Social Security (Payments on Account of Benefit) Regulations 2013

Debate between Baroness Lister of Burtersett and Baroness Sherlock

Wednesday 13th February 2013 Lords Chamber

[Baroness Lister of Burtersett]

My Lords, I have a few points to make. The Minister will be glad that I am not going to go over all the previous arguments about the demise of the Social Fund and I will not cover everything that I had planned to cover. However, I want to ask about budget advances. I think that the Minister may have referred to my first point. In the answers to questions raised at the seminar, which I was unable to attend, it was stated that,

“the test of ‘serious risk’ for budgeting advances has been carried forward from the existing system and is deliberately set at a high bar, but it is one staff are familiar with”.

However, I am advised by CPAG that in the existing system the “serious risk” test is applied to crisis loans and not budgeting loans, which budgeting advances replace. So, yes, staff are familiar with it but in another part of the system. By introducing the test for budgeting advances, the bar is being set higher for this part of the system, and yet another part of social security is being made available only in situations of dire need. Surely, the point of budgeting loans is in part to help prevent ever getting to a situation where there may be a serious risk of damage to health or safety. Will the Minister explain why this particular change has been made? To be honest, I think that he slightly conflated crisis and budgeting loans in his introductory explanation. Will he also confirm that, as with regard to crisis loans, health will include mental as well as physical health, and that safety relates to potential as well as actual danger? Does he agree that the lack of adequate cooking, heating or sleeping facilities could constitute a risk to health? I would feel happier about this shift if the Minister could give that assurance.

Regulation 15 prescribes the maximum amounts of budgeting advances as £348 for single people, £464 for couples and £812 for households with children, single or couples and irrespective of the number of children. These amounts are much lower than the current maximum amount under the Social Fund budgeting loans scheme, which is £1,500. I should be grateful if the Minister could explain the justification for this reduction. In particular, is there any evidential basis to suggest that the maximum amounts can be so substantially reduced, compared to that used for the Social Fund scheme of budgeting loans, without it causing problems for some claimants?

Having elicited some management information through Parliamentary Questions, I accept that these amounts are higher than the average budgeting loan award made to each of these family groups in 2011-12 and that fewer than 100 people are recorded as receiving awards higher than those specified. However, that suggests that such a big reduction in the maximum amount is unnecessary from a public spending point of view while a small number of claimants could suffer as a consequence. Is the Minister able to give any information as to the kinds of circumstances in which claimants have received higher awards than those specified and what kinds of sums are involved? Given that these maximum amounts are set out in the regulations, can he explain the procedures for keeping them under review and for uprating them? This question becomes more important now with the significant reduction in the maximum amounts.

I thank the Minister for explaining why a person has to pay back all a previous advance before getting the next one, but I am still worried that, at a time when benefit levels are being cut in real terms and people will have problems with monthly budgeting, these new rules will be unduly restrictive and cause real hardship. Lone parents and disabled people currently receive two-thirds of the gross expenditure on budgeting loans and they will therefore be the groups hardest hit.

[Baroness Sherlock]

My Lords, I thank the Minister for introducing these regulations and explaining how they would work; and my noble friend Lady Lister for her characteristically incisive questions. For this one moment only, I am glad that I am standing here and not sitting in the Minister’s seat. As has been explained, these regulations come in two parts. I will first look briefly at the payments on account. The Minister has explained the circumstances in which these will operate and my noble friend Lady Lister has already tried to tease out the reason why the Government have gone for this strict test of being available only to those in financial need. It is even slightly stricter than that. They will be available only for those in financial need as a result of having applied for a benefit, but not yet received a payment, when it seems likely that they will do; or when an award of benefit has been made, but the date on which it would be paid has not yet been reached.

That last one is likely to be of particular interest to millions of people who will find themselves being moved from weekly or fortnightly to monthly payments. Recent research commissioned by DWP, Work and the Welfare System: a survey of benefits and tax credits recipients, by Tu and Ginnis in 2012, found that 42% of potential universal credit claimants said they would find it harder to budget with monthly payments; 80% of these said that they were likely to run out of money before the end of the month. As I understand it, they will not all be entitled to budgeting advances, only those who find themselves in this stiff test of financial need, as a result of the circumstances I have described.

