restrict such innovative thinking. Ring-fencing could also prevent pooling of funding streams and ultimately limit the ability of each local authority to devise schemes that best address the specific needs in their respective areas.

We have had some excellent contributions. I think the best one—no, that was invidious—very enjoyable one was from my noble friend Lord Brooke with his reminiscences of Degsy Hatton. It is quite clear that we need to make sure, if we are putting money out for vulnerable people, that it goes to vulnerable people and is not diverted elsewhere. We are localising this funding for sound reasons, because the closer to the ground you can get with this funding the better it is likely to be spent. Local authorities clearly already have duties to provide assistance to vulnerable people.

There is clearly a great weight of feeling in this Committee, very well expressed—brilliantly expressed in many cases—and I will take those thoughts away, reflect on them and come back with an answer about where those reflections have gone. Reflection can be a fairly external matter. However, we will be setting out the purpose of the funding in a settlement letter from the Secretary of State for Work and Pensions. Clearly, at one level at least, that provides sufficient clarity on the purpose of the funding for local authorities. Picking up the point made by the noble Baroness, Lady Lister, on cash for emergencies, that cash is meant for emergencies. Of course, with local disasters, there comes a point when they are overwhelmed but I shall reply in writing on that.

Amendment 86ZZZD would require local authorities to provide victims of domestic violence with financial support. Local authorities, along with other specialist support services, often already provide more tailored support than the current community care grant scheme offers. Where an individual requires household items, it may be better to offer furnished accommodation in such circumstances. Local authorities will have the appropriate support services on the ground and be in the best position to assess what type and level of support is required. On top of this, they already have a duty to provide support and accommodation to anyone made homeless as a result of domestic violence, and this complements a wide range of assistance which is also available at local level.

[Baroness Hollis of Heigham]

My Lords, that is a district council function, not a county council one. When half the local authorities in England are split between two tiers, it really is not going to work like that.

[Lord Freud]

My Lords, I know that the noble Baroness is very concerned about this issue and it may be that there is a breakdown in some particular circumstances. But there is a duty on authorities to meet these duties. In my reflections, I will look at this because it may be connected with how we might find a solution to the more general concerns.

--- Later in debate ---

[Lord Freud]

I would be highly delighted to provide that list of duties. The new national provision of payments on account will be monitored by the department to ensure that it is working effectively and efficiently. We are confident that the combination of this national provision and the new local provision will be a better way of providing support to those who need it most.

Amendment 86ZZZEB seeks to standardise the delivery by local authorities of the new provision and appeals, and introduce an independent tier of review for local authority decisions. This would defeat the purpose of our proposed reforms by, in effect, requiring local authorities to administer a national scheme. It is not clear whether this is intended to cover only English local authorities or to extend the responsibility to local authorities in Scotland and Wales. The whole reason for devolving assistance to the local level in England is to enable decisions to be made at the most appropriate level to effectively identify and target those in greatest need. It will be the responsibility of local authorities in England to decide on appropriate arrangements for internal review. As already discussed, local authorities are answerable for the services they provide and have a range of duties towards vulnerable people that they are required to meet, which I will list.

[Baroness Hollis of Heigham]

By tier, if you would.

[Lord Freud]

Picking up on the powerful point made by my noble friend Lord Kirkwood on the Independent Review Service, that service review’s decision is made on whether to award discretionary Social Fund payment. These decisions must have been subject to an internal Jobcentre Plus review before being passed to the Independent Review Service. The reforms to the discretionary Social Fund will mean that the Independent Review Service’s workload will diminish and eventually come to an end. It would not be appropriate or feasible to have a national review scheme to deal with the diversity of new provision delivered by local authorities and the Welsh and Scottish Governments. Local authorities will set up their own internal review mechanisms if they think it appropriate to do so. In addition, the Local Government Ombudsman is fair and impartial, and is available to people dissatisfied with decisions made by their local authority.

Amendment 86ZZZF would delay the introduction of new systems until universal credit is fully rolled out and has achieved prescribed performance targets. This would delay the benefits of a more localised approach to the discretionary support. Performance standards are already in place for the current benefit regime, for which the Secretary of State is accountable, and this will continue to be the case for universal credit. The business plan for 2011-15 confirms that the department will continue to publish a range of indicators on the performance of delivery businesses, including claims processing, customer and employer satisfaction and labour market services. With these measures already in place, we do not see the need for regulations to set out the performance targets or standards for universal credit which the amendment would require.

On the question raised by my noble friend Lord Kirkwood on cuts-driven reform, the White Paper on universal credit gave the commitment that this was not a cost-cutting measure and that costs would be funded. The initial funding allocation is fixed for the rest of the spending review period and future allocations will take account of changes in need.

[Baroness Hollis of Heigham]

Will the noble Lord also circulate to us in a letter what the future funding allocations will be by subheading, including that held centrally and that going out to local authorities over the rest of the spending review period?

[Lord Freud]

My Lords, I hesitate to commit to that. If it is available at a reasonable price, I will do it but I will not if it is not.

[Baroness Hollis of Heigham]

I am sorry but the noble Lord has just given a commitment that this is not a fixed money measure and that funding will continue at a certain level until the end of the CSR, so he must know what those figures are.

[Lord Freud]

Yes, my Lords, the figure is £178 million per year, which I think is in the documentation, until the end of the spending review.

[Baroness Hollis of Heigham]

But we also need to see the breakdown within those headings.

[Lord Freud]

Could the noble Baroness make it clear what breakdown she means? I think she meant by area.

[Baroness Hollis of Heigham]

By allocation.

[Lord McKenzie of Luton]

I think there are two issues. First, what is the total pot for the rest of the spending review? I think the noble Lord has confirmed that that is £178 million—fixed or to be uprated by inflation?