Welfare Reform Bill

Baroness Sherlock Excerpts

Thursday 10th November 2011 Grand Committee

[Baroness Sherlock]

My Lords, perhaps I may pick up on the second part of the question asked by the noble Earl, Lord Listowel. Would someone be required to work during the school holidays? I shall let the officials think about that while I pose a couple of other questions. I was pleased to hear the noble Lord say that the Government appreciate that there are two objectives here: the care of children and the importance of work. He has explained the figures and the research the Government have done into the impact of work. Can he share with us their research into the impact on children of parents working at the point at which they have to make the transition into school?

[Lord Freud]

My Lords, I cannot bring to mind a particular piece of research on that question, but I suspect that the noble Baroness, Lady Lister, probably went into this in great detail when she was working on her piece of research for the CSJ. If I can find something which pinpoints that particular question, I will certainly give the noble Baroness the reference. But the general point I sought to make is that a range of research in this area shows the great benefits for families of working, and if I can give a particular answer to her question, I will.

[Lord Freud]

Let us not debate research none of us can remember. I will have a look at this and if I can provide anything more solid, I will do so. On the point about school holidays, under the regulations, if a lone parent had to leave a job because no appropriate childcare was available in the holidays, that would be taken into account for good reason. Technically it is good cause, but it would become good reason.

[Baroness Sherlock]

My Lords, I am so sorry, but in that case I need to clarify this. As I understood it, the question posed by the noble Earl was not whether someone would be sanctioned for being unable to get suitable childcare, but whether they would be allowed only to choose to take a job that enabled them to stay at home with their children during the holidays. The summer holidays last a long time and children might never see their lone parent during working hours. I think the point that the noble Earl was trying to clarify is this: if I am a lone parent and the only job I can find is one that requires me to work during the school holidays and I do not take it, is that good reason?

[Lord Freud]

I think it would be good reason. As I have just said, if someone cannot find appropriate childcare in the holidays—

[Baroness Sherlock]

My Lords, I am so sorry, but I must be expressing myself badly. I am assuming that childcare is available during the holidays, but if for reasons due to my own strange peccadilloes I want to spend the holidays with my child and the only job available is one that would require me to work all year round—during school hours in term time is fair enough, but also during school hours in the holidays—in those circumstances would I as a lone parent have to take that job, even if it meant that my child would have to spend the whole of the school holidays in childcare? Would the noble Lord clarify that point?

[Lord Freud]

Yes, my Lords, the picture the noble Baroness draws is correct. If a job is available and there is appropriate childcare, the lone parent would be obliged to take that job.

[Baroness Sherlock]

I thank the noble Lord for that clarification, if not for the answer, which I am very disappointed with. I accept that the noble Lord does not have research on the question of transition available to him at the moment. I just want to lodge a concern that the point of transition for children either moving into school at all or moving from junior to secondary school is difficult, and there is research out there to support that. The research looks at the impact in later life if those transition points are not well handled. I would be grateful, before we get to Report, if the noble Lord would give some thought to whether he could give us some comfort that the Government would want to give a clear policy steer that they would expect their advisers to look kindly on lone parents who, for good reason, want to support their children during the key transition point into school. I have one final question. If a five year-old were not in school—I will not go into it; there may be reasons why a five year-old may not yet have started school—would that lone parent still be required to go out to work?

[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.

--- Later in debate ---

[Lord Freud]

Let me just try to pin down the point on transitions and whether people should be in work. There is little evidence relating to the effects of maternal employment on children's cognitive and behavioural outcomes in the UK, but what there is suggests that there are few negative effects of maternal employment once the child is aged over 18 months. If I can find some more research, I shall get it to noble Lord post-haste.

[Baroness Sherlock]

I will not trade research, but I think it would be helpful to come back to this on Report. I just want to put down a marker that some of the research around the impact of maternal work centres around two things. The two outstanding issues are, first, the quality of substitute care and how you control that in evaluating the impact on child development; and, secondly, the degree to which the mother wishes to work, which has always been a significant issue. There has been some work suggesting that if the mother wants to work, the effect on the mother can be positive, and that that is communicated to the child and, if that is not the situation, the opposite is communicated. Until now our regime has not required lone parents or partners to go out to work against their wishes in those circumstances. Obviously it is a little harder to do. Perhaps in his research the noble Lord might look at what might be the nearest parallel to that. Perhaps we should have a coffee and discuss research at a later date.

[Lord Freud]

The point that the noble Baroness, Lady Sherlock, makes is an incredibly complicated and central one because people’s way of thinking about themselves is shaped by many things, not least by the expectations that others and the state have on them. We are trying to develop a really complicated socio-psychological set of impacts with the system. There is not an easy answer. We are trying to make people want to work because that is the expectation and that is the norm. That is what we are trying to achieve with our reforms.

