Queen’s Speech

Lord Smith of Leigh Excerpts

Tuesday 10th June 2014 Lords Chamber

[Lord Smith of Leigh (Lab)]

My Lords, I, too, want to comment on the bits missing from the gracious Speech. I shall speak to the welfare aspects of this debate from my perspective as the recently re-elected leader of Wigan Council and as chair of the Greater Manchester Combined Authority. The four aspects I wish to talk about are the bedroom tax, universal credit, the new Work Programme and the Social Fund.

The bedroom tax is acknowledged to be a failure by everyone except the Government. It has not delivered the objectives they claimed it would. It has not saved housing benefit to the extent that they claimed it would, partly because they overestimated the numbers of people who would be affected. Also, as I have told the House before, in places such as Wigan moving from a three-bedroom council house to a private one-bedroom house involves higher rents, and the housing benefits are therefore higher, too. So it has failed to meet that target and the target of persuading people to move. In my authority, only 102 people have moved as a result of the bedroom tax—not because many of them may not want to move but because smaller properties are simply not available in the public sector. People are stuck where they are and they are stuck with the bedroom tax. Nationally, only about 4.6% of people have moved as a result of the bedroom tax.

However, the bedroom tax has had major consequences. One consequence is that the number of tenants now in arrears has shot up considerably—it has increased to 55% nationally, I understand, according to the Joseph Rowntree Foundation. In Wigan, arrears have gone up and we are trying to manage that, but it is difficult. Despite the application of discretionary housing payments, there is simply not enough money to meet the need in my authority and therefore people get into difficulties. Of course, there have been some beneficiaries of the bedroom tax in Wigan: there are far more payday lenders in the town now than there ever were before.

I believe in reform of the welfare programme. I was surprised when the Minister, in introducing the debate, referred to the success of universal credit. As far as I know, it has not yet been rolled out in a programme. I always had doubts. The Government’s ambition led them to do it far too quickly without making sure that they could cope with any difficulties that arose. To understand this better, my authority, as the noble Lord, Lord Freud, knows, became a pilot and a pathfinder authority. We wanted to learn the lessons that could be learnt from introducing universal credit. We did a small experiment for newly unemployed single persons who get on to universal credit—just over 1,000 people so far—and soon discovered the major flaws in the actual process. They are pretty obvious.

First, people do not have the skills in personal budgeting, so we have had to try to remedy some of that. Secondly, they lack access to financial institutions into which they can have the benefits paid. Banks do not, frankly, want people on that kind of income as their clients, as they are far too costly and too difficult, so we have had to set up more credit unions to try to cope with the problem. The third problem is the lack of access to and understanding of IT. I think the national figures, which our experience bears out, are that about 40% of this group do not have access to IT and find it difficult. We have been able to set up schemes within the local authority to try to do this. We can do it for a small group of clients, but if we had had to roll out the full scheme, as was originally threatened, for 1 April, it would have been beyond us to cope with the scale of the problems. I hope the Government understand that we want to help. We understand the need to reform welfare but we need to be very cautious about what we do.

The press seems to indicate that the Government, apart from not being able to get their computer system up and running, are having somewhat of a rethink. I want to ask them to consider rethinking the idea of making direct payments of housing benefits. This is one of the most difficult things for people to manage. All that would happen in many cases is that people would get into severe debt, leading probably to homelessness and so on. If the Government work with local authorities, I think we can reach an understanding; otherwise, again, we will simply provide more help for payday lenders.

I was also surprised when the Minister said in his introduction that 500,000 people had got jobs through the Work Programme. If they have, then maybe somebody ought to tell the providers, because they have only been paid for 48,000 places provided in respect of long-term unemployment. Maybe there is a deficit there that needs to be fixed. Those 48,000 would represent about 3.2% of the 1.5 million people who have been through the Work Programme. I do not think that is particularly successful.

However, I am genuinely pleased to note that the Government are actually beginning to understand more that this is not simply a numbers game but about understanding the people we are dealing with and their needs. I accept that, for many people, getting and keeping a job would be a real transformation in their lives. However, for many people, we have to transform their lives before they can get and keep a job. The Greater Manchester Combined Authority is running quite an ambitious “Work Programme plus” with the Government, which, fortunately, the DWP has agreed to. That will give people not only a key worker to help them with their problems but access to a range of supporting services from local authorities, health authorities and mental health authorities to help them.

There is a gap in understanding in this House about the nature of poverty and how poor people work. However poor people are, and whether that is due to unemployment, low pay or zero-hours contracts—whatever the cause—people can have a crisis in their lives. Children needing shoes, an unexpectedly high energy bill or whatever it might be can cause a real problem for them. The Social Fund was set up to try to deal with crises of this nature but, just as the recession was beginning to bite, the Government passed the Social Fund on to local authorities and halved the available money. I do not think that was the right thing to do, but we coped with it. We decided that we would try not just to cope with the crisis situation but to be more thematic. Rather than say to someone, “You need a new fridge, here’s the money”, we try to find providers who will give them fridges—we will call down a contract for fridges. That saves us money and is more effective. However, from April 2015, even the paltry sum we have is going to disappear. What do the Government expect to happen from April 2015? Do they expect hard-pressed local authorities to provide the funding? In many cases, that will not be possible.

If the Government really cared about fairness in our society, they would reverse that mean-minded policy and work with local authorities to change the lives of people with complex dependencies. That would be an investment, not a cost. The Government would save money, local authorities would save money and we would manage to help people turn their lives around, not just for this generation but for generations to come.