Welfare Reform Bill

Baroness Howe of Idlicote Excerpts

Monday 10th October 2011 Grand Committee

[The Earl of Listowel]

My Lords, I am afraid my last comments were probably not very clear, for which I apologise. The question I really wanted to ask was about a young person leaving care who has a sum of capital in a child trust fund. Will that sum be exempt if he needs to draw on universal credit?

[Baroness Howe of Idlicote]

My Lords, having listened to the detailed arguments, which were extremely well put, if I may say so, the message to me is definitely that all this looks as though it is going to discourage people from saving. If the Minister cannot reply to what we have heard, that is a very worrying message to be sending out.

[Baroness Sherlock]

My Lords, I would like to add one final word. Could the Minister reflect for us briefly on one of the wider consequences of this move? When tax credits were set up, they were, as he will know, designed to replicate work in many ways and to replicate the tax system, so it is not the case that having savings is not taken into account at all. Under tax credits, genuine income from savings is taken into account, and that is the way it should be, but under this new system it is not just the very richest who are affected. Once people reach £6,000 worth of savings, they will face, as my noble friend Lady Drake described, a heavily punitive rate of effective taxation on that. I wonder what the effect of that is on the marginal deduction rates as they move into work.

I ask the noble Lord to do two things. One is to comment on how he has factored that into the effective incentives to move into work in a whole variety of situations. Secondly, could he say whether he is not worried at all that it might push people back into an approach of dependency on the state as opposed to their trying to share that responsibility between themselves and the state, which the tax credits system encourages them to do?

--- Later in debate ---

[Lord Skelmersdale]

My Lords, before the debate continues, I have to say that I am afraid that the noble Lord, Lord McAvoy, has somewhat misunderstood what I said. I came down firmly in favour of fortnightly payments. What I did not say, if for no other reason, was that the move from weekly to fortnightly payments is so recent. I do not believe that it has yet bedded down.

[Baroness Howe of Idlicote]

My Lords, I congratulate the noble Baroness, Lady Lister, on her excellent exposition of the case and the passion with which she presented it to us. Like my noble friend Lord Northbourne, for many years I have been and still am involved with the Peckham Settlement charity. I know that there was considerable concern when the money that the women had charge of ran out for one reason or another.

I am very impressed by the range of options here, but I would really like to support the one identified by the noble Lord, Lord Kirkwood of Kirkhope, because I think that really said it all. It is a question of choice, and that should be what we give individuals in this situation. We know the number of times families have gone hungry when women have not had control of the money, for all the reasons that have been explained previously. This particular option is the one that we should all consolidate behind. More than anything else, I say this because the more people who speak in favour not just of this amendment but of what is being said in all these amendments, the more likely we are to persuade the Minister to have another look at this, and above all to take it back to his colleagues, who may have rather different views, and to try and persuade them.

[Baroness Hollis of Heigham]

My Lords, I support the amendment of my noble friend Lady Lister, which she moved so powerfully, and I certainly hope it will cause the Minister to reflect on the issues she has raised. I want to speak to a related issue that could be raised under Clause 29, but I raise it now because I think it will make worse the situation that my noble friend has described, and I am fearful. This issue is the payment methods for housing benefits—not to whom they are paid, which we will come on to later, but how they are paid. I hope the Minister can give us reassurances on that, and if not, that we can follow this up in the discussion afterwards.

Your Lordships will know that HB is very complicated to assess and to administer. Local authorities will often not allow a member of staff to fly solo on handling HB claims until they have had some six months—I repeat six months—training and chaperoning. This is almost as much as a police officer. The reason, of course, is that it involves checking entitlement, rents, family size, the non-dependence in the home, property size, the landlord’s veracity, any disability, backdating, separating out service charges—including fuel, water rates and energy bills—and careful checking against fraud, because it is a big-ticket item. It takes a good local authority with intimate knowledge of its locality an average of between seven and 10 days to process a housing benefit claim. Crawley Borough Council, for example, which is a very high performer, processes about 40 per cent of new claims in one day and the rest in under 10. None the less, do we think that universal credit staff can deliver a benefit as complicated as HB?

In future, this will be done online by a family in Exeter, with queries, I understand, to a call centre in Warrington. That call centre will be handling over 30,000 new HB claims a week: nearly 7,000 a day. Families competent in financial management may be able to cope; we calculate that perhaps 40 per cent of families are ready to use the online process. Those who are most dependent on HB are the same group who are most dependent upon and in need of weekly and fortnightly payments: people with, say, mental health problems or learning difficulties, or other people who for whatever reason lead chaotic lives. These are the people who find that their paperwork is lost, that landlords are unhelpful, that call backs go missing, that deadlines pass. I understand that there is a 63-page form to fill in: one mistake, and no money gets paid. I hope the call centre line is free. Is it? The lines will be jammed, callers will have to call back repeatedly, and they will have to hang on for long periods of time while their call is transferred to someone who knows something about HB—that is, if the call has not been cut off in the mean time through the handing-on process and they have to start all over again.