[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.

--- Later in debate ---

Ring-fencing can create problems. We wanted to help Liverpool Polytechnic but we were effectively denied the means to do so. Of course, hard cases always make bad law, but I have never forgotten that episode and I thought of it immediately when the noble Baroness, Lady Lister, moved her amendment.

[Baroness Sherlock]

My Lords, I hesitate to lower the tone after that marvellous exposition by St Sebastian—by the noble Lord. Perhaps the Minister will answer some questions for me. I have been reading the very large and very helpful response to the consultation exercise that the department kindly provided. I wonder whether he would help me with the sums. His Treasury and City background might help me to understand this. I am grateful for the briefing from Family Action and I take that briefing very seriously. I noticed that it had been giving out grants to people in need since 1869—even longer than the Social Fund—so it has some knowledge whereof it speaks. When organisations like that warn that things are about to get very bad, we need to listen, because they know what they are talking about.

Perhaps the Minister could help me to understand. I gather that in terms of crisis loans, during 2010-11, £152.9 million will be disbursed, and it is intended that from 2013-14 that will be replaced by the amount of £36 million, which will be transferred to local authorities. I am assuming that cannot literally be a cut of £160 million, or 76 per cent. I presume that there is a gross and net issue here. Perhaps he would help me to understand the effect of that transition.

Secondly, will the Minister tell us what work the department has done in estimating the impact of this recession, or other recessions, on demand going forward? Perhaps he could help us by looking at what happened previously. I note that the briefing from the Government in response to the consultation denies that the recession or youth unemployment had any part to play in the increased demand, although the fact that it started in 2008-09 would seem to imply a coincidence because that was around the same time as GDP began to go downwards. I wonder whether he could help us to understand that as well.

Thirdly, perhaps he could help me to understand how the new system will respond to changes? For example, how flexible can it be to changes in the profile of need in a particular local authority area? For example, if another of his policies such as the benefit cap were to have the unfortunate consequence of causing significant numbers of poor people to move from one area to another—I am not suggesting that it will, this is just for the sake of argument—how would that be affected by a local authority in that circumstance, or a circumstance like that?

I have one final question. Does he have any concerns about the consequences of what seems to me to be a move between what is currently annually managed expenditure to something that effectively becomes—albeit indirectly—a form of DEL? The only reason I ask is because one reason why something like this is part of the social security system is because it responds—and is managed and funded by central government to respond—to the changing profile of the labour market and the people in need because of changes in circumstances. How will government finances handle that in future?

[Lord German]

My Lords, I shall add some further questions about process. I shall not to go over the same ground that we have just covered, but I am very grateful to the noble Baroness, Lady Lister, and to my noble friend Lord Kirkwood for the historical background. This morning I started reading a report by her colleague, the Assembly Member for Cardiff West, on this very issue and on Labour's history in it in the past few years. In his report on this issue, the pride of place in the new Labour era goes directly to the noble Baroness, Lady Lister, with a major quote about the need for reform of the system. He then traces the whole history of the Labour Party's involvement and engagement with the Social Fund during the previous Government, and ends with a quote from the last document which we have, the DWP document of March 2010, which says that,

“the Social Fund has remained largely unchanged in the two decades since its introduction”,

that the existing scheme was “passive”, doing,

“little to help people build up personal financial management skills”,

and that it was “short-term”, “complex”, and presented a series of “delivery challenges” if the system were to,

“provide better value for money for the tax payer”.

I have no idea whether that is an accurate recording but he took his starting point from the noble Baroness, Lady Lister, and his end point is that there is a problem which has not been dealt with, so reform is obviously essential.

The second piece of quite interesting information which I took from this document is on the report of the Calman commission. I do not want to appear like a cracked record here but I shall refer to an amendment in a moment. It is not clear to me which country we are talking about and whether “national” means England. However, one issue considered by the Calman commission, which was of course set up by the three parties represented around the centre of this Committee, was to recommend to the Government that the discretionary elements of the Social Fund should be devolved. The previous Government, in their response, said “We'll think about it”. I presume that the thinking has now moved on, which is why this issue may well be before us in terms of devolution. In a moment, I want to trace what I think is going to happen in Scotland and Wales because, although there is not yet a clear picture, there is a sense of direction in Scotland, and one beginning to emerge in Wales, as to what will happen.

First, Calman treated this as not being part of the major social security network. He regarded it as a different animal. Another quote which I liked, because I had the greatest respect for this Labour politician, is when the late Donald Dewar said that the Social Fund was,

“flawed in concept and arbitrary in its impact”.