I would be grateful if the Minister would explain what he understands as being a “serious risk”. Would running out of food or cooking facilities constitute that, as my noble friend Lady Lister mentioned? Food banks already see significant numbers of people turning up because their benefit payments have been delayed. I suggest that this is likely to become much more significant in future with the move to monthly payments. Even if the test is the same as now, will the Minister concede that there may be a different set of needs resulting from a change in the circumstances because all these people are moving into monthly payments? Has he considered that aspect of it?

Regulations 11 to 15 cover budgeting advances. My noble friend Lady Lister has gone through the reduction in the maximum amount available, so I do not need to revisit that but I will be interested to hear the Minister’s answer. I would be interested, though, in the following information, if the Minister can provide it. His department has inquired about what has been happening with regard to the replacement for the Social Fund in different parts of the country. How many of those schemes will offer cash to claimants? What has his department found out about that? That will be important since they will replace a system whereby claimants can access cash at the moment. What research has the department done to establish the alternatives to which claimants are likely to turn? Since many claimants will not be able to access mainstream credit, it must be feared that they will turn at best to expensive legal credit, home credit or retailer financing, or at worst to illegal loan sharks.

I would be grateful if the Minister could explain again why he thinks it is important that claimants should be able to have only one loan at a time, even when it is a very small loan. A family may have borrowed £150 to buy a bed for a child but then a disaster strikes: for example, their washing machine breaks down, there is a flood or the bicycle which the mum is going to use to get to a job interview is stolen. They then need a significantly larger loan. What is the rationale for their not being allowed to take out more than one loan even if the total of the loans is well below the ceiling?

Will the Minister address the interaction between the new low ceiling, the fact that the adviser will be required to establish that the claimant can afford to repay the loan and the fact that the maximum period over which it can be borrowed has been reduced from two years to one year? Therefore, somebody taking out the maximum loan will have to contend with a tighter borrowing period and will have to prove that he or she can afford to repay it. Is there not a danger that that will make it even harder to get the loan in the first place?

These regulations may seem minor and technical but we will see millions of people face changes in their payment patterns because the decisions the Government have taken—in the face of widespread dismay and advice to the contrary—to move to a single payment, including amounts for rent, children as well as work, and to pay it monthly in arrears, are likely to be the cause of significant difficulty for a great many claimants. The least they deserve is a generous, open, accessible system of payments on account to ease the regulations’ passage.

Local Government Finance Bill

Debate between Baroness Lister of Burtersett and Baroness Sherlock

Monday 16th July 2012 Grand Committee

[Baroness Lister of Burtersett]

The phrase keeps going through my mind, “More haste, less speed”. It is no criticism of local authorities, but we have to remember that devising a means-tested benefit scheme is very complicated. As the Institute for Fiscal Studies pointed out, councils face a difficult task in squaring a number of circles in devising schemes—and my noble friend Lord McKenzie outlined some of those circles and squares earlier. They have little experience or expertise in designing means-tested support schemes, and very little time to do it. It worries me that we are requiring local authorities to rush this process when they have to take account of so many factors in working out their means test, balancing all the different vulnerable groups that they are supposed to take into account while having their latitude squeezed by having to protect pensioners.

My noble friend Lord McKenzie pointed out that councils will have to take account of their child poverty needs assessments because they have a duty under the Child Poverty Act. A recent survey by 4Children found that fewer than half of English local authorities have a child poverty strategy in place, and 35 of those without a strategy do not even have a needs assessment, so presumably before they can work out their council tax benefit scheme they will have to do a child poverty needs assessment, which will slow things down as well. We will go on to talk about some of the other factors that they need to take into account—disabled people, carers and so forth. It really worries me that, all right, they may have schemes in place, but they will then have a year in which local people will be finding all sorts of holes in those schemes. It will not be us who suffer but local people in need.

[Baroness Sherlock]

I want to add one brief comment. If I understood correctly, the noble Lord, Lord Tope, suggested that the Committee should not try to press amendments that would delay the scheme because local authorities have already begun to consult on it. I do not want to overly stress the importance of Parliament, but surely the point of this exercise is for us to get the Bill right. If the Government have placed local authorities in a position where they are asking them to start the scheme so early that they are required to consult before Parliament has finished scrutiny of the Bill, surely that is a problem for us, not for them.

Welfare Reform Bill

Debate between Baroness Lister of Burtersett and Baroness Sherlock

Wednesday 23rd November 2011 Grand Committee

[Baroness Sherlock]

Before my noble friend responds, will the Minister explain one thing to the Committee? He has explained why he wants to make clear to a claimant household exactly what income is coming to it as a result of universal credit and the different components to help them understand that. Why does he then have a problem with separating payments as opposed to assessments?

[Baroness Lister of Burtersett]

To save the Minister jumping up and down, I asked him a specific question about monitoring the impact on the distribution of income within households which I would be grateful if he would answer. I do not think he answered it, although the reply has been so fragmented because of the Divisions that we may have missed it.

Welfare Reform Bill

Debate between Baroness Lister of Burtersett and Baroness Sherlock

Tuesday 1st November 2011 Grand Committee

[Baroness Sherlock]

This is the last time that I shall intervene; I shall stop. I want to come back to a point raised initially by the right reverend Prelate: one of the problems, as I know the Minister understands, is that in areas of mental health a lot of problems are not diagnosed and are not necessarily known to be such problems. They can present as behavioural problems but in fact these have underlying causes that may, complete rationally, be wholly unknown to decision-makers and the person themselves may not be willing to disclose them. I am not expecting decision-makers to be able to know that in advance; I am more interested in how the system can deal with that if at some point this information surfaces. It may be that I have simply misunderstood the explanation that the Minister has given. I would be grateful if he could clarify it for me.

[Baroness Lister of Burtersett]

Is my noble friend’s point not that it is at the point where someone has said they will engage with the regime that you are more likely to achieve that outcome if you then withdraw the sanction? You have achieved your end but there is still a sanction. I do not think that the Minister has addressed that point.

Welfare Reform Bill

Debate between Baroness Lister of Burtersett and Baroness Sherlock

Wednesday 26th October 2011 Grand Committee

[Baroness Lister of Burtersett]

I very much welcome the positive response of the Minister and the fact that he has clearly been talking with kinship carers and thinking about how to address the issues raised by the amendment tabled by my noble friend Lady Drake.

I just press him on his final point about doing this on a case-by-case basis. One of the recurrent themes of our discussions is the extension of discretion. I understand the value of discretion, but as the noble Lord himself has acknowledged, it does not provide the clarity of treatment that something in legislation would do. I get the sense that there may be something in future in regulations. I cannot speak on behalf of my noble friend but it would be valuable if there could be a firm commitment before the Bill leaves this House, even if it is not in the Bill, that it will be in regulation. I will not say all that I was going to say because the noble Lord clearly does not need convincing of the importance of this issue. It is one that I have become aware of only fairly recently, partly at the all-Peers meeting where a member of a kinship carers’ association spoke to us. I was very struck by their case in the way that the Minister has clearly been.

I also want to mention, if only to get it on the record, that I was at a conference at the Law Society at the weekend on economic and social human rights. A presentation was made there by the Poverty Truth Commission from Scotland. Some of its members are people with experience of poverty, some of whom are kinship carers. I was struck that it said one of the key issues was kinship care. I will not quote as much as I was going to, but the commission states:

“Kinship carers have been supporting each other and struggling for recognition and justice for many years”.

Recognition is very important for people living in poverty. This is something I have become aware of through my work on the Commission on Poverty, Participation and Power, which also involved people with experience of poverty. The kind of amendment that my noble friend proposes would have both symbolic and practical significance. It would provide that recognition that simply saying, “We will look at it on a case-by-case basis”, would not do. Having said that, for once I can hear the ministerial nuances and I know when to say thank you very much.

[Baroness Sherlock]

My Lords, I have two brief points to make. I was delighted to hear the warmth of the Minister’s response. If he is thinking about this area, perhaps I could punt two thoughts at him. First, I can see that he will be concerned that there may be a range of other circumstances that may appear similar on the face of it, where there is a disruption to the circumstance of an older child, perhaps moving house, and therefore there might be some wish to have that taken into account; for example, a family break-up where the children are suddenly moving to a different house and although the children are of school age, the disruption to the household might make the parent feel that they should stay at home; or the formation of a step-family where there is some significant upheaval in the household which might put a parent who might normally want to go out to work in that situation. If the Minister is thinking, perhaps he can think about those issues as well.

The reason he might want to think that this is a different case is that the grandparents or the other kinship carers have a choice: they do not have to take these children on.

The danger must be that they have to do so unless they have absolute assurances. That is the distinction, which is why I think there is a particularly compelling case for a legislative requirement.