All that is handled now with skill, patience, good will and huge experience by local authority and housing authority offices. Local government officers find that 66 per cent of all those on housing benefit need the face-to-face service they offer. The Government are assuming that only 10 per cent will do so, and that that 10 per cent will be serviced by Jobcentre Plus offices, whose staff are not only not experienced in housing matters but in physical terms are often inconveniently located. For example, one district in Kent with 100,000 people has no Jobcentre Plus in its area. Claimants needing a face-to-face service in the north of the district have a £9 bus ride to get to and from the Jobcentre Plus offices, while those in the south have a £7 bus ride—a day’s allowance for the claimant gone on a day’s travelling costs.

At the moment, the only experience that DWP staff have of housing issues is from 200,000 home owners nationwide, less than 5 per cent of the jobseeker’s allowance caseload. Housing cost assessments will go up from 200,000 to 4.83 million. So I have some questions for the Minister, and I apologise for not giving him advance warning of them, but they are absolutely integral to the whole issue of how payments are made.

Will claimants get an itemised statement of the elements making up their universal credit so that they can see what they should get in housing benefit and thus, what is often the trickiest and most difficult to compute, be able to compare it with previous awards? Will claims get slowed down to the slowest part of the process? If there is delay over housing benefit, will the claimant know that that is where the difficulty lies, and will they none the less receive the rest of their universal credit, which may be more open to real-time assessment? At the moment, if a claimant gets their jobseeker’s allowance paid, the landlord can be pretty confident that they will get their housing benefit. Will that happen in the future?

If a claim has to be investigated further, perhaps because the family needs an extra bedroom because of disability, and it takes a fortnight or more to get the required information back from GPs, will the entire universal credit payment be held up until it is resolved? What, as my noble friend so eloquently argued, will the family live on in the meanwhile? What plan B does the Minister have in mind for the individual living on the breadline, especially since that same individual may want the housing benefit to be paid directly to the landlord? However, the Minister wants it paid directly to the tenant, who will now be far more exposed to the vagaries of administration as well as to the temptation of fraud.

Perhaps I can suggest a plan B to him: get local authority staff who are highly experienced, skilled and swift to do the housing benefit calculation for the DWP and—given that central and local government computers already communicate with each other on these issues and the whole system is online—get them to feed their data into the central universal credit processing centre. After all, the ATLAS project means that local authorities have a direct link into JSA, ESA and IS. On top of that, they can access electoral records, they can verify residency, they have knowledge of local HMOs, and they have street knowledge. No call centre 200 miles away can identify a contrived tenancy, or whether too many individuals all appear to be claiming housing benefit for a shared property, or whether rent arrears are beginning to mount up and intervention is necessary. Local housing benefit staff can and do, and they act on it. Having a local contact point would also stop the phones being jammed by worried landlords wanting to know whether their tenant is going to get housing benefit, which is essential if we assume that most tenants will in future get their housing benefit paid direct to them. Landlords want the security of a paid rent, and hence their demand that rents be paid directly to them, but they also rely on cash flow. Cumbersome administration that makes the timing of their payment from the tenant unpredictable is at least as significant.

Claimants who have steady circumstances and basic competence will cope with an online system supported by a call centre and may very well be able to cope with monthly payments. However, the claimants about whom so many of us around this Table, as well as local authorities and housing associations, are most worried, are vulnerable, chaotic and prone to error. They may have literacy difficulties, they are in constant flux and they will not cope. Many of the most vulnerable are also clients of other statutory services. No call centre can deal with them or will interface with them. The local HB office does this each and every day.

Tax credits are relatively easy because they are based on the previous year's income, with fixed periods of claim. Yet even here, as I know to my pain, the computer nearly toppled over and the backlogs were huge because no one had appreciated the rollercoaster nature of the lives of so many lone parents. Half of them had more than a dozen changes of circumstance per year, many connected to childcare. The computer was often three changes behind. HB is far more complicated than tax credit. It exposes the tenant to the much greater risk of homelessness, and no unemployed tenant facing homelessness will concern himself with looking for a job rather than trying to secure his home, which is the outcome that we want him to seek.

We will strengthen UC and protect some of the clients of UC most at risk by developing a partnership with local authorities, particularly as they will be holding and distributing the discretionary housing allowance to soften the difficulties that will follow from the tough new HB changes that we will no doubt debate in a later session. For the Government, local authorities represent a back-up resource that it would be foolish to squander. I realise that I have sprung some questions on the Minister. I hope that, if necessary, we can follow this up with a meeting. They were triggered by the concerns raised by my noble friend’s amendment, and by the additional difficulties inherent in the complexity of the nature of HB, which the system as presently constructed cannot begin to address.