Reform was therefore essential, but that essential reform is still on the table. What is likely to happen in Scotland is that its Government, as I thought, are likely to add an element of their own funding to this sort of money and to create their own scheme, so that there will be a different scheme in Scotland, administered by I do not know whom—possibly by the third sector—and managed on a whole-Scotland basis. The argument that is developing in Wales is very similar: there will be a possibility of an all-Wales scheme, delivered by and responsible to the National Assembly for Wales.

In that context, we therefore have to be clear that most of the questions and discussion which we have had so far are about what happens in England. I respect that and it is very important, because that is probably where there is now the greatest area of concern about how it will all work. I am sure that in Amendment 86ZZZEB, tabled by the noble Lord, Lord McKenzie, proposed new subsection (5A)(a) and (b) refer to England, and that the word “national” in “uniform national appeals process” in new subsection (5A)(c) again refers to England.

We have this problem because we refer to nations. We have a National Assembly for Wales. That means that Wales is a nation. I am not certain how we refer to England at the moment. Presumably that is what the amendment needs. There has to be concern about how this will be delivered. It is appropriate to leave the structure and nature of the business to Governments in Scotland and Wales for them to shape in a way that is appropriate to them because they will have the legislative and financial competence. Of course, this Parliament will have no competence in that matter because the formula will be moved on through a structure that will eventually end up in the Barnett formula. It is important perhaps to look at models that we can share across the United Kingdom. The one for England is not yet absolutely clear.

Before I leave the issue of Scotland and Wales, I ask the Minister whether there has been any mention in Scotland and Wales of the use of the legislative consent motion. That is the device by which a devolved Administration can either ask for or accept permission to legislate, or give the permission to this Parliament. It works in both directions. I wonder whether that has happened. There is still some concern about the nature of what the Administrations want to do.

I will not repeat the arguments on the ring-fencing issue, but in England it is also the case that where you have accountability for funds that emanate from Parliament, there must be some accountability to Parliament. I will start by asking the Minister about the issue of the accounting officer. If discretionary funds are moved in the way that is described, am I right in believing that the accounting officer for those funds will be the Permanent Secretary of the Department for Work and Pensions? We should remember that by definition this is the person whom Parliament may call to account for the stewardship of the resources within their control. How on earth will the Permanent Secretary of the DWP account for money that has been spent without any ring-fencing or contract of any sort by local authorities throughout England? I would be grateful for an answer to that.

The Bill has no lines of accountability across departments. I would like to know what the line of accountability across departments is. If the Permanent Secretary of the Department for Communities and Local Government were the accounting officer, would they be the accounting officer for some parts of the fund, with the DWP Permanent Secretary having responsibility for others? What are the lines of accountability across departments? Or will accountability be split between various departments? In other words, who should Parliament call to account for these moneys.

The second issue is about reporting back. We have heard about ring-fencing going in one direction. If there is to be an accounting officer and Parliament is to call them to account for those moneys, what will be the reporting back mechanism from local authorities in England to the accounting officer in whichever department it is? If that is not described, clearly we will lose the sense of being able to account for public money. I certainly worry about that.

I have asked a range of questions that need to be answered. I start from the premise that I have worked from this wonderful document. I will give a reference to the noble Baroness, Lady Lister, on this matter. It seems to me that we started with a problem many years ago and ended up with a problem that is still there. We need to find an answer but in so doing we need to ensure that we have covered all the possible corners that may be preventing us getting to the most appropriate solution.

--- Later in debate ---

[Lord Freud]

If the noble Lord looks at page 11 of the government response document, it shows that the tripling was clearly driven by a phone-based service. As I said, we are getting that more under control. The 10-year average spend is £30 million, and clearly we are aiming to get back down to more sensible levels through this method, as I said.

[Baroness Sherlock]

The Minister obviously has access to in-year figures, which we do not. If he were to project forward from the most recent figures that he has, what would he expect the spend to be?

[Lord Freud]

At the end of this year, we are expecting it to come down to £60 million.

[Baroness Sherlock]

That is twice what you are projecting handing over.

[Lord Freud]

It is on a downward—

[Baroness Sherlock]

Just checking, thank you.

[Lord Freud]

There is a downward trajectory, and the measures that we are putting into effect do not reflect that full amount. The full amount is £60 million, but the underlying figure is coming down by more than that if you annualise the latest set of figures.

[Baroness Sherlock]

I am very grateful to the Minister. I just wanted to be sure that I had understood, for the record, that he is proposing to halve the amount being spent on crisis loans for general expenditure as a result of this change. I thank him very much for that clarity.

[